The “Guidance Out Of Darkness Act” Is The Low-Hanging Fruit Of Regulatory Reform

We often marvel that we don’t actually know how many federal agencies exist. And the number of “commissions” and programs (many expired and now unauthorized)? Forget it.

That in turn implies we don’t know how many rules and regulations there are.

Sure, agencies issue over 3,000 rules every year, and we can easily count those. But they also issue thousands of guidance documents, “interpretative” rules and policy statements, plus scads of other materials not exposed to the sunshine of public notice-and-comment. These can affect everything from labor policy to higher education to finance, yet these don’t always (almost never) wind up in the Federal Register like ordinary rules do.

Granted, guidance documents are ostensibly non-binding — but are you going to argue with an agency holding permitting authority over your business? Besides, influencing policy, not mere offering position statements, is prevalent. Some major policy initiatives of our era — like the Securities and Exchange Commission’s “Disclosure Related to Climate Change” and the Environmental Protection Agency’s “Waters of the United States” transformations — started as interpretive guidance. Similarly, the inclusion of “gender identity” in the definition of “sex” originated in a 2016 Department of Education and Department of Justice “Dear Colleague” letter. The Labor Department Wage and Hour Division’s policies reclassifing some independent contractors as employees and defining “joint employment” were 2015 and 2016 “Administrative Interpretations.”

There’s so much agency nudging outside the normal Administrative Procedure Act notice-and-comment process that we took to calling the phenomenon “regulatory dark matter.” Just below I’ve pasted a “word cloud” I extracted from regulations.gov. Some of it would qualify as guidance, some not; some occupies a gray area. But as Washington continues its hyperspending and displacement of the private economy and wields the carrots and sticks of procurement and contracting to get its way, every agency proclamation bears monitoring.

Denial of Application, Action Memo/Letter, Adjudication, Advisory Opinions, Agreement/Contract, Analysis, Approval, Audit, Brief, Certification, Clarification, Comment Response, Company/Organization Comment, Complaint, Consent Decree, Consent Order, Data, Decision, Decree, Delay of Effective Date, Determinations, Early comment, Economic Analysis, Environmental Assessment, Environmental impact Statement, Evaluation, Exemption, Extension of Comment Period, Fact/Data Sheet, Findings of Fact, Guidance, Hearings, ICR Supporting Statement, Industry Circular, Information Collection Request (ICR), Interagency Review, Letter, Management Directive, Meeting, Meeting Materials, Memorandum, Motion, Notice of Adequacy, Notice of Approval, Notice of Data Availability, Notice of Filing, Notice of Intent, Notice of Receipt of Petition, Order, Permit/Registration, Petition, Policy, Press Release, Public Announcement/Notice, Procedure, Public Comment, Public Hearing Deposition/Testimony, Public Participation, Publication, Report, Request for Comments, Request for Grant Proposals, Risk Assessment, Settlement Agreement, Significant Guidance, Study, Supplement, Technical Support Document, Waivers, Withdrawal, Work Plan

Unfortunately, a surge in policy-by-guidance appears to be inevitable unless steps are taken to counteract the recent alarming consolidation of power in Washington. During the past three years, we have witnessed an unprecendented multi-trillion dollar legislative profusion on infrastructure, “innovation” and “inflation” spending (what Washington calls “investments”). Those will have regulatory effects, plus spawn waves of guidance. In addition, Biden’s dramatic cross-agency progressive social and climate pursuits, rooted in the broader progressive ESG campaign, will pile more arbitrary and unilateral agency interpretations atop the already unknown, unfathomable and unaccounted-for.

For some, all that proliferation, confusion and the sheer unavoidable presence of Washington may be OK; for others, not so much. It’s bad enough for the federal government to direct its spending (your taxes) to domestic and international ends with which you may not not agree; but the hazards of regulatory dark matter have escalated with Biden’s March 20 veto of legislation that would have protected citizens’ retirement savings from getting channeled toward ESG conceits that will dramatically expand government-by-guidance. This intolerable development — one might regard it the caboose on a long train of abuses — needs to be addressed with utmost urgency but is beyond our scope here.

All that said, it might come as a surprise that addressing overuse and abuse of guidance occasionally emerges as a bipartisan concern, and we should hope that sentement arises again.

This past week, Sen. Ron Johnson (R-Wisconsin) and a group of 14 GOP colleagues introduced the regulatory transparency bill known as the Guidance Out of Darkness Act (or “GOOD Act”). The House version (H.R. 890) was also introduced recently by Rep. James Comer (R-Kentucky).

The six-page GOOD Act’s simple aim is to require a public access portal for guidance documents. As Johnson put it in a statement on March 15, the GOOD Act would require that agencies “publish their regulatory guidance on the internet in an easily accessible location,” thereby “helping all entities — including small businesses, workers and households — to comply with regulations.”

The 118th is the fourth Congress in which Sen. Johnson has introduced the GOOD Act, which dates back to the 115^th Congress (then-S. 2296) when Rep. Mark Walker (R-NC) introduced the House version (H.R. 4809). The Senate Homeland Security and Governmental Affairs Committee has moved the GOOD Act forward by voice vote multiple times, and it passed the full House chamber by voice vote in 2018. But the GOOD Act hasn’t managed to garner full Senate passage.

Thats a shame; the pedigree for proper handling of guidance is bipartisan and goes back many years. While the GOOD Act’s sponsors are all Republicans, its support, and its principles, have not been merely partisan. The Office of Managment and Budget’s “Final Bulletin for Agency Good Guidance Practices” was issued back in 2007, elements of which Barack Obama’s OMB retained despite his infamous “pen and phone. And somewhat surprisingly at the agency level, the Food and Drug Administration has long maintained sophisticated search capabilities for guidance.

But the reality is that guidance supervision suffers worse neglect than regulatory oversight does, where the law is routinely ignored. The deprioritization of guidance disclosure was demonstrated most starkly with Joe Biden’s revocation of Donald Trump’s Executive Order 13891 on “Promoting the Rule of Law Through Improved Agency Guidance Documents,” parts of which one might recognize as an executive version of the GOOD Act.

Biden’s revocation of Trump’s guidance EO provoked a February 8, 2021 letter to the White House from Johnson and 20 other senators (see their press statement) calling the rash move into question. Referencing the bipartisan pedigree of guidance disclosure, the senators noted that the GOOD Act had received support from Vice President Kamala Harris when she served in the Senate (“In fact, Vice President Kamala Harris, who then served as a member of the Committee, voted for the legislation”; see also S. Rept. 115-271).

Yours truly was there for hearings prior to the GOOD Act’s introduction and I can attest to the bipartisan appeal that guidance supervision has (or can have) when things aren’t so polarized. Beginning back in 2015, the Homeland Security and Government Affairs Committee (HSGAC) conducted a series of hearings chaired by Sen. James Lankford (R-Oklahoma) and his Democratic colleage, Heidi Heitkamp of North Dakota, on “Examining the Use of Agency Regulatory Guidance.”

At the first of the hearings, the Government Accountability Office released a review of agency guidance and compliance with the aforementioned 2007 Office of Management and Budget memo on “Good Guidance Practices,” and offered recommendations for improvement. Witnesses agreed, at the querying of Sen. Heitkamp, that guidance is not supposed to be legally binding. Even Department of Labor and Department of Education witnesses nodded at that obvious fact. Today, there are legislative proposals (such as the Guidance Clarity Act) that would reinforce GOOD in providing that assurance as well.

The problem though, is that the regulated public, such as farmers and business people, are reluctant to disregard guidance. Who wants to cross a bureaucracy with time and resources on its hands? At the hearings, though, and reflective of the “word cloud” above and other assessments “mapping Washington’s lawlessness,” not everyone agrees on what guidance actually is and is not—and that is a problem. The GOOD Act itemizes some of them though, as seen here:

• a memorandum
• a notice
• a bulletin
• a directive
• a news release
• a letter
• a blog post
• a no-action letter
• a speech by an agency official

The tenor of the early HSGAC investigations, which remains a prevalent theme in today’s public policy discussion generally (see the recent House Judiciary Hearing chaired by Rep. Thomas Massie (R-Kentucky) on “Reining in the Administrative State”) is that a breakdown in democratic accountability is underway. Where we once had the Obama administration’s “pen and phone,” today we have even more extreme “reset,” “build back better,” ESG and other pursuits that not only defy Congress, but are likely to be driven by unaccountable and unregulated guidance.

Unelected agencies act unilaterally, pushing what ought to be unenforceable guidance on an nervous public and, as Sen. Heitkamp put it at that initial hearing, “shortcutting” the ordinary rulemaking process. Sen. Lankford observed that whether a given initiative becomes a guidance on the one hand, or a rule requiring formal notice-and-comment on the other, is a “black box” to Congress. That is an abnormality in a constitutional republic to say the least, and is unacceptable.

A deeper difficulty here that goes beyond the GOOD Act’s ability to rectify is that, even if requirements to employ APA were stipulated, it wouldn’t assure democratic accountability. Ordinary rulemaking can itself flout the law, pointing to a need for an even broader regulatory reform agenda. For example, attempts to to isolate “significant” guidance will be resisted by agencies. We know this because, even for ordinary APA rulemakings designated signficant (typically an annual economic impact of $100 million), cost-benefit analyses are the exception rather than the rule.

GOOD is the low-hanging fruit of regulatory reform, and boasts a legacy of bipartisan support. Despite the need to be oppositional and to posture against, Democrats have nothing to be embarrased about in supporting GOOD. The United States has an inventory of its laws (the U.S. Code) and of its regulations (The Code of Federal Regulations). The third leg of the Administrative State stool, for better or worse (OK, worse) is comprised of often slippery and ill-defined guidance documents that remain difficult to locate.

Guidance documents need to have a formal inventory and repository as well, and the GOOD Act is the appropriate tool to provide the portal necessary for transparency. That is a necessary but still not sufficient condition for democratic accountability.

In practical support of GOOD Act-style disclosure, at the time of the initial HSGAC hearings, one could point to at most a few thousand guidance documents. That empty-shelf condition remained the case in 2018 when the House Oversight and Government Reform Committee — in a report called Shining Light on Regulatory Dark Matter that demanded agencies cough up their documents — still only managed to isolate 13,000. However, in the wake of Trump portals, even with Biden’s revocation, I have been able to amass at least the locations of over 107,000 amid the remnants.

That makes it obvious that GOOD could do even more good, so to speak; Trump’s executive order version of guidance disclosure required each agency to have its own portal. The more fruitful legislated “Megaportal” for regulatory dark matter that we really need would be fulfilled by the GOOD Act; all documents would be available from one location.

The two political parties, obviously, do and will continue to debate the merits of government regulation vs. other kinds of discipline of risk. What they ought not debate is disclosure and transparency. They’ve collaborated in the past and can do so again; optimistically, they’ll do so their own accord. As it stands, though, getting Congress to act may take panicked state and local governments plus small business appealing to Washington, as an inevitable regulatory and guidance surge makes itself felt in the wake of the COVID and post-COVID legislative consolidations.

After transparency and disclosure comes accountability; agencies at the very least should ditch guidance when they ought to be issuing a formal rulemaking. But we need that transparency and disclosure the GOOD Act can provide as a base.

For more:

• Mapping Washington’s Lawlessness: An Inventory of “Regulatory Dark Matter” (2017 & 2016 eds.)
• A Partial Eclipse of the Administrative State: A Case for an Executive Order to Rein in Guidance Documents and Other “Regulatory Dark Matter” (2018)
• “An Emergency Law to Extinguish Regulatory Dark Matter” (2022)
• “Federal Agency Guidance Document Inventory Tops 107,000 Entries” (2022)
• “Megaportals for Guidance Documents: Toward Emergency 2025 Legislation to Correct Biden’s ‘Whole-of-Government’ Incursions” (2022)