Agency Control and Internally Binding Norms.

AuthorNabavi-Noori, Alexander

NOTE CONTENTS INTRODUCTION 128l I. THE ROLE AND LIMITS OF GUIDANCE IN INTERNAL ADMINISTRATIVE LAW 1290 A. Guidance as a Tool for Administration 1291 I. Bureaucratic Supervision 1297 2. Creating a "Law" of Internal Discretion 1298 3. Privileged Reason-Giving 1299 B. Limits and Controls on Internal Guidance 1301 1. Binding-Norm Test 1301 2. Agency Enforcement Discretion 1309 II. AGENCY GUIDANCE WITHIN THE AGENCY HIERARCHY 1311 A. Interpretive Consistency and the U.S. Equal Employment Opportunity Commission 1313 B. Procedural Consistency and the Occupational Safety and Health Administration 1320 C. Enforcement Discretion, Adjudicative Consistency, and U.S. Citizenship and Immigration Services 1327 III. JUDICIAL REVIEW OF INTERNALLY BINDING GUIDANCE 1333 A. Challenges and Possibilities for Judicial Review of Internally Binding Guidance 1335 B. Toward Contextual Judicial Review of Guidance 1340 CONCLUSION 1345 INTRODUCTION

Administrative agencies carry out their missions, delegated to them by Congress, in part by issuing legislative rules. Agency legislative rules (also referred to as "regulations") vastly outpace the legislative output of Congress and, together with ordinary statutes, create a web of requirements that regulated parties must adhere to. Still, these legislative rules and statutes often leave many unanswered questions about what the law requires and consequently leave agencies with significant discretion in enforcing their mandates. As a result, agencies also generate significant amounts of "guidance": general statements of policy or interpretations of existing law that advise the public - and agency staff--on how the agency intends to exercise this discretion.

Scholars, practitioners, and courts have long sought to develop a reliable means of distinguishing agency legislative rules from agency guidance.' Though a seemingly mundane distinction, the stakes involved in setting boundaries around guidance documents are high. Although guidance documents, unlike legislative rules, cannot formally bind regulated parties, they comprise the vast majority of the regulatory output of the administrative state and collectively play a central role in structuring agency action and discretion. (2) These documents can determine, for example, the procedures that workplace-safety inspectors dutifully follow in carrying out their on-site safety inspections, or whether a frontline immigration officer will favorably exercise discretion to provide an individual with relief from removal. (3)

The fundamental distinction between agency guidance documents and legislative rules is grounded in the Administrative Procedure Act of 1946 (APA). To promulgate new legislative rules, the APA ordinarily requires that agencies undergo a set of time-consuming and resource-intensive procedures, including notice and comment, which allow regulated parties and interested members of the public to play a role in shaping eventual regulations. (4) These legislative rules carry the force of law and can create new rights for or obligations on regulated parties. By contrast, agencies can issue guidance documents with few procedural requirements at all thanks to the APA's exemptions for "general statements of policy" and "interpretative rules." (5) Consequently, agencies can issue guidance documents in far greater volume, at a much faster pace, and with far less accountability than they can promulgate legislative rules. Agencies therefore use guidance to rapidly respond to their experience with regulations in the real world and to ease the burden of implementing large, complex policy initiatives. (6)

Unlike legislative rules, however, guidance documents lack formal legal force. In the language of the courts, agencies may not use these documents to establish a "binding norm." (7) Instead, guidance must satisfy two criteria. First, it must "act[] prospectively," proceeding carefully so as not to "impose any [new] rights and obligations" on a regulated party. (8) Second, and more controversially, the guidance must "leave[] the agency and its decision-makers free to exercise discretion." (9) To enforce this test, the courts engage in a legal fiction, determining that agency guidance that inappropriately creates such a binding norm is not guidance at all, but instead a procedurally invalid legislative rule that should have undergone notice-and-comment rulemaking. So, to qualify for the APA's guidance exemption from notice-and-comment procedures, guidance documents may only telegraph what an agency might do in a certain scenario, leaving room for alternative approaches proposed by regulated parties and allowing agency staff to exercise discretion.

The paradigmatic use case for permissible guidance under this test arises where a statute or regulation leaves businesses, individuals, or other regulated parties uncertain exactly how to achieve compliance, either because it does not anticipate a particular factual scenario or because the relevant requirements are vague, leaving room for competing interpretations. An agency might then choose to issue guidance to address these ambiguities. The guidance would offer regulated parties insight into how they might achieve compliance with regulatory mandates in the face of this uncertainty, while emphasizing that the agency's view is tentative and remains open to alternatives. In other words, the guidance is not "binding" on the regulated parties; it is merely a suggestion.

Much of the existing scholarship on agency guidance and the binding-norm test is preoccupied with the external effects of guidance documents--that is, their effects on regulated parties. Scholars have, for example, long been skeptical that agencies use guidance as merely a tool to clarify existing regulatory obligations. Instead, these scholars argue that agencies regularly use guidance to create new obligations without having to undergo notice and comment. As a result, much has been written to address the question of just when agencies go too far over the line in writing guidance that is unlawfully "binding" on regulated parties--and whether agencies do so regularly and with malicious intent to subvert otherwise necessary procedures. (10) Recently, however, a new body of empirical research has begun to challenge this simplistic view of guidance, elucidating the subtler practical realities that define the relationship between agencies and regulated parties. Most notably, a recent study by Nicholas R. Parrillo on behalf of the Administrative Conference of the United States (ACUS) identifies structural and institutional factors that help explain why regulated entities may choose to comply with guidance--and, in fact, even request that agencies produce more guidance to help them achieve compliance--rather than ignore it. (11) Nevertheless, the existing doctrine and its emphasis on rooting out impermissibly "binding norms" are still rooted in the traditional skepticism of guidance's external effects.

There is, however, another important function for agency guidance that has received far less scholarly attention in connection with the binding-norm test: how agencies use guidance internally as a tool for managing the work of their staffs. Like supervisors at any complex organization, agency administrators need to direct and control the work of lower-level employees. In addition to the important role guidance documents play in structuring the relationship between agencies and regulated parties, they also represent a crucial mechanism through which agency administrators communicate with agency staff about how to exercise the agency's often considerable discretion. This communication often happens in the form of enforcement guidelines, field guidance, policy manuals, and a range of other documents that agency supervisors use to encourage the consistent and transparent exercise of the agency's discretion by frontline officials.

On its face, the binding-norm test poses a serious challenge for the internal functioning of agency guidance. As often written and recited by the courts, the test emphasizes that guidance must leave the "agency and its decision-makers free to exercise discretion" without distinguishing between staff at different levels of the agency hierarchy or further elaborating on where this decision-making flexibility must be located. (12) The test therefore suggests that an agency cannot compel its own frontline employees, who must routinely make decisions and exercise discretion on behalf of the agency, to follow the agency's own guidance documents. At least some courts have adopted this position, insisting that even frontline officials must be free to exercise individual enforcement discretion unbound by guidance promulgated by the agency head (13)--a result that would significantly undermine agencies' ability to engage in bureaucratic supervision of low-level staff. A more modest view would suggest that so long as the agency itself remains free to exercise discretion to depart from guidance, either through the agency head or through appeal to supervisors within the agency, then the guidance can avoid creating an impermissible binding norm. (14) But the question of which of these views, if any, reflect the empirical realities of how agency administrators expect guidance to operate within the agency, or, for that matter, how frontline agency officials expect to carry out their roles has yet to be explored.

Indeed, the everyday internal workings of agency guidance documents are "rife with 'unknown unknowns.'" (15) As a result, important questions remain as to how agencies train and instruct frontline personnel to consistently apply the agency's view of the law without impermissibly running afoul of the bindingnorm test. How do agencies promote or discourage flexibility in implementing guidance at different levels of the agency's decision-making hierarchy? How much rigidity do agencies expect from frontline staff in implementing...

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