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Regulatory Overhaul Moves At Lightning Speed

June 07, 2011

As the legislature races to its adjournment date – less than two weeks from now – bills are being introduced and pushed through committees at a feverish rate.  Last night saw the introduction of an omnibus regulatory reform act, and the bill already received its first committee debate in the Senate Commerce Committee today. 
This proposal is an overhaul of the way state agencies make rules to implement state and federal laws.  Its provisions, if enacted, could have large implications for local governments.

The bill contains many complicated ideas, both technical and legal.  It is the product of the series of regulatory reform meetings held across the state by a legislative committee this spring.  Because it represents a key campaign promise of the legislative majority party, it is likely that this bill will receive a hearing at a break-neck pace.  Legislators will be trying to pass it through at least one chamber to beat Thursday’s deadline for bills to “crossover” to the other chamber and remain eligible for consideration during this legislative session.
The Regulatory Reform Act of 2011 would, among other things:
  1. Prohibit agency actions pursuant to guidance, policy, or non-binding interpretive statements.  However, the legislation does not appear to have any mechanism to ensure agencies follow this directive.
  2. Require rules to be adopted only if they are expressly authorized by federal or State law.  These rules must also be (a) necessary to serve the public interest, (b) reasonably necessary to implement or interpret federal or State law, (c) not unnecessary or redundant, (d) based on sound, reasonably available scientific, technical, economic, or other info (when appropriate), and (e) designed to achieve the objective in a cost-effective and timely manner.  This provision parallels a similar requirement included in the state budget which is likely to become law.
  3. Set up a process for annual agency review of rules.  This review must evaluate whether existing rules are unnecessary or unduly burdensome.  However, the bill does not appear to require the agency to take any further action to bring rules identified under this procedure into compliance.
  4. Require the rulemaking body to allow comments on fiscal notes during the public hearing process and approve the fiscal note before final passage of a rule.  Currently, the public may not have official input on fiscal notes, and rulemaking bodies such as the N.C. Environmental Management Commission (EMC) do not approve fiscal notes prepared for rules.
  5. Lower the threshold for financial impacts that give rise to a fiscal analysis from $3 million to $500,000.  This threshold was already lowered to $500,000 by a legislative action earlier this year, but that threshold would have expired July 1, 2012.  This bill would make the lowered threshold permanent, thus requiring a fiscal note if the aggregated financial impact of a rule exceeds $500,000.  Further, if a rule is determined to have this redefined “substantial economic impact,” then this bill would require the agency to propose at least two alternatives to the rule.
  6. Redirect appeals of contested cases from state agencies to Superior Court.  Now, an appeal of a determination by an administrative law judge goes to a state agency or the appropriate rulemaking body, such as the EMC.  Under this bill, redress would instead be in the state court system.
  7. Allow major developments in CAMA counties to proceed without further environmental review if they receive a CAMA permit.  A “major development” is already defined in state statute and generally includes large residential, commercial, and industrial developments.  This provision would make environmental analyses under the State Environmental Protection Act (SEPA) unnecessary under these circumstances.
  8. Extend some permit terms from five to ten years.  Air quality (Title V) permits would be issued for ten-year terms, as would discharges into waters that are NOT waters of the U.S.  Importantly, NPDES permits would remain on a five-year renewal schedule, for both wastewater and stormwater discharges.

Please respond to Erin Wynia with any questions about the bill’s implications or with any concerns you have.  Even better, if you have an example of a situation where these provisions would make your operations easier or more difficult, please provide that example.  Thank you for quick feedback due to the time pressures associated with this bill.

Posted on June 07, 2011 by Erin Wynia