December 4, 2013. Two earlier posts looked at the history of regulatory reform in North Carolina and regulatory reform’s focus on environmental rules. The current General Assembly has continued to work on regulatory reform in general and limiting environmental rules in particular. Regulatory reform legislation adopted by the N.C. General Assembly since 2011 reflects two basic ideas: 1. Some number of agency rules are simply unnecessary and should be repealed; and 2. If a federal environmental standard exists, state and local environmental rules should not go beyond the federal requirement except in extraordinary circumstances. More about the assumptions behind recent regulatory reform efforts below.
Assumption: State agencies have unnecessary and overly burdensome rules that should be repealed. There will always be a need to review, update and in some cases repeal outdated rules, but it is not clear that rooting out “unnecessary” rules can do much to turn down the political heat over regulations. It isn’t for lack of trying. In October 2010, Governor Beverly Perdue issued an executive order on regulatory reform. Executive Order 70 invited citizens to identify overly burdensome and unnecessary rules and directed state agencies to do an internal review to identify unnecessary and outdated rules. In 2011, the General Assembly’s Regulatory Reform Committee invited the public to identify “outdated, unnecessary, unduly burdensome, or vague rules…that are an impediment to private sector job creation” in a series of public meetings. The legislature also amended the state’s Administrative Procedures Act in 2011 to put the rules review process created under Executive Order 70 into law. G.S. 150B-19.2
The earlier post on the history of regulatory reform describes the somewhat underwhelming results of both efforts to root out unnecessary and overly burdensome rules. Although state agencies identified several hundred unnecessary rules through the internal review required under Executive Order 70 , most of those rules related to programs that no longer existed or had been superceded by new standards. Since the rules were no longer being enforced, repeal did nothing to ease complaints about regulatory burden. On the other hand, rules identified by citizens as unnecessary or unduly burdensome often turned out to be required by state or federal law or the result of a significant policy debate and unlikely candidates for a politically painless repeal.
The Regulatory Reform Act of 2013 (Session Law 2013-413 ) takes a new approach, requiring state agencies to review and readopt all existing rules every ten years. If a rule is not reviewed on the schedule set by the state’s Rules Review Commission, the rule automatically expires. (Rules needed to carry out a delegated federal program will not automatically expire, but still have to be reviewed and readopted.) Continuing its preoccupation with environmental rules, the General Assembly directed the Rules Review Commission to schedule state water quality standards and wetland rules for the first round of review in 2014. Ten-year review and readoption may one day settle into a manageable routine, but several potential pitfalls lie ahead:
– Given N.C.’s lengthy rulemaking process, a 10-year readoption schedule could lead to constant churning and little certainty for either regulators or the public. Nothing in Session Law 2013-413 shortens the process for readoption of an existing rule, so the agency would need to go through all of the usual rule adoption steps: public notice, fiscal analysis, review by the Rules Review Commission, and possible legislative disapproval. The Falls Lake nutrient rules took about five years from beginning to effective date and the rules include some requirements that phase-in even later. Streamlining the process for readoption and starting the ten-year review period at full implementation of a rule (rather than adoption) could reduce the churning.
– Review and readoption of rules will be even more disruptive if it is used to constantly revisit policy decisions rather than simply identify outdated, unnecessary rules. The fact that the General Assembly targeted water quality and wetland rules for the first round of review and readoption suggests a policy agenda. Public statements by the director of the state’s water quality programs, Tom Reeder, indicate that the Department of Environment and Natural Resources has already put stream buffer and wetland rules — repeatedly targeted by development interests — in the spotlight for the first round of water quality rule review.
– Complex sets of rules have to be reviewed together. Stream buffer rules, for example, have generally been adopted as part of a larger plan to solve a specific water quality problem. Federal law requires the state to reduce pollution causing impaired water quality (like the nutrient problems in Falls Lake and Jordan Lake), but federal rules do not dictate the solution. North Carolina ‘s longstanding policy has been to create a solution that shares the burden of pollution reduction among all of the major pollution sources (wastewater treatment plants, industrial dischargers, agricultural runoff and development activity). In most cases, the final rules also represent a long negotiation process. Using rule review to respond to one interest group could shift more of the regulatory burden and cost of pollution reduction to others. A piecemeal approach to regulatory reform carries the risk of making complex environmental protection programs less effective and less equitable, but no less politically charged.
— The interrelationship of rules has practical implications. According to Tom Reeder, the legislative mandate to review surface water standards and wetland rules in 2013 also draws in two additional sets of rules. Mr. Reeder expects the 2014 water quality rule review to involve 395 rules.
– Rule review comes without any additional staff resources. The massive water quality rule review will create a new workload for a water quality staff still shrinking under budget cuts and reorganization decisions. Mr. Reeder has already suggested that rule review may further delay revisions to state water quality standards needed to comply with federal Clean Water Act requirements.
Assumption: State and local environmental standards should not go beyond federal standards except in extraordinary circumstances.
The Regulatory Reform Act of 2011 ( Session Law 2011-398 ) prohibited state environmental agencies — and only environmental agencies — from adopting a more restrictive standard than a corresponding federal rule. The law has exceptions for rules to address a “serious and unforeseen threat to public health, safety or welfare” and rules required by state law, federal law, state budget policy or a court order. The same legislation directed all state agencies to provide the General Assembly’s Joint Select Regulatory Reform Committee with a list of existing rules and indicate for each rule whether the rule was mandated by federal law and whether the rule was more stringent than an analogous federal regulation. (The session law defined analogous to mean that a federal rule regulated the same conduct or activity.)
An earlier post (originally written about a 2013 Senate bill) provides examples of state environmental rules that go beyond the corresponding federal rule. (The examples come from the 2011 DENR report to the Select Regulatory Reform Committee.) The post also notes some of the difficulties in limiting state environmental rules to federal standards. At the most basic level, it turns out to be harder than legislators may think to even figure out whether a state rule is “more stringent” than a corresponding federal rule. It is rarely as easy as comparing two numerical standards; in many cases, federal rules set a framework and goals in the expectation that the state will fill in the detail. Another problem is that federal environmental statutes and rules set a floor rather than a ceiling on environmental protection — a floor based on national priorities rather than state needs. Finally, federal rules rarely include all of the administrative pieces needed for a complete environmental protection program. Since the states actually carry out most of these programs, Congress and EPA left the states a good bit of flexibility in setting up permitting and enforcement programs.
Having put limits on new state environmental rules in 2011, the 2013 General Assembly took on local environmental ordinances. Session Law 2013-413 puts a one year moratorium on adoption of new local environmental ordinances regulating issues addressed by state or federal environmental rules. An earlier post goes into more detail about the temporary limit on local environmental ordinances. The one-year moratorium actually represents a compromise to allow time for the legislature’s Environmental Review Commission to look at the appropriate scope of local government authority to adopt environmental standards. The N.C. Senate had proposed to permanently restrict adoption of local environmental ordinances.
Even the one-year moratorium may be a problem for local government. A number of cities and counties operate environmental infrastructure (like water and wastewater treatment systems) under state-issued permits that require the local government to put environmental protection measures in place by ordinance.
Behind all of this lies a genuine concern about the layering of federal, state and local requirements. Citizen comments clearly indicate confusion about where environmental standards come from and how different requirements fit together. In spite of everyone’s best efforts, the overlay of federal rules, state rules and local ordinances don’t always fit together perfectly. Conflicts get resolved, but the property owner caught up in an unintended consequence of overlapping standards will be understandably frustrated in the meantime.
Which is all to say that there are good reasons to look at the intersection of federal, state and local environmental standards. It is just not as easy as waiving away everything other than the standard adopted by the highest level of government.