Secret Laws for the Powerful

Mark Chenoweth and Peggy Little

The Office of Management and Budget issued a memo recently reminding all federal administrative agencies that “the Constitution vests all Federal legislative power in Congress.” That may seem obvious, but agencies often regulate Americans beyond their lawful authority and without accountability. Our organization—the New Civil Liberties Alliance—has petitioned 18 agencies to adopt a permanent rule prohibiting such unconstitutional regulation.

One agency head, Hester Peirce of the Securities and Exchange Commission, outlined the problem in a bracing speech she delivered days before the OMB statement. She faulted the commission’s staff for abusing tools like “no-action letters” and “guidance” to create “secret law,” free from judicial or legislative review.

No-action letters are meant to clarify to the addressee if its behavior is subject to regulation, but too often agency staff use them to craft law at will. Ms. Peirce noted that when these letters—which are publicly available—are issued in tandem with nonpublic guidance, all the issuances can start to constitute their own obscure and ever changing body of law.

Click here to read more of this Wall Street Journal article by Mark Chenoweth and Peggy Little.