Earlier this month the Trump Administration issued two executive orders limiting federal agencies’ use of informal guidance documents to regulate conduct. "Informal guidance documents" are generally understood to include agency policy guidelines or memoranda which interpret law or regulation and have some legal effect on the public, but have not been subject to public notice and comment before made final. Critics of informal guidance documents, including the public dealing with environmental laws, have argued a lack of fair notice and due process in enforcement proceedings involving informal guidance documents. The new executive orders directly address this set of issues.
The first executive order, Executive Order on Promoting the Rule of Law Through Improved Agency Guidance Documents (Oct. 9, 2019), begins by stating that, “The rule of law requires transparency.” It then instructs federal agencies to treat all previously issued informal guidance as nonbinding to allow regulated parties to know in advance the rules by which agencies will judge their actions. It further gives all agencies 120 days to publish procedures governing any inspections the agency may conduct, and for all future inspections to be conducted in accordance with those procedures. The order also provides agencies with 270 days to propose procedures that encourage voluntary self-reporting of violations and voluntary information sharing by regulated parties, and provide pre-enforcement rulings to regulated parties. The order sets out how to promulgate of procedures for contesting agency actions and other procedural directions addressing fair notice.
The second executive order, Executive Order on Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication (Oct. 9, 2019), similarly begins, “Americans deserve an open and fair regulatory process that imposes new obligations on the public only when consistent with applicable law and after an agency follows appropriate procedures.” This order directs agencies to narrow their use of informal guidance by rescinding any existing guidance documents they determine, through specified procedures, to be out of compliance with the order. Each guidance document that remains in effect after this initial culling of noncompliant documents must state that it does not bind the public and display procedures for how to petition the agency for withdrawal or modification of the guidance. For some guidance documents, additional procedural steps will be required. The order also references a forthcoming memorandum on this subject to be issued by the Office of Management and Budget. Then, federal agencies will have 120 days to publish all existing and future guidance documents on their websites.
The degree of burden this will impose on federal agencies is varied. EPA, as an example, has thousands of guidance documents interpreting its regulations. This has become increasingly common as regulatory promulgation often garners hundreds of thousands of comments (or more) from the public, and almost every final rule is litigated. EPA uses guidance documents to provide instruction on how to implement the regulations as EPA intended, despite that intention not always being readily perceived from the plain language of EPA’s regulations.
The exact impact of the executive orders on EPA-regulated industries will not be clear until, at least, implementing memos and instructions are published early next year. Practically, the industry may enjoy the certainty of rulemaking solidified by the procedural process and public involvement. Agencies will not be allowed to issue binding guidance documents without going through formal public notice and comment. However, regulated entities may also be impacted if agencies reduce informal guidance offerings that seek to clarify confusing aspects of regulatory provisions, and the process to issue clarifying instructions will look much more like the full regulatory process. Meanwhile, informal guidance documents are not necessarily headed for extinction, but are of questionable enforceability until reviewed and validated as required. Litigation involving the executive orders is likely and companies or individuals facing EPA enforcement should stay tuned.