HB2260 - 492R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 41-1001, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1001. Definitions

In this chapter, unless the context otherwise requires:

1. "Agency" means any board, commission, department, officer or other administrative unit of this state, including the agency head and one or more members of the agency head or agency employees or other persons directly or indirectly purporting to act on behalf or under the authority of the agency head, whether created under the Constitution of Arizona or by enactment of the legislature. Agency does not include the legislature, the courts or the governor. Agency does not include a political subdivision of this state or any of the administrative units of a political subdivision, but does include any board, commission, department, officer or other administrative unit created or appointed by joint or concerted action of an agency and one or more political subdivisions of this state or any of their units. To the extent an administrative unit purports to exercise authority subject to this chapter, an administrative unit otherwise qualifying as an agency must be treated as a separate agency even if the administrative unit is located within or subordinate to another agency.

2. "Code" means the Arizona administrative code.

3. "Committee" means the administrative rules oversight committee.

4. "Contested case" means any proceeding, including rate making, price fixing and licensing, in which the legal rights, duties or privileges of a party are required or permitted by law, other than this chapter, to be determined by an agency after an opportunity for an administrative hearing.

5. "Council" means the governor's regulatory review council.

6. "Delegation agreement" means an agreement between an agency and a political subdivision that authorizes the political subdivision to exercise functions, powers or duties conferred on the delegating agency by a provision of law. Delegation agreement does not include intergovernmental agreements entered into pursuant to title 11, chapter 7, article 3.

7. "Emergency rule" means a rule that is made pursuant to section 41‑1026.

8. "Fee" means a charge prescribed by an agency for an inspection or for obtaining a license.

9. "Final rule" means any rule filed with the secretary of state and made pursuant to an exemption from this chapter in section 41‑1005, made pursuant to section 41‑1026, approved by the council pursuant to section 41‑1052 or 41‑1053 or approved by the attorney general pursuant to section 41‑1044. For purposes of judicial review, final rule includes proposed summary rules having interim effect pursuant to section 41‑1027.

10. "general permit" means a permit or authorization that is issued or granted by an agency to a qualified applicant to conduct identified operations or activities if the applicant meets the applicable requirements of the general permit, that requires less information than an individual or traditional permit or authorization and that does not require a public hearing.

10. 11. "License" includes the whole or part of any agency permit, certificate, approval, registration, charter or similar form of permission required by law, but it does not include a license required solely for revenue purposes.

11. 12. "Licensing" includes the agency process respecting the grant, denial, renewal, revocation, suspension, annulment, withdrawal or amendment of a license.

12. 13. "Party" means each person or agency named or admitted as a party or properly seeking and entitled as of right to be admitted as a party.

13. 14. "Person" means an individual, partnership, corporation, association, governmental subdivision or unit of a governmental subdivision, a public or private organization of any character or another agency.

14. 15. "Preamble" means:

(a) For any rule making subject to this chapter, a statement accompanying the rule that includes:

(i) Reference to the specific statutory authority for the rule.

(ii) The name and address of agency personnel with whom persons may communicate regarding the rule.

(iii) An explanation of the rule, including the agency's reasons for initiating the rule making.

(iv) A reference to any study relevant to the rule that the agency reviewed and either proposes to rely on in its evaluation of or justification for the rule or proposes not to rely on in its evaluation of or justification for the rule, where the public may obtain or review each study, all data underlying each study and any analysis of each study and other supporting material.

(v) The economic, small business and consumer impact summary, or in the case of a proposed rule, a preliminary summary and a solicitation of input on the accuracy of the summary.

(vi) A showing of good cause why the rule is necessary to promote a statewide interest if the rule will diminish a previous grant of authority of a political subdivision of this state.

(vii) Such other matters as are prescribed by statute and that are applicable to the specific agency or to any specific rule or class of rules.

(b) In addition to the information set forth in subdivision (a) of this paragraph, for a proposed rule, the preamble also shall include a list of all previous notices appearing in the register addressing the proposed rule, a statement of the time, place and nature of the proceedings for the making, amendment or repeal of the rule and where, when and how persons may request an oral proceeding on the proposed rule if the notice does not provide for one.

(c) In addition to the information set forth in subdivision (a) of this paragraph, for a proposed summary rule, the preamble also shall include a statement of the time, place and nature of the proceedings for the making, amendment or repeal of the rule and an explanation of why summary proceedings are justified.

(d) For a final rule, except an emergency rule, the preamble also shall include, in addition to the information set forth in subdivision (a), the following information:

(i) A list of all previous notices appearing in the register addressing the final rule.

(ii) A description of the changes between the proposed rules, including supplemental notices and final rules.

(iii) A summary of the comments made regarding the rule and the agency response to them.

(iv) A summary of the council's action on the rule.

(v) A statement of the rule's effective date.

(e) In addition to the information set forth in subdivision (a) of this paragraph, for an emergency rule, the preamble also shall include an explanation of the situation justifying the rule being made as an emergency rule, the date of the attorney general's approval of the rule and a statement of the emergency rule's effective date.

15. 16. "Provision of law" means the whole or a part of the federal or state constitution, or of any federal or state statute, rule of court, executive order or rule of an administrative agency.

16. 17. "Register" means the Arizona administrative register.

17. 18. "Rule" means an agency statement of general applicability that implements, interprets or prescribes law or policy, or describes the procedure or practice requirements of an agency. Rule includes prescribing fees or the amendment or repeal of a prior rule but does not include intraagency memoranda that are not delegation agreements.

18. 19. "Rule making" means the process for formulation and finalization of a rule.

19. 20. "Small business" means a concern, including its affiliates, which is independently owned and operated, which is not dominant in its field and which employs fewer than one hundred full‑time employees or which had gross annual receipts of less than four million dollars in its last fiscal year. For purposes of a specific rule, an agency may define small business to include more persons if it finds that such a definition is necessary to adapt the rule to the needs and problems of small businesses and organizations.

20. 21. "Substantive policy statement" means a written expression which informs the general public of an agency's current approach to, or opinion of, the requirements of the federal or state constitution, federal or state statute, administrative rule or regulation, or final judgment of a court of competent jurisdiction, including, where appropriate, the agency's current practice, procedure or method of action based upon that approach or opinion. A substantive policy statement is advisory only. A substantive policy statement does not include internal procedural documents which only affect the internal procedures of the agency and does not impose additional requirements or penalties on regulated parties, confidential information or rules made in accordance with this chapter.

21. 22. "Summary rule" means a rule that is made pursuant to section 41‑1027. END_STATUTE

Sec. 2. Section 41-1009, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1009. Inspections; applicability

A. An agency inspector or regulator who enters any premises of a regulated person for the purpose of conducting an inspection shall:

1. Present photo identification on entry of the premises.

2. On initiation of the inspection, state the purpose of the inspection and the legal authority for conducting the inspection.

3. Disclose any applicable inspection fees.

4. Afford an opportunity to have an authorized on‑site representative of the regulated person accompany the agency inspector or regulator on the premises, except during confidential interviews.

5. Provide notice of the right to have:

(a) Copies of any original documents taken by the agency during the inspection if the agency is permitted by law to take original documents.

(b) A split of any samples taken during the inspection if the split of any samples would not prohibit an analysis from being conducted or render an analysis inconclusive.

6. Inform each person whose conversation with the agency inspector or regulator during the inspection is tape recorded that the conversation is being tape recorded.

7. Inform each person interviewed during the inspection that statements made by the person may be included in the inspection report.

B. On initiation of an inspection of any premises of a regulated person, an agency inspector or regulator shall provide the following in writing:

1. The rights described in subsection A of this section.

2. The name and telephone number of a contact person available to answer questions regarding the inspection.

3. The due process rights relating to an appeal of a final decision of an agency based on the results of the inspection, including the name and telephone number of a person to contact within the agency and any appropriate state government ombudsman.

C. An agency inspector or regulator shall obtain the signature of the regulated person or on‑site representative of the regulated person on the writing prescribed in subsection B of this section indicating that the regulated person or on‑site representative of the regulated person has read the writing prescribed in subsection B of this section and is notified of the regulated person's or on‑site representative of the regulated person's inspection and due process rights. The agency shall maintain a copy of this signature with the inspection report and shall leave a copy with the regulated person or on‑site representative of the regulated person. If a regulated person or on‑site representative of the regulated person is not at the site or refuses to sign the writing prescribed in subsection B of this section, the agency inspector or regulator shall note that fact on the writing prescribed in subsection B of this section.

D. An agency that conducts an inspection shall give a copy of the inspection report to the regulated person or on‑site representative of the regulated person either:

1. At the time of the inspection.

2. Notwithstanding any other state law, within thirty working days after the inspection.

3. As otherwise required by federal law.

E. The inspection report shall contain deficiencies identified during an inspection. Unless otherwise provided by law, the agency may provide the regulated person an opportunity to correct the deficiencies unless the agency determines that the deficiencies are:

1. Committed intentionally.

2. Not correctable within a reasonable period of time as determined by the agency.

3. Evidence of a pattern of noncompliance.

4. A risk to any person, the public health, safety or welfare or the environment.

F. If the agency allows the regulated person an opportunity to correct the deficiencies pursuant to subsection E of this section, the regulated person shall notify the agency when the deficiencies have been corrected. Within thirty days of receipt of notification from the regulated person that the deficiencies have been corrected, the agency shall determine if the regulated person is in substantial compliance and notify the regulated person whether or not the regulated person is in substantial compliance. If the regulated person fails to correct the deficiencies or the agency determines the deficiencies have not been corrected within a reasonable period of time, the agency may take any enforcement action authorized by law for the deficiencies.

G. An agency decision pursuant to subsection E or F of this section is not an appealable agency action.

H. At least once every month after the commencement of the inspection an agency shall provide a regulated person with an update on the status of any agency action resulting from an inspection of the regulated person. An agency is not required to provide an update after the regulated person is notified that no agency action will result from the agency inspection or after the completion of agency action resulting from the agency inspection.

I. This section does not authorize an inspection or any other act that is not otherwise authorized by law.

J. This section applies only to inspections necessary for the issuance of a license or to determine compliance with licensure requirements. This section does not apply:

1. To criminal investigations, investigations under tribal state gaming compacts and undercover investigations that are generally or specifically authorized by law.

2. If the inspector or regulator has reasonable suspicion to believe that the regulated person may be engaged in criminal activity.

3. To the Arizona peace officer standards and training board established by section 41‑1821.

K. If an inspector or regulator gathers evidence in violation of this section, the violation shall not be a basis to exclude the evidence in a civil or administrative proceeding, if the penalty sought is the denial, suspension or revocation of the regulated person's license or a civil penalty of more than one thousand dollars.

L. Failure of an agency, board or commission employee to comply with this section:

1. Constitutes cause for disciplinary action or dismissal in accordance with pursuant to section 41‑770.

2. Shall be considered by the judge and administrative law judge as grounds for reduction of any fine or civil penalty.

M. An agency may make rules to implement subsection A, paragraph 5 of this section.

N. Nothing in this section shall be used to exclude evidence in a criminal proceeding.END_STATUTE

Sec. 3. Section 41-1027, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1027. Summary rule making

A. An agency may use the summary rule making procedure set forth in this section in place of the rule making procedure set forth in sections 41‑1021 through 41‑1024 for the following actions:

1. Repeals of rules made obsolete by repeal or supersession of an agency's statutory authority.

2. Making, amendment and repeal of rules that repeat verbatim existing statutory authority granted to the agency.

3. Repeal of other obsolete rules or rules deemed by the agency to be ineffective as long as the repeal does not increase the cost of compliance or reduce procedural rights of the entity regulated.

B. An agency shall initiate summary rule making by filing the proposed summary rule with the council and the secretary of state for publication in the next register. The notice filed with the secretary of state shall include the preamble.

C. The agency shall forward copies of the notice filed with the secretary of state pursuant to subsection B of this section to the council.

D. The proposed summary rule takes interim effect on the date of publication in the register.

E. Within ninety days after publication in the register, after consideration of any comments, the agency shall submit to the council a summary rule, preamble, concise explanatory statement and economic, small business and consumer impact statement.

F. The summary rule making procedures of this section are not available for rules exempted from council approval pursuant to section 41‑1057. END_STATUTE

Sec. 4. Title 41, chapter 6, article 3, Arizona Revised Statutes, is amended by adding section 41-1037, to read:

START_STATUTE41-1037. General permits; issuance of traditional permit

A. If an agency proposes a new rule or an amendment to an existing rule that requires the issuance of a permit or agency authorization, the agency shall use a general permit unless any of the following applies:

1. A general permit is prohibited by federal law.

2. The issuance of an alternative type of permit or authorization is specifically authorized by state statute.

3. The issuance of a general permit is not technically feasible.

4. The issuance of a general permit would result in additional regulatory requirements or costs being placed on the permit applicant.

B. The agency retains the authority to revoke an applicant's ability to operate under a general permit and to require the applicant to obtain a traditional permit if the applicant is in substantial noncompliance with the applicable requirements for the general permit. END_STATUTE

Sec. 5. Section 41-1051, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1051. Governor's regulatory review council; membership; terms; compensation; powers

A. A governor's regulatory review council is established that consists of six members who are appointed by the governor and who serve at the pleasure of the governor, and the director of the department of administration or the assistant director of the department of administration who is responsible for administering the council. The director or assistant director is an ex officio member and chairperson of the council. The council shall elect a vice‑chairperson to serve as chairperson in the chairperson's absence. The governor shall appoint at least one member who represents the public interest, at least one member who represents the business community, one member from a list of three persons who are not legislators submitted by the president of the senate and one member from a list of three persons who are not legislators submitted by the speaker of the house of representatives. At least one member of the council shall be an attorney licensed to practice law in this state. The governor shall appoint the members of the council for staggered terms of three years. A vacancy occurring during the term of office of any member shall be filled by appointment by the governor for the unexpired portion of the term in the same manner as provided in this section. The governor shall appoint pursuant to section 38‑211 the members who are not nominated by the president of the senate and the speaker of the house of representatives.

B. The council shall meet at least once a month at a time and place set by the chairperson and at other times and places as the chairperson deems necessary.

C. Members of the council are eligible to receive compensation in an amount of two hundred dollars for each day on which the council meets and reimbursement of expenses pursuant to title 38, chapter 4, article 2.

D. The chairperson, subject to chapter 4, articles 5 and 6 of this title, shall employ, determine the conditions of employment of and specify the duties of administrative, secretarial and clerical employees as the chairperson deems necessary.

E. The council may make rules pursuant to this chapter to carry out the purposes of this chapter.

F. The council shall make the following information available to the public on request and on the council's web site website:

1. A list of agency rules approved or returned pursuant to section 41‑1052.

2. A list of agencies not certifying compliance as provided in section 41‑1091.

3. A list of agencies that report a lack of progress pursuant to section 41‑1056, subsection H I. END_STATUTE

Sec. 6. Section 41-1052, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1052. Council review and approval

A. Before filing a final rule with the secretary of state, an agency shall prepare, transmit to the council and the committee and obtain the council's approval of the rule and its preamble and economic, small business and consumer impact statement which that meets the requirements of section 41‑1055 and that is prepared by the governor's office of strategic planning and budgeting.

B. Within ninety days of receipt of the rule, preamble and economic, small business and consumer impact statement, the council shall review and approve or return, in whole or in part, the rule, preamble or economic, small business and consumer impact statement. An agency may resubmit a rule, preamble or economic, small business and consumer impact statement if the council returns the rule, economic, small business and consumer impact statement or preamble, in whole or in part, to the agency.

C. The council shall not approve the rule unless:

1. The economic, small business and consumer impact statement contains the information, data and analysis prescribed by this article and is prepared by the governor's office of strategic planning and budgeting.

2. The economic, small business and consumer impact statement is generally accurate.

3. By clear and convincing evidence, the probable benefits of the rule outweigh the probable costs of the rule.

4. The rule is clear, concise and understandable.

5. The rule is not illegal, inconsistent with legislative intent or beyond the agency's statutory authority.

6. The agency adequately addressed the comments on the proposed rule and any supplemental proposals.

7. The rule is not a substantial change, considered as a whole, from the proposed rule and any supplemental notices.

8. The preamble discloses a reference to any study relevant to the rule that the agency reviewed and either did or did not rely on in the agency's evaluation of or justification for the rule.

9. The rule is not more stringent than a federal law unless there is statutory authority to exceed the requirements of that federal law.

10. If a rule requires a permit, the permitting requirement complies with section 41‑1037.

D. The council shall verify that a rule with new fees does not violate section 41‑1008. The council shall not approve a rule that contains a fee increase unless two‑thirds of the voting quorum present vote to approve the rule.

E. The council shall verify that a rule with an immediate effective date complies with section 41‑1032. The council shall not approve a rule with an immediate effective date unless two‑thirds of the voting quorum present vote to approve the rule.

F. The council may require a representative of an agency whose rule is under examination to attend a council meeting and answer questions. The council may also communicate to the agency its comments on any rule, preamble or economic, small business and consumer impact statement and require the agency to respond to its comments in writing.

G. A person may submit written comments to the council that are within the scope of subsection C, D or E of this section. The council may permit oral comments at a council meeting within the scope of subsection C, D or E of this section.

H. If the agency makes a good faith effort to comply with the requirements prescribed in this article and has explained in writing the methodology used to produce the economic, small business and consumer impact statement, the rule may not be invalidated after it is finalized on the ground that the contents of the economic, small business and consumer impact statement are insufficient or inaccurate or on the ground that the council erroneously approved the rule, except as provided for by section 41‑1056.01.

I. The absence of comments pursuant to subsection C, D or E of this section or article 4.1 of this chapter does not prevent the council from acting pursuant to this section. END_STATUTE

Sec. 7. Section 41-1055, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1055. Economic, small business and consumer impact statement

A. The economic, small business and consumer impact summary shall include:

1. An identification of the proposed rule making.

2. A brief summary of the information included in the economic, small business and consumer impact statement.

3. If the economic, small business and consumer impact summary accompanies a proposed rule or a proposed summary rule, the name and address of agency employees who may be contacted to submit or request additional data on the information included in the economic, small business and consumer impact statement.

B. The economic, small business and consumer impact statement shall include:

1. An identification of the proposed rule making.

2. An identification of the persons who will be directly affected by, bear the costs of or directly benefit from the proposed rule making.

3. A cost benefit analysis of the following:

(a) The probable costs and benefits to the implementing agency and other agencies directly affected by the implementation and enforcement of the proposed rule making. The probable costs to the implementing agency shall include the number of new full‑time employees necessary to implement and enforce the proposed rule as determined by the governor's office of strategic planning and budgeting. The Governor's office of strategic planning and budgeting shall notify the Joint legislative budget committee of the number of new full‑time employees necessary to implement and enforce the rule before the rule is approved by the council.

(b) The probable costs and benefits to a political subdivision of this state directly affected by the implementation and enforcement of the proposed rule making.

(c) The probable costs and benefits to businesses directly affected by the proposed rule making, including any anticipated effect on the revenues or payroll expenditures of employers who are subject to the proposed rule making.

4. A general description of the probable impact on private and public employment in businesses, agencies and political subdivisions of this state directly affected by the proposed rule making.

5. A statement of the probable impact of the proposed rule making on small businesses. The statement shall include:

(a) An identification of the small businesses subject to the proposed rule making.

(b) The administrative and other costs required for compliance with the proposed rule making.

(c) A description of the methods that the agency may use to reduce the impact on small businesses. These methods may include:

(i) Establishing less costly compliance requirements in the proposed rule making for small businesses.

(ii) Establishing less costly schedules or less stringent deadlines for compliance in the proposed rule making.

(iii) Exempting small businesses from any or all requirements of the proposed rule making.

(d) The probable cost and benefit to private persons and consumers who are directly affected by the proposed rule making.

6. A statement of the probable effect on state revenues.

7. A description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed rule making.

C. If for any reason adequate data are not reasonably available to comply with the requirements of subsection B of this section, the agency shall explain the limitations of the data and the methods that were employed in the attempt to obtain the data and shall characterize the probable impacts in qualitative terms. The absence of adequate data, if explained in accordance with this subsection, shall not be grounds for a legal challenge to the sufficiency of the economic, small business and consumer impact statement.

D. An agency is not required to prepare an economic, small business and consumer impact statement pursuant to this chapter for the following rule makings:

1. Initial making, but not renewal, of an emergency rule pursuant to section 41‑1026.

2. Summary rule makings pursuant to section 41‑1027 that only repeal existing rule language.

3. Any rule making that decreases monitoring, record keeping or reporting burdens on agencies, political subdivisions, businesses or persons, unless the agency determines that increased costs of implementation or enforcement may equal or exceed the reduction in burdens.

E. The economic, small business and consumer impact statement for a rule making that is exempt pursuant to subsection D of this section shall state that the proposed rule making is exempt.

F. The cost‑benefit analysis required by subsection b of this section shall calculate only the costs that occur in this state. END_STATUTE

Sec. 8. Section 41-1056, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1056. Review by agency

A. At least once every five years, each agency shall review all of its rules to determine whether any rule should be amended or repealed. The agency shall prepare and obtain council approval of a written report summarizing its findings, its supporting reasons and any proposed course of action. For each rule, the report shall include a concise analysis of all of the following:

1. The rule's effectiveness in achieving its objectives, including a summary of any available data supporting the conclusions reached.

2. Written criticisms of the rule received during the previous five years.

3. Authorization of the rule by existing statutes.

4. Whether the rule is consistent with other rules made by the agency, current agency enforcement policy and current agency views regarding the wisdom of the rule.

5. The clarity, conciseness and understandability of the rule.

6. The estimated economic, small business and consumer impact of the rules as compared to the economic, small business and consumer impact statement prepared on the last making of the rules.

B. The report prescribed in subsection A shall include a competitiveness review of the rules to compare the rules of this state to other western states to determine whether the persons who are directly affected by the rules of this state bear a greater cost than similar persons in other western states. The Governor's office of strategic planning and budgeting shall prepare the competitiveness review of the rules.

B. C. The council shall schedule the periodic review of each agency's rules and shall approve or return, in whole or in part, the agency's report on its review. The council may grant an agency an extension from filing an agency's report. If the council returns an agency's report, in whole or in part, the council shall inform the agency of the manner in which its report is inadequate and, in consultation with the agency, shall schedule submission of a revised report. The council shall not approve a report unless the report complies with the provisions of subsection A.

C. D. The council may reschedule a report or portion of a report for any rule that is scheduled for review and that was initially made or substantially revised within two years before the due date of the report as scheduled by the council.

D. E. If an agency finds that it cannot provide the written report to the council by the date it is due, the agency may file an extension with the council before the due date indicating the reason for the extension. The timely filing for an extension permits the agency to submit its report not more than one hundred twenty days after the due date on or before the date prescribed by the council.

E. F. If an agency fails to submit its report, including a revised report pursuant to subsection B C, or file an extension before the due date of the report or if it files an extension and does not submit its report within the extension period, the rules scheduled for review expire and the council shall:

1. Cause a notice to be published in the next register that states the rules have expired and are no longer enforceable.

2. Notify the secretary of state that the rules have expired and that the rules are to be removed from the code.

3. Notify the agency that the rules have expired and are no longer enforceable.

F. G. If a rule expires as provided in subsection E F and the agency wishes to reestablish the rule, the agency shall comply with this chapter.

G. H. Not less than ninety days prior to before the due date of a report, the council shall send a written notice to the head of the agency whose report is due, the governor and the director of the department of administration. The notice shall list the rules to be reviewed and the date the report is due.

H. I. On or before June 30 of each year, each agency shall report to the council the agency's progress toward completion of the course of action established in all reports submitted to the council during the previous five years. The annual report prescribed by this subsection shall be on a form developed by the council.

J. A person may petition the council to require an agency that has an obsolete rule to ensure that the rule is included in the five year report with a recommendation for repeal of the rule. END_STATUTE

Sec. 9. Section 41-1056.01, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1056.01. Impact statements; appeals

A. Within two years after a rule is finalized, a person who is or may be affected by the rule may file a written petition with an agency objecting to all or part of a rule on the any of the following grounds that either:

1. The actual economic, small business or consumer impact significantly exceeded the impact estimated in the economic, small business and consumer impact statement submitted during the making of the rule.

2. The actual economic, small business or consumer impact was not estimated in the economic, small business and consumer impact statement submitted during the making of the rule and that actual impact imposes a significant burden on persons subject to the rule.

3. The actual benefit of the rule did not by clear and convincing evidence outweigh the cost of the rule.

B. The burden of proof is on the petitioner to show that either or both of the provisions set forth in subsection A of this section are met.

C. Within thirty days after receiving the copy of the petition, the agency shall reevaluate the rule and its economic impacts and publish notice of the petition in the register. For at least thirty days after publication of the notice the agency shall afford persons the opportunity to submit in writing statements, arguments, data and views on the rule and its impacts. Within thirty days after the close of comment, the agency shall publish a written summary of comments received, the agency's response to those comments, and the final decision of the agency on whether to initiate a rule making or to amend or repeal the rule. The agency shall initiate any such rule making within forty‑five days after publication of its final decision.

D. Any person who is or may be affected by the agency's final decision on whether to initiate a rule making pursuant to subsection C of this section may appeal that decision to the council within thirty days after publication of the agency's final decision.

E. The council shall place on its agenda the appeal if at least three council members make such a request of the council chairman within two weeks after the filing of the appeal with the council.

F. If the appeal is placed on the council's agenda, the council chairman shall provide a copy of the appeal and written notice to the agency that the council will consider the appeal. The agency shall provide the council with a copy of the written summary described in subsection C of this section.

G. The council shall require an agency to promptly initiate a rule making or to amend or repeal the rule or the rule package, as prescribed by section 41‑1024, subsection E, objected to in the petition if the council finds that either or both of the provisions set forth in subsection A of this section are met.

H. This section shall not apply to a rule for which there is a final judgment of a court of competent jurisdiction based on the grounds of whether the contents of the economic, small business and consumer impact statement were insufficient or inaccurate. END_STATUTE

Sec. 10. Laws 2009, third special session, chapter 7, section 28, is amended to read:

Sec. 28. Moratorium on rule making relating to increased monetary or regulatory costs; exceptions; definitions

A. Notwithstanding any other law, for fiscal year years 2009‑2010, and 2010‑2011 an agency shall not conduct any rule making, including an informal rule making process, that would impose increased monetary or regulatory costs on other state agencies, political subdivisions of this state, persons or individuals or would not reduce the regulatory burden on the persons or individuals so regulated.

B. Subsection A of this section does not apply to rule making for any of the following:

1. An authorization or requirement enacted by the legislature after January 1, 2009 or as authorized by the governor after January 22, 2009.

2. To avoid a violation of a court order or federal law that would result in sanctions by the court or federal government to an agency in fiscal year years 2009‑2010 and 2010‑2011 for failure to conduct the rule making action.

3. To prevent a threat to the public health, peace or safety.

4. To fulfill an obligation related to fees, rates, fines or regulations that are expressly delineated in the constitution of this state.

5. To implement or comply with the fiscal year years 2009‑2010 and 2010‑2011 state budget or the American recovery and reinvestment act of 2009 (P.L. 111‑5).

6. A rule or other item that is exempt from title 41, chapter 6, Arizona Revised Statutes, pursuant to section 41‑1005, Arizona Revised Statutes.

7. To eliminate or replace archaic or illegal rules.

C. An agency shall not conduct any informal or formal rule making pursuant to this section without the prior written approval of the office of the governor. This subsection does not apply to any agency that is independent of the office of the governor, including any agency that is headed by a single elected official or the corporation commission.

D. For the purposes of this section, "agency", "person", "rule" and "rule making" have the same meanings prescribed in section 41‑1001, Arizona Revised Statutes.