Analysis: Bill seeks to modernize South Carolina’s regulatory framework

Brendan Connors

Written by
January 30, 2026

Analysis: Bill seeks to modernize South Carolina’s regulatory framework

The burden of overregulation is one of the largest obstacles preventing South Carolina from reaching its full economic potential. H.3021, also known as the Small Business Regulatory Freedom Act, seeks to limit overregulation and help businesses flourish.

 

Summary

H.3021 reforms state regulatory processes with targeted exemptions to ensure the small number of necessary regulations are kept intact while significantly reducing the total number of regulatory rules. The most impactful change is codifying an end to judicial deference; an outdated tool of judicial review already overturned at the federal level. There are significant changes to the regulatory review process that prevent regulations from persisting without the involvement of elected officials. 

 

Small Business Regulatory Review Committee 

The Small Business Regulatory Review Committee (SBRRC) was created in 2004 to review proposed regulations at their discretion. The SBRRC is made up of 11 small business owners from across the state, with five members appointed by the Governor, three members appointed by the Speaker of the House, and three members appointed by the President of the Senate.  

H.3021 would expand their responsibilities, requiring the SBRRC to conduct an initial review of each regulations pending reauthorization to consider its impact on: 

  • small business; 
  • economic development; 
  • the agency itself, including the financial impact. 

It will be the duty of the SBRRC to reduce the total number of regulatory requirements by 25%, with legislative staff provided to support this effort. After reviewing the regulations, they will make recommendations to the General Assembly on whether the regulations should remain in effect or be repealed. 

 

Statutory delegation 

H.3021 states that state agencies cannot promulgate any regulation without statutory delegation from the legislature, and all regulations must cite the statute that grants authority to the promulgating agency.  

If passed, any existing statutory delegation will expire on July 1, 2037, while any statutory delegation created after July 20, 2026, would expire three years after the stature’s effective date. For both expiration timelines, there are four exceptions: 

  • Emergency regulations, which already have a limit of 90 days. 
  • Regulations required to conform with existing state or federal law. 
  • Compliance with changes to federal laws or regulations. 
  • Regulations required to maintain eligibility for federal grants. 

The authority can be redelegated once it expires, but this rule change requires continued collaboration between the legislature and state agencies to ensure agencies are acting within the authority granted to them by elected officials. 

 

Promulgating regulations 

The bill changes the requirements for agencies promulgating new regulations and readopting existing regulations. In statute, regulations are required to be reviewed by each agency every five-years. This bill would replace that with an automatic expiration after seven years for all new regulations, while the SBRRC will set an expiration date for existing regulations from 2028 through 2034. A regulation is exempt from automatic expiration for the following: 

  • Required to comply with federal law or to receive federal funding. 
  • Created under the authority of the South Carolina Constitution. 
  • Created by an agency directly managed by an elected official. 

All regulations—including those exempt from automatic expiration—must include an assessment report with a cost-benefit analysis covering at least five years that clearly demonstrates that the benefits outweigh the costs. The framework for this cost-benefit analysis will be outlined in a new Economic Impact Manual published by the Revenue and Fiscal Affairs Office (RFA). 

If the projected cost over five years is under $1 million, then the preliminary report is submitted to the SBRRC and the relevant House and Senate committees. However, if the projected cost over five years is equal to or greater than $1 million, then the agency must first submit their preliminary report to RFA, who then prepares an economic impact statement and a final assessment report. This final assessment is then published and sent to the agency for submission to the SBRRC and the relevant House and Senate committees. 

Additionally, any proposed regulation with a five-year projected cost equal to or greater than $1 million requires a bill approving it. 

 

Judicial deference 

One of the most important aspects of this bill is it puts an end to judicial deference, the practice of judges deferring to an agency’s interpretation of their statutes rather than judges interpreting the statutes by their own merit.  

Judicial deference originates from Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., a landmark 1984 Supreme Court case. The Court overturned Chevron precedent in 2024, ended judicial deference at the federal level, but ending state-level deference requires a state-level solution. 

If a citizen is negatively affected by a regulation that they believe exceeds an agency’s express statutory authority, the individual may challenge the validity of the regulation in court. 

This bill will ensure that after state courts have exhausted all customary tools of judicial review, they will resolve any remaining ambiguity against increased agency authority rather than deferring to their interpretation. If the court sides with the plaintiff, then that regulation must be declared invalid.  

The Small Business Regulatory Freedom Act passed the House in 2025 and is pending Senate approval. A Senate Judiciary subcommittee is currently considering the bill. The Senate should pass this bill to protect citizens from the burden of overregulation and allow small business to flourish in our state.