Legislature was wise to reclaim power

Of all the legislation enacted by the North Carolina General Assembly this year, none is more significant than House Bill 402, which strengthens legislative oversight of state regulations. Passed by both chambers in June, it drew opposition from Gov. Josh Stein. In July, lawmakers overrode his veto to make it the law of the land.

From now on, if an executive agency proposes a rule with projected compliance costs of at least $20 million over five years, it must return to the General Assembly for approval before it can be issued and enforced. The bill also raises the legal thresholds for boards, councils, and commissions to impose major regulations. If the projected costs are at least $1 million over five years, that will require a supermajority of two-thirds of panel members. If a rule would cost $10 million or more, unanimity is required.

There are good economic reasons to welcome these reforms, which constitute North Carolina’s version of a REINS Act (that stands for Regulations from the Executive in Need of Scrutiny). While regulations can be needed to protect public health and safety, their benefits ought to exceed their costs. All too often, they don’t.

The stakes are high. A recent study by Patrick McLaughlin of Stanford University’s Hoover Institution and John Wong of George Mason University’s Mercatus Center found that for every 10% increase in regulatory restrictions, a state’s economic-growth rate fell by more than a third of a point.

The primary reason to cheer the enactment of House Bill 402, however, is that it will help to restore the constitutional separation of powers.

Take another look at how I worded my explanation of the legislation: that a costly rule must “return to the General Assembly for approval before it can be issued and enforced.” Executive-branch officers and agencies propose new rules, of course. But they do so only because the legislature has initially granted them the power to do so. Neither elected executives nor the officials they appoint possess any inherent constitutional authority to issue new regulations. What the legislature gives, the legislature can reclaim.

On this question, North Carolina’s constitution is clear. It does list as one of the governor’s duties that he or she “take care that the laws be faithfully executed.” It would be unconstitutional for the General Assembly to apply regulations by committee or floor votes — to decide which companies are out of compliance with a clear-water rule, for example, and assess fines accordingly. But the rule itself can only be issued if authorized by statute.

If lawmakers conclude that a rule isn’t in keeping with legislative intent, they have the power rectify the error. Of course, it would be highly impractical to send every proposed rule to the General Assembly for approval. Some delegation is clearly necessary. What House Bill 402 does is set reasonable thresholds based on the potential costs imposed on companies, households, and other units of government.

As for other elected executives, most lack any inherent powers at all. Their “respective duties shall be prescribed by law,” the constitution states. The agriculture commissioner can regulate farms, the insurance commissioner contracts, and the labor commissioner workplaces and elevators only to the extent the General Assembly has granted that authority by statute.

If all this leads you to conclude that North Carolina’s legislative branch is far more powerful than its executive branch, great! I have successfully conveyed my point. Our constitution establishes separate branches of government, yes, but they were never meant to be equal in formal powers.

The authority to levy taxes, to appropriate the resulting revenue, to declare certain categories of private behavior to be illegal, and to set fines, prison terms, or other consequences for engaging in that behavior is assigned by our state constitution to our elected senators and representatives.

In other words, the reins of regulation have always led back to the General Assembly. House Bill 402 simply gives lawmakers a firmer grasp on them.

John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy and American history.