Meant to enhance fairness and transparency in federal administrative enforcement, the new presidential EOs will significantly affect the practice of administrative law.
- Two recent Executive Orders will curtail use of agency guidance documents.
- Executive Order 13891 requires affected federal agencies to treat such Guidance Documents as generally non-binding in law and practice.
- Executive Order 13892 requires that agencies provide "prior public notice" of any legal standards the agency will be applying.
On October 9, 2019, the President issued two Executive Orders which, if fully implemented, could significantly affect the practice of federal administrative law. Although both Executive Orders emphasize their goal is to “promote the rule of law,” they are designed to curtail agency positions that are not adopted through notice and comment rulemaking.
Executive Order 13891 is intended to exert greater control over the use of “guidance documents” throughout that part of the federal bureaucracy controlled by the President—federal executive departments and agencies. Independent federal agencies such as the FCC, FTC and the SEC are not covered by this Order. On the other hand, Executive Order 13892, which complements Order 13891, is focused on improving the transparency and fairness of federal civil administrative enforcement and adjudication and applies throughout the federal government with few exceptions. Both Executive Orders were published in the Federal Register on October 15, 2019. (See 84 FR 55235 and 84 FR 55239.)
President Trump’s sentiments regarding enforcement actions premised on guidance were not difficult to discern. On signing these Orders, the President stated that this “new action [is taken] to protect Americans from out-of-control bureaucracy and stop regulators from imposing secret rules and hidden penalties on the American people. All too often guidance documents [have been used as] a backdoor for regulators to effectively change the laws and vastly expand their scope and reach. ... This regulatory overreach gravely undermines our constitutional system of our government. … A permanent federal bureaucracy cannot become a fourth branch of government, unanswerable to American voters.”
The President has not been alone in his concern over agency actions that are based more on internal policy pronouncements than promulgated regulations. Courts have long been particularly concerned with the use of Guidance Documents (defined in the Order as “an agency statement of general applicability, intended to have future effects on the behavior of regulated parties”) to justify agency enforcement proceedings. An exposition of this problem was provided by Judge Randolph of the D.C. Court of Appeals several years ago in the case of Appalachian Power Co. v EPA, 208 F. 3d. 1015, at 1020 (D.C. Cir. 2000):
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 phrase, 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 on the regulations. * * * Law is made, without notice and comment, without public participation, and without publication in the Federal Register or the Code of Federal Regulations. * * * The agency may also think there is another advantage--immunizing its lawmaking from judicial review.
Executive Order 13891
This Executive Order finds that while “non-binding Guidance Documents” are exempt from the notice and comment requirements of the Administrative Procedure Act (APA), they have sometimes been used “inappropriately” to compel compliance with the agency’s demands. The Order therefore proclaims that the new policy of the federal executive branch is, “to the extent consistent with federal law,” to require affected federal agencies to treat such Guidance Documents as generally non-binding in law and practice. Moreover, when these agencies are in the process of formulating new Guidance Documents, the Order requires that public input be taken into account, and that policy documents be readily available to the public. To ensure the transparent use of Guidance Documents, each agency must post on its website all its Guidance Documents and note they lack the force and effect of law, except as otherwise authorized.
Coincidentally, the Administrative Conference of the United States published recommendations that would enhance the efficiency and fairness of federal agency procedures. Among the recommendations were proposals to elicit public comment on pending interpretive rules and to make agency guidance documents widely available. (See 84 FR 38927 (August 8, 2019).)
Executive Order 13892
This Executive Order notes that “regulated parties must know on advance the rules by which the Federal Government will judge their actions,” but finds that departments and agencies in the executive branch have not always acted with transparency and fairness. It goes on to require that agencies provide “prior public notice” of any legal standards the agency will be applying. Also, non-compliance with Guidance Documents cannot be used to allege a violation unless its probative effect has been established by publication in the Federal Register or elsewhere. This emphasis on fairness and transparency could have wide-ranging implications for a variety of agency actions, ranging from interpretations of statutes and regulations to policies driving federal enforcement proceedings.
The Office of Management and Budget (OMB) will be developing policies to ensure all federal agencies implement the President’s orders. Whether and to what extent OMB follows through with these Executive Orders could have a profound impact on administrative enforcement and adjudications in the future.
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