Sneaky Regulation? Federal Agencies Issue over 24,000 “Public Notices” Annually

A mixed economy like ours does not remain static.

Economic activity increasingly shifts toward government outright (health care, retirement, education) or exists under “Mother-May-I” constraints like energy production does.

The greatest threat to job creation, wealth and prosperity is that we extend these anti-freedom regulatory policies into tomorrow’s innovations in communications, robotics/automation, manufacturing, and sciences and technology.

When more and more activity falls within the ambit of government rather than that of private competitive enterprise, rules and regulations, executive orders and “notices” take on ominous new significance. This is worsened by policymakers continually dodging the constitutional imperative that an elected body (Congress) create legislation.

Newly significant too are President Barack Obama’s “pens,” “phones” and “years of action” self-consciously operating outside the normal legislative process and even normal Administrative Procedure Act public-input thresholds.

The president just extended the deadline on signing up for Obamacare marketplaces, for example. Exemptions multiply, no matter what the statute says. Meanwhile, what could have been a healthy integrative private health provision and insurance market crumbles.

Among these “notices” sometimes are so-called “guidance documents or, the newer buzzword, “subregulatory guidance.” These have become controversial at times.

Regulations with economically significant impact ($100 million or more in annual impacts) are supposed to receive special attention from agencies and from reviewers at the Office of Management and Budget.

But guidance documents with equivalent impacts may escape cost-benefit or other scrutiny. Decisions may be made by agencies, and private parties compelled to act or not act, without formal regulation or thorough understanding of costs. Examples include EPA Clean Water Act jurisdictional guidance on “Waters of the United States,” and the Federal Trade Commission’s “Guidance” on disclosure of paid search engine results.

Such activism constitutes regulation not properly designated as such, and so we know it is not controlled, because even above-board regulation is not reviewed and pruned.

A July 2012 U.S. House Committee on Oversight and Government Reform noted how agencies have “skirted the regulatory process” with “misuse of guidance documents.”

Guidance documents, while not legally binding or technically enforceable, are supposed to be issued only to clarify regulations already on the books. However… they are increasingly used to effect policy changes, and they often are as effective as regulations in changing behavior due to the weight agencies and the courts give them. Accordingly, job creators feel forced to comply.

Executive orders matter increasingly in a realm where the domain of private sector authority and control shrinks. So do “Public Notices” in the Federal Register.

While there are 3,500 rules finalized annually, there are tens of thousands of public notices, with uncounted “guidance documents” among them.

The table below shows that the number of notices annually has never dipped below 24,000 since 1996. How many have pondered the implications of 477,929 notices since 1995? Not very many, one suspects, since even the 3,500 rules produced annually–themselves get inadequate review (see The Funnel).

Ordinary notice-and-comment regulations already often lack cost-benefit or other analysis, so we get more than a “socially optimal” amount, for those who speak that language. Guidance documents and other relatively unsupervised decrees, combined with the growth of transfer rules or “budget rules” allow still more behind the scenes, unaccountable rulemaking.

As the federal government conducts so much commerce and takes over private activity via traditional regulation plus pen and phone, regulation gets ever harder to measure.