Regulatory Reform: Jobs and Economic Recovery Take Priority over State Bureaucracy

The General Assembly passed several pieces of legislation this session that will limit the regulatory authority of state bureaucracies. Important reforms include mandatory cost-benefit analysis for all new regulations and a prohibition on state agencies creating new environmental rules unless required to under federal or state law.

Republicans had promised to reduce the regulatory burden on small businesses as one of their 10 promises in their “100 Days That Will Change North Carolina” legislative agenda. While several major reforms passed, there is still one significant bill left on the agenda.

What Passed

Commission Begins Regulatory Reform Process

SB 17 created the Joint Commission on Regulatory Reform, which became the primary impetus for several regulatory reform bills. The commission is composed of members of both parties in both legislative chambers, with the stated goal of working “to create a strong environment for private sector job creation by lifting the undue burden imposed by outdated, unnecessary, and vague rules.” The commission’s final report is due in May of 2012.

Cost-Benefit Analysis for New Regulations

SB 22, signed by Gov. Perdue on March 25, tries to force some level of rational decision-making onto regulatory authorities. State bureaucracies are now required to perform cost-benefit analysis to determine the economic impact of proposed rules. This procedure had already been in place for some government agencies since Oct. 2010, when Gov. Perdue issued an executive order mandating cost-benefit analysis for those under her control. The new law applies this process to all state regulatory authorities.

This bill would simply require that before new regulations go into effect, state agencies must take into account the impact these rules would have on individual businesses and North Carolina’s economy as a whole.

“No More Stringent” Law

SB 781, the “Regulatory Reform Act”, ends state agencies’ ability to enact environmental regulation without a state or federal law mandating the regulation’s creation. This restriction on regulatory authority is often called a “No More Stringent Law”. North Carolina had a similar measure for decades. However, in 1991 state environmental agencies gained their authority to create regulations above and beyond what state and federal law required.

As a result of this change, North Carolina now has much stricter regulatory atmosphere than is mandated by federal and state law.  In a statement, Lew Ebert, CEO and President of the North Carolina Chamber of Commerce spoke to the problems caused by ever-growing amounts of state regulation.

“With more than 15,000 rules and regulations created over the past decade – or nearly four a day! – North Carolina businesses have expressed great concern on burdensome, redundant red tape.  For businesses, protecting the health and safety of their employees and the quality of our environment are top priorities.  But too often we find regulations that are unnecessary or go too far.  The regulatory climate is a competitiveness issue – what it costs businesses to comply with new rules, the confusion of frequently changing rules, and state rules that are more stringent than federal rules.  Businesses need predictability and certainty.”

Environmental groups are against the proposed bill, claiming that it will be an erosion of North Carolina’s ability to respond to state-specific concerns. However, the General Assembly is still able to pass any environmental legislation it feels is needed, and state agencies are allowed to respond to emergency situations.

SB 781 passed the General Assembly on June 18, and awaits the Governor’s signature. Despite pressure from environmentalists, there has been no signal that the Governor intends to veto the legislation.

Still to Come?

Streamlining State and Federal Air Quality Regulations

SB 308 removes state regulation of certain types of emissions that are also regulated by federal law.  Current North Carolina air quality standards were created in the early 1990s, before federal rules covered this area.  The bill comes as a response to concern from several industries that the cost of complying with two separate standards is too high.  Although passed by the House, the bill did not make it through the Senate by the session’s end. However, it may be revived in either the redistricting or constitutional amendment special sessions.

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This article was posted in Legislative Activity by Neal Inman on June 21, 2011 at 11:30 AM.

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