Feds Using Blog Posts, Informal Docs To Skirt Regulatory Process

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Federal agencies are increasingly using informal guidance documents, memoranda and blog posts to create rules and skirt the formal regulatory process, and Congress must stop them, a new Competitive Enterprise Institute (CEI) white paper finds.

The federal government has no complete survey on the use of what CEI calls “regulatory dark matter.” The Office of Management and Budget (OMB) only reviewed 14 out of “thousands” of documents created by federal officials in 2014, CEI said.

But agencies are increasingly using these informal documents to create official regulations with consequences, like recent U.S. Department of Housing and Urban Development (HUD) guidance claiming landlords and home sellers who don’t rent or sell to convicted criminals are violating the Fair Housing Act.

These guidance documents are “purportedly not legally binding,” but they still “cajole and intimidate” people and businesses into complying with the agency, CEI said. Most new rules never reach the attention of the media or Congress.

“President Obama has been deservedly criticized for unilateral executive actions that are dreadnoughts of rule-without-congress,” CEI said. “But federal agency guidance documents, memoranda and other regulatory dark matter swell ominously, often out of sight.”

Congress is partly responsible for the swelling administrative power through “over-delegation to agencies and neglect of the Administrative Procedure Act’s formal rule-making process,” CEI said. But Congress also has the power to stop the bureaucratic growth by reclaiming the authority it delegated.

Congress should use the Congressional Review Act to reject agency rules and guidance documents and withhold appropriations for specific agency actions it hasn’t authorized, CEI said. Congress should also make sure OMB reviews all agency guidance, however informal, for financial impact, the paper stated.

Downsizing the federal government is the only way to curb administrative rule effectively and permanently, CEI explained.

“Regulation and guidance cannot be controlled without downsizing the federal government and strengthening democratic accountability,” CEI said. “That requires reining in the colossal bureaucracies that enable rule by unelected experts.”

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