House panel advances big changes to state rulemaking process

State lawmakers — and dollars and cents — would play a far bigger role in Minnesota's regulatory process under a Republican proposal that cleared its first hurdle Tuesday.

Approved by the House Government Operations and Elections Policy Committee, the bill sponsored by Rep. Ron Kresha (R-Little Falls) would make sweeping changes to how the state's executive branch agencies establish regulations by requiring that proposed rules deemed to have "substantial economic impact" gain legislative approval.

Rep. Ron Kresha

State law allows dozens of state agencies to create regulations under a multi-step administrative rulemaking process that requires public comment periods and public meetings to receive input.

The bill, referred to the House Civil Law and Data Practices Committee, would introduce additional legislative review on proposed rules likely to result in an annual negative impact of $5 million or more to the state's private sector economy; cause a significant jump in consumer costs; adversely impact competitiveness; or increase compliance costs by more than $25,000 for any business with fewer than 50 employees.

The bill, HF1261, would impact the procedure used by state agencies to set rules governing a wide range of issues, including water and air standards, fire codes and outdoor recreation regulations.

Kresha painted the legislation as a nonpartisan issue.

"This is a conversation that has been going on a long time," he said of finding a way to improve the state’s administrative rulemaking process. "There is no 'us vs. them.' There's just 'us' and we're trying to figure it out."

Critics, though, said the bill would add an additional layer of government, slow the rulemaking process and undercut the autonomy of state regulatory agencies.

"This is a very limited view of rulemaking if we only look at one side of the ledger, only look at costs," said Kirk Koudelka, an assistant commissioner with the Pollution Control Agency.

A companion, SF1329, sponsored by Sen. Kent Eken (DFL-Twin Valley), awaits action by the Senate State and Local Government Committee.

Sets up new process

State agencies post proposed rule changes and open 60-day public comment periods under the state’s existing rulemaking process. That period is followed by further opportunities for public input at public hearings, but there is no direct legislative input in the process.

The crux of HF1261 proposes that before giving notice to adopt a rule — kicking off the established public process — the agency must determine if the proposed regulation has a substantial economic impact. If calculated that it would, a panel established by the legislative auditor would convene to conduct an economic impact analysis to be provided to the state agency proposing the rule before public comment could begin.

If ultimately determined a proposed rule has substantial economic effect, as defined by Kresha’s bill, it could not take effect until passed by the Legislature and signed into law.

‘Stop rulemaking process in tracks’

Supporters of the proposed changes say it would help bring more legislative oversight to a labyrinth administrative rulemaking process and force the state to take dollars and cents into account when drawing up new regulations.

Rep. Cindy Pugh (R-Chanhassen) said she was shocked to discover the large number of state agencies with rulemaking powers and that the rules they create “hold the weight of law.”

Lawmakers, she said, should “move forward with increased Legislative oversight.”

Testifiers and House members critical of the proposal disagreed, saying the bill would slow the rulemaking process, allow economic considerations to take precedence over all others and could invite legal challenges.

"This is a bill that will stop the rulemaking process in its tracks," said Scott Strand, executive director at the Minnesota Center for Environmental Advocacy.

Kresha's bill, he said, would mean fewer public comment periods and make the process less transparent.

"If (agencies) need legislative approval they'll just come to the Legislature in the first place," Strand said.