Cutting the weeds: Reining in bureaucracy

Small business is the backbone of South Carolina’s economy. 

They, along with their employees and consumers, are increasingly burdened by a plethora of regulation and red tape.  

According to a study done by the National Association of Manufacturers, federal government regulations alone can cost businesses across the country upwards of $12,000 per employee. 

Some regulations may be necessary, however with the combination of vague laws and the principle of judicial deference, regulatory agencies have effectively been given legislative and judicial powers despite being unelected. 

This has prompted the creation of REINS Acts (Regulations from Executive in Need of Scrutiny). While the federal REINS Act has yet to be passed since being introduced nearly 20 years ago, multiple states have already passed their own versions. 

What does a REINS Act do? 

The main goals of a REINS Act are to reduce the overall regulatory burden on businesses and take power away from unelected, seemingly uninhibited regulatory agencies. 

This is done in different ways. 

For example, the federal REINS proposal requires any regulation with an economic impact of at least $100 million each year, to be approved by Congress. These regulations will then expire after 10 years unless Congress decides to extend them. 

Additionally, if an agency implements a major rule without congressional approval, citizens can take legal action. 

State REINS Acts also require legislative approval of major rules, although the dollar amount is different in every state.  

States may additionally include provisions ending the practice of judicial deference, a principle that drastically tips the scale towards the regulatory agency in a court of law. 

What is judicial deference? 

Judicial deference is a legal principle that encourages courts to favor an agency’s definition of their own rule if that rule is deemed “ambiguous.” 

If that sounds contradictory to the idea of an indifferent judiciary, that’s because it is. 

Courts are effectively told to favor agencies. So along with legislative power, regulatory agencies are essentially given de facto judicial power despite being unelected. 

Why would an agency create a clearly understood regulation if ambiguity increases their leverage in court? How are small businesses expected to succeed when legal uncertainty is practically encouraged? 

Judicial deference was primarily established with the Chevron Supreme Court Case in 1984. The courts of some states, including South Carolina, then adopted this framework almost in its entirety. 

On the federal level this has been largely resolved with the recent SCOTUS case, Loper Bright Enterprises v. Raimondo in 2024. Loper overruled the precedent of Chevron deference, requiring judges to exercise their own judgement when ruling on “ambiguous” regulations. 

On the state level judicial bias in the form of judicial deference is still an issue. 

What do other states do? 

There are currently nine states that have already passed REINS-style Acts. 

Most recently, the North Carolina General Assembly overrode Governor Josh Stein’s veto to pass their version. The law requires legislative approval of any regulation costing $20 million or more over a five-year period after implementation. 

Previously in 2018, Arizona became the first state in the country to eliminate the state equivalent of Chevron.  

Arizona courts are now required to interpret regulations themselves and without deference to the regulatory agency. While Arizona does not have an explicit REINS Act, this is a victory for impartiality and a strong blow to judicial bias. 

What would S.C.’s proposal do? 

S.C.’s REINS proposal, the Small Business Regulatory Freedom Act (H.3021), includes these provisions mentioned in North Carolina and Arizona’s versions, but also incorporates additional measures. 

With the aim of reducing the number of regulatory requirements by 25%, it forces agencies to identify and propose two of its own regulations for removal for every newly proposed one. If a proposed regulation will cost at least $1 million or more over five years, it must be approved by the General Assembly. If less, it must be approved by the Small Business Regulatory Review Committee, a new entity established by the bill- made up of volunteer business leaders. 

If South Carolina is a garden, regulations are the weeds. For the state to truly flourish, it cannot be overwhelmed by vague, unquestionable rules that come from unelected bodies and make business confusing and unpredictable.  

It’s time to cut the weeds and fix the system that has allowed them to fester. 

The Small Business Regulatory Freedom Act has passed the House. As the bill moves to the Senate for further consideration, keep an eye out for SCPC’s upcoming full bill analysis, which will help South Carolinians better understand the impact of this proposal. 

Ethan Brawer is a research intern for the South Carolina Policy Council. 

This report may be republished in whole or in part, provided that proper credit is given to the author(s) and the South Carolina Policy Council.