A Partial Eclipse of the Administrative State: A Case for an Executive Order to Rein in Guidance Documents and Other 'Regulatory Dark Matter'

Abstract

The Trump administration has taken concrete action to streamline some federal agency guidance documents, just as it did with respect to so-called "significant regulatory actions." In particular, the administration strongly reaffirmed Office of Management and Budget (OMB) cost-benefit review of agency rules, and implemented new regulatory “budgeting” considerations on the whole. The primary vehicle was Trump’s Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” which established a one-in/two-out policy for implementing new rules, and implemented a net freeze on net costs for regulation.

Trump also set up regulatory reform task forces to identify “outdated, unnecessary, or ineffective” regulations, those with costs greater than benefits, and those that inhibit jobs and job creation; and launched an executive branch reorganization plan.

In the process the Trump White House reinforced OMB review of “significant guidance documents,” as specified a decade before in the George W. Bush administration’s 2007 “Final Bulletin for Agency Good Guidance Practices.”

While interpretative rules and guidance and other such "regulatory dark matter" are not subject to the Administrative Procedure Act’s notice-and-comment requirement, they are subject to the Congressional Review Act's (CRA) requirement to submit to the Government Accountability Office and to both houses of Congress, so that Congress might choose to enact a "resolution of disapproval."

Many observers have called for Congress to act on regulatory streamlining. A non-legislative option in the meantime is for the president should supplement the administrative actions already taken, and issue a new executive order to strengthen review and control of sub-regulatory guidance.

The new order should incorporate longevity lessons from President Ronald Reagan’s E.O. 12291 that first formalized OMB regulatory analysis and review of notice-and-comment rules, a process that largely remains in effect. While presidents often eliminate predecessors’ executive orders, orders addressing regulation have enjoyed staying power. A new order focused on guidance—with a proper management framework that is compelling and comprehensive—could greatly amplify executive oversight of agencies. Moreover, since revoking or easing guidance does not require going through the notice-and-comment process as revoking a rule does, the streamlining enabled and encouraged via a new executive order may become more important as the two-for-one low-hanging fruit is picked.

Features should include:
Plank 1: Reaffirm Already “Official” Procedures for Guidance Document Oversight;
Plank 2: Improve Disclosure of Specific Guidance and Summary Statistics;
Plank 3: Incorporate Guidance into the "Regulatory Plan and Unified Agenda for Federal
Regulatory and Deregulatory Actions";
Plank 4: Designate Guidance as “Regulatory” or “Deregulatory”;
Plank 5: Modify the CRA Reporting Template to Clearly Designate Guidance, Not Just Rule
Types;
Plank 6: Future Guidance—Affirm that Future Agency Guidance is Null Unless Submitted to
GAO and Both Houses of Congress;
Plank 7: Past Guidance—Affirm that Prior Improperly Issued Guidance Will not be Regarded In
Effect Unless Agencies Formally Submit It;
Plank 8: Secure a Comprehensive Compendium of All Validly Issued Guidance;
Plank 9: Disallow Guidance without Congressional Approval;
Plank 10: Ban the Initiation of Certain Federal Agency Guidance, Especially in Frontier Sectors;
Plank 11: Require Public Notice and Comment Procedures for Guidance;
Plank 12: Liberally Deem Guidance “Significant” and Escalate Formal OMB Review of It.

Keywords: guidance documents, administrative state, administrative law, regulation, Executive order, 13771, Donald Trump, Congressional Review Act, regulatory reform

JEL Classification: K2, K23, K11, H1