Despite significant regulatory reforms being adopted at the state level over the past session—including multiple states adopting REINS and ending judicial deference to agencies—state efforts to enact regulatory “sunset” and retrospective review laws continue to face significant roadblocks to enactment. Unfortunately, the difficulties these laws have faced are not due to the bills being particularly contentious or partisan—states currently with sunset laws range from California and Colorado to Tennessee and Texas—but instead due to unfounded myths that seem to arise any time states attempt to move sunset laws.
Despite past success in passing sunset laws—16 states currently have a limited regulatory sunset requirement and six states have a comprehensive regulatory sunset requirement—the most recent sunset law was passed a decade ago when West Virginia passed a law in 2016. Last year three states made strong efforts to pass such laws, but all fell short. These states were:
- South Carolina: Despite passing the bulk of the Small Business Regulatory Freedom Act, the state legislature ultimately voted to remove the sunset requirement from the bill. That provision sought to shift state regulations from traditional five-year agency reviews to automatic seven-year expirations unless actively renewed.
- Wisconsin: The legislature considered B. 277, which would provide Wisconsin regulatory agencies with an efficient mechanism to review and remove outdated or duplicative regulations, provide greater oversight of regulatory decisions by elected officials, and provide a mechanism to claw back regulations deemed critical.
- Connecticut: State lawmakers introduced a slate of regulatory modernization bills (including SB 248 and SB 252) targeting expanded, structured agency reviews to eliminate obsolete rules, but neither passed. SB 252 would have created a Regulation Sunset Commission to systematically review existing agency regulations and recommend elimination or amendment of rules that are outdated, duplicative, unnecessary, or overly burdensome.
What Sunset Laws Do—and Why They Are Valuable
For those unaware, regulatory sunset laws typically require regulatory agencies to review their active regulations every so often—say every seven years—to determine whether the regulations they oversee and enforce continue to be necessary and provide an efficient mechanism for those agencies to allow unnecessary or outdated regulations to cease to be active.
This process is valuable for two main reasons. First, it ensures agencies are periodically reviewing whether their regulations are achieving their intended results. Few would question the assertion that major projects require periodical reviews to ensure they are on the right path and achieving the intended outcomes. Yet, few such effective processes exist for regulations. They are promulgated and then stay on the books indefinitely with no mechanism for efficient removal when necessary and with no retrospective review. As such, sunset laws would create a mechanism for periodically reviewing regulations to ensure they are achieving their intended goals, that the science backing the regulation has held up, and that they are still necessary.
Second, sunset laws provide an efficient mechanism for regulatory agencies to repeal—or sunset—regulations that are no longer necessary, are outdated, or have failed to achieve their intended result. In most states and at the federal level, regulators must go through the same time-intensive process to repeal a rule as they do to promulgate a new regulation even though repealing a regulation typically removes a burden rather than impose one (meaning less due process is needed). This fact, coupled with the reality that any new incoming governor or president may only have four years to accomplish their agenda, many administrations choose to tell their agencies to priorities passing the new regulations to further their goals rather than spend the time and money to repeal older regulations.
Sunset laws can allow agencies to let unnecessary regulations to simply cease to be in effect without going through the lengthy and expensive process of repealing them. If the rule is deemed unnecessary or outdated, the agencies can instead simply choose to let them die without any further action needed.
Yet, despite the seemingly commonsense nature of these laws, they continue to receive significant pushback from legislatures across the country and across the political spectrum mainly due to a few myths that can be easily dispelled.
Myths v. Facts of Sunset Laws
While creating a retrospective review process is fairly straightforward—require agencies to periodically look back on whether their regulatory actions have achieved their intended missions and whether the data and assumptions the regulatory actions were based upon held true—it rarely happens due to the following myths.
- Myth 1: Sunsetting must be a blanket sunset that automatically throws out regulatory systems at a specific date that, while perhaps not perfect, may be preferred by the regulated entities.
Many opponents to sunset laws have been convinced that all sunset laws much impose a harsh deadline of a certain number of years, at which point all regulations will just end and only if the agency goes through the entire process of reissuing the regulation—even if the regulations is effective—will the regulation continue to exist. While this is certainly one way for sunset laws to work, it certainly doesn’t have to be.
Instead sunsetting can be very targeted with agencies giving entities impacted by the regulations an opportunity to weigh in on whether to repeal a regulation or not. For example, one regulatory sunset system could provide agencies with a requirement that they review regulations after a period of time, but not require that the regulation automatically sunset at that time. Instead, under this system, only the regulations identified by the agency—perhaps with input from the regulated community—would sunset and those believed to be necessary or preferred by the regulated community would stay on the books.
Alternatively, there is no reason that a sunset procedure could not be reverse engineered so that the agencies can submit proposals for repealing a group of old or unnecessary regulations to the legislature and allow for the legislature to vote for all regulations identified by the agency to be repealed. This plan would not only ensure agencies have an efficient mechanism for repealing outdated or ineffective regulations, but would also create greater transparency as the legislatures vote would ensure anyone who may disagree with the agency’s decisions can raise those concerns with the legislature during a hearing or before any final vote.
While these are only two alternatives to the “automatic sunset” concern that regularly arises when these types of bills are considered, they show that legislatures and the regulated community can work together to develop a sunset procedure that is appropriately tailored for their state, while still maintaining the critical components of sunsetting laws (periodic review and efficient removal mechanism).
- Myth 2: Sunsetting is about arbitrarily repealing regulations and making agencies’ lives harder
Often opponents to sunsetting laws argue that they’re really just intended to repeal any and all regulations and force the agencies to preoccupy their time with reissuing older regulations, so they don’t have the time or resources to issue new regulations.
As noted above, that does not need to be the case since sunsetting opportunities for agencies can be helpful because it often takes the same time and resources to repeal a rule as it does to promulgate a new one. Sunsetting laws can allow agencies to repeal old rules quickly without deprioritizing current needs. Further, there is no reason that sunsetting laws have to be drafted without input from the agencies themselves. Instead, lawmakers can—and probably should—work with their states’ agencies to identify ways that are practical for the agency while still achieving the intended goals.
Ultimately, sunset laws are more about retrospective review than simply gutting regulations. As noted, most important projects require individuals to periodically review their progress to ensure the project stays on track and is achieving its intended results and the the same should be true for regulations. Perhaps most importantly, if the agencies issuing the regulations truly want them to address the problem they say, then they should want to review the rule periodically to see that it is, in fact, doing that and, if not, adjust the regulation to fix the issues preventing it from addressing the problem.
- Myth 3: Sunset laws are almost impossible to enforce without automatic repeals
This is perhaps the myth with the most weight, which is why many sunset laws have automatic sunset requirements. What is going to keep a regulatory agency from simply keeping all of their regulations and ignoring the periodic review requirements if there is no penalty for doing so? This is a valid argument and one that has proven true at the federal level.
The federal Regulatory Flexibility Act—which requires federal agencies to consider the impact regulations have on small businesses—has long required federal agencies to review their rules every ten years to determine whether their assumptions about how a rule would impact small businesses proved true. Yet, so toothless is this requirement, that most federal agencies have simply abandoned the pretense of even trying to conduct the required retrospective review.
However, there is no reason that sunset laws can’t have some penalty for agencies failing to abide by the law’s periodic review requirement. Such penalties could range from the rule automatically ceasing to exist if the agency fails to properly conduct the review to automatic budget reductions to increased legislative oversight.
Graham Owens is a Regulatory Policy Fellow at Americans for Prosperity.
