John Locke Update / Research Brief

Shine the light on North Carolina’s regulatory dark matter

posted on in Law & Regulation, Rights & Regulation
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  • Regulatory dark matter are “rules” we don’t know are rules — policies, guidelines, interpretive statements, etc. that state agencies enforce against people as if they were rules
  • There’s no telling how much regulatory dark matter there is in North Carolina
  • Legislators should require agencies to identify regulatory dark matter and either repeal or formally adopt them, and they already have the language to do so

Did you know there’s an unspoken rule in the English language about the order of adjectives? Author Mark Forsyth wrote about “The language rules we know – but don’t know we know” for the BBC when this paragraph from his book The Elements of Eloquence went viral on social media:

Adjectives in English absolutely have to be in this order: opinion-size-age-shape-colour-origin-material-purpose Noun. So you can have a lovely little old rectangular green French silver whittling knife. But if you mess with that word order in the slightest you’ll sound like a maniac. It’s an odd thing that every English speaker uses that list, but almost none of us could write it out.

Unfortunately, government also has “rules” we don’t know are rules. I’m not talking about laws, which are made in the legislature, a deliberative body of elected representatives given the constitutional authority to create laws. Nor am I speaking of actual rules, which are created by government agencies according to specific process in state law (the Administrative Procedure Act, or APA) and using power delegated them by the legislature for the purpose of implementing the laws passed by the legislature.

Rules we didn’t know are rules are government agencies’ policies, guidelines, interpretive statements, etc. that, despite never having gone through the official rulemaking process and been formally adopted as rules, have all the practical effect of bona fide rules. These are what federal regulation expert Clyde Wayne Crews Jr. calls “regulatory dark matter“:

“Regulatory dark matter” refers to the thousands of executive branch and independent agency actions including guidance documents, proclamations, memoranda, bulletins, circulars, letters and more that are subject to little scrutiny or democratic accountability but carry practical, binding regulatory effects.

Red tape and overregulation are notorious for stifling an economy and hindering job creation. But regulatory dark matter is insidious not only for contributing to overregulation, but also because by definition we can’t know how much overregulation it is causing. How far does regulatory dark matter reach in North Carolina?

It is for this reason I was encouraged by a bill that the General Assembly passed last year as part of its ongoing interest in regulatory reform. House Bill 612 would have required a single state division, the Division of Social Services (DSS), to identify and either repeal or codify its regulatory dark matter.

Unfortunately, it was vetoed by Gov. Roy Cooper. The governor rejected it under the flimsy justifications that it somehow would “limit the ability of the Department of Health and Human Services to implement, adapt to and oversee programs of public assistance and child welfare which are regulated and driven by federal law” (it wouldn’t) and “is an overreach of legislative authority to effectively nullify executive branch policy and rulemaking which is unconstitutional.” Cooper is flat wrong on the separation-of-powers issue here, although his insistence upon executive branch rulemaking in the face of the legislature is well in keeping with his autocratic abuse of the Emergency Management Act and unilateral rule by executive order.

Drag all regulatory dark matter into the light

For me, HB 612 didn’t go far enough. The General Assembly should take its principles and its text and apply it to all state agencies, departments, divisions, etc.

Here is what such a reform would do:

  • Have state agencies, departments, divisions, etc. (agencies) identify and report to the Office of Administrative Hearings (OAH) by certain dates all of their “policies, guidelines, and other interpretive statements” that actually function as rules according to the official state definition of a rule — those would be rules in violation of the APA
  • For their remaining policies, guidelines, and other interpretive statements, have each agency give a written explanation to OAH for why they would not count as rules
  • Have each agency go over this report with OAH to determine which policies, guidelines, and other interpretive statements are in violation of the APA, with any disputes going through the Rules Review Commission and then to Superior Court
  • Classify all such rules discovered in this process as interim rules, not permanent — doing so would prevent unnecessary disruption to the agency’s normal conduct of business
  • Require action on those interim rules by a certain date by which time, if they haven’t been formally adopted as rules, they are repealed
  • Let people contest in court any decision by any agency against them that uses “a policy, guideline, or other interpretive statement in violation of” the state’s rulemaking procedures
  • Give administrative law judges the authority to determine whether an agency’s policy, guideline, or other interpretive statement should have been adopted as a rule and is therefore invalid to enforce — this would also signal to judges the General Assembly’s intent that agencies stay within their legally defined boundaries, a key change because courts otherwise tend to interpret legislative intent in such a way as to give broad deference to agencies

The General Assembly has constitutional as well as moral authority to take such action. State agencies are staffed by bureaucrats who, even if they are conscientious, well-meaning public servants, are neither elected by the voters nor entrusted with lawmaking authority. Whenever and wherever they have issued guidelines and then treated those guidelines as if they’ve created actionable rules, they need to be checked.

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. As director of regulatory studies and research editor at the John Locke Foundation, Jon gets in the weeds of all kinds of policy… ...

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