Regulating Outside The Rules

by Ryan Young on October 2, 2012

in Deregulate to Stimulate, Regulation

The federal regulatory process is a complicated thing. As with any complex body of law, there are loopholes that agencies can exploit. Over at The Washington Times, Wayne Crews and I point out three of these loopholes, and kindly suggest that Congress close them.

The first is “sue and settle.” Agencies like the EPA work closely with environmental and other pressure groups that sue targeted employers or states over some grievance to force a settlement, opening what our Competitive Enterprise Institute colleague William Yeatman aptly describes as “EPA’s New Regulatory Front.” Litigation is costly. Companies routinely settle to avoid protracted court battles, and settlement terms usually force compliance with the goals of the EPA or the allied interest group.

The second option, involving what are called guidance documents, is less opaque, but no lovelier. Agencies issue these to clarify rule interpretations when there is confusion. As the House oversight panel report explains: “Guidance documents, while not legally binding or technically enforceable, are supposed to be issued only to clarify regulations already on the books.” Guidance documents can be helpful, since many regulations are so poorly written that they border on incomprehensible.

Some guidance documents exceed mere helpful clarification. The committee report continues: “However they are increasingly used to effect policy changes, and they often are as effective as regulations in changing behavior due to the weight agencies and the courts give them.”

If the first two options aren’t available, agencies have a third way to regulate outside the rules: good old-fashioned emergency powers. The APA contains a loophole that allows agencies to avoid the public comment period and make final rules effective on their publication date during an emergency, as determined by the agency itself.

Read the whole thing here.

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