Expands scope of New Jersey Regulatory Flexibility Act dealing with economic impact of rules on small businesses.

A1269

ASSEMBLY, No. 1269

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman MICHAEL INGANAMORT

District 24 (Morris, Sussex and Warren)

Co-Sponsored by:

Assemblyman Auth and Assemblywoman Fantasia

SYNOPSIS

���� Expands scope of New Jersey Regulatory Flexibility
Act dealing with economic impact of rules on small businesses.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act

expanding components of administrative rule-making that deal with
impact of rule on small businesses and amending and supplementing P.L.1986,
c.169 (C.52:14B-16 et seq.).

����
Be It Enacted

by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 2 of P.L.1986,
c.169 (C.52:14B-17) is amended to read as follows:

���� 2.��� As used in this act,
"small business" means any business
, including its affiliates,

which is resident in this State, independently owned and operated and not
dominant in its field, and which employs fewer than

100
full-time employees
or has gross annual sales of less than $6 million
.

(cf: P.L.1986, c.169, s.2)

���� 2.��� Section 3 of P.L.1986,
c.169 (C.52:14B-18) is amended to read as follows:

���� 3.��� In developing and
proposing a rule for adoption, the agency involved shall utilize approaches
which will accomplish the objectives of applicable statutes while minimizing
any adverse economic impact of the proposed rule on small businesses of
different types and of differing sizes.� Consistent with the objectives of
applicable statutes, the agency shall utilize such approaches as:

���� a.���� The establishment of
differing compliance or reporting requirements or timetables that take into
account the resources available to small businesses;

���� b.���
The consolidation or
simplification of compliance or reporting requirements for small businesses so
long as the public health, safety, or general welfare is not endangered;

����
c.
���� The use of
performance rather than design standards; and

����
[
c.
]
�
d.
� An exemption from coverage by the rule,
or by any part thereof, for small businesses so long as the public health,
safety, or general welfare is not endangered.

(cf: P.L.1986, c.169, s.3)

���� 3.��� (New section)� The
Legislature finds and declares that:

���� a.���� A vibrant and growing
small business sector is critical to creating jobs in a dynamic economy.
However, small businesses bear a disproportionate share of regulatory costs and
burdens.

���� Uniform regulatory and
reporting requirements can impose unnecessary and disproportionately burdensome
demands, including legal, accounting, and consulting costs, upon small
businesses with limited resources.� The failure to recognize differences in the
scale and resources of regulated businesses can adversely affect competition in
the marketplace, discourage innovation, and restrict improvements in
productivity.� Unnecessary regulations create entry barriers in many industries
and discourage potential entrepreneurs from introducing beneficial products and
processes.

���� The practice of treating all
regulated businesses as equivalent may lead to inefficient use of regulatory
agency resources, enforcement problems, and, in some cases, to actions
inconsistent with the legislative intent of health, safety, environmental, and
economic welfare legislation.

���� b.��� The regulatory and
enforcement culture of State agencies can be more responsive to small business
without compromising the statutory missions of the agencies. When adopting
rules to protect the health, safety, and economic welfare of New Jersey, State
agencies should seek to achieve statutory goals as effectively and efficiently
as possible without imposing unnecessary burdens on small employers.
Alternative regulatory approaches which do not conflict with the stated
objective of applicable statutes may be available to minimize the significant
economic impact of rules on small businesses.

���� c.���� Therefore, the process
by which State rules are developed and adopted should require agencies to
solicit the ideas and comments of small businesses, to examine the impact of
proposed and existing rules on such businesses, and to review the continued
need for existing rules. Judicial review for compliance should be available for
small businesses.

���� 4.��� (New section)� An agency
seeking to continue in effect an expiring rule by duly proposing for
re-adoption the rule, with an amendment, prior to its expiration pursuant to
section 10 of P.L.2001, c.5 (C.52:14B-5.1), shall consider, as part of the
regulatory flexibility analysis, the following factors to ensure that any
adverse economic impact of the rule on small businesses is minimized in a
manner consistent with the objectives of the applicable statutes:

���� a.���� The continued need for
the rule;

���� b.��� The nature of complaints
or comments received from the public concerning the rule;

���� c.���� The complexity of the
rule;

���� d.��� The extent to which the
rule overlaps, duplicates, or conflicts with other federal and State rules; and

���� e.���� The length of time
since the rule has been evaluated or the degree to which technology, economic
conditions, or other factors have changed in the area affected by the rule.

���� The agency's consideration of,
and findings regarding, these factors shall be described in the regulatory
flexibility analysis issued on the proposed rule pursuant to section 4 of
P.L.1986, c.169 (C.52:14B-19).

���� In all other cases, the agency
shall conduct and complete a regulatory flexibility analysis and consider the
additional factors set forth in the section by the end of each seven year
period following the effective date of a rule.� The agency's consideration of,
and findings regarding, these factors as well as the regulatory analysis shall
be filed in writing for the record with the New Jersey Business Action Center
within the Department of State.

���� 5.��� (New section)� a. �A
small business that is adversely affected economically or aggrieved by final
rule-making action may object to all or a part of a rule subject to regulatory
flexibility analysis by filing a petition with the agency within 90 days after
the date of final rule-making action.� For the purpose of this subsection,
"date of final rule-making action" includes the date of adoption of a
rule or of an amendment to a rule, or of readoption of a rule due to
expiration, or of the end of a seven year period following the effective date
of a rule, whichever is applicable.

���� A petition filed pursuant to
this subsection shall be based on the following grounds:

���� (1)�� the agency failed to
prepare a regulatory flexibility analysis; or

���� (2)�� the regulatory
flexibility analysis issued failed to contain or consider a matter or factor
required by law or contained a clear error or omission of a material fact which
directly resulted in the agency's failure to consider, or the agency's
underestimation of, an adverse economic impact.

���� The petition shall include a
detailed and comprehensive explanation of the grounds.

���� After receiving a petition, an
agency shall determine whether the petition has merit and respond to the
petitioner within 45 days after the petition is filed. �If the agency finds
that the petition is without merit, it shall state the finding and explain the
basis for that finding in writing.� If the agency finds that the petition has
merit, the agency shall state the finding and explain the basis for that finding
in writing, and shall take such action as the agency deems necessary to ensure
compliance with P.L.1986, c.169 (C.52:14B-16 et seq.), including, if
appropriate, to amend the rule to which the small business objected.

���� b.��� If an agency determines
that the petition filed under subsection a. of this section has no merit or an
agency fails to take action it deemed necessary on a petition that the agency
determined had merit, the small business that is adversely affected economically
or aggrieved by final rule-making action may seek judicial review by the
Appellate Division of the Superior Court of agency compliance with the
requirements of P.L.1986, c.169 (C.52:14B-16 et seq.) on the same grounds
as set forth in its petition.

���� A small business may seek such
review during the period beginning on the date the agency renders a
determination that the petition filed under subsection a. of this section has
no merit and ending 90 days later.

���� The agency may cause the
requested review to be dismissed upon a filing with the court of a motion for
summary disposition accompanied by an affidavit setting forth, with
particularity, the facts that demonstrate that the grounds for the request for
review by the small business fail to show in a clear and definitive way that
the small business would prevail on the plenary review. �The small business
shall have the right to challenge such a motion by submitting an affidavit that
contradicts the assertions of the agency's affidavit.� The court may render a
ruling on the motion for the summary disposition based solely on the affidavits
submitted.

���� In granting any relief in an
action instituted pursuant to this section, the court shall order the agency to
take corrective action consistent with P.L.1986, c.169, including, but not
limited to, remanding the rule to the agency, and deferring the enforcement of
the rule only against small businesses unless the court finds that continued
enforcement of the rule is in the public interest.

���� If the court finds that the
grounds set forth by a small business in the request for the judicial review
are false, inaccurate, trivial, frivolous or vexatious, the court shall impose
appropriate sanctions including, but not limited to, an order to pay to the
agency the amount of the reasonable expenses incurred as a result of the
agency's response to the request for review including reasonable attorneys
fees.

���� Nothing in this section shall
be construed to limit the authority of any court to review agency action which
review is available, or provided for, by any other law; or to stay the
effective date of any rule or provision thereof under any other provision of
law. �Compliance by an agency with P.L.1986, c.169 shall be subject to judicial
review only in accordance with this section.

���� 6.��� This act shall take
effect on the first day of the sixth month following enactment.

STATEMENT

���� This bill makes changes to the
�New Jersey Regulatory Flexibility Act� in order to expand the scope of the law
with regard to small businesses, defined as businesses that employ fewer than
100 full-time employees or having gross annual sales of less than $6 million.

���� The bill requires an agency to
use, when developing rules, the consolidation or simplification of a compliance
or reporting requirement for small businesses as an approach to minimize the
rule�s impact on small businesses, so long as the public health, safety, or
general public welfare is not endangered.

���� Under the bill, an agency
seeking to continue in effect an expiring rule by duly proposing for
re-adoption the rule, with amendment, prior to its expiration, is to consider a
series of factors, as part of the regulatory flexibility analysis, which are set
forth in the bill.� This review is to be conducted by the agency at the time a
rule is proposed for re-adoption (which is generally every seven years), to
ensure that the rule continues to have a minimal impact on small businesses.

���� The bill establishes a process
by which a small business that is adversely affected economically or aggrieved
by final rule-making action may file a petition with the agency objecting to
all or a part of a rule subject to regulatory flexibility analysis.� For cases
in which the agency rejects the petition, this process addresses concerns about
frivolous appeals without creating unprecedented procedures with
respect to the courts.� Specifically, the bill: (1) establishes a petition
process as a prerequisite for a court appeal; (2) requires the appeal petition
to be filed within 90 days after final rule-making action; (3) creates an
optional summary disposition process based on affidavits; (4) sets sanctions
for frivolous appeals; and (5) places a restriction on appeals based on
compliance with the regulatory flexibility process.