Congress should heed GAO’s new regulatory reform recommendations

The Government Accountability Office (GAO) released a December 2023 report titled “Options for Enhancing Congressional Oversight of Rulemaking and Establishing an Office of Legal Counsel.”

The report was almost completely ignored by the media and even trade press. That’s unfortunate, because it offers timely suggestions that Congress ought to heed.

It’s more than timely, particularly given that the Supreme Court will soon weigh in on major regulatory matters such as curbing the precedent known as Chevron deference, which would limit what many see as overabundant federal agency leeway in regulating. In this particular instance, Loper Bright v. Raimondo/Relentless v. Commerce will decide if federal agencies can require herring fishing operations to pay for at-sea monitors, with broad implications for the extent to which agencies will be able to exercise power in interpreting ambiguous statutes.

The issues addressed in the GAO report are also pivotal ones amidst recurrent highly contentious federal budget negotiations. Overspending and overregulating tend to go hand-in-hand, and GAO’s commonsense recommendations tend to inform both, as seen for example in a separate March 2023 study highlighting $247 billion in improper payments registered in fiscal year 2022.  

On improving congressional oversight of the regulatory process at this important juncture, the GAO suggests several options:

Create a New Regulatory Oversight Entity: This proposal entails forming a new office, committee, or commission within the legislative branch to assess and report on existing and proposed rules. Such a body, dubbed in prior legislative proposals that go back more than two decades a Congressional Office of Regulatory Analysis, could enhance oversight, paralleling or replacing the now diminished regulatory review function of the White House Office of Management and Budget (OMB).

Creating such an entity would involve staffing and cost considerations, but those could be negligible compared to the benefits of regulatory liberalization. Interestingly, GAO did not mention former president Bill Clinton signing a short-lived Truth in Regulating Act which required GAO itself to prepare an independent transparency report with respect to what were then called economically significant rules.

The GAO report emphasizes non-partisanship and independence in any new regulatory review body. However, the backdrop of all this is the default tendency toward regulatory solutions regardless of which party governs. Therefore, any new entity should be specifically chartered to prioritize market solutions over administrative regulations, and to recognize that political failures are more common and more problematic and prone to permanence than alleged market failures.

Revise Existing Regulatory Review Processes: This intermediate step would involve amending current regulatory review procedures, but would not establish a new oversight body. GAO’s suggested changes here include mandatory public disclosure of data supporting new rules, periodic retrospective reviews of regulations, and introducing cost ceilings for agencies and a unified regulatory budget. The suggestions are good ones, with the only blemish being that already some existing laws with respect to oversight and reporting are disregarded.

Alter the Oversight Function: Modifying the roles of entities like OMB already involved in rulemaking is another option GAO describes. This includes requiring uniform cost-benefit analysis for all rulemakings (which would mean revisiting OMB’s recent rewrite of its Circular A-4 guidance to agencies on their regulatory analysis procedures), enhancing congressional committee roles in estimating regulatory program costs, and ensuring that agencies publish draft regulatory impact analyses before proposing new rules.

The foregoing recommendations and offshoots of them deserve attention in ongoing wrangling over Congress’s over-delegation to agencies and its failure to engage in adequate oversight. A foundational reform beyond GAO proposals would involve requiring Congress to approve major or controversial rules before they become binding (like the so-called REINS Act waiting in the wings, which stands for “Regulations from the Executive In Need of Scrutiny.”)

Another oversight gap neglected by GAO in its report is the overuse of guidance documents and policy statements by agencies, which, while technically non-binding, exert significant influence over the regulated public. A major legislative proposal to require prominent centralized disclosure of these is the Guidance Out Of Darkness, or GOOD Act, which has substantial bipartisan support. There are plenty more steps necessary to address guidance—both its use and misuse—and GAO and other bodies such as the Congressional Research Service and the Administrative Conference of the United States should delve into them more deeply into them.

The point is that guidance must be addressed alongside standard notice-and-comment rulemaking, in order to not merely shift the overregulation problem by inspiring overreliance on guidance.

Overall, the GAO’s recommendations offer some excellent suggestions for anchoring and informing fresh discussions for achieving a more transparent and accountable federal government, at precisely the time those discussions face forcing events like new Supreme Court rulings, and debates over the scope of federal spending and attendant regulation. The report has been regrettably overlooked.

For more see:  “The GAO Weighs In On Regulatory Reform Options For Congress,” Forbes