Sunset Review: When the Regulatory Day is Done

by Julie Pelegrin

Consistently throughout the history of the world, two events have never failed to occur on a daily basis: sunrise and sunset. Having covered regulatory “sunrise” last week, it’s only fitting that we now discuss regulatory “sunset.” Before the General Assembly begins regulating a profession or occupation, it requires a study to ensure that the regulation will be in the public interest. Similarly, once regulatory bodies and functions are created, the General Assembly requires periodic review to ensure that they continue to serve the public interest.

The law requires all advisory boards and the regulatory divisions, boards, and agencies, and some functions, in the Department of Regulatory Agencies (DORA) to repeal based on a schedule specified in the statute. In the common vernacular, this schedule of repeals is called a “sunset” provision, i.e., the sun sets on the agency, board, or function, and it ceases operating. According to DORA’s website, the term “sunset” in reference to this process was actually coined in Colorado in the 1970s. The Colorado Office of Policy, Research and Regulator Reform (COPRRR) within DORA handles the sunset process.

How does it work?

When a new advisory board is created in any department or a new division, board, agency, or function is created within DORA, the new entity or function is scheduled for repeal within 10 years. Approximately two years before that repeal date, COPRRR begins the review process, which includes research, writing, legislation, and rule-making.

Generally, the review process focuses on two issues: 1) Is there a public need for the entity or function; and 2) Is the regulation that the entity or function imposes the least restrictive, consistent with the public interest?

COPRRR must consider several factors in answering these questions. In addition to specifically looking at public safety and interest protections and the necessary level of regulation, the factors include:

  • The entity’s efficiency;
  • The degree to which the entity actually works with and represents the interests of the public and not just the regulated occupation;
  • How the regulations impact the economy and competition within the regulated occupation;
  • Whether the requirements for entering the occupation encourage affirmative action;
  • Whether the regulation takes into account prior criminal history and whether it uses this information to protect the public or to protect the occupation; and
  • Whether administrative and statutory changes are necessary to improve the entity’s operations and better serve the public interest.

In completing the research, COPRRR will collect data; review the pertinent literature, statutes, and rules; and solicit information from and meet one-on-one or in small groups with a wide variety of public and private interested persons. The COPRRR website includes an online comment form that anyone can use to provide input.

When the research is completed, the reviewer writes a sunset report, which must be submitted to the Office of Legislative Legal Services by October 15 of the year before the entity or function is scheduled to repeal. The report generally consists of background information and recommendations for statutory and regulatory changes. The report also recommends whether the entity or function should continue or be allowed to repeal. A division, board, agency or function may be continued for up to 15 years before the next review; an advisory board may be continued indefinitely. If the COPRRR recommends significant statutory or administrative changes, it is more likely to recommend a shorter continuation time to review whether the changes are effective.

The OLLS drafts a bill to implement the statutory recommendations made in the sunset report. The Speaker of the House, in even-numbered years, or the President of the Senate, in odd-numbered years, selects a committee of reference to review the sunset report and the bill draft.

The committee of reference holds a public hearing on the drafted—but not yet introduced—bill and the COPRRR’s report. These hearings usually occur in January soon after the legislative session starts, but may occur before session starts. At the hearing, personnel from the COPRRR present, and the committee typically takes public testimony on, the report and the bill draft. The committee may adopt amendments to the bill draft before deciding whether to approve the bill draft for introduction. The committee must base its decisions concerning the bill on the same factors that the COPRRR considered in making its recommendations.

If the committee approves the bill draft for introduction, the committee chair assigns at least one legislator—who may or may not be a member of the committee—to sponsor the bill. If it’s a House committee of reference that approves introduction of the bill, the bill starts in the House, and the Senate President assigns one or two Senators to be Senate sponsors. If a Senate committee of reference approves introduction of the bill, the bill starts in the Senate, and the Speaker of the House assigns one or two Representatives to be House sponsors. Sunset bills do not count against a legislator’s five-bill limit, but a legislator cannot be the prime sponsor of more than two sunset bills regarding divisions, boards, agencies or functions in a single legislative session.

When a sunset bill is introduced, it must be assigned to the same committee of reference that held the initial sunset hearing on the bill draft. After introduction, sunset bills are like any other bill; they may be amended and they must pass both houses and be approved by the Governor before they can become law. While the bill as drafted must reflect the recommendations in the sunset report, the General Assembly may amend the bill in any manner that fits within the single subject stated in the bill title.

If the committee does not approve introduction of the bill or the sunset bill does not pass, then the repeal takes effect in July or September of the year after the COPRRR issues its report. An advisory board ceases operations immediately upon the repeal date. But the repeal of a division, board, agency, or function actually starts a one-year wind-up period. The entity or function continues to operate just to finish its business until the following July or September when the entity ceases to exist or the function ceases to operate. A license issued or renewed during this wind-up year, and any other outstanding licenses, expire when the entity or function actually ceases.

Think of the wind-up year as the twilight. At the end of the year, the regulatory sun finally drops below the horizon, and everything goes dark. After that, only the General Assembly can make the sun rise again on that piece of government.