House Bill 402 / SL 2025-82 (=S290)
HB 402 limits the circumstances under which North Carolina administrative rules with significant financial effects can take effect. The bill creates a new threshold for rules with an aggregate financial cost of at least $20 million over five years: those rules must be specifically ratified by the General Assembly before becoming effective, unless they are required by federal law or needed to maintain a federally delegated program. It also preserves the existing objection process for permanent rules, while clarifying that rules subject to legislative ratification are not subject to that objection pathway.
The bill also tightens the fiscal-note process for rules with a “substantial economic impact,” defined as at least $1 million in aggregate financial impact over a 12-month period within a five-year analysis window. Agencies must prepare and obtain approval of a fiscal note from the Office of State Budget and Management before publishing such rules, and must also obtain certification that certain regulatory principles were followed. The bill adds detailed requirements for how agencies measure costs, including baseline conditions, direct and opportunity costs, monetization where possible, and a 7% discount rate for future costs. Separately, it requires a two-thirds vote for board, commission, or similar agency rules costing at least $1 million over five years, and a unanimous vote for those costing at least $10 million over five years.
HB 402 amends North Carolina’s Administrative Procedure Act, especially the provisions governing rulemaking, fiscal notes, and rule effectiveness. It adds a new statutory section imposing supermajority or unanimous-vote requirements on certain agency rules based on projected aggregate financial cost, and it requires legislative ratification for the most expensive rules. The bill also revises the definition and analysis of substantial economic impact, increasing procedural scrutiny for agency rulemaking and giving the Office of State Budget and Management a larger role in reviewing fiscal notes and certifying compliance with regulatory principles. These changes affect state agencies, boards, commissions, regulated businesses, and other persons subject to administrative rules.
The bill appears to have been supported by legislative leadership and ultimately enacted over the Governor’s veto, indicating strong support in the General Assembly for tighter oversight of agency rulemaking. The absence of recorded committee transcripts or vote details limits the ability to identify specific floor arguments, but the enacted status suggests the measure was viewed favorably by lawmakers who wanted more legislative control over high-cost regulations. The veto and override posture also indicate that the executive branch likely opposed the bill or at least its approach to administrative rulemaking.
The main point of contention is the balance between regulatory oversight and agency flexibility. Supporters likely viewed the bill as a check on costly regulations and an accountability measure requiring greater legislative involvement for rules with major economic effects. Opponents, including the Governor as shown by the veto, likely objected to the added procedural hurdles, the legislative ratification requirement, and the supermajority/unanimous-vote standards, which could slow or block agency action. Another likely point of dispute is the bill’s broad application to rules with large projected costs, while exempting federally required rules and federally delegated programs to avoid conflict with federal law.