John Locke Update / Research Brief

Fight regulatory dark matter by defining terms properly

posted on in Government Reform, Law & Regulation, Rights & Regulation
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  • Regulatory dark matter is an executive agency’s policies, guidelines, memos, or interpretive statements of rules that the agency then enforces as if they are the rules themselves
  • House Bill 361 would make any agency policy, guideline, interpretive statement, etc., implemented as a rule to be “unenforceable”
  • The bill would require any such policy treated as a rule to be formally adopted as a rule first

For the past century, astronomers have hypothesized that interstellar space comprises what is called “dark matter.” As described by Space.com, it is “material that scientists cannot directly observe” and “does not emit light or energy.” That doesn’t mean it doesn’t exist or that it isn’t important, however:

Since at least the 1920s, astronomers have hypothesized that the universe contains more matter than seen by the naked eye. Support for dark matter has grown since then, and although no solid direct evidence of dark matter has been detected, there have been strong possibilities in recent years.

“Motions of the stars tell you how much matter there is,” Pieter van Dokkum, a researcher at Yale University, said in a statement. “They don’t care what form the matter is, they just tell you that it’s there.” Van Dokkum led a team that identified the galaxy Dragonfly 44, which is composed almost entirely of dark matter.

A rule is known by its “practical, binding regulatory effects”

The concept of dark matter — something that can’t be seen in the normal way of observing things, but something that has clear, observable effects and therefore must have substance and impact — is behind the concept of regulatory dark matter. Federal regulation expert Clyde Wayne Crews Jr. defines it as “executive branch and independent agency actions including guidance documents, proclamations, memoranda, bulletins, circulars, letters and more that are subject to little scrutiny or democratic accountability but carry practical, binding regulatory effects.”

In 2018, the U.S. Government Accountability Office made the important determination that federal agency “guidance” documents function as rules. The GAO rightly discerned that a rule can be detected by how it acts and affects people (its “practical, binding regulatory effects”), not what it’s called. Like the stars affected by the unseen dark matter, the people affected by regulatory dark matter don’t care what form a rule takes, they can just tell you it’s there.

One of Pres. Joe Biden’s early actions in his presidency has been to overturn his predecessor’s actions against federal agencies ruling in the shadows by guidance documents and other regulatory dark matter. No longer having to portray himself as a moderate to the electorate, Biden now aims to rule by executive agencies’ “thousands of sub-regulatory memoranda, notices, administrative interpretations, decrees and various other forms of regulatory dark matter that can have regulatory effect despite that being against the rules.”

A policy that acts as a rule should be defined as such

In North Carolina, a regulation is supposed to be readily observable in the NC Administrative Code after undergoing a highly structured rulemaking process put forth in state law. But legislators for years have known that an agency’s “policies, guidelines, and other interpretive statements” can actually function as rules.

A new bill would try to address that problem.

House Bill 361 would make a small but substantial change in the Administrative Procedure Act (APA). This change would occur in how the APA defines an agency “policy.” Here is the current definition:

“Policy” means any nonbinding interpretive statement within the delegated authority of an agency that merely defines, interprets, or explains the meaning of a statute or rule. The term includes any document issued by an agency which is intended and used purely to assist a person to comply with the law, such as a guidance document.

Although the interpretive statements, guidance documents, etc., are supposed to be “nonbinding,” those are the very things that become rules by practical effect. Here is the addition HB 361 would make at the end of that definition:

Any policy that an agency attempts to implement as a rule shall be unenforceable unless it is adopted as a rule.

It’s a small change, but it would be significant. It would mean that an agency couldn’t tell people to abide by how they say they interpret a rule if they’re treating their own guidance as the rule itself.

For example: a rule states you shall do X, but the agency tells you they take it to mean you shall do Y, and then they enforce your doing Y. This change would mean the agency couldn’t enforce your doing Y when the rule merely called for your doing X. If the agency wanted you to do Y, then they should’ve made that the rule.

Why didn’t they? It could be it’s just easier. Another reason, however, could be that ordering you to do Y exceeds the power delegated to them by the General Assembly — power they could assert in a roundabout way with a do X rule treated as do Y. This bill would preclude such a surreptitious power grab, which the elected legislative branch should do. Unelected bureaucrats should not be empowered to create de facto laws.

Making a definitional distinction between an enforceable rule vs. unenforceable policy, guidance, interpretive statements, etc., would help fight regulatory dark matter in North Carolina.

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. Serving as Senior Fellow of Regulatory Studies and also Research Editor at the John Locke Foundation, Jon gets in the weeds of all… ...

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