Lawmakers should back measure to review Corporation Commission

EFFECTIVE government regulation should be simple, predictable and consistent. Otherwise, regulation can become a major obstacle to business growth and job creation in the private sector.

Thus, lawmakers must ensure government agencies are efficient and effective, and regular review of government structure is warranted. The Oklahoma Corporation Commission is a good place to start due to its history, immense scope and recent trends.

The commission regulates some of the largest industries in the state including oil and gas. It’s an interesting creation, performing functions of all three branches of government — judicial, executive and legislative — under one roof. That combination can reduce the checks and balances that exist elsewhere, potentially fueling government inertia without accountability. Some independent evaluations suggest this is already the case.

A year ago, a Barclays report ranked all state, provincial and federal utility regulators in the United States, United Kingdom and Canada. Tier 1 states were those where regulation involved the lowest cost of capital, while Tier 5 states had the highest costs. Having a high cost of capital results in low investment returns, which makes a company unattractive to investors.

Oklahoma fell two spots, to Tier 4 status. That shift, Barclays said, was due to “delays in making regulatory rulings …” Oklahoma and the famously dysfunctional District of Columbia were the only two entities to fall in that year’s ranking.

Regulatory delays increase business costs, which in turn deter investment and raise expenses for Oklahoma consumers. That Oklahoma is among the nation’s worst on the Barclay’s metric is cause for concern.

The Corporation Commission’s history also highlights why a thorough review is warranted. The agency was founded at statehood to regulate public service corporations. Its duties have grown continually ever since, yet it’s not clear its organizational structure has adapted with the times.

To cite one glaring example, the three corporation commissioners, who are elected officials, are constitutionally required to take a special, second oath of office swearing that they have no direct or indirect financial interests in many industries, including any “street railway, traction line, canal, steamboat, pipeline, car line, sleeping car line, car association, express line, telephone or telegraph line ...”

When no one has bothered to update the oath of office in a century, it’s reasonable to ask if other practices are behind the times, particularly in light of negative, independent evaluations.

House Bill 1377, by Rep. Weldon Watson, R-Tulsa, would get the ball rolling by establishing a task force to “study current regulation to determine if the Oklahoma Corporation Commission is properly structured to efficiently operate in the twenty-first century.”

Among other things, that task force would review the commission’s performance, including the time required to process its workload, and an assessment of the agency’s mission to determine if it applies to “modern day agency functions.”

HB 1377 requires only a review. What harm could come from studying whether there’s a more efficient way of operating the Corporation Commission, one of Oklahoma’s most powerful and least understood agencies? Such reviews are conducted in the private sector every day.

Lawmakers should advance this proposal. Oklahoma can’t afford a telegraph-era regulatory model in an iPhone age.