A Trump Executive Order on Regulatory Guidance Documents Can Pick up the Ball Congress Dropped

Reform of so-called guidance documents or policy statements seeped into the broader regulatory reform debate in a number of ways, such as their incorporation into Trump’s one-in, two-out executive order.

Business likes sub-regulatory guidance or clarifications, except when they don’t. Sometimes agency guidance is seen as threatening and binding, when legally it is not supposed to be. You can read about this persistent problem in a recent Administrative Conference of the United States report attempting to instruct agencies on their bounds.

You can also you can see a survey of guidance in the House Government Reform and Oversight Committee’s March 2018 report Shining Light on Regulatory Dark Matter.

Disclosure of all agency decrees matters, not just of the traditional “rules.” Attempts to govern drones, vehicle-to-infrastructure communications, bathrooms and more with guidance point to a need for Congress to subject guidance to standard procedures like public consultation and the (limited) White House Office of Management and Budget review that ordinary regulation gets.

Various regulatory liberalization threads that recognize guidance have come together somewhat in recent years.

Congress has noticed the prevalence of guidance and incorporated it into several legislative proposals like the Regulatory Accountability Act, and the GOOD Act. The latter stands for “Guidance Out of Darkness” but isn’t a religious revival; it’s just a requirement that agencies post guidance publicly. Congress should even vote to approve costly or particularly controversial dark matter decrees, especially in frontier sectors, says me.

Back in 2016, Rep. Paul Ryan’s (R-WI) “Better Way” task force report series presented reforms for rulemaking and for the Administrative Procedure Act that governs it. The reports expressed an intent to “Rein in the use of ‘guidance’ to advance significant regulatory changes” and “tighten submission requirements so that no regulations or covered guidance escape Congress’s review [as required by the Congressional Review Act].

Congress has a duty to affirm that every agency decree matters, not just those subject to formal notice-and-comment or deemed economically significant. But regulatory reform bogged down in the Senate. The situation has deteriorated to the point that Congress has no idea of precisely what today’s thousands of agency proclamations consist.

Ending regulation by guidance is especially urgent with respect to rapidly moving new technologies, business models, and contractual arrangements trapped by obsolete, decades-old regulatory structures. If government oversight is warranted in any of these areas, Congress should legislate directly rather than allow open-ended agency regulation and guidance.

Over-regulation and excess guidance cannot be controlled without downsizing the federal bureaucracy; without challenging administrative state legitimacy and rule by unelected experts (so professed).

It would take legislative action to fully accomplish such goals. Congress could, for example:

  • Amend or repeal enabling statutes that sustain regulatory excesses in the first place.
  • Abolish, downsize, cut the budgets of, and deny funds to agencies, sub-agencies, and programs pursuing actions not authorized by Congress.

Other less-drastic steps to be listed below would best also be done by Congress; but a new presidential executive order on regulatory guidance (discussed elsewhere) could afford considerable synergies with the Trump deregulatory program (for the moment ignoring exceptions like Trump’s affinity for trade, antitrust and social media regulation).

The importance of an executive order on guidance documents will become apparent especially as the one-in, two-out low-hanging regulatory fruit is picked and as the realization sinks in that, under the Administrative Procedure Act, rules cannot be eliminated, only replaced.

Among other steps, a comprehensive presidential executive order on guidance documents should unilaterally:

  • Require congressional affirmation for guidance and other agency dark matter proclamations likely to have significant economic impact.
  • Review and repeal specific significant and sub-significant guidance documents periodically.
  • Insist upon the Congressional Review Act’s reporting requirement for guidance as well as for rules; agencies must submit rules, including guidance, to the Government Accountability Office and to (both houses of) Congress in order to give the latter an opportunity to enact a streamlined disapproval. For guidance, they rarely do so.
  • Apply the APA’s notice-and-comment requirement to guidance.
  • Subject guidance documents to more intense OMB cost-review, whether deemed “significant” by agencies or by the OMB Director or OMB Office of Information and Regulatory Affairs administrator. While accurate tabulation of regulatory costs is an impossibility, better exposure for compulsory regulation and guidance still can help provide a public record for future reform.
  • Require agencies to present quantitative and qualitative data concerning regulation and guidance (including historical tables) to Congress in a “Regulatory Report Card” format.

Basically, until Congress steps up, executive order-driven disclosures such as Federal Register highlighting and a presidential version of the GOOD Act and Shining Light inventories should enable streamlined, online disclosures of economically significant guidance. This would augment what a few executive agencies voluntarily disclose based on a decade-old OMB memorandum to agencies.

To prevent regulating under the radar, centralized disclosure of secondary, sub-significant proclamations matters too. These currently are scattered under numerous monikers and across various websites, when disclosed at all, that is.

It has been a generation since Congress last proposed major downsizing of the federal bureaucracy. The big story today is regulators don’t need to write rules anymore; they can just issue guidance and other proclamations. This is a disaster for frontier technologies, high-tech sectors and growth prospects generally, and all based on a fallacy of agency expertise.

For these reasons, Congress needs to take significant steps to reestablish congressional authority over lawmaking and to contain federal regulatory adventurism.

In the meantime, an executive order that, paradoxically, refuses to exercise executive power but instead returns it to the legislature, is what it will take to re-affirm separation of powers.

Originally published at Forbes.