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How to reinvolve the legislature when agencies want costly rules

My research brief about why Florida’s legislative rules ratification process would serve well for North Carolina explains:

As difficult as it appears, however, nearly all proposed rules go on to become permanent, and very, very few are ever disapproved by the General Assembly. A 2010 study from the John Locke Foundation found that the legislature disapproved only about one-tenth of one percent of agency rules introduced.

Clarifying the legislative review of rules would be a good idea. But some rules are different from others. Some are minor, procedural things, whereas others can impose major costs in time and money on people and businesses.

It’s those big, costly rules that are the issue. It’s not good enough for them to get a pass because the legislature has too many other issues on their plate. Florida knows this:

Under Florida’s process, known as legislative rules ratification, agencies must produce a “statement of expected regulatory cost” when the aggregate cost of a proposed rule would be $200,000 or more in the first year (i.e., a five-year cost of at least $1 million). Those cost could be direct and indirect costs to the private sector. Proposed guidance to agencies in determining those costs included three subcategories: costs on small businesses, adverse impacts across a broad array of economic measures, and costs of compliance. Any rule found to exceed that cost threshold would need legislative rules ratification.

If that last part sounds similar to North Carolina’s, let me explain the key difference. In Florida, unless a legislator drafts a bill and it passes the legislature, the rule does not go into effect. In North Carolina, a rule subject to legislative review is expected to take effect unless the legislature passes a bill to disapprove it. In Florida, it takes a bill to approve it.

The biggest hurdle in the process in both states is the high cost in time and effort involved in drafting and passing legislation. Agencies in North Carolina benefit from this cost by seeing very few rules ever disapproved. Even when legislators probably disagree with a rule, they often don’t have the time to mess with it. In Florida, agencies are forced to double-check with the legislature to make sure their costly rules still have the legislature’s blessing.

Here’s even better news. As the Florida Bar Journal pointed out, legislative rules ratification causes agencies and legislators to work together on big rules. This cooperation has become “routine.” My brief even cites an example of legislative rules ratification at work over important but very expensive rules, and wrote in sum that:

Having the legislature discuss, debate, and even wrangle over those issue brought considerations and concessions that might not have otherwise been made under uncontested agency rules.

Such debate from their elected representatives over a potential major change is exactly what people should be able to expect.

Which is why it would be a good process to add to North Carolina’s process of legislative review of rules.

Jon Sanders / Research Editor and Senior Fellow, Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...