Committee advances bill to cap administrative rule costs at $500,000 over two years

The State and Local Government Committee approved House Bill 6, which would prohibit state administrative agencies from issuing rules that impose an economic cost to the state, local governments, or regulated parties exceeding $500,000 over a two-year period, subject to several enumerated exceptions.

Representative Wade Williams, sponsor of House Bill 6, said Kentucky administrative regulations contain more than 22,000 restrictions and argued the proposal would add "guardrails" to rulemaking so that costly policy decisions are made by elected legislators rather than unelected agency officials. Williams said the bill’s exceptions include rules necessary to avert threats to public health, safety or welfare; to prevent loss of federal or state funds; to meet federal or state legal deadlines; to comply with court orders; or to implement licensure and regulation under the state health plan.

Senator Chambers Armstrong asked how many regulations exceed the proposed threshold. A Legislative Research Commission staffer reported that for the full year 2024 the LRC identified about 12 rules that met the threshold and that a narrower reading produced roughly six.

One senator asked to briefly explain a no vote and said he was concerned the $500,000 threshold could require calling the legislature into special session if agencies needed to take urgent regulatory action. "I'm really worried about us tying the hands of the government when the government needs to act," he said, while noting surprise that the number of affected rules appeared lower than expected.

The committee recorded eight yays and two nays and reported the bill favorably to the floor. The bill’s text and the committee discussion list several specific exceptions and direct the agencies to follow added procedural requirements when a proposed rule would exceed the threshold.