Report: Federal Regulatory Agencies Abuse Power with Guidance Documents

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A new report by Competitive Enterprise Institute and Paragon Health Institute scholar Dr. Joel Zinberg, Restoring Good Guidance Practices: How to restrain the administrative state and make government better, delves into problems posed by federal agency “guidance documents” and offers reforms to restore accountability to the regulatory process.

Guidance documents are agency letters, bulletins, and memoranda that provide general statements of policy or interpretive rules advising the public of how the agency interprets the statutes and regulations it administers. Unlike the more familiar legislative rules that carry the force of law, guidance documents are technically nonbinding and, therefore, not subject to rulemaking safeguards like: notice and comment procedures of the Administrative Procedure Act, review by the Office of Management and Budget for significant regulations, and possible review and revocation by Congress under the Congressional Review Act.

“In reality, many guidance documents do bind regulated entities fearful of running afoul of regulators, imposing large obligations and costs on them,” Zinberg explained. “And with guidance, the public often has little-to-no input into or notice of important policy changes.”

Another problem is that guidance cannot be judicially reviewed until there has been final agency action. That problem could be exacerbated if the Supreme Court overturns or substantially limits Chevron deference, Zinberg believes, because agencies could further use guidance to evade notice and comment rulemaking and judicial review.

Zinberg’s report examines Good Guidance Practices (GGPs) – such as notice and public comment, centralized review, and searchable data bases – that subject significant guidance to public and stakeholder scrutiny, improve final guidance documents with stakeholder input, and inform interested parties of relevant guidance.

The report focuses on the Department of Health and Human Services (HHS), the nation’s leading health regulatory agency and the largest federal civilian department, as a case study. HHS issued a GGP regulation in response to President Trump’s 2019 Executive Order 13891, “Promoting the Rule of Law Through Improved Agency Guidance Documents.” But then President Biden revoked that EO on his first day in office, and HHS subsequently revoked its GGP regulation.

“The explanation in HHS’s regulation rescinding its GGP regulation made little sense. It was a political decision to reverse a political opponent’s accomplishments and to remove restraints on the expanding administrative state.” said Zinberg. “The agency and the Biden administration view GGPs as a burden rather than a benefit. They are more interested in empowering the administrative state than with improving government through the accountability and improved policy that results from GGPs.”

The report urges specific reforms:

  • Congress should pass a statute requiring federal agencies to adopt the GGP requirements found in EO 13891 so that these good policies can’t be administratively undone.
  • If Congress does not act, a future administration should re-issue President Trump’s EO 13891 that directed all agencies to promulgate GGP regulations establishing procedures for issuing guidance and searchable databases.

View the report, Restoring Good Guidance Practices: How to restrain the administrative state and make government better, by Dr. Joel Zinberg