Regulatory “Dumbfounders”: The Gold, Silver and Bronze

The editor of this publication is often asked  to name several of the most significant surprises which he observed over the past half century working on issues dealing with the administrative state.

Outside the wonky world of regulations the resultant answer would hardly ring an audible chime with the general populace. Nonetheless the question is challenging and is  recast to identify  regulatory “dumbfounders”.  Answers change with the passage of time and  rebranding the question as the identification of “dumbfounders” is  appropriate because we were in search of a non-existent noun in lieu of a verb to designate a specific event that designates a surprise.

The Gold:   Benefit-Cost Analysis  Is  Applicable to Regulations

 Benefit-cost analysis had its origins in the evaluation of water resource development projects such as dams and waterways. The idea of applying the techniques unique to the analysis of the benefits and costs resulting from the pouring of tons of concrete to build massive public works projects to the analysis of the benefits and costs emanating from  piles of paper which compel  changes in the social or economic behavior of individuals  was dumbfounding to a wide range of personnel within the administrative state; see this post for additional background.

 The Silver:   Regulatory  Guidance  Is Not Binding — On Either Regulators or Regulated Parties

 Regulatory agencies routinely issue statements that are not published as regulations and are frequently referred to as guidance. Some inhabitants of  the regulatory state believe that the term guidance means exactly what the dictionary says it means:  “the act or function of guiding” with an emphasis on to “guide” but not to “compel” which when translated by these individuals into the parlance of  the regulators means that the regulators  should be extremely deferential to guidance but not bound by it for any period of time, however short, because guidance is solely advisory to both the regulators and private parties.

Nothing could be farther from prevailing practices as enunciated by the administrative law academy; in their view agency guidance  governs the actions of agency personnel until which time a party convinces senior management of the agency to the contrary.  A related question is if guidance governs the views of agency personnel until it is reversed by a superior, is it not in the best interests of the regulated party to comply with the guidance until it is reversed?

See this report of the Administrative Conference of the US which sets forth the views of interviewees in agencies, industry, and NGOs on the probable prevailing circumstances that discourage regulated parties from seeking departures from guidance, as well as factors that can incline agencies against departing from guidance.  Also see this action by DOJ regarding its internal guidance which eliminates any uncertainty whatsoever –why is not the DOJ document the standard to be used by all agencies?: DOJ Guidance Documents

Consequently we conclude that given the definitions  advanced by the academicians technically speaking guidance is not binding but it is tantamount to a binding requirement on regulated parties.

The Bronze:  The Office of Management and Budget  Does Not Have the Authority to Review Agency Regulations

Heretofore the gold dumbfounder was  the claim that the President did not have the authority to implement centralized regulatory review in the White House Office of Management and Budget. However since the myriad of studies and statements  on guidance are  increasing both in frequency and significance, the issues concerning  regulatory guidance documents have been upgraded to the silver medal status leaving no choice but to  relegate an issue which was formerly one of the most contentious issues in the administrative state–centralized regulatory review- to the bronze medal status.

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