Legislation Could Jeopardize Future NC Rulemaking

Last week, the N.C. Senate approved the conference report of an administrative procedures bill (H.B. 162) that would prohibit state agencies and commissions from adopting regulations with an economic impact of more than $100 million over a five-year period and would require a supermajority of the rulemaking commission for  agencies and commissions to adopt regulations with an economic impact of $10 million or more over a five-year period. This could affect the ability of the state to adopt a wide variety health, safety, and environmental regulations that are important to the work of nonprofits. Affected regulations could include rules related to immunizations, unemployment benefits, WIC electronic benefit transfer, foster care and adoption, child care centers, greenhouse gas emissions, and historic preservation tax credits, among other things.

The N.C. House of Representatives did not vote on the conference report of H.B. 162 last week, and it is unclear whether the House may take it up during its next special session later this month. The Center is concerned that, by restricting the state’s ability to regulate many important health, safety, and environmental issues, this provision could interfere with the important work of many nonprofits. If your nonprofit is concerned about this issue, we encourage you to contact your House member to share your concerns about these possible unintended consequences.

Some additional information and talking points:

  • The provision doesn’t distinguish between a rule that would impose a small cost on a large number of people versus a rule that imposes a substantial economic burden on a small number of regulated people or businesses. The provision does not take into consideration cost-benefit analysis (the rule would be barred even if the benefits would be substantially greater), health effects, or federal requirements.  Aggregate financial impact is interpreted as cost plus benefit to all parties affected by OSBM staff. Therefore, if a rule package creates $90,000,000 in estimated benefits and $10,000,000 in estimated costs, it would be prohibited under this bill.
  • Since the $100 million/five year cap represents aggregated costs, a rule/rule set that has widespread impact may bump up against the cap even though the rule does not impose an unreasonable cost on any one entity. The issue will arise even more frequently with the $10 million/5 year aggregated cost threshold that triggers supermajority approval of a rule.
  • The bill does not include any exceptions, such as for rules required to meet a federal mandate, comply with a court order, or to address a significant threat to public health and safety. This could lead to a situation where federal law requires adoption of a major state rule, but the commission is unable to get a supermajority to approve the rule. Potentially, this could jeopardize federal grants and contracts for nonprofits.