On June 27, 2016, NAR sent a letter to the Senate Committee on Homeland Security and Governmental Affairs in support of their hearing entitled “Examining the Use of Agency Regulatory Guidance, Part II” held on June 30, 2016. In the letter, NAR describes federal regulatory guidance as a double-edged sword, where guidance may clarify certain aspects of a complex rule or impose burdensome obligations without the safeguards of formal rulemaking procedures.
For example, NAR has worked successfully with the Environmental Protection Agency to develop guidance that helps NAR members understand and comply with the Lead-Based Paint Disclosure Rule. Additionally, NAR continues to work with the Consumer Financial Protection Bureau to provide guidance on the Know Before You Owe regulation, or “TRID,” to clarify that lenders are permitted to share Closing Disclosures with third parties when a consent form is present.
Alternatively, regulatory guidance can be a hindrance to regulated stakeholders because agencies are not required to follow the Administrative Procedures Act when developing and issuing guidance, which decreases transparency and the ability for public input. When the U.S. Army Corps of Engineers issued guidance in an attempt to clarify certain definitions of Waters of the U.S. in 2010, it actually made changes to the statutory definition of U.S. waters under the Clean Water Act, which is beyond the scope of regulatory guidance. In such cases, guidance may cause confusion, rather than clear up ambiguities on an issue.
With this letter, NAR urged the Committee to push federal agencies to adhere to Office of Management and Budget directives on issuing regulatory guidance, develop written policies to determine when regulatory guidance is appropriate, and apply stronger internal controls for regulatory guidance procedures.