Responding to agency avoidance of OIRA.

Author:Mendelson, Nina A.
Position:Office of Information and Regulatory Affairs - II. Agency Avoidance C. A Broader Typology of Potential Avoidance Tactics 2. Guidance Documents through IV. Conclusion, with footnotes, p. 485-521 - The Conflict Between Executive Discretion and the Rule of Law
  1. Guidance Documents

    Another tactic might be the agency use of so-called "guidance documents" to make policy in lieu of issuing a notice-and-comment rule. Generally, an agency's issuance of a rule is subject to notice-and-comment requirements under the Administrative Procedure Act (APA); the agency must publish a proposed rule, accept public comments, and consider them prior to finalizing the rule. (143) Guidance documents, however, encompass two classes of agency actions that are exempt from these requirements--interpretive rules and general policy statements. (144) The resources and time demanded by notice-and-comment rulemaking likely have significantly contributed to an increased use of such guidance documents by agencies. (145) Agencies using guidance documents need not comply with the Administrative Procedure Act requirements to reply to public comments, for example. In some instances in which a rule would be subject to judicial review, agencies may be able to delay judicial review if they embody their policies in guidance documents. (146) Moderating the attractiveness of this strategy for agencies, however, is the fact that guidance documents are also inferior to rules in certain ways. These include the lack of legally binding effect and reduced judicial deference to agency legal interpretations contained in interpretive rules. (147)

    It is important to distinguish an agency's incentives to minimize APA requirements and judicial review from any incentives to avoid OIRA review, however. With respect to OIRA review, although using guidances instead of rules may have been a permitted strategy to avoid review for a time, that is clearly not the case now. President Bush's issuance of Executive Order 13,422 in January 2007 specifically directed agencies to submit "significant" guidance documents for OIRA review. (148) This instruction implies that such documents may not have been reviewed on a regular basis previously. The use of guidance documents appears to be one of the few agency avoidance tactics that has risen to the level of triggering a new Executive Order in response. In that Order, "significant" guidance documents were defined as those having the same characteristics, roughly, as "significant" rules, including those having an anticipated annual effect of $100 million or more or those raising novel or legal policy issues. (149) The Order did not require preparation of regulatory impact analyses, but only a "brief explanation of the need for the guidance document and how it will meet that need." (150) Although President Obama has rescinded that Executive Order, OIRA has continued to assert the right to review significant guidance documents, (151) stating that even before Executive Order 13,422, OIRA had long reviewed significant policy and guidance documents. (152)

    It remains unclear, however, how frequently and how extensively that review is conducted. OIRA's "historical records" of reviews for the last fifteen years (1998 through May 2013) list, at most, only a handful of guidance documents reviewed annually, compared with hundreds of rulemaking documents. (153) Guidance document reviews, however, may not be systematically reported; for example, no information regarding the substance of guidance document reviews appears to be publicly available either on OIRA's website or through (154) And many guidance documents, including those that restate or summarize regulatory requirements for the lay reader or for agency staff, may simply not meet Executive Order criteria for significance. However, it seems clear that guidance documents, once reviewed, may be subject to change or reversal in the OIRA process, just as rules are. (155) Most of those listed as having been reviewed are also listed as having been changed during the OIRA review process--or even withdrawn. (156)

    Could agency use of guidance documents, given OIRA's claim to be able to review them, still represent a serious device for avoidance of OIRA review? It seems unlikely that agencies could avoid review of policies altogether through the use of guidance documents. OIRA has been attending more specifically to guidance documents through, for example, OMB's Bulletin for Agency Good Guidance Practices, which instructs agencies to obtain public feedback for all significant guidances, and to conduct a notice-and-comment process for economically significant guidances and submit them for OIRA review. (157) Moreover, interest groups affected by guidance documents are likely to bring issues of any importance to OIRA's attention, much as they do for rules undergoing regulatory review. Further, agencies are likely to anticipate countermoves or sanctions from OIRA, as they deal with OIRA repeatedly on both guidances and rules. Those repeat interactions and the prospect of countermoves are likely to prompt agencies to make OIRA aware of significant guidance documents before they are issued. (158) Once OIRA detects avoidance it could simply demand more detailed information on future guidance documents or review them more closely. Thus, in issuing its 2011 guidance document on which medical services would count as "essential health benefits" under the Affordable Care Act, the Department of Health and Human Services provided advance public notice, received significant public input, and shared the document with OIRA, which cleared it. (159)

    Nou has argued that guidance documents may be "more difficult to reverse" in OIRA review because these documents are not legally binding and so the document's "effects are unclear." (160) This may not be correct with respect to OIRA's review authority, however. Although a guidance document will not have the same legal force as a rule, it will still--by design--represent an agency's policy announcement. OIRA would thus have an ability equivalent to that in regulatory review to suggest, for example, that the agency consider alternatives or language revisions. The impacts of the guidance could be estimated by assessing it as if it were a binding rule, and then reflecting its nonbinding character by adjusting the probability of both benefits and costs. Guidance documents may generally be less effective than binding rules, but sometimes possibly more effective, where "soft law" and "social norms" are more persuasive and yield less backlash than hard law. In short, compared with some other avoidance techniques, guidance documents seem less likely to escape OIRA attention altogether.

    The more significant question is whether the use of guidance documents might allow agencies to avoid disciplining requirements that would otherwise have applied through the regulatory review process. For example, an agency must prepare a detailed cost-benefit analysis, including alternatives, for an economically significant rule undergoing OIRA review, but may not have to prepare such an analysis for an economically significant guidance. (161) The Department of Health and Human Services's use of a guidance document to define "essential health benefits" was criticized as permitting the agency to avoid preparing the cost-benefit analysis otherwise required by the Executive Order. (162) Lars Noah has similarly criticized FDA's use of guidance documents. (163)

  2. Other Snbregulatory Statements

    We have already focused on the major form of subregulatory statement--guidance documents. Agencies can also issue even less formal statements of policy position. For example, an agency may write a letter answering a regulated entity's question, perhaps setting forth an interpretation or promising a safe harbor. Such a statement could be posted on an agency website, putting all regulated entities on notice. (164) An agency may draft an internal memorandum that then becomes public, or an agency official may give a speech that has the effect of publicly stating a new or changed agency policy. In this area, John Graham and Cory Liu give a vivid example of "rule-like" statements by the Environmental Protection Agency and other agencies, including a press release and an interagency agreement that had the effect of restricting so-called "mountain top mining." (165) These could be understood as avoidance methods, as they are not subject to OIRA review or the other disciplining mechanisms, including costbenefit analysis for economically significant rules, contained in Executive Order 12,866.

    As with all the avoidance methods we discuss, how often agencies elect to make policy using such methods, and whether the desire to avoid presidential supervision plays a significant role in that decision, are empirical questions. For instance, in the mountaintop mining example described above, the White House was apparently involved in the decision--EPA's press release described the policy being announced as that of the "Obama Administration." (166) It may be, however, that the decision was not subjected to disciplining measures such as cost-benefit analysis because it was not formally reviewed by OIRA.

    Nonetheless, subregulatory statements may be among agencies' tools of avoidance. Besides potentially avoiding OIRA review, an agency may also be able to minimize its APA obligations to publish, collect public comments, and respond to those comments. Meanwhile, the statement may still prompt changes in behavior among those the agency regulates, making it at least a somewhat effective device from the agency's perspective. An agency may also be able to avoid judicial review, as these statements typically would be considered neither final nor ripe. (167) These tools, however, do have their shortcomings. Unlike a rule, subregulatory statements are not legally binding, and it may be more difficult to apprise regulated entities of their existence.

    An agency considering making such statements as a means of avoiding OIRA review would likely consider possible countermoves. For example, other interested agencies or interest groups may bring such statements to...

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