Introduction: A New Era for Administrative Law in North Carolina
Judicial deference to executive agencies has long influenced the regulatory landscape in North Carolina. Courts have traditionally afforded weight to agency interpretations of statutes and regulations. That approach, however, is changing. The North Carolina Supreme Court, in a series of recent notable decisions, has refined the relationship between courts and agencies, clarified the role of agency deference, and reaffirmed that questions of law belong exclusively to the judiciary.
This shift mirrors the national trend following the United States Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which ended Chevron deference at the federal level. The North Carolina Supreme Court has clarified that courts—not agencies—will have the final say on interpreting statutes and regulations.
Below is an overview of five notable recent decisions, important takeaways, and what they mean for those navigating North Carolina’s regulatory landscape.
Summary of Key Decisions
Kinsley v. Ace Speedway Racing, Ltd. (August 23, 2024)
An initial sign of change to the state’s regulatory landscape came in Ace Speedway, a case arising from COVID-19 restrictions and an executive abatement order closing a racetrack. The racetrack owners challenged the abatement order under the North Carolina Constitution. The Court allowed the constitutional claims to proceed and set forth a test requiring courts to examine the actual governmental purpose and whether less restrictive alternatives were available—moving beyond traditional rational-basis review. The opinion signals that the Court is willing to limit executive power and scrutinize agency actions more closely, especially when fundamental rights are implicated.
Savage v. N.C. Department of Transportation (August 22, 2025)
In Savage, the issue presented involved whether courts should defer to an agency’s interpretation of an ambiguous statute. The case involved NCDOT’s reading of a law governing the dismissal of criminal charges and its impact on a driver’s license revocation. The Court held that statutory interpretation is a question of law for the judiciary, thus rejecting Chevron deference. By rejecting NCDOT’s interpretation, the Court made clear that ambiguity in statutes does not justify judicial deference to agency views. This ruling represents a key shift in state administrative law, ensuring that courts—not agencies—bear the ultimate responsibility for interpreting statutes.
N.C. Department of Revenue v. Philip Morris USA, Inc. (August 22, 2025)
Philip Morris, which was decided on the same day as Savage, involved a dispute over whether the Office of Administrative Hearings (OAH) could decide constitutional challenges to tax statutes. The Court held that OAH, as an executive administrative tribunal, lacks jurisdiction to decide facial and as-applied constitutional challenges, reserving such authority for the judiciary. This decision reinforces the separation of powers and limits agency authority, clarifying that constitutional interpretation is a judicial function—rather than an administrative one. Businesses should note that constitutional arguments must be raised in court, not before an administrative tribunal, representing an important procedural point for tax and regulatory disputes implicating constitutional concerns.
N.C. Department of Environmental Quality v. Farm Bureau Federation, Inc. (October 17, 2025)
In Farm Bureau, the Court examined whether the North Carolina Department of Environmental Quality (DEQ) exceeded its authority by adding three conditions to general permits for animal waste management systems without following the North Carolina Administrative Procedure Act (APA). The Court held that the permit conditions were generally applicable rules under the APA and, as such, must go through formal notice-and-comment rulemaking prior to enforcement. This decision signals that courts will scrutinize agency attempts to impose broad regulatory requirements without legislative or APA compliance. Regulated industries should be aware that agencies cannot sidestep rulemaking by imposing broad requirements in permits.
Mitchell v. UNC Board of Governors (October 17, 2025)
Finally, in Mitchell, the Court addressed whether courts should defer to an agency’s interpretation of its own rules. The case arose from a dispute over the dismissal of a professor and whether internal procedures were properly followed. The Court held that judicial review is de novo, meaning that courts interpret regulations independently of agency interpretations. While agency expertise may inform the court’s interpretation, agency interpretations are not binding on the judiciary. This decision underscores the judiciary’s exclusive role in interpreting law.
Key Themes and Practical Implications
Across these decisions, the Court emphasized that de novo review is the proper standard of review, such that courts will interpret statutes and regulations independently of the agencies’ interpretations. While agency expertise may be considered, it is not binding. The rulings also reaffirm the fundamental principle of separation of powers, making clear that judicial interpretation cannot be delegated to executive agencies. Additionally, the Court strengthened procedural safeguards by requiring agencies to comply with the Administrative Procedure Act when imposing generally applicable requirements.
For businesses and regulated industries, these decisions emphasize the importance of the statutory and regulatory text, as agency interpretations no longer provide definitive guidance. These decisions may also lead agencies to increase formal rulemaking activity and adapt their enforcement and permitting strategies.
Looking ahead, it will be important to watch how the Court approaches agency decisions in 2026 with this established foundation.
