Governor McMaster Signs ‘Small Business Regulatory Freedom Act’ Into Law

South Carolina Governor Henry McMaster has officially signed H. 3021, the Small Business Regulatory Freedom Act, into law. The legislation represents one of the most significant overhauls of the state’s regulatory system in decades, aiming to streamline South Carolina’s code of more than 80,000 rules.

The bill’s passage was heavily championed by grassroots organizations and business advocacy groups, including Americans for Prosperity – South Carolina (AFP-SC) and the National Federation of Independent Business (NFIB). Proponents argue the new law will deliver critical relief to Main Street businesses by increasing accountability and curbing administrative overreach.

Key Pillars of the Legislation

The Small Business Regulatory Freedom Act introduces several major structural changes to how state agencies create and enforce rules:

• The “REINS Act” Mechanism: Under the new law, South Carolina becomes the 15th state to adopt a mechanism modeled after the federal REINS Act. Any proposed agency regulation that carries an estimated economic cost exceeding $1 million over five years will now require an explicit “up or down” vote of approval from the state legislature before it can take effect.

• An End to Judicial Deference: The law codifies an end to the practice where state courts defer to an agency’s own interpretation of a statute. Instead, judges must interpret regulations de novo (afresh). If ambiguity remains after standard judicial review, courts are instructed to rule against increased agency authority.

• Empowering the Small Business Regulatory Review Committee (SBRRC): The 11-member committee, composed of local business owners, will see expanded responsibilities. The SBRRC is tasked with conducting initial reviews of regulations pending reauthorization to evaluate their impact on economic development, small businesses, and agency finances.

• Sunset Provisions & Mandatory Cost-Benefit Reports: State agencies will be required to justify new rules with a rigorous five-year cost-benefit analysis proving that a regulation’s benefits outweigh its economic costs. Furthermore, many new regulations will face an automatic seven-year expiration date unless formally reviewed and renewed.

Diverging Perspectives

Supporters view the law as a necessary course correction to unleash the state’s economic potential.

“Small business owners spend too much time and money complying with regulations that are outdated, unnecessary, or more complicated than they need to be,” said Ben Homeyer, South Carolina Director for the NFIB. “H. 3021 is a big step toward making state government more accountable.”

However, the legislation has faced pushback from environmental and public health advocacy organizations. Critics, such as the Conservation Voters of South Carolina, have raised concerns that the law uses a “blunt approach” to cutting regulations. Opponents argue that automatic sunset clauses and sweeping rollbacks could accidentally dismantle critical protections for the state’s environment, public health, and workplace safety.

Looking Ahead

With Governor McMaster’s signature, state agencies must now adjust to the new, more stringent rulemaking parameters. How smoothly the state transitions to this legislative-heavy approval process remains to be seen, but the law marks a definitive shift in power from unelected state bureaucracies back to the General Assembly.