Opinion
23-ALJ-30-0300-RH
10-09-2023
South Carolina Department of Motor Vehicles, Proponent, In Re: Self-Insurers
PUBLIC HEARING REPORT
Deborah Brooks Durden, Judge S.C. Administrative Law Court
PROCEDURAL HISTORY
This matter is before the Administrative Law Court (ALC or Court) pursuant to an Agency request regarding Document Number 5228 filed by counsel for the South Carolina Department of Motor Vehicles (Agency, Department, or SCDMV) on August 1, 2023. The Agency proposes to promulgate regulations under Section 90-400. The proposed promulgation would effectively transfer regulations currently housed in Sections 38-121 from the Chapter of the South Carolina Code of Regulations pertaining to the South Carolina Department of Public Safety (DPS) to the Chapter pertaining to the Agency. Further, this promulgation also contains some changes to the former regulations to bring the newly promulgated regulations into alignment with the Agency's current processes for self-insurers.
On September 25, 2023, the Department filed its Statement Confirming Need for Public Hearing and Statement of Need and Reasonableness. During the promulgation process the Department received no public comments and no requests for a public hearing. A public hearing still needed to be held, however, to address one typographical error in the Proposed Regulations as published in the Public Register on August 25, 2023. For that reason, a public hearing was held at the ALC on October 6, 2023. Appearing at the hearing for the Agency were Brandy A. Duncan, General Counsel and Shirley Rivers, Director of Driver Services. No one registered as interested parties.
INTRODUCTION
The regulations at issue in this report concern the application for, and approval of, self-insurer status for political subdivisions and non-political subdivision applicants. Specifically, the statute and associated proposed regulations allow for self-insurer status to be issued to political subdivisions and others so long as they meet certain requirements of financial stability and resources, as well as having a minimum number of vehicles registered in South Carolina. When the Agency was still a part of DPS, it promulgated regulations under Section 38-121 regarding the self-insurer process. 2003 Act No. 51, § 3 created the Agency and transferred all functions, powers, duties, responsibilities, and authority statutorily exercised by the Motor Vehicle Division and the Motor Carrier Services unit with DPS to the Agency. At the time of the split of the Agency from the DPS, the regulations regarding the two agencies were not divided within the South Carolina Code of Regulations. Thus, after discovering this failure to split the regulations regarding the Agency and DPS, following the split of the agencies, SCDMV began a review of all regulations within the DPS Chapter of the South Carolina Code of Regulations to determine what, if any, SCDMV regulations were still contained within the DPS Chapter of the South Carolina Code of Regulations for purposes of evaluating whether the regulations were still needed. For those regulations the Agency determined were still needed, the regulation promulgation process was started. Each regulation identified was grouped topically for promulgation so that similar topics could be addressed in one set of promulgation and dissimilar topics would be addressed separately. These regulations are promulgated pursuant to the authority provided by S.C. Code § 56-9-60, which discusses self-insurers.
STANDARD OF REVIEW
The process for promulgating regulations, or rule-making, is contained in Chapter 23, Title 1 of the South Carolina Code. To promulgate regulations, an agency must give notice in the State Register. S.C. Code § 1-23-110(A)(1). If requested "by twenty-five persons, by a governmental subdivision or agency, or by an association having not less than twenty-five members," a public hearing must be held. S.C. Code § 1-23-110(A)(3). When promulgation is by a single-director agency, an administrative law judge (ALJ) must conduct the hearing. S.C. Code § 1-23-111(A). As the presiding official, the ALJ "shall issue a written report which shall include findings as to the need and reasonableness of the proposed regulation based on an analysis" of factors contained in Section 1-23-115(C). S.C. Code § 1-23-111(B); see also Rule 48, SCALC. These factors include cost and benefit, effect on business or cost of living, effect on employment, source of revenue for implementation, uncertainties of benefit or burden, and the effect on environmental or public health. S.C. Code § 1-23-115(C) (excluding subsection (C)(4) and (C)(8) as stated in Section 111). If the ALJ determines that the proposed regulations are not needed or reasonable, the agency may modify the proposed regulations, promulgate with the report, or terminate promulgation. S.C. Code § 1-23-111(C).
PUBLIC COMMENT
The Agency's General Counsel informed this Court that no one reached out to the Agency with comments regarding promulgation of these regulations following publication of the Notice of Drafting or after publication of the Proposed Regulations. Additionally, no one appeared at the time of the public hearing to comment on the proposed regulations or the proposed amendment to correct a typographical error in the proposed regulations.
DISCUSSION
90-400: Self-Insurers
90-400 sets out the requirements applicants must meet if they voluntarily elect to apply to be self-insured, as well as requirements for maintaining self-insurer status once it has been issued. 90-400 also discusses requirements for applying for a renewal of self-insurer status, including deadlines that must be met for a renewal application. Notable changes from the regulations as currently drafted in the DPS Chapter as opposed to the Agency proposed regulations include: removal of language duplicative of S.C. Code § 56-9-60, ramifications that may occur if a self-insurer utilizing a claims account to qualify for self-insurer status fails to provide the required quarterly bank statements, clarification on what self-insurers must do if their claims account decreases by more than thirty percent in any self-insurer year, as well as the possibility of granting up to ninety days of extension time to self-insurers that timely apply for renewal when the Agency has not completed their review of the application prior to expiration of the prior self-insurer certificate. Additionally, the proposed regulations removed all references to DPS and replaced them with references to the Agency. The substantive changes will bring clarity to the self-insurer program and will also allow for more flexibility during the renewal process.
At the Public Hearing, the Agency did request one change to the Proposed Regulation to address a typographical error contained in the Proposed Regulation as published in the State Register. That is the accidental omission of the word "no" in the final sentence of the Proposed Regulation.
The Court notes that exclusion of the word "no" from this sentence makes the sentence nonsensical and this Court believes any reasonable reader would be aware that this sentence is missing a word.
The Court finds no reason not to implement these changes. There is no obvious cost, burden, or other economic effect to promulgating these regulations with the changes noted above since this is a process the Agency already engages in, based in part on the regulation currently housed in the DPS Chapter of the South Carolina Code of Regulations and based in part on S.C. Code § 56-9-60. Therefore, the Court recommends promulgation of this regulation with the changes already captured in the Proposed Regulations published in the State Register and with the additional change noted in this Public Hearing Report.
RECOMMENDATION
Upon review of the proposed regulatory changes, I find that they are both needed and reasonable. Therefore, I RECOMMEND that Document 5228 be APPROVED.