A BILL TO BE ENTITLED
AN ACT to amend the Administrative procedure act to create a distinction between the standard for Review of the adoption of rules and the standard for review of the content of rules to be used by the rules review commission in reviewing temporary and permanent rules and to make other conforming changes.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 150B‑21.9 is repealed.
SECTION 2.  Part 3 of Article 2A of Chapter 150B of the General Statutes is amended by adding a new section to read:
"§ 150B‑21.9A. Standards and timetable for review by Commission.
(a)	Adoption Standards. – After receipt of a rule from an agency, the Commission shall determine whether the rule was adopted in accordance with Part 2 of this Article. If the Commission determines that the rule was not adopted in accordance with Part 2 of this Article, the Commission shall then return the rule to the agency that adopted the rule, and shall notify the agency of the specific violation of Part 2 of this Article. If the Commission determines that the rule was adopted in accordance with Part 2 of this Article, the Commission shall review the rule based on the content standard set forth in subsection (b) of this section.
(b)	Content Standards. – The Commission shall not consider questions relating to the quality or efficacy of the rule or the specific means by which the agency has chosen to execute its statutory authority but shall restrict its review to determination of the standards set forth in this subsection. The Commission shall determine whether a rule meets all of the following criteria:
(1)	The subject matter of the rule is within the authority delegated to the agency by the General Assembly.
(2)	The rule is clear and unambiguous.
(3)	The rule is reasonably necessary to implement or interpret an enactment of the General Assembly, or of Congress, or a regulation of a federal agency. The Commission shall consider the cumulative effect of all rules adopted by the agency related to the specific purpose for which the rule is proposed.
(c)	Fiscal Notes. –  The Commission may ask the Office of State Budget and Management to determine if a rule has a substantial economic impact and is therefore required to have a fiscal note. The Commission must ask the Office of State Budget and Management to make this determination if a fiscal note was not prepared for a rule and the Commission receives a written request for a determination of whether the rule has a substantial economic impact.
(d)	Timetable. – The Commission shall review a permanent rule submitted to it on or before the twentieth of a month by the last day of the next month. The Commission shall review a rule submitted to it after the twentieth of a month by the last day of the second subsequent month. The Commission shall review a temporary rule in accordance with the timetable and procedure set forth in G.S. 150B‑21.1."
SECTION 3.  G.S. 150B‑21.10 reads as rewritten:
"§ 150B‑21.10.  Commission action on permanent rule.
(a)	At the first meeting at which a permanent rule is before the Commission for review, the Commission must take one of the following actions:
(1)	Approve the rule, if the Commission determines that the rule meets the content standards for  review set out in G.S. 150B‑21.9A(b).
(2)	Object to the rule, if the Commission determines that the rule does not meet the content standards for  review set out in G.S. 150B‑21.9A(b).
(3)	Extend the period for reviewing the rule, if the Commission determines it needs additional information on the rule to be able to decide whether the rule meets the content standards for review.
(b)	In reviewing a new rule or an amendment to an existing rule, the Commission may request an agency to make technical changes to the rule and may condition its approval of the rule on the agency's making the requested technical changes."
SECTION 4.  G.S. 150B‑21.11 reads as rewritten:
"§ 150B‑21.11.  Procedure when Commission approves permanent rule.
(a)	When the Commission approves a permanent rule, it must notify the agency that adopted the rule of the Commission's approval, deliver the approved rule to the Codifier of Rules, and include the text of the approved rule and a summary of the rule in its next report to the Joint Legislative Administrative Procedure Oversight Committee.
(b)	If the approved rule will increase or decrease expenditures or revenues of a unit of local government, the Commission must also notify the Governor of the Commission's approval of the rule and deliver a copy of the approved rule to the Governor by the end of the month in which the Commission approved the rule.
(c)	Entry into the Code. –  Entry of a rule in the North Carolina Administrative Code after review by the Commission creates a rebuttable presumption that the rule was adopted in accordance with Part 2 of this Article."
SECTION 5.  G.S. 150B‑21.12 reads as rewritten:
"§ 150B‑21.12.  Procedure when Commission objects to a permanent rule.
(a)	 Notification of Objection. – When the Commission objects to a permanent rule, it must send the agency that adopted the rule a written statement of the objection and the specific reason for the objection. The Commission shall identify each provision of the rule that fails to satisfy any of the content standards set out in G.S. 150B‑21.9A(b) and explain how the provision fails to satisfy the standards.
(a1)	Agency Action. –   Upon notification of objection, the agency that adopted the rule must take one of the following actions:
(1)	Change the rule to satisfy the Commission's objection and submit the revised rule to the Commission.
(2)	Submit a written response to the Commission indicating that the agency has decided not to change the rule.
(b)	Time Limit. – An agency that is not a board or commission must take one of the actions listed in subsection  (a1) of this section within 30 days after receiving the Commission's statement of objection. A board or commission must take one of these actions within 30 days after receiving the Commission's statement of objection or within 10 days after the board or commission's next regularly scheduled meeting, whichever comes later.
(c)	 Changes to the Rule. – When an agency changes a rule in response to an objection by the Commission, the Commission  shall determine whether the change satisfies the Commission's objection. If it does, the Commission  shall approve the rule. If it does not, the Commission  shall send the agency a written statement of the Commission's continued objection and the specific reason for the continued objection. The Commission  shall also determine whether the change is substantial. In making this determination, the Commission shall use the standards set forth in G.S. 150B‑21.2(g). If the change is substantial, the revised rule shall be published and reviewed in accordance with the procedure set forth in  G.S. 150B‑21.1.
(d)	Return of Rule. – A rule to which the Commission has objected remains under review by the Commission until the agency that adopted the rule decides not to satisfy the Commission's objection and makes a written request to the Commission to return the rule to the agency. When the Commission returns a rule to which it has objected, it must notify the Codifier of Rules of its action and must send a copy of the record of the Commission's review of the rule to the Joint Legislative Administrative Procedure Oversight Committee in its next report to that Committee. If the rule that is returned would have increased or decreased expenditures or revenues of a unit of local government, the Commission must also notify the Governor of its action and must send a copy of the record of the Commission's review of the rule to the Governor. The record of review consists of the rule, the Commission's letter of objection to the rule, the agency's written response to the Commission's letter, and any other relevant documents before the Commission when it decided to object to the rule."
SECTION 6.  This act becomes effective October 1, 2004, and applies to temporary and permanent rules adopted on or after that date.