Committee debates new documentation requirement to stop stalled 'perpetual' CON projects

Counsel for the certificate of need committee said the second proposed rule would tighten what evidence qualifies as a capital expenditure and require documentation to demonstrate actual project commencement and commitment.

Clayton Weems described the impetus: some projects approved years ago have not proceeded beyond token actions. He cited an example from 2011 in which a project reportedly submitted a picture of a pole in the ground as its capital expenditure and then made no progress. To prevent similar cases, the proposed rule would ask for documentation such as construction plans approved by the department, confirmed financing, legally binding construction contracts with start and completion dates, and physical evidence of construction materials or equipment on site.

Several members said the rule looks like it could expand the department’s oversight beyond the original statutory scope by effectively governing project completion rather than only initial approvals. Senator Coleman and others suggested the committee review statutory definitions (including whether court precedent ties capital expenditure to generally accepted accounting principles) and consider whether a legislative change — rather than rulemaking — is the appropriate remedy. Counsel responded that capital expenditure definitions are tied to GAAP in case law and that most projects generate the documentation requested, but he acknowledged he was 'pitch hitting' for program staff and would follow up with the certificate of need committee for more institutional detail.

The committee did not vote on the proposed capital‑expenditure documentation rule and asked the department to return with additional information so members could assess whether the requirements are feasible and consistent with statute.