Sunrise Reviews: Regulatory Structures and Criteria


I. Highlights

A. Senate Concurrent Resolution No. 121, adopted by the Legislature in the 2002 Regular Session, requested the Bureau to conduct a study of the current policies and criteria used to conduct sunrise reviews pursuant to chapter 26H, Hawaii Revised Statutes.

B. Findings. The Bureau finds that:

(1) Hawaii law does not mandate the legislature to choose the least restrictive method of regulation that will fulfill the need for regulation. The requirement formerly existed in section 26H-2, Hawaii Revised Statutes, but has since been repealed;

(2) The list of sunrise review criteria in section 26H-2, Hawaii Revised Statutes, is missing two basic criteria found in other states' sunrise review statutes. The two criteria are the need for assurances of competency and the lack of other adequate protections. Although missing from the statutes, the Auditor has adopted these criteria as supplemental criteria in its sunrise reviews. All other states with sunrise review statutes have these two criteria; and

(3) It is not feasible to add economic impact, insurance reimbursements, or accessibility of services as additional criteria for the Auditor's sunrise review.

First, economic impact amounts to the costs of regulation to the state, the cost of services to consumers, or restrictions on entry. All three components are already incorporated into section 26H-2.

Second, insurance reimbursement is not relevant to the basic question of whether regulation is necessary to protect consumers who are otherwise left unprotected from harm caused by the incompetence of practitioners.

Third, accessibility of services is already a criterion in section 26H-2, Hawaii Revised Statutes, under a different choice of words.

C. Recommendations

(1) Section 26H-2, Hawaii Revised Statutes, should be amended by adding the two basic criteria missing from that section--the need for assurances of competency, and the lack of other adequate protections; and

(2) The additional criteria proposed in S.C.R. No. 121, specifically, economic impact, insurance reimbursement, or accessibility of services, should not be adopted.

II. Frequently Asked Questions

A. What is a sunrise review?

Answer: It is a review of whether it is necessary for a legislature to enact legislation to regulate an as yet unregulated profession or occupation in order to protect the health, safety, or welfare of the public.

B. Who conducts the sunrise review?

Answer: It depends on the state. Although the decision to regulate ultimately lies with the legislature, it is usually an executive department or agency that prepares the sunrise review report. In other states the reports are prepared by a legislative committee, a legislative auditor, a council of legislative and executive branch members, or even the proponents of the legislation. In Hawaii, the sunrise reviews are conducted by the Auditor.

C. What are sunrise review criteria?

Answer: The criteria are different ways of asking whether it is necessary to regulate a profession or occupation in order to protect the public. They are generally presented in the form of a test in which all the criteria must be met in order for a proposal to pass the sunrise review. The three most common criteria involve harm, competency, and protection. They may be paraphrased as follows:

(1) Does the unregulated practice harm the public;

(2) Is the harm due to incompetent practice; and

(3) Is the public unprotected.

D. What is the regulatory structure of a sunrise review statute?

Answer: The regulatory structure of a sunrise review statute is generally built around two basic issues that the legislature must decide. The two issues are:

(1) Is regulation necessary to protect the public?

(2) If regulation is necessary, what is the least restrictive method of regulation that will fulfill that need for regulation?

The sunrise review criteria help to answer the first issue. The second issue involves choosing a method of regulation. From the least restrictive to the most restrictive, the methods are as follows:

(1) Strengthened civil remedies and criminal sanctions;

(2) Regulation of the business rather than its employee practitioners;

(3) Registration;

(4) Certification; and

(5) Licensure.