Small Business Exemption From Rules

Minn. Stat. 14.127 provides a procedure for small businesses or small cities to claim exemption from certain state rules. Under the statute, an agency must determine if the cost of complying with a proposed rule in the first year after the rule will take effect will exceed $25,000 for a business with less than 50 full-time employees or a statutory or home rule charter city with less than 10 full-time employees. [Note that under Minnesota’s administrative Procedure Act any proposed amendments to existing rules constitute a proposed rule. The statute is unclear in that context as to what would constitute “the cost of complying” with an amended rule. Specifically, it is silent as to whether the $25,000 figure is for incremental (that is, new costs) only or whether those incremental costs can be added to existing costs of compliance with the existing rule to reach the $25,000 threshold.] That determination must be made before the close of the rulemaking hearing or, in cases where there is no hearing, before submission of the record to the administrative law judge. If the agency determines that the costs will exceed $25,000 or if the administrative law judge disapproves the agency’s determination that the costs do not exceed $25,000, the above defined business or city may file a written statement with the agency claiming exemption from the rules. Upon filing the statement, the rules do not apply to the business or city until the rules are approved by a law enacted after the agency’s determination or the administrative law judge’s disapproval. The law applies to any rule for which the record has not closed before July 1, 2005. Certain exemptions apply (e.g., Minn. PUC rulemaking).

Enhanced Federal Compliance Assistance

The federal Small Business Regulatory Enforcement Fairness Act was amended to require federal agencies that develop and publish rules for which a regulatory flexibility analysis is required by federal law to publish one or more guides to assist small entities in complying with the rule. The compliance guides, which are to be posted on the agency’s website and distributed to industry contacts of those potentially affected by the rule, shall include a description of the actions needed to meet the requirements of the rule to enable a small entity to know when such requirements are met and shall also include, if determined by appropriate by the agency, a description of possible procedures-such as tests-that may assist small entities in meeting the requirements.

CREDITS: This is an excerpt from A Guide to Starting a Business in Minnesota, provided by the Minnesota Department of Employment and Economic Development, Small Business Assistance Office, Twenty-eighth Edition, January 2010, written by Charles A. Schaffer, Madeline Harris, and Mark Simmer. Copies are available without charge from the Minnesota Department of Employment and Economic Development, Small Business Assistance Office.

This post is also part of a series of posts on Minnesota Environmental Protection Programs and how they affect starting a business in Minnesota.