With very little fanfare, President George W. Bush quietly signed an executive order on January 18, 2007 approving major changes to the federal regulatory review process. EO 13422 gives the president and his appointees greater management authority over executive agencies, and specifically over the quasi-regulatory “guidance documents” that have until now escaped executive review.
Loophole Closed
It took a full week following the signing of the order before the mainstream media realized its significance. But once it did, the story became front-page news.
Following a New York Times above-the-fold article, several environmentalists and non-government organizations publicly denounced the order as an unwarranted expansion of executive power that would roll back public safeguards.
To the contrary, supporters argue, the executive order closed a legal loophole that had allowed federal agencies to circumvent regulatory review and planning requirements through the issuance of guidance documents.
By law, guidance documents have never had any legally binding effect–they are merely an agency’s interpretation of how the public can comply with a particular rule or regulation.
Even so, the use of guidance documents to regulate the public had become a common practice. Even though guidance documents do not have legally binding effect, they have practical binding effect when issued in a manner that pressures private citizens to act according to their directives.
‘Guidance’ Becomes Requirement
An example of a guidance document masquerading as a rule is the U.S. Environmental Protection Agency’s (EPA) environmental justice guideline, “Interim Guidance for Investigating Title IV Administrative Complaints Challenging Permits,” issued in February 1998.
In light of the profound legal and policy ramifications of this document, the House Committee on Government Reform asked the General Accounting Office (GAO) to determine whether the guidance document was actually a rule. On January 20, 1999 GAO sent a letter to the subcommittee confirming the guidance document was indeed a rule and should have gone through the formal notice and comment period required for a rulemaking.
Used as Shortcut
It is far easier for federal agencies to issue guidance documents than to undergo the rigors of rulemaking. Rulemakings require internal agency review; public participation (including notice and comment under the Administrative Procedure Act); compliance with the analytical requirements of Executive Order 12866, the Regulatory Flexibility Act, and the Unfunded Mandates Reform Act; Office of Management and Budget review; Congressional review; and potentially judicial review.
Because of these increasingly stringent analytical requirements–which were primarily instituted by Presidents Carter and Clinton–agencies have had a strong incentive to issue “rules” in the form of procedurally onerous guidance documents that–intentionally or not–cut the public and the regulated community out of the regulatory process.
Agencies Now Accountable
Now, Bush’s Executive Order 13422 requires the president’s executive agencies to (1) state why a rule is needed, (2) give an accurate accounting of costs and benefits of an individual rule and the aggregate costs and benefits of all rules issued by the agency that year, and (3) create a Regulatory Policy Officer (RPO) within each agency to ensure the executive order is implemented by the agency.
The RPO will be a political appointee, responsible to the president, and will be required to coordinate with the Office of Management and Budget.
Want Congressional Control
Critics have complained the executive order politicizes the regulatory process by allowing a political appointee–who reports to the president and not Congress–control over an agency’s regulatory output. They say they fear the activities of the RPO will not be subject to the same transparency and accountability as, say, an agency administrator, who is confirmed by, and reports to, Congress.
Yet the RPO is most certainly accountable–to the chief executive. Like an agency administrator, the RPO serves at the pleasure of the president and is ultimately responsible to him. Hence, supporters of the executive order say, the criticism is simply a bid by Congress for more direct power over executive branch officials.
Critics continue to decry EO 13422 as an unwarranted and possibly unconstitutional expansion of executive power, yet it is certainly well-settled that the president has the power to make political appointments of officers within his own executive agencies.
Hysterical claims of unconstitutional “power grabs” serve only to distract us from the important and sizable problems with the regulatory process that EO 13422 is intended to address.
William L. Kovacs ([email protected]) is vice president of the U.S. Chamber of Commerce Environment, Technology, and Regulatory Affairs Division.
