• In our state constitution, laws are made only by elected legislators accountable to the people
  • Regulations carry the force of laws but are made by bureaucrats in the executive branch using authority delegated to them by the legislature
  • It is very easy for agencies to abuse this authority, which is why legislators must keep a very close watch over regulations, and there are several ways they can do so

If lawmaking power is supposed to be forever separate from the powers of the executive branch, then how is it that state agencies can create what amount to laws?

The answer to this question shows why good government, transparency, accountability, and even our constitutionally recognized rights require our lawmakers to keep a close watch over the rulemakers. 

The conclusion of this piece offers several tools legislators can use to keep regulation in check.

Regulation is easy, while crafting laws is difficult — but they both have the force of law

Only one branch of state government, the legislative branch (the General Assembly), has the state constitutional authority to make law. This authority is exclusive to the legislature, because the state constitution is crystal clear about the separation of powers: “The legislative, executive, and supreme judicial powers of the State government shall be forever separate and distinct from each other.”

Meanwhile, bureaucrats in the executive branch, state departments and agencies, use a different procedure to make regulations, and it is a procedure itself governed by state law — the Administrative Procedure Act (APA).

In “Crafting Laws vs. Making Rules,” I discuss in greater detail the differences between the two processes. But the biggest difference is this: “The lawmaking process is a far more difficult place for a proposed course of action than is the rulemaking process.”

Regulations pose a serious separation-of-powers problem

But how can state agencies create regulations with the force of law? The answer is, they can by authority delegated to them by the legislature. The idea is that lawmakers determine by law the direction the state should go in a policy area, and then have the relevant agency devise the rules to achieve the legislature’s will expressed by the law. 

The danger, however, is that the legislators shed the authority vested in them by the people they represent to have laws by another name (regulations) drawn up by agency bureaucrats who are answerable only to the head of the executive branch and not the voters. 

Worse, the same process that renders rulemaking so much easier to achieve than lawmaking also makes it harder for the General Assembly to stop them. As discussed in “Crafting Laws vs. Making Rules,” they have to use the lawmaking process to block a rule:

2010 study by the John Locke Foundation showed how rare it is that a permanent rule gets blocked by the legislature. It found that, of the 6,510 permanent rules introduced between fiscal years 2004-05 and 2008-09, only 218 (about 3 percent) were subject to legislative review. Of those, only 28 actually had bills filed to disapprove of them, and of them, only seven passed.

When this happens, the people of North Carolina are ruled by an unanswerable executive taking advantage of a hamstrung legislature.

It being so easy to produce regulations vs. laws and so hard for regulations to be rejected by the elected lawmakers, agencies can easily be tempted to abuse their delegated authority and write rules that go well beyond their charge from the legislature. When this happens, the people of North Carolina are ruled by an unanswerable executive taking advantage of a hamstrung legislature.

This process threatens to break down even further against good government when the agencies decide to redelegatetheir delegated power to outside and even foreign bodies. For example, Gov. Roy Cooper’s Executive Order No. 246 would have the North Carolina Department of Transportation devise rules to conform with emissions standards from California

Agencies also have learned to shield their regulatory intent from the formal rulemaking process by issuing policies, guidelines, interpretive statements, memos, etc. that have the practical effect of bona fide rules. These stealth rules are known as “regulatory dark matter.”

Barely constrained rulemaking isn’t merely a separation-of-powers problem. It portends significant costs on North Carolina families and the economy. A report on the regulatory burden in 2015 by economists at the Beacon Hill Institute at Suffolk University estimated that state regulations could cost the North Carolina economy as much as “over $25 billion annually.”

A report by economists at the Beacon Hill Institute estimated that state regulations could cost the North Carolina economy as much as “over $25 billion annually.”

There are several ways rulemaking can go awry, especially without credible checks against regulation. Well-intended regulations can fail from misapprehension of a problem, develop unintended negative consequences, become obsolete from technological change or innovation, or be taken over by special interests to serve their purposes. Regulation may not always be well-intended, however; it can also be installed out of political concerns, put in place to serve special interests, or stem from a “captured regulator “(a regulatory body taken over by political or industry insiders serving cronies rather than the people of North Carolina). 

A menu of reforms for legislators to keep regulations under control

It is for all these reasons that we at Locke urge a robust menu of regulatory reforms:

  • Pass legislative rules ratification. This reform would put new, expensive regulations on hold till they passed legislative scrutiny. 
  • Require state agencies to identify and either repeal or codify regulatory dark matter. This measure would stop agencies’ secret rulemaking and help restore transparency. 
  • Expand the “no more stringent” law. This reform would prevent the executive branch from going out of bounds to burden North Carolinians with rules that are harsher than what the federal government and General Assembly have chosen to impose. 
  • Pass a small business regulatory flexibility law. This measure, something most states and the federal government already have, would allow agencies to reduce the compliance and reporting burdens disproportionately affecting small businesses.
  • Require compensation for victims of regulatory takings. This reform would help prevent ill-conceived executive actions from being adopted without due consideration of their impact on people’s businesses and livelihoods. 
  • Impose strong cost/benefit analysis with a rejection requirement. This stipulation would keep agencies from imposing rules on people that portend greater costs than benefits. 
  • Require full consideration of alternatives to a proposed regulation. Full consideration would remind rulemakers that their choices always include not taking action, which may very well turn out to be the best option. 
  • Require rules to include stated objectives and outcome measures. This idea would help ensure rules work as intended or be repealed, since the stated objectives and outcome measures would be considered when a regulation came up for periodic review. 
  • Shorten the window for sunset with periodic review to every five years. This adjustment would help keep the regulatory environment lighter and up-to-date. 
  • Promote regulatory budgeting and a Red Tape Reduction Commission. Both are ways to help identify and eliminate unneeded and outdated rules. 

Click each reform for greater discussion.