Beveridge & Diamond
 

President Bush and OMB Impose New Restrictions on Issuance and Use of Federal Agency Guidance Documents

Beveridge & Diamond, P.C., January 23, 2007

On January 17, President Bush signed Executive Order (E.O.) 13422, amending E.O. 12866 which addresses federal regulatory planning and review.  On the same day, the Office of Management & Budget (OMB) finalized its Bulletin for Agency Good Guidance Practices, following extensive public notice and comment on its November 2005 draft.  Together, these complementary measures tighten regulatory (OMB) review of “significant” federal agency guidance documents.  They address perceived problems with poorly designed, improperly implemented, and unsupervised agency guidance.  The new policies are intended to “produce clear and consistent agency practices for developing, issuing, and using guidance documents,” in order to make agency guidance “more transparent, fair, and accountable.”

E.O. 13422 clarifies that OMB’s oversight authority under the Clinton-era E.O. 12866 encompasses significant guidance documents as well.  It requires advance notification to OMB (OIRA) of any significant guidance documents, as well as written identification of the “specific market failure...or other specific problem” warranting the guidance.  Agencies must name a “regulatory policy officer” to ensure compliance with the E.O., and must also prepare annual reports providing “the agency’s best estimate of the combined aggregate costs and benefits of all its regulations planned for that calendar year to assist with the identification of priorities.”

The OMB Bulletin, effective in 180 days, was issued pursuant to E.O. 13422 and the Information Quality Act.  Largely using FDA regulations as a model, it prescribes specific standards and requirements for agencies to follow when promulgating significant guidance documents.  If guidance is deemed “significant,” the Bulletin requires several basic procedures.  Agencies must develop by July 2007 written procedures for the internal clearance of significant guidance documents.  Agency staff should not depart from issued guidance without “appropriate justification and supervisory concurrence.”  The guidance itself must feature certain clarifying information, including the term “guidance” (or equivalent), the issuing agency, citation to the applicable statutory provision or regulation, and details of any previously issued guidance being superseded.  Guidance may not include mandatory terms, like “shall,” “must”, or “required.”  OMB also encourages inclusion of a public disclaimer that the guidance is non-binding and reflects current agency thinking on a topic.  All significant guidance must be available on agency websites, and agencies are encouraged to create public listserves and link such guidance to Regulations.gov.  Agencies must also provide for electronic public comments on significant guidance documents, though no response is required; early, pre-adoption notice and comment is encouraged.  “Economically significant” guidance documents, having a greater than $100 million impact annually or otherwise adversely impacting the economy, are subject to even stricter procedures, including a Federal Register notice, public docket, and full public notice and comment (with responses).

Importantly, OMB clarifies what guidance is and is not covered by the above procedures.  “Guidance documents” encompass all guidance materials, regardless of format or label (e.g., manuals, advisories, policy statements, etc.).  But a guidance document is covered only if “significant,” i.e., though not legally binding it may, among other things, impose an economic cost greater than $100 million annually or otherwise adversely affect the economy, environment, public health and safety, or the like; is seriously inconsistent with another agency’s taken or planned action; or raises novel legal or policy issues.  Significant guidance must be generally applicable and externally-focused, with “broad and substantial impact on regulated entities, the public or other Federal agencies.”  Expressly not deemed significant are “routine” agency matters; purely internal agency policies and personnel matters; most military or foreign affairs; pure scientific research; media interviews; agency briefs and positions taken in litigation, pre-litigation, or investigations; and legal advisory opinions issued by agency General Counsels or the Department of Justice solely for internal use.  Notably, agency responses to individual inquiries are not “significant” unless the correspondence “is reasonably anticipated to have precedential effect and a substantial impact on regulated entities or the public.”

The new policies have already generated much interest and reaction among private and public stakeholders.  Debated issues that may arise during implementation include whether cost-benefit analysis will play a larger role in the development of significant guidance; whether there is any perceived chilling effect on long-term guidance; the extent to which OMB will actually exert its authority; and disagreements whether guidance documents qualify as “significant.”  Furthermore, EPA has voiced concerns that the new steps required for significant guidance documents could encourage courts to subject to judicial review previously exempt agency actions.

To view E.O. 13422, please click here.

To view the OBM Bulletin, click here.

For more information, please contact Don Patterson at (202) 789-6032 (dpatterson@bdlaw.com) or James Auslander at (202) 789-6009 (jauslander@bdlaw.com).