Exploring Stealth Regulation in the US System

Mercatus_policy

The research “Confronting the Problem of Stealth Regulation” conducted by Graham and Broughel focuses on the problem of “stealth regulation”, that is under-the-radar rulemaking which is enacted circumventing two key components of the US regulatory system. The first is the Administrative Procedure Act of 1946 (APA) which compels regulatory agencies to consider the wishes of the American public via a process of public participation in rulemaking. The second is the regulatory review by the Office of Information and Regulatory Affairs (OIRA), in place since the early 1980s, providing assurance that a minimal level of evidence, especially economic evidence, is supplied to support agency decisions.

Whether intentionally or not, agencies often avoid these procedural requirements. Graham and Broughel find that agencies avoided the notice-and-comment process in almost 52 percent of regulations finalized from 1995 to 2012. Meanwhile, only about 8 percent of final regulations underwent OIRA scrutiny between fiscal years 2004 and 2013.

More troubling, however, is the fact that agencies can evade checks and balances altogether via an array of mechanisms that circumvent or bypass the traditional rulemaking process. A non exhaustive list of stealth regulatory mechanisms includes guidance documents and policy memoranda, rule interpretations, agencies’ collaboration with local authorities and interest groups, failure to enforce rules, warning and threats by inspectors.

To address stealth regulation, the authors suggest to:

  • introduce systematic tracking of agency evasion tactics;
  • increase OIRA resources;
  • require impact assessment and OIRA review for significant guidance documents;
  • allow judicial review of significant guidance documents;
  • provide more specific instructions from Congress.

 

Graham, J.D. and J. Broughel. 2015. Confronting the Problem of Stealth Regulation. Mercatus Policy Brief. April 2015 (based on previously published work, “Stealth Regulation: Addressing Agency Evasion of OIRA and the Administrative Procedure Act”, Harvard Journal of Law and Public Policy. Federalist Edition 1, no. 1, 2014: 30-54)

(Fabrizio Di Mascio)