Trump’s New Executive Branch Reorganization Should Discipline Agency Guidance Documents

President Donald Trump is undertaking a “Comprehensive Plan for Reorganizing the Executive Branch.” (E.O. 13781)

For the new executive branch reorganization to bear maximum results (see Office of Management Budget director Mick Mulvaney’s implementation memorandum here), cross-governmental restrictions over the production of agency guidance documents, memoranda, notices and other regulatory material need to be expanded.

One recent rollback example is that of Labor Secretary Alexander Acosta, who rescinded Obama-era regulator guidance on joint employer and independent contractor liability.

These controversial directives were not laws from Congress; nor were they ordinary notice-and-comment regulation. Rather, they were so-called administrator’s interpretations. But they “made it harder for people who want to be in business for themselves and punished large companies for contracting with smaller ones.”

Along with over 3,000 regulations produced each year, federal agencies issue thousands of guidance documents, interpretive bulletins, notices, memoranda, proclamations, and even blog posts that sometimes carry regulatory heft, or seem to do so to targets. Yet they do not go through the formal rulemaking process.

These guidances appear under numerous monikers and get scattered across various websites, if publicized at all. One thing the Trump administration should do is put them all in one place where they can be found.

A George W. Bush-era directive subjected the “economically significant” (generally, $100 million in effect) subset of agency guidance to review. That process still partly endures, but needs a boost in order to hold guidance to standards more akin to those that apply to rules, including OMB review and the Administrative Procedure Act’s notice-and-comment requirements. Some new legislative proposals would now do that.

In the meantime, Trump’s well known “one-in, two-out” regulation on rulemaking also applies to significant guidance, which is something less well-known.

Guidance is especially worrisome since notice and comment procedures and OMB review of even ordinary rules, are already lacking. A GAO report found a third of rules are issued although no “notice of proposed rulemaking” had been issued.

Notably, the Congressional Review Act’s 60-day resolution of disapproval process applies to guidance, too, so Congress and the administration can work together to repeal burdensome guidance that way before it gets off the ground. But that will take concerted effort.

This all takes on much more urgency now that the reorganization plan is underway.

Across the bureaucracy, “Agency Reform Plans” are now due. It will be interesting to see what restraints they propose for themselves. I suspect, however, that the shift to rule by guidance is something that could slip through the cracks in this reorganization effort, leaving open an avenue for the administrative state to grow.

In my own partial inventory, I’ve located at least 617 “economically significant” guidance documents acknowledged in effect. But thousands of secondary pieces of regulatory dark matter exist.

For example, in the financial sector, the St. Louis Fed has compiled some 136 pieces of “significant” guidance in in existence across financial regulatory agencies, while the Conference of State Bank Supervisors maintains a database with some 2,200 so-called “directives.”

But that’s just one sector. While surveys of countable trends in regulation are long established, one suspects that unknown and unknowable aspects of the regulatory enterprise increasingly outweigh the known. That’s what must not be missed in the Trump administration’s reorganization of the executive branch.

Trump can take steps alone, or with Congress.

The entire administrative state needs overhaul at this point. Sub-regulatory guidance from both executive and independent agencies needs to be treated more like regulation, while regulation in turn needs to be treated like normal laws and positively affirmed.

Alone, the White House can intensify Office of Management and Budget review of guidance; and it can question agency self-assertions that guidance is not significant. It can ban the issuance of federal agency guidance on industries that aren’t here yet or where Congress hasn’t enacted authorizing legislation for an agency to butt in.

Most obviously and simply, the web-posting of significant and secondary guidance, which is all over the map, as we’ve noted, needs to be harmonized and expanded.

Congress can get involved to apply regulatory reform legislation in existence, and under consideration, to guidance.

For starters, putting into law elements of the Office of Management and Budget’s 2007 Good Guidance Practices memo (which the bipartisan Regulatory Accountability Act would do), would be helpful.

That legislation passed the House but is stuck in the Senate. Clearly executive branch and regulatory agency reorganization is a long-term project. But it has at least gotten under way.

Originally posted to Forbes.