Notice & Comment

Fresh Start: A Comment on “An Empirical Study of Agencies and Industries,” by Michael Asimow

Nick Parrillo’s article on the binding effect of guidance is brilliant.  It formed the basis for ACUS Recommendation 2017-5 which furnishes best practice suggestions for mitigating the de facto binding effect of guidance. Yet ACUS had to work within the constraints of the APA’s primitive treatment of guidance and the dubious and result-oriented case law that seeks to implement the APA’s provision on guidance.

That enormous body of case law focuses on the de facto binding effect of policy statements (looking both to the agency’s language and its practices).  Parrillo shows the futility of that endeavor—in many situations the guidance is and has to be rigidly applied.   Other case law dwells on whether a purported interpretive rule actually interprets language as opposed to supplying an numerical limit, as if that should matter. There’s a lot of talk about the amorphous concept of agency “intent” or whether something is “new law” as opposed to clarification of “existing law.”  The law distinguishes interpretive rules from policy statements, even though the categories of “law” and “policy” are not distinct.  Mostly guidance documents are unreviewable, except when they’re reviewable.  All these painfully indeterminate standards invite costly and never-ending litigation. They also inadequately protect the interest of statutory beneficiaries as opposed to those regulated by the agency.

It seems to me that a fresh start is imperative and it requires a legislative fix.  Guidance should not be treated  as an inferior form of rulemaking.  Guidance is pervasive and enormously important both to the agency and to private parties who are regulated  by (or are beneficiaries of) the statutory scheme administered by the agency.  Agencies should be encouraged to adopt guidance, not discouraged from doing so by onerous and costly procedures or by murky legal standards. Guidance deserves equivalent treatment to adjudication and rulemaking and should be governed by its own distinctive legislatively-mandated procedures.

Fortunately, a well-thought out legislative model is at hand (if we can overcome our federal-centric view of administrative law).  It’s in the 2010 Revised Model State Administrative Procedure Act (2010 MSAPA).

The first step taken by the 2010 MSAPA is to exclude guidance from the definition of “rule.”  A guidance document is defined as a “record of general applicability developed by an agency which lacks the force of law but states the agency’s current approach to, or interpretation of, law or describes how and when the agency will exercise discretionary functions.”  [§102(14)]  Thus the MSAPA breaks out guidance from rulemaking; it unifies the law relating to policy statements and interpretive rules and does not force anybody to figure out which is which.

The procedural rules relating to guidance documents are spelled out in MSAPA §311.  Guidance can be adopted without any prior procedures, such as notice and comment, and it can be applied in a binding manner by agency staff.  Section 311(b) provides “An agency that proposes to rely on a guidance document to the detriment of a person in any administrative proceeding shall afford the person an adequate opportunity to contest the legality or wisdom of a position taken in the document. The agency may not use a guidance document to foreclose consideration of issues raised in the document.”

And §311(c) provides “A guidance document may contain binding instructions to agency staff members if, at an appropriate stage in the administrative process, the agency’s procedures provide an affected person an adequate opportunity to contest the legality or wisdom of a position taken in the document.” (These provisions match up nicely with ¶¶2 and 3 of ACUS Rec. 2017-5 but they should be mandated by law as opposed to being non-enforceable best practices)  Section 311(d) requires an explanation of a change in guidance and protects the interests of persons who relied on it.  Section 311(e) requires indexing and internet posting.

A key provision, set forth in section 311(f), allows any person to petition an agency to revise or repeal a guidance document,  Within 60 days (or some other defined period), the agency must revise or repeal the guidance, deny the petition (with a reasons statement), or initiate a “proceeding” to consider a revision or repeal.  (A “proceeding” means a “formal or informal agency process including adjudication, rulemaking and investigation.”)  Note that such a petition can be filed either by regulated parties who think the guidance is over-regulating or by beneficiaries of the statutory scheme who feel that it is under-regulating.   Of course, such petitions are permitted by existing law, but the MSAPA requires an agency response with a defined time period.

The petition remedy set forth in §311(f) is a clever mechanism to provide for post-adoption public participation for guidance documents that are important and controversial enough to trigger such petitions.  If the agency rejects the petition, it must state why, and this reasons statement could be the basis for a judicial challenge.  Otherwise, the agency must launch a “proceeding” to reconsider the guidance and that will entail some form of public participation.  The petition remedy is consistent with but more concrete than the provisions in ¶¶10 and 11 of ACUS Rec. 2017-5 or the earlier treatment of public participation in ACUS Rec. 72-5.  Since only the most important guidance documents will be petitioned against, §311(f) should not operate as a disincentive to adopt guidance.

The MSAPA provisions on guidance are vastly preferable to those in the APA and to the highly unsatisfactory body of federal caselaw.  The MSAPA allows an agency to self-describe a guidance document so that courts won’t be called on to decide whether the document is guidance or a legislative rule.  It prescribes what the agency can do with guidance, protects reliance interests, and requires that agencies provide an opportunity for challenging guidance both ex ante and ex post.  Let’s consider a fresh start on solving a significant problem of federal administrative law.

Michael Asimow is Visiting Professor at Stanford Law School and Professor of Law Emeritus, UCLA Law School.

This post is part of a symposium on federal agency guidance. The rest of the posts in this symposium can be viewed here.