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OMB Memo Targets Agencies’ Issuance of Non-Binding Guidance

A memo from the White House’s Office of Management and Budget asserted the authority by which Congress is able to exercise direct oversight of federal agencies’ actions, and emphasized that Congress has the right to overturn guidance issued by federal agencies outside of the formal rulemaking process, the Wall Street Journal reported. The OMB said its memo “reaffirms the broad applicability of [the Congressional Review Act] to all federal agencies and a wide range of rules. The memo urged regulators over the banking and financial services sectors to coordinate with the White House before publishing guidance that may be considered economically significant, according to the WSJ. Legal experts quoted by the WSJ suggested, however, that the OMB memo may be only symbolic in impact since the agencies, including the SEC, operate independently of the White House. SEC Commissioner Hester Peirce in a recent speech lamented the use of agency guidance, which she described as “secret law.”  Peirce said she has become “increasingly concerned that this necessary guidance—due to a lack of transparency and accountability—may have turned into a body of secret law. This secret law, as a practical matter, binds market participants like law does but is immune from judicial—and even Commission—review.”

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