You are here

Examining Agency (Over)Use of Regulatory Guidance Documents

Today the U.S. Senate Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management conducted a hearing on Examining the Use of Agency Regulatory Guidance, Part II. I was invited to testify in part based on my concern about “regulatory dark matter,” by Chairman James Lankford and Ranking Member Heidi Heitkamp. The link to my written testimony is here; below are my five-minute oral remarks: 

Good morning, I am Wayne Crews, vice president for Policy at the Competitive Enterprise Institute, a libertarian public policy and advocacy group, and I thank the committee for the invitation to address agency sub-regulatory guidance.

I'll give my conclusion first, which is to say that sub-regulatory guidance from both executive and independent agencies often needs to be treated more like regulation. That means codifying elements of the Office of Management and Budget’s 2007 Good Guidance Practices memo; Federal Register publication; more intense OMB review or guidance; and questioning agency self-assertions that guidance is not significant. 

Furthermore, the web-posting of significant guidance, which is all over the map, needs to be harmonized and expanded.   

Congressional directives matter too. We’ve seen recent directives regarding guidance disclosure and retrospective review in Financial Services, Labor/HHS, and Transportation/HUD Appropriations. In addition, the legislative history indicates the Congressional Review Act’s resolutions of disapproval apply to guidance as well, if Congress chooses to elevate such concerns.

Guidance, to me, has become more worrisome in a system that already doesn’t always follow APA procedures for ordinary notice and comment rulemaking, or conduct OMB review. Senators may have noticed there’s still no sign of the White House Report to Congress on regulatory costs and benefits. Congress has neglected its role in regulatory oversight, as June's House task forces addressing Article I and delegation issues made clear.

Indeed, just as some guidance needs to be treated more like regulations, regulations, in turn, need to be treated more like normal laws passed by Congress and positively affirmed.

In written testimony I’ve put guidance in context with ordinary laws, of which there are a few dozen annually, and with regulations, of which there are several thousand annually.  

But beyond those, Congress lacks and needs a clear grasp on the amount and cost of the many thousands of executive branch and federal agency guidances and memoranda, with sometimes practical if not always technically legally binding regulatory effect. I’ve taken a partial numerical inventory and there are 580 acknowledged “significant” agency guidance documents now in effect. But many thousands of other secondary guidances are subject to little scrutiny or democratic accountability, or true knowledge of significance. In an analogy to astronomy, I’ve taken to calling this voluminous material “regulatory dark matter.”

On p. 19 of my written testimony I note several prominent examples, such as HUD guidance on rentals to those with a criminal record, and Labor Department guidances on independent contracting, and on joint employment.  

In the financial sector alone, the St. Louis Fed lists 74 pieces of “significant” guidance in play across financial agencies, while the Conference of State Bank Supervisors points to over 1,400 so-called “directives.”

Guidance has been an issue for decades, of course. But today’s frontier economy is highly complex, and sub-regulatory guidance can easily cross the line of economic significance, such as ominous “advisory opinions” promised by FCC in the wake of its net neutrality rule. Similarly, FAA’s new 624-page highly prescriptive Drone rule should have been a law from Congress, but in my quick survey I count at least six areas where the agency anticipates issuing new guidance in this frontier sector. 

I realize that businesses often regard certain guidance as vital and I do not wish to dismiss those concerns, other than to stress that safety, public health, financial stability, privacy and the like are competitive features, too, and decentralized stakeholders have a disciplinary role to play that can be undermined by too much regulatory zeal. Reforms should come from a stance recognizing that not every matter is a public policy question, that so-called market failures may have political causes, and that coercive central regulation isn’t always the answer, especially if guidance inappropriately takes the place of normal regulations or laws.  

I support this subcommittee on increased OMB review and enhanced APA exposure, as well as establishing guidance principles in legislation. But keep uppermost in mind that even normal rules aren't always getting proper APA scrutiny, and denial of significance is to be expected.

In Part One of this hearing series last September, Senators fretted that the process by which an agency internally elects to issue guidance on the one hand, or a normal regulation on the other is something of a “black box.” Surely we do not want unknown aspects of the regulatory enterprise increasingly outweighing the known. So I urge close interaction between this important subcommittee, the public, and the entrepreneurial sector—not just to get things done, but to see what can be undone, for the public good.