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Senate Bill 1 would require state agencies to cut 30 percent of regulations within three years, or eliminate two for every new one implemented.
A broad proposal in Ohio to slash state regulations by 30 percent across the board could further tilt the playing field against renewable energy by relaxing rules on utilities and fossil fuels.
Supporters see Senate Bill 1 as a way to create an ideal business environment in the state, while opponents say it would threaten many rules that are essential to protect Ohioans, including environmental rules, regulations for utilities, the state fire code and a host of other requirements.
Utilities and mining companies are expected to be among the biggest winners if the legislation makes it into law. Among other things, the bill could stymie adoption of new environmental rules requiring fossil fuel operations to control emissions more. At the same time, it could relieve fossil fuel plants of some of their current obligations if those rules get eliminated.
“This is an arbitrary reduction that does not get at whether rules are accomplishing a useful purpose. Nor does the bill consider the interplay with federal statutes and rules,” said research director Zach Schiller of Policy Matters Ohio in his March 5 testimony against the bill.
“Overly burdensome regulations are a barrier to that end, and are clearly limiting opportunities for many of Ohio’s businesses,” said co-sponsor Rob McColley, R-Napoleon, when he and Kristina Roegner, R-Hudson, introduced SB 1 on Feb. 12. Both are on the Ohio Senate’s Government Oversight and Reform Committee, which held its third hearing on the bill on March 5.
As introduced, the bill calls for agencies to reduce their “inventory of regulatory restrictions” by 10 percent each year in 2020, 2021 and 2022. If the total 30-percent target isn’t met according to the bill’s schedule, state agencies “may not adopt a new regulatory restriction unless it simultaneously removes two or more other existing regulatory restrictions,” the bill says.
The bill is similar to one passed by the Ohio Senate last year, but which failed to pass in the Ohio House of Representatives. The bill’s two-for-one requirement also resembles a requirement in a January 2017 executive order by Donald Trump.
What counts as a regulatory restriction will depend in part on word use and grammar. Words like “shall,” “must,” “require,” “prohibit” and “may not” would be red flags under the bill. Likewise, the bill warns about the use of indicative tense. That tense is generally used for statements of fact.
The semantic approach apparently comes from the Mercatus Center at George Mason University, which has received funding from the Koch Family foundations and whose board members include Charles Koch. Program manager James Broughel of the center’s regulatory studies program testified in support of SB 1 on Feb. 26.
Broughel’s word use analysis shows that the state lottery commission has the highest number of presumed regulatory restrictions, followed by the Ohio Environmental Protection Agency, which scored 28,266 as of 2018. Ohio EPA rules regulate air emissions, discharges to waterways, spills and other pollution. A broad range of industries is covered, including power plants and various activities relating to coal, oil and gas.
On Broughel’s industry ranking, utilities face the eighth highest number of claimed restrictions, numbering 2,089 as of 2018. Mining comes in tenth place in his top-ten list of affected industries, with 1,734 alleged restrictions. However, the category excludes oil and gas activities, which are subject to additional health, safety and environmental rules. And the Mercatus Center’s other rankings include two categories each for healthcare and agricultural activities.
“The Mercatus study raises as many questions as it answers,” Schiller said. For example, economic growth was supposedly the aim of the Mercatus Center. But “did it bother to check and see if there was a clear correlation between the number of restrictions and gross state product?” he asked.
No doubt some language could be cut from the state’s administrative code, Schiller added. “But a blanket idea that the words ‘shall’ or ‘prohibit’ are somehow bad words; that requiring businesses and residents alike to follow certain rules is bad for business — these are outlandish notions that have no place in legislation.”
For its part, the Office of the Ohio Consumers’ Counsel wants lawmakers to exempt the Public Utilities Commission of Ohio from the bill.
Many PUCO rules “address essential services for Ohioans,” including electricity, heat, water and phone services, said lobbyist Jeff Jacobson, testifying on behalf of the Ohio Consumers’ Counsel. “These regulations can have significant ramifications for Ohioans’ safety, family life and finances, and jobs.
A better approach would be specific legislation aimed at particular concerns, Jacobson continued. In the last legislative session, House Bill 247 would have eliminated electric security plans, which have let utilities add on a range of charges to all customers’ bills. Although HB 247 languished in committee, passing it would have cut many regulatory requirements and protected Ohioans from more above-market charges, Jacobson said.
Likewise, Ohio law requires a wide range of provisions to protect against fire and hazards, said Fire Marshal Michael Kocab on behalf of the Ohio Fire Officials Association and the Northeastern Ohio Fire Prevention Association. SB 1, if passed today, “puts Ohioans — and first responders — at serious risk of injury, or even death,” he testified.
SB 1 could soon be reported out of committee for a full vote by the Ohio Senate. If passed, it would go to the Ohio House of Representatives. If enacted, the bill could face legal challenges.
A challenge to Trump’s two-for-one rule reduction order is currently pending in federal court in the District of Columbia. Judge Randolph Moss initially dismissed the case, but agreed last month to let at least one claim to proceed under an amended complaint.
At issue is whether organizations and individuals can challenge the arbitrary two-for-one rule based on specific injury, rather than hypothetical harm. In 2018, Moss had suggested parties could file challenges to rescissions of individual regulations. The litigation costs of all those individual challenges could be staggering for advocacy organizations, business stakeholders and taxpayers.
Moreover, any rule rescissions in Ohio would most likely have to comply with state administrative law, which generally requires public notice and comment periods for any rulemaking. Those proceedings would likewise impose substantial costs on advocacy groups, business stakeholders and taxpayers funding state agencies.
“Unfortunately, this bill is both impractical and unwarranted,” Schiller told lawmakers. After all, the Ohio Administrative Code (OAC) reflects the laws of the state. “If you want to reduce the OAC by 30 percent, you could accomplish this by repealing 30 percent of the laws you and previous General Assemblies have approved,” he said.