Bureaucrats Turn ‘Dark Regulatory Matter’ Into Law, But Is It Constitutional? – Pacific Research Institute

Bureaucrats Turn ‘Dark Regulatory Matter’ Into Law, But Is It Constitutional?

The Dark State is real and ubiquitous, but it is neither new nor necessarily sinister. In some respects, it is inherent in our system of government.

Although our government was conceived as three interdependent, coequal branches, it has evolved into an administrative state run mainly by a gargantuan Executive Branch and various independent agencies to which Congress delegates many functions.

The most prominent of these is the power to promulgate formal rules, or “regulations,” which require publication, OMB approval, and public comment. In one way or another these regulations control almost every aspect of our commercial and personal lives.

But via the production of what some have called “regulatory dark matter,” bureaucrats at regulatory agencies such as the FDA, EPA and SEC constantly test the limits of the checks on them: By means of “administrative discretion” and the issuance of “guidance” documents, announcements, and memoranda, rather than regulations, in effect they make law without a congressional mandate or public participation.

Arguably, these actions make them more autonomous than was contemplated by the framers of the U.S. Constitution or the Congress.

Bureaucratic ‘Guidance’

Rather than merely explaining the implementation of a legislatively-mandated policy, via the issuance of agency “guidance” documents they can actually create new programs or requirements without clear statutory authority or adherence to requirements such as those of the Administrative Procedure Act (APA).

The APA specifies the process federal agencies must use to develop and issue regulations, including clearance by the Office of Management and Budget and a requirement to publish notices of proposed and final rulemaking in the Federal Register; however, the publishing and public comment requirements do not apply to “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.”

As an indication of the proliferation of guidance documents, earlier this year the FDA’s Center for Drug Evaluation and Research published a list of no fewer than 98 new and revised guidances planned for calendar year 2018, and the FDA’s Center for Veterinary Medicine announced 25.

The FDA’s approach to genetically engineered animals illustrates how regulators created a new regulatory pathway, relying on both dubious statutory authority to issue guidance and on arbitrary enforcement discretion.

In 2009 (following a public comment period), the FDA promulgated “final guidance” that expanded the definition of a “new animal drug” beyond anything that Congress could have ever contemplated.

It specified that animals modified by certain genetic engineering techniques contain within them new genetic material that falls within the new animal drug definition, and, therefore, that material is regulated by FDA under the Food, Drug and Cosmetic Act. (The Act defines drugs as substances that promote the health of an animal, including “articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease” and “articles (other than food) intended to affect the structure or any function of the body of man or other animals.”)

Solutions Seeking Problems

The FDA guidance thereby created a new regulatory program that imposed an onerous and dubious regulatory regime that was, in effect, a solution in search of a problem, given that the products in question could have been regulated more expeditiously and appropriately elsewhere.

FDA then invoked enforcement discretion to exempt from compliance with these requirements certain genetically engineered laboratory animals and the commercially available ornamental, genetically engineered GloFish®.

The agency’s ill-conceived and burdensome program (which led to a 22-year review before approval of the first product) has thereby virtually wiped out an entire once-promising sector of American biotechnology — namely, genetically engineered food animals.

In his essay “Government by Waiver,” NYU Law Professor and Hoover Institution Fellow Richard Epstein observes that enforcement discretion offers agencies backdoor alternatives to “legitimate policy making,” with unfortunate results for both the regulated market and the rule of law.

The power will be used, he believes, to extract concessions from private actors. He notes that administrative agencies that “are given too much discretion can end up blurring the line between coercive power and waiver power in a way that grants these agencies an immense amount of informal authority — authority that extends well beyond the powers they are granted by Congress.”

FDA: Coercive Power

With such broad discretion in how it devises policy and enforces standards for new regulated products, FDA is the foremost example of coercive power cited by Professor Epstein. Because the agency’s power is so great, manufacturers will not commonly challenge FDA’s approach, regulatory hurdles or approval conditions because to do so could risk future delays, disapprovals, and difficulties with other regulated products.

Remedies for the abuse of regulatory discretion are elusive. Professor Epstein’s worthy solution — sharp constraints on the growth of government and a more skeptical attitude toward the power of government — presents a conundrum.

Allowing government officials too little discretion can lead to rigidity in decision-making when novel situations arise, while too much lends itself to self-serving regulatory excess and entrenched opposition to administration policies.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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