Here’s What Donald Trump And Congress Should Do About Regulatory Dark Matter

It’s becoming too easy for federal agencies to steer private activity without issuing “real” regulations anymore. Instead, we get regulatory dark matter — particularly as the economy becomes more technologically advanced.

Beyond the dozens of laws and thousands of federal rules and regulations that you can look up, agencies issue thousands of proclamations like memoranda, guidance documents, notices, circulars and administrative interpretations.

Recent notable examples of regulatory dark matter include:

“Obamacare statutory mandate waivers (extension of the employer mandate deadline, and continuation of non-compliant policies); HUD guidance insinuating refusal to rent or sell to an ex-con may violate the Fair Housing Act; the notorious Department of Justice/Education Department “Dear Colleague Letter on Transgender Students“; driverless car guidance from the National Highway Traffic Safety Administration; “commonsense guidelines” on a “Driver Mode” for smartphones (also NHTSA); Labor Department “administrator’s interpretations” on whether you are an independent contractor or an employee, and on franchising/joint employer rules.”

The list goes on (for more see p. 23 here in this new report). Unless addressed, expect plenty future guidance from new regulatory launchpads like the Dodd-Frank financial law, the Federal Aviation Administration’s 2016 drone rule, and online “net neutrality” (depending upon whatever as-yet-unknown form it and the Federal Communications Commission survive).

If this kind of thing continues, the federal government may regulate remotely by issuing software patches “updating” driverless cars and drones in the future.

No need to write real rules. Too much trouble; even boring.

The Trump administration has invoked “deconstruction of the administrative state“; if that’s the plan, dark matter should be the main target.

One welcome development is a brand new executive order establishing a “Comprehensive Plan for Reorganizing the Executive Branch,” including the call to, “as Appropriate”…”Eliminate or Reorganize Unnecessary or Redundant Federal Agencies.”

There’s a 180-day deadline to report back to the White House. While the new order is more of a streamlining to improve “services,” it should have heft for cutting agency regulatory invasiveness, too.

Beyond talk, there’s been action; along with today’s executive order, President Donald Trump has issued aggressive ones requiring deregulation task forces at agencies; eliminating two rules to offset burdens of each new one; and a temporary regulatory moratorium.

The Federal Register reflects it; apart from FAA airworthiness directives and Coast Guard drawbridge proclamations and fishery designations, new regulation has essentially stopped under Trump.

Congress already passed several reform bills that await Senate action; and over a dozen nullifications of individual rules are in play.

But agency creativity in skirting oversight and using even “darker” dark matter, like threats and warnings, will be their adaptation to regulatory reform.

Therefore, early on in the Trump administration, I hope we can establish the principle that all executive orders and all legislative overhauls aimed at “deconstructing the regulatory state” need to explicitly incorporate regulatory dark matter.

There has been some recognition of this by the administration and Congress.

Trump’s order temporarily freezing regulation also applies to guidance, which bears close watching. The same goes for his one-in, two-out policy (not particularly radical, Canada and Great Britain have both implemented rule-in, rule-out requirements with some success). Sen. Dan Sullivan’s (R-Alaska) Regulations Endanger Democracy (RED) Tape Act, if enacted, would codify Trump’s executive order policy, and extend it to guidance and memoranda besides.

The Regulatory Accountability Act, which passed the House early in the 115th Congress, boosts early public notice, formal hearings on regulations, and Office of Management and Budget oversight of regulation–and also addresses guidance.

Other efforts to address dark matter include the Regulatory Predictability for Business Growth Act. It would require interpretive rules and guidance altering previously issued guidance (whew) to undergo public notice and comment. The Reforming Executive Guidance (REG) Act of 2017, sponsored by Rep. Jason Lewis (R-Minn.), would subject significant guidance to notice and comment, and clarify its coverage under the Congressional Review Act (the CRA requires reporting to Congress on regulation and guidance, and implements a disapproval mechanism).

The Article I Regulatory Budget Act, sponsored by Sen. Mike Lee in the 114th Congress, would provide for notice and comment for significant guidance, and for a private right of civil action in district court when one is affected by significant guidance not so labeled. The bill’s summary sheet explains that the Act will “Eliminate the abuse of regulatory ‘dark matter.’”

Several congressional regulatory liberalization threads came together in the 2016 “Better Way” task force report series covering regulatory and Administrative Procedure Act overhauls. The reports asserted that Congress will “Rein in the use of ‘guidance’ to advance significant regulatory changes, (p. 48)” and “tighten submission requirements so that no regulations or covered guidance escape Congress’s review and will authorize courts to find invalid and unenforceable rules that have not been submitted to Congress under the CRA (p. 14).”

Past attempts at serious government downsizing in the 1970s, ‘80s, and ‘90s brought partial liberalization of some regulated sectors, but downsizing fell short when it came to shutting down agencies and increasing agency and congressional accountability. Congress now has no clue of what today’s thousands of agency proclamations consist.

Regulation and guidance cannot be controlled without reining in the colossal bureaucracies that embody rule by unelected experts (so professed). That’s what makes the new Trump executive order so appealing–almost a prerequisite.

Stopping agency pre-emptive regulation of new technologies, business models, and contractual arrangements happening without congressional authorization is particularly important. If government oversight is warranted in new areas, like “vehicle to infrastructure” communications, or Federal Aviation Administration oversight of commercial space activity, Congress should legislate directly rather than allow for open-ended agency regulation and guidance.

Toward that end, to authoritatively address regulatory dark matter, Congress should:

• Repeal or amend enabling statutes that sustain regulatory authority. If Trump and Congress don’t do it, states–which created the federal government–may take matters into their own hands eventually.
• Abolish, downsize, cut the budgets of, and deny appropriations to aggressive agencies, sub-agencies, and programs that routinely pursue actions not authorized by Congress. Such ends should be the aim of the recent executive orders on downsizing; careerists have too much power and too much at stake, truly, to ever allow the APA notice and comment process to seriously jeopardize anything they do (see EPA’s underhanded lobbying for its own Waters of the United States rule). It’ll take a Congress tougher than anything seen recently.
• Require congressional affirmation for guidance and other agency dark matter proclamations likely to have significant economic impact. This could be done, for example, with a modification of the Regulations from the Executive in Need of Scrutiny (REINS) Act.
• Repeal specific guidance documents when warranted.
• Regularly apply the Congressional Review Act’s 60-day resolution of disapproval process to guidance and make sure existing guidance was properly reported in the first place. This has been neglected: a new RedTapeRollback site (my organization, the Competitive Enterprise Institute, is an affiliate) lets you check and see if guidance you deal with may in fact be illegal. The books still need to be combed.
• Apply the Administrative Procedure Act’s notice-and-comment requirement to guidance, as some legislation already noted proposes.
• Subject regulatory dark matter to more intense OMB review. While regulatory costs can never be accurately tabulated, better exposure of the costs of guidance still can help develop a public record for future reform endeavors. Along with Trump’s new executive orders, President Reagan’s Executive Order 12291 put the burden of proof on agencies to assess burdens and demonstrate need for a more rules. Guidance documents should be held to the same standard.
• Require agencies to present quantitative and qualitative regulation and guidance data to Congress (perhaps like the federal budget’s Historical Tables). Reinstating a version of the Reagan and first Bush administrations’ Regulatory Program of the United States Government, which included a lengthy tabular appendix (“Annual Report on Executive Order 12291”) could help.
• Guidance should appear the Federal Register in an accessible, predetermined way (rules themselves weren’t even broken out into “final” and “proposed” until the 1970s, the Federal Register office tells me). Other disclosures needed are as follows.
  • Economically significant guidance. Require streamlined, one-location online disclosure of economically significant guidance, augmenting what a few executive agencies voluntarily already publish based on the 2007 OMB memorandum to agencies (I tabulate those I find in one table right here, but no one should need to do this).
  • Secondary guidance and notices. Require centralized disclosure of these hundreds of thousands of proclamations, now scattered under numerous monikers and across various websites, if publicized at all.

It has been a generation since Congress last proposed major downsizing of the federal bureaucracy. “Deconstructing” it is a much bigger job, given the vast special interests entrenched to defend it. So, the public should understand that agencies exceed bounds largely because Congress enabled it.

Originally published at Forbes.com.