North Carolina reins in agency power, opens door to more housing

Raleigh, North Carolina; August 14, 2026: Governor Josh Stein signed the Regulatory Reform Act of 2026 into law on Tuesday, requiring North Carolina courts to independently review state agencies’ rule interpretations instead of deferring to the agencies’ interpretations. The law also eliminates local zoning barriers to accessory dwelling units and to multifamily housing on land already zoned for commercial use.

“When agencies get to decide what their own rules mean, the deck is stacked against the people those rules govern,” said Jaimie Cavanaugh, senior State Policy counsel with Pacific Legal Foundation. “This law puts North Carolina judges back in charge of interpreting the law, and it gives homeowners the freedom to build on their own property without arbitrary permission slips standing in the way.”

For years, North Carolina courts deferred to agencies’ own reading of ambiguous rules, leaving little recourse when that reading favored the agency rather than the people it harmed. The new law codifies a 2025 North Carolina Supreme Court ruling that requires independent review instead, giving judges—not the agencies being challenged—the final word.

The law’s zoning changes mean cities with 50,000 or more residents outside the coastal area must now allow at least one accessory dwelling unit per single-family lot in residential zones, and cities of 80,000 or more in counties of 1 million or more must allow multifamily housing when commercial or industrial land is redeveloped. It also allows third-party inspecting for home power systems, a reform advanced by energy affordability nonprofit Permit Power. These changes chip away at local rules that have long added to the cost of housing in North Carolina’s cities.

Pacific Legal Foundation applauds North Carolina lawmakers for advancing these housing and deference reforms—principles PLF fights for nationwide.