"[A]s more goals are pursued through rules and regulations mandating private outlays rather than through direct government expenditures, the Federal budget is an increasingly inadequate measure of the resources directed by government toward social ends."
—Economic Report of the President (Jimmy Carter), 1980
The federal regulatory state is even more out of control than ridiculous federal spending is , and it’s been that way for a long time; when are presidential candidates of either party going to detail how they’ll fix it?
Congress passes a few dozen laws each year; agencies issue thousands of rules and regulations. A weekday doesn’t pass without new regulation. What policymakers and presidential candidates alike have even worse grasp of is the amount of and cost of thousands of other executive branch and federal agency proclamations and issuances such as memoranda, guidance, bulletins, circulars, “advisory opinions” and other such “dark matter” with potentially regulatory effect. Yet oversight of even routine rules and regulations is in a state of disaster. The economy, citizens and job-seekers continue to suffer because of it. This memo is an overview of how things have fallen apart; the question is what will presidential candidates do about over-regulation? Upcoming nationally televised events like the CNN town halls and places like CPAC would be good venues to explain.
First, the central review process at the White House Office of Management and Budget (OMB) to supervise regulations doesn’t work. It was set up by President Ronald Reagan’s Executive Order 12291 (and tweaked by subsequent executive orders from other presidents) to assure rule benefits exceed costs. The idea was important but it did not last.
For starters, President Bill Clinton’s 1993 Executive Order No. 12866 eased off the heavier oversight of the Reagan order by “reaffirm[ing] the primacy of Federal agencies in the regulatory decision-making process.” The process was already incomplete (it incorporated only executive agencies, not the independent agencies), but today central review captures only a fraction of rulemaking. During calendar year 2015, when 3,408 rules were finalized by dozens of federal departments, agencies and commissions, OMB’s draft fiscal year 2015 Report to Congress reviewed a few hundred significant rules, and 54 major rules—but presented net-benefit analysis for only 13, and glaringly ignored independent agencies. Independent agencies today do great damage, such as the Federal Communications Commission and the several bodies implementing and enforcing the Dodd-Frank law with accountability to no one. Overall, the OMB has reviewed just 160 rules since 2001 that incorporated both cost and benefit analysis, and another 86 with cost analysis. Yet during that stretch agencies issued over 53,000 rules, plus uncounted guidances and other proclamations.
Second, The Administrative Procedure Act process is broken in that agencies fail to issue a Notice of Proposed Rulemaking for a substantial portion of their rules such that the public would have a chance to at least comment on them. That is a severe lapse since the very creation of the APA already constituted a break with the Constitution and traditional democratic accountability: Indeed, in Is Administrative Law Unlawful, Philip Hamburger sees the modern administration state as a reemergence of the absolute power practiced by pre-modern kings. According to a Government Accountability Office report:
"Agencies did not publish a notice of proposed rulemaking (NPRM), enabling the public to comment on a proposed rule, for about 35 percent of major rules and about 44 percent of nonmajor rules published during 2003 through 2010."
Agencies often cite the APA’s “good cause” exemption (P.L. 79-404. Section 553), which in GAO’s sample agencies used “for 77 percent of major rules and 61 percent of nonmajor rules published without an NPRM.” The sky is rarely falling in a way that requires such haste Rather, the implication is that agencies think it is practical, necessary, and in the public interest (the APA-specified exceptions to issuing a NPRM) to bypass Congress much of the time and make law unilaterally, compounding the breakdown in accountability already illegitimately imposed by delegation itself.
In their defense, agencies tend to ask for public comments more often than not on final rules for which they had never issued an NPRM. But that gesture is too little too late since “the public does not have an opportunity to comment before the rule’s issuance, nor is the agency obligated to respond to comments it has received.” Reports like the GAO survey appear, and nothing is done to fix matters. Will anyone running for president restore accountability?
Third, Congress rarely uses its most powerful accountability tool, the Congressional Review Act to pass “resolutions of disapproval” (RODs) of costly or controversial agency rules. With the spotty public notice and inadequate accountability just noted, it is imperative that Congress frequently go on record via Congressional Review Act based RODs to signal awareness of agency overreach and to reprimand them. This is a major issue that needs attention, illustrated by passage in Congress (but not the Senate) of the “Regulations from the Executive In Need of Scrutiny” Act. REINS would make the ROD an affirmation instead of a disapproval; no major rule could be effective until Congress approved it. This is a principle that also should apply to regulatory dark matter like the agency guidance noted here at the outset.
Fourth, even if Congress were inclined toward aggressive oversight, the CRA itself is further undermined by agency lapses. Many final rules are no longer properly submitted by agencies to the Comptroller General (CG) of the GAO and to Congress as required under the CRA, according to a report prepared for the Administrative Conference of the United States.
That submission has been regarded an indispensable step since Congress awaits reports to issue a ROD in the first place. By failing to submit rules, “the rulemaking agencies have arguably limited Congress’ ability to use the expedited disapproval authority that it granted itself with the enactment of the CRA.” In this respect, Congress arguably doesn’t always have the raw material it needs to even contemplate a resolution of disapproval. However there are easy remedies for this such as passing REINS or simply automating RODs on every final rule regardless. Technically, and something vital to future reforms, it must be stressed that the CRA’s legislative history indicates that it already applies to agency actions like guidance that are ostensibly not formal rules.
Back in 1999 in the Administrative Law Review, Morton Rosenberg described legislative history demonstrating that the scope of the CRA goes beyond applicability solely to rules for which the APA’s notice and comment provisions apply. That is, the CRA “intentionally adopted the broadest possible definition of the term ‘rule’ when it incorporated the APA’s definition,” and was “meant to encompass all substantive rulemaking documents—such as policy statements, guidances, manuals, circulars, memoranda, bulletins and the like—which as a legal or practical matter an agency wishes to make binding on the affected public.” Certainly, the CRA’s framers recognized the phenomenon of agency strategic avoidance of APA:
"The framers of the legislation indicated their awareness of the now widespread practice of agencies avoiding the notification and public participation requirements of APA notice-and-comment rulemaking by utilizing the issuance of other, non-legislative documents as a means of binding the public, either legally or practically, and noted that it was the intent of the legislation to subject just such documents to scrutiny."
So, the reports to GAO and to Congress aren’t actually necessary to apply brakes to the bureaucracy. That matters in particular for decrees for which the issuance of a formal report to Congress and the CG was never going to occur in any event.
Given these four (non-exhaustive) shortcomings in today’s regulatory process, one may rest assured that if agencies and administration do not want to give information about or measure rules’ costs, they simply aren’t going to do it. The regulatory bureaucracy is not the only place Washington’s attitude toward the public is to conceal rather than disclose: we find misleading unemployment and GDP (a number created to justify government spending) statistics. Maladroit response to Freedom of Information Requests, the use of private email for official business, and loss of government emails are regularly in the news. Reporters describe difficulty in accessing federal data. To justify regulation, we find claims in the water-flows-uphill category that always expand, never reduce, the state: declaring savings from switching from fossil energy to much more expensive forms of less reliable electricity; asserting that adding regulations creates jobs and growth; proclaiming that minimum wages do not decrease employment and that forcing companies to expand overtime pay grows the middle class.
In this culture, alongside failure to divulge regulatory costs and benefits, we see the once routinely published regulatory planning agendas becoming more erratic or simply failing to appear at all. The Draft 2015 Report to Congress on the Benefits and Costs of Federal Regulations, which usually appears by April at the latest, didn’t appear until October 16, the latest ever.
The government operates via Obama’s a “pen and phone” but also beneath a cloak, even as it calls itself the “most transparent administration in history.”
Promises to balance America’s budget are great; but The next POTUS isn’t going to solve America’s economic doldrums while the regulatory state remains untethered . It’d be nice to hear more from them.
Originally posted at Forbes.