Throughout this week, the Washington Examiner‘s Restoring America project will feature its latest series, “Reforming the Deep State: Reining in the Federal Bureaucracy.” We invited some of the best policy minds in the conservative movement to speak to the issues of what waste, fraud, abuse, and unaccountability exist throughout the federal government and what still needs to be done. To learn more about the series, click here.
Like an iceberg, the federal administrative state is a massive force with most of its power hidden beneath the surface — and its impact on the states is deeper than most Americans realize.
Since the 1970s, the administrative state has grown significantly, with the addition of agencies such as the Environmental Protection Agency, the Occupational Safety and Health Administration, and the Department of Energy. Over the decades, Congress has delegated much of its authority to these agencies.
As states face a growing federal administrative state, they have simultaneously increased their dependency on federal dollars. The latest data indicate that the average state receives 37% of its revenue from Washington, D.C. These dollars and the strings they often come with affect how states budget and govern.
But Washington’s overreach doesn’t stop with funding strings. It also imposes its will through “guidance” — a form of agency communication that provides directions to individuals, companies, and state and local governments seeking to comply with federal law. While most guidance is intended to be clarifying, it does not carry the force of law, even though some bureaucrats would love for states to believe it does. In fact, states are not required to adopt the recommendations from federally issued guidance. Unfortunately, some federal agencies prey on a state’s lack of awareness and occasionally use guidance to circumvent the rulemaking process, imposing directives on the states.
RICHARD NIXON ENABLED THE ADMINISTRATIVE STATE
During the Biden administration, the Department of Agriculture issued guidance after the Bostock v. Clayton County Supreme Court decision, which held that workplace discrimination based on sexual orientation or gender identity is a form of sex discrimination, warning that states refusing to follow its interpretation of Title IX laws risked losing federal funding for school lunch programs. Twenty-six state attorneys general sued the administration and were granted an injunction. This guidance has since been rescinded by the Trump administration.
Beyond the weaponization of guidance, federal grants also often come with strings attached that burden states. For example, the EPA launched the Clean School Bus Program and the Clean Heavy-Duty Vehicles Grant Program, which allocated more than $5 billion to states and localities to replace legacy diesel school buses with electric ones. Typically, states and local school districts cover the cost of school transportation, but now state leaders must grapple with the strings attached to these grants. While Washington subsidizes upfront “upgrades,” states are left with questions about the sustainability of the new vehicles — both in terms of maintenance and long-term costs — as well as the additional administrative work required for grant reporting. To convert an entire bus fleet, in New York, for example, it’s estimated that the state would pay “between $8 and $15.25 billion more than the cost of replacing them with new diesel buses.”
These examples aren’t one-offs. Heavy-handed rules, conditional grants, and guidance are common practices from federal agencies.
State lawmakers should exercise their legislative oversight authority and closely examine how their state agencies are implementing federal directives and grants. Further, states should consider passing legislation, similar to a recent Tennessee law, which requires state agencies to seek approval from their corresponding legislative committee prior to applying for federal funds. Policies like these ensure greater transparency and give states a clearer picture of what they are committing to before accepting money from Washington.
States should also consider enacting guidance transparency reforms. Utah, for example, requires all state agencies to disclose federal guidance they receive from their federal counterparts. Greater visibility on federal guidance means policymakers can better understand federal recommendations and choose when to (and when not to) implement them.
CLICK HERE TO READ MORE FROM THE ‘REFORMING THE DEEP STATE’ SERIES
Finally, states should ensure they are not exacerbating the problems created by the administrative state with their own overly burdensome regulatory code and rules. The Commonwealth of Virginia’s Office of Regulatory Management offers a strong model, having reduced regulations by 26.8% and saving an estimated $1.2 billion annually.
States can serve as a natural check on the administrative state by adopting practical reforms that protect them from federal overreach. But agencies must also be reined in at the federal level. The Trump administration has the opportunity to right-size the administrative state and restore the proper balance of power between the states and Washington.
Madison Ray is the Senior Director for the Center for Practical Federalism at State Policy Network.
