Reining in regulatory dark matter

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Divisive issues are distracting public attention from policy reforms that could make everyone better off by expanding the economy. One of these is regulatory reform. It is a huge enough task on its own made more difficult not just by Twitter and cable news hyperbole, but by a major transparency problem. Many regulatory costs are never accounted for.

Agencies issue all manner of regulatory “dark matter” outside the required rulemaking process through guidance, bulletins, circulars, memoranda, interpretations, and more. These are not officially rules, but they carry regulatory weight. Such guidance covers issues ranging from medical devices to college admissions. Guidance is not supposed to be legally binding, but if your business needs a permit, your choices may be slim.

{mosads}The fix to this stealth lawmaking must come from Congress. But until then, the president can issue an executive order to rein in regulatory dark matter until Congress can make such reform permanent. There is precedent for such executive action. Ronald Reagan, Bill Clinton, and Barack Obama all issued executive orders to increase transparency and ensure that federal agencies follow better rulemaking procedures.

Early in his term, Donald Trump issued an executive order capping net regulatory costs and instituting a “one in” and “two out” policy for new significant regulatory actions. Net regulation has likely not shrunk under this administration, but its growth has noticeably slowed, and those executive orders deserve some credit for the strong growth in the economy. Reining in excessive guidance would be a solid next step.

An executive order can set a positive precedent that Congress can later expand upon and codify. Such an executive order should strengthen disclosure requirements for guidance documents that are not always made public. They should be made available in a single location and an easily searchable format. After all, people cannot comply with regulations they do not know about. Dark matter is, by nature, very hard to detect.

Agencies are already required to contribute to transparency reporting through the twice yearly “unified agenda of federal regulatory and deregulatory actions” for recent and upcoming regulations. The agenda lists rules that go through the standard rulemaking process, but not guidance documents. An executive order should require the agenda to include guidance and other agency subregulatory directives. Each guidance document should also be classified as either “regulatory” or “deregulatory” to make their individual impacts easier to determine.

As it happens, all regulations and guidance documents are required to be submitted to Congress and the Government Accountability Office under the Congressional Review Act, which gives Congress 60 legislative days to pass a resolution of disapproval to repeal the rule or guidance. Worse, certain regulations have not been submitted to Congress for years. The executive order should deem all such existing guidance documents to be invalid, unless the Government Accountability Office and both chambers of Congress had properly received the regulations in the past, and strictly enforce that requirement for all future guidance documents as well.

All federal regulations are publicly cataloged and searchable in the code of federal regulations. Dark matter needs a similar compendium. Agencies have issued more than 13,000 guidance documents since 2007. Of those, less than 200 were properly reported to the Government Accountability Office and Congress, or just roughly half of 1 percent. Given that such submission is required under the Congressional Review Act, much of the universe of guidance is unlawful. At the very least, an executive order can partially solve these basic transparency and accountability problems.

Federal regulations have costs that rival taxation. In the short term, a well crafted executive order can do a lot of good for public accountability and provide much needed regulatory relief. If the president wants to continue to brag about a strong economy, then an executive order is something he can easily do. Congress should be eager to share credit for this reform.

Clyde Wayne Crews is the vice president for policy at the Competitive Enterprise Institute and the author of the study “Partial Eclipse of the Administrative State: A Case for an Executive Order to Rein in Guidance Documents and other Regulatory Dark Matter.” Ryan Young is a fellow focusing on regulatory studies at the Competitive Enterprise Institute.

Tags Barack Obama Bill Clinton Congress Donald Trump Government Regulation

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