Report: Washington’s “Regulatory Dark Matter” Devours Economy, Jobs

Regulators are imposing new restrictions on American businesses and economic activity through guidance documents, memoranda and even blog posts, with little oversight from Congress or input from the American people, a new Competitive Enterprise Institute report shows.

“The Obama administration is imposing its regulatory agenda on the American economy by dodging legally required checks and balances,” said Wayne Crews, CEI vice president for policy and the author of the report. “The administration has been deservedly criticized for unilateral executive actions, but other types of agency rulemaking go overlooked, and people have no chance to weigh in on new policies that impact them.

“Congress needs to focus on the ‘regulatory dark matter’ used by federal agencies to enact new policies and rules,” said Crews.

It’s troublesome enough that over a third of agency rules are issued without a Notice of Proposed Rulemaking, as required by the Administrative Procedure Act. Yet how agencies decide whether a new policy will be a rule or a guidance is like a “black box” mystery to lawmakers in Congress.

The report urges Congress to take up some specific reforms. For example, use the power of the purse to defund agency actions and programs not authorized by Congress; repeal or amend vaguely worded laws; require congressional approval before agency proclamations that have a big economic impact; apply Congressional Review Act “resolutions of disapproval” to regulatory dark matter; and require more intense regulatory review and reporting.

Currently, a set of House task forces is looking at ways to rein in executive branch overreach and restore congressional oversight and control over federal regulatory agencies.

Prominent recent examples of executive agency guidance include:

  • A Department of Labor blog post and “Administrative Interpretation” informing the public that most independent contractors are henceforth employees; 
  • A Housing and Urban Development guidance document decreeing landlords and home sellers turning down of people with criminal records as a violation of the Fair Housing Act;
  • A Treasury Department delay of the Patient Protection and Affordable Care Act’s employer mandate and accompanying tax penalty for non-compliance, without public feedback or mandatory economic analysis; and
  • An Environmental Protection Agency Clean Water Act interpretive guidance on “Waters of the United States.” 

> View the report: Why Congress Must End Regulation by Guidance Document

> Related: A Quick and Dirty Inventory of Federal Agencies’ Significant Guidance Documents