‘Necessary and Suitable’ Regulatory Reform
By Kent Wood
House Bill 4242, sponsored by Rep. Ken Goike (R – Ray Township), was recently signed into law by Governor Rick Snyder. HB 4242 will change the Administrative Procedures Act (APA) to require any proposed agency regulation to now contain a “demonstration that the proposed rule is necessary and suitable to achieve its purpose in proportion to the burdens it places on individuals” within a regulatory impact statement the agency is already required to produce.
Previously under the state’s APA, an agency is required to give notice that it is proposing a rule, and must submit a report containing a synopsis of the comments contained in the public hearing record, a copy of the request for rule-making, and submit a regulatory impact statement.
Under the previous law, the regulatory impact statement must contain, among other things, an identification of the businesses, groups, or individuals who will be directly affected by, bear the cost of, or directly benefit from the rule; a comparison of the proposed rule to standards in similarly situated states, if requested by the Office of Regulatory Reinvention or the Joint Committee on Administrative Rules; an estimate of the actual statewide compliance costs of the proposed rule on businesses and other groups; and an identification of any disproportionate impact the proposed rule may have on small businesses because of their size.
Overall, this is a good bill for business. Northern Michigan business owners often deal with regulations that seem duplicative and over-burdensome, and many question to what ends certain regulations are going, or question the relationship between the regulatory burdens on job providers versus the public benefit received. To that end, requiring state agencies to analyze and consider for themselves whether their own proposed regulations are even necessary or suitable to attaining a desired public benefit is a sound policy.
While only time will tell if this law will be successful short circuiting harmful and unnecessary business regulations before they take effect, this is the kind of sound regulatory policy that is a step in the right direction for northern Michigan businesses.