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Two bills that address the growing burden imposed by Oregon’s regulatory agencies received a hearing Feb. 14 before the Senate Committee on Rules. One bill takes aim at a “moving-target permitting,” a phenomenon in which state agencies require permit applicants to redo costly analyses in response to ever-changing standards. The second would require the production of thorough fiscal-impact statements before agencies adopt administrative rules.

The bills are part of OBI’s Growth and Innovation Agenda, a collection of recommendations developed in consultation with scores of employees throughout the state to address Oregon’s competitiveness crisis.

Senate Bill 42 would require regulatory agencies to provide third-party analyses, supported by substantial evidence, of the fiscal impacts of proposed rules. The impacts would include the potential loss of jobs and raised consumer costs as well as increased fees and significant agency administrative costs.

Such impact statements are simply good governance, OBI Senior Policy Director Sharla Moffett explained to the committee. Much of the state’s policy is set through administrative rules, and these rules have significant effects on the public and regulated entities. Increasingly, however, the preparation of fiscal impact statements has become a “check-the-box” exercise for agencies, which conduct them merely to meet rulemaking requirements.

During the rulemaking process for the Climate Protection Program, which the Department of Environmental Quality (DEQ) implemented as the result of an executive order, an agency contractor predicted a net cost benefit to the state. By contrast, a third-party economic consultant estimated that the effects of the program, including higher energy prices and lost jobs, tax revenue and wages, would cost Oregon nearly $10 billion over the life of the program. The Climate Protection Program was adopted without any attempt to resolve this gaping cost discrepancy.

Senate Bill 38 would prohibit regulatory agencies from requiring permit applicants to comply with regulations not in effect at the time they submit their permits. This is simple common sense. But common sense often doesn’t drive regulatory agency behavior, as the example below, offered by Moffet, reveals.

In 2018, the Legislature created Cleaner Air Oregon, a program designed to protect people living near regulated facilities. In March 2019, a facility was directed to demonstrate compliance with the program. To that end, it began work on complex (and costly) air-dispersion modeling under a tight deadline. The modeling demonstrated that the facility posed no measurable risk to its neighbors.

Almost immediately, though, the DEQ announced that it would change the regulation and subsequently increased the standard for noncancer risks. The facility had to model its emissions a second time, again showing no measurable risk to neighbors.

Then DEQ tightened standards further, requiring the facility once again to conduct complex and costly modeling. And, once again, the modeling showed no measurable risk to neighbors.

By the time the facility received a permit, the moving-target Cleaner Air Oregon process had consumed three years, a quarter million dollars in modeling costs and untold hours of agency staff work. All to determine the absence of risk.

SB 38 would give regulated employers much-needed certainty about the rules in effect at the time they submit applications.

And taken together, SB 38 and SB 42 would improve Oregon’s regulatory environment, whose steady erosion in recent years has tarnished the state’s reputation among employers and placed its economic competitiveness at risk.

Go here to read Sharla Moffett’s full testimony on SB 38. Go here to read her full testimony on SB 42.

Go here to learn more about OBI’s Growth and Innovation Roadmap.