Rules review process challenges a skeptic’s view

A healthy skepticism tends to come in handy. That’s especially true when it comes to gauging the merits of a new government program.

When the program doesn’t work as originally advertised, thanks to the law of unintended consequences or the impact of government planners’ “fatal conceit,” the skeptic avoids disappointment.

On the other hand, a program that works better than expected offers the skeptic a pleasant surprise.

Take, for example, a relatively recent program to subject thousands of North Carolina state government rules and regulations to a thorough review. The state Regulatory Reform Act of 2013 established the program. It requires most existing state rules to face a formal review at least once every 10 years. Rules with no review would “sunset,” meaning they would disappear from the state’s books.

Supporters, including John Locke Foundation regulatory expert Jon Sanders, have touted the program’s potential benefits.

“Of all the rules review processes states have used, only sunset provisions with periodic review have a ‘robustly significant’ effect in reducing red tape,” Sanders wrote recently about his 2013 research on the topic. “Not surprisingly, it has a significant, positive impact on the state’s economy as well.”

The 2013 law required state agencies to classify rules within three categories, sometimes referred to as buckets. First, agencies could deem a rule “unnecessary.” That rule would head to the scrap heap. Second, agencies could classify a rule as “necessary with substantive public interest.” This type of rule generates public comment and potential objections. It would be forced to undergo an extensive rule-making process again to ensure it’s still needed.

The third and largest bucket contained rules deemed “necessary without substantive public interest.” These rules generate little debate. Within the authorizing legislation, lawmakers offered the following example: “A ‘necessary without substantive public interest’ rule includes a rule that merely identifies information that is readily available to the public, such as an address or a telephone number.”

Applying some degree of skepticism to the law, this observer originally predicted that a handful of rules would get scrapped, a handful of others would face the gauntlet of a thorough review, while almost all rules — 80 to 90 percent, at least — would make it into the last bucket. Unless the public generated clear opposition, state agencies would not consider it worth their time and effort to classify a rule as having “substantive public interest.”

The review process would remove a handful of truly outlandish or counterproductive rules, but the overall impact on state government’s regulatory burden would be marginal at best.

Actual results have been more encouraging. Yes, the third bucket has been the largest. But the number of rules either designated for the trash heap or a more thorough review has been substantial.

At last count, the state had tagged 1,077 of 8,964 reviewed rules (12 percent) as unnecessary. Another 2,337 (26 percent) had been targeted for another trip through the rule-making process. That left roughly 62 percent of the rules to remain on the books unchanged. Less than half of the more than 19,000 total rules subject to review have gone through the bucket process, but the percentages of rules dumped into each bucket has remained fairly consistent since the process started in 2013.

That’s a nice surprise. It’s also possible that even more rules might be subjected to the extensive rule-making process in the future. Carolina Journal reported last week that the head of the state’s Rules Review Commission wants to eliminate the “necessary without substantive public interest” category.

“When 61 percent of the rules that are going through this process are staying in the code with no change, they’re not getting the full exposure to public comment or careful examination,” RRC chairman Garth Dunklin told state lawmakers late in 2016. That “bothers us from a policy standpoint.”

“The concept there was to make agencies pick up and look at their rules, and examine their continuing usefulness and efficacy, expose them to the process of public comment that is a part of our rule-making process,” Dunklin added.

Dunklin needs support from the N.C. House and Senate to change state law. If lawmakers agree to his plan, this skeptic might see more pleasant surprises on the regulatory front in the years ahead.

Mitch Kokai is senior political analyst for the John Locke Foundation.