‘Rule throttle’ measure may go too far, critics say

A measure “throttling” the costliest new government regulations could have unintended consequences, critics say. For example, House Bill 162 might have stopped the General Assembly from forcing schools to collect vaccination reports on sixth-grade students.

The original bill expanded the categories of state regulations subjected to a periodic “sunset” review by the Rules Review Commission. But a provision added to the bill during conference committee negotiations could make sweeping changes to North Carolina’s regulatory landscape, with legislators split on whether the positives outweigh the negatives. One part of the bill would bar any state agency from imposing new rules with major financial impacts without the General Assembly’s OK — potentially causing headaches when large changes are needed, say, for complicated health-care or education programs.

The provision — now Section 4 of the bill — was added to H.B. 162 by a House-Senate conference committee. The bill has been parked in the House Rules committee since August 2017, but it may return sometime this year.

Section 4 has two components: prohibition and limitation. Prohibition forbids any agency from adopting any rule that costs more than $100 million over five years. Limitation requires agencies adopting rules costing more than $10 million over five years to undergo an additional layer of approval before being adopted.

The provision does not apply to temporary or emergency rules, but concerns over unintended consequences remain. For instance, 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.

Jon Sanders, the director of regulatory studies at the John Locke Foundation, said legislators are still interested in the provision, particularly the Joint Legislative Administrative Procedure Oversight Committee.

“[The provision] is trying to claw back some of the legislative power that has been ceded to the administrative agencies over time,” Sanders said. “But the question is, How do you do it without unnecessarily hamstringing the good operations of those agencies while preventing them from overstepping their boundaries?”

In an email, Rep. Nelson Dollar, R-Wake, expressed concerns about the scope of the bill.

“Expanding the legislative oversight role in the development/review of administrative rule making will require additional time and expertise to effectively review programmatic rules that can span hundreds of pages,” Dollar said.

”The legislature is already implementing a mandatory sunset review of all rules. There are many questions about the operation of this proposal including do part-time citizen legislators have the time to delve into the minutia of complex rules which will invite more requests for legislation to address what in the past have been administrative matters addressed by the executive branch.”

Sanders said the provision does provide an element of accountability for agency decisions. It requires agency oversight boards or elected officials to sign off on the most costly rules.

Sen. Andy Wells, R-Catawba, a co-chairman of the APO committee, agrees. “House Bill 162 is about accountability. If you like bigger government, you probably won’t like making government accountable. If you want less government, you’ll like HB 162,” Well said in an email.

Wells said regulations can act as a form of taxation on businesses. “We wouldn’t slap a $100 million tax increase on the private sector with no debate. Why would we want an anonymous bureaucracy to create a rule with the same financial impact?” Wells asked.

“Of course it’s complicated and challenging for the state to calculate the costs of a rule with significant economic impact. But not as challenging as the private sector figuring out how to pay for it,” he said.