NC Regulatory Round-up: March 27

Apologies for the delay in posting—between life as a graduate student, a teaching assistant, and a new father, it’s been hard to keep up with the busy bees at the General Assembly working to rewrite North Carolina regulation, much less provide much in the way of context. Expect a deluge in the coming weeks.

But first, a few updates:

  • Republicans endorse more regulatory bodies: Though Senate Bill 10 was supposedly necessary to prune the regulatory tree, Senate Bill 337 would add a new branch, the N.C. Public Charter School Board. The through line between both bills is that they take power away from Democratic appointees—Senate Bill 10 by firing them, Senate Bill 337 by creating a new board that takes on many of the duties of the State Board of Education.
  • More money, more regulation: Still on the education beat, North Carolina home-schoolers have not all embraced the legislature’s endeavor to give them tax credits for home schooling their children. WRAL quotes Nikki Esquivel, who has home schooled her children for 15 years: “Most of us know that, along with government money, comes government regulation.”
  • And the nanny state will soon stop telling motorcycle drivers they have to wear helmets, if House Bill 109 is passed. In exchange for feeling the breeze through their hair, motorcyclists will have to have at least $10,000 in medical insurance to cover their accidents. The bill does not specify a regulatory mechanism to ensure that drivers have this insurance, though if evidence starts coming in that drivers are not covering themselves adequately, you can expect it will be coming down the pike. If I’m a motorcyclist who DOES wear his helmet, I would wonder what this is going to do to my insurance premium.

NC Regulatory Round-up: March 13

The new pope is stealing headlines, but down here in North Carolina, the regulatory beat goes on.

  • Republicans may cry out for state’s rights over federal control, but when it comes to North Carolina decentralization, state lawmakers don’t seem to have such a hot view of local control. House Bill 150 would restrict local zoning options, an issue that seems to be of concern of homebuilders who don’t want to change their housing designs for local markets. Fracking legislation, which would make it easier for companies to drill by reducing environmental standards and government monitoring, would keep localities from establishing stricter regulatory standards than at the state level. And in the NC Senate, Republicans have moved forward a bill that would take control of the Charlotte airport away from the city and give it to a newly authorized regional authority.
  • The teen-tanning ban was debated today on the House floor, with some nanny state concerns emerging from Marilyn Avila (R-Wake). She also claimed that the risk tradeoffs would lead to increased cancer exposure, theorizing that teens will simply tan unsupervised in the sun. However, other lawmakers claimed that the health effect would be worth it, and that those teens desiring darker skin would simply switch to tanning sprays.
  • A bill with both Republican and Democratic sponsors would enable North Carolina “benefit corporations,” which explicitly list benefits to the general public in their corporate charters (the ranks of benefit corporations currently include Ben and Jerry’s, King Arthur’s Flour, and Patagonia). What’s interesting from a regulatory angle is that the state would outsource certification of benefit corporations to a private third party—a public-private regulatory device more common than you might think, currently used to regulate Medicare providers and institutions that receive federal student loans. The likely recipient of the certification authority would be B Lab, a nonprofit that has been pushing this sort of legislation across the country (Maryland was the first to pass such a bill in 2010). Both for ideological and pragmatic reasons, the bill has drawn the evil eye from Art Pope’s Civitas Institute for the second year in a row.

Purge the Pinkos! Socialists infiltrating NC boards and commissions!

Okay, so North Carolina lawmakers didn’t go quite that far as they justified passing SB 10 yesterday, but WRAL does offer this McCarthy-esque quote:

Rep. Edgar Starnes, R-Caldwell, said the move was necessary to purge state regulatory boards and commissions that, he said, “have been infiltrated with people that have a very left-leaning bent.”

If Starnes offered an explanation of how these spooky folks with a “left-leaning bent” “infiltrated” so many North Carolina boards and commissions, WRAL didn’t include it. Each of these people was appointed by a North Carolina governor with the approval of the General Assembly. Starnes’ language seems all too reminiscent of another defunct House committee (albeit federal): the House Committee on Un-American Activities, which, as historian Landon Storrs has recently showed, was captured by people with a very right-leaning bent to purge those with a left-leaning bent from government service during the 1940s and ’50s.

Apparently not all of Starnes’ colleagues agreed with him: three Republicans joined the Democrats in opposition to the bill, but it passed nevertheless 71-43.

SB 10: History enters the discourse

Over at NC Spin, an opinion piece on SB 10 throws in a few historical nuggets, including an explanation of why the number of utilities commissioners increased from five to seven:

During the Arab Oil Embargo in the 1970’s, energy prices were highly volatile and public utilities including bus, power, telephone and other companies suddenly faced huge fluctuations in their costs. According to state statutes they flooded the Utilities Commission with rate hike requests, each request requiring a hearing to determine the relevance and size of increases. The Commission, as then constituted, consisted of five Commissioners and they were swamped in trying to read and hear reams of data and material involved in the rate hearings. Our legislature wisely increased the number of Commissioners from five to seven members and until energy prices stabilized those seven were kept busy.

And the author (who is strangely anonymous, atypical for NC Spin and hopefully an oversight that will soon be corrected) claims that Democrats did something similar to the Wildlife Resources Commission in the 1980s, though no explanation of why:

Democrats are framing this as a “power grab” but there is precedence, on a much smaller scale, for eliminating boards. Back in the 1980′s they totally eliminated the Wildlife Resources Commission and reconstituted it the next day.  The argument that current actions are purely political doesn’t wash because the truth is that all appointments are selected by elected officials and are, as such, political.

Overall, the piece takes a largely charitable view of the content of SB 10, while castigating the lack of transparency in its composition as well as the mass firing.

SB 10 induces GOP infighting over due process

Democrats in the House did not let Senate Bill 10 go without a fight, and last week, it underwent hasty revisions and emerged for a vote after procedural shenanigans, passing 70-42. Those changes toned down some of the most Machiavellian measures in the bill—for instance, the Utilities Commission and the Industrial Commission pushes back the mass firing to 2015. On Monday, the House votes once again, and then it’s kicked back to the Senate, where it will go to a conference committee.

Since Republicans have a super-majority, it didn’t matter that it won zero Democratic votes. The proffered GOP rationales ran from the ideological (i.e., we must do this because it reduces the size of government!) to a sharp awareness of a limited window of opportunity, (i.e., pass this now or else we may never have another chance!). Perhaps somewhat more surprising—or, not surprising at all, if you followed my logic in my first post on SB 10—is that some Republicans opposed the bill.

Two Republican lawmakers voted against the bill, and John Blust (R-Guilford) spoke up for due process. WRAL quotes him as saying:

“Why do we all think that’s such a small, slight thing?” Blust asked. “Whether you like it or not, due process means notice to be heard and at least have your point of view considered.”

Blust wasn’t defending due process at the level of regulatory boards and commissions, but rather at the legislative level. His concern was that Republicans were using their super-majority to bypass the processes for public notice and comment.

In criticizing the speed and procedural maneuvering of his own party, Blust framed his concerns with the electoral bottom line. Again, from WRAL:

“I don’t like this idea, ‘Well, we have the power. Let’s go ahead and do it,'” he said. “Just because we have power, we need to be judicious with it. I wish we would be more careful with it.”

 

“The people have the right to yank us in two years and put someone else in,” he added.

 

If North Carolina voters do punish Republicans at the polls next go around, it will be hard to tell precisely how much was driven by anger over regulatory reform.

GOP General Assembly: between the poles of libertarianism and paternalism?

The General Assembly has been sending what seems like conflicting ideological messages regarding risk regulation.

On the libertarian side, it’s considering canning auto inspection requirements, which would reduce the government’s role in encouraging safer vehicles on North Carolina roads. You wouldn’t need to get an inspection every year—but then again, neither would the guy driving the clunker with bad breaks behind you on Interstate 40.

On the paternalistic side, it’s moving forward on a ban on teen use of tanning beds (or at least a requirement that a doctor prescribe tanning time), to the chagrin of Civitas, “North Carolina’s conservative voice,” which contends that parents should be able to decide whether their children…or else we’re on a slippery slope to the NC Nanny State telling us we can’t sunbathe in our backyards.

Of course, North Carolina conservatives have not always been opposed to paternalism.

The sun also sets: House Bill 74

After the surprise of Senate Bill 10, the GOP-led General Assembly has returned to a regulatory reform agenda many pundits had predicted: adding sunset provisions to regulatory rules.

House Bill 74, the only bill currently in the regulatory reform committee in the state House, is “an act to provide for the periodic review and expiration of rules.”

What’s most significant is that HB 74 sets sunset provisions for most administrative rules in North Carolina, changing the default for their continuance. “Permanent rules” will no longer be permanent; they will “sunset” after 10 years unless re-adopted. Re-adoption promises to be laborious—to earn re-authorization, rules will have to appear again in the North Carolina Register, accept comments and possibly hold a public hearing.

“For every rule, there’s someone who has to live with it,” said sponsor Tom Murry (R-Wake) in explaining the bill, according to WRAL. “Many of [the rules] haven’t had proper sunsetting or sunshine in many years.”

The bill affects all rules subject to North Carolina’s Administrative Procedures Act (a knock-off of the federal version that was enacted almost 30 years before North Carolina’s was passed in 1974—of note for understanding this bill, both APAs spell out the procedural requirements for rule-making, including proscriptions regarding notice, comment, and public hearings). HB 74 mandates a massive review process, overseen by the Rules Review Commission. By the end of 2016, all rules for Health and Human Services that are not re-adopted will expire. By the end of 2017, the same will apply for all the rules regarding the Environment and Natural Resources. The next year will be the year for reviewing the rules of the occupational licensing boards and commissions, and all other rules must be reviewed by the end of 2019, or else they will be automatically repealed. After that, every bill on the books will need to be re-approved every 10 years, or else it will be magically pruned from the regulatory vine.

Adding sunset provisions to legislation and rules is not new—the sunset provisions in the Bush tax cuts precipitated the fiscal cliff stare-off in Washington—and I am curious what empirical studies of their effects suggest.

The theory of the four Republicans introducing the bill seems to be that the mechanism will sweep away obsolete rules, making for a cleaner regulatory environment. The necessary ones will remain, and perhaps even be easier to follow and enforce without all the clutter. Every ten years, a new generation of commissioners will have the opportunity to update the work of the past.

Yet with what WRAL quotes as 23,000 affected rules on the books, it could also conceivably clutter an already confusing rule-making process, bulking up the North Carolina Register even further and making the system even more opaque to the average state business or resident. And it’s not just the public that might be overwhelmed—agencies and commissions could find their attention spread thin as they churn through hundreds of re-adopted rules.

NC Regulatory Round-up: Feb 18

A quick rundown of recent NC regulatory stories:

  • Two stories explored the connections among Governor Pat McCrory (R), Duke Energy, and the Utilities Commission, and both gave attention to the public perception of capture if SB 10 goes through. The Institute for Southern Studies published an online piece that called attention to McCrory’s continued financial stake in Duke Energy, his former employer, and previous conflicts of interest when he was mayor of Charlotte. Indy Week linked the capture critique with concerns that it will hamper efforts to address climate change through increased use of renewable energy sources.
  • The House Committee on Regulatory Reform took up a “broad, sweeping bill” to “prune the complex web of regulations that agencies turn state and federal laws into administration action.” I will dig more into that bill, HB 74, later this week.
  • Might payday lending sneak back into North Carolina after getting the boot in 2005? Senator Jerry Tillman (R-Randolph) thinks the industry should be allowed to return, so long as sufficient regulation is in place—specifically, a monitoring system to ensure that borrowers have no more than one loan at a time. Last week, he introduced a bill to that effect, SB 89.
  • Governor McCrory has appointed Staci Meyer as chair of the Industrial Commission. Meyer was appointed by former Governor Mike Easley in 2009, but of course if Senate Bill 10 survives the House, McCory will have the option of canning Meyer and the five other members of the commission.

 

SB 10: On to a more deliberative House?

The increasingly infamous Senate Bill 10—the one that effectively fires sitting members on numerous boards in order to make way for McCrory-approved appointees—made it out of the Senate on Thursday, and the House will take it up tomorrow.

A few key tidbits from the last couple of days:

  • Origins: The legislation apparently did not begin with the governor’s office, according to the N&O. So what person or organization did cook up the idea then? Was it Senator Bill Rabon (R-Brunswick), its sponsor and one of the few people speaking on behalf of the bill? It does not appear among the model legislation on the American Legislative Executive Council (ALEC) website, so far as I can tell, and it does not appear to be a trend arriving in North Carolina from other states.
  • Opposition: Watchdogs at the NC Justice Center have grown alarmed at what Rob Schofield calls “a power grab that smack[s] of the old Soviet bloc or, perhaps, a third rate banana republic.” At least two environmental groups—the NC Sierra Club and the North Carolina Coastal Federation—have issued statements condemning the bill. “This is an unwarranted and ruthless attack on environmental boards and commissions whose job it is to serve the public,” said Molly Diggins, state director of the NC Sierra Club. I wonder if some businesses aren’t voicing opposition to the bill sotto voce.
  • Changes: The bill underwent some minor revisions during its lightening journey (48 hours) through the Senate last week. Amendments to the bill, officially titled “The Government Reorganization and Efficiency Act,” added two positions to the Board of Transportation among a few other tweaks. (See here for full text of the bill.)
  • Slowdown in the House: SB 10 will apparently not get the quick and dirty treatment in the House. The reason is not because of the independent commission power grab, but instead because of apprehension regarding the portion of the bill that will eliminate 12 special superior court judgeships. House GOP members have apparently heard from enough of their constituency regarding case overload. “I think we’re going to be very slow and deliberate before we start tinkering with the judicial system,” said House Majority Leader Edgar Starnes (R-Hicory), according to the N&O.

A quick run down of the press it’s received thus far:

  • The News and Observer has devoted a handful of articles to the bill, and this piece has a handy sidebar on the specific changes to each commission. This one explored the Industrial Commission in particular, claiming that it has been “plagued with inefficiencies and a history of poor management”—the words of reporter Mandy Locke, not a source, and based on an exposé last April by the N&O that “30,000 or more businesses in this state are breaking the law by not carrying insurance to protect injured workers.”
  • WRAL’s coverage includes video of both the Thursday reading (go to the 11min mark, though there’s nothing really to see—there was no debate on the bill, which passed 35-14) and interviews with the sponsor (who said “it’s not a fair question” to ask about whether it was done to clear out the Democrats) and a Democratic opponent (“It’s an unprecedented and breathtaking power grab.”).
  • Civitas Review has been silent so far on the bill, while the North Carolina Justice Center’s Progressive Pulse includes it in the parade of horribles unleashed by the GOP.

 

In case I didn’t make clear: This is radical

A few quick follow-ups on yesterday’s post:

First, I failed to make clear how radical a proposal Senate Bill 10 is. It’s radical, particularly the part regarding effectively firing all sitting commissioners and allowing for the governor to make his own appointments. I corresponded with one of my academic advisors, Edward Balleisen, about the bill, and despite his scholarly expertise on regulation, no precedents for the wholesale firing of sitting commissioners jumped to mind. If you know of any, please make a comment to illuminate us. Regardless, this is an unusually brazen power grab, and it would certainly bend the Utilities Commission, the Industrial Commission, the Coastal Resources Commission, the Environmental Management Commission, the Wildlife Resources Commission, and the State Lottery Commission to the Republicans’ will.

Second, after looking at the text of the bill (which wasn’t public at the time of yesterday’s post), I see that this is actually more about re-writing the short term than the long term.

Before explaining why, I should clarify my point regarding how this changes the relationship between these independent commissions and the electoral cycles. The governor makes most appointments in the current system—that’s not new. But in the current system, those appointments are staggered, with most commissioners serving terms of six years. That means that a commissioner would out-serve the governor that appointed her, and since the appointments are staggered, a governor could not control all seats—unless, of course, a governor is elected to a second term. Still, that system introduces a lag that soothes out the transitions between election cycles. With the Republicans controlling the House, Senate, and governor’s mansion for the first time since the 19th Century, they apparently want to get rid of that lag time.

Which brings me back to the actual text of the bill. Much of that staggered structure will remain, and though some of the seats—such as those on the Coastal Resources Commission—are reduced to four years, those on the Industrial Commission and the Utilities Commission will remain six years. So in that sense, this bill re-boots the system to the GOP’s advantage, but doesn’t significantly alter the structure for the future. That means that if a Democrat is elected governor in 2016, he or she will have to deal with McCrory’s appointees.

Unless, of course, Democrats reset the system like the Republicans are trying to do now.

More to come on the actual bill, though we’ll see how much it changes after the hearing this afternoon.