Provides a cure period in regulations affecting small businesses and local governments

1 Co-sponsor

• Diane J. Savino

BILL NUMBER:S4816

Title of bill

An act to amend the state administrative procedure act, in relation to providing a cure period in regulations affecting small businesses and local governments

Purpose or general idea of bill

This bill requires agencies, when adopting rules that involve the assessment of penalties on small businesses or local governments, to consider including a 'cure period' that will allow time for correction or amelioration of violations prior to the imposition of penalties.

Summary of provisions

Bill §1 amends §202-b of the State Administrative Procedure Act by adding a new subdivision 1-a. This subdivision provides that, when it is developing a rule for which a regulatory flexibility analysis (RFA) is required and which involves the establishment or modification of a violation or of penalties associated with a violation, an agency shall either:

* include a cure period or other opportunity for ameliorative action, the successful completion of which prevents the imposition of penalties on the small business or local government subject to an enforcement action, or

* include an explanation in the RFA of why no such cure period was included in the rule.

Effects of present law which this bill would alter

Currently, agencies are required to consider establishing differing compliance requirements that take Into account the resources available to small businesses or local governments, but are not specifically required to consider the inclusion of a cure period in a new rule or to explain why one was not included.

Justification

State agencies enforce compliance with rules and regulations through a variety of means, including the potential Imposition of penalties. It is generally agreed that monetary penalties should reflect the severity of a violation, and that agency enforcement efforts should remain focused on promoting compliance, not on generating revenues. Recently, the New York City Council passed Local Law 46 of 2010, which included provisions requiring that in adopting rules involving violations or penalties, consideration must be given to including a "cure period" or other opportunity for ameliorative action which, if successfully completed, would prevent the imposition of penalties.

The New York City Regulatory Review Panel explained the basis for this new policy as follows:

"To help small businesses during these difficult economic times, the Panel recommends ... new and innovative strategies to enforce compliance with agency rules by means other than automatic fines or penalties. Such strategies would be especially useful for low-risk violations that do not pose an imminent threat to public health, safety, or well-being. Several large agencies ... have already adopted such an approach, providing small business owners with an opportunity to cure low-risk violations without having to pay fines or penalties. This approach saves businesses time and money, allowing them to focus on business rather than deal with government. It also fosters a productive relationship between small business owners and City agencies, as opposed to one that may be perceived as strictly punitive."

State agencies should also consider whether their regulatory programs can be structured to promote compliance in this manner. Requiring consideration of whether low-risk violations can be ameliorated without penalty imposition will assist the many small businesses who try to provide safe and high-quality goods and services to New Yorkers but may be caught in a minor or technical violation of the rules.

Prior legislative history

New bill.

Fiscal implications for state and local governments

None.

Effective date

First day of October after it becoming law.