Learn more about defining the baseline
What is the regulatory baseline?
The regulatory baseline is your best, good-faith description of what the world is likely to look like in the future if your rule package is not adopted. It includes the effects of all existing, enforceable requirements and the major external trends that would reasonably occur anyway. The baseline is the reference point you use to identify which costs and which benefits are truly new or different because of your proposed rule changes, rather than part of the status quo.
What to include in the baseline:
- Ongoing costs and benefits from:
- current North Carolina statutes and session laws
- permanent rules and executive orders (and how they are actually implemented in practice)
- applicable federal laws and regulations
- relevant court decisions
- binding permit or license conditions
- External factors expected to happen anyway, such as:
- economic trends (e.g., wage growth, inflation, fuel prices)
- demographic trends (e.g., population growth, aging population)
- technological trends (e.g., expected adoption of new systems)
- market trends (e.g., demand shifts, price changes)
- Rule of thumb: Only include factors you’d reasonably expect to happen even if this rule (or rule set) were never adopted.
| Factor | Baseline Example (hypothetical, for illustration only) |
|---|---|
| Economic | Wages expected to rise 3% annually due to labor market conditions |
| Demographic | State population growing 1.2% per year; more retirees needing services |
| Technology | 70% of businesses expected to adopt cloud permitting systems by 2028 |
| Market | Fuel prices projected to increase 15% due to supply issues |
| Existing federal requirements | EPA air toxics standards already require annual stack testing. Facilities will continue testing under current federal rules even if this state rule is not adopted. |
| State program commitments | The state’s approved SIP requires NOx reductions by 2030. Regulated facilities are expected to meet these reductions under existing obligations. |
| Local government actions | Major cities are expanding stormwater fees under existing ordinances, independent of this rule package. |
| Behavioral/compliance patterns | Historically, 95% of eligible facilities apply for general permits rather than individual permits. This pattern is expected to continue. |
| Funding/grant cycles | Federal grant funding for the program is authorized through 2030 and is expected to continue at current levels absent any federal rule change. |
| Industry practices | Most facilities have already upgraded to low-sulfur fuel to meet existing requirements. Further voluntary conversions would be minimal without a rule change. |
| Contractual/consent order obligations | A consent order already requires Facility X to install control technology by 2027. This will occur regardless of the proposed rule. |
| Lifecycle/asset replacement patterns | Facilities typically replace monitoring equipment on a 10-year cycle. A wave of replacements is expected between 2027-2029 even without new rules. |
What to exclude fromthe baseline
- temporary and emergency rules
- internal agency policies, procedures, guidance or memos that are not independently enforceable (not required by statute, rule, court order, or permit)
- purely voluntary industry standards
- temporary legislation or statutory provisions with fixed sunsets that will expire whether or not your rule is adopted
- in gray areas, (e.g.,MOAs/MOUs, State Implementation Plans (SIPs) under federal programs, federal grant assurances, local ordinances) treat an item as part of the baseline only if it clearly creates binding, enforceable obligations comparable to law, rule, or permit conditions.
Why the baseline matters
Defining the baseline correctly is critical because it determines which impacts “count” as new costs or benefits from your rule. If you treat too many things as part of the baseline –such as non‑binding practices or temporary measures -- you may understate the impacts of your rule or conclude that a fiscal note is not required when it actually is.
Conversely, if you define the baseline too narrowly and exclude factors that would reasonably occur without the rule, you may overstate the impacts and attribute normal background changes to the proposed rule itself. Aim for a balanced, realistic view of what would happen with and without the rule.
For more guidance
If you need additional assitance, please contact us osbmruleanalysis@osbm.nc.gov.