The Growing Outrage Of Off-The-Books Federal Regulation


President Barack Obama has practically trademarked going around Congress, proclaiming “I’ve got a pen and I’ve got a phone. And that’s all I need.”

It’s long been the case that substantial federal red tape and intervention happen without proper oversight by our elected representatives.

Last year, there were 87 laws passed by Congress and signed by the president—but 3,408 regulations from unelected bureaucrats.That’s thirty-nine rules for every law, in this preliminary “Unconstitutionality Index.”

Such rules include legally challenged big environmental controls like Waters WAT +0.14% of the United States and Clean Power Plan rules. They include FCC -mandated “net neutrality” online, and range down to energy efficiency mandates and the paternalism of mandated serving sizes for breath mints.

The administration outlines priorities in its twice-annual Unified Agenda of regulations, and President Obama’s has nearly a year to go. The “hidden tax” of such regulation matters.

Yet Washington’s intervention doesn’t end with such regulations as these, the ones formally implemented via the 1946 Administrative Procedure Act‘s requirements that allegedly but do not always allow public notice and comment.

Pen and phone-like, there’s a lot of other less-formal stuff that doesn’t lend itself well to being counted, and that’s a mounting concern.

“Regulatory dark matter” comprises all the ways that the executive branch can and does go around Congress and the American people, injecting itself into our states, our communities, and our personal lives on matters such as healthcare, retirement, labor policy, education policy—not by passing laws or issuing normal regulations—but via guidance documents, memoranda, bulletins, manuals, circulars and other proclamations that are not well-governed and scrutinized.

Such proclamations aren’t supposed to be legally binding; but if you’re a small business person awaiting a permit or approval, say, they’re hard to ignore—assuming you have the compliance teams to find where they’re published.

Like dark matter in the universe, regulatory dark matter may begin to outweigh what we can readily see and count. Especially in the pen and phone era, dark matter matters — for democratic accountability.

At a September 2015 hearing, Senators marveled at lack of clarity in the internal process by which bureaucracies elect to carry out some new initiative: Do they choose to do it via an ordinary notice-and-comment regulation? Or via guidance or memoranda?

Senators couldn’t get a straight answer; One lamented that it “is a black box to us.

Obama’s executive orders contribute to policy being implemented without Congress, such as orders requiring paid sick leave and minimum wages for private employers who happen to be government contractors.

But executive orders are not the main way Obama has wielded the pen and phone; rather, executive meomoranda have been (as this newspaper has noted). Recent memoranda have involved a student aid bill of rights, overtime regulations, and defaulting us into retirement plans at work whether we want it or not. According to White House data as of December 2015, there had been 222 executive orders since 2008, but 472 executive memoranda ranging from the mundane to the weighty.

Atop that, guidance and other notices from the hundreds of federal agencies is much more slippery. For starters, the Administrative Conference of the United States tells us “there is no authoritative list of government agencies. Every list of federal agencies in government publications is different.”And Agencies are all over the map in terms of their public disclosure of guidance they have in effect.

In non-mandatory tallies of “significant” guidance documents (those with impacts of at least $100 million annually), agencies have voluntarily acknowledged at least 580 of them on the books.

But meanwhile, as of today, agencies have issued 529, 062 “public notices” since 1994 that have appeared in the Federal Register.

Most are trivial, but policymakers really haven’t inventoried all that is there, and there are even more since not all guidances, administrative errata and other dark matter even appear in the Federal Register.

Indeed the more the federal government steers our economy in health care, finance, energy, labor and other sectors, the more it can “regulate” without issuing rules at all.

In the financial sector alone, for example, the St. Louis Federal Reserve Bank at the end of 2015 listed 74 instances of what it deemed significant guidance; Meanwhile the Conference of State Bank Supervisors had compiled 1,445 pieces of guidance from several agencies that affect the financial sector.

Bottom line here — Congress really has no clue of the extent of regulatory dark matter.

But it better get one, because of the books regulation has changed the very nature of how we must debate and address federal red tape from now on.

At the very least, Congress (and a future president) must affirm that all federal agencies decrees matter, not just those incorporated into the APA process and published as real “rules.” Less formalized decrees need at least the same administrative scrutiny and opportunity for public comment that ordinary rules get (which is itself too little).

Regulatory overreach happens because Congress has relinquished its constitutional legislative power. So Congress must vote to approve all costly and controversial agency rules—and dark matter decrees, too.

As the joke goes, the Constitution isn’t perfect, but it’s better than what we have now. No more executive branch pens and phones—just laws from our elected representatives.

Originally posted at Forbes