by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
The conference report on House Bill 162, which has already passed the Senate, includes a common-sense adjustment of the state’s sunset provisions with periodic review. That regulatory review process is already removing about one out of every eight administrative rules on the books, but with the adjustment, it could do even more.
There’s another intriguing regulatory reform in the report. It’s called the “rules throttle.” It aims to bring more accountability and restore some legislative authority over the rulemaking process while throttling down on the more costly rules.
Contained in Section 4 of the conference report, the rules throttle would have several aspects. It would apply different throttles to proposed rules (or sets of rules) of differing projected financial impacts.
If, during a five-year period, the rule (or set of rules) would have a projected cost of at least one hundred million dollars, the originating agency would be prohibited from adopting it.
If, during a five-year period, the rule (or set of rules) would have a projected cost of at least ten million dollars, the following adoption standards would apply:
As I see it, the rationale behind the rules throttle is rooted in a good-government viewpoint on the separation of powers and informed with the understanding of the very real risks of overregulation.
To elaborate: Administrative rules are crafted in the executive branch, using delegated legislative authority from the legislative branch, to interpret and implement laws. This process makes intuitive sense in general because the various agencies, boards, commissions, etc. have subject-matter expertise that legislators don’t. They can do the detailed work in implementing policy that legislators can’t.
Rules carry the full force of law, meaning also that an essentially legislative power of lawmaking is vested in bureaucrats who lack direct accountability to the people. There is a risk of abuse of power inherent with that lack of accountability. More so, however, is the convenience it offers, as rules are much easier to implement than laws.
The rules throttle would apply only to deeply impactful proposed rules. It would restore some accountability to the agency, board, or commission’s decisions on crafting rules, and it would also invite legislative review. In that respect, it is similar to a REINS Act.
Where it differs is in what the legislature would be voting on. Under this proposal, the General Assembly would have to act directly to disapprove the rule, which otherwise takes effect when the legislature adjourns. REINS would require an affirming vote for a rule to proceed. A 2010 JLF study found legislative review to be very ineffective, with legislators voting to disapprove only three percent of rules subject to review.
How far would the proposal go? According to The Insider of Jan. 10, Garth Dunklin, the chairman of the state Rules Review Commission, “said the provision banning costly regulations needs clearer language so the commission will know when to apply the new requirements.”
Speaking before the Administrative Procedures Oversight Committee, Dunklin signaled welcome to the idea if clarity could be brought to such things as the term “set of rules” and whether the provision would apply to rules up for renewal.
According to Carolina Journal,
[A] report compiled by Senate staffers says six rule packages would have been banned had H.B. 162 been in effect since 2011. The K-12 Read to Achieve program, collecting immunization reports, and Unemployment Insurance Reform were among those rules costing more than $100 million over five years.
The limitation provision would have covered 25 rule packages over that period, including a Historic Preservation Tax Credit and the 2017 Child Care Center and Home Rule Readoptions regulation.
Those concerns about unintended negative consequences are worth noting.
For that matter, so is this: Nothing in the bill would preclude the General Assembly from drafting and passing a bill instituting any of those $100-million-plus rules packages.
The accountability requirements of the rules throttle are a good idea. They would contribute to a well-functioning regulatory climate. There are, however, many additional ways to improve the regulatory climate (see the list at the end of this report), and every bit helps.