Notice & Comment

The Binding Effect of Interpretive Rules, by Ronald M. Levin

Nick Parrillo’s article Federal Agency Guidance and the Power to Bind is a truly admirable study of the realities underlying agencies’ creation and use of guidance documents.  It will doubtless stand as a definitive examination of the practical factors that can cause informal agency pronouncements to exert coercive pressure on private persons, even when those pronouncements are legally not supposed to have a binding effect.  His research provided the basis for Recommendation 2017-5 of the Administrative Conference of the United States (ACUS), which offers suggestions as to actions that agencies can take in order to ameliorate these de facto coercive effects.

One aspect of the article’s scope merits particular attention here.  “Guidance” is now a conventional term for what have traditionally been called policy statements and interpretive rules.  The article certainly is about policy statements, but is it also about interpretive rules?  Yes and no.  In a crucial footnote in the introduction, Nick explains that there is a dispute about whether interpretive rules can permissibly be binding in the first place.  He notes that for most interviewees the issue is academic, because agency counsel tend to think of guidance as a single category.  But some commentators and courts have suggested that interpretive rules may legitimately be binding, and Nick chose not to take on that dispute directly.  Thus, he decided to discuss interpretive rules only insofar as particular interviewees thought of them as nonbinding.  Insofar as they do, he contends, the de facto coercive pressures impinge on interested persons in about the same way as they do with policy statements.

Nick’s article (actually only a portion of his ACUS study) fills more than 100 pages in the Yale Journal on Regulation, so I am certainly not going to argue that he should have extended his analysis even further than he did.  Nevertheless, the article’s noncommittal stance as to whether interpretive rules may be binding plainly invites further exploration of that issue.

Indeed, uncertainties about the status of interpretive rules led to an unusual debate in the Assembly of ACUS when it took up the draft that ultimately became Recommendation 2017-5.  I myself played a significant role in that debate:  I offered an amendment that would have extended the recommendation to encompass interpretive rules.  The Assembly rejected my amendment, largely on the ground that Nick’s research had focused on policy statements, but it called for further study of the interpretive rules issue.

If this was a “good deed,” its “punishment” came to pass soon afterwards, when the Conference staff prevailed on me to conduct such a study.  Having made such a fuss, I felt that I could not refuse.  Thus, I am now serving as a consultant, in collaboration with Blake Emerson, on a project to consider the extent to which the principles of Recommendation 2017-5 should apply to interpretive rules.  A draft recommendation growing out of this project is working its way through the Conference’s deliberative processes and is expected to come before the Assembly in June.

The report that Blake and I prepared for consideration by the Conference describes interviews that we conducted with officials at various agencies (although the breadth of our research pales in comparison with Nick’s massive effort).  Like Nick, we found that many agency counsel treat guidance as a single category, without distinguishing interpretive rules from policy statements.  Moreover, no agency official maintained that interpretive rules should be treated as beyond all challenge at the administrative level.  Some interviewees did indicate that their agency would expect persons who disagree with a rule to seek reconsideration outside the context of particular adjudicated cases.  But none took the position that they would treat guidance as beyond dispute at the agency level simply because it is interpretive.

Against this background, our report maintains that, as a matter of good practice, affected persons should generally have some opportunity to ask an agency to revise or reconsider an interpretive rule.  ACUS has long taken that position where policy statements are concerned – most recently in Recommendation 2017-5.  It has not spoken to the situation of interpretive rules, but our report contends that the agencies’ approaches to these two forms of guidance should not be radically different.  The basic justification for this position is that an interpretive rule, like a policy statement, does not have the force of law.

In early committee deliberations on this issue, it became apparent that the concept of binding effect, as applied to interpretive rules, was still capable of generating controversy.  The problem was that this concept can be freighted with a variety of doctrinal associations.  Some participants approached the concept from a perspective shaped by the case law applying the interpretive rules exemption in the Administrative Procedure Act.  Others echoed judicial opinions that have suggested – albeit controversially – that courts effectively render an interpretive rule binding when they accord it deference under the Auer v. Robbins standard of review.

At this writing, however, it seems likely that ACUS will steer around these doctrinal and theoretical disputes by focusing squarely on the aspects of interpretive rules that correspond most closely to the concerns of Recommendation 2017-5 (and Nick’s article).  That is, the Conference will likely recommend that, as a matter of best practice, agencies should take steps to ameliorate the coercive effects of interpretive rules, in roughly the same manner as the prior recommendation had urged with respect to policy statements.  At the same time, the Conference will likely refrain from addressing any of the legal doctrines under which interpretive rules are sometimes characterized as binding.  For a consensus-oriented organization like ACUS, this narrow focus seems to be a sensible pathway to decision.

Because the ACUS project is a moving target, I do not want to make definite predictions about what the final recommendation will say.   For now, however, the Conference seems to be poised to make a statement that could prove influential in the resolution of a longstanding controversy.  In effect, it would show that Nick’s incisive and sophisticated findings are generally applicable to both policy statements and interpretive rules – even though he himself did not feel prepared to claim that much for them.

Ronald M. Levin is the William R. Orthwein Distinguished Professor of Law at Washington University in St. Louis.

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

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