SD20 - Report of the Joint Subcommittee Studying the Regulatory Responsibilities, Policies and Activities of the State Corporation Commission

Executive Summary:

The 1902 Constitution of Virginia created the State Corporation Commission (the SCC) vesting it with legislative, judicial, and executive powers. When it began operations in 1903, the SCC had two primary functions, the regulation of rates and services of railroads and the issuance of corporate charters. Since 1903, the SCC's jurisdiction has expanded significantly as a result of legislative amendments and constitutional amendments to include the regulation of energy, insurance, securities, corporate filings, communications, financial institutions, and railroads. Despite the growth of the regulatory responsibility of the SCC over the years and the ever-increasing impact of its policies, there is no external assessment routinely made showing the impact that the policies have had or will have on the economy and the lives of citizens of the Commonwealth, or whether alternative approaches would allow the SCC to better fulfill its constitutional and legislative responsibilities. Senate Joint Resolution 173 and House Joint Resolution 187, passed during the 2000 General Assembly Session, created the joint subcommittee to review the regulatory responsibilities, policies and activities of the see and examine the short- and long-term impact of its policies and activities. Though initially created for a two-year period, Senate Joint Resolution 45 (2002) continued the study for an additional year.

The broad scope of the study required the joint subcommittee to spend a significant portion of the first year of the study developing a comprehensive list of issues appropriate for its consideration. A final list of issues for consideration, which included input from interested parties and stakeholders, became the joint subcommittee's base reference for the parameters of its inquiry. At the close of the first year of the study the joint subcommittee hired the George Mason University School of Public Policy (GMU consultant) as an independent consultant to conduct a study of the SCC and provide recommendations for the consideration of the joint subcommittee in carrying out its charge.

The second year of the study initially focused on the joint subcommittee's review of successive drafts of the GMU consultant's report culminating with the final report that was submitted on August 1, 2002. Recognizing the need to obtain effective input from the business sectors regulated by the SCC as well as groups representing consumers and citizens, the joint subcommittee encouraged interested parties to submit their comments directly to the consultant. After the submission of the second draft report, a public comment process was instituted to further facilitate participation from these interested parties. In addition, the joint subcommittee provided the SCC with the opportunity to respond or provide comment at every critical juncture of its review.

Prior to the hiring of the GMU consultant, the joint subcommittee learned that in January 2000 the SCC had hired David Wirick of the National Regulatory Research Institute to perform a comprehensive review of its operations. His findings were submitted to the SCC in March 2001 and made available to the joint subcommittee. After the submission of the GMU consultant's final report, the joint subcommittee decided to include the recommendations of Mr. Wirick in its deliberations. A matrix consisting of the 76 recommendations submitted by both consultants was developed including a comparative analysis of the findings. The joint subcommittee focused on developing its final recommendations using the matrix of consultants' recommendations as a reference guide. Throughout the study, the SCC had taken actions based on the findings of the consultants' reports. In light of these actions, the joint subcommittee determined that it would be appropriate to allow the SCC more time to complete its implementation efforts before further deliberating possible final recommendations. To provide this opportunity, the joint subcommittee requested and received an additional year of study.

The final year of the study began with a review of the status of the SCC's implementation of the consultants' recommendations and additional opportunities for public comment. The joint subcommittee noted the success that been achieved in providing a forum for groups with diversified interests to express their views on the operations of the SCC and how those operations might improved in light of the rapidly changing environment of the business sectors it regulated. It also was noted that the SCC had taken several actions in response to the consultants' reports and other concerns raised by interested groups over the course of the joint subcommittee's study.

Many of these actions served to promote more efficient operations at the SCC and alleviate specific concerns, both actual and perceived, regarding the agency's regulatory and policy-making process. After some deliberation, the joint subcommittee determined that many of the major issues and concerns raised not only by the consultants' reports, but also by the inquiries of the joint subcommittee, had been addressed or were in the process of being addressed. It was the consensus of the joint subcommittee that, given the on-going nature of the SCC's efforts in this regard, additional final recommendations were not necessary. Rather, the joint subcommittee determined that it would be appropriate to review the SCC's efforts at some point in the near future.

Accordingly, the membership unanimously agreed to recommend that the SCC provide the Governor and the General Assembly an update on the status of actions taken in response to the consultants' reports by November 30, 2003.