Ohio House Commerce and Labor Committee - 3-18-2026

It is 11 a.m., and I call this meeting to the House Commerce and Labor Committee to order. Would you please rise for the Pledge of Allegiance?

As most of you may have noticed by now, Morgan is no longer setting to my left. We now have Ethan. Ethan, would you like to introduce yourself

With that, will the clerk please call the roll.

Vice Chair Lear? Here.

Here.

Claggett checked in.

Fisher? Here.

Kishman? Here.

Rader?

White? Present.

Thank you, Chair. Good morning.

Chair Johnson, Vice Chair Lear, Ranking Member McNally, and distinguished members of the House Commerce and Labor Committee, Thank you for allowing me the opportunity to provide testimony on House Bill 465. This legislation will support small businesses by requiring the Department of Liquor Control to renew liquor licenses within 48 hours after a renewal application is filed. This bill will also require local regulatory bodies to renew applications for cigarette licenses within the same time frame. Ohio is home to many small businesses that require current licensure to sell liquor and cigarettes. And we want to ensure that these businesses can operate without downtime because of delayed application approval. Current law mandates the applications be considered, but it does not enforce a time frame for this process. This bill will expedite this process but will still allow for licensure approval to be delayed if the local governing authority files an objection against the application. While the sale of liquor and cigarettes in our state may be a legislative priority for some of us, we still have responsibilities to ensure that businesses can operate in our state without excessive administrative burden. It is our responsibility to support an economy that is welcoming to small businesses and provides entrepreneurs with a framework to succeed. I urge your support of this bill, and I'm willing to answer any questions that you may have.

That's correct.

That's correct.

Yes.

So I have tons of small businesses in my district. I represent part of downtown Cleveland where there's a lot of bars and restaurants and establishments that sells liquor. And there's been some challenges with the renewal process. And when businesses have to shut down or close their doors while they're going through the renewal process, it definitely hurts their bottom line, and I've seen it firsthand. And currently, the renewal process, can you start your renewal 30 days ahead of time? Yes.

Absolutely.

One, how did you pick 48 hours? And two, have you talked to Liquor Control? What do they think since they have to do this work?

Okay. Thank you. Any other questions for the witness?

I don't see it being a problem. You know, I didn't really have any pushback. I talked to some folks, some stakeholders in my county government. There wasn't that much pushback either. I think they have the same sentiment as some of the business owners. The faster we can expedite the process, the better. So thank you for the question.

Representative White. Thank you very much, Chair, and thank you for your testimony today. I wanted to ask also in following up and other representatives here checking back with those other agencies. Can you give an idea, and you may not have an exact number, which is fine, when we're talking about how much money then is being lost to a community and to business owners when they're not able to have expedited, whether it's 48 hours or not to get their liquor license. I know you have cigarette here also and vape. So just trying to get an idea of what we're seeing as a loss of income.

And for the follow-up, I just wanted to know also, have you seen any businesses then be adversely affected where they've had to close their doors or shut down or lay workers off during that time period?

I think it's imperative if you know your liquor license is going to expire that you make an effort to apply before the expiration date.

And you know maybe the bill should read 48 hours prior to the expiration date you get a renewal provided you applied for the application and give them time

I just feel that you don't wait until your license expired and expect to get a turnover quickly and renewed. You need to be somewhat responsible yourself in life or an application at least 20 days ahead of time.

But three months is ridiculous. That's just not acceptable to anybody. I think we're reasonable people on this committee. We can see that.

Welcome to committee. Thank you. Good morning, Chair Johnson, Vice Chair Lear, Ranking Member Rader, and distinguished members of the Commerce and Labor Committee. Thank you for the opportunity to present House Bill 605. This is a simple one-section bill that enacts new Ohio Revised Code to codify the spirit doctrine in public construction projects. This is not a sweeping overhaul of construction law. It is a targeted restoration of a fundamental principle of fairness that the United States Supreme Court established more than a century ago, and that most of the country still follows today. Let me provide some background. In 1918, the Supreme Court decided United States v. Spirin. A contractor named George Spirin was building a dry dock for the federal government, exactly according to the government's detailed plans and specifications. The government had required him to relocate and rebuild a sewer line. Spirin did the work precisely as drawn, and the government accepted it. Then heavy rains caused the sewer to burst because of hidden defects in the government's own design. The government tried to force Spirin to fix the damage at his own expense, but the Supreme Court ruled unanimously that the contractor could not be held responsible. When an owner furnishes plans and specifications and requires the contractor to build exactly to them, The owner impliedly warrants that those documents are accurate, adequate, and sufficient for the job. That is the Spear and Doctrine in its simplest form. For over 100 years, this rule has governed federal construction contracts and has been adopted or rarely rejected in the vast majority of states. It applies only in traditional design, bid, build projects, where the public owner controls the design and the contractor has no discretion to change it. It does not apply to design build projects, performance specifications, or a contractor's own workmanship. In Ohio, however, the picture changed in 2007 with the Ohio Supreme Court's decision in Dugan and Myers Construction Company versus Ohio Department of Administrative Services. The court recognized Spirin for a certain site condition issues, but refused to extend it to defective or incomplete plans and specifications. that ruling allowed public owners to insert broad disclaimers and no damages for delay clauses that effectively override the implied warranty. The practical result has been a steady shift of uncontrollable design risk onto the lowest bid contractor. The scope of this problem is enormous. Ohio public entities, state agencies, school districts, counties, cities, and townships spend approximately $13 billion each year on construction projects, ranging from new schools and highway improvements to local water and sewer works and public buildings. That is a real taxpayer money funding issue, funding infrastructure that our communities rely on every day. Yet because contractors must now bid with the knowledge that they may be held liable for flaws in documents that they did not create and cannot change, They build substantial risk premiums and contingencies into every bid. When those flaws surface, as they inevitably do on complex projects, we see wave after wave of change orders, claims, delays, and further litigation. Industry studies and data from public agencies across the country including analyses of state transportation departments and large building programs consistently show that defective plans incomplete specs and design errors are the root cause of roughly 25 to 40 percent of all change orders and construction disputes on public projects. In some examinations of highway and building work, design-related issues account for nearly one-third of the total value of change orders on Ohio's $13 billion annual public construction volume that translates into hundreds of millions of dollars in extra costs, thousands of additional claims, and countless months of delay every single year. These are not abstract numbers. They are higher taxes, postponed school openings, longer commutes on unfinished roads, and frustrated local officials trying to stretch thin budgets. House Bill 605 simply restores the original balance. It creates a statutory implied warranty that applies only to public construction projects. Public owners will warrant that the plans and specifications they furnish are accurate, complete, free from defects, and sufficient for successful and timely completion. A contractor who builds exactly to those documents will not be liable for damages caused by defects in them, provided the reliance was reasonable. Reasonable reliance is presumed unless the defect was obvious on its face, a reasonable pre-bid inspection would have revealed it, or the contractor failed to act in good faith. Standard contract language requires site visits or assuming responsibility until completion will no longer override the warranty, and any conflicting exculpatory clauses would be void as against public policy and public contracts. Importantly, this bill changes nothing for private projects, nothing for design-build delivery, and nothing for a contractor's own workmanship or patent errors. It simply ensures that the taxpayer-funded design, bid, build work, the method still used for the majority of Ohio public projects, the party who controls the design bears responsibility for it. So there are some questions that I am happy to take here and ready to answer, but I'm going to skip to the end and just say that I ask for your support to move this legislation forward. Let's get 605 on the books and codify the spirit, and I'm happy to answer any questions you might have.

Yes, sir. Thank you, Mr. Chair. Thank you, Representative Workman, bringing this forward. Good bill. Great testimony. And you mentioned that other states have done this. They either have it in statute or they have it via the courts. So I've also noticed some states went further and applied this to the private sector. Had you thought about maybe even going further, applying this to the private sector, or maybe there's some thoughts there on why we wouldn't go that far?

Any other questions? Representative Fisher.

Sure. Through the chair to Representative Fisher. Thank you for that question. I mean, across the board, I think what we're seeing is a massive increase in delays to project completion. Without codifying Spirin, it has been a default used throughout the state of Ohio and nationally, but having it codified provides streamlined and consistent language that our public works contractors and also the owners of the projects can follow. I anticipate that codification of the Spirin will cut costs dramatically. The contractors will no longer have to build those unanticipated expectations into their budgets when they're bidding. We can bring overall public works costs down and provide more transparency and reliability in the process. So this, I think, is really going to help save millions, if not hundreds of millions, in the long run.