Cutting Red Tape for Businesses with the Small Business Regulatory Freedom Act

Regulatory review and consolidation have become a hot topic in the South Carolina Statehouse, particularly as they pertain to our state’s small businesses. This is welcome, because, in 2022, South Carolina was home to 463,549 small businesses, accounting for 99.4% of the state’s businesses. One effort to ensure our state’s business climate is friendly for small entrepreneurs is legislation called the Small Business Regulatory Freedom Act, which has been filed in both the House and Senate.

In a free market economy, the goal of government regulations should never be to prevent businesses from starting and thriving. However, in the Palmetto State, this could well be the case. Businesses must comply with an extensive code of regulations totaling over 10 million words!

During public testimony on February 18, 2025, in House LCI’s Regulatory Review subcommittee hearing, committee chair Rep. Jeff Bradley (R-Beaufort) (pictured to the left with a stack of business regulations) shared how heavy this regulatory burden has become. He compared business regulations between states, ranging from California’s high 412,000 regulations and Idaho’s low 15,000.

Bradley went on: “SC has 81,000 do’s and don’ts…every single business that goes into business needs an attorney…to figure out what your regulations are and what you are governed by.”

The changes proposed in H. 3021 and S. 254 are could be the cure.

What’s in the Small Business Regulatory Freedom Act

The goal of the Small Business Regulatory Freedom Act is to reduce regulations by 25% and create a sunset provision in the form of automatic expirations that enforce review of business regulations.

Here’s the key changes made through these companion bills:

• Business Owner Review for Regulations: The Small Business Regulatory Review Committee (composed of 11 SC business owners in a volunteer capacity) would conduct an initial review of all regulations pending reauthorization and make recommendations to the House and Senate concerning whether they should be reauthorized.
• Reining in Excess Regulations: State agencies would be limited in the regulations they can propose, with only those statutorily delegated permitted. If a statute authorizes promulgation of a regulation, that authority expires three years after that regulation takes effect, and the statute must be updated for the regulations to continue being allowed.
• Cutting Red Tape: When a state agency proposes a new regulation, they shall also identify and propose the removal of two current regulations (this is HUGE!).
• Challenging Agency Overreach: Citizens will be able to challenge any new regulation if they believe the state agency did not have statutory authority to issue the regulation. The court can find the regulation invalid if this is the case!
• Cost-estimate reports for all proposed regulations: All regulations up for adoption would need to be paired with an assessment report spanning at least five years that demonstrates the proposed regulation’s benefits outweighing projected costs for businesses.
  • All assessment reports and data used would need to be made publicly available.
  • If the cost estimate is greater than or equivalent to$1 million over the span of five years, then the report would need to be submitted to the Office of Research and Statistics in the Revenue and Fiscal Affairs Office for approval. For proposed regulations with cost estimates below $1 million, the promulgating agency would need to make their assessment report available online and brought to the Small Business Regulatory Review Committee.
  • When a regulation is reviewed for renewal, a retrospective renewal report would be required comparing the regulation’s results to the initial projected assessment.
• Automatic Expiration and Periodic Review of Regulations: All regulations would expire on January 1 of the eighth calendar year after their effective date, unless they receive a written extension in the form of a joint resolution from the House and Senate.
  • Regulations not subject to automatic expiration are those required to comply with federal law or funding, created with grants of rulemaking under SC Constitution, or created by an agency directly managed by an elected official (rather than an appointed agency head or board).
  • Once the Small Business Regulatory Freedom Act is signed into law, the Small Business Regulatory Review Panel would set an initial expiration date for existing regulations.
• Regulation Screening: All proposed regulations would be reviewed by the Small Business Regulatory Review Committee, which would provide recommendations to the General Assembly on whether or not to authorize the new regs.

Keep in mind that the regulations affected by this legislation are only those applying to South Carolina businesses and found within

H.3021, sponsored by Representative Bradley, has made it to the House calendar, after passing the Labor, Commerce, and Industry Committee this week.

S.254, sponsored by Senator Tom Davis (R-Beaufort), is currently residing in the Judiciary committee of the Senate.

REINS Act

The REINS Act is proposed federal legislation that helps to monitor the impact of excessive regulations, specifically requiring congressional approval of any new regulation that has an impact of $100 million or more. Across the nation, states have recently been adopting their own REINS-style laws in efforts to ease this regulatory burden, with Kansas passing legislation on April 29, 2024 requiring legislative approval of rules with costs to business of $1 million or more over a five-year period. The Small Business Regulatory Freedom Act draws from this effort, with a focus specifically on those affecting small businesses.

Our Hopes

The Small Business Regulatory Freedom Act cuts the regulatory red tape that has been burdening our state’s businesses for far too long. By adding in greater accountability and review processes, as well as automatic sunsetting of unnecessary regulations, South Carolina can bolster its business climate and ensure that entrepreneurs can thrive in the Palmetto State.