From the July 5, 2002 print edition
Small-business review board permanent
Critics hope change of status will bring more action after four years of `underutilization'
Christy L. Cain

A government watchdog group formed to protect small businesses may finally get some teeth to back up its bark.

The Legislature established the Small Business Regulatory Review Board four years ago to "temporarily" scrutinize the state agencies that create rules affecting small businesses. The watchdog was set to be put to sleep last week but instead received permanent status when Gov. Ben Cayetano signed the Hawaii Small Business Regulatory Flexibility Act into law.

"This is the first step in making this law significant," said Christine Camp, chairwoman of the Small Business Council, an advocacy group for small businesses. "They [the review board] weren't seriously accepted before, but now they will be, because they are permanent and they are not going to go away."

The law making the review board permanent changed the original legislation in two significant ways. Due to lack of funding, the new version eliminates a provision for small businesses to have a "defender" represent them within the state government. The new law also provides that current members of the review board, not the governor, will approve new appointees to the board.

The regulatory review board is small businesses' first line of defense against state rules and regulations that could harm them. It has 11 nonpaid members representing Hawaii's business community.

"If there are any changes in rules by state agencies, we look at them first and advise the agency and the governor in respect to small businesses," said Denise Walker, chairwoman of the review board and one of the drafters of the legislation that created it.

"This is the only piece of pro-small business [legislation] in the state for 40 some odd years," she added.

Under the act, state agencies that want to change regulations first must submit to the review board statements showing the economic impact those changes would have on small businesses, Camp said. The board will review the proposed changes and work with the agencies on behalf of the small-business community.

"Many of the departments weren't submitting the impact statements," Camp said. "If they knew it [the review board] was temporary and was going to end this year, they didn't want to bother with it."

Walker acknowledged that the review board has been underutilized, but said it has aided in some negotiations between state departments and small-business owners.

One example she cites is the state Department of Health's recent proposal to change requirements for home health-care providers.

"Many of the home health-care operators for the elderly came before our board this year because they were concerned the DOH would pass laws that would severely hurt their businesses," she said. "We reviewed the rules, set up a situation where they meet on a quarterly basis, and the department was more flexible in their acts to accommodate home health-care operators."

The DOH said the board allows for increased input from a variety of businesses.

"Our department makes every effort to include small-business representatives by getting input from them on what the impacts could be early on in the process," said Janice Okubo, DOH spokeswoman. "This board helps that effort and ensures there are not issues overlooked."

Currently, the review board can advise only on state regulations; federal changes go through a counterpart to the review board at the federal level.

"The department of health and department of labor have notoriously skated through federal changes because these are not reviewed by us," Walker said. "We're proposing that we interface closer with this [federal] board so that laws aren't just arbitrarily passed for Hawaii."Walker said the Hawaii act is being used as a model for other states drafting small-business protections.

"We were touted federally, and many states are now patterning their acts from ours," she said. "But it's kind of a shame because we have been underutilized."

Small-business owners who feel a pending or newly introduced regulation is unfair can take their concerns to the review board.

"This enables the small-business community to sit down with the regulating agencies before something is put into law so they can talk about how that law is going to impact them," said James Coon, a small-business owner and former review board member.

"This allows them to work out many of the differences before it gets to the public hearing stage. There are times when the government is trying to achieve one thing and it impacts small businesses in ways they wouldn't have thought it would."

"The bureaucrats will no longer have control over creating new rules," Camp said. "Now there will be business input."

Pacific Business News (Honolulu) - July 8, 2002
http://pacific.bizjournals.com/pacific/stories/2002/07/08/smallb1.html

© 2002 American City Business Journals Inc.