In an April 19 report, Why Congress Must End Regulation by Guidance Document, the Competitive Enterprise Institute (CEI) warns us about the enormous impact of federal agencies’ sub-regulatory “guidance” documents, including a big negative effect on the economy and job creators. These guidelines, which can be as informal as a bulletin or press release, do not undergo formal notice and comment rulemaking procedures and are not legally binding in a strict sense, as the House Oversight Committee has noted. Nonetheless, they are used to make major policy decisions and, according to Senator Pat Roberts (R-Kan.), are “often as effective as regulations in changing behavior due to the weight agencies and courts give them.”
Notable recent examples of regulation by guidance cited by the CEI include:
- Education Department guidance affecting colleges and schools with new mandates at the rate of one mandate per business day;
- Housing and Urban Development guidance decreeing that landlords and home sellers who deny those with criminal records are violating the Fair Housing Act;
- The Treasury Department’s decree—first by July 2013 blog post, then by IRS guidance— delaying ObamaCare’s employer mandate and accompanying tax penalty for non-compliance, without public feedback or the mandatory economic analysis;
- The Department of Health and Human Services’ November 2013 declaration—announced in a presidential Obama press conference and subsequently in a guidance document—that non-ACA compliant health policies could continue to be sold;
- The Federal Aviation Administration’s “Notice of Policy” regulatory interpretation on drones that temporarily outlawed commercial activity in violation of the Administrative Procedure Act (later reversed by the National Transportation Safety Board).
The George W. Bush Administration cracked down on guidance documents, analyzing them, specifically labelling some as nonbinding and others as requiring formal notice and a comment period. However, under President Obama, over a third of agency rules are issued without notice and comment.
Federal agencies often prefer the sub-regulatory approach because it’s an easy way of getting around Congressional oversight. Not surprisingly and despite prominent examples of regulation-by-guidance, Congress remains largely in the dark about the size and the scope of the problem. That is a shame because “a highly engaged executive and Congress can draw attention to and highlight regulatory dark matter and sub-rosa regulatory activity,” explains Clyde Wayne Crews Jr., Policy Director at CEI.
Curt Levey, Executive Director of FreedomWorks Foundation and its Regulatory Action Center, noted that :
“Sub-regulatory guidance is a double menace. Federal regulations often bypass the legislative process by essentially rewriting statutes, but at least those rules are subjected to the notice and comment rulemaking procedures, which provides a limited degree of accountability. Guidance documents, on the other hand, allow for virtually no accountability and are almost impossible to challenge in court. In fact, that’s often precisely why federal bureaucrats use sub-regulatory guidance.”