The distinctions and relationships between the three branches of government—legislative, judicial, and administrative—are not static, but ever-changing, both at the federal and state levels. The separation of powers required by the United States and North Carolina Constitutions is a source of constant debate and discussion, not least amongst those making, interpreting, and enforcing the law.
In recent years, the interplay between the executive and the judicial branches, in particular, has been called into question. At the federal level, a 2024 United States Supreme Court decision, Loper Bright Enterprises v. Raimondo, overturned the long-standing Chevron doctrine established by the Court’s 1984 Chevron v. Natural Resources Defense Council decision. The 1984 decision gave federal government agencies significant authority by directing that, in the absence of explicit guidance from Congress, courts must defer to agencies’ interpretation of applicable statutes.
Opponents of Chevron deference argued it gave the executive branch the ability to interpret laws as it saw fit, rather than leaving the law-making and law-interpreting to the legislative and judicial branches, respectively. Those opponents argued that the “administrative state” was too powerful and created an uncertain regulatory environment with unnecessary bureaucratic red tape. In deciding Loper, the Court looked to the Administrative Procedure Act of 1946, which gives courts the nondelegable responsibility of “decid[ing] all relevant questions of law” when reviewing agency actions. So, Loper shifted authority from federal agencies to the judicial branch by requiring courts to exercise independent judgment rather than fully relying on agencies to fill statutory gaps.
Chevron and Loper address federal agencies and rules. As for state agencies and rules in North Carolina, agency interpretations are to be given “great weight,” but they are not binding on courts. N.C. Acupuncture Licensing Bd. v. N.C. Bd. of Physical Therapy Exam’rs, 371 N.C. 697, 700 (2018). As per the North Carolina Administrative Procedure Act, administrative law judges shall decide cases based upon the preponderance of the evidence, giving due regard to the demonstrated knowledge and expertise of the agency with respect to facts and inferences within the specialized knowledge of the agency. Then, decisions made by administrative law judges can be appealed to superior court, where the superior court judge is to review the decision de novo as to questions of law, and to use the whole record standard of review when findings or decisions are unsupported by substantial evidence, or arbitrary, capricious or an abuse of discretion.
North Carolina House Bill 402, introduced on March 13, 2025, would codify judicial independence, eliminating judicial deference to agency decisions, both by administrative law judges and courts. Per this proposed legislation, judges and courts would lean on agency knowledge and expertise in fact-finding, but when it comes to actual decision-making, judges’ and courts’ authority would be totally independent of agencies.
The Bill also reduces administrative power by guaranteeing the General Assembly additional oversight over regulations with a significant economic impact of at least $1 million, whereas the General Assembly currently only has input if a rule is the subject of complaint. Proposed rules are reviewed by the Rules Review Commission. As it stands, if the Rules Review Commission receives at least ten written complaints about a rule, then the rule is subject to review by the General Assembly. HB 402 eliminates the need for ten disapproval letters. Instead, rules can be subject to General Assembly scrutiny if the rule (1) receives at least ten disapproval letters or (2) has a substantial economic impact of at least $1 million.
HB 402 also expands the definition of “substantial economic impact” by encompassing not only proposed rules that will cost at least $1 million, but also proposed rules whose costs would total at least $1 million when adding the cost of the current conditions and the altered conditions imposed by the introduced language. So, HB 402 expands the list of rules that would be considered “of substantial economic impact,” and therefore subject to the General Assembly’s review.
The ever-changing statutory and regulatory landscape can make compliance challenging. We encourage anyone with questions to seek the advice of experienced and competent counsel, as the consequences of noncompliance can be costly.
The Administrative, Regulatory, and Government Law practice group has knowledge and experience helping clients navigate local, state, and federal rules. You can learn more about our practice group here.
