White House Orders End-of-Term Reg Slowdown

Written by Nick Curabba

That loud shuffling noise you hear is the sound of federal regulators preparing proposed regulations for publication in the Federal Register in advance of a newly imposed June 1 deadline.  In a May 9 memorandum from White House Chief of Staff Josh Bolten, the heads of all executive departments and agencies are directed to "resist the historical tendency of administrations to increase regulatory activity in their final months," and instead propose no new regulations after June 1.  In an early holiday present to regulators and the regulated alike, the Bolten memo also directs the agency heads to finalize no regulations after November 1, 2008.

There is an exception for "extraordinary circumstances" (a term that is not defined), and the memo is written in an aspirational (no regulations "should" be proposed after June 1) rather than the mandatory tone, but the fact that such a memo was issued at all is notable and will likely curtail some regulatory activity in the second half of this year.  Since the Office of Management and Budget generally has a 30-day opportunity to review regulatory initiatives classified as "significant," the June 1 deadline also means that unless significant proposed regulations have already been submitted to OMB, they will likely not be issued this year.

In the employee benefit space, this means that we could expect to see the Department of Labor's participant disclosure proposed regulations (submitted to OMB for review on May 1) very soon. It also means that the DOL will be pushing very hard to finalize its proposed 408(b)(2) regulations prior to the November 1 cut-off.  Proposed regulations on investment advice (an issue that has been live since the Pension Protection Act was enacted in August 2006), however, have not been sent to OMB and therefore will likely have to wait until next year and a new administration.  At the IRS, several planned regulatory items will either have to be hurried or scrapped until next year. 

The Bolten memo does not specify if the term-end slow-down applies only to formal notice-and-comment regulations, or if it goes further to agency informal guidance.  If the latter, then DOL Field Assistance Bulletins or advisory opinions may also have to soon cease for the year.  If those types of guidance are not covered by the memo, we may be in for a steady stream of notices, revenue rulings, revenue procedures, advisory opinions, FABs, information letters and other pieces of informal guidance as the agencies work through their agendas in the sprint to year's end.