Shining the Light on Regulatory Dark Matter: Due Process and Management for Agency Guidance Documents

While agency development and use of guidance documents can be a mind-numbing subject, it is very important. Guidance – the full spectrum of agency policy statements and interpretive rules, including agency memoranda, circulars, bulletins, frequently- asked questions and so forth – is a vast but often mysterious part of the administrative law universe, what some experts call “regulatory dark matter.”

Why? Astrophysicists have concluded that ordinary matter – including the planets, moons and stars in our galaxy and the multitude of galaxies beyond our own – comprises only about five percent of the universe. Dark matter and dark energy are most of the universe, rendering the bulk of existence beyond our ability to directly observe.¹  Likewise, we know that the totality of guidance documents is enormous – in both numbers and sheer tonnage, orders of magnitude beyond ordinary regulations developed through public notice and comment. But, in truth, nobody actually knows how many guidance documents there are or how to find them all. And guidance is rendered all the more mysterious and even foreboding by the lack of meaningful due process and management.

To be sure, guidance can and often does play a beneficial role in regulatory programs. When properly used, guidance can reasonably channel the discretion of agency employees, provide the public with clear notice of the line between permissible and impermissible conduct and ensure equal treatment of similarly-situated parties. Unfortunately, concerns have been raised that agency guidance practices should be better managed and be more transparent, consistent and accountable. Moreover, there is growing concern that, in some cases, guidance documents are being used in lieu of regulations – without following the procedural safeguards required for regulations. As the D.C. Circuit bluntly stated:

“The phenomenon we see in this case is familiar. Congress passes a broadly worded statute. The agency follows with regulations containing broad language, open-ended phrases, ambiguous standards and the like. Then as years pass, the agency issues circulars or guidance or memoranda, explaining, interpreting, defining and often expanding the commands in regulations. One guidance document may yield another and then another and so on. . . . Law is made, without notice and comment, without public participation, and without publication in the Federal Register or the Code of Federal Regulations.²

When I served as Counselor to the Administrator in the Office of Information and Regulatory Affairs at the White House Office of Management and Budget (OMB) during the George W. Bush Administration, we issued a Bulletin for Agency Good Guidance Practices³  that required, among other things, agency procedures for the approval and use of guidance, standard elements in guidance, including avoiding inappropriate mandatory language, and public access and feedback procedures. Unfortunately, oversight by Congress and the Government Accountability Office has shown the agencies too often have failed to comply with the OMB Bulletin.⁴  Thus, much work remains to be done.

The good news is that the Department of Justice (DOJ) has provided leadership by issuing a memorandum in November to prohibit improper guidance documents at DOJ⁵  and also by recently issuing a memorandum to curb improper use of guidance in civil enforcement cases.⁶ 

Yet, more can and should be done to improve the development and use of guidance on a government-wide basis. For example, OMB should have clear procedures for interagency review of significant guidance documents. OMB also should require agencies to follow the longstanding recommendations of the Administrative Conference of the United States and the American Bar Association by providing streamlined pre-adoption notice and comment for significant guidance.⁷  Moreover, Congress could elevate good guidance practices by statute. ⁸

Failure to act could inadvertently undermine OMB’s authority to review regulations. As the D.C. Circuit might have put it, agencies could issue broad, open-ended regulations that could pass through OMB review – and for that matter, Congressional and court review. Then, the agencies could follow with guidance “expanding the commands in the regulations” to a degree that would have raised objections if those details had appeared in the regulations from the start. Indeed, the drive toward robust good guidance practices can be seen as part of a larger movement by the three constitutional branches of government – the executive, the legislative, and the judicial – to reasonably channel the discretion of the so-called “fourth branch of government.”

Paul Noe is Vice President for Public Policy at the American Forest & Paper Association. From 2001 – 2006, he served as Counselor to Administrator John Graham in the Office of Information and Regulatory Affairs, Office of Management and Budget in the George W. Bush Administration and also held the position of Vice President for Regulatory Affairs at the Grocery Manufacturers Association.
 

¹Clyde Wayne Crews, “Mapping Washington’s Lawlessness: An Inventory of ‘Regulatory Dark Matter’” (March 2017), at p.3.  
² Appalachian Power Co. v. EPA, 208 F.3d 1015, 1019 (DC Cir. 2000)(striking down emissions monitoring guidance as requiring notice and comment through legislative rulemaking procedures).  
³Office of Management and Budget, Final Bulletin for Agency Good Guidance Practices, 72 Fed. Reg. 3432 (Jan. 25, 2007).
⁴See, e.g.,Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Regulatory Affairs and Federal Management, “Examining the Use of Agency Regulatory Guidance, Part II” (June 30, 2016); U.S. Government Accountability Office, Regulatory Guidance Processes: Selected Departments Could Strengthen Internal Control and Dissemination Practices, GAO-15-368 (April 2015) (reviewing implementation of OMB Bulletin for Agency Good Guidance Practices by the departments of Health and Human Services, Labor, Education and Agriculture and finding substantial deficiencies).
⁵Memorandum from Attorney General Jeff Sessions to all Components, “Prohibition on Improper Guidance Documents” (Nov. 16, 2017), https://www.justice.gov/opa/press-release/file/1012271/download  
⁶Memorandum from Associate Attorney General Rachel Brand to Heads of Litigating Components, “Limiting Use of Agency Guidance Documents in Affirmative Civil Enforcement Cases” (Jan. 25, 2018), https://www.justice.gov/file/1028756/download
⁷See Paul R. Noe and John D. Graham, “Due Process and Management for Guidance Documents: Good Governance Long Overdue, 25 Yale J. on Reg. 103 (2008), at 105-108 & n. 24.
Law & Regulatory Practice (May 4, 2017); Jonathan S. Masur & Eric A. Posner, “Cost-Benefit Analysis and the Judicial Role,” supra; John D. Graham and Paul R. Noe, “A Paradigm Shift in the Cost-Benefit State,” RegBlog, University of Pennsylvania Law School (April 26, 2016); Cass R. Sunstein, The Cost-Benefit State: The Future of Regulatory Protection, American Bar Association, Section of Administrative Law and Regulatory Practice, Chicago, IL (2002).  
^{8 See, e.g., S.2296/H.R.4809, the “Guidance Out Of Darkness Act” (“Good Act”) (requiring federal agencies to post all guidance documents in a centralized location on their websites); S.580, the “Truth in Regulations Act of 2017” (codifying the OMB Bulletin for Agency Good Guidance Practices).}