by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
In 2013, the General Assembly enacted a strong regulatory reform, sunset with periodic review for administrative rules. Research had found sunset with periodic review to yield significant, positive economic returns by reducing the drag of regulatory burdens on businesses and individuals. North Carolina’s experience was in keeping with research expectations. The first round of periodic review resulted in over one out of 10 rules in the state’s administrative code being repealed.
As it turns out, however, more rules should have been removed from the code but for quirks in the review process and state law. Those rules had technically been repealed since the legislation authorizing them had been repealed, but in order to have them removed from the code, the rulemaking agencies had to alert the state Codifier of Rules to do it, which they failed to do.
Why didn’t they? Because the original periodic review law — since amended — allowed agencies to classify rules up for review as either “unnecessary” (repealed), “necessary with substantive public interest” (to be reviewed), or “necessary without substantive public interest.” That last category allowed the rules to be reauthorized immediately without review.
It was too easy for agencies to deem rules “necessary without substantive public interest” and therefore not review them. Nearly two-thirds of rules were fit into that category, which is why Locke urged removing that category and having all rules reviewed that aren’t removed as unnecessary. The General Assembly passed that reform in 2019. In the meantime, several rules based on repealed laws were among the unreviewed rules in that first round of periodic review.
Current law for termination of agency rules (General Statutes § 150B-21.7) states that “a rule adopted under [a] repealed law is repealed as of the date the law is repealed.” If it’s repealed, how would it be removed from the code? “The agency that adopted the rule shall notify the Codifier of Rules that the rule is repealed pursuant to this subsection.” Once notified, “the Codifier of Rules must enter the repeal of the rule in the North Carolina Administrative Code.”
That important second part of rule termination didn’t happen, however, under the “necessary without substantial public interest” exception in the original periodic review. Without official notification of those 1,000+ rules having been repealed, the Codifier of Rules could not remove them from the code.
According to testimony presented before the House Regulatory Reform Committee March 15 by state Codifier of Rules Ashley Snyder, the amount of rules on the books based on laws that no longer exist is rather significant:
The OAH [Office of Administrative Hearings] estimates that there are in excess of 1,000 administrative rules currently in the North Carolina Code for which the adopting agency’s statutory rulemaking authority was subsequently repealed.
In other words, the state’s administrative code is clogged with over 1,000 rules not backed by law. Their authorizing legislation has been repealed, yet they are still adding to business and individuals’ regulatory burdens, like pulling off a tick but leaving the head embedded.
Below is screenshot from the presentation. Committee members were told that the stack of papers in the photograph is not from a stock image. Those are printouts of rules that are based on repealed statutory authority. In other words, these rules simply should not be.
Unfortunately, as Snyder testified, the next round of periodic review won’t begin until July 2024. The process takes many years to complete. So unless the law changes, these orphan rules and their potential for mischief won’t be removed by their adopting agencies for many years.
A bill before the General Assembly at the request of the North Carolina Office of Administrative Hearings would make a simple fix to the problem. Senate Bill 81 as filed would allow the Codifier of Rules to remove such rules from the code.
Specifically, S.B. 81 would add a time limit to the notification period after which, if no notification were received, the Codifier of Rules would be allowed to remove repealed rules from the code on her own authority.
The law would be changed to read (additions in bold) “The agency that adopted the rule shall notify the Codifier of Rules that the rule is repealed pursuant to this subsection within 30 days.” And further on: “When notified of a rule repealed under this section, the Codifier of Rules must enter the repeal of the rule in the North Carolina Administrative Code. If the Codifier of Rules does not receive timely notice from the agency under this section, the Codifier shall remove the rule from the North Carolina Administrative Code after notifying the agency.”
That simple fix would, if passed, lead to over 1,000 rules that have already been repealed to be officially removed from the state’s administrative code. They would burden us no longer.