Capital - March 2005

State panel exists under rule of flaw
By Jack Betts

When the 1995 General Assembly quietly empowered an obscure advisory board with unprecedented authority to slow or kill proposed rules, business lobbyists beamed with satisfaction. For decades, state agencies, boards and commissions had been drawing up thousands of pages of rules, which have the effect of law, affecting a dizzying array of matters, ranging from how well drillers and barbers do their jobs to complex environmental regulations.

“They had gotten completely out of control,” says Mike Carpenter, executive director of the state Home Builders Association. Business owners thought there were too many rules. Agencies were adopting hundreds more each year, some they didn’t have specific authority to. Often these rules were so vague businessmen couldn’t decipher them.

So the Senate adopted a proposal to give the Rules Review Commission — an advisory panel whose authority had been limited to examining rules and earmarking those it felt needed more work — the power to delay enactment up to two years, bounce back rules to originating agencies and, if flaws weren’t fixed, veto them. Even when the RRC passed a rule, it could be stalled if a single legislator filed an objection. The proposal slipped though in the closing days of the session as a special provision in the budget, a tactic legislative leaders sometimes use to push through a pet project that could get lost in the rush to adjournment.

While it made the business lobby happy, others howled. One Hunt administration official warned it would create an “unmitigated disaster” by keeping the executive branch from adopting rules to carry out responsibilities the General Assembly gave it through legislation. “A bureaucratic nightmare,” added Steve Levitas, a Greensboro lawyer who was deputy secretary of the Department of Environment and Natural Resources. Harry Payne, then state labor commissioner and now head of the Employment Security Commission, fumed, “With practically no review of their decision to veto, the members of the Rules Review Commission wield more power than most elected officials.”

Environmentalists were livid, fearing the new powers would hinder orderly adoption of complicated rules used by regulatory agencies. They fretted that the RRC would have the powers of jury, judge and executioner. It spanned the cosmos of constitutional authority: a creature of the legislature — half its now 10 members appointed by the speaker of the House, half by the Senate president pro tem — with powers of the executive and judicial branches. Surely there would be a lawsuit in all this, culminating in the courts cutting it down to size, just as they had in the 1980s when they whacked back the old Advisory Budget Commission — a sort of mini-legislature that made key spending and policy decisions when the General Assembly was not in session.

Mike Easley, then the attorney general, held a strategy session in his office to consider challenging the constitutionality of the commission’s new powers, but he decided not to. After all, there is a presumption that legislation passed by the General Assembly is constitutional. Besides, if he decided to challenge them so directly, legislators might take offense — and remember it the next time the attorney general’s office asked for a budget increase or a new law.

A few early challenges failed, and most state agencies learned to live with the RRC. Two years ago, the legislature tinkered with its powers, allowing noncontroversial rules to take effect much faster. It also curtailed state agencies’ ability to skirt the commission by adopting temporary rules. They must have authority to adopt a certain rule, which must be necessary to carry out a legislative requirement, and it must be clear and unambiguous.

The RRC has not shut down the government, as some once feared. Its members — lawyers, business folk, retirees and ordinary citizens willing to put up with the tedium of reviewing rules for $200 per diem — have approved rules regularly, and most still go in effect. But the wheels came off the wagon last year, skidding the commission’s existence back into a question for the courts.

The Environmental Management Commission, after five years of work, proposed new rules to control stormwater runoff in response to state and federal laws. The RRC raised a number of objections. Among them: The proposal was too large and complicated to understand. So the environmental agency broke it into pieces; commission members complained there were too many.

When its staff approved the final version, the commission, fearing the rules were too controversial, canned them. “I probably should have kept my mouth shut — I made more enemies than you can haul on a Greyhound bus,” says commissioner Jeff Gray, a Raleigh lawyer. The reason he didn’t: “There were all these run-on sentences, and there were broader effects on local governments” beyond controlling runoff. The rejection led to the General Assembly adopting by statute what would have been accomplished through a rule. Lawmakers adopted a weak stormwater bill last year and might consider revisions this year.

The episode earned the RRC a legislative tongue-lashing. “A decision that is rendered without reason is arbitrary and capricious and is void,” Sen. Dan Clodfelter, a Charlotte Democrat, said at a hearing last year. It also confirmed the predictions that the RRC wouldn’t be able to handle controversial rules. “Virtually every controversial issue will wind up in the legislature,” says the Home Builders’ Carpenter, “and that is where it ought to go. After all, if the RRC had approved the rule, we would have taken it to the legislature” to get it changed.

The RRC’s failure to adopt strong runoff rules, and the legislature’s approval of weak ones, reflects a regulatory system that just isn’t working, says Trip Van Noppen, a Chapel Hill lawyer for the Southern Environmental Law Center. “We have to protect our drinking water supply, protect our communities from flooding, protect our coastal waters where we fish and shellfish, and the biggest problem we have in all those areas is how we manage the runoff from thunderstorms.”

That’s why a coalition of environmental groups is challenging the constitutionality of the RRC. It has filed a friend-of-the-court brief in a case before the N.C. Court of Appeals brought by the N.C. Pharmacy Board over rejection of a workplace rule. And it has challenged the RRC’s constitutionality in another suit filed in Wake Superior Court last year. In both those suits, environmentalists say the RRC violated the separation-of-powers principles in the state constitution.

But a coalition of business groups, including the state chamber of commerce, believe there’s a different danger: “The RRC acts to protect the public from rules that have no statutory authority and to relieve citizens of the burden of later challenging rules that have no statutory authority. Simply put, the RRC helps the executive branch get it right the first time around.”