The North Carolina General Assembly pledged to rein in "unelected bureaucrats” with an overhaul of the state’s creation of regulations in one of its most contentious legislative actions of 2025. But what does it really mean when lawmakers say they intend to cut through red tape?
House Bill 402, which became law after a dramatic veto override vote in July, made it more difficult to pass regulations with a significant economic impact. The costliest rules — those with an aggregate financial cost of $20 million or greater over five years — now must be passed by the state legislature itself.
Through a more critical lens, what state Republicans frame as common-sense legislation aimed at preventing costly regulations can also be seen as a political maneuver meant to chip away at the Gov. Josh Stein’s power.
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That’s because the governor, as the chief executive of North Carolina, appoints the department heads of most of the state’s foremost rulemaking agencies including the Department of Environmental Quality and the Department of Health and Human Services.
He also appoints many of the members of the 178 rulemaking bodies which approve new regulations. However, the governor’s power over some of the most consequential of these regulatory agencies has slipped away in recent years.
In 2023, the legislature transferred two seat appointments on the Environmental Management Commission from the governor to the Commissioner of Agriculture. As a result, Republicans now control a majority of the seats on the 15-member commission tasked with passing rules to protect the state’s air and water quality.
Last year, the legislature also flipped the North Carolina Utilities Commission to majority-Republican appointees by transferring one of the governor’s appointments to the state treasurer.
Those numbers could prove to be especially important considering that H.B. 402 requires a two-thirds vote to pass a proposed permanent rule with a cost of $1 million over five years and a unanimous vote for rules costing $10 million over five years.
Rep. Pricey Harrison, a progressive Democrat who’s represented Greensboro since 2005, was one of the most vocal opponents to H.B. 402. She told Carolina Public Press that she fears important environmental protections will be stymied by the changes made in the bill.
“They've taken away (Stein’s) appointments,” Harrison said. “A lot of them are getting replaced with industry — sort of Chamber of Commerce types — and they are not exactly enthusiastic about enacting more regulations to protect the public.”
The future of the state’s water quality regulations have become a central talking point for objectors to H.B. 402. That’s because they are some of the most expensive rules enforced by the government.
“There's never going to be anything cheaper than dumping your waste stream into the river,” said Brooks Rainey, a lobbyist for the Southern Environmental Law Center.
The SELC and other environmental advocacy groups warned that the law will make it near impossible to keep PFAs and other harmful chemicals out of North Carolina’s fresh water.
“When we ask industry not to dump their waste stream into the river, that's going to cost them money to do something else with it, so, unfortunately, what (H.B. 402) does is it’s going to make it pretty much impossible to adopt new water quality regulations.”
However, many economists agree that state governments should assess the impact of excessive or outdated regulations on their economies.
North Carolina’s Administrative Code, the body of law that contains all rules and regulations created by those aforementioned executive agencies, contains about 109,000 total restrictions.
It would take the average person more than a month, reading 24 hours per day, to get through the more than 6 million words that comprise the state’s administrative code.
While North Carolina is about middle-of-the-pack when it comes to the number of restrictions it has — 27th most of U.S. states — that is still enough to put a significant damper on the economy, economist Patrick McLaughlin told CPP.
McLaughlin is a research fellow at the Hoover Institution, a conservative public policy think tank at Stanford University. His academic focus centers on regulations and their effect on the economy.
“The biggest hidden cost of regulations is the opportunity costs,” McLaughlin said.
“Every dollar that goes into regulatory compliance and every second of time that goes into regulatory compliance is, necessarily, not a dollar spent on some other productive activity or not a second spent on entrepreneurship.”
According to his research, that tradeoff can result in higher prices and fewer jobs.
The biggest problem with the rulemaking procedure in most states, according to McLaughlin, is that agencies are incentivized to constantly create new rules, but they have little reason to go back and remove or change regulations that aren’t working as intended.
“If you can get regulators to view their jobs not as rule makers but as rule managers, that's a key change,” McLaughlin said.
As for potential solutions, McLaughlin suggested that states have a “one in, one out” policy for regulations. For every new rule implemented at an agency, one old rule should be removed.
He also recommended that state regulations be passed with sunset provisions, where effective regulations may be renewed and ineffective ones expire after a set time period.
McLaughlin does agree that some regulations, even with a significant economic impact, are worth it because of the benefits they provide. He said cost-benefit analysis should be a major part in the consideration of new regulations.
H.B. 402 doesn’t quite heed that advice. One controversial provision clarifies that the calculation of a proposed rule’s aggregate financial cost shouldn’t include benefits.
“Look at costs and benefits,” McLaughlin said, “And this should be what gets put in front of a legislator ideally, if they're looking to vote up or down on a specific regulation that was brought to them because of the REINS Act, hopefully they can look at more than just the cost.”
This article first appeared on Carolina Public Press and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.