Deep in a state Senate budget that slashes jobs and transfers key divisions from the N.C. environment department is a ban on new environmental, labor and farm rules that are tougher than federal standards.

The prohibition echoes a 1970s-era measure that legislators eventually repealed. Now as then, it pits business against environmentalists in a fight over whether the regulations impede economic growth or protect the public.

The Senate proposal follows regulatory-reform hearings the legislature's new Republican majority held around the state this spring. The hearings convened as the state struggles to rebound from 9.7 percent unemployment and steep budget shortfalls.

N.C. Chamber President Lew Ebert calls the proposal "preemptive medicine" that would create the regulatory predictability and stability that businesses crave. Ebert said North Carolina created 15,000 state rules over the past decade.

"It's a chance to deal with a big concern and say we're ready to do business," he said.

ChiefExecutive.net and Forbes.com, however, already rank North Carolina's business-friendly climate second- and third-best in the country.

"In the end the companies that are here create jobs. The studies don't," Ebert said.

Environmental advocates say the move would leave the state at the mercy of one-size-fits-all federal regulations that often ignore local problems.

"We would be prohibited from looking out for North Carolina's best interests in deciding what we need in the way of environmental protection," said state Sierra Club director Molly Diggins.

The new proposal would keep the environment, labor and agriculture departments from adopting state rules more restrictive than similar federal standards. It allows some exceptions, such as for "unforeseen threats" or court orders, and would not preclude the legislature from acting.

New rules with no federal parallel would have to undergo cost-benefit studies to prove their worth.

Decades ago, the business-supported Hardison Amendments, named for a former state legislator, also prevented the state from enacting stronger environmental standards than the federal government. They were repealed in 1991.

Even so, the state Manufacturers & Chemical Industry Council, which represents some of the largest N.C. industries, says the new proposal would stabilize the regulatory environment and boost the jobs picture.

Such measures bubble up in states across the nation, said Steve Brown, executive director of the Environmental Council of the States, a national group of environmental agency leaders.

"From time to time, these bills are a way for the public to say 'enough is enough,'" he said. "But for public policy, they're more for show than for reality."

The problem, he said, is that states give up local control.

State rules are intended to address local and regional matters to which broader federal regulations don't apply - hog farm odors, groundwater standards or open burning, for instance, in North Carolina.

The two often overlap. But in some cases the state and federal governments take different regulatory approaches.

North Carolina, for example, regulates 97 toxic air pollutants to the 187 that the Environmental Protection Agency oversees. EPA prescribes pollution-control technology for broad industry sectors.

The state, in contrast, takes the extra step of applying health-based standards meant to ensure that toxic emissions are within safe limits at individual plant boundaries.

State agencies share legislators' frustration with regulations, Brown said. Typical state environmental budgets haven't risen since 2004 despite a growing workload, including new federal regulations that states have to adopt.

The N.C. Department of Environment and Natural Resources is likely to see heavy job cuts under any budget scenario. The state House would cut 206 jobs in 2011-12, the Senate 132, Gov. Bev Perdue 101.

The House and Senate budgets abolish the department's environmental health division, moving its functions elsewhere, and transfer its forestry division to the agriculture department. The Senate would also move the soil and water conservation division to agriculture.

Other environmental programs also are facing the knife.

The Clean Water Management Trust Fund, the state's largest pool of conservation money and entitled by statute to $100 million a year, would be cut to a $10 million appropriation under the House and $12.5 million by the Senate. Perdue would hold it at $50 million.

The N.C. legislature's joint committee on regulatory reform held hearings in Charlotte and five other cities. Its chairman, Sen. David Rouzer, R-Johnston, couldn't be reached.

Written comments to the committee, not including form letters, ran 2 to 1 in favor of reform, according to tallies distributed by staff members.

The Sierra Club says it counted 350 speakers at the hearings, of which it said 162 people voiced support for regulations and 129 objected.

Perdue's administration has tacitly acknowledged the chafing over state rules.

Early in this year's legislative session, the governor signed a moratorium on most new regulations that carry $500,000 a year or more in compliance costs. This month the environment department created a program to help small businesses and individuals get state permits and obey them.

"Our programs are generally trying to work with people to get the problems fixed" rather than fine violators, said Robin Smith, an assistant secretary of environment.