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Regulating
the Regulators
Seven Reforms for Sensible Regulatory Policy in North Carolina
D
aren
B
akst
, J.D., LL.M.
F
eBruary
2010
P
oLicy
r
ePort
Regulating
the Regulators
Seven Reforms for Sensible Regulatory Policy in North Carolina
D
aren
B
akst
, J.D., LL.M.C
ontents
2 Executive Summary 3 Introduction3 What Are Regulations?3 The Importance o Strong Oversight4 Existing Oversight in North Carolina5
R
efoRm
o
ne
:
The Legislature Should Not Delegate an Excessive Amount o Power to Agencies5
R
efoRm
T
wo
:
The Legislature Should Give the RRC the Power toRequire Clear Statutory Authority 6
R
efoRm
T
hRee
:
The Legislature Should Empower the RRC to RejectRegulations Inconsistent with Legislative Intent6
R
efoRm
f
ouR
:
The Legislature Should Require Agencies to ConductCost-Benet Analysis with Proper Oversight9
R
efoRm
f
ive
:
The Legislature Should Require Agencies to ConductSmall Business Regulatory Flexibility Analysis11
R
efoRm
S
ix
:
The Legislature Should Require Periodic Review o Regulations12
R
efoRm
S
even
:
The Legislature Should Prohibit Agencies rom PassingRules that Exceed Federal Standards12 Conclusion13 End Notes
The views expressed in this report are solely those o the author and do not necessarily refect those o the sta or board o the John Locke Foundation. For more inormation, call 919-828-3876 or visit www.JohnLocke.org.©2010 by the John Locke Foundation.
seven reforms for sensible regulatory policy in north carolinapolicy report
e
xeCutive
s
uMMary
Unelected and unaccountable bureaucrats and ap-pointees regularly make major policy decisions that a-ect the lives o North Carolinians.They have the power to issue regulations aectingalmost every acet o our lives, rom the air we breatheto who may attend community colleges.The people o North Carolina need protections putin place to provide oversight over government agenciesso that their rule-making decisions represent the will o the legislature and not the whims o the agencies.Most state governments and even the ederal govern-ment have ar better controls over the regulatory powero government agencies than does North Carolina.The excessive regulatory power allowed by NorthCarolina imposes great costs on its citizens and busi-nesses and hurts the economic competitiveness o thestate.This report identies seven reorms that North Car-olina should adopt to improve the regulatory environ-ment in the state:
1) The Legislature Should Not Delegate an Excessive Amount o Power to Agencies
When legislation is drated, clear parameters shouldbe in place so that there are limits as to what an agency can do when implementing specic legislative provi-sions.
2) The Legislature Should Give the Rules Review Com-mission the Power to Require Clear Statutory Authority
Agencies are tasked with rulemaking and are un-likely to constrain their own power voluntarily. They will tend to take the most expansive reading o theirstatutory powers when developing regulations When statutory authority is in question, the pre-sumption by the Rules Review Commission should beagainst statutory authority, not in avor o it.I questions regarding statutory authority are suchthat it is reasonably unclear whether an agency headedby unelected bureaucrats may make major policy deci-sions (i.e., through regulations), then the Rules Review Commission should presume that those decisions rest with the state legislature, the representative body ac-countable to all citizens.
3) The Legislature Should Empower the Rules Review Commission to Reject Regulations Inconsistent with Legis-lative Intent
Oten an agency can have statutory authority butstill take action beyond the scope o the legislature’s in-tent. An example o this problem is the State Board o Community Colleges’ proposed regulations to admit il-legal immigrants into community colleges.It would be dicult to argue that the Board doesnot have the authority to determine whether illegal im-migrants can be admitted to community colleges. It would also, however, be very dicult to argue that thelegislature intended to delegate this major policy deci-sion to the Board when it passed language giving theBoard power to set admissions standards. The peopleneed protections put into place to ensure that an agen-cy’s actions are consistent with the intent o the legisla-ture when it decided to delegate power to the agency.
4) The Legislature Should Require Agencies to Conduct Cost-Benet Analysis with Proper Oversight
For nearly 40 years, the ederal government hasused some orm o cost-benet analysis to review regu-lations. The North Carolina General Assembly shouldpass a law that also requires cost-benet analysis.The cost-benet analysis process should include:Rejection o rules i costs exceed benets.Consideration o alternatives to achieve the statedobjective and selection o the alternative that im-poses the least cost to society.Selection o the least burdensome regulatory op-tion.
5) The Legislature Should Require Agencies to Conduct Small Business Regulatory Flexibility Analysis
One-size-ts-all regulation can cause signicantproblems, especially when it comes to compliance.Small businesses simply are not in as good o a positionto meet regulatory mandates as larger businesses.To address the dierences between small businessesand larger businesses, agencies should be required toconsider regulations that reduce the impact on smallbusinesses. That consideration would include havingless stringent compliance requirements or small busi-•••
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