3-18-24 – Kansas Reflector – TOPEKA
Legislation hands attorney general power to suspend rules, regulations and laws
The Kansas House committee’s hearing on a bill creating a “regulatory relief” division in the executive branch of state government began running off the rails Monday as soon as a legislative staff member confirmed the office of Attorney General Kris Kobach would be granted power to suspend laws, regulations and rules for chosen businesses.
Charles Reimer, who serves the House and Senate commerce committees as an assistant revisor of statutes, offered nuts and bolts of House Bill 2821. He said the new division on regulatory overreach would be controlled by Kobach, a Republican. It would be accompanied by an 11-member advisory council appointed, if current political trends held, by Republicans. The panel would vote on which state laws, rules or regulations could be suspended for up to 24 months to benefit specific innovative companies vowing to deliver value to consumers.
The new division would require hiring of more lawyers in the attorney general’s office and the selection of a director of regulatory relief. Under the House version of the bill, a state regulatory agency could argue against approval of a company’s application to be part of the so-called “sandbox” program for cutting-edge businesses. Applications from companies eager to shed the yoke of state government mandate would be exempt from the Kansas Open Records Act. Deliberations of the advisory panel would be exempt from the Kansas Open Meetings Act.
“In a nutshell,” Reimer said, “it provides an opportunity for businesses to have certain regulations and statutes waived so they can provide what the bill describes as an ‘innovative offering’ to consumers of Kansas for a limited time.”
He said the attorney general’s new division also would strive to identify regulations, rules or laws that unnecessarily hampered business growth and were ripe for repeal by legislators and the governor.
Kobach didn’t testify for or against the bill, but it was endorsed by the Kansas Chamber, Americans for Prosperity and other pro-business lobbying organizations. A central advocate for the concept has been the American Legislative Exchange Council, a libertarian political advocacy organization.
Questions about ramifications of the bill were raised by the Kansas Board of Healing Arts due to concern about how health licensing could be weakened and patient care imperiled. There was opposition from the Kansas Sierra Club, which argued one consequence of the bill could be widespread disregard for state environmental regulations related to wildlife, water and soil resources.
Rep. Dan Osman, an attorney and Overland Park Democrat, said the legislative branch of Kansas government was assigned the task of adopting and repealing laws, rules and regulations. The House bill would introduce a structure into the state’s executive branch in which the attorney general held sway over when, where and how long established state laws, rules or regulations would be applied to certain companies, Osman said.
“I don’t consider it to be enforcement,” he said. “I think that that would be more akin to determining which laws exist or don’t exist. Is that a constitutional issue?”
Exploiting loopholes
Champions of the bill recommended the House Commerce, Labor and Economic Development Committee amend it to extend the suspension of regulations, laws or rules for up to three years and eliminate the $250 application fee for a company seeking an exemption from routine oversight by bureaucrats.
It was suggested eligibility be broadened to more or less any businesses in Kansas — not just innovative newcomers — eager for relief from boundaries set by generations of state lawmakers.
“Now you’re touching every business, every regulation, every law that we have in the state,” said Rep. Tom Kessler, a Wichita Republican and member of the House committee. “Businesses are probably going to exploit regulation loopholes to gain a competitive advantage over existing businesses. How can we keep that from happening?”
Rep. Michael Dodson, R-Manhattan, said the legislation created “a little bit of gray area” as to whether companies receiving a waiver from the attorney general’s office could be found liable for civil damages or criminal penalties. There were assurances companies qualifying for participation in the business innovation sandbox couldn’t avoid accountability for misdeeds, but that didn’t end questions and comments along that line of thought.
“This bill does not give anybody immunity,” said Rep. Sean Tarwater, a Stilwell Republican and chairman of the House committee. “If there’s negligence, they’re going to pay.”
Rep. Patrick Penn, R-Wichita, backed up the chairman: “It’s not a get-out-of-jail-free card.”
The process of appointing members of the regulatory relief division’s 11-person advisory council struck Democratic Rep. Stephanie Sawyer Clayton of Overland Park as unfair to Kansans who didn’t support a slate of GOP candidates for the Legislature. Under the bill, Kobach would appoint the regulatory office’s director. That director would appoint nine members of the council, with six from business and three from government.
The final two slots would be filled by appointees of Senate President Ty Masterson and House Speaker Dan Hawkins, both Republicans. The GOP holds a supermajority in both chambers, and flipping to Democratic leadership in Kansas could take decades.
“We don’t have anyone from the Senate minority or the House minority appointing anyone?” Sawyer Clayton said.
Penn, the Wichita Republican who sponsored the bill, said Democrats shouldn’t worry. He said: “I think the implication was that this is political, but I don’t think dollars have a red or blue behind them.”
‘Universal approach’
Eric Stafford, the chief lobbyist for the Kansas Chamber, said he understood why some people had trepidation about Kansas adopting a regulatory sandbox model that was much broader than the narrow, single-industry approach in most states. He said it boiled down to the need for Kansas to provide an incentive, through temporary avoidance of regulations or laws, so businesses would locate in Kansas, play in the state’s innovation sandbox and create emerging markets here.
“We like the universal approach rather than the industry-specific model,” he said. “We fell like this would be a good step in Kansas to strengthen our regulatory climate.”
Michael Austin, a lobbyist with Americans for Prosperity of Kansas, said the legislation would help tackle hidden costs of regulation on Kansas businesses. He said the Kansas administrative regulatory code contained 3.3 million words outlining 73,000 restrictions.
He also said bloated business regulation diminished job expansion in Kansas by holding back small businesses and start-up companies. He pointed to a graph that showed Kansas added jobs from 2012 to 2017, and implied avoidance of government regulation under Republican Gov. Sam Brownback drove those numbers.
He didn’t mention Brownback signed in 2012 an aggressive tax bill that provided an incentive for people to form limited liability companies to avoid paying personal state income tax. That tax program, which caused dangerous reductions in state revenue, was repealed in 2017 by the GOP-led Legislature.
Austin’s chart also depicted a decline in Kansas job formation in 2020 and 2021, which he apparently sought to attribute to excessive government regulation under the state’s Democratic governor. The chart didn’t place in context onset of the COVID-19 pandemic in March 2020, which sent a shock wave through the economy and increased unemployment.
And, ‘innovative offering’
Susan Gile, executive director of the Kansas State Board of Healing Arts, said the House bill could cause problems for the board tasked with licensing and regulating 16 health care professions, including physicians, chiropractors and physician assistants.
She pointed to a portion of the bill allowing a person to gain access to a market by promising to deliver an innovative offering “without obtaining a license, certification, registration or other authorization that might be required by state law.”
“The definition of ‘innovative offering’ needs to be clarified,” she said. “This term is used five times within the bill, but there is no definition provided. What criteria determines whether an offering is innovative, and how is this defined?”
Gile questioned whether sandbox applicants in health care fields would be allowed to deploy personnel without essential educational and professional expertise. If the sandbox lowered requirements below state law, she said, it could interfere with patient protection.
Zack Pistora, who lobbies for the Kansas Sierra Club, said HB 2821 could afford businesses the opportunity to skirt environmental safeguards affirmed by the Legislature. It could unfairly give companies special opportunities to sidestep regulations, laws and rules that other businesses in the same field had to uphold, he said.
“The laws and regulations of Kansas should be enforced impartially and equally for all people and companies in the state. We have our legal structure to protect the environment, public health and well-being of the people of our state. There should not be a mechanism by which some companies or industries in the state can experiment and be exempt from important fundamental safeguards as established by the state, while others cannot,” he said.
Pistora said the state’s natural environment and ecosystems were too precious to be “compromised by near-term business enterprises, particularly because environmental consequences may not be noticeable immediately.”