N.C. lawmakers should retake power over major state rules

March 11, 2013

Click here to view and here to listen to Jon Sanders discussing this Policy Report.

RALEIGH — Elected, accountable lawmakers should rein in the power of unelected state government bureaucrats by taking a more active role in approving or rejecting North Carolina’s major rules. That’s the key recommendation in a new John Locke Foundation Policy Report.

The report urges N.C. legislators to follow the lead of the U.S. House of Representatives by approving a state-level version of The Regulations from the Executive In Need of Scrutiny, or REINS, Act.

“The REINS approach would use North Carolina’s legislative process to allow deeply impactful regulations to proceed only if they can obtain majority support from elected and accountable representatives of the people,” said report author Jon Sanders, JLF Director of Regulatory Studies.

North Carolina has more than 22,500 permanent administrative rules, Sanders reports. “Over the past 20 years, state officials have been adding an average of 2,360 new pages to the North Carolina Register every year,” he said. “This indicates an aggressive regulatory climate.”

Rules carry the full force of law, even though elected legislators do not vote for them, Sanders said. Instead those legislators delegate rule-making authority to state government employees.

“This delegated power should be limited to allow agencies to deal with true nuts-and-bolts administrative issues,” Sanders said. “State agencies headed by unelected bureaucrats not directly accountable to the people are not, however, the proper vehicles for deciding and dictating major matters of state policy.”

The current legislative process does little to slow the growth in new rules, Sanders said. “The regulatory system in North Carolina is heavily biased in favor of expanding regulations, including major regulations that have a substantial economic impact,” he said. “Legislators can block rules, but only after a cumbersome process. Of 6,510 permanent rules introduced between 2004 and 2009, legislators blocked only about one-tenth of 1 percent of them.”

The REINS approach would shift the power in the rule-making process back toward legislators, Sanders said. Originally suggested 30 years ago by federal appellate judge Stephen Breyer, later a Clinton appointee to the U.S. Supreme Court, the federal version of REINS would require Congress to approve any proposed rule that would have a significant economic impact.

The REINS Act of 2011 cleared the U.S. House by a 241-184 vote before languishing in the Senate. That legislation defined a rule as having a “substantial economic impact” if it had “an aggregate financial impact on all persons affected” of at least $500,000.

Supporters have filed a Reins Act of 2013 on Capitol Hill. “The General Assembly could use it as the basis of a regulatory reform bill here, making appropriate changes to apply to North Carolina’s regulatory environment,” Sanders said.

A North Carolina-specific REINS Act would include several basic elements, Sanders said. “First, it would define a ‘major rule’ according to its projected negative annual economic impact, imposition of significant cost and price increases on consumers, or other nontrivial negative economic impacts, such as on market competition, employment, productivity, investment, and technological or other innovations.”

The legislation would require the General Assembly to consider a vote to approve any major rule proposed by a state agency, Sanders said. Without a vote of approval from both chambers of the legislature and the governor’s signature within a set period of time, the proposed major rule would die.

A North Carolina REINS Act also would include another important stipulation, Sanders said. “The REINS law would make clear that the vote in the General Assembly is not a vote to enact the major rule as state law,” he explained. “Instead the vote simply grants legislative authority to the agency to proceed with the proposed major rule under the regulatory process.”

Adopting the REINS approach to regulation makes sense for North Carolina, Sanders said. “It would restore ultimate authority over state regulations back to the people of North Carolina,” he said. “It would return major lawmaking power to the General Assembly that legislators either should not or did not intend to hand over to state agencies. It would put an end to rules that amount to little more than ‘acts of pretend legislation.’ It would fight the lax regulatory climate that invites those bad rules.”

Sanders notes two other potential improvements tied to a REINS Act. “Legislators, knowing they would face votes over proposed regulations and could no longer rely on unelected bureaucrats to make major policy decisions, would have new incentives to write clearer, more narrowly focused bills,” he said. “On the other side of the process, the bureaucrats, knowing they would face defeat by legislative action or inaction if they overstepped their bounds, would have new incentives to write better, more circumspect rules clearly within their statutory authority.”

Jon Sanders’ Policy Report, “Take the REINS: How to return lawmaking authority to elected, accountable legislators,” is available at the JLF website. For more information, please contact Sanders at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].