State regulatory system faces overhaul?

Update 5/6/26: H.3021 has passed second reading on the Senate floor. Upon third reading the House will consider the Senate amendments.

The Senate Judiciary Committee advanced an amended version of H.3021, also called the Small Business Regulatory Freedom Act, which seeks to prevent overregulation from placing an undue burden on small businesses.

The bill as amended includes three major policy directives:

• Regulation Review: Tasks the Legislative Audit Council (LAC) with conducting a formal review of all state regulations every five to eight years based on a schedule they create. Requires state agencies to submit an internal review of their regulations to the LAC with a timeline for implementing changes. The LAC will submit a report to the legislature with regulatory recommendations based on their findings.
• REINS Provision: If the Office of Revenue and Fiscal Affairs finds a regulation that has an estimated economic impact of at least $10 million over five years, it must be approved by a joint resolution in the House and Senate.
• Judicial Deference: Requires courts to interpret statutes independently rather than deferring to agency interpretations of ambiguity (often referred to as “Chevron deference” in federal law), ensuring agencies do not expand their authority through statutory interpretation.

What was removed

The Senate version of H.3021 is substantially different from the version that passed the House unanimously in 2025.

The Small Business Regulatory Review Committee, a volunteer group of 11 small business owners across the state, was initially tasked with reviewing regulations with the goal of reducing the number of regulatory requirements by 25%. The Senate version shifts this responsibility to the LAC, but lacks any language directing a reduction in regulation. The Senate version also removes a provision requiring agencies to identify two regulations to repeal for every new regulation they propose.

Members of the Senate Judiciary Committee made a point of not granting subpoena powers to the LAC during regulatory reviews, citing their own power to subpoena agencies. If the intent is to streamline the regulatory review process on the legislative side, lawmakers should give the LAC the necessary tools to thoroughly review agency regulatory practices. Granting the LAC the power to compel compliance from agencies delaying the regulatory review process would save lawmakers valuable time approving regulations.

The House version of H.3021 also included automatic expiration for regulations and statutory delegations, which authorizes an agency to implement a regulation. This would have required lawmakers to reauthorize nearly all regulations and statutory delegations. In the 1970s, South Carolina tried automatic expiration for statutory delegations, and it caused a backlog that left agencies without statutory authority while they continued acting with assumed authority. However, past issues were caused by statutory delegations expiring, not the actual regulations, yet the Senate version removes automatic expiration for both.

Quick fixes

While the Policy Council has previously supported H.3021 as passed by the House, the Senate amendments depart from the original intent of the bill: reducing regulation.

Lawmakers should make the following changes to ensure South Carolina’s small business owners get the change they deserve:

• Include language directing the LAC to reduce overall regulatory requirements
• Grant subpoena power to the LAC when reviewing regulations
• Reintroduce automatic expiration for regulations

Current state law requires the legislature to review regulations every five years, something they struggle to achieve. While both versions of the bill extend the timeline for regulatory review, the Senate version shifts that responsibility to the LAC without requiring additional action from lawmakers on regulations with an expected five-year cost under $10 million.

This will result in going through the motions of administrative recommendations without compelling the legislature to act any differently on the existing system of overregulation burdening small businesses. Passing H.3021 with automatic regulation expiration will require the legislature to actively uphold or drop regulations.

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.