Strategic or sincere? Analyzing agency use of guidance documents.

AuthorRaso, Connor N.

NOTE CONTENTS INTRODUCTION I. LEGAL TREATMENT OF GUIDANCE DOCUMENTS A. Introduction B. Interpretive Rules C. Policy Statements D. Legal Implications of the Distinction Between Legislative Rules and Guidance Documents 1. Procedural Requirements 2. Legal Effects 3. Standard of Judicial Review II. PREVIOUS STUDIES III. THE TRADEOFF BETWEEN LEGISLATIVE RULES AND GUIDANCE DOCUMENTS A. Congressional and Presidential Preferences B. Alignment of Political Principals C. Judicial Challenge D. Difference in Level of Procedural Constraints E. Durability F. Enforceability G. Budget IV. EMPIRICAL ANALYSIS A. Testing for Strategic Use of Guidance 1. Time in Office 2. Alignment of Preferences of Political Superiors 3. Congressional Preferences 4. Presidential Preferences 5. Judicial Challenge B. Measuring the Scope of Significant Guidance C. Measuring the Ideological Significance of Guidance D. OMB's Guidance Reform Nominations CONCLUSION APPENDIX INTRODUCTION

Scholars and policymakers alike have devoted increasing attention to a seemingly obscure question: do federal agencies improperly issue "guidance documents"' in place of legally binding "legislative rules" on a widespread basis? (2) This attention has been motivated by concern that agencies frequently use guidance documents to avoid procedures (3) intended both to facilitate public participation in the regulatory process and to enable the elected branches of government to monitor agencies more easily. (4) The scope of this loophole is potentially vast. Guidance documents greatly outnumber legislative rules, (5) which in turn are approximately ten times more common than enacted legislation. (6) As a result, agency use of guidance documents is an important issue in administrative law. This Note provides the first large-scale empirical analysis of this issue, probing newly available data to determine whether agencies commonly issue guidance to avoid the notice and comment process.

Both Congress and the President have expressed concern that agencies use guidance to circumvent the rulemaking process. For example, a report from the House Committee on Government Reform notes that guidance documents may allow agencies to avoid procedures that "protect citizens from arbitrary decisions and enable citizens to effectively participate in the process." (7) Likewise, the Bush Administration issued an executive order that subjects guidance documents to a standardized review process. (8) This attempt to exert executive control over agency guidance prompted significant opposition from interest groups and Congress, (9) highlighting the degree to which the Bush Administration was concerned that agencies were using guidance to formulate policy "below the radar." Progressive groups argued that this review process was unnecessary. (10) This Note provides the first large-scale empirical analysis of the central issue underlying this dispute: in practice, do agencies frequently use guidance documents to implement important policy decisions?

Debate over the Bush executive order reinvigorated scholarly interest in guidance documents. (11) Existing academic work has primarily described how administrative law establishes legal boundaries between legislative rules and guidance documents. Most studies then discuss the normative implications of guidance practices, arguing that agencies use guidance documents to avoid accountability to the public, Congress, the White House, and the courts. (12) The common concern is that guidance documents allow agencies to make policy secretly and unilaterally, undermining the legitimacy of the administrative process.

Like the Bush Administration, these studies generally assume that agencies often improperly substitute guidance documents for legislative rules. No academic work has examined this assumption empirically, however. This Note does so by using newly available data to analyze whether guidance documents are actually used as a substitute for legislative rules. This issue can only be approached indirectly. However, the answers to three questions should be suggestive. First, do strategic concerns appear to influence when agencies issue guidance? Second, is guidance used on a large scale relative to the notice and comment process? Third, is guidance used to implement important policy decisions? Affirmative answers to these questions would certainly suggest that agencies commonly use guidance documents as a substitute for the rulemaking process. If this is the case, then guidance is undermining the accountability mechanisms governing the regulatory process and should be the target of legal reforms such as the Bush Administration's executive order.

This Note first outlines how the law distinguishes between legislative rules and guidance documents. Next, it discusses previous work on guidance documents. Then, it discusses the strategic tradeoff between using legislative rules and guidance documents from the perspective of an agency leader. The Note next uses data generated by the Bush executive order to empirically analyze whether concern that agencies use guidance documents to avoid the rulemaking process is well justified. Analysis of this data suggests that agencies do not frequently abuse guidance documents to avoid issuing significant legislative rules. Concern over agency abuse of guidance documents has therefore been overstated in both the policy world and the administrative law literature. In light of these findings, proponents of restricting guidance should bear the burden of providing empirical support before assuming that agencies commonly abuse guidance documents.

  1. LEGAL TREATMENT OF GUIDANCE DOCUMENTS

    1. Introduction

      The term "guidance document" suggests a wide variety of regulatory materials. Examples of such materials include general agency interpretations of existing legislative rules, statements outlining how an agency intends to regulate an evolving policy area, training manuals written for internal agency staff, compliance guides directed to the general public, advisory opinions tailored to individual case facts, and memoranda from agency leaders providing direction to agency staff members. As these examples suggest, agencies use guidance documents both to manage internal operations and to communicate with outside parties.

      "Legislative rules" (13) are the administrative equivalent of public laws passed by Congress. Like public laws, legislative rules are legally binding, generally applicable, and nonretroactive. (14) Before issuing a legislative rule under the Administrative Procedures Act's (APA) informal rulemaking process, agencies are required to provide notice of the proposed text and to accept public comments. (15) Agencies must also complete a number of lesser-known procedural requirements before issuing a legislative rule. (16) Guidance documents are not subject to any of these requirements, however. (17) In many situations, an agency holds clear authority to issue a guidance document. The line between guidance and legislative rules is unclear in other cases, however. The following discussion outlines how the courts have distinguished between the two in these difficult cases.

    2. Interpretive Rules

      Courts are commonly asked to determine whether interpretive rules are legislative rules in disguise. Interpretive rules clarify an agency's interpretation of an existing legislative rule or statute without imposing substantive changes. (18) Unlike legislative rules, they do not have the force of law. They therefore do not bind external parties, (19) but they may, nonetheless, have the effect of altering their conduct. (20) Finally, the literature has noted that interpretive rules sometimes serve as instructions from agency leaders to subordinates. (21)

      In analyzing this question, courts ask whether a rule has a "legally binding" effect. (22) If so, agencies are required to issue a legislative rule. The D.C. Circuit has adopted a multifactor test to implement this standard. The test asks whether: (1) there would have been an adequate legislative basis for the agency to perform its mandate in the absence of the rule; (2) the rule was published in the Code of Federal Regulations; (3) the agency explicitly invoked its general legislative authority; and (4) the rule effectively amended a prior legislative rule. (23) Affirmative answers to the first question and negative answers to the final three increase the probability that a court will find that the rule is, indeed, interpretive rather than legislative.

      This standard has been applied repeatedly, and the final factor generally receives the greatest emphasis. (24) The courts focus on whether interpretive rules contradict the meaning of an underlying legislative rule or break with precedent. (25) A rule that makes a meaningful amendment to the text of an underlying legislative rule is less likely to be deemed interpretive. (26) Some D.C. Circuit cases have extended this requirement even further, holding that an interpretive rule may not alter an agency's prior interpretation (rather than merely the text) of a legislative rule. (27) However, this standard has not been applied in most other circuits. (28)

      One of the most frequently cited cases on the validity of interpretive rules, American Mining Congress v. Mine Safety & Health Administration, (29) illustrates the difficulty courts face in evaluating interpretive rules. The Mine Safety and Health Administration (MSHA) held licensing authority over mines and could require mine owners to submit safety data. The agency issued a legislative rule pursuant to this authority requiring mine owners to report "diagnosed" cases of lung disease. Mine owners applied widely different definitions of "diagnosis," prompting MSHA to issue an interpretive rule defining diagnosis as the point at which a miner's x-ray crossed a particular disease level. (30) The court held that the interpretive rule merely clarified the reporting requirement imposed by...

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