Indicates Matter Stricken

Indicates New Matter

 

Committee Report

February 26, 2025

 

H. 3021

 

Introduced by Reps. Bradley, G. M. Smith, Herbkersman, Lawson, B. Newton, Wooten, Mitchell, Pope, Guffey, Neese, Martin, Chapman, Pedalino, McCravy, Chumley, W. Newton, Taylor, Schuessler, Davis, M. M. Smith, Long, Sanders, Teeple, Gagnon, Hixon, Erickson, Hager, Ballentine, Calhoon, Holman, Moss, Burns, Gilreath, Gilliam, Rankin, Vaughan, B. L. Cox, Ligon, Oremus and Hartz

 

S. Printed 2/26/25--H.                                                                           [SEC 2/27/2025 3:41 PM]

Read the first time January 14, 2025

 

________

 

The committee on House Labor, Commerce and Industry

To whom was referred a Bill (H. 3021) to amend the South Carolina Code of Laws by enacting the "Small Business Regulatory Freedom Act" by adding Section 1-23-285 so as to provide the Small Business Regulatory, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

 

    Amend the bill, as and if amended, SECTION 3, by striking Section 1-23-110(E) and inserting:

    (E) An agency may not promulgate any regulation unless the agency has been expressly granted the power to do so by a statutory delegation. The regulation must be within the scope of authority specifically granted by the statute, and the agency must cite the specific statutory provision authorizing the regulation. If a statute authorizes promulgation of a regulation, that authority expires three years after the regulation is promulgated and takes effectaccording to the following schedule:

       (1) All statutory delegations currently in effect on July 1, 2026, shall expire on July 1, 2037, except that the authority does not expire for:

           (a) regulations promulgated originally as emergency regulations filed pursuant to Section 1-23-130, or regulations which would qualify as such but are filed using the ordinary regulation process;

           (b) regulations required to conform with enacted state or federal legislation;

           (c) regulations required to comply with federal law or regulation changes; or

           (d) regulations required to maintain or become eligible for federal grants or appropriations.

       (2) All delegations created after June 30, 2026, shall expire three years after the statute's effective date, except that the authority does not expire for:

           (a)  regulations promulgated originally as emergency regulations filed pursuant to Section 1-23-130, or regulations which would qualify as such but are filed using the ordinary regulation process;

           (b) regulations required to conform with enacted state or federal legislation;

           (c) regulations required to comply with federal law or regulation changes; or

           (d) regulations required to maintain or become eligible for federal grants or appropriations.

       (3) To the extent this section is more permissive than Section 1-23-120(A)(2), this section takes precedence. After that time, existing regulations may still be updated, in accordance with the Administrative Procedures Act, to conform with enacted legislation or federal law or regulation changes; however, new regulations may not be promulgated pursuant to that statute.

Amend the bill further, SECTION 5, by striking Section 1-23-120(J)(1) and inserting:

       (1) All administrative regulations expire on January first of the eighthseventh calendar year after their effective date unless readopted pursuant to this section, except as detailed in item (6).

Renumber sections to conform.

Amend title to conform.

 

WILLIAM HERBKERSMAN for Committee.

 

 

statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill requires that the Small Business Regulatory Review Committee (SBRRC) shall conduct an initial review of regulations that are pending readoption. The committee must consider the impact of the regulation on small businesses, economic development, and the agency itself. Additionally, this bill establishes that it is the duty of the committee to reduce the overall regulatory burden on business by reducing the number of regulatory requirements by 25 percent. The House of Representatives and the Senate shall provide staff support to the committee to carry out its obligations under this bill.

 

Currently, there is no expiration date set for regulations, and therefore, regulations are not currently reauthorized or reviewed for readoption. Every five years, each state agency that promulgates regulations must conduct a formal review of all regulations it has promulgated and submit it to the Code Commissioner. The SBRRC duties currently include directing agencies to prepare an economic impact statement and a regulatory flexibility analysis on regulations that may have a significant adverse impact on small businesses. The committee also has authority to request a final assessment report from RFA in cases where the committee determines that information in addition to the agency's economic impact is critical in the committee's determination that a proposed permanent regulation has a significant adverse impact on small business. There is currently no set percentage by which the committee must reduce regulatory requirements in order to reduce the regulatory burden on businesses.

 

This bill states that an agency may not promulgate any regulation unless the power to do so has been expressly granted by a statutory delegation. This bill also establishes an expiration date of the authority for an agency to promulgate a new regulation as three years after the regulation is promulgated and takes effect. This bill requires that for every regulation that is promulgated by an agency, the agency must identify and propose the removal of two existing regulations. Furthermore, this bill provides that a court of competent jurisdiction has the power to declare a regulation invalid if it finds the agency lacked express statutory authority for it to be promulgated. Additionally, this bill establishes that a regulation cannot be submitted to the General Assembly for review three years after the effective date of the statute that specifically authorized the regulation.

 

This bill creates a new requirement for the promulgation process of regulations whereby all new regulations submitted for promulgation and existing regulations being reviewed for readoption must include an assessment report consisting of a cost-benefit analysis that, at minimum, projects the first five years after the regulation goes into effect. The assessment report must be prepared in accordance with an Economic Impact Manual that RFA will be required to publish. Additionally, the assessment report and all documentation, assumptions, methods and data used must be transparent, replicable, data-driven, and made publicly available. If the assessment report conducted by the agency has a cost estimate that exceeds $1,000,000 over five years, then the assessment report is considered the preliminary report and a statement of economic impact provided by RFA must be submitted concurrently with the proposed regulation. If the cost estimate is less than $1,000,000 over five years, the preliminary assessment report is sufficient and no additional assessment report is required. If the cost estimate is equal to or exceeds $1,000,000 over five years, then the preliminary assessment must also be submitted to RFA for review. RFA shall then prepare and publish a final assessment report within sixty days after the required public hearing. The regulatory agency is required to publish the applicable preliminary or final assessment report on its website, including its analysis, all backup documentation, and data and provide the same information to the SBRRC and the relevant House and Senate committees. The published analysis must be replicable, and when relevant, published documentation must be in a machine-readable format. Additionally, if the cost estimate is equal to or exceeds $1,000,000 over five years, then a joint resolution approving the regulation by the House and Senate is required.

 

Currently, assessment reports are only required for regulations submitted to the General Assembly for legislative review that have a substantial economic impact. An economic impact statement prepared by RFA is not currently required to be submitted with a proposed regulation. Rather, a brief fiscal impact statement prepared by the agency is required to be submitted with a proposed regulation. RFA does not currently publish an Economic Impact Manual and does not typically conduct economic impact analyses, but instead typically analyzes legislative fiscal impacts for the impact on state and local governments. For reference, a fiscal impact generally focuses on specifically expenditure and revenue changes affecting the state budget while an economic impact may include direct and indirect costs and benefits on the general public, businesses, or other entities and government agencies. Under current law, a final assessment report must be prepared by RFA only for regulations with a substantial economic impact, which is not currently quantified, and upon written request by two members of the General Assembly. The office must prepare and publish a final assessment report within sixty days after the public hearing. Further, the current final assessment report is limited in scope and analysis, and one has not been requested since 2011.

 

This bill also requires that standardized analytic methods and measures must be applied to all regulations and must be updated in accordance with best practices and predictive success. Updates to the standards must be approved by RFA. Analysis techniques and methods may not vary between rules, and any variation must be justified and approved by RFA. When a regulation is reviewed for readoption, a retrospective assessment report must be conducted and compared to the initial projected assessment report. A regulation being reviewed for readoption must also be accompanied by a cost-benefit analysis that projects at least five years after the regulation goes into effect. These requirements would be a significant expansion of the responsibilities for state agencies. For reference, within the scope of analyses that RFA routinely and typically conducts, it is commonplace for analytical methods and measures used by the office to vary depending on the subject matter of the analysis, data availability, and feasibility. Additionally, there is currently no retrospective assessment report required for regulations. Further, there is currently no requirement that a cost-benefit analysis be submitted for a regulation being reviewed for readoption that includes a projection covering the first five years after the regulation goes into effect.

 

This bill also removes the exemptions from assessment reports so that regulations specifically exempt from General Assembly review, emergency regulations, and regulations which control the hunting or taking of wildlife including fish must now have assessment reports. Regulations that are currently exempt from General Assembly review include those to maintain compliance with federal law including grant programs, those by the state Board of Financial Institutions in order to authorize state-chartered savings and loan associations, and state-chartered credit unions to engage in authorized activities, those by the Department of Revenue to adopt regulations, revenue rulings, revenue procedures, and technical advice of the Internal Revenue Service to maintain conformity with the Internal Revenue Service, and emergency regulations.

This bill removes the five-year formal review requirement for regulations and replaces it with an automatic expiration. Regulations will be set to automatically expire on January first of the eighth calendar year after their effective date. An agency who desires to maintain a regulation must readopt the regulation through the review process prior to expiration but not more than two years prior to expiration. Pursuant to Section 1-23-110, the review process is the same process used for promulgating a new regulation. This bill also requires that when conducting an analysis required to readopt a regulation, the agency must use actual impacts and costs as the basis for any calculation rather than estimates. Additionally, pursuant to the proposed changes to Section 1-23-110 within Section 3 of this bill, the review process would also include the requirement to identify and propose the removal of two existing regulations.

 

This bill provides three exemptions for automatic expiration, including regulations to comply with federal law or receive federal funding, regulations created with grants of rulemaking authority under the S.C. Constitution, and regulations created by an agency that is directly managed by an elected official. Although the exempt regulations are not subject to automatic expiration, they must still undergo the review process as required for nonexempt regulations. Regulations for which an agency is seeking an exemption from the automatic expiration period must have been adopted by Joint Resolution of the House and Senate. This bill also mandates that an extension to automatic expiration can be granted by Joint Resolution of the House and Senate to an agency totaling no more than 365 days upon a written request. This bill requires that a regulation is repealed if not readopted by its expiration date, excluding exempt regulations.

 

Regulations not subject to General Assembly review are currently not required to submit assessment reports or undergo review, except for temporary emergency regulations being extended or readopted. Currently, if there is no committee action on a proposed regulation, any member of the General Assembly may introduce a Joint Resolution approving or disapproving a regulation 30 days after the regulation is submitted to a standing committee and if no legislation is introduced to disapprove or enacted to approve the regulation prior to the 120-day review period, the regulation is approved on the 120^th day.  If there is committee action on a proposed regulation, a Joint Resolution can be introduced to approve the regulation, approving an identifiable portion of the regulation and disapproving the remainder, or disapproving the regulation.

 

This bill also requires that the expiration date for existing regulations shall be set by the SBRRC and shall occur between the second and eighth calendar years after the effective date, July 1, 2026. For reference, there are approximately 5,522 existing regulations. Therefore, the SBRRC will be responsible for setting expiration dates for all existing regulations as well as conducting initial reviews of regulations pending readoption, for an average of 921 regulations each year from 2028 through 2034.

 

Lastly, this bill requires that the court shall not defer to the agency's interpretation of the statute or rule during judicial review upon exhaustion of administrative remedies and shall resolve any remaining ambiguity against increased agency authority.

 

RFA contacted 104 agencies, departments, commissions and committees to ascertain the fiscal impact of this bill. The impact on these agencies varies widely depending on the number of regulations that the agency has promulgated. Of these agencies, 31 agencies indicated that the bill will not have an impact as they do not promulgate regulations, 38 agencies expect that the impact can be managed within their current budgets, and of those 38 agencies, 4 agencies provided information regarding the potential future impact or other considerations. Twenty-four agencies report that this bill will increase General Funds and Other Funds expenses to comply with the new regulation promulgation and regulation readoption processes. Of the 24 agencies, 13 report that the expenditure estimate for this bill is undetermined or are only able to provide a partial expenditure estimate, and 11 are able to provide an estimated expenditure impact for this bill. In total, this bill will increase General Funds and Other Funds expenses by an undetermined amount as less than half of the agencies are able to estimate a full expenditure impact due to this bill; however, agencies report that this bill will increase General Funds expenses by at least $4,527,100 including $4,504,100 recurring and $23,000 non-recurring, and this bill will increase Other Funds expenses by at least $1,245,000 including $891,000 recurring and $354,000 non-recurring.

 

The following is a detailed explanation of the range of responses.

 

Thirty-four agencies indicate that this bill will have a minimal or no impact on their respective operations. This bill may increase workload due to the new processes for promulgating new regulations and readopting existing regulations including an assessment report for each regulation consisting of a comprehensive cost-benefit analysis. The following agencies stated that any increase in workload can be managed with existing staff, resources and/or appropriations or spending authorizations: the Board of Financial Institutions, the Citadel, the College of Charleston, Coastal Carolina University, the Commission for the Blind, the Commission on Indigent Defense, the Commission for Minority Affairs, the Department of Agriculture, the Department of Children's Advocacy, the Department of Commerce, the Department of Corrections, the Department of Health and Human Services, the Department of Mental Health, the Department of Motor Vehicles, the Department of Parks, Recreation, and Tourism, the Department of Probation, Parole and Pardon Services, the Department of Revenue, the Department of Transportation, the Education Lottery Commission, the House of Representatives, the Human Affairs Commission, Legislative Services, the Medical University of South Carolina, the Office of the Attorney General, the Office of Regulatory Staff, the SC Ports Authority, the Senate, the State Ethics Commission, the State Fiscal Accountability Authority, the State Housing Finance and Development Authority, the State Law Enforcement Division, the State Treasurer's Office, the University of South Carolina, Winthrop University.

 

Thirty-one agencies indicated that this bill would have no fiscal impact to their agency as the bill was not applicable to their respective operations. Four agencies indicated that this bill would have no fiscal impact to their agency although this bill could be applicable to their respective operations and provided the following input: Patriot's Point indicates that while they have the authority promulgate regulations, they have never done so and therefore do not expect to undergo the new regulation promulgation and regulation readoption processes. The Office of Resilience indicates that they have the authority to promulgate regulations but have never done so. However, the Office of Resilience notes that they would be unable to meet the requirement of this bill to eliminate two regulations in order to propose a new regulation as they currently have no existing regulations to eliminate. The Administrative Law Court indicates that this bill would not have a fiscal impact on the court as no increase in workload is anticipated by the court; however, this bill would change how they may interpret cases. The Department of Archives and History has, based on RFA's count, 743 existing regulations but does not anticipate undergoing the new readoption process. The Department of Archives and History indicates that this bill will have no fiscal impact because the department anticipates allowing existing regulations, with the exception of those that are federally mandated, to expire, and therefore, be removed.

 

The following are detailed reports from the 24 agencies that indicate an increase in expenses due to this bill.

 

Aeronautics Commission. This bill will have an undetermined expenditure impact on the Aeronautics Commission. This bill creates additional responsibilities for the commission due to the new regulation promulgation and regulation readoption processes. The commission indicates that this bill will create additional expenses to the agency associated with legal review. Additionally, the commission indicates that it will rely on consultants to conduct cost-benefit analyses for the new assessment review requirements of this bill. As the cost of legal and consulting fees is unknown at this time, the expenditure impact on the Aeronautics Commission is undetermined. The commission states that any increase in costs will likely need to be funded by the State Aviation Fund and will reduce funds used for airport development.

 

Clemson University. This bill will create additional responsibilities for Clemson University in order to comply with the new regulation promulgation and regulation readoption processes. At this time, Clemson indicates that if implemented, additional funds and staff would be required to comply with the new processes; however, a full impact to the university is not currently feasible to estimate. Therefore, the expenditure impact on Clemson is undetermined. Clemson will request Other Funds authorization to fund expenses due to this bill.

 

Clemson - PSA. This bill will create additional responsibilities for Clemson-PSA (PSA) due to the new regulation promulgation and regulation readoption processes. The PSA anticipates that this bill will increase expenses by approximately $303,000. Expenses include $300,000 of recurring expenses beginning in FY 2026-27 for salary and fringe to hire 1.0 FTE Legal Analyst (unclassified) that will be responsible for coordinating the new regulation promulgation and regulation readoption processes. Salary and fringe estimates are based on the salary and fringe of an existing FTE that is currently responsible for assisting with PSA regulations as the new FTE would be required to possess similar abilities, education, and experience. Additionally, non-recurring expenses will increase by approximately $3,000 in FY 2026-27 for one laptop and necessary accessories. The PSA will request General Fund appropriations to fund expenses due to this bill.

 

Commission on Higher Education. This bill will create new responsibilities for the Commission on Higher Education (CHE) due to the new regulation promulgation and regulation readoption processes. CHE indicates that this bill will increase expenses by approximately $370,100 beginning in FY 2026-27. Expenses include approximately $87,000 for salary and fringe to hire 1.0 FTE Attorney that will provide legal analysis on current, renewed, and new CHE regulations and will work collaboratively with the project manager on the required assessment, cost-benefit, and retrospective assessment reports, $104,000 for salary and fringe to hire 1.0 FTE Project Manager II that will manage the regulation creation and renewal timeline including overseeing creation of assessment, cost-benefit analysis, and retrospective assessment reports, $73,000 for salary and fringe to hire 1.0 FTE Senior Accountant/Fiscal Analyst to provide the cost-benefit analysis and fiscal impacts of current, renewed, and new regulations, and $87,000 for salary and fringe to hire 1.0 FTE Program Manager I that will assist in research, planning, and data analysis for the assessment, cost-benefit, and retrospective assessment reports required in this bill. Additionally, expenses for recurring operating costs will include $10,000 for laptops, monitors, and keyboards, $800 for agency cell phones, $4,000 for workstations, $300 for VPN remote access, $2,000 for Microsoft with Teams, and $2,000 for STATA for the data and fiscal analysts. CHE also notes that additional financial analysis software costs may vary from $2,500 to $50,000 annually. CHE will request General Fund appropriations to fund expenses due to this bill.

Department of Consumer Affairs. This bill will create additional responsibilities for the Department of Consumer Affairs (DCA) due to the new regulation promulgation and regulation readoption processes. DCA indicates that this bill will increase expenses in order to comply with the new regulation promulgation and readoption requirements but as the timing of expiration or renewal of  DCA's existing regulations are unknown at this time, the resulting expenses due to this bill are unknown. The department intends to contract external consultants to comply with the assessment analysis requirements of this bill, and the cost of external consultants is unknown. Therefore, this bill will have an expenditure impact on the department, but the extent of that impact is undetermined at this time. The department anticipates that some administrative responsibilities can be handled with existing staff and resources; however, since the cost of an external consultant is unknown, DCA may request General Funds appropriations and/or Other Funds authorizations to fund expenses due to this bill.

 

Department of Education. This bill creates additional responsibilities for the Department of Education due to the new regulation promulgation and regulation readoption processes. The department indicates that this bill may increase expenses by at least $228,000 beginning in FY 2026-27, but the total increase of expenses due to this bill is undetermined. The department expects to hire 1.0 FTE Governmental Affairs with salary and fringe of approximately $114,000 and 1.0 FTE Cost Analyst with salary and fringe of approximately $114,000. The department anticipates that this bill will also require new equipment for the FTEs as well as tracking software to comply with the new regulation readoption processes; however, these expenses are unknown at this time. Additionally, the department indicates that the requirement to remove two regulations in order to implement one could lead to further increases in expenses depending on what regulations will be deleted. However, as it is currently unknown what regulations will be removed, the increases in expenses due to removal are unknown. Therefore, the total expenditure impact due to this bill is undetermined. The department will request General Fund appropriations to fund expenses due to this bill.

 

Department of Employment and Workforce. This bill creates additional responsibilities for the Department of Employment and Workforce (DEW) due to the new regulation promulgation and regulation readoption processes. DEW indicates that the total increase in expenses due to this bill is undetermined as there is uncertainty as to how some aspects of the bill would apply to the agency's regulations, and the cost of implementing the bill would depend on the specific aspects of each regulation, how regulations may need to be changed, and data to prepare the required reports during the new promulgation and readoption processes. DEW specifies that expenses will increase by at least $158,000 beginning in FY 2026-27 for salary and fringe to hire 1.0 FTE Attorney IV responsible for regulation development. While the non-recurring operating costs for this FTE will likely be absorbed by the agency, DEW indicates that it is probable that implementation of the requirements of this bill as written would be a significant endeavor that would require significant staff time and resources beyond the aforementioned FTE. However, as the specific needs would depend on each unique regulation, this additional cost is unknown at this time. Therefore, the total expenditure impact on DEW due to this bill is undetermined. DEW will request General Fund appropriations to fund expenses due to this bill.

 

Department of Environmental Services. The Department of Environmental Services (DES) anticipates that this bill will increase expenses by approximately $1,624,000 beginning in FY 2026-27 including $1,616,000 of recurring and $8,000 of non-recurring expenses. The bill will significantly expand DES's responsibilities to comply with the new regulation promulgation and regulation readoption processes. For reference, according to DES, the department has over 200 existing regulations. DES indicates that the agency would require additional FTEs to fulfill the requirements of continuously readopting all regulations before the respective expiration dates and to conduct economic impact studies. Additionally, staff would need to determine which regulations could be removed in order to promulgate new regulations. Removing regulations would also require staff to work with facilities and businesses to assist them in understanding their environmental responsibilities under state and federal law. The agency currently conducts a review of its regulations every five years pursuant to the existing regulation review requirement and identifies opportunities to streamline the process including managing any repeals. This bill would require that process to occur on a continuously ongoing basis in order to comply with the readoption process for the agency's more than 200 regulations. DES indicates that recurring expenses will increase by approximately $121,000 for salary and fringe to hire 1.0 FTE Economist responsible for completing economic impact studies, by approximately $605,000 for salary and fringe to hire 5.0 FTE Environmental Health Manager IIIs responsible for monitoring regulations, by approximately $121,000 for salary and fringe to hire 1.0 FTE Project Manager I responsible for ensuring regulation changes and updates are tracked and completed agencywide, by approximately $242,000 for salary and fringe to hire 2.0 FTE Attorney IIIs responsible for ensuring all updates are completed timely and in line with existing laws, and by approximately $242,000 for salary and fringe to hire 2.0 FTE Environmental Health Manager IIIs responsible for stakeholder engagement. Additionally, recurring expenses will increase by approximately $252,000 for indirect costs, $5,000 for laptop expenses, $17,000 for general office supplies, and approximately $11,000 for travel. DES indicates that non-recurring expenses will increase by approximately $8,000 for laptops. DES will request General Fund appropriations to fund the expenses due to this bill.

 

Department of Insurance. The Department of Insurance (DOI) anticipates that this bill will have a significant impact on its operations and will increase recurring expenses by at least $92,000 beginning in FY 2026-27, but the total increase in expenses due to this bill is undetermined. DOI anticipates that it will need to review existing statutes and regulations to ensure that the promulgating authority is sufficient and seek to correct any ambiguity by legislation, readopt more than 70 regulations, develop cost impact assessments and reports, create a process and system to monitor regulations and expirations, hire consultants as needed, and develop a website for the new reporting requirements. DOI anticipates that this bill would increase recurring expenses by at least $92,000 beginning in FY 2026-27 for salary and fringe to hire 1.0 FTE Paralegal to help monitor the authorization and readoption process and to assist with the review, modification, and management of the readoption process. DOI also anticipates converting an existing part-time employee who currently handles the administrative regulation process to a full-time position, but the increase in expenses for this conversion is unknown at this time. Additionally, DOI expects to hire consultants to complete required reports pursuant to the new regulation promulgation and regulation readoption processes and anticipates that consultants will increase expenses by at least $5,000 to $10,000 per report for at least 70 reports. Furthermore, DOI foresees that this bill may lead to an increase in legal costs as the language in this bill creates a private right of action for anyone aggrieved by a regulation to challenge the authority of an agency that promulgated it. DOI expects that some may contend that a lack of authority exists to promulgate some regulations, and DOI will have to defend those actions. Therefore, the total increase in expenses for DOI due to this bill is undetermined. DOI will request General Fund appropriations to fund expenses due to this bill.

 

Department of Labor, Licensing and Regulation. This bill creates additional responsibilities for the Department of Labor, Licensing and Regulation (LLR) due to the new regulation promulgation and regulation readoption processes. LLR anticipates that this bill will increase expenses by approximately $714,000 beginning in FY 2026-27 including approximately $413,000 of recurring expenses and $300,000 of non-recurring expenses. LLR expects that recurring expenses will include approximately $146,000 for salary and fringe to hire 1.0 FTE Attorney III, approximately $126,000 for salary and fringe to hire 1.0 FTE Program Coordinator I, and approximately $142,000 for salary and fringe to hire 1.0 FTE Economist. Additionally, LLR estimates non-recurring expenses to increase by approximately $300,000 for a software solution to streamline the process of reviewing, tracking, and analyzing regulations in accordance with the new requirements of this bill. LLR will request Other Funds authorization to fund expenses due to this bill. 

 

Department of Public Health. This bill creates new responsibilities for the Department of Public Health (DPH) due to the new regulation promulgation and regulation readoption processes. DPH indicates that this bill will increase expenses by approximately $594,000 annually beginning in FY 2026-27. DPH currently has 42 existing regulations, which would require the department to timely readopt an average of approximately 6 regulations each year. The department indicates that it will require 5.0 additional FTEs to comply with the regulation readoption process. Therefore, DPH expenses will increase by approximately $121,000 for salary and fringe to hire 1.0 FTE Economist responsible for determining economic impacts to adhere to new assessment report requirements, approximately $102,000 for salary and fringe to hire 1.0 FTE Senior Accountant/Fiscal Analyst responsible for preparing and managing the new assessment report responsibilities, approximately $236,000 for salary and fringe to hire 2.0 FTE Senior Consultants responsible for facilitating rulemaking and rule maintenance activity, and approximately $121,000 for salary and fringe to hire 1.0 FTE Attorney III responsible for advising on legal issues and representing DPH related to rulemaking and rule maintenance activities. Additionally, DPH indicates that expenses will increase by approximately $10,000 each year for standard employee costs including supplies, travel, and contractual and license costs as well as approximately $4,000 for laptop and computer monitors. DPH notes that a three-year replacement cycle is followed for laptop and computer monitor equipment, and the budget includes funding to replace 1/3 of devices for the newly acquired items. DPH will request General Fund appropriations to fund expenses due to this bill.

 

Department of Public Safety. This bill will create additional responsibilities for the Department of Public Safety (DPS) due to the new regulation promulgation and regulation readoption processes. DPS indicates that this bill will increase expenses as additional personnel will be required to implement the requirements of this bill. However, the total expenses cannot be estimated at this time because DPS is uncertain of the extent of which this bill will affect its operations. Therefore, the total expenditure impact on DPS is undetermined. DPS will request General Fund appropriations to fund expenses due to this bill.

 

Department of Social Services. This bill creates new responsibilities for the Department of Social Services (DSS) due to the new regulation promulgation and regulation readoption processes. DSS indicates that this bill will create additional workload for general counsel staff, finance staff, accountability data and research staff, communications staff, and information technology staff in order to prepare and interpret regulations and to prepare cost-benefit analyses and assessment reports. The department will likely require additional FTE's including salary and fringe benefits and will incur expenses related to operational costs. The total increase in expenses will depend on the number of regulations being proposed each year, and the breadth of the regulations. Since the number and type of regulations to be proposed for promulgation and readoption is unknown, the expenditure impact on DSS is undetermined. DSS indicates that it would request a mix of General Fund appropriations and Other Funds authorization increase to fund expenses due to this bill.

 

Department of Veteran's Affairs. This bill will create additional responsibilities for the Department of Veteran's Affairs (DVA) due to the new regulation promulgation and regulation readoption processes. DVA expects that this bill will increase expenses by approximately $77,000 beginning in FY 2026-27 including $73,000 of recurring expenses for salary and fringe to hire 1.0 FTE Program Coordinator I responsible for all analysis and updating of regulations, and approximately $4,000 of non-recurring expenses for a laptop, phone and associated equipment. DVA will request General Fund appropriations to fund expenses due to this bill.

 

Department of Natural Resources. This bill creates new responsibilities for the Department of Natural Resources (DNR) due to the new regulation promulgation and regulation readoption processes. DNR indicates that this bill will increase expenses by at least approximately $438,000 beginning in FY 2026-27. Based on RFA's count, DNR has approximately 102 existing regulations including 40 regulations that primarily focus on providing public outdoor recreation opportunities and protecting fish and wildlife species. DNR indicates that this bill will impose significant increases in workload for the agency in order to comply with the new regulation promulgation and regulation readoption processes, and the department will need to hire 4.0 FTEs to accomplish the new requirements created by this bill. DNR states that this bill will increase expenses by approximately $98,000 for salary and fringe to hire 1.0 FTE Planning Administrator or similar position, $98,000 for salary and fringe to hire 1.0 FTE Attorney III, and $194,000 for salary and fringe to hire 2.0 FTEs Program Coordinator IIs in order for the department to readopt existing regulations and promulgate any new regulations. DNR indicates that expenses will also increase by approximately $48,000 for operating costs for the new FTEs. DNR also notes that additional direct fiscal impacts of this bill are difficult to estimate at this time, but the department expects to encounter complications due to this bill as many of the existing regulations focus on providing outdoor recreation opportunities and protecting fish and wildlife species. DNR indicates that removing two existing regulations each time a new regulation is promulgated could have significant impacts on South Carolina's natural resources. We anticipate that DNR will request General Fund appropriations to fund expenses due to this bill.

 

Forestry Commission. This bill will create additional responsibilities for the Forestry Commission and increase expenses, although the exact fiscal impact on the commission's expenses is undetermined. Smoke Management Guidelines are deemed by the General Assembly to be regulations pursuant to Act 139, Section 3 of 2012. The commission would hire an outside consultant to prepare assessment reports required by this bill because it lacks the required subject matter expertise in actuarial science. Calculating the potential impacts to small businesses would require modeling on how changes to the Smoke Management Guidelines might impact potential liability in private tort actions where one or both of the litigants are small businesses. Presumably, a consultant must be qualified in actuarial science and must compile and model data regarding injuries and loss related to smoke and flames from prescribed fire and attempt to model how changes may impact potential liability. Hiring a consultant will increase expenses; however, since consultant fees are unknown at this time, an exact fiscal impact on the commission's expenses is undetermined. The commission will request General Fund appropriations to fund expenses due to this bill.

 

Jobs - Economic Development Authority. This bill creates new responsibilities for the Jobs - Economic Development Authority (JEDA) due to the new regulation promulgation and regulation readoption processes. JEDA indicates that this bill will increase expenses by at least $20,000 for legal expenses and a Financial Analyst consultant, but the total increase due to this bill is undetermined. JEDA is a three-person agency and expressed concern that the requirements of this bill will be difficult to accomplish with limited staff. In order to preserve existing regulations, JEDA will require legal and professional help to readopt or modify existing regulations, creating additional burden and costs to the authority. JEDA estimates that expenses for legal and financial consultations will be $20,000 at minimum, and in the year that its existing regulations are being reviewed, JEDA estimates an additional increase in expenses of $20,000. In the long term, JEDA also indicates that it may require additional staff, but an accurate estimate of the cost of hiring additional staff is unavailable at this time. Since the extent of legal and financial consulting services and the hourly legal and consulting fees are unknown and the potential cost of additional staff is also unknown, the total expenditure impact on JEDA is undetermined. JEDA receives no state appropriations, and therefore, these expenses will have to be absorbed by the agency. If current revenues are not sufficient to absorb additional expenses, JEDA would increase fees paid by borrowers who finance products using JEDA bonds to fund expenses due to this bill. Any increase in bond fees will affect charter schools, non-profits, small manufacturers, and solid waste facilities. 

 

Legislative Council. This bill will increase the workload for Legislative Council (LC). LC indicates that this bill will increase expenses by approximately at least $350,000 starting in FY 2026-27 including $180,000 for salary and fringe for 1.0 FTE Attorney, $120,000 for salary and fringe for 2.0 FTE Administrative Professionals, and $50,000 for additional printing and processing costs. LC's role in regulations includes, but is not limited to, the following responsibilities: the monthly publication of the State Register, which includes the processing, formatting, editing, and printing and binding of Executive Orders, Notices of General Public Interest, Notices of Drafting, Proposed Regulations, Emergency Regulations, Final Regulations, and Final Regulations exempt from General Assembly review, in addition to the maintenance of the list of pending regulations submitted for General Assembly review; the processing and editing of regulations for General Assembly review, including facilitation of the delivery of regulations and required documentation to the Clerks of the House and Senate; advising and instructing agencies, legislative members, and staff on administrative procedures as outlined in the APA process; maintenance of diverse training documentation and templates including the Standards Manual for Drafting and Filing Regulations and the flow chart for the regulatory process; providing guidance and answering inquiries pertaining to the APA process and research regarding past and present regulations; maintenance of the computer database of regulations; ensuring the legislative website is up to date on current regulations and pending regulations; maintenance of regulations as published in the Code of Regulations; maintenance of records for the State Archives; drafting and delivery of Joint Resolutions to approve and disapprove regulations; and coordination with committees and agencies for the withdrawal and resubmission of regulations as requested, including additional editing, processing and updating of various databases to reflect changes. Currently, LC handles an average of 73 regulations for General Assembly review each year. This figure excludes all other documents managed by LC as listed above. This bill could increase the number of regulations handled by LC by at least 300 percent. The current budget provides 1.0 FTE Editor for the development and printing of the State Register, although 1.0 FTE Assistant Editor has been pulled from the Unclassified FTEs of the agency in order to meet existing responsibilities. As noted, a modestly estimated increase of 300 percent, and assuming that Council would be involved in working considerably more closely with committee staff and with the staff of the SBRRC to ensure publication, deadlines, and other requirements of the APA and this bill are met, would result in the need for additional FTEs, associated fringe benefits, and increased printing and processing costs. Additionally, it is important to note that Council is currently at maximum capacity for its allocated office space in the Dennis Building and provisions would need to be made to add office space to accommodate additional staff. Council will request General Fund appropriations to cover the expected increase in expenses.

 

Office of the Secretary of State. This bill creates additional responsibilities for the Office of the Secretary of State (SOS) due to the new regulation promulgation and regulation readoption processes. The SOS indicates that expenses may increase by an undetermined amount. At this time, the SOS anticipates that duties related to the new regulation approval and readoption process may have to be absorbed by existing legal staff. However, the full impact of this bill on existing duties and workload is undetermined at this time, and therefore, whether the agency would need to request appropriations to hire an additional FTE is undetermined at this time. Additionally, since the need for an additional FTE is undetermined, an increase in expenses due to additional equipment, software, or data subscriptions is also undetermined. The agency will request Other Funds authorization to fund expenses due to this bill.

 

Public Service Commission. This bill charges the Public Service Commission with additional responsibilities to comply with the new regulation promulgation and regulation readoption processes. The Public Service Commission anticipates that this bill will increase expenses by approximately $490,000 beginning in FY 2026-27 including $476,000 of recurring and $14,000 of non-recurring expenses. For reference, based on a count of regulations by RFA, the commission has approximately 499 existing regulations. To implement the proposed legislation effectively, the commission expects to hire 4.0 FTEs including a Program Manager IV with salary and fringe benefits of approximately $151,000, a Program Manager III with salary and fringe benefits of approximately $126,000, an Attorney V with salary and fringe benefits of approximately $126,000, and an Administrative Coordinator II with salary and fringe benefits of approximately $73,000. Each new employee would be provided with recurring IT subscriptions and support totaling approximately $1,000 per year. Each new employee would also be provided with computer hardware and software for a total of approximately $3,000 non-recurring funds. Additionally, the commission would incur training costs for these employees including travel costs that amount to a total of approximately $11,000 of non-recurring funds. Therefore, this bill would increase the commission's recurring expenses by approximately $476,000 beginning in FY 2026-27 and approximately $14,000 in non-recurring expenses. The commission will request an Other Funds authorization increase to fund expenses due to this bill.

 

Revenue and Fiscal Affairs. This bill significantly expands current responsibilities and creates new responsibilities for RFA due to the new regulation promulgation and regulation adoption process. RFA anticipates that this bill will substantially increase the office's workload and expenses, which cannot be absorbed with existing staff and appropriations. This bill requires RFA to publish a new Economic Impact Manual as a resource for agencies to prepare their preliminary assessment reports. If the cost estimate prepared by an agency is less than $1,000,000 over five years, the preliminary assessment report is sufficient and no additional assessment report is required. If an agency's cost estimate for a regulation exceeds $1,000,000 over a five-year period (or $200,000 per year on average), this bill requires RFA to prepare a statement of economic impact and a final assessment report to be submitted concurrently with a proposed regulation within sixty days after the public hearing. 

 

Currently, RFA is only required to prepare a final assessment report under certain situtaions. Further, the current report requirements are limited in scope and would be significantly expanded under this bill, and an assessment report has not been requested since 2011. Since the new threshold for RFA to complete a final assessment report is $1,000,000 over five years, or $200,000 a year, RFA anticipates the number of final assessment report requests will increase significantly. For reference, currently RFA has 10.0 FTEs who work on an average of 350 Fiscal Impact Statements per year. Based on RFA's count, there are approximately 5,522 existing regulations, or approximately 920 potentially requiring assessment reports per year for regulations that must be reviewed for readoption. Legislative Council estimates that on average, approximately 73 new regulations are proposed for promulgation each year. While the exact number of regulations to be readopted and that will undergo the new review process is unknown, if only 20 percent of new and existing regulations require assessment reports each year, RFA would be responsible for approximately 198 assessment reports per year. Additionally, the new assessment report requirements include a cost-benefit analysis along with an economic impact statement. Currently, assessment reports are not required to include a cost-benefit analysis, which would require significantly more extensive research, data, subject matter expertise, and analysis to conduct. RFA does not currently conduct economic impact analyses or cost-benefit analyses, but instead it conducts fiscal impact analyses on state and local government impacts of legislation. Depending on the subject matter and scope of an analysis, an economic impact analysis or cost-benefit analysis can be significantly more involved than a fiscal impact analysis. For reference, a fiscal impact generally focuses on the direct affects of legislation on the state budget while an economic impact or cost-benefit analysis may include direct and indirect effects on the general public, businesses, or other entities and government agencies. Therefore, this bill will substantially increase the workload of RFA and vastly expand the scope of analysis required. RFA would likely need to hire additional staff and acquire additional software, data subscriptions, and/or consulting services. The number of additional FTEs required is currently unknown, as it will depend on the number of assessment reports per year that have regulation cost estimates exceeding $1,000,000 over a five-year period. Additionally, RFA researched resources to best implement the new responsibilities created in this bill and has not been able to identify a viable option at this time. Therefore, the increase in expenses due to the resources is unknown. Further, the number of staff and expenses needed will greatly depend on the number of assessments that RFA is ultimately responsible for completing.

 

Additionally, this bill requires RFA to approve standardized analytic methods and measures applied to all regulations in accordance with best practices and predictive success, and to approve any variations in analysis techniques and methods. It is important to note that there are limitations with this requirement. Within the scope of analyses that RFA routinely and typically conducts, it is commonplace for analytical methods and measures used in an analysis to vary depending on the subject matter of the analysis, data availability, and feasibility. Data availability is a common obstacle, and therefore, RFA usually recommends best analytical methods and measures after gathering information on available resources for each analysis. As such, creating a set of standardized analytic methods and measures that must be applied to all regulations and may not vary between rules may prove to be impractical and cumbersome for agencies. Nevertheless, to develop a set of comprehensive standardized methods that can be applied to all regulations, RFA will need to conduct research on data and resource availability for an expansive list of subject matter that regulations encompass. For an example of the expansiveness of data that may be required, regulations cover topics including barber shop requirements, parking permit fees at universities, and food packaging, among many more. Given these wide-ranging topics, developing a set of analytic methods will also increase workload and expenses. Based on these significant changes to the agency's operations, the total expenditure impact for RFA due to this bill is undetermined but is likely to be substantial.

 

South Carolina Election Commission. This bill will create additional responsibilities for the South Carolina Election Commission (SCEC) in order to implement the proposed new regulation promulgation and regulation readoption process. SCEC expects that this bill will increase expenses by approximately $101,000 beginning in FY 2026-27 for salary and fringe to hire 1.0 FTE Paralegal or Attorney to assist with the implementation of the new processes. The commission will request General Fund appropriations to fund expenses due to this bill.

 

State Library. This bill creates additional responsibilities and work for the State Library that is outside the scope of responsibilities and knowledge of existing staff. The State Library indicates that this bill will increase expenses by approximately $192,000, beginning in FY 2026-27 including $184,000 recurring and $8,000 non-recurring expenses. In order to perform the duties required by this bill that are not part of the State Library's normal course of business, the library expects to hire 1.0 FTE Attorney III with salary and fringe of approximately $87,000 to be responsible for drafting new regulations and processing the reapproval of current regulations and 1.0 FTE Economist with salary and fringe of approximately $87,000 to be responsible for cost-benefit analyses to comply with the new readoption process for existing regulations. Additionally, recurring expenses include approximately $10,000 for specialized software. Software for the Economist will be required to perform cost-benefit analysis and the associated regression analyses. Software for the Attorney will be required to access specialized law resources in order to comply with the requirement of removing two regulations when a new regulation is proposed for promulgation. For reference, the library currently has two existing regulations, and therefore, the new promulgation process would require all existing regulations be removed, so the library expects that its new Attorney will require specialized resources to develop solutions. The library also anticipates incurring approximately $8,000 of non-recurring expenses for two laptops, four monitors, two desks, and two chairs. The library will request General Fund appropriations to fund expenses due to this bill.

 

Worker's Compensation Commission. This bill creates additional responsibilities for the Worker's Compensation Commission due to the new regulation promulgation and regulation readoption processes. The commission indicates that expenses may increase by an undetermined amount. Currently the commission expects to hire additional FTEs to implement operations in order to comply with the new regulation promulgation and readoption processes, to acquire additional equipment, software, and/or data subscriptions, and to incur additional expenses. The commission indicates that the actual impact will require additional review and a more in-depth cost analysis. The commission will request General Fund appropriations to fund expenses due to this bill.

 

State Revenue

This bill may impact General Fund, Other Fund, and Federal Fund revenues. As this bill requires that the SBRRC reduce regulations by 25 percent and that during the promulgation and readoption process, any agency introducing a regulation to be promulgated must identify and propose two existing regulations for removal, this bill may reduce revenue generated through regulations. However, as the number and type of regulations to be removed is unknown, the total decrease in state revenue is undetermined.

 

Clemson University. This bill could impact Clemson's Parking and Transportation Auxiliary and operations under parking regulations, among other regulated operations. Clemson indicates that the university's parking and transportation auxiliary generates approximately $10,500,000. At this time, Clemson indicates that if implemented, the removal of some existing regulations could reduce Other Funds revenue; however, a full impact to the university is not currently feasible to estimate. Therefore, the revenue impact on Clemson is undetermined.

 

Clemson - PSA. This bill could impact Clemson-PSA's ability to collect statutorily authorized fees. In FY 2024, the total actual revenue collected from statutorily authorized fees was approximately $5,371,000. The PSA indicates that its Division of Regulatory Services and Livestock Poultry Health are authorized by statute to collect various fees, but the Code of Regulations typically prescribes the mechanisms by which those fees are collected. Accordingly, an automatic expiration or any delay in readopting regulations could impact the ability to collect statutorily authorized fees. Additionally, the PSA advises that further clarification on this bill is needed but based on the PSA's current interpretation of the bill, the bill may cause the PSA to lose the ability to collect fees entirely. If the ability to collect fees is lost, PSA would require an increase in General Fund appropriations to offset the loss of revenue in order to maintain the level of services currently offered by the PSA.

 

Coastal Carolina. This bill could impact fines and fees revenue authorized by existing regulations for Coastal Carolina University. The potential loss of parking and transportation fees and fines revenue currently authorized by existing regulations could create a sizable financial burden on the university and its public safety and transportation operations. Since the current impact of this bill on the university's revenue due to the potential removal of existing regulations is unknown at this time, the revenue impact on Coastal Carolina is undetermined.

 

Department of Employment and Workforce. DEW anticipates that this bill could impact unemployment insurance tax revenues. However, it is not possible to estimate the total impact to revenue because the expected changes to or removal of existing regulations required in the new promulgation process for each regulation is unknown. Therefore, the impact on unemployment tax revenues due to this bill is undetermined.

 

Department of Insurance. DOI indicates that this bill may reduce General Fund revenues by approximately $622,000. Each year, DOI deposits on average approximately $622,000 in regulatory fines and fees into the General Fund. If the authority to promulgate the regulations is not granted or timely authorized or readopted, the regulation may be deemed repealed. These regulations include but are not limited to:

 

SC Code Regs. Ann. Section 69-33 ($250 reinstatement and appointment fees),

SC Code Regs Ann. Section 69-47 (application and biennial certificate fee for private review agents),

CE fees ($50 bookkeeping fee and $1000 fine for CE sponsors who fail to comply with Section 38-43-106,

S.C. Code Regs Ann. Section 69-77-$1000 application fee and $500 renewal fees for PBMs, and

SC Code Regs. Ann. Section 69-78 for PSAOs (authorizes the Director to set the license fee by bulletin).

 

Department of Public Health. This bill could decrease revenue for DPH due to a potential change in fees collected pursuant to regulations. Several of DPH's programs are funded and operated using fee revenue. If a regulation is not readopted by its expiration date, the regulation would be deemed repealed, and therefore, DPH would lose its ability to charge fees and experience a decrease in revenue. This would affect DPH's ability and/or authority to administer its various programs. If the regulations that authorize fees to support DPH programs are repealed or delayed, DPH would request General Fund appropriations to offset lost fee revenue.

 

Department of Public Safety. DPS indicates that this bill could impact the ability to receive federal funds. While this bill specifies that regulations required to comply with federal law or receive federal funding would not be subject to an automatic expiration, DPS expects that the exempt regulations would still be required to undergo the same review process as non-exempt regulations, and therefore, there exists some ambiguity on the impact on exempt regulations. The State Transport Police (STP) receive funds from the Federal Motor Carrier Safety Administration (FMCSA), and federal statutes give the STP exclusive authority in the state for enforcement of commercial motor carrier laws, including Federal Motor Carrier Safety Regulations, Hazardous Material Regulations, and Size and Weight laws and regulations. For reference, in FY 2024-25, the FMSCA awarded STP approximately $8,000,000. STP has ten employees in the Motor Carrier Unit paid 100 percent with federal funds for a total of approximately $877,000. Eighty percent of the STP officer's salaries are also paid through federal funds for a total of approximately $4,900,000. Because some ambiguity exists on the impact to exempt regulations under review, the revenue impact on DPS is undetermined.

 

Department of Transportation. DOT expressed concern that the removal or expiration of its regulations could impact the availability of $1 billion in federal funding and result in penalties of up to 10 percent for each violation. While this bill specifies that regulations required to comply with federal law or receive federal funding would not be subject to automatic expiration, DOT anticipates that the exempt regulations would still be required to undergo the same review process as non-exempt regulations, and therefore, there exists some ambiguity on the impact on exempt regulations. The existing DOT regulations are essential to be in compliance with federal funding requirements. If the proposed regulation review process either repeals, expires, or delays these regulations, it could result in a significant impact to the agency due to loss of federal funding. To continue daily activities associated with the maintenance and construction of the state highway system, DOT believes its state regulations would need to be codified or exempt from review to remain in compliance with federal laws and regulations.

 

Winthrop University. This bill could impact Winthrop University fines and fees associated with the use of motor vehicles on campus that are used for enforcement and maintenance of parking areas. If the regulation for these fines and fees is removed or if readoption is delayed, Winthrop would need to seek other avenues to fund these activities. For reference, the fines and fees collected pursuant to Winthrop's regulations generate approximately $251,000 per year. The fines and fees revenue are used to fund $79,000 salary and fringe for 1.0 FTE Parking Enforcement Officer, $125,000 salary and fringe for 3.0 FTE Temp Parking Officers, $5,000 for supplies and decals, and $42,000 for lot maintenance. If the regulation authorizing these fines and fees is removed or if readoption is delayed, Winthrop would either need to identify other funding or request General Funds.

 

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

_______

 

 

 

 

 

 

 

 

A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ENACTING THE "SMALL BUSINESS REGULATORY FREEDOM ACT" BY ADDING SECTION 1-23-285 SO AS TO PROVIDE THE SMALL BUSINESS REGULATORY REVIEW COMMITTEE SHALL CONDUCT AN INITIAL REVIEW OF REGULATIONS PENDING REAUTHORIZATION AND MAKE RECOMMENDATIONS TO THE GENERAL ASSEMBLY FOR RETAINING OR REMOVING REGULATIONS, TO PROVIDE IT IS THE DUTY OF THE COMMITTEE WHEN REVIEWING REGULATIONS TO REDUCE THE OVERALL REGULATORY BURDEN ON BUSINESSES BY REDUCING THE NUMBER OF REGULATORY REQUIREMENTS BY TWENTY-FIVE PERCENT, AND TO PROVIDE THE COMMITTEE MAY REQUEST ANY NECESSARY INFORMATION FROM STATE AGENCIES AND TO REQUIRE THE COMPLIANCE OF AGENCIES WITH THESE REQUESTS, AMONG OTHER THINGS; BY AMENDING SECTION 1-23-110, RELATING TO THE PROCESS FOR PROMULGATING REGULATIONS UNDER THE ADMINISTRATIVE PROCEDURES ACT SO AS TO PROVIDE AGENCIES MAY NOT PROMULGATE REGULATIONS ABSENT EXPRESS STATUTORY AUTHORITY AND CITATION TO THE SPECIFIC STATUTORY AUTHORITY, TO PROVIDE FOR EVERY REGULATION AN AGENCY PROPOSES, IT MUST IDENTIFY AND PROPOSE TWO OF ITS REGULATIONS TO REMOVE, TO PROVIDE PERSONS AGGRIEVED BY A REGULATION MAY CHALLENGE THE VALIDITY OF THE REGULATION IN A COURT OF COMPETENT JURISDICTION, AND TO PROVIDE COURTS MAY DECLARE REGULATIONS INVALID UPON FINDING AN ABSENCE OF EXPRESS STATUTORY AUTHORITY TO PROMULGATE; BY AMENDING SECTION 1-23-115, RELATING TO ASSESSMENT REPORTS FOR REGULATIONS SUBMITTED FOR PROMULGATION, SO AS TO PROVIDE ALL REGULATIONS SUBMITTED FOR PROMULGATION MUST INCLUDE ASSESSMENT REPORTS, TO ALLOW LONGER REVIEW PERIODS IN CERTAIN CIRCUMSTANCES, TO PROVIDE DISCOUNT RATES MUST BE JUSTIFIED IF APPLIED IN AN ANALYSIS REPORT, TO PROVIDE PROMULGATING AGENCIES MUST CONDUCT RETROSPECTIVE ASSESSMENT REPORTS IN CERTAIN CIRCUMSTANCES, TO PROVIDE ASSESSMENT CONTENTS MUST BE MADE PUBLICLY AVAILABLE IN A CERTAIN MANNER, TO PROVIDE CERTAIN STANDARDIZED ANALYTIC METHODS AND METRICS MUST BE APPLIED TO ALL REGULATIONS, TO REQUIRE RETROSPECTIVE ASSESSMENT REPORTS BE CONDUCTED WHEN REGULATIONS ARE REVIEWED FOR RENEWAL, AMONG OTHER THINGS; BY AMENDING SECTION 1-23-120, RELATING TO DOCUMENTS REQUIRED TO BE FILED TO INITIATE THE REVIEW PROCESS FOR A REGULATION, SO AS TO REQUIRE THE DOCUMENTS INCLUDE AN AUTOMATIC EXPIRATION DATE, AND TO PROVIDE FOR THE AUTOMATIC EXPIRATION AND PERIODIC REVIEW OF REGULATIONS; AND BY AMENDING SECTION 1-23-380, RELATING TO JUDICIAL REVIEW UPON EXHAUSTION OF ADMINISTRATIVE REMEDIES, SO AS TO PROVIDE REQUIREMENTS FOR JUDICIAL REVIEW OF AGENCY INTERPRETATIONS OF REGULATIONS.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

 

SECTION 1.  This act may be cited as the "Small Business Regulatory Freedom Act."

 

SECTION 2.  Article 2, Chapter 23, Title 1 of the S.C. Code is amended by adding:

 

    Section 1-23-285.  (A) The Small Business Regulatory Review Committee shall conduct an initial review of regulations pending reauthorization and make recommendations to the House and Senate as to whether reauthorization is appropriate. In determining the appropriateness of a reauthorization, the committee shall thoroughly evaluate and consider the impact of the regulation on:

       (1) small business;

       (2) economic development; and

       (3) the agency itself, including the financial impact on the agency.

    (B) It is the duty of the committee when reviewing regulations pursuant to subsection (A) to reduce the overall regulatory burden on businesses by reducing the number of regulatory requirements by twenty-five percent.

    (C) The House of Representatives and Senate shall provide staff support to the committee as needed to carry out its obligations under this section.

    (D) The committee may request additional information from agencies as the committee considers necessary to carry out its obligations under this section. An agency that receives such a request shall respond with the requested information in a timely manner.

 

SECTION 3.  Section 1-23-110 of the S.C. Code is amended by adding:

 

    (E) An agency may not promulgate any regulation unless the agency has been expressly granted the power to do so by a statutory delegation. The regulation must be within the scope of authority specifically granted by the statute, and the agency must cite the specific statutory provision authorizing the regulation. If a statute authorizes promulgation of a regulation, that authority expires three years after the regulation is promulgated and takes effect. After that time, existing regulations may still be updated, in accordance with the Administrative Procedures Act, to conform with enacted legislation or federal law or regulation changes; however, new regulations may not be promulgated pursuant to that statute.

    (F) When an agency proposes a regulation for promulgation, the agency also shall identify and propose the removal of two existing regulations for each regulation the agency proposes to add.

    (G) Any person aggrieved by a regulation may challenge the validity of the regulation on the grounds that the agency lacked express statutory authority to promulgate the regulation. The challenge may be brought in a court of competent jurisdiction, and the court has the power to declare the regulation invalid if it finds that the agency lacked express statutory authority to be promulgated.

SECTION 4.  Section 1-23-115 of the S.C. Code is amended to read:

 

    Section 1-23-115.  (A) All regulations submitted for promulgation must include an assessment report prepared in accordance with the procedures in this article. The assessment report must contain a cost-benefit analysis that clearly demonstrates that the projected benefits of the regulation exceed its projected costs. The assessment report and all documentation, assumptions, methods, and data used must be made publicly available, transparent, replicable, and data-driven. If the cost estimate exceeds one million dollars over five years, then a statement of economic impact provided by the Office of Revenue and Fiscal Affairs also must be submitted concurrent with the proposed regulation. Additionally, upon written request by two members of the General Assembly, made before submission of a promulgated regulation to the General Assembly for legislative review, a regulation that has a substantial economic impact must have an assessment report prepared pursuant to this section and in accordance with the procedures contained in this article.  In addition to any other method as may be provided by the General Assembly, the legislative committee to which the promulgated regulation has been referred, by majority vote, may send a written notification to the promulgating agency informing the agency that the committee cannot approve the promulgated regulation unless an assessment report is prepared and provided to the committee. The written notification tolls the running of the one-hundred-twenty-day legislative review period, and the period does not begin to run again until an assessment report prepared in accordance with this article is submitted to the committee. Upon receipt of the assessment report, additional days must be added to the days remaining in the one-hundred-twenty-day review period, if less than twenty days, to equal twenty days. A copy of the assessment report must be provided to each member of the committee.

    (B) A state agency must submit to the Office of Research and Statistics of Revenue and Fiscal Affairs Office, a preliminary assessment report on regulations which have a substantial economic impactprepare a preliminary assessment report for each proposed regulation in accordance with an Economic Impact Manual published by the Office of Research and Statistics of the Revenue and Fiscal Affairs Office.

       (1) If the cost estimate is equal to or exceeds one million dollars over five years, then the preliminary assessment report must be submitted to the Office of Research and Statistics of the Revenue and Fiscal Affairs Office for review. Upon receiving this report, the office may require additional information from the promulgating agency, other state agencies, or other sources. A state agency shall cooperate and provide information to the office on requests made pursuant to this section. The office shall prepare and publish a final assessment report within sixty days after the public hearing held pursuant to Section 1-23-110. The office shall forward the final assessment report and a summary of the final report to the promulgating agency. The agency must publish this report, including its analysis and all backup documentation, on its website and provide its analysis, and provide the same information to the Small Business Regulatory Review Committee and the relevant House and Senate committees to whom the regulation is referred.

           (2) If the cost estimate is less than one million over five years, the agency must publish its preliminary assessment report, including its analysis and all backup documentation, on its website and provide its analysis, and provide the same information to the Small Business Regulatory Review Committee and the relevant House and Senate committees to whom the regulation is referred.

       (3) In addition to the requirements of item (1), if a cost estimate is equal to or exceeds one million dollars over five years, then a joint resolution approving the regulation by the House of Representatives and the Senate is required.

    (C) The preliminary and final assessment reports required by this section must disclose the effects of the proposed regulation on the public health and environmental welfare of the community and State and the effects of the economic activities arising out of the proposed regulation.  Both the preliminary and final reports required by this section may include:

       (1) a description of the regulation, the purpose of the regulation, the legal authority for the regulation, and the plan for implementing the regulation;

       (2) a determination of the need for and reasonableness of the regulation as determined by the agency based on an analysis of the factors listed in this subsection and the expected benefit of the regulation;

       (3) a determination of the costs and benefits associated with the regulation and an explanation of why the regulation is considered to be the most cost-effective, efficient, and feasible means for allocating public and private resources and for achieving the stated purpose;

       (4) the effect of the regulation on competition;

       (5) the effect of the regulation on the cost of living and doing business in the geographical area in which the regulation would be implemented;

       (6) the effect of the regulation on employment in the geographical area in which the regulation would be implemented;

       (7) the source of revenue to be used for implementing and enforcing the regulation;

       (8) a conclusion on the short-term and long-term economic impact upon all persons substantially affected by the regulation, including an analysis containing a description of which persons will bear the costs of the regulation and which persons will benefit directly and indirectly from the regulation;

       (9) the uncertainties associated with the estimation of particular benefits and burdens and the difficulties involved in the comparison of qualitatively and quantitatively dissimilar benefits and burdens.  A determination of the need for the regulation shall consider qualitative and quantitative benefits and burdens;

       (10) the effect of the regulation on the environment and public health;

       (11) the detrimental effect on the environment and public health if the regulation is not implemented.  An assessment report must not consider benefits or burdens on out-of-state political bodies or businesses.  The assessment of benefits and burdens which cannot be precisely quantified may be expressed in qualitative terms.  This subsection must not be interpreted to require numerically precise cost-benefit analysis.  At no time is an agency required to include items (4) through (8) in a preliminary assessment report or statement of the need and reasonableness;  however, these items may be included in the final assessment report prepared by the office.

    (D) All documentation, assumptions, methods, and data for the assessment report must be published on a publicly accessible website and, where relevant, in a machine-readable format made readily available to the public, including any supporting calculations, documents, data, databases, or data tables so that the results of the analysis can be replicated. Uncertainties pertaining to these estimates must be reported.

       (1) Standardized analytic methods and measures must be applied to all regulations. These standards must be updated in accordance with best practices and predictive success. Updates to standards must be approved by the Office of Revenue and Fiscal Affairs. Analysis techniques and methods may not vary between rules. Any variation must be justified and approved by the Office of Revenue and Fiscal Affairs.

       (2) An agency may include longer periods of review but must, at a minimum, provide a cost-benefit analysis that projects the first five years after the regulation goes into effect.

       (3) Use of a discount rate must be justified if applied to the analysis. If used, the agency must also provide an analysis without the use of discount rates.

       (4) When a regulation is reviewed for renewal, a retrospective assessment report must be conducted and a comparison made between the initial projected assessment report and the retrospective assessment report. When the projected results approximate the actual results, the assumptions and methods of the projected assessment report must be incorporated into the standards for assessment reports and used for similar regulations.

    (D)(E) If information required to be included in the assessment report materially changes at any time before the regulation is approved or disapproved by the General Assembly, the agency must submit the corrected information to the office which must forward a revised assessment report to the Legislative Council for submission to the committees to which the regulation was referred during General Assembly review.

    (E) An assessment report is not required on:

       (1) regulations specifically exempt from General Assembly review by Section 1-23-120;  however, if any portion of a regulation promulgated to maintain compliance with federal law is more stringent than federal law, then that portion is not exempt from this section;

       (2) emergency regulations filed in accordance with Section 1-23-130;  however, before an emergency regulation may be refiled pursuant to Section 1-23-130, an assessment report must be prepared in accordance with this section;

       (3) regulations which control the hunting or taking of wildlife including fish or setting times, methods, or conditions under which wildlife may be taken, hunted, or caught by the public, or opening public lands for hunting and fishing.

 

SECTION 5.  Section 1-23-120 of the S.C. Code is amended to read:

 

    Section 1-23-120.  (A) All regulations except those specifically exempted pursuant to subsection (H) must be filed with Legislative Council for submission to the General Assembly for review in accordance with this article;. However, a regulation mustmay not be filed with Legislative Council for submission to the General Assembly more than:

       (1) one year after publication of the drafting notice initiating the regulation pursuant to Section 1-23-110, except those regulations requiring a final assessment report as provided in Sections 1-23-270 and 1-23-280; or

       (2) three years after the effective date of the statute that specifically authorized the regulation.

    (B) To initiate the process of review, the agency shall file with the Legislative Council for submission to the President of the Senate and the Speaker of the House of Representatives a document containing:

       (1) a copy of the regulations promulgated;

       (2) in the case of regulations proposing to amend an existing regulation or any clearly identifiable subdivision or portion of a regulation, the full text of the existing regulation or the text of the identifiable portion of the regulation; text that is proposed to be deleted must be stricken through, and text that is proposed to be added must be underlined;

       (3) a request for review;

       (4) a brief synopsis of the regulations submitted which explains the content and any changes in existing regulations resulting from the submitted regulations;

       (5) a copy of the final assessment report and the summary of the final report prepared by the office pursuant to Section 1-23-115. A regulation that does not require an assessment report because the regulation does not have a substantial economic impact must include a statement to that effect. A regulation exempt from filing an assessment report pursuant to Section 1-23-115(E) must include an explanation of the exemption;

       (6) a copy of the fiscal impact statementpreliminary assessment report prepared by the agency as required by Section 1-23-110;

       (7) a detailed statement of rationale which states the basis for the regulation, including the scientific or technical basis, if any, and identifies any studies, reports, policies, or statements of professional judgment or administrative need relied upon in developing the regulation;

       (8) a copy of the economic impact statement, as provided in Section 1-23-270(C)(1)(a);  and

       (9) a copy of the regulatory flexibility analysis, as provided in Section 1-23-270(C)(1)(b); and

       (10) a schedule for the automatic expiration of the regulation in accordance with subsection (J).

    (C) Upon receipt of the regulation, the President and Speaker shall refer the regulation for review to the standing committees of the Senate and House which are most concerned with the function of the promulgating agency. A copy of the regulation or a synopsis of the regulation must be given to each member of the committee, and Legislative Council shall notify all members of the General Assembly when regulations are submitted for review either through electronic means or by addition of this information to the website maintained by the Legislative Services Agency, or both. The committees to which regulations are referred have one hundred twenty days from the date regulations are submitted to the General Assembly to consider and take action on these regulations. However, if a regulation is referred to a committee and no action occurs in that committee on the regulation within sixty calendar days of receipt of the regulation, the regulation must be placed on the agenda of the full committee beginning with the next scheduled full committee meeting.

    (D) If a joint resolution to approve a regulation is not enacted within one hundred twenty days after the regulation is submitted to the General Assembly or if a joint resolution to disapprove a regulation has not been introduced by a standing committee to which the regulation was referred for review, the regulation is effective upon publication in the State Register. Upon introduction of the first joint resolution disapproving a regulation by a standing committee to which the regulation was referred for review, the one-hundred-twenty-day period for automatic approval is tolled. A regulation may not be filed under the emergency provisions of Section 1-23-130 if a joint resolution to disapprove the regulation has been introduced by a standing committee to which the regulation was referred. Upon a negative vote by either the Senate or House of Representatives on the resolution disapproving the regulation and the notification in writing of the negative vote to the Speaker of the House of Representatives and the President of the Senate by the Clerk of the House in which the negative vote occurred, the remainder of the period begins to run. If the remainder of the period is less than ninety days, additional days must be added to the remainder to equal ninety days. The introduction of a joint resolution by the committee of either house does not prevent the introduction of a joint resolution by the committee of the other house to either approve or disapprove the regulations concerned. A joint resolution approving or disapproving a regulation must include:

       (1) the synopsis of the regulation as required by subsection (B)(4);

       (2) the summary of the final assessment report prepared by the office pursuant to Section 1-23-115 or, as required by subsection (B)(5), the statement or explanation that an assessment report is not required or is exempt.

    (E) The one-hundred-twenty-day period of review begins on the date the regulation is filed with the President and Speaker. Sine die adjournment of the General Assembly tolls the running of the period of review, and the remainder of the period begins to run upon the next convening of the General Assembly excluding special sessions called by the Governor.

    (F) Any member of the General Assembly may introduce a joint resolution approving or disapproving a regulation thirty days following the date the regulations concerned are referred to a standing committee for review and no committee joint resolution approving or disapproving the regulations has been introduced and the regulations concerned have not been withdrawn by the promulgating agency pursuant to Section 1-23-125, but the introduction does not toll the one-hundred-twenty-day period of automatic approval.

    (G) A regulation is deemed withdrawn if it has not become effective, as provided in this article, by the date of publication of the next State Register published after the end of the two-year session in which the regulation was submitted to the President and Speaker for review. Other provisions of this article notwithstanding, a regulation deemed withdrawn pursuant to this subsection may be resubmitted by the agency for legislative review during the next legislative session without repeating the requirements of Section 1-23-110, 1-23-111, or 1-23-115 if the resubmitted regulation contains no substantive changes for the previously submitted version.

    (H) General Assembly review is not required for regulations promulgated:

       (1) to maintain compliance with federal law including, but not limited to, grant programs;  however, the synopsis of the regulation required to be submitted by subsection (B)(4) must include citations to federal law, if any, mandating the promulgation of or changes in the regulation justifying this exemption. If the underlying federal law which constituted the basis for the exemption of a regulation from General Assembly review pursuant to this item is vacated, repealed, or otherwise does not have the force and effect of law, the state regulation is deemed repealed and without legal force and effect as of the date the promulgating state agency publishes notice in the State Register that the regulation is deemed repealed. The agency must publish the notice in the State Register no later than sixty days from the effective date the underlying federal law was rendered without legal force and effect. Upon publication of the notice, the prior version of the state regulation, if any, is reinstated and effective as a matter of law. The notice published in the State Register shall identify the specific provisions of the state regulation that are repealed as a result of the invalidity of the underlying federal law and shall provide the text of the prior regulation, if any, which is reinstated. The agency may promulgate additional amendments to the regulation by complying with the applicable requirements of this chapter;

       (2) by the state Board of Financial Institutions in order to authorize state-chartered banks, state-chartered savings and loan associations, and state-chartered credit unions to engage in activities that are authorized pursuant to Section 34-1-110;

       (3) by the South Carolina Department of Revenue to adopt regulations, revenue rulings, revenue procedures, and technical advice memoranda of the Internal Revenue Service so as to maintain conformity with the Internal Revenue Code as defined in Section 12-6-40;

       (4) as emergency regulations under Section 1-23-130;

       (5) regulations exempt under subsection (J)(6).

    (I) For purposes of this section, only those calendar days occurring during a session of the General Assembly, excluding special sessions, are included in computing the days elapsed.

    (J) Each state agency, which promulgates regulations or to which the responsibility for administering regulations has been transferred, shall by July 1, 1997, and every five years thereafter, conduct a formal review of all regulations which it has promulgated or for which it has been transferred the responsibility of administering, except that those regulations described in subsection (H) are not subject to this review. Upon completion of the review, the agency shall submit to the Code Commissioner a report which identifies those regulations:

       (1) for which the agency intends to begin the process of repeal in accordance with this article;

       (2) for which the agency intends to begin the process of amendment in accordance with this article;  and

       (3) which do not require repeal or amendment.Automatic Expiration and Periodic Review of Regulations:

       (1) All administrative regulations expire on January first of the eighth calendar year after their effective date unless readopted pursuant to this section, except as detailed in item (6).

       (2) Prior to expiration, an agency with authority over the regulation that desires to maintain the regulation must readopt the regulation pursuant to the process specified in Section 1-23-110, except for regulations subject to item (6). The readoption process cannot begin more than two years prior to the regulation's expiration.

       (3) An amendment to a regulation through subsequent rulemaking does not affect the regulation's expiration date, unless the amendment completely eliminates and readopts the regulation. In such cases, the regulation's new expiration date becomes January first of the fifth calendar year after its effective date.

       (4) When conducting analyses required under Section 1-23-110 during the readoption of a regulation, the agency must use actual impacts and costs as the basis for any calculation rather than estimated impacts and costs.

       (5) Exemptions:

           (a) The following regulations are not subject to automatic expiration:

               (i) regulations required to comply with federal law or receive federal funding;

               (ii) regulations created with grants of rulemaking authority under the South Carolina Constitution;

               (iii) regulations created by an agency that is directly managed by an elected official;

           (b) A regulation exempt from automatic expiration under subitem (a) must still undergo the review as required for nonexempt regulations under the readoption process, but its renewal is not a subject for consideration because of its exempt status. For an exempt regulation being reviewed, the agency shall provide documentation to the Small Business Regulatory Review Committee and the relevant House and Senate committees just as it would for regulations submitted for the readoption process, including a retrospective assessment, its analysis and all backup documentation, and a statement of economic impact received from the Office of Revenue and Fiscal Affairs, if applicable.

           (c) regulations for which an agency is seeking an exemption pursuant to this item must have been adopted by joint resolution of the House and Senate and this exemption must be clearly delineated in the regulation.

       (6) By joint resolution, the House and Senate may grant extensions totaling no more than 365 days postponing the expiration date upon a written request by the agency. In the agency's written request, the agency must explain why it cannot readopt the regulation under the time allotted and why the expiration of the regulation would harm the public health, safety, or welfare. Extensions do not affect subsequent expiration dates. Reviews under item (5) cannot be granted extensions.

       (7) A regulation is deemed repealed if it has not been readopted pursuant to this section by its expiration date, excluding regulations exempt from automatic expiration.

       (8) The initial expiration dates for existing regulations shall be set by the Small Business Regulatory Review Panel and shall occur between the second and eighth calendar years after the effective date of this section.

    (K) Nothing in this subsection (J) may be construed to prevent an agency from repealing or amending a regulation in accordance with this article before or after it is identified in the report to the Code Commissioner.

 

SECTION 6.  Section 1-23-380(5) of the S.C. Code is amended to read:

 

    (5)(a) The court may not substitute its judgment for the judgment of the agency as to the weight of the evidence on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, interpretations, inferences, conclusions, or decisions are:

                (a)(i) in violation of constitutional or statutory provisions;

                (b)(ii) in excess of the statutory authority of the agency;

                (c)(iii) made upon unlawful procedure;

                (d)(iv) affected by other error of law;

                (e)(v) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or

                (f)(vi) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

           (b) In interpreting a state agency regulation, the court shall not defer to the agency's interpretation of the statute or rule and instead shall interpret the statute or rule de novo. After applying all customary tools of interpretation, the court shall resolve any remaining ambiguity against increased agency authority.

 

SECTION 7.  This act takes effect on July 1, 2026.

----XX----