Regulatory Review Task Force Executive Summary Report

2013

Presented on November 15, 2013

Executive Summary Report

2013

Dear Reader, On behalf of Governor Haley, our South Carolina Legislators and Agencies, and the Regulatory Review Task Force, thank you for taking the time to review the contents of South Carolinas 2013 Regulatory Review Task Force Executive Summary Report. This report represents part of the Haley Administrations continued effort to create lasting change for improving South Carolinas overall business climate and stimulating economic growth. We are committed to working towards a future we know can exista thriving state economy and a government that works for the citizens of South Carolina. Mark Lutz Chairman, Regulatory Review Task Force

State of South Carolina

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TABLE OF CONTENTS
EXECUTIVE SUMMARY .......................................................................................................... 3 Why is regulatory review needed in South Carolina? ............................................................ 3 How is the Administration responding to South Carolina's need? ......................................... 3 Task Force Members............................................................................................................... 4 Task Force Process ................................................................................................................. 5 Report Summary ..................................................................................................................... 5 Task Force Consensus..6 REGULATORY CONTENT RECOMMENDATIONS ........................................................... 7 Department of Agriculture .......................................................................................................... 7 Department of Employment and Workforce............................................................................... 8 Department of Health and Environmental Control ..................................................................... 9 Department of Health and Human Services.............................................................................. 11 Department of Insurance ........................................................................................................... 11 Department of Labor, Licensing and Regulation ...................................................................... 12 Department of Natural Resources ............................................................................................. 15 Department of Revenue ............................................................................................................ 15 Department of Social Services .................................................................................................. 16 Department of Transportation ................................................................................................... 16 ADDITIONAL REGULATORY CONTENT RECOMMENDATIONS .............................. 18 REGULATORY PROCESS RECOMMENDATIONS........................................................... 20 LEGISLATIVE PROCESS RECOMMENDATIONS............................................................ 22 TASK FORCE EXTENSION RECOMMENDATIONS ........................................................ 23

State of South Carolina

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EXECUTIVE SUMMARY
Governor Nikki Haley established the Regulatory Review Task Force (Task Force) by Executive Order 2013-2 (see Appendix A) on February 12, 2013, to evaluate South Carolinas current regulatory burdens on all sizes and types of businesses in the state and propose recommendations to relieve those burdens. The Task Force followed a structured process, as outlined in the Executive Order, which resulted in the creation of a report that consists of two parts: Task Force Recommendations and a Detailed Appendix containing extensive supporting detail. The remainder of this Executive Summary describes the Task Force effort in more detail and takeaways that report readers can expect. DISCLAIMER This report is intended to provide the reader with a strong grounding in the Task Forces process, its assessment of the regulatory environment, and its recommended path forward. This report is not intended to be a comprehensive, stand-alone, and final assessment of every state regulation and process. Why is regulatory review needed in South Carolina? Extensive research confirms that burdensome regulations are a problem for South Carolina small businesses. According to the National Federation of Independent Business (NFIB), government regulations rank in five of the Top 25 problems for small businesses: #4 Uncertainty over government actions #5 Unreasonableness of government actions #16 State and local paperwork #20 Dealing with tax agencies #25 Understanding regulatory environments Other small business concerns cited by the NFIB regarding government regulations include: Environmental regulations Cost of government-required equipment/procedures Health and safety regulations Additional research concludes that many regulations are burdensome for all businesses in South Carolina. This is supported by several statistics, some of which include: South Carolina earned a D for our regulatory review process citing inconsistent legislative review and lax analytical requirements (Source: NYU School of Law Institute for Policy Integrity 2010 report). South Carolina ranks 14th Most Burdensome State for professional licensure (Source: Institute of Justices 2012 License to Work study). Dozens of moderate-income occupations require an average of $166 in fees and 422 hours of education for initial licensure. The Department of Labor, Licensing and Regulation has issued a 2012 report that identifies regulatory schemes that are more restrictive than necessary to protect the health, safety, or welfare of the public. How is the Administration responding to South Carolinas need? Governor Haleys Executive Order takes a comprehensive view of state regula tions and regulatory processes. It provides for an independent assessment not influenced by regulating
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agencies, legislative committees, or the Governors Office itself. The Task Force kept that independent mindset front and center in all of its work. At the core of the Task Force effort is a series of reports prepared by target state agencies. Those reports ensure that each agency accomplished its statutory obligation to conduct a five-year review and promote an inward focus on regulatory review geared towards reducing obstacles to economic development. The second focus of the Task Force effort involves encouragement of the business and regulated communities to participate in the regulatory review process. Being among those primarily affected by burdensome regulations and processes, participation of these groups can provide the most direct feedback on problem areas. Third, it is important to give the general public an opportunity to participate in the regulatory review process as well. Regulations and processes that impede economic development affect all citizens of the state in one way or another. Their input is very important in this overall effort. Finally, there are a number of efforts currently underway that touch on different parts of the regulatory process. The Small Business Regulatory Review Committee, the Office of the Lieutenant Governor, and various groups and associations around the state all touch on different aspects of the regulatory environment. The efforts and activities of these groups are important process inputs. The overall Task Force effort assesses all of these disparate inputs and develops a cohesive set of recommendations that coordinates the regulatory review process in general. Task Force Members The Task Force is composed of ten members, including the Chairman of the Small Business Regulatory Review Committee, appointees from the majority and minority leaders of the South Carolina Senate and House of Representatives, representatives from different business sectors, and representative from the conservation community. The Task Force Chairman, appointed by Governor Haley, is responsible for coordinating the overall effort and ensuring that it meets it schedules and objectives. Mark Lutz (Regulatory Review Task Force Chairman) Senator Tom Davis Senate Majority Appointee Senator Brad Hutto Senate Minority Appointee Representative Eric Bedingfield House Majority Appointee Charles Buddy Young (NFIB Appointee) Dan Dennis (Small Business Regulatory Review Committee Chairman) Dana Beach (Environmental Appointee) Phil Waddell (Chamber Appointee) Nick Odom (South Carolina Manufacturers Alliance Appointee) Patrick Caster (Healthcare Appointee)

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Task Force Process The Task Force employed the following process in conducting its efforts and completing its tasks: organized and held five full Task Force meetings; arranged the Task Force Members into five groups of two that would each focus on separate state agencies; reviewed and assessed reports from twenty-two state agencies; solicited and reviewed regulated community and public input submitted electronically; solicited and reviewed regulated community and public input during a series of six Town Hall meetings across the state; invited live expert testimony from Lieutenant Governor Glenn McConnell as well as additional testimony from various regulatory experts from around the state; conducted ongoing follow-up discussions with various state agencies, industry stakeholders, and regulatory experts; and reviewed, assessed, organized and reported on the Task Force recommendations and next step suggestions. Report Summary The Task Force effort can certainly be described as a very large undertaking. Across the twenty-two state agencies, it is estimated that there are approximately 3,122 regulations and perhaps hundreds of additional processes and procedures that have been developed and adopted. In addition, the regulated communities affected by those regulations, policies, and procedures are widely dispersed across the state. As such, the Task Force split its recommendations into the following four categories: Regulatory Content Review & Recommendations Specific regulation modifications were the primary focus of the Task Force. Through all of the data inputs, the Task Force received a wide range of suggestions with varied levels of specificity. The Task Force reviewed and assessed the suggestions and singled out those that it believes should receive the initial attention of the corresponding agencies. Those recommendations appear in this section. However, the Task Force also suggests that the remaining, extensive lists of suggestions included in the Appendices of the report should be part of the ongoing regulatory review process that we hope each agency will continue. Regulatory Process Review Throughout the Task Force effort, it became clear to the Members that a variety of regulatory processes are equally or, perhaps, even more important than specific regulation modifications. The first of the two categories of Regulatory Process Recommendations appear in this section. These refer to processes that the Task Force believes will streamline the regulatory promulgation process and, thus, lead to further reductions in regulatory burdens and obstacles. Legislative Considerations & Recommendations The second category of processes that affect regulatory burden is that which is associated with the Legislative Process. The Task Force believes it is important to make recommendations that streamline those processes, both for the sake of streamlining the statutory component of the regulatory process and, hopefully, reducing the burden the regulatory process has on the Legislative Agenda.

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Task Force Extension Recommendations The final section of the Task Force report focuses on making the Task Force effort live on after delivery of this Final Report. Since this overall effort is so extensive, the Task Force believes it is prudent to consider this as merely a first step in an ongoing process. South Carolinas economy will greatly benefit from a continuous process of regulatory review and modification. That will allow for even deeper exploration of all of the current regulations and agency processes and broaden the number of stakeholders, regulated community members, public participants, and legislators that can and should participate in the process.

Task Force Consensus The Task Force members represented a diverse cross-section of the legislative, business, and environmental communities. As such, complete concurrence on each recommendation was rare. Often, one or more members dissented on specific recommendations. However, in aggregate, the Task Force report represents a solid consensus of the group.

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REGULATORY CONTENT RECOMMENDATIONS

DEPARTMENT OF AGRICULTURE (SCDA) 1. Consolidate dairy regulations under the Department of Agriculture. One outstanding example of potential regulatory streamlining is the merger of dairy and cheese regulating procedures. Dairy producers face multiple hurdles in navigating regulatory requirements necessary to run a successful business. The South Carolina Department of Health and Environmental Control (DHEC) regulates all Grade A facilities in the state that produce, haul, process, package and distribute milk and milk products. The SCDA regulates cheese. The dual agency division of regulatory responsibilities serves as a deterrent to new dairy and cheese business development in the state. This division is inefficient, costly, and unique to South Carolina. Streamline dairy regulations so that the SCDA assumes increased responsibility with regards to regulating Grade A milk. 2. Exempt small egg producers from large operator regulations. S.C. Code Ann. 39-39-110 to 39-39-180 (1976) outlines specific restrictions that apply to all egg manufacturers who sell eggs off of the farm. Those standards include regulations from washing, sterilizing, grading, sorting, and labeling and are overly burdensome for small producers. Amend code to contain the following language for an exemption (from VA code of laws): Producers selling a total of 150 dozen eggs or less per week produced by their own hens, or eggs purchased from other producers not to exceed 60 dozen per week, are exempt from this law provided all eggs are of edible quality and of the quality as represented. 3. Exempt small-scale honey producers from large operator regulations. S.C. Code Ann. 39-25-20 (1976) provides an exemption to small-scale honey producers that allows producers to forego the SCDA permitting process if they sell no more than 400 gallons of honey and sell directly to the end consumer. The Honey Exemption, as currently applied, poses an issue for food hub and small-scale distributors, such as Grow Food Carolina, that work with small-scale honey producers. SCDA should adopt an exemption for honey producers based solely on the amount of honey produced and eliminate the selling only to the end consumer requirement. This would still uphold the purpose of the exemption by retaining the regulations for larger-scale honey producers while allowing small-scale farmers to forego the permitting requirement but still sell through a local distributor. Amend the language to read: Beekeepers producing no more than four hundred gallons (4,800 pounds) of honey annually and who only sell directly to the end consumer are exempt from inspections and regulations requiring honey to be processed, extracted and packaged in an inspected food processing establishment, or from being required to obtain a registration verification certificate (RVC) from the SCDA. However, labels are required on all containers of honey that are sold in South Carolina. Beekeepers shall file for the exemption on forms to be provided by the SCDA.
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4. Exempt small poultry producers from poultry inspection laws for large scale operators. S.C. Code Ann. 47-19-140 (1976) provides criteria for exemptions from the poultry products inspection law. Consider adopting the exemption set forth in S.192 introduced by Senator Verdin (R-Laurens) in January 2013, with the understanding that it is meant to read: A BILL TO AMEND SECTION 47-19-140 OF THE 1976 CODE, RELATING TO EXEMPTIONS FROM THE POULTRY PRODUCTS INSPECTION LAW, TO PROVIDE FOR AN EXEMPTION TO THE PROVISIONS IN THIS CHAPTER FOR CERTAIN POULTRY PRODUCERS OR OTHER PERSONS WHO SLAUGHTER OR PROCESS THE PRODUCTS OF MORE THAN FIVE THOUSAND TURKEYS OR AN EQUIVALENT NUMBER OF POULTRY OF ALL SPECIES IN THE CURRENT CALENDAR YEAR, AND TO MAKE TECHNICAL CORRECTIONS. 5. Correct duplication of regulatory authority over hazardous materials. The recommendations by the SCDA are thoughtful and accurate, but they do not go far enough. Due to the overlap in regulation and authority over hazardous materials by both DHEC and the State Fire Marshals Office, the agency recommends that SC Code Ann. 23-39-10 et al. be repealed as an unnecessary layer of legislation. DEPARTMENT OF EMPLOYMENT AND WORKFORCE (DEW) 1. Unemployment Compensation Process DEW should analyze and review the entire premise of unemployment compensation process management to make it more informative to and business friendly for small businesses. Unlike larger businesses, small business owners typically do not have the means to employ contractors such as TALX or others to advocate for them in pursuing cases of fraud misfilings, etc. If not properly managed, this can adversely affect the experience rate and, ultimately, unemployment tax that must be paid. 2. Rulings with respect to the Status, Liability and Rate Contributions DEW recommends a new draft of R.47-36, Review of Rulings with Respect to the Status, Liability, and Rate Contributions of an Employer or Employing Unit be submitted for the 2014 legislative session to clarify the process, audit procedure, and language regarding the appeals.

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DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL (DHEC) 1. Amend Regulation 61-102, Standards for Licensing Birthing Centers for Deliveries by Midwives Amend R.61-102.H(7)(e). The extra width doors required by this regulation are an economic burden and do not provide any increased safety for the patient. Amend Regulation 61-102.J (2). The cost associated with 50-foot candle power lighting is an economic burden and provides no increased safety for the patient. 2. Amend Regulations pursuant to the South Carolina Solid Waste Policy and Management Act, S.C. Code 44-96-10 through 44-96-470 Amend regulations to provide clarification of the timing of consistency determinations and establishing that authority for zoning rests with local governments, not DHEC. This will enable businesses to locate solid waste management support functions more freely and eliminate the need for a permit holder to obtain two separate permits and two separate consistency determinations for innovative research and development. This recommendation is consistent with what DHEC also recommended. 3. Repeal R.19-450, Permits for Construction in Navigable Waters The current scope of the regulation is overly broad. This results in DHEC evaluating matters that are more properly addressed by other programs, agencies, and political subdivisions that already have similar authority. This recommendation is consistent with what DHEC also recommended. 4. Amend R.61-9, Water Pollution Control Permits and Repeal R.72-101 et seq., R.300 et seq., and R.405 et seq. Amend to help reduce unnecessary burdens on permitted businesses and eliminate redundancy in the regulations. 5. Repeal R.61-62.5, Standard No. 5.1, Best Available Control Technology (BACT)/Lowest Achievable Emission Rate (LAER) Applicable to Volatile Organic Compounds (VOCs) This standard is more stringent than the federal standard and may not be effective in reducing ambient ozone levels. Recent research seems to demonstrate that NOx reduction far outweighs VOC reductions in reducing ambient levels of ozone, which calls into question the efficiency of Standard 5.1 in reducing ambient ozone levels in the state. Repealing Standard 5.1 will allow industry to implement less costly VOC controls. This recommendation is consistent with DHEC recommendations.

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6. Amend R.61-67, Standards for Wastewater Facility Construction Amend this regulation to address issues with the wastewater capacity checkbook and pump and haul operations. This will reduce unnecessary burdens on the regulated community by ensuring permitting consistency, eliminating the need for multiple permits for certain projects, and eliminating the need for additional paperwork to be submitted by a permit applicant. This recommendation is consistent with DHEC recommendations. Additionally, amend current wastewater treatment regulations to provide an exemption for de minimis discharges or prefabricated and commonly used treatment technology. The cost of permitting and reporting associated with the regulations is a significant economic disadvantage to industry. 7. Amend R.61-l07.19, Solid Waste Landfills and Structural Fill Amend this regulation to streamline the permitting process, remove zoning consistency determinations, and allow mining and recycling of wastes within an operation area as a permit modification/standard practice. This recommendation is consistent with DHEC recommendations. 8. Repeal R.61-107.279, Solid Waste Management: Used Oil The requirement for used oil marketers to obtain a permit from the state was in excess of federal requirements. Eliminating this requirement will reduce the administrative burden on businesses. This recommendation is consistent with DHEC recommendations. 9. Repeal R.72-101 through 72-108, Erosion and Sediment Reduction and Stormwater Management Regulations Repealing this regulation will eliminate confusion as well as reduce the administrative burden for the regulated community. Repeal of 72-101 through 72-108 should be followed by revising Reg. 61-9 (Water Pollution Control Permits) to eliminate duplicative regulatory requirements for the control of stormwater runoff during construction activities. This recommendation is consistent with DHEC recommendations. 10. R.72-300 through 72-316. Erosion and Sediment Reduction and Stormwater Management Regulations and amend R. 61-9, Water Pollution Control Permits Repeal R.72-300 through 72-316 and amend R.61-9 to incorporate requirements for post-construction stormwater management and establish a minimum acreage threshold for regulatory requirements, thereby reducing the administrative burden for the regulated community. This recommendation is consistent with DHEC recommendations.

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11. Repeal R.72-405 through 72-445, Standards for Stormwater Management and Sediment Reduction and amend R. 61-9, Water Pollution Control Permits Repeal regulation 72-405 through 72-445 and amend Reg. 61-9 to incorporate the most recently updated technical requirements for post-construction stormwater management. This will allow for improved efficiency and a reduction in the administrative burden for businesses. This recommendation is consistent with DHEC recommendations. 12. Land Use Regulations The Task Force recommends that DHEC conduct a complete review of land use regulations. This review should focus on development of stormwater regulations and plans, NPDES General Permits, buffers, and other rules that apply to these types of situations. Specifically, Recommend regulations be amended to limit the use of NPDES General Permit opt-out clause for builders building on less than ten contiguous lots. Also modify the NPDES 45-foot buffer from sensitive water bodies. (3.2.4(C) (I) (b)) Revise silt fence requirement for home builders to revert to prior enforcement standards rather than the new, Department of Transportation standard requirements. DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS) Review Process Improvement/Claims Processing HHS should review current processes for completing and submitting Edit Correction Forms (ECFs). HHS is hoping to eliminate ECFs by year-end and is reviewing other forms mentioned by commenters, including the Medicaid/hospice forms. HHS should review the process associated with obtaining referrals for therapy services. This process appears to require an overly burdensome back and forth approval mechanism that could be simplified.

DEPARTMENT OF INSURANCE The Task Force received comments that are SC Code-related, rather than regulationrelated, and could be considered outside of the scope of the Task Force effort. However, the Task Force recommends that the Department further review them and consider working with the General Assembly to address the following changes: 1. Eliminate Small Employer Reinsurance Program. Repeal S.C. Code 38-71-1410. This is no longer necessary. Risk assuming carriers take on the full risk of their small group enrollees and are not participating in SERP. 2. Eliminate The South Carolina Health Insurance Pool. Repeal S.C. Code 38-74-10. Due to the creation of Federally-Facilitated Exchanges put into place with the Affordable Care Act, SCHIP is no longer necessary.
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3. Expand the coverage area for wind and hail protection. Amend S.C. Code 38-75-460, Residual Market/Property and Casualty The Wind Pool. By expanding the wind and hail coverage area, greater regulatory stability can be provided. This will give more businesses the opportunity to have the necessary coverage. 4. Streamline Dispute process. Amend S.C. Code 38-90-160, Captives-Arbitration of Insurance Disputes. This change would provide an economic benefit to the captive insurance industry by providing a mechanism for dispute resolution that is simpler and more cost effective than the court system. DEPARTMENT OF LABOR, LICENSING AND REGULATION (LLR) 1. Strengthen LLR Directors Review Capability S.C. Code 40-1-70 is part of the enabling legislation for LLR. Part 9 of that section says "The powers and duties of regulatory boards include, but are not limited topromulgating regulations which have been submitted to the director, at least thirty days in advance of filing with Legislative Council as required by Section 1-1230." The Task Force recommends that a Part 10 be added, with verbiage that reads "the director shall review each submitted regulation for approval or rejection based on whether or not the regulation exceeds statutory authority." 2. Repeal Standards for Residential Builders Commission Repeal S.C. Code 40-59-20(7), 40-59-220(D), 40-59-240(B), and S.C. Code Reg. 106-1. This will eliminate the licensure requirement for specialty contractors and the limitation to 3 specialty registrations at a time. A statutory amendment to include a separate licensing category for HVAC installers and repairers, plumbers, and electricians is also recommended. 3. Amend Modular Housing Standard Amend S.C. Code 23-43-90 and add an additional section. The current regulations require duplicative and unnecessary reviews of house plans by LLR. The current process for plan approval for a modular home is for the manufacturer to design (or contract with someone to design) a house. The house plan then goes to a third party inspection agency for a licensed engineer or architect to review. The inspection agency also inspects the house as it is built in the factory. After a detailed review by a licensed professional at the inspection agency, LLR requires that a copy of the plan be sent to them for a staffer to review before they will issue final approval. This redundancy un-necessarily delays the start of construction and provides no additional value derived from the delay. One of the benefits of modular construction is the shorter time frame which comes from the factory building process, and it is frustrating to manufacturers and homebuyers when LLR takes a few days or up to a few weeks to do a plan review that is not needed.

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4. Amend Contractors Licensing Board Standards Amend S.C. Code 40-11-30: Raise the requirement for licensure from $5,000 to $15,000. This will more accurately reflect the level of cost in todays market. This statute has not been revised since 1998. Amend S.C. Code 40-11-240(B)(4). Remove the requirement for an entity to provide the Agency a reference from a bank or other financial institution in order to qualify for licensure. This regulation also requires a detailed statement of the entitys current financial condition. A bank reference is not necessary to determine financial health of an entity. 5. Amend Board of Physical Therapy Standards S.C. Code 40-45-270 provides a very limited exemption for physical therapy students, physical therapy assistant students, physical therapists, or physical therapy assistants who are employed by the federal government and licensed out-of-state educators to practice in South Carolina without a South Carolina license. Other situations exist in which out-of-state licensed physical therapists need to travel to South Carolina and practice for a limited time period. Such professionals should not have to go through the process of obtaining a license in South Carolina. The Agency recommends amendment of the statute to permit a physical therapist that is licensed in another jurisdiction of the United States or credentialed in another country to practice in South Carolina if that person is providing physical therapy to individuals with an athletic team or organization or a performing arts company temporarily practicing, competing, or performing in the State for no more than sixty days in a year. Further, the Agency recommends amending the statute to permit a physical therapist to practice who is licensed in another jurisdiction of the United States and who enters this state to provide physical therapy during a declared local, state, or natural disaster or emergency, but for no longer than sixty days. The Board may extend the time period in its discretion. 6. Amend Manufactured Housing Board R.79-2 Amend R.79-2 to combine multiple licenses. There are currently nine classifications for licenses regulated by the Board: manufacturer, retail dealer, retail salesperson, retail multi-lot salesperson, apprentice salesperson, show permit/temporary, installer, repairer and contractor. Many of these classifications contain similar or identical characteristics and represent essentially the same type of activity. Combining or bundling multiple classifications into fewer licenses would simplify the licensure process for small business operators. Examples reflective of the dual licensure held by some licensees would include combining contractor with retail salesperson or multi-lot salesperson or combining installer with retail salesperson. 7. Repeal Board of Funeral Service Standards Repeal S.C. Code 40-19-265(C). The Agency made no recommendation regarding the funeral service statutes or regulations but noted a number of public comments supporting the repeal of the permitting requirement for retail sales outlets.

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Repeal S.C. Code 40-19-20(19); S.C. Code 40-19-20(12); S.C. Code 40-19-290; and S.C. Code 40-19-265(C). These regulations define what constitutes a retail sales outlet as it pertains to funeral merchandise, the process one must be follow to receive a permit to operate such an outlet, the criteria one must meet in order to receive a permit, and how financial transactions of such an outlet must be carried out. The Board has used and interpreted these regulations in a manner that appears not related to public safety as much as it might be construed as economic protectionism. The repeal of these regulations should ease the burden for small businesses or individuals that wish to make or sell low budget funeral merchandise. 8. Amend the Board of Cosmetology Amend S.C. Code 40-13-20(1) to remove a rental booth from the definition of salon found in the code. There is no booth renter license clearly outlined within the Cosmetology Practice Act. The Board of Cosmetology has interpreted the definition of a salon, a building or any place, or part of a place or building including, but not limited to a rental booth, in which cosmetology is performed, to require a booth renter to be licensed separately as a salon, essentially a salon within a salon. Again, the booth renters license is in addition to the cosmetology, nail, or estheticians license held by the booth renter. The Board itself has recognized that this person is more properly referred to as an independent contractor. The Task Force recommends that the salon owner be responsible for ensuring that any booth renter has the proper professional license to practice before renting the space. Beyond that, the booth renter should be responsible for making sure that he/she has the proper business and tax licenses required by local and state authorities to operate as an independent contractor. The Board should not have regulatory authority that extends beyond the scope of the actual performance of professional duties of cosmetologists, estheticians, or nail technicians. Amend S.C. Code Reg 35-23(A) and update LLR software to allow for carryover of continuing education hours earned in one license period for a maximum of 2 additional licensing periods. Carrying credits to the next renewal cycle is efficient because it is cost effective for the licensee and time effective for the businesses employing them. A licensee should not lose credits that were paid for because the hours are not permitted to carry over into the next renewal cycle. Amend S.C. Code 40-13-250 to permit a licensee who achieves exemption status to avoid proving the status at every renewal period and require that the licensee seek exemption status as soon as the licensee becomes eligible rather than waiting until the next renewal cycle. Repeal S.C. Code Reg. 35-10(H)(1). Schools operate independently of the Board and should be able to change their rules without Board approval.
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Repeal S.C. Code 35-20(G)(1), which currently requires that the uniform and attire of a licensee assisting a customer be clean and appropriate at all times. This is more appropriately addressed in the workplace between the employer and employee and, ultimately, by the consumer themselves.

DEPARTMENT OF NATURAL RESOURCES Reduce excessive regulation of the commercial fishing industry. Repeal or amend state regulations that exceed federal guidelines, standards or processes to bring state regulation into line with the existing federal regulations. Also repeal or amend any state regulations that exceed federal standards and are not specifically established in state statute. This will simplify the regulatory environment for commercial fishing in the state and assist those businesses in being more compliant with those regulations. DEPARTMENT OF REVENUE (DOR) The current method of operation for DOR is based on a reactionary response to legislation. The DOR reacts to new tax regulations and legislation passed by local political subdivisions by creating the necessary forms and instructions for collecting those taxes and distributing those forms to tax payers. While it is advantageous to have DOR collect all of the sales and use taxes for the state and the many local taxing authorities, it is quite confusing for small businesses. The local political subdivisions frequently enact deadlines, exemptions, and discounts that are inconsistent with state sales and use tax regulations. This can be particularly confusing to small businesses who operate in multiple local political subdivisions. The Task Force recommends the following to help minimize this confusion and simplify the task of reporting and paying sales and use taxes: Amend regulations or pass new legislation to require that all sales and use taxes enacted by any local political subdivision must commence and terminate on dates that are identical to deadlines used for state sales and use taxes. Amend regulations or pass new legislation to require that all sales and use taxes enacted by any local political subdivision must provide the same exemption and discounts as state sales and use taxes. Review sales and use tax regulations to create a level playing field for all retailers who sell to private, non-profit schools. Current regulations exempt out-of-state retailers from use tax, while in-state retailers are subject to sales tax. Remove the exemption for out-of-state retailers who sell to private, non-profit schools. Review sales and use tax regulations to provide equal and consistent outcomes for in-state and out-of-state contractors. Base sales and use tax on standard finished products. The goal should be to prevent inconsistencies in treatment for various raw materials used in fabrication of identical end products. This will ensure a more equitable outcome resulting in the same tax being paid by both in-state and out-of-state contractors. Develop a process that will engage small business owners and other stakeholders in a process to create a more business-friendly method for designing and filing monthly sales tax return forms (ST-23 and ST-389). Particular areas that should

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be addressed are complexity of forms, requirement to submit multiple forms for branch offices of the same business, and ability to complete forms online. DEPARTMENT OF SOCIAL SERVICES (DSS) CHILD CARE DIVISION Child Care Facility Inspections: Amend S.C. Code 63-13-80 to remove references requiring DHEC and the State Fire Marshal to perform health and fire inspections of child care facilities. DSS fire marshals assumed these inspection duties in 2008. The regulation should be amended to reflect the manner in which these inspections are currently performed. Amend the regulation that requires providing businesses with two working days notice of initial and renewal licensing visits to five working days notice. This will allow for a more reasonable time window for small businesses to comply with inspections. Amend the sections of regulations that require that five hours of training be in specified topic areas. Amend regulations that relate to blood borne pathogen training. Current regulations require annual training to maintain certification. This time frame is unnecessarily short. The requirement should be changed to complete retraining every 2 years. DEPARTMENT OF TRANSPORTATION (DOT) During its Regulatory Review Reporting process, DOT received thirteen (13) comments about perceived problems with its encroachment permit process. The encroachment permitting process provides for a detailed engineering review and analysis of a request to perform work within DOT highway rights of way. The review and analysis is necessary to ensure safe operation of the states transportation facilities and protect the publics infrastructure investment. Comments included the following: burdensome application required; length of time for response; length of permit time until expiration; lack of appeals process; requirement for support letters; inconsistency between county DOT offices around the State in handling encroachment permits; formal versus informal processes; inconsistency of approvals for encroachment permits based on employee interpretation of Access and Roadside Management Standards (ARMS); requirement of performance bonds for encroachment permits; restrictive maintenance policy within encroachment permit; unnecessary levels of review; and lack of administrative or regulatory review of the ARMS manual. DOT describes a relatively robust internal committee whereby it believes it has previously addressed these issues. However, the fact that those comments were still rendered and the Task Force received additional, similar comments indicates that many issues still exist. The Task Force recommends that further, more detailed analyses of these issues be addressed by a committee. Issues to be addressed should include: Requirement that the ARMS manual be open to input from the public (including builders and contractors) and subject to administrative and regulatory review. Improvement in the timeliness of the encroachment permitting process.

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Modify the Performance Bond requirements to eliminate duplication with county bonds and reduce the amount required.

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ADDITIONAL REGULATORY CONTENT RECOMMENDATIONS

The following additional regulatory recommendations achieved less agreement among the Task Force members and are listed separately. While the majority is still in favor of recommending them for further exploration, along with the above recommendations, the greater level of dissent among the members should be noted. DHEC-OCRM Recommendations The South Carolina Coastal Management Program Document (CMPD) sets forth requirements for South Carolinas coastal management program (CMP) for the coastal zone, an area defined as Beaufort, Berkeley, Charleston, Colleton, Dorchester, Georgetown, Horry, and Jasper Counties. Statutory authority for the CMPD resides in the Zone Management Act, S.C. Code 48-39-80 et seq. The General Assembly first approved the CMPD in 1979, and DHEC refined the Document in 1993. DHEC also published an excerpt document in 1995. The CMP is currently not efficient because it requires certification of all projects, regardless of size. This is true even for projects that are exempt from an application submittal under other DHEC regulations. For example, a construction project with a disturbed area of 10 square feet is automatically covered under the South Carolina General Construction Permit (CGP) for stormwater discharges. However, the CMP regards this as permit coverage and, therefore, requires a submittal to obtain coastal zone consistency. The program is also inefficient in areas of the eight coastal counties that are not proximate to the coast. For example, the most inland areas of Horry County are 40 miles from the coast and 38 miles to the nearest tidal water. However, these areas are still subject to the same standard as areas near Myrtle Beach. The Task Force recommends streamlining the Document to better allow the regulated community to understand and comply with requirements of the OCRM. The following should be considered: Develop a long term funding mechanism to purchase isolated and other types of freshwater and saltwater wetlands. Revise the Coastal Zone Consistency program to allow for automatic certification of certain small projects. i. Limit the geographic area of the coastal counties subject to the CMP. ii. Reformat the Coastal Zone document to allow for proper regulatory citations (i.e. 61-XX). iii. Remove from the document all inventories and narratives that are informative only or that are covered under other regulation. iv. Revise the excerpt document to reflect only those portions of the program document approved by the legislature. v. Modify the definition of isolated freshwater wetlands from one acre or less to isolated freshwater wetlands of five acres or more. vi. Limit DHEC-OCRM jurisdiction from the critical line seaward.
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vii. Ensure that Section R.72-307C (5) (g) (which states, For activities in the eight coastal counties, additional water quality requirements may be imposed to comply with the SC Coastal Council Stormwater Management Guidelines. If conflicting requirements exist for activities in the eight coastal counties, the SC Coastal Council guidelines will apply) does not provide for guidelines that exceed the guidelines for the other 38 counties. The other 38 counties also have wetland, rivers, lakes, etc. Please note that some of these 38 counties also have slope and grade changes, which in turn give their stormwater velocity. Department of Employment and Workforce (DEW) Amend the Illegal Immigration Reform Act Amend S.C. Code 41-8-20(c) to allow small employers without Internet access to enter into an agreement with DEW to permit the Department to enroll the employer in E-Verify and to conduct employment verification of new hires. This will ease the process by which small businesses that do not operate from a physical address can be compliant with E-Verify requirements. Public Service Commission (PSC) Address third party leasing of alternative energy sources. The PSC should give consideration to amending the Electric Utility regulations to allow third party leasing of alternative energy sources and remove the limit on "net metering." The discussions and negotiations now underway in various committees and subcommittees in the General Assembly are a step in the right direction regarding these potential providers. This refers primarily to wind and solar energy equipment but could apply to any future alternative sources of energy as they became practical and economically viable. By allowing third party leasing, we can potentially create an entirely new source of jobs and economic development in South Carolina.

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REGULATORY PROCESS RECOMMENDATIONS

1. Encourage Regulation Sunsetting The Task Force considered broad regulatory sunsetting suggestions and legislation that have been discussed in the General Assembly. Some Task Force members would support legislation that requires full sunsetting of every state regulation every 5 years, however that did not receive majority support . Many Task Force members recommend strengthening SC Code 1-23-120(J). This statute requires for all regulatory agencies to submit a complete regulatory review similar to the one that participating agencies completed and submitted for inclusion in this Task Force report, to the South Carolina Code Commissioner every five years. It was reported that prior to this years regulatory review pursuant to Governor Haleys Executive Order 2013-02, the majority of regulatory agencies have not conducted these required reviews since the inception of statute. The Task Force recommends that actions be taken to ensure the following: require the Code Commissioner to review every regulatory report submitted pursuant to SC Code 1-23-120(J); allow the Code Commissioner to set follow-up actions pursuant to the agency reports; and create a sanction mechanism, or request the Governor to issue a standing Executive Order, to further ensure that each agency continue its five-year review process as required under the statute. 2. Increase Visibility of Proposed Regulations Too often, the Task Force heard that many small businesses were not aware of impending regulatory changes. In addition to publishing proposed regulations in the State Register, each agency should ensure that its proposed regulations also appear on its website. Some agencies already comply with this suggestion. The Task Force also suggests the following: processes to ensure agency websites offer easy searches for proposed regulations; sign-up processes whereby regulated communities can automatically be notified of relevant regulations; and if economically feasible, a cross-agency database whereby regulated communities can sign up in one place and receive updates on proposed regulations from multiple agencies at once. 3. Increase Permit/License Application Visibility For pending permit/license applications, each agency should offer online status updates for application processing. Some agencies already offer this; however, this capability should be in place statewide.

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4. Eliminate Duplicate Permit/License Requirements It was suggested to the Task Force that there are a considerable number of examples of duplicate permit or license requirements that exist in the state. There are cases where multiple state agencies require similar permits/licenses, overlapping federal standards apply, or where third party professionals are required to certify. For example, manufactured housing plan reviews are still required even though they may have already been approved by an architect. It is recommended that each agency continue its regulatory review to identify duplicative permit/license requirements or establish a mechanism by which the regulatory community can report duplicative requirements that can then be addressed. 5. Automate All Permit and License Applications Some agencies have paper submission forms for their permit/license applications, some have online forms, and some have a mix. Where budgeting allows, each agency should fully automate its permit/license application and review process, e.g. DHEC is exploring such a model at present. This will enhance the usability of each website and enhance the ability for the regulated communities to follow the review process for their applications (see #3 above). 6. Increase Frequency of State Register Publication Currently, publication of proposed regulations in the State Register occurs on a monthly basis and requires several weeks advance submission by each agency. Given todays electronic capabilities, the Legislative Council should incorporate electronic versions of the State Register so agencies can streamline their proposed regulation submissions and regulated communities can have more frequent updates. For example, the Legislative Council should publish the State Register daily in electronic format and monthly in a hard copy compilation. 7. Strengthen the Small Business Regulatory Review Committee (SBRRC) Raise the profile of the SBRCC ongoing work to help foster better interaction between state agencies and the Committee for the benefit of small businesses and the economy of the state. The Task Force agrees with the SBRRC in recommending the following: For issues related to Regulatory Review of proposed or existing regulations, a state agency must respond to a SBRRC inquiry/request within 30 day from receipt of the inquiry/request. As the Committee can ask agencies to examine existing regulations, it can also request an Economic Impact Statement on any active proposed regulation from the time that the regulation is proposed, regardless of the public hearing date, until such time as the request is withdrawn. Consider changing the term Committee to a more proactive name that better conveys the idea of the permanence with which the Committee exists. Some suggestions are the Small Business Regulatory Review Commission and the Small Business Regulatory Review Board.

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LEGISLATIVE PROCESS RECOMMENDATIONS

1. Reduce Agency Regulatory Overreach A key component of reducing the regulatory obstacles to economic development in South Carolina is to ensure that regulations do not exceed statutory authority. At present, the Office of the Lieutenant Governor has begun a process for comparing each promulgated regulation with its enabling statutes. That process is designed to identify regulations which exceed those statutory requirements and return them to the promulgating agencies for review and revision. The Task Force applauds the work by the Lieutenant Governor and his staff and suggests further review of that process. It should be determined whether that work should remain in the Office of the Lieutenant Governor or, instead, transferred to another committee or group and what lessons can be learned from that effort to date. An option for accomplishing the regulation/statute comparison can also be expanding the role of the Legislative Council, as follows: Potentially carry these duties out under the authority of SC Code Ann. 2-1150, which states that the Legislative Council shall make preliminary studies and recommendations upon proposed legislation. However this occurs when so requested by committees or members of the General Assembly. Potentially carry these duties out under the authority of SC Code Ann. 2-1160, which states that the Legislative Council shall organize and supervise operation of research, reference and drafting divisions. If the above 2 citations do not provide appropriate authority for the Legislative Council to take on these duties, this initiative would require a new statutory provision. 2. Require Up/Down Votes in the General Assembly At present, promulgated regulations that do not receive and Up/Down vote in the General Assembly are automatically deemed approved. It has been reported to the Task Force, and the Task Force agrees, that a process should be put in place by which every promulgated regulation receives an Up/Down vote. Task Force Member Representative Eric Bedingfield has pending legislation in the House (H.3128) which suggests a fix for this situation. The Task Force agrees that a resolution is required and H.3128 is a reasonable approach that should be encouraged in the General Assembly. 3. Compare with Federal Regulations Another example of regulatory overreach that impedes economic development is state regulations that exceed federal authority. Where appropriate protections exist, the Task Force recommends that the state work to ensure that no S.C. regulation is more stringent than applicable federal authority, unless specific circumstances are identified to the General Assembly which may prompt other action.

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TASK FORCE EXTENSION RECOMMENDATIONS

To maximize the goals and objectives of Executive Order 2013-2, a series of actions should be undertaken to build upon this initial Task Force effort: explicitly continue the Regulatory Review process; develop a promotional effort to educate the regulated communities on the existence of the program and encourage wider participation; monitor the implementation of the initial Task Force recommendations; review the effectiveness of the regulatory changes suggested by the Task Force; identify best practices among other states that are conducting similar programs; and highlight other impediments to economic development beyond regulatory burdens, such as tax policy, infrastructure, education, etc. To accomplish the above actions, a number of options could be considered and vetted: renew the charter of the current Task Force; transform the current Task Force into an SC Regulatory Compliance & Oversight Commission (RCOC); empanel a standing committee or Task Force for ongoing regulatory reviews and recommendations; broaden the scope of the SBRRC; expand the role of the Lieutenant Governors office in the Regulatory Review process; create a Permit Central that would house all current and promulgated regulations. This would allow for continuous monitoring of potential regulatory overlap and identifying streamlining opportunities; create a business forum, both in person and online, for continuous collaboration and sharing of ideas to promote awareness and identify recurring regulatory issues; and create a neutral board, functioning like a small claims court, that would review regulated community concerns and advocate for resolution in the corresponding state agencies.

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Per the requirements of Section 1-11-425 of the South Carolina Code of Laws, a total of 10 copies of this public document were printed by Apexgraphix at a cost of $119.45 or $11.94 per copy.