Anyone who was awake during their high school civics class should know that our Constitution protects American liberties by separating powers between the legislative, executive and judicial branches. It’s really quite simple: Congress makes law, the President is charged with enforcing the law, and—when disputes arise—the Courts say what the law is.
But it’s plain that something has gone awry. One need only look to the ever-rising tide of regulations, to see that our Constitutional safeguards have been dismantled. Indeed, rather than a sea of liberty with modest islands of regulation, America has become a sea of regulation, with only small islands of liberty.
There are numerous problems contributing to the breakdown in our system of checks and balances. For one, the courts have long abandoned the Non-Delegation Doctrine, which once prohibited Congress from delegating lawmaking powers to federal agencies. As a result, federal agencies are now permitted to fill in the blanks when statutes are said to be vague or ambiguous. And the problem is exacerbated by the reality that Congress all too often fails to use precise language when enacting statutes. Finally, the system has broken down because Courts have begun deferring to the interpretations of federal agencies—sometimes even interpretations that seem to contravene the plain language of the law that Congress has enacted.
All of this invites bureaucrats in Washington to continually expand the scope of their own powers through regulations. As the Founding Fathers recognized, power is of an encroaching nature. We see this in practice all the time, as agencies are endlessly interpreting statutes as authorizing regulation in new and ingenious ways that Congress never contemplated. Thus the Fourth Branch of Government—the administrative bureaucracy in Washington—has been allowed to grow out of control, entangling its tentacles in every aspect of our lives.
Yet at least when an agency goes through the formal process of promulgating an official regulation the regulated community is allowed notice and an opportunity to raise public concerns. That much is required by the Administrative Procedures Act (APA). Of course, the APA is a poor substitute for constitutional limitations on federal power, but at least it tends to somewhat slow down the Leviathan. Though it would be far preferable to leave lawmaking to Congress, at least the APA requires federal agencies to allow the public an opportunity to object to newly promulgated regulations. And in a liberal democratic society, this is the least we should expect.
But the troubling reality is that federal agencies are increasingly opting to adopt informal “underground” regulations without going through this notice and comment process—therein taking a short-cut to avoid even the basic requirements of the APA. We document examples of underground regulations in a recently released white paper: The Fourth Branch & Underground Regulations.
As we explain, federal agencies frequently purport to state a definitive interpretation of federal law through guidance documents, field rulings, and informal letters. Of course that practice may be helpful in some cases for individuals and small businesses seeking to understand what the law requires. But in cases where an agency pronounces an interpretation that is not well settled, and which would result in new liabilities for the regulated public, we maintain that it’s imperative to allow the regulated community some opportunity for public comment, as a matter of good government.
We detail numerous examples in recent years in which federal agencies have asserted new and controversial interpretations of federal law in a manner that effectively results in imposition of added regulatory burdens for small business. For example, the Internal Revenue Service has controversially interpreted the Affordable Care Act as prohibiting stand-alone reimbursement accounts and is threatening small business owners with penalties of $100 per day if they should offer their employees assistance with health care expenses outside of an integrated health insurance plan. But IRS has never promulgated an official regulation here, and has never allowed the small business community the basic right to submit comments in opposition.
Our white paper also takes issue with the federal practice of asserting new and controversial positions in amicus filings or in enforcement actions. We maintain that the regulated community should at least have some forewarning before an agency seeks to enforce new rules, as a basic matter of fairness. And even if the timeline must be expedited, we argue that federal agencies should give the public some opportunity to raise concerns before an agency commits itself to a position that would result in added regulatory burdens.
We aim to shine a light on the problem of underground regulations because it is an increasingly serious matter for the small business community. Of course, this is only one aspect of the larger problem facing America. Ultimately we must find a way to restore the Constitution and to enforce a strict separation of powers. But, at the very least one would hope that we could find a way to rein-in the Fourth Branch of government. At the very least federal bureaucrats should be required to allow the regulated community an opportunity to voice its concerns before imposing new rules.
For those interested in the issue of underground regulations, a copy of our report can be found here.
