Cite as PDC Interpretation No. 09-01
Implementing RCW 34.05.110 - Penalty waivers for Small Business Paperwork Violations
The Public Disclosure Commission enforces the election campaign, lobbying, and personal financial affairs reporting requirements in RCW 42.17A. The findings at RCW 42.17A.001 include:
(10) That the public's right to know of the financing of political campaigns and lobbying and the financial affairs of elected officials and candidates far outweighs any right that these matters remain secret and private.
(11) That, mindful of the right of individuals to privacy and of the desirability of the efficient administration of government, full access to information concerning the conduct of government on every level must be assured as a fundamental and necessary precondition to the sound governance of a free society.
The provisions of this chapter shall be liberally construed to promote complete disclosure of all information respecting the financing of political campaigns and lobbying, and the financial affairs of elected officials and candidates, and full access to public records so as to assure continuing public confidence of fairness of elections and governmental processes, and so as to assure that the public interest will be fully protected. In promoting such complete disclosure, however, this chapter shall be enforced so as to insure that the information disclosed will not be misused for arbitrary and capricious purposes and to insure that all persons reporting under this chapter will be protected from harassment and unfounded allegations based on information they have freely disclosed.
Commission rules implementing RCW 42.17A are codified in Title 390 WAC. As required by RCW 42.17A, persons and entities file reports with the Commission, including campaign finance, lobbying, and personal financial affairs disclosure reports. The Commission collects this information and makes it available to the public. The Commission may impose civil penalties upon persons or entities violating the provisions of RCW 42.17A. RCW 42.17.755. The Commission may also order other administrative sanctions, such as directing the person or entity to cease and desist from the activity that constitutes a violation. Id.
In 2009, the Washington State Legislature enacted a law effective July 26, 2009 regarding penalties imposed on small businesses that commit first time paperwork violations. Chapter 358, Laws of 2009 (adding a new section to RCW 34.05, the Administrative Procedure Act). The new law was codified at RCW 34.05.110. In 2010, the Legislature amended the law. Chapter 194, Laws of 2010.
RCW 34.05.110 requires state agencies to waive any fines, civil penalties, or administrative sanctions for first-time paperwork violations by a small business, unless one of the exceptions set out in that law applies. RCW 34.05.110 also defines the following: "Paperwork violation" means the violation of any statutory or regulatory requirement that mandates the collection of information by an agency, or the collection, posting or retention of information by a small business. This includes but is not limited to requirements in RCW, WAC, the Washington State Register, or any other agency directive. "First-time paperwork violation" means the first instance of a particular or substantially similar paperwork violation. "Small business" means a business with two hundred fifty or fewer employees or a gross revenue of less than seven million dollars annually.
However, subsection (4) of RCW 34.05.110 specifies the exceptions to the otherwise mandatory penalty waiver. The exceptions include that no waiver of penalties is required when "The agency head determines that the effect of the violation . . . causes serious harm to the public interest[.]"
Some entities filing reports required by RCW 42.17A and Commission rules satisfy the definition of "small business" in RCW 34.05.110.
The 2010 amendments added a new provision at RCW 34.05.110(1). That provision directs that agencies must provide small businesses a copy of the state law or agency rule alleged to have been violated and a period of at least two business days to correct the violation before imposing a penalty or sanction. The requirement does not apply if certain conditions in (1) are met, or if the agency determines under (4) that exception to the requirement is to be made.
At its June 25, 2009 meeting, the Commission considered Chapter 348, Laws of 2009 (RCW 34.05.110) and determined that the effect of a violation of RCW 42.17A, PDC rules or PDC directives causes serious harm to the public interest. These statutes, rules and directives enable disclosure and transparency in election campaigns, lobbying and regarding the financial affairs of public officials. The public interest in disclosure of this information is likewise recognized as serious and important in the findings of RCW 42.17A.001. At its June 25, 2009 meeting, the Commission also took into account the PDC assistance already provided to filers that may be small businesses prior to an enforcement action being taken. That assistance can include, for example, making telephone calls to filers or making other contacts to notify them of filing requirements, sending email or postcard reminders to filers, and sending warning letters to filers.
Therefore, the Commission concluded that penalties and administrative sanctions imposed under RCW 42.17A and Commission rules and directives will not be waived for small businesses making first-time paperwork violations as provided in RCW 34.05.110(2) and as of the date that law was effective on July 26, 2009.
At its May 27, 2010 meeting, the Commission considered the 2010 amendments to RCW 34.05.110. The Commission determined that implementing the requirement in (1) (to provide a copy of the PDC rule or statute to a person and a two business day opportunity to correct) causes serious harm to the public interest for the same reasons described above. Enforcing the laws and rules that require timely filing in the manner specified in RCW 42.17A supports transparency and the voters' interests in filers complying with RCW 42.17A and Title 390 WAC. The Commission took into account that copies of RCW 42.17A and Title 390 WAC are already made available through links on the Commission's website at www.pdc.wa.gov. Therefore, the Commission concluded that RCW 34.05.110(1) would not apply to PDC matters. This finding is effective as of June 10, 2010.
The Commission is also providing this written interpretation of the Commission's June 25, 2009 and May 27, 2010 analysis of RCW 34.05.110 in order to assist the public as well as persons who file reports with the Commission.
Approved: August 27, 2009 | Amended July 26, 2010
References: Chapter 42.17A RCW; RCW 34.05.110; Chapter 194, Laws of 2010; Title 390 WAC