HB1762

SECTION 1. The legislature finds that according to a 2023 report published by the George Mason University Mercatus Center, Hawaii ranks as the twenty-eighth most regulated state in the nation. As of 2023, the Hawaii Code of Rules contains 108,741 restrictions. The top three policy areas targeted by these state regulations include: health services; social assistance and; industry, commerce, and development. The report went on to share that growth in regulations is correlated with increased poverty rates, lost jobs, and higher inflation.

On the federal level, the U.S. Code of Federal Regulations contains 1,097,563 regulatory restrictions as of 2023, creating challenges for businesses and individuals striving for legal compliance. According to a Mercatus Center report, "the growth in federal regulations between 1997 and 2015 is associated with the following effects on the Hawaii economy: seventeen thousand and twenty-eight additional people living in poverty, four hundred ninety-one lost jobs annually, and a 7.35 per cent increase in overall pricing." Congress has introduced a Regulations from the Executive in Need of Scrutiny (REINS) Act every year since 2009. This legislative proposal increases congressional oversight and requires legislative approval for major agency rules which carry a financial impact of one hundred million dollars or more. The REINS Act seeks to hold the executive branch of administrative rulemaking accountable with legislative preemptive authority to halt agency rules and regulations before they are enacted. Kentucky, Florida, Utah, Oklahoma, Kansas, Indiana, Wisconsin, Louisiana, and North Carolina have successfully instituted REINS-style laws increasing oversight on administrative rules that carry the potential of large economic impacts to their states. Furthermore, this legislation ensures that taxpayers and even small businesses are not left bearing the brunt of a regulation with a hefty price tag. Hawaii should follow suit and take tangible steps to counteract the burden of accumulated regulations with a measure that balances power and increases accountability.

The purpose of this Act is to establish a cost-benefit analysis requirement that defines a specific financial impact threshold and establishes proactive legislative action through concurrent resolution on an agency’s major rule change above the threshold of one million dollars before that rule can be adopted.

SECTION 2. Hawaii Revised Statutes Chapter 91, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Major rule" means any administrative rule, whether emergency or permanent in nature, that will result in or is likely to result in one million dollars or more over the initial five-year period in implementation and compliance costs that are reasonably expected to be incurred by or passed along to businesses, local government units, and individuals as a result of the proposed rule and regulation following the adoption of such rule.

"Implementation and compliance costs" means direct costs that are readily ascertainable based upon standard business practices, including but not limited to, fees, the cost to obtain a license or registration, the cost of equipment required to be installed or used, additional operating costs incurred, the cost of monitoring and reporting, and any other costs to comply with the requirements of the proposed rule and regulation."

SECTION 3. Section 91-3, Hawaii Revised Statutes, is amended to read as follows:

"§91-3 Procedure for adoption, amendment, or repeal of rules. (a) Except as otherwise provided in this section, prior to the adoption of any rule authorized by law, or the amendment or repeal thereof, the adopting agency shall:

(1) Give at least thirty days' notice for a public hearing. The notice shall include:

(A) A statement of the topic of the proposed rule adoption, amendment, or repeal or a general description of the subjects involved;

(B) A statement that a copy of the proposed rule to be adopted, the proposed rule amendment, or the rule proposed to be repealed will be mailed to any interested person who requests a copy, pays the required fees for the copy and the postage, if any, together with a description of where and how the requests may be made;

(C) A statement of when, where, and during what times the proposed rule to be adopted, the proposed rule amendment, or the rule proposed to be repealed may be reviewed in person; and

(D) The date, time, and place where the public hearing will be held and where interested persons may be heard on the proposed rule adoption, amendment, or repeal.

The notice shall be mailed to all persons who have made a timely written request of the agency for advance notice of its rulemaking proceedings, given at least once statewide for state agencies and in the county for county agencies. Proposed state agency rules shall also be posted on the Internet as provided in section 91-2.6; and

(2) Afford all interested persons opportunity to submit data, views, or arguments, orally or in writing. The agency shall fully consider all written and oral submissions respecting the proposed rule. The agency may make its decision at the public hearing or announce then the date when it intends to make its decision. Upon adoption, amendment, or repeal of a rule, the agency, if requested to do so by an interested person, shall issue a concise statement of the principal reasons for and against its determination.

(b) Notwithstanding the requirements of subsection (a), if an agency finds that an imminent peril to the public health, safety, or morals, to livestock and poultry health, or to natural resources requires adoption, amendment, or repeal of a rule upon less than thirty days' notice of hearing, and states in writing its reasons for such finding, it may proceed without prior notice or hearing or upon such abbreviated notice and hearing, including posting the abbreviated notice and hearing on the Internet as provided in section 91-2.6, as it finds practicable to adopt an emergency rule to be effective for a period of not longer than one hundred twenty days without renewal.

(c) In addition to emergency rules adopted pursuant to subsection (b), an agency may, in a similar manner, adopt emergency rules where new federal legislation or federal and state court decisions disrupt prior practice under any statute administered by the agency and adoption of an emergency rule is urgently needed to:

(1) Conform existing rules to new requirements;

(2) Implement newly-established rights;

(3) Clarify existing rules and prevent confusion among those covered by existing statutes;

(4) Stabilize a regulated industry or endeavor;

(5) Avoid disruption of governmental or industrial operations;

(6) Facilitate orderly agency or legislative study of the consequences of the new federal legislation or a federal or state court decision;

(7) Reinforce or preserve the unmodified goals of a statute administered by the agency; or

(8) Temporarily resolve any practical problems created by the new federal legislation or federal and state court decisions;

provided that an agency shall not adopt any emergency rule pursuant to this subsection without conducting a public hearing; provided further that an agency shall give no less than thirty days' notice of the hearing; provided further that any emergency rule adopted pursuant to this subsection shall be effective until no later than adjournment sine die of the next regular legislative session following adoption of the emergency rule.

(d) The adoption, amendment, or repeal of any rule by any state agency shall be subject to the approval of the governor. The adoption, amendment, or repeal of any rule by any county agency shall be subject to the approval of the mayor of the county. This subsection shall not apply to the adoption, amendment, and repeal of the rules of the county boards of water supply.

(e) The requirements of subsection (a) may be waived by the governor in the case of the State, or by the mayor in the case of a county, whenever a state or county agency is required by federal provisions to adopt rules as a condition to receiving federal funds and the agency is allowed no discretion in interpreting the federal provisions as to the rules required to be adopted; provided that the agency shall make the adoption, amendment, or repeal known to the public by:

(1) Giving public notice of the substance of the proposed rule at least once statewide prior to the waiver of the governor or the mayor; and

(2) Posting the full text of the proposed rulemaking action on the Internet as provided in section 91-2.6.

(f) No adoption, amendment, or repeal of any rule shall be invalidated solely because of:

(1) The inadvertent failure to mail an advance notice of rulemaking proceedings;

(2) The inadvertent failure to mail or the nonreceipt of requested copies of the proposed rule to be adopted, the proposed rule amendment, or the rule proposed to be repealed; or

(3) The inadvertent failure on the part of a state agency to post on the website of the office of the lieutenant governor all proposed rulemaking actions of the agency and the full text of the agency's proposed rules as provided in section 91-2.6.

Any challenge to the validity of the adoption, amendment, or repeal of an administrative rule on the ground of noncompliance with statutory procedural requirements shall be forever barred unless the challenge is made in a proceeding or action, including an action pursuant to section 91-7, that is begun within three years after the effective date of the adoption, amendment, or repeal of the rule.

(g) Whenever an agency seeks only to repeal one or more sections, chapters, or subchapters of the agency's rules because the rules are either null and void or unnecessary, and not adopt, amend, or compile any other rules:

(1) The agency shall give thirty days' public notice at least once statewide of the proposed date of repeal and of:

(A) A list of the sections, chapters, or subchapters, as applicable, being repealed; and

(B) A statement of when, where, and during what times the sections, chapters, or subchapters proposed to be repealed may be reviewed in person;

(2) The agency shall post the full text of the proposed sections, chapters, or subchapters to be repealed on the Internet as provided in section 91-2.6; and

(3) Any interested person may petition the agency regarding the sections, chapters, or subchapters proposed to be repealed, pursuant to section 91-6.

This subsection does not apply to the repeal of one or more subsections, paragraphs, subparagraphs, clauses, words, phrases, or other material within a section that does not constitute the entire section to be repealed.

(h) In addition to the procedural requirements outlined in this section, a major rule shall be subject to the following requirements:

(1) Each adopting state agency promulgating a major rule shall provide:

(A) Whether the proposed rule is mandated by federal law as a requirement for participating in or implementing a federally subsidized or assisted program and whether the proposed rule exceeds the requirements of the applicable federal law;

(B) An analysis specifically addressing the following components:

(i) A comprehensive analysis of the rule's economic impact, including a detailed quantification of implementation and compliance costs, on the specific businesses, business sectors, public utility ratepayers, individuals, and local government units that will be affected by the proposed rule, on the state economy as a whole;

(ii) A detailed explanation of the methodology and assumptions used to determine the economic impact, including the dollar amounts calculated;

(iii) An estimate of the total annual implementation and compliance costs that are reasonably expected to be incurred by or passed along to business, local government units, or individuals and a determination of whether those costs will exceed one million dollars over the initial five-year period following the adoption of the proposed rule;

(iv) A statement of the need for the rule and the legal basis supporting it;

(v) Any measures taken by the agency to minimize the cost and impact of the proposed rule on business and economic development within the State, local government, and individuals; and

(vi) A classification of the rule as a major rule with a justification for the classification;

(2) No agency shall submit a major rule to the lieutenant governor for filing without completing an economic impact analysis for the proposed rule and providing the analysis to the legislature;

(3) The agency shall consult with counties and state departments, as appropriate, when preparing the economic impact statement of a proposed rule which increases or decreases revenue of the state or counties or imposes functions or responsibilities on the state or counties which may increase their expenditure or fiscal responsibility. The agency shall consult and solicit information from businesses, business associations, local government units, state agencies, or members of the public that may be affected by the proposed rule, or that may provide relevant information; and

(4) A major rule shall not take effect unless specifically approved by the legislature through a concurrent resolution receiving a majority in each chamber."

SECTION 4. Section 91-4, Hawaii Revised Statutes, is amended to read as follows:

"§91-4 Filing and taking effect of rules. (a) Each agency adopting, amending, or repealing a rule, upon approval thereof by the governor or the mayor of the county, shall file forthwith certified copies thereof with the lieutenant governor in the case of the State, or with the clerk of the county in the case of a county. In addition, the clerks of all of the counties shall file forthwith certified copies thereof with the lieutenant governor. A permanent register of the rules, open to public inspection, shall be kept by the lieutenant governor and the clerks of the counties.

(b) Each rule hereafter adopted, amended, or repealed shall become effective ten days after filing with the lieutenant governor in the case of the State, or with the respective county clerks in the case of the counties; provided that:

(1) If a later effective date is required by statute or specified in the rule, the later date shall be the effective date; provided further that no rule shall specify an effective date in excess of thirty days after the filing of the rule as provided herein;

(2) An emergency rule adopted pursuant to section 91-3(b) shall become effective upon filing with the lieutenant governor in the case of the State, or with the respective county clerks in the case of the counties, for a period of not longer than one hundred twenty days without renewal unless extended in compliance with section 91-3(b) if the agency finds that immediate adoption of the rule is necessary because of imminent peril to the public health, safety, or morals, or to natural resources. The agency's finding and brief statement of the reasons therefor shall be incorporated in the rule as filed. The agency shall make an emergency rule adopted pursuant to section 91-3(b) known to persons who will be affected by it by publication at least once in a newspaper of general circulation in the State for state agencies and in the county for county agencies within five days from the date of filing of the rule; [~~and~~]

(3) An emergency rule adopted pursuant to section 91-3(c) shall become effective upon filing with the lieutenant governor in the case of the State, or with the respective county clerks in the case of the counties, and shall be effective until no later than adjournment sine die of the next regular legislative session following adoption of the emergency rule. The agency's finding and brief statement of the reasons therefor shall be incorporated in the rule as filed. The agency shall make an emergency rule adopted pursuant to section 91-3(c) known to persons who will be affected by it by publication at least once in a newspaper of general circulation in the State for state agencies and in the county for county agencies within five days from the date of filing of the rule[.]; and

(4) A major rule adopted pursuant to section 91-3(h) shall become effective upon the adoption of the concurrent resolution in both houses of the legislature."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1762
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII