Regulation

Regulations in South Carolina are ostensibly put in place to protect South Carolina citizens, but too often their principle effects include the hindrance of business growth and higher prices. A basic level of governmental regulation for certain professions is expected; however, the General Assembly routinely sees fit to go far beyond this basic level.

Overregulation increases prices by two different mechanisms. First, large or established businesses that can take on the additional costs imposed by regulations without having to shut their doors will still pass on some of these artificial costs to consumers in the form of price increases. Second, some small businesses, startups or potential entrants into industry, will either have to close shop or will be deterred from entering a market if the costs imposed by regulation are too high. This second mechanism reduces the level of competition in any given industry which, will in turn lead to higher prices and lower quality services as remaining business will have less fear of losing customers to a reduced number of competitors. In fact, regulations that restrict entry or drive up costs (such as licensing laws) are often pushed for by existing businesses in an industry who hope to restrict their level of competition.

Finally, we should remember that there is a more effective mechanism than government-imposed regulation by which consumers are protected. That mechanism is reputation. The market ensures that absent governmental favoritism, businesses that have a reputation for poor service and high prices will stagnate or fail while businesses with a reputation for excellent service and low prices will prosper.

Proposed in 2014 Legislative Session

Regulating the Online Sale of Hearing Aids (Filed 2/26/14)

S.1056 effectively prevents non-licensed hearing aid specialists from selling hearing aids through the mail, internet, or ‘other means’. S.1056 also adds in language that will require licensed hearing aid specialists to provide for the fitting, sale, and delivery of all hearing aids. In addition, the bill establishes that if a person wants to purchase hearing aids from a non-licensed seller, they can only do so by obtaining a prescribed recommendation from a licensed hearing aid specialist. This bill violates both the economic liberty and well-being of all South Carolinians, as it prevents individuals from choosing, for themselves, among the many, and often times cheaper, alternatives to hearing aids purchased through licensed hearing aid specialists. This is a classic example of licensing laws run amok, as it serves to protect the economic interests of licensed hearing aid sellers, at the expense of non-licensed sellers and those who purchase hearing aids.

Deregulating Brewpubs and Changing Liquor laws (Filed 2/07/13, Amended 5/27/14)

H.3512, a bill designed to allow the use of coupons in the purchase of alcoholic liquor, to prohibit sale of alcoholic liquor between retail dealers, and to relax regulations currently in place on breweries and brewpubs, was amended in conference committee Tuesday. The bill was amended to include language that would eliminate all current restrictions on the amount of beer breweries can produce and sell on site, including the five hundred thousand barrel limit proposed in S.1230, the “Stone” bill. H.3512 will also allow breweries to purchase and sell other brands of beer for on-site consumption, provided that the beer is purchased through the “three tier system”, or basically through a licensed wholesaler. The bill still contains provisions allowing retail sellers to sell alcohol on Election Day and to offer discounts on alcoholic liquors and other non-alcoholic items, while also prohibiting sales from one retail dealer to another and the sale of alcohol on Christmas Day. Tuesday’s amendments were decent steps toward removing government intrusion in the economy (at least in a small way), as breweries will face fewer restrictions on doing what they do best, brewing and selling their own beer.

Allowing Brewpubs to Brew and Sell more Beer (Filed 4/16/14)  

S.1230 would allow licensed brewpubs to brew up to five hundred thousand barrels of beer annually. Current law restricts brewpubs to brewing no more than two thousand barrels of beer a year. The bill would also change existing statute to allow brewpubs to sell beer they brew to wholesalers. These are overdue reforms that if passed will make South Carolina a more attractive location for large brewers who may wish to open new brewpubs. Repealing the kind of questionable regulations this bill deals with is part of a path to economic growth that doesn’t rely on tax favors for special interests.

Deleting All Hair Braiding Licensure Laws (Filed 4/08/2014)

H.5063 would remove all licensure and registration requirements for those who wish to engage in hair braiding. Licensure requirements like those governing hair braiding help to stifle economic mobility and prevent financial independence for many who wish to use their skills. This would be an excellent change in law that would remove significant barriers to would be entrepreneurs.

Loosening Regulations on Retail Sale Outlets Selling Funeral Merchandise (Filed 4/08/2014)

H.5067 would remove requirements that any retail sales outlet selling funeral merchandise (such as caskets) be licensed/have a permit from the Board of Funeral Services to perform funeral services. In place of a funeral services permit retail sales outlets would register with the board biannually as sale outlets for a $100 fee. This is a laudable attempt to lower both the costs of doing business for entrepreneurs and the price of goods for consumers. This bill also represents a positive mindset change, at least among some legislators, in the regulation of the funeral industry. Regulators have up to this point been intransigent when it comes to reform, despite recommendations from the Governor’s Regulatory Taskforce.

H.5083 (Filed 4/09/2014) would establish regulations for surety bondsman including raising educational requirements from 20 hours to 80 hours.

H.5106 (Filed 4/10/2014) would allow the Department of Social Services to issue deficiency notices and impose penalties on family childcare homes for not complying with statutes or regulations, and for not correcting deficiencies once notified the exist.

H.5116 (Filed 4/10/2014) would raise the minimum fee bail bondsmen must charge for bond from $25 to $100, or 10%, whichever is greater, as well as require a minimum down payment of $100 or 5% for any payment agreement, which cannot be altered and must be paid within 18 months.

Solar Leasing Turned Crony

S.536 originated as a relatively simple bill to allow solar leasing, a process by which customers buy energy from solar panels which are installed by solar leasing companies on their homes/facilities for little to no installation cost. The bill has since been amended with recommendations from solar interest groups and utility industry lobbyists. The new 19 page bill would allow solar leasing (by licensed entities and with an overall cap on the amount of energy generated by solar leasing) and allow existing utilities to apply for cost recovery (government approved rate hikes) for investments made in the renewable energy sector. In short, what started as a common sense reform has turned into yet another way for publicly regulated utilities to bilk consumers out of their money.

More Cost Recovery for Utilities (Filed 4/02/2014)

S.1189 is near identical to the amended version of S.536. Each bill allows a limited amount of solar leasing by companies that hold a certificate from the Office of Regulatory Staff. Each bill also allows utilities to receive more cost recovery (Public Service Commission approved price hikes) when they participate in a “Distributed Energy Resource Program” by buying or making investments in renewable energy. While it is absurd that solar leasing is currently illegal, this bill which purports to change that causes as many problems as it fixes. Solar leasing should be legal without certificates, and the last thing consumers need is more avenues for utility cost recovery.

Sunset Provision for Regulations (Filed 3/25/14)

H.4962 would make it so that all regulations promulgated after July 1 2014 automatically expire five years after their enactment. We’ve reported before that sunset provisions like this proposal are one of the few policies that have been found to have a statistically and economically significant effect in reducing regulation. Currently regulations must be reviewed five years after their enactment but not removed. A sunset provision would make it harder for regulations to carry on through mere inertia. Instead, agencies would have to present the real world costs and benefits of regulations they wish to continue.

Allowing the Importation of Pharmaceuticals from Licensed Foreign Pharmacies (Filed 3/12/14)

S.1113 would allow the importation and dispensation of pharmaceuticals from certain pharmacies without South Carolina permits. Only pharmacies licensed in Canada, the United Kingdom, the Republic of Ireland, the Commonwealth of Australia, or New Zealand would be able to take advantage of this law. This is a common sense reform that would put more sorely needed competition in the pharmaceutical industry to the benefit of consumers.

New Regulations on Dentists and Their Staff (Filed 2/19/14)

S.1036 would place numerous new training and certification requirements on dentists and their staff if their practices perform any procedures which require anesthesia/sedation. The bill also stipulates the exact procedures that must be followed and the equipment that must be available when anesthesia is administered. While it is reasonable to want medical professionals to have appropriate training, that training may not necessarily come through the specific avenues which are required under this bill. And other provisions such as requiring that all dental staff that provide hands on care have CPR and life support training seems a little overboard when patients receiving significant surgery are likely to have multiple individuals present for their care.

The fact is dentists and their staff members already face strong incentives to provide quality care just like all other medical professionals. If a patient is hurt or even dies under the care of a medical professional they can expect a loss of business, potential civil damages, and even possibly criminal punishment. There is no evidence to suggest that dental patients in South Carolina are at great risk in the absence of the law. The primary effect of this law will simply be to drive up the costs of operation for dentists and potentially lower consumer choice by driving some dentists out of business.  Also of note, the bill’s sponsor happens to be a dentist.

Regulating Balconies (Filed 2/20/14)

H.4733 would authorize municipalities and counties to inspect exterior balconies of various residential properties including hotels, apartments, and assisted living facilities to ensure they comply with International Building Code standards every five years. The bill would also allow the Building Codes Council to assess and collect a fee of $5 for each balcony inspected, not exceeding $100 for each building. The owner of properties that fail to correct a balcony considered unsatisfactory will be guilty of a misdemeanor and can be fined $100 for a violation. This is yet another example of government overstepping its authority when it comes to regulation of industry and private property.

Regulating Medication to Benefit Pharmacies (Filed 2/20/14)

H.4737 would mandate that any medication containing ephedrine, pseudoephedrine, or phenylpropanolamine be available for purchase only with a prescription. Pharmacists would store the applicable medications and sell them to those with prescriptions. On its face this is a regulation designed to hinder the production of illegal narcotics as each of the drug components listed above can be used to manufacture methamphetamine. South Carolina already has laws on the books addressing this problem however, as individuals cannot purchase more than a designated quantity of these drugs in a day or month and must provide identification when making their purchase.

Once we consider the source of the legislation it is easy to be suspicious of the true motivations behind the bill. H.4737 was introduced by Kit Spires, a pharmacy owner who has a history of introducing bills related to pharmacies. This bill may or may not make the manufacture of certain narcotics more difficult but it would have two other effects, the desirability of which are highly questionable. First, the bill would likely be a money maker for Spires and other pharmacists by forcing people to purchase certain drugs exclusively at their businesses. Second, this regulation would make it more difficult for sick citizens to get the medication they need.

A Crackdown on Residential Property Renters (Filed 2/04/14)

S.985 provides for the partnership of local jurisdictions and the Department of Revenue (DOR) in order to crack down on individuals receiving rental income from their residential properties without a license and without paying accommodations taxes. DOR and local jurisdictions would share data to find non-compliant renters. Implementing jurisdictions would also include in annual property tax notices material that outlines the legally required taxes that must be collected from tourists renting residential property. A fiscal penalty is provided if a residential property owner renting his or her residence fails to collect the appropriate taxes after receiving notice of the need to do so.

Put simply, this is protectionism. Residential property owners are cutting into larger accommodations businesses revenues by providing the same service. The amount of revenue that the state will be raise by cracking down on these residential property renters is likely minimal, but the crackdown will no doubt serve to reduce the number of residential property owners providing accommodation services thereby freeing up more business for large accommodations businesses. Rather than seeking to stifle small entrepreneurs, the state should applaud them. The state should be questioning the desirability of licensing and specialized taxes, not competition.

Regulating Installation of Blue Colored Head Lamps (Filed 2/6/14)

H.4608 would provide that motor vehicles may be equipped with factory-installed blue colored head lamps, but would also make it illegal for a vehicle owners to install these lamps on a vehicle themselves.  The latter caveat is yet another example of government overstepping its authority when it comes to regulation of industry and private property.

Raising the Minimum Wage (Pre-filed 12-10-13)

H.4400 would raise the minimum wage in South Carolina to $10 an hour. This bill is no doubt intended to help individuals on the lower end of the pay scale but in reality it would do more harm than good. Employers will not pay workers above their ability to produce value. If a worker is producing $7.25 of value an hour for an employer and the law suddenly decrees that all employees must be paid $10 an hour the employer is far more likely to let the employee go then to raise his wage to $10 an hour. Employers will also no longer have incentive to hire new workers who produce less than the mandated wage. The principal result of increasing the minimum wage is not increasing prosperity but rather increasing unemployment particularly among the youth. See our analysis for more details on these effects.

Related: S.959, S.960

Mandating Paid Sick Leave (Pre-filed 12/17/13)

S.906 would mandate that all South Carolina employers provide earned paid sick leave to employees, and outlines what sick leave can be taken for and the rate at which earned sick leave will accrue. While ensuring everyone has paid sick leave may seem like a noble goal, this policy will serve to increase the cost of employees for employers who don’t already offer sick leave. The unintended effect of this policy then will be to cause some employers to either hire fewer employees (reducing employment opportunities) or to pass on this new cost on to employees by reducing other forms of compensation.

Allowing Industrial Hemp Cultivation (Pre-filed 12/17/13)

The United States imports an estimated $2 billion worth of hemp annually from Canada and China, but it’s against the law to grow hemp in this state and 39 others. S.839 would allow South Carolinians to grow hemp, a product of the cannabis plant which is used in producing fiber, oil and seed products such as rope, paper, fuel, construction materials, food, soaps, lotions, clothing and more. The bill distinguishes the growing of hemp from growing marijuana (the cannabis plants cultivated must not contain more THC than allowed by the Controlled Substance Act) and creates a new penalty with a maximum 5 year sentence or $5,000 fine for growing marijuana on property used for hemp production. Although the production of hemp is banned federally as it is not distinguished from marijuana in federal law, states are not required to enforce that law unless they are receiving federal funds to be used specifically for the enforcement of that law. South Carolina would not be violating federal law by allowing hemp production.

Just as many would argue that harsh restrictions on oil and fuel production in the U.S. leaves our country more dependent on foreign oil, the same can be said in the case of hemp—the ban on its production creates the need to import this product from other countries like China who owns a substantial amount of America’s $17 trillion plus debt. It is hard to find the logic behind saying a product can be legally imported, but not legally produced. Moreover, the prohibition on hemp cultivation cuts U.S. citizens and more specifically South Carolinians out of this profitable industry. Our politicians love to tout their record as job creators, and by simply removing government restrictions on the production of a very useful product, a whole new market and industry that didn’t exist before would now contribute to South Carolina’s economy.

And finally, beyond the jobs and economic boost hemp production would provide to South Carolina, this historical cash crop grown by our founding fathers is beneficial to the environment as it can remediate soil damage and absorbs tons of carbon dioxide annually.

(Slightly) Relaxing Liquor License Regulation (Pre-Filed 12/10/13)

H.4399 would allow the issuance of licenses to companies that manufacture or sell liquor within 300 feet of a church, school, or playground, if the owners of these facilities don’t object. The state should not be regulating the placement of these businesses absent its ability to produce compelling evidence that they in themselves generate negative effects for communities. This bill, while it does not completely do away with this regulation, at least loosens it.

S.824 would put more regulations for the approval of construction of modular buildings (including residential and commercial). (Pre-filed 12/10/13)

More Government Power Over Insurance Companies

H. 4351 would force the Department of Insurance (DOI) to create and maintain a profile of each licensed insurance adjuster, agency, broker, company, and producer; each profile would include a plethora of information on the insurance entity, including most importantly, all complaints of violations of the insurance code filed against the licensee by a citizen or initiated by the director. These profiles would be public records subject to FOIA requests, and DOI would have to maintain a database of these profiles online, which would be updated weekly.

Aside from this giving yet another task to a government agency—creating the need for more tax-backed man hours or perhaps new full time government employees to create and maintain this new database—this law would put yet another burden on the private insurance industry. Anyone who runs a business knows that while some complaints are certainly legitimate, many are frivolous, and H.4351 would give state government the power to display these possibly frivolous complaints to the public. Moreover, there are already avenues like the Better Business Bureau, Angie’s List, etc. where people can voice their complaints against private companies. Yes, South Carolina’s FOIA laws are weak, but they’re not made stronger by making more private-sector information open to the public. They’re made stronger by making lawmakers subject to the law.

Regulation: H.4542 would require any surgery involving the ankle be performed in an accredited hospital or ambulatory surgical center. It would also require a podiatrist who performs boney surgical procedures of the ankle to be board-certified or board-eligible by the American Board of Podiatric Surgery.

Proposed in 2013 Legislative Session

H.3417would make interior design a regulated profession.

H.3148 would require anyone who wishes to receive compensation for weaving or braiding artificial hair to be licensed by the State Board of Barber Examiners.

H. 3477 would ban credit card surcharges by sellers in sales, service, and lease transactions.

H.3079 provides highly specific regulations for charitable raffles.

S.256would ensure that regulations submitted to the General Assembly for approval would not be alterable by the General Assembly, and would require an affirmative vote by a majority of members in both General Assembly bodies in order to become law.

S.76 would force real estate brokers and “certain related professions” to carry errors and commissions insurance.

S.310 would add regulations to home building and selling.

H.3235 would create the Deposit Beverage Container Program to encourage recycling.

H.3295 would eventually require all new and existing power lines within municipal boundaries to be buried.

H.3484 would require the Public Service Commission, which regulates public utilities, to get a fiscal impact statement from the State Budget Office before submitting proposed regulation to the General Assembly.

S.348 would mandate that new fireplaces have “tight-fitting flue dampers and outdoor combustion air.”

H.3288 would grant county governments the authority to make laws requiring that property owners keep their lots clear of, “rubbish, debris, and other unhealthy and unsightly material or conditions”.

H.3353would require that owners of All Terrain Vehicles or ATVs apply for and receive a decal and registration from the DMV for their ATVs before they can legally operate them.

S.25 would prohibit nonresident drivers of South Carolina who have their vehicle registered in another state, but have not paid property taxes on the vehicle, from operating the vehicle in our state.

S.277 attempts to regulate music therapy in South Carolina.

H. 3456 would make mobile barber shops legal, provided they get a license from the state, and pay a licensing fee every year.

H. 3554 would limit the amount of beer a brewery could give out/ sell to a single customer in a single day to 64 ounces , and in total (to all its customers in a single day) 288 ounces. It would also limit the alcohol content allowed to be given out to 14%.

S.349 seeks to regulate Appraisal Management companies through a myriad of registration requirements, fees, and other measures.

S.377 provides requirement under which Limited Liability Companies can organize, operate, dissolve, transfer, and convert.

S.399 approves further regulation by the Board of Examiners relating to professional counselors, marriage and family therapists, and psycho-educational therapists.

H. 3726 would give specific regulations over food and beverages served and sold in schools.

H.3539 removes the prohibition of selling alcohol on election days.

S.463 would require insurance producers, adjusters, physical damage appraisers, and bondsmen to provide their email and residential address in order to get a license to practice.

H. 3731 seeks to regulate natural births by creating a licensure requirement for lay midwives to practice.

H. 3146 would require a person who wants to get a Residential Home Builder License to get a fingerprint based background check.

H. 3232 would create a temporary (10 days) license to sell motorcycles at shows. It would cost twenty dollars.

H. 3489 would create a new board called The Board of Clinical Laboratory Science, which would have the power to give licenses to Medical Laboratory Personnel (previously licenses weren’t required for this position).

H. 3320 would require Nursing Homes to carry a minimum liability insurance policy of $100,000.

H. 3322 mandates that upon receiving payment of a loan secured by a mortgage, the mortgagor must apply at least 30% of the payment toward the principle balance of said loan. Failure to do so will result in a penalty.

H. 3831 would make every store which sells “tangible personal goods” have a bathroom that would be made available to customers during business hours upon request.

S.537 would ensure public hearings before a regulation is added or deleted.

S.567 would require any business who sells beer, alcohol, or liquor for on premise consumption, to maintain liability insurance of at least $50,000.

H.4123 would prohibit businesses in Richland County that require a “Retail Dealer License” from opening within 5 miles of another business which offers the same service.

Prohibiting Local Governments from Mandating Employee Benefits

H.3941 would prohibit local governments from establishing, mandating, or requiring employers to provide employee benefits, such as health dental benefits, paid vacation, retirement benefits, etc. There are already too many state mandates and federal mandates (like Obamacare) on employers which create financial burdens and inhibit companies’ abilities to expand, higher more employees, and pay higher wages. There is no reason why local governments need to further expand these mandates.

Licensing Sign Language Interpreters

H.3880 would require the licensure of sign language interpreters and would create a new government board to accomplish this purpose. The need for regulation of this profession and a new bureaucracy to oversee the regulation is dubious at best. Somehow up to this point in time, South Carolina has managed to get by without licensing sign language interpreters, presumably because the power of market regulation in the form of reputation has allowed consumers to select appropriately skilled interpreters. The market and power of reputation should be more than sufficient to weed out unskilled interpreters in the future without the help of a new bureaucracy.

S.627 extends the authority to regulate the transport of “unprocessed forest products” to the Department of Transportation. The Department will now issue permits and related fees to conduct such transportation.