GUIDANCE IN THE RULEMAKING PROCESS: EVALUATING

GUIDANCE IN THE RULEMAKING

PROCESS: EVALUATING PREAMBLES,

REGULATORY TEXT, AND

FREESTANDING DOCUMENTS AS

VEHICLES FOR REGULATORY

GUIDANCE

Kevin M. Stack

Professor of Law and Associate Dean for Research

Vanderbilt University Law School

FINAL REPORT

May 16, 2014

*This report was prepared for the consideration of the Administrative Conference of the United States. The views

expressed are those of the author and do not necessarily reflect those of the members of the Conference or its

committees.

ADMINISTRATIVE CONFERENCE

OF THE UNITED STATES

Contents

Contents .................................................................................................................................................................. ii

Introduction ............................................................................................................................................................. 1

I. Definition of Guidance and Scope of Inquiry .......................................................................................... 4

A. Definition and Dimensions of Guidance ...................................................................................................4

B. Scope of Inquiry and Methodology ..........................................................................................................6

II. Guidance and Rulemaking: A Brief Overview ........................................................................................ 7

A. The APA’s Vision: The Dual Role of the Statement of Basis and Purpose -- Justification and

Guidance ...................................................................................................................................................7

B. The Expanding Preamble, Ossification, and Separately Issued Guidance ...............................................9

III. The Law Governing Contemporaneous Guidance ................................................................................. 13

A. Process Requirements for Issuing Contemporaneous Guidance ............................................................14

B. Process Requirements for Revising Contemporaneous Guidance: The Impact of Alaska

Professional Hunters ..............................................................................................................................16

C. When Is Contemporaneous Guidance Subject to OIRA Review? ..........................................................18

D. What Contemporaneous Guidance is Required? ....................................................................................19

E. What May Not Be Included in Contemporaneous Guidance? ................................................................22

F. Reviewability of Contemporaneous Guidance .......................................................................................25

G. Standard of Judicial Review ...................................................................................................................27

H. Summary Table .......................................................................................................................................30

IV. Agency Practices for Providing Contemporaneous Guidance ............................................................... 31

B. Preambles as a Vehicle for Guidance .....................................................................................................34

C. Guidance in Regulatory Text and Appendices .......................................................................................41

D. Separately Issued Contemporaneous Guidance ......................................................................................46

V. Recommendations to Federal Agencies ................................................................................................. 47

Introduction

In the past two decades, the use of guidance—nonbinding statements of

interpretation, policy, and advice about implementation—by administrative agencies has

prompted considerable interest from executive branch officials, committees in Congress,

agency officials, and commentators. Most of this attention has been directed toward

“guidance documents,”

freestanding, nonbinding policy and interpretive statements issued

by agencies. Policymakers and commentators have expressed concern that agencies are

relying on guidance documents in ways that circumvent the notice-and-comment

rulemaking process; in particular, the worry is that with the increased analytical and

justificatory burdens of notice-and-comment rulemakings, agencies have turned to

guidance as a way to establish norms without the participation benefits and explanatory

burdens of the notice-and-comment process.

OFFICE OF MANAGEMENT AND BUDGET, FINAL BULLETIN FOR AGENCY GOOD GUIDANCE PRACTICES, 72

FED. REG. 3432, 3439 (Jan. 25, 2007) (defining a “guidance document” as “an agency statement of general

applicability and future effect, other than a regulatory action . . . that sets forth a policy on a statutory,

regulatory or technical issue or an interpretation of a statutory or regulatory issue.”) [hereinafter OMB’s

Good Guidance Bulletin].

For instance, in 1992, the Administrative Conference of the United States (ACUS) recommended that

agencies provide affected persons an opportunity to challenge the wisdom of a guidance document or policy

statement before the statement is applied to persons affected. Admin. Conf. of the United States, Agency

Policy Statements, Recommendation 92-2, 57 Fed. Reg. 30,103 (June 18, 1992). The ACUS

Recommendation commented, “The Conference is concerned . . . about situations in where agencies issue

policy statements which they treat or which are reasonably regarded by the public as binding . . . .[but these

pronouncements do] not offer the opportunity for public comment . . .”). In 2007, President Bush issued an

executive order which subjected significant guidance documents to regulatory review based on similar

concerns. See Exec. Order No. 13,422, 3 C.F.R. § 191 (2008). President Obama revoked Executive Order

14,422, see Exec. Order No. 13,497, 3 C.F.R.§ 218 (2010), but as discussed below, see Memorandum from

Peter Orzag, Dir. Office of Mgmt. & Budget, to Heads and Acting Heads of Exec. Dep’ts and Agencies

(Mar. 4, 2009) [hereinafter “Orzag Memorandum”] (available at

http://www.whitehouse.gov/sites/default/files/omb/assets/ memoranda_fy2009/m09-13.pdf), significant

guidance is still subject to regulatory review. In 2007, OMB issued a “Final Bulletin for Agency Good

Guidance Practices” which requires agencies to provide a means for comment on certain significant guidance

documents, see OMB’s Good Guidance Bulletin, supra note 1, and this Bulletin remains in effect.

Committees in Congress have expressed concerns that agencies are inappropriately relying on guidance. See,

e.g., COMM. ON GOV’T REFORM, 106TH CONG., NON-BINDING LEGAL EFFECT OF AGENCY GUIDANCE

DOCUMENTS, H.R. REP. NO. 106-1009, at 9 (2000) (“[A]gencies have sometimes improperly used guidance

documents as a backdoor way to bypass the statutory notice-and-comment requirements for agency

rulemaking . . .”); cf. The Regulatory Accountability Act of 2013, S. 1029, 113th Cong. (2013) (Section

706(d) would overrule Auer deference to agency interpretations of their own regulations); Todd D. Rakoff,

The Choice Between Formal and Informal Modes of Administrative Regulation, 52 ADMIN. L. REV. 159, 166

(2000) (arguing that agencies are avoiding ossified rulemaking process by use of nonbinding guidance). For

a concise overview of the legal and policy debates over guidance documents, see Nina A. Mendelson,

Regulatory Beneficiaries and Informal Agency Policymaking, 92 CORNELL L. REV. 397, 397-414 (2007). As I

discuss below, recent empirical research calls into question empirical basis for the theory of strategic

substitution of guidance documents for rules. See infra Part II.B.

Concern about agency reliance on guidance is also evident in the Supreme Court’s

doctrines governing the standards of judicial review of agency action. Based in part on the

preference for policy formulation through rulemaking and other more formal processes, in

2001, the Supreme Court announced a general presumption that to qualify for Chevron

deference,

agency interpretations of the statutes the agency administers must be issued

through relatively formal processes, such as notice-and-comment rulemaking.

That 2001

decision, United States v. Mead Corp.,

gives agencies incentives to act through notice-

and-comment as opposed to guidance documents if they seek to trigger Chevron deference

in review of their actions. In addition, in the last two years, three members of the Supreme

Court have announced their interest in reconsidering the longstanding doctrine identified

with Bowles v. Seminole Rock & Sand Co.

and Auer v. Robbins,

under which the

reviewing courts must accept agency interpretation of their regulations unless plainly

erroneous or inconsistent with the regulation.

In the same time period, the Supreme Court

denied deference to an agency interpretation of its own regulation that appeared in a

litigation brief.

These decisions suggest a narrowing of deference available to agencies

when they take interpretive positions or issue guidance informally and post hoc.

This multi-decade debate about guidance and its relationship to notice-and-

comment rulemaking has largely passed over the function and varieties of

contemporaneous guidance—that is, guidance that agencies provide about the meaning of

their rules in the rulemaking process. Contemporaneous guidance appears in three main

forms. First, agencies provide guidance about the meaning and application of their rules in

explanatory “statement[s] of their basis and purpose,”

statements which constitute the

bulk of the regulatory “preambles” issued with final rules. Second, they provide guidance

about the application and interpretation of their regulations in the Code of Federal

Regulations, in notes and examples, and appendices to rules that are published in the Code

Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-44 (1984).

United States v. Mead Corp., 533 U.S. 218, 230-31 (2001) (noting that agency decisions decided in notice-

and-comment qualify for review under Chevron).

Id.

325 U.S. 410 (1945).

519 U.S. 452 (1997). While this doctrine was traditionally associated with Seminole Rock, since 1997 the

Supreme Court and other courts have frequently attributed it to Auer, see, e.g., Talk Am., Inc. v. Mich. Bell

Tel. Co., 131 S. Ct. 2254, 2265–66 (2011) (Scalia, J., concurring) (noting that the Seminole Rock doctrine has

recently been attributed to Auer), despite the fact that Auer involved a straightforward application of

Seminole Rock, see Auer, 519 U.S. at 461 (relying on Seminole Rock with little ado).

Decker v. Northwest Envt’l Def. Center, 133 S. Ct. 1326 (2013); id. at 1338 (Roberts, C.J., and Alito, J.,

concurring) (noting that it “may be appropriate to reconsider” Seminole Rock/Auer in another case); id. at

1339, 1442 (Scalia, J.) (concurring in part and dissenting in part) (urging the Court to overturn Seminole

Rock/Auer).

See Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2166–68 (2012) (concluding that “general

rule” of granting Auer deference to interpretations in litigation briefs did not apply in these circumstances of

the case in view of fair notice concerns).

5 U.S.C. § 553 (2012).

of Federal Regulations. Third, at the same time that agencies promulgate their regulations,

they sometimes issue freestanding guidance documents. Contemporaneous guidance has a

fundamental fair-notice benefit: It furnishes the public and regulated entities the agency’s

understanding of the regulation at the time of issuance, reducing some of the uncertainty

incident to any new regulatory change, as opposed to later in time or in the context of an

enforcement proceeding.

The neglect of contemporaneous guidance in debates about guidance practices and

rulemaking has practical implications along four dimensions. First, and at a most basic

level, there has been little dialogue among policymakers or commentators about the best

practices for providing guidance in the rulemaking process. Agencies have adopted a

diverse set of practices. While uniformity is not necessary or a value to unreflectively

demand of a practice as diverse and wide-ranging as rulemaking, the self-conscious

choices that some agencies make about how to issue contemporaneous guidance can be a

source of information and insight to other agencies. One aim of this Report is to catalogue

the variety of agency practices, and legal regime that governs them, as a prompt to

reflection about those that best suit particular rulemaking environments.

Second, while many agencies openly embrace the guidance function of preambles,

other agencies treat their preambles as unrelated to, and performing an entirely different

function than, their “guidance documents.” But by treating preambles as occupying a

functionally and conceptually distinct silo from guidance, some agencies neglect the basic

guidance function of the “statement of [] basis and purpose,” exclude preambles from their

general policies on guidance, fail to include reference to preambles in their official

compilations of guidance, and web postings of guidance. Many agencies could also do

more to make guidance they provide in preambles easier to locate, for instance, by

organizing them to make it easier for the reader to locate the most salient discussions of

each element of the regulation, limiting the extent to which they rely on discussions of the

rule in notice of proposed rulemaking (NPRM) which can require the reader to integrate

two separate statements of the rule, and/or by including hyperlinks to the preambular

guidance on electronic versions of their regulatory texts. A second aim of this Report is to

suggest reasons why contemporaneous guidance deserves a place at the table in debates

and agency choices about guidance practices and rulemaking, and to make several specific

supporting recommendations in this regard.

This is not to say that a broad variety of circumstances—uncertainty about how a regulation will affect

those subject to it, changes in technological, business, environmental or other conditions, newly acquired

expertise or studies, constraints on agency staff time, etc.—all provide a justification for issuing post hoc

guidance. But if all other considerations are equal, contemporaneous guidance has a fair notice benefit.

Third, at the other extreme, in some cases, agencies treat the text of their preambles

and the text of their rules as functional equivalents. Thinking about preambles as a source

of guidance also prompts inquiry into the boundaries of appropriate use of the preamble.

A third aim of the Report is to identify the residual need to insist on the distinctions

between preamble and regulatory text.

Fourth, agencies have unrealized opportunities for including notes and examples in

the Code of Federal Regulations (CFR) or more extensive guidance published as

appendices to the CFR. Where the agency knows that the regulated public relies primarily

on the CFR to understand its obligations, there is a strong need for uniformity in guidance,

and that guidance does not need to be frequently amended including notes and examples in

the CFR or more extensive guidance in an appendix to the CFR can enhance the visibility

of this agency advice. The Report also seeks to identify some of those opportunities.

This Report is organized as follows. Part I defines guidance and discusses the

scope of the inquiry and methodology of the Report. Part II gives a brief overview of

notice-and-comment rulemaking and the role of guidance in the rulemaking process. Part

III describes the legal regime governing guidance in preambles, regulatory text, and

contemporaneous, separately issued documents. The summary provided in Part III

illustrates the continuities between guidance issued in a preamble, regulatory text, and

separate documents, highlighting the need for self-conscious choice by agencies about the

forms in which they issue guidance. Part IV offers a description of the varieties of

contemporaneous guidance that agencies issue. Part V makes several recommendations to

federal agencies. Given that regulations have long since outnumbered statutes,

it is worth

examining the promise and challenges that contemporaneous guidance faces.

I. Definition of Guidance and Scope of Inquiry

A. Definition and Dimensions of Guidance

It is first important to define what is meant by the word “guidance” in this Report.

By “guidance” this Report refers to (i) agency statements outside of those appearing in

regulatory text that pertain to the meaning or interpretation of the agency’s regulations or

to advice about how to comply with the agency’s regulations, and (ii) agency statements

See CORNELIUS M. KERWIN & SCOTT P. FURLONG, RULEMAKING: HOW GOVERNMENT AGENCIES WRITE

LAW AND MAKE POLICY 13-21 (4th ed. 2011) (documenting, in both number of rules and pages of the

Federal Register devoted to federal regulations, a level of production that far exceeds comparable measures

for federal legislation).

appearing in regulatory text that are designed to guide the application or interpretation of

the regulation, such as examples or official commentaries.

This definition departs from the most prominent definition of guidance which

appears in the Office of Management and Budget’s Final Bulletin on Agency Good

Guidance Practices (“OMB’s Good Guidance Bulletin”)

in two important respects.

Under OMB’s Good Guidance Bulletin, a “guidance document” is “an agency statement of

general applicability and future effect, other than a regulatory action, that sets forth a

policy on a statutory, regulatory or technical issue or an interpretation of a statutory or

regulatory issue.”

In contrast, this Report addresses only guidance about the meaning or

application of regulations, not guidance about statutes or other sources of law. In that

respect, this Report focuses on a narrower class of guidance that falls within the Bulletin’s

definition.

Second, this Report includes statements that appear in the regulation’s text or are

published in an appendix to the regulation’s text as forms of guidance. Because some of

these statements might qualify as “regulatory action[s]” under OMB’s Good Guidance

Bulletin’s definition of guidance, they would be excluded from its scope.

Because

statements that are similar in content can appear in a regulation’s preamble, text, or a

separately issued document, the broader definition used in this Report does not preclude

consideration of these forms of guidance, and agencies’ justifications for using them. But

because “guidance” is so frequently associated with documents issued outside of

rulemaking, it is worth expressly emphasizing that under the definition of “guidance” used

here, the guidance may appear in a preamble or the text of a regulation, not merely in

separately issued documents.

With guidance so defined, guidance can be classified on three dimensions:

1. Timing. Guidance can be provided at the time of the regulation’s issuance

or at a later time. Contemporaneous guidance would include guidance that appears in a

OMB’s Good Guidance Bulletin, supra note 1. The definition of “guidance document” adopted in OMB’s

Good Guidance Bulletin is the same as that used in President Bush’s Executive Order, Further Amendments

to Executive Order 12866 on Regulatory Planning and Review, Executive Order 13,422, 72 Fed. Reg. 2763,

2762 (Jan. 23, 2007) (inserting Section 3(g) with this definition), which President Obama revoked. See Exec.

Order No. 13,497, 3 C.F.R. § 218 (2010).

See OMB’s Good Guidance Bulletin, supra note 1, at § I.3.

It is worth also emphasizing that statements in preambles could be considered guidance documents even

under the definition of guidance in OMB’s Good Guidance Bulletin because they are “an agency statement[s]

of general applicability and future effect, other than a regulatory action, that sets forth a policy on a . . .

regulatory or technical issue or an interpretation of . . . a regulatory issue.” Id.

preamble, the regulation’s text, or documents issued at the same time as the regulation,

such as compliance guides.

All other guidance is post hoc.

2. Content. Guidance can take innumerable forms, including: providing (1)

general advice about the meaning of particular words or provisions, (2) answers to

frequently asked questions, (3) announcement of priorities of the agencies with regard to

the enforcement of their regulations, (4) examples of calculations required under the

regulations, and (5) examples of model forms.

3. Location. As noted above, guidance can also appear as part of different

documents, most obviously including: (1) the regulation’s preamble, (2) portions of the

agency’s reasoning stated in a Notice of Proposed Rulemaking (NPRM) adopted in the

regulation’s preamble, (3) the regulation text, such as in notes and examples, (4) an

appendix to the regulation’s text whether published in the Code of Federal Regulations

(CFR) or not, or (5) documents issued separately from these core rulemaking documents.

B. Scope of Inquiry and Methodology

This Report focuses on this third dimension—the location of guidance. In almost

every rulemaking, agencies face a choice regarding guidance. They can issue virtually

identical advice and text in the regulation’s preamble, the regulation’s codified text or

appendix, or in a separate document issued alongside the rule; guidance that appears in

preambles in some rulemakings appears in regulatory text or separately issued documents

in other rulemakings. The variation is not itself a cause for concern; the difference in the

content of regulations, their audience, duration, and interaction with the surrounding legal

landscape among many other factors may justify these different choices, even for a single

agency. But because these different locations can have different legal effects, different

modes of publication, and different ability to reach the regulated, it is worth examining the

constraints on the agency’s choices and the considerations that inform their best practices

with regard to issuing contemporaneous guidance. Those questions are the focus of this

Report.

The Report was conducted primarily through legal research and research on

agencies’ practices in providing contemporaneous guidance. As to agency practices, the

research had two components. First, it involved text-based word searches of rulemakings

conducted in the last five years by executive agencies that had promulgated economically

Small Business Regulatory Enforcement Fairness Act, Pub. L. No. 104-121, § 212(a), 110 Stat. 873,

codified at 5 U.S.C. § 601 nt. (2012).

significant regulations in the last 15 years. The focus on the last five years was to ensure

study of current practices. The set of executive agencies that had issued an economically

significant rule in the last 15 years is drawn from David Lewis and Jennifer Selin’s

Sourcebook of the United States Executive Agencies.

This sample was chosen because it

reflects a cross-section, at least of executive agencies, engaged in the most significant

rulemakings. Second, with the assistance of Staff Counsel at the Administrative

Conference of the United States (ACUS), I also conducted half-hour phone interviews with

counsel working on rulemaking in 12 agencies in January and February, 2014.

The

Report includes discussion of examples of rulemakings from those agencies even if they

were not among those identified for the word searches of agency practices. On February

10, 2014, I presented an overview of the project for brown bag discussion at ACUS

headquarters attended by more than thirty other government lawyers working on

rulemaking. The experience and insight of the lawyers with whom I spoke informed the

recommendations and coverage of this Report.

II. Guidance and Rulemaking: A Brief Overview

To assess the appropriate role of guidance in rulemaking today, it first makes sense

to begin with some background understanding of the place and prominence of guidance

within and outside of notice-and-comment rulemaking proceedings.

A. The APA’s Vision: The Dual Role of the Statement of Basis and

Purpose -- Justification and Guidance

The Administrative Procedure Act (APA) provides a simple structure for notice-

and-comment rulemaking, especially given the scope of federal lawmaking that now

emerges through this process. Section 553 of the APA sets out three basic elements of

notice-and-comment rulemaking.

First, section 553 requires publication of a “[g]eneral

notice of proposed rulemaking” in the Federal Register, commonly referred to as an

DAVID E. LEWIS & JENNIFER L. SELIN, SOURCEBOOK OF UNITED STATES EXECUTIVE AGENCIES 132 (Table

20) (December 2012 First Edition). The following agencies fall in this category: USDA, DOC, DOD,

DOED, HHS, DHS, HUD, DOI, DOJ, DOL, STAT, DOT, DTRS, DVA, EPA, EEOC, OMB, OPM, RRB,

SBA, and SSA.

These agencies included the Board of Governors of the Federal Reserve System, Consumer Financial

Protection Bureau, Department of Education, Department of Health and Human Services, Department of the

Interior, Department of Transportation, Department of the Treasury, Equal Employment Opportunity

Commission, Merit Systems Protection Board, Occupational Health & Safety Review Commission, Social

Security Administration, and U.S. Coast Guard.

5 U.S.C. § 553 (2012). Section 553 provides a default process for rulemaking except in the rare case of a

statute that requires the rulemaking be conducted through the APA’s formal rulemaking procedure, see id. §

553 (noting that § 556 & § 557 apply when the rules are required by statute “to be made on the record and

after opportunity for an agency hearing”), or when a statute specifies its own rulemaking procedure.

“NPRM.”

Second, after publication of that required notice, the agency “shall give

interested persons an opportunity to participate in the rule making through submission of

written data, views, or arguments.”

Third, after consideration of these comments, “the

agency shall incorporate in the rules adopted a concise and general statement of their basis

and purpose.”

The APA exempts from these notice and consideration requirements

“interpretative rules, general statements of policy, or rules of agency organization,

procedure, or practice,” among other exceptions, which are sometimes referred to as

nonlegislative rules or guidance documents.

Early understandings of the APA suggest that the statement of basis and purpose,

which comprises much of what is commonly referred to as the regulation’s “preamble,”

was intended to have a dual role: not only identifying the legal and factual basis for the

rule, but also providing guidance on its meaning and import for the public and the courts.

This message comes through clearly in the Attorney General’s Manual on the

Administrative Procedure Act.

Of the statement of basis and purpose, the Manual opines,

“[t]he required statement will be important in that the courts and the public will be

expected to use such statements in the interpretation of the agency’s rules.”

And the

Manual goes on, “the statement is intended to advise the public of the general basis and

purpose of the rules.”

The APA’s legislative history also includes support for this

understanding. “The required statement of basis and purpose of rules issued,” as both the

House and Senate Judiciary Committee Reports commented on S.7 which became the

APA, “should not only relate to the date so presented but with reasonable fullness explain

the actual basis and objectives of the rule.”

5 U.S.C. § 553(b) (2012).

Id. § 553(c).

Id.

Id. § 553(b)(3)(A); see Mendelson, supra note 2, at 406 (describing process applicable to guidance

documents).

UNITED STATES DEPARTMENT OF JUSTICE, ATTORNEY GENERAL’S MANUAL ON THE ADMINISTRATIVE

PROCEDURE ACT (1947).

Id. at 32.

Id.

H.R. REP. NO. 79-1980, at 259 (1946); S. REP. NO. 79-752, at 201 (1945), as available in ADMINISTRATIVE

PROCEDURE ACT, LEGISLATIVE HISTORY, 79TH CONG., S. Doc. No. 79-248, 1944-46, 225 (1944-46). The

Senate Report also contains as an appendix to the Attorney General’s 1945 report on Senate Bill 7. The

Attorney General’s report stated the following in regards to the statement of basis and purpose:

Section 4 (b), in requiring the publication of a concise general statement

of the basis and purpose of rules made without formal hearing, is not

intended to require an elaborate analysis of rules or of the detailed

considerations upon which they are based but is designed to enable the

public to obtain a general idea of the purpose of, and a statement of the

basic justification for, the rules. The requirement would also serve much

the same function as the whereas clauses which are now customarily

found in the preambles of Executive orders.

The idea that the statement of basis and purpose was meant to apprise the public of

the purpose and effect of the rule—that is, that it serve a guidance function—in addition to

disclosing the basis for the rule has sound logic. The statement of basis and purpose is

necessary for the procedural validity of the rule,

and constitutes the agency’s

authoritative statement of the rule’s purposes and basis. Because the statement of basis

and purpose is part and parcel of the agency’s rulemaking, it makes sense these documents

would help inform the public about the meaning and application of the rules they

accompany, and that the public and courts would turn to them for those purposes.

As this

Report documents, while many agencies rely extensively on statements of basis and

purpose to apprise the public of the application of their rules, the guidance function of

these statements has had not had prominence in policy on guidance nor received much

attention from government bodies or commentators.

B. The Expanding Preamble, Ossification, and Separately Issued

Guidance

Part of the explanation for the relative neglect of the guidance function of

preambles is that agencies have come to devote more and more attention in their preambles

to justifying the legal sufficiency of their rules. For some agencies, a clear legal division

of labor has taken hold: The preamble is devoted almost entirely to the legal sufficiency of

the regulation, and guidance is something the agency provides outside the rulemaking, in

separately issued documents.

This development has been conventionally understood as a consequence of

heightened judicial scrutiny review of the rationality of agency regulations that took hold

in the late 1960s and early 1970s in the form of “hard look review” and has persisted ever

since. Hard look review developed as a combination of two doctrinal elements. First, hard

look review adopts the pre-APA administrative law requirement associated with SEC v.

S. REP. NO. 752, at 225 (1945) (also available in ADMINISTRATIVE PROCEDURE ACT, LEGISLATIVE HISTORY,

79TH CONG., 2D SESS., Doc. No. 248, 1944-46, 225 (1946).

See Indep. U.S. Tanker Owners Comm. v. Dole, 809 F.2d 847, 852 (1987) (vacating a rule for inadequate

statement of basis and purpose).

See Kevin M. Stack, Interpreting Regulations, 111 Mich. L. Rev. 355 (2012) (defending reliance on

agency preambles to interpret regulations).

A few more comprehensive commentaries observe that agencies include statements of basis and purpose to

explain their rules, but do not give the practice focused attention. See, e.g., JEFFREY S. LUBBERS, A GUIDE TO

FEDERAL AGENCY RULEMAKING 337 (5th ed., 2012) (“Agencies often use the statement [of basis and

purpose] to advise interested persons how the rule will be applied.”); Richard J. Lazarus, Meeting the

Demands of Integration in the Evolution of Environmental Law: Reforming Environmental Criminal Law,

83 GEO. L.J. 2407, 2437 (1995) (noting that lengthy preambles are just one sources of “underground

environmental law” which also includes extensive guidance).

Chenery Corp.

(known as Chenery I), which stated that a reviewing court will uphold an

agency’s action based only on “the grounds upon which the agency acted in exercising its

powers.”

Second, hard look review embraces a relatively high standard for the quality of

the reasons provided by the agency, despite statements by courts that arbitrary and

capricious review is lenient or narrow.

When the Chenery I requirement for a

contemporaneous statement of reasons is combined with a high standard for the quality of

those reasons, the consequences for the agency are clear: For rules to survive judicial

review, the agency must provide an extremely detailed justification of their grounds. The

place for the agency to do so is in the rule’s statement of basis and purpose.

The Supreme Court’s decision in Motor Vehicle Manufacturers Ass’n v. State Farm

Mutual Automobile Insurance Co.

still provides the classic statement and illustration of

hard look review. In State Farm, the Court set a high standard for the agency’s level of

express justification in its statement of basis and purpose in the rule. To avoid being

arbitrary or capricious under section 706 of the APA, the agency must “examine the

relevant data and articulate a satisfactory explanation for its action, including a ‘rational

connection between the facts found and the choice made.’”

An agency rule would

normally be arbitrary and capricious if “the agency has relied on factors which Congress

has not intended it to consider, entirely failed to consider an important aspect of the

problem, offered an explanation for its decision that runs counter to the evidence before the

agency, or is so implausible that it could not be ascribed to a difference in view or the

product of agency expertise.”

In State Farm, the Supreme Court reversed the agency’s

decision to rescind a rule under this standard, in part because the agency provided no

consideration of one of the viable options within the ambit of the existing rule.

Since the

State Farm decision, both the Supreme Court and the Courts of Appeals have emphasized

that the vesting of wide power for agencies “carries with it a correlative responsibility for

the agency to explain the rationale and factual basis for its decision,”

a duty that agencies

discharge in their statements of basis and purpose. This duty not only includes evaluation

of alternatives and explanation of the basis for the regulations adopted, but also a duty to

discuss salient comments.

As a result, the agency’s articulation of the grounds of its

318 U.S. 80 (1943).

Id. at 95.

See, e.g., Citizens to Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971) (describing the standard as a

“narrow” one); Muwekma Ohlone Tribe v. Salazar, 708 F.3d 209, 220 (D.C. Cir. 2013) (same).

463 U.S. 29 (1983).

Id. at 43.

Id.

Id. at 51

Bowen v. Am. Hosp. Ass’n, 476 U.S. 610, 627 (1986); see also, e.g., Detsel by Detsel v. Sullivan, 895

F.2d 58, 63 (2d Cir. 1990).

See, e.g., Am. Mining Cong. v. EPA, 965 F.2d 759, 771 (9th Cir. 1992).

action and engagement with commentators in its statement of basis and purpose is

necessary to the validity of the rule.

As these doctrines of judicial review congealed in the contemporary hard look

doctrine, the length of regulatory preambles has grown as measured by the average number

of pages per final rule published in the Federal Register. Based on a study performed by

the Congressional Research Service, the average number of Federal Register pages per

final rule in 1976, 1977, 1978 was 1.7, 2.07, 2.2 respectively, whereas the averages in

2009, 2010, and that 2011 were 5.93, 6.97, and 6.91 respectively.

The common sense

explanation is that the prospect of stringent judicial review, which requires the agency to

“show it’s work,” has prompted agencies to devote more energy to writing elaborate

statements of the legal sufficiency of their regulations in their preambles.

Other analysis

requirements imposed on agencies also add to the explanatory obligations the agency must

discharge in their preambles, including the analysis requirements imposed by Executive

Order 12,866,

the Regulatory Flexibility Act,

the Paperwork Reduction Act of 1995,

the National Environmental Policy Act of 1969,

and the Unfunded Mandates Reform Act

of 1995,

among other analysis and consultation requirements.

At the same time that the agency’s duties of explanation—and actual

explanations—of the basis for their rules in preambles has grown, the need for guidance as

to the meaning and application of agency regulations has not gone away.

MAEVE P. CAREY, CONG. RES. SERV. R43056, COUNTING REGULATIONS: AN OVERVIEW OF RULEMAKING,

TYPES OF FEDERAL REGULATIONS, AND PAGES IN THE FEDERAL REGISTER, 17-18 (2013) (calculations

produced by dividing the number of pages per final rule by the number of final rules, information reported in

Table 6).

See, e.g., Richard J. Pierce, Jr. Seven Ways to Deossify Agency Rulemaking, 47 ADMIN. L. REV. 59, 65

(1997) [hereinafter “Seven Ways”] (suggesting that the stringent judicial gloss on the APA has

“transform[ed] the simple, efficient notice and comment process into an extraordinarily lengthy, complicated,

and expensive process,” discouraging agency use of rulemaking); Thomas O. McGarity, Some Thoughts on

“Deossifying” the Rulemaking Process, 41 DUKE L.J. 1385, 1401 (1992) (attributing the “Herculean effort of

assembling the record and drafting a preamble” to heightened judicial scrutiny of rulemaking); Mark

Seidenfeld, Demystifying Deossification: Rethinking Recent Proposals to Modify Judicial Review of Notice

and Comment Rulemaking, 75 TEX. L. REV. 483, 492-98 (1997) (providing account of ways in which hard

look review has increased burdens of explanation and evidence production on agencies).

Exec. Order No. 12,866, 3 C.F.R 638 (1994). For a copy of this Regulatory Planning and Review

Executive Order as amended, see 5 U.S.C. § 601 nts. (2012).

5 U.S.C. § 604(a)(2) (2012) (requiring agencies to state changes made in rule in response to comments).

44 USC §§ 3501-3521 (2006) (requiring in § 3505 approval by Director of OMB that rules minimize

federal information collection burdens).

42 USC § 4321 et seq. (2006) (requiring in § 4332 preparation of environmental impact statement for

significantly effecting the quality of the human environment).

2 U.S.C. § 1532(a)(5)(A) (2012) (requiring agencies to respond to comments from state and local

governments).

A common suspicion is that the increased costs associated with notice-and-

comment rulemaking has given agencies incentives to look for alternative, less costly ways

to establish policy or advise the public of the agency’s understanding of the law. In

particular, several commentators suggested that the high cost of notice-and-comment

rulemaking has caused agencies to rely to a greater extent on separately issued guidance

documents which need not proceed through notice-and-comment rulemaking,

effectively

substituting guidance documents for rulemaking.

Recent empirical investigations call

into question this suggestion that agencies rely on guidance documents to avoid the

burdens of notice-and-comment rulemaking. In a study of the Environmental Protection

Agency (EPA), Food and Drug Administration (FDA), Federal Communications

Commission (FCC), Occupational Safety and Health Administration (OHSA), and the

Internal Revenue Service (IRS), between 1996 and 2006, Connor Raso found that agencies

do not increase their issuance of guidance strategically,

and that the body of significant

legislative rules issued still dwarfs that of significant guidance.

In an extensive study of

the Department of the Interior, Jason and Susan Webb Yackee also found no support for

increased reliance on nonlegislative rules between 1950-1990.

More generally, Anne

Joseph O’Connell also found that the volume of agency notice-and-comment rulemaking

remains significant, and thus does not appear to be so costly that it is no longer a viable

option for agencies.

See 5 U.S.C. § 553(b) (2012) (excepting interpretative rules and general statements of policy from notice

and comment requirements).

See, e.g., Robert A. Anthony, Interpretive Rules, Policy Statements, Guidances, Manuals, and the Like—

Should Federal Agencies Use Them to Bind the Public?, 41 DUKE L.J. 1311, 1316-17(1992) (arguing that

with the increased cost of notice-and-comment rulemaking, agencies are increasingly willing to rely on forms

of nonlegislative rules, such as interpretative rules and general statements of policy to implement their

statutes); Pierce, Seven Ways, supra note 41, at 86 (same).

Connor Raso did not find evidence that agencies issued guidance documents more often as presidential

terms waned, nor more frequently during periods of divided government. See Connor N. Raso, Note,

Strategic or Sincere? Analyzing Agency Use of Guidance Documents, 119 YALE L.J. 782, 806-07 (2010).

See Raso, supra note 49, at 813-14 (Table 3 showing that the ratio of significant guidance documents to

significant legislative rules ranges from .00 and .01 (Defense and Energy) to .31 and .35 (Education and

Homeland Security)).

Jason Webb Yackee & Susan Webb Yackee, Testing the Ossification Thesis: An Empirical Examination of

Federal Regulatory Volume and Speed, 1950-1990, 80 GEO. WASH. L. REV. 1414, 1461 (2012). The

Yackees’ article includes interim final rules and guidance documents in a category on “no-comment

regulations,” drawn from searches of the Federal Register. With regard to guidance published in the Federal

conservative because they are counting interim final rules in this category. However, their study does not

capture guidance that is not published in the Federal Register, so may also understate agency reliance on it.

See Anne Joseph O’Connell, Political Cycles of Rulemaking: An Empirical Portrait of the Modern

Administrative State, 94 VA. L. REV. 889, 936 (2008) (suggesting that volume of agency rulemaking shows it

is not ossified). Interestingly, Anne Joseph O’Connell’s study reveals that agencies have increased issuance

of direct final rules and interim final rules. See id. Both direct final rules and interim final rules include

statements equivalent to statements of basis and purpose, but they do not undergo a pre-publication comment

period. NAT’L ARCHIVES & RECORDS ADMIN., FEDERAL REGISTER DRAFTING DOCUMENT HANDBOOK, 2-6

to 2-8 (1998) (noting that direct final rules and interim final rules should include preambles explaining the

These studies complicate and may undermine the view that agencies have

increasingly relied on separately issued guidance documents in response to the greater

demands on, and costs of, notice-and-comment rulemaking. But these studies do not

address the extent to which the agency preambles have been devoted to justifying the legal

sufficiency of the regulations as opposed to serving a guidance function. The increased

legal demands saddled upon the agency’s preamble have all been directed toward legal

sufficiency or analysis requirements, not their guidance function.

To the extent those

increased justificatory and analysis requirements have had an effect on agency’s activities

in rulemaking—and the lengthening of agency preambles is a good indication that they

have an effect—they have augmented the prominence of the justificatory role of the

preamble. At the same time, even as policymakers and commentators have devoted more

attention to agencies’ use of guidance, that attention has been almost exclusively directed

to separately issued guidance documents, not guidance provided within rulemaking

documents. We need a better understanding of the guidance function these documents

do—and must—serve.

III. The Law Governing Contemporaneous Guidance

Assessment of best practices for providing guidance in rulemakings—that is, best

practice for contemporaneous guidance—requires understanding the legal regime and

constraints that apply to providing guidance in regulatory preambles, the regulatory text

(including any appendices), or in separately issued documents. Despite the ubiquity of

contemporaneous guidance,

there are few, if any, resources that draw together the legal

regime applicable to contemporaneous guidance. From the perspective of the agency and

the public, there are a host of questions about how the general law of guidance applies to

contemporaneous guidance, including:

 What, if any, process requirements apply to issuing contemporaneous

guidance?

 What, if any, process requirements apply to revising contemporaneous

guidance?

rule’s purpose and grounds). Agencies’ increased reliance on these forms suggests that at least the “notice-

and-comment rulemaking has significant costs that the agencies want to avoid.” Joseph O’Connell, supra, at

936.

See, e.g., Unfunded Mandates Reform Act, 2 U.S.C. § 1523(a) (2006); Small Business Regulatory

Enforcement Fairness Act, 5 U.S.C. § 609, Pub. L. No. 104-121, 110 Stat. 857 (1996); Regulatory Flexibility

Act, 44 U.S.C. §§ 301-612 (2006); Congressional Review Act, 5 U.S.C §§ 801-08 (2006); Paperwork

Reduction Act, 44 U.S.C. §§ 3501-20 (2006); 44 U.S.C. § 3504(c) (2006).

See infra Part IV.

 When is contemporaneous guidance subject to OIRA review?

 What, if any, guidance must be included in a regulatory preamble or

regulatory text, or separately issued document?

 What, if any, guidance may not be included in a regulatory preamble or

regulatory text?

 What forms of contemporaneous guidance are reviewable?

 What standards of judicial review apply?

This Part addresses these questions, and then provides a summary of the answers in

Table 1.

A. Process Requirements for Issuing Contemporaneous Guidance

One of the distinctive features of separately issued guidance documents is that they

are exempt from the requirements of notice-and-comment under APA § 553(b)(A).

But

this does not mean that there are no applicable procedural requirements. The APA requires

that interpretive rules and general statements of policy be published in the Federal

and that other forms of guidance be publically available.

Preambles and

regulatory text obviously must meet that publication requirement.

The more involved and less explored process issue for contemporaneous guidance

arises from those agencies covered by OMB’s Good Guidance Bulletin.

As noted at the

outset, this Bulletin defines “guidance documents” to exclude regulatory actions,

so it

would not apply to any guidance the agency provided in the text of its regulations. But

under the definition in the Bulletin, agency preambles (as well as separately issued

documents) could qualify as guidance documents within the Bulletin because they may be

statements of “general applicability and future effect . . . that set[] forth a policy on a . . .

regulatory issue or interpretation of a . . . regulatory issue.”

Likewise, statements in an

agency preamble could also constitute “significant guidance” which includes guidance

leading to an annual effect on the economy of more than $100 million, creating serious

See infra Section III(H).

5 U.S.C. § 553(b)(A) (2012).

See id. § 552(a)(1)(D).

See id. § 552(a)(2)(B) (2012).

OMB’s Good Guidance Bulletin, supra note 1. The Bulletin applies only to executive agencies. See id. §

I.2 (defining “agency” as agencies other than those considered to be independent regulatory agencies under

44 U.S.C. § 3205(5)).

Id. § I.3 (“The term ‘guidance document’ means an agency statement of general applicability and future

effect, other than a regulatory action (as defined in Executive Order 12866, as further amended by, section

3(g)), that sets forth a policy on statutory, regulatory, or technical issue or an interpretation of a statutory or

regulatory issue.”).

Id.

inconsistencies with another agency’s actions or planned actions, altering budget impacts

on entitlements, or raising novel legal issues arising out of legal requirements or the

president’s priorities or Executive Order 12,866.

Accordingly, for executive agencies, to the extent any statements in an agency

preamble as well as those in separately issued documents would be considered “significant

guidance documents” or even “economically significant guidance documents” under the

Bulletin, the agency would have to comply with the procedural requirements the Bulletin

imposes.

Most interesting for their application to preambles are the requirement that: (1)

there be a designation of the statement as “guidance” (or its equivalent),

(2) the agency

maintain on its web site a list of significant guidance documents,

and (3) the agency

structure a means for the public to submit comments on significant guidance documents.

While many agencies provide extensive guidance about the meaning and operation of their

regulations in their preambles, few agencies appear to treat their preambles as subject to

the procedural requirements of OMB’s Good Guidance Bulletin which, by its own terms,

could apply to guidance provided in preambles.

Consider in particular OMB’s Good Guidance Bulletin’s requirement that each

agency maintain on its web site a list of its current significant guidance documents in

effect, including a link to the document.

Based on a review of the web sites of the 21

executive branch agencies that have issued an economically significant regulation in the

last 15 years,

only the Department of Transportation’s web site on guidance mentions

preambles as a source of guidance.

In sum, while guidance provided in agency preambles or in regulatory text clearly

meet the APA’s publication requirements, these same statements, if their effects are

significant, could require compliance with OMB’s Good Guidance Bulletin. That would

require the agency to be conscientious about how it designated those guidance portions, to

Id. § I.4(a)(i)-(iv).

Id. § II.2-3 (outlining basis procedures for significant guidance). The Bulletin’s imposition of procedural

requirements for issuing guidance builds upon ACUS Recommendation 92-2 on Agency Policy Statements.

That recommendation urged agencies to provide procedures to challenge the legality and wisdom of the

statements prior to these policies being applied. See Admin. Conf. of the United States, Agency Policy

Statements, Recommendation 92-2, ¶ II(B), 57 Fed. Reg. 30,103 (June 18, 1992).

Id. § II.2 (setting out requirement elements for significant guidance).

Id. § III.1 (providing for Web posting of significant guidance).

Id. § III.2 (setting forth requirements for public to submit comments and complaints about its guidance).

Id. § III.1.

This list of agencies is drawn from LEWIS & SELIN, supra note 17, at 132 (Table 20). It includes: USDA,

DOC, DOD, DOED, HHS, DHS, HUD, DOI, DOJ, DOL, STAT, DOT, DTRS, DVA, EPA, EEOC, OMB,

OPM, RRB, SBA, and SSA.

The web sites on guidance for the agencies noted did not include mention of preambles or a rule’s

statement of basis and purpose, except for DOT (websites on guidance visited March 2014).

post or mention preambles alongside other significant guidance on their web sites, and

even to provide an opportunity to comment on the significant guidance in preambles,

among other requirements.

B. Process Requirements for Revising Contemporaneous Guidance: The

Impact of Alaska Professional Hunters

The process requirements that apply to an agency decision to revise

contemporaneously issued guidance are even clearer than those that apply to issuing

contemporaneous guidance. Clearly guidance issued as part of a regulatory text can only

be revised through a new notice-and-comment proceeding. Based on the rule adopted by

the D.C. Circuit in Alaska Prof’l Hunters Ass’n v. FAA

and Paralyzed Veterans of

America v. D.C. Arena,

in some cases, agencies must also proceed through notice-and-

comment to revise guidance provided in their preambles.

The “Alaska Hunters” rule, also known as the “one-bite” rule,

states that “[w]hen

an agency has given its regulation a definitive interpretation, and later significantly revises

that interpretation, the agency has in effect amended its rule, something it may not

accomplish without notice and comment.”

As the D.C. Circuit recently clarified in

Mortgage Bankers Ass’n v. Harris,

this rule involves two basic inquiries: whether the

interpretation is definitive (“definitiveness”), and whether there has been a significant

change in the interpretation (“significant change”), but does not require substantial and

justified reliance on the prior interpretation.

In Paralyzed Veterans, the D.C. Circuit characterized a change in an interpretation

of a rule as an “amendment” to a regulation.

The court then turned to APA § 551(5),

which defines “rulemaking” as including “formulating, amending, or repealing a rule.”

On this basis, the court concluded that amendments in the form of changes to

interpretations must go through notice-and-comment.

As commentators have pointed out,

the Paralyzed Veterans court neglected to consider that § 553, which sets forth the

177 F.3d 1030, 1035-36 (D.C. Cir. 1999).

117 F.3d 579, 588 (D.C. Cir. 1997).

Stack, supra note 29, at 415–16.

177 F.3d at 1034.

720 F.3d 966 (D.C. Cir. 2013), petition for cert. filed, Nos. 13-1041, 13A636 (Feb 28, 2014).

Id. at 969; Matthew P. Downer, Note, Tentative Interpretations: The Abracadabra of Administrative

Rulemaking and the End of Alaska Hunters, 67 VAND. L. REV. (forthcoming 2014) (exploring distinction

between definitive and tentative interpretations).

See Paralyzed Veterans, 117 F.3d at 586.

Id.

Id.; 5 U.S.C. 551(5) (2012).

requirements for notice-and-comment rulemaking, specifically exempts “interpretative

rules” from notice-and-comment.

Alaska Hunters formalized Paralyzed Veterans into a doctrine.

At issue in Alaska

Hunters was a thirty-year-old practice of the Federal Aviation Administration’s Alaska

regional office that uniformly advised hunting and fishing guides flying clients on Alaskan

hunting tours that they were not considered “commercial operators,” a treatment that

resulted in exempting these businesses from some FAA regulations.

In 1997, FAA

officials in Washington, D.C. published a “Notice to Operators” announcing that it would

interpret these hunting businesses as “commercial operators” subject to commercial

operator regulations going forward.

Relying on Paralyzed Veterans, the Alaska Hunters

court held that the “Notice to Operators” was procedurally invalid because it effectively

amended a regulation by changing a definitive interpretation without notice-and-

comment.

The prior interpretation, the court noted, had become “an authoritative

departmental interpretation, an administrative common law.”

In subsequent decisions,

the D.C. Circuit has narrowed the scope of this rule somewhat, holding that when an

administrative interpretation includes conditional language (e.g., “may use,” “can be

used”) or did not establish an “express, direct, and uniform interpretation,”

it is not

definitive. While roundly criticized by commentators as inconsistent with the APA §

553,

the D.C. Circuit and several other Circuits continue to apply this doctrine.

Jon Connolly, Note, Alaska Hunters and the D.C. Circuit: A Defense of Flexible Interpretive Rulemaking,

101 COLUM. L. REV. 155, 160, 165 (2001).

Alaska Prof’l Hunters Ass’n, 177 F.3d at 1034 (citing Paralyzed Veterans, 117 F.3d at 586) (“‘Rule

making,’ as defined in the APA, includes not only the agency’s process of formulating a rule, but also the

agency’s process of modifying a rule.”).

Id. at 1031-32.

Id. at 1033.

Id. at 1034.

Id. at 1035.

MetWest Inc. v. Sec’y of Labor, 560 F.3d 506, 509 (D.C. Cir. 2009) (conditional statement,

“circumstances may exist,” in guidance does not establish a definitive agency interpretation); Darrell

Andrews Trucking, Inc. v. Fed. Motor Carrier Safety Admin., 296 F.3d 1120, 1126 (D.C. Cir. 2002)

(presence of language “can be used” or “could be used” rendered guidance ambiguous and thus did mark a

definitive interpretation); Ass’n of Am. R.R.s v. Dep’t of Transp., 198 F.3d 944, 949 (D.C. Cir. 1999)

(agency interpretations not sufficiently authoritative or uniform).

Richard W. Murphy, Hunters for Administrative Common Law, 58 ADMIN. L. REV. 917, 918 (2006)

(“Academic commentary on [the Alaska Hunters doctrine] has been scathing.”); see also William Funk, A

Primer on Nonlegislative Rules, 53 ADMIN. L. REV. 1321, 1329 (2001) (criticizing the D.C. Circuit's

reasoning in Alaska Hunters); Pierce, Seven Ways, supra note 41, at 566 (same); Peter L. Strauss, Publication

Rules in the Rulemaking Spectrum: Assuring Proper Respect for an Essential Element, 53 ADMIN. L. REV.

803, 846 (2001) (same); Connolly, supra note 79, at 157 (same).

See Mortg. Bankers Ass’n v. Harris, 720 F.3d 966 (D.C. Cir. 2013) (reaffirming the Alaska Hunters

doctrine). The Third, Fifth and Sixth Circuits have adopted the Alaska Hunters doctrine. See SBC Inc. v.

FCC, 414 F.3d 486, 498 (3d Cir. 2005); Dismas Charities, Inc. v. U.S. Dept. of Justice, 401 F.3d 666, 682

(6th Cir. 2005); Shell Offshore Inc. v. Babbitt, 238 F.3d 622, 629 (5th Cir. 2001). In contrast, the First,

Seventh, and Ninth Circuits have rejected the Alaska Hunters doctrine. See Abraham Lincoln Mem’l Hosp. v.

The Alaska Hunters rule has clear implications for preambles. It seems clear that

guidance provided in a preamble to a regulation could be definitive under Alaska Hunters.

Guidance provided in a preamble is clearly authoritative; it is the agency as an institution

that issues it. So long as it was not conditional or ambiguous, it would qualify as a

definitive interpretation. As a result, under Alaska Hunters, for the agency to significantly

change its definitive guidance provided in a preamble would require the agency to undergo

a new notice-and-comment proceeding.

The idea that a notice-and-comment proceeding is required to change guidance

given in a preamble to a regulation may strike many as an odd result in part because it

appears to blur the distinction between rule and preamble. That blurring follows from

Alaska Hunters, but also has an important implication for agencies: For definitive

guidance, there may be less procedural difference that would initially appear between

statements in the preamble and in the regulatory text. So long as the statements in the

preamble are definitive, then they can be changed, like regulatory text, only through

notice-and-comment. So the difference in procedural requirements is only a difference in

the processes that govern their issuance: Regulatory text is subject to notice-and-comment

under the APA, whereas guidance in a preamble, like separately issued guidance, is at most

subject to the notice obligations imposed by OMB’s Good Guidance Bulletin (which in

turn involves notice and comment for economically significant guidance).

C. When Is Contemporaneous Guidance Subject to OIRA Review?

For agencies that are not independent regulatory agencies,

preambles to

significant final rules, the text of those rules, as well as significant guidance documents are

all subject to some oversight by the Office of Information and Regulatory Affairs under

Executive Order 12,866.

Executive Order 12,866 defines regulatory actions as “any substantive action by an

agency (normally published in the Federal Register) that promulgates or is expected to

lead to the promulgation of a final rule or regulation . . . advanced notices of proposed

rulemaking, and notices of proposed rulemaking.”

Preambles to final rules and

Sebelius, 698 F.3d 536 (7th Cir. 2012); Erringer v. Thompson, 371 F.3d 625 (9th Cir. 2004); Warder v.

Shalala, 149 F.3d 73 (1st Cir. 1998). The Tenth Circuit appeared to criticize the Alaska Hunters decision, but

did not either formally adopt or reject it. See United States v. Magnesium Corp. of Am., 616 F.3d 1129 (10th

Cir. 2010).

Exec. Order. No. 12,866 § 3(b), 3 C.F.R 638 (1994) (defining agencies, unless otherwise noted, as

excluding independent regulatory agencies as listed in 44 U.S.C. § 3502(10)).

Id. at § 3(e).

Id.

regulatory text are clearly “regulatory actions.” As such, under the Executive Order’s

Centralized Review provisions, for regulations that are “significant,”

covered agencies

must provide the text of the preamble and the regulatory text to OIRA for review.

In addition, “significant” guidance documents are also subject to OIRA review.

While President Obama revoked President Bush’s Executive Order which formally

subjected guidance documents to review,

that did not remove significant guidance

documents from OIRA review. As former OIRA Administrator Cass Sunstein reports,

“Across multiple administrations, OIRA has long reviewed such [guidance] documents . . .

so long as they count as ‘significant.’”

This understanding was confirmed by then-OMB

Director Peter Orzag in a March 2009 memorandum that made clear that the revocation of

President Bush’s Executive Order formally including guidance in regulatory review

restored regulatory review to the process between 1993 and 2007.

“During that period,”

Director Orzag wrote, “OIRA reviewed all significant proposed final agency actions,

including significant policy and guidance documents.”

D. What Contemporaneous Guidance is Required?

While the law does not require including particular guidance in regulatory text,

there are minimum obligations for contemporaneous guidance to be included in regulatory

preambles as well as in separate guidance documents called “compliance guides” for rules

that have “a significant impact on a substantial number of small entities,” as required by

the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).

Id. § 3(e).

Id. § 6(a)(3)(B).

Exec. Order No. 13,497, 3 C.F.R. § 218 (2010), revoking Exec. Order No. 13422, 3 C.F.R. § 191 (2008)

(revoked) (subjecting guidance to regulatory review).

Cass R. Sunstein, The Office of Information and Regulatory Affairs: Myths and Realities, 126 HARV. L.

REV. 1838, 1853 (2013).

See Orzag Memorandum, supra note 2. The issuance of this memorandum, Sunstein reports, “reflects

broad support for such review within the Executive Office of the President,” notwithstanding the fact that

guidance might strictly fit within Executive Order 12,866’s definition of “regulatory action.” See Sunstein,

supra note 94, at 1853 n.60. For a description of the character of OIRA’s review of guidance documents

during that period, see Jennifer Nou, Agency Self-Insulation Under Presidential Review, 126 HARV. L. REV.

1755, 1785 (2013).

See Orzag Memorandum, supra note 2.

President Clinton’s directive on plain language, which includes plain language in final rules, remains in

effect. See Memorandum for the Heads of Executive Departments and Agencies on “Plain Language in

Government Writing” (June 1, 1998), 63 Fed. Reg. 31,885 (June 10, 1998).

5 U.S.C. § 601 notes, § 212 (requiring the production of compliance guides whenever the agency must

produce a regulatory flexibility analysis under 5 U.S.C. § 605(b) and quoting § 605(b)).

1. Preambles

The near exclusive focus on the justificatory function of statements of basis and

purpose in regulatory preambles also completely occludes the question of what minimum

level of guidance preambles must provide. There are two legal sources that could be

understood to impose a minimum guidance obligation on the agency: the requirement of

APA § 553 that the agency issue a “statement of [] basis and purpose,” and the Regulatory

Flexibility Act’s requirement that agencies engaged in rulemaking under § 553 provide a

“statement of the need for, and objective of, the rule.”

These requirements ensure that a minimum guidance function is served by the

preamble. Independent U.S. Tanker Owners Committee v. Dole

100

provides the established

formulation of the necessary requirements for an agency’s statement of basis and purpose

to be procedurally valid. While the statement need not “be an exhaustive, detailed account

of every aspect of the rulemaking proceedings,” the statement “should indicate the major

issues of policy that were raised in the proceedings and explain why the agency decided to

respond as it did, particularly in light of the statutory objectives that the rule must

serve.”

101

Under this standard, the Independent U.S. Tankers court concluded that the

agency’s statement did not explain how the rule furthered statutory objectives, and

accordingly vacated the rule.

102

Requiring this articulation in the statement of basis and purpose clearly helps a

reviewing court assess whether the agency has taken a hard look at the problem in light of

its statutory objectives. But it just as clearly serves a guidance function. It requires the

agency to provide an independent articulation of the purpose of the rule and its place in the

implementation of the statute. The fact, as Independent Tankers held, that issuing a

statement of basis and purpose with an adequate explanation of how the rule furthers the

statute’s purposes is procedurally necessary for a notice-and-comment rulemaking

103

suggests that guidance is one of the purposes—and minimum obligations imposed on—

these statements. In other words, part of what makes a statement of basis procedurally

valid is providing a minimum level of guidance that explains how the rule implements the

statute’s purpose. From this perspective, statement of basis and purpose that falls short of

this minimum requirement does not perform its necessary guidance function of stating the

rule’s purposes in light of statutory objectives.

104

5 U.S.C. § 604(a)(1) (2012)

100

809 F.2d 847 (D.C. Cir. 1987).

101

Id. at 852.

102

Id.

103

Id.

104

Direct Final Rules and Interim Final rules should also include the functional equivalent of a preamble, see

FEDERAL REGISTER DRAFTING DOCUMENT HANDBOOK, supra note 52, at 2-6 to 2-8 (1998) (noting that direct

The Regulatory Flexibility Act (RFA) requires that when an agency promulgates a

final rule through notice-and-comment, the agency must provide a “regulatory flexibility

analysis” that includes “a statement of the need for, and objectives of, the rule,”

105

published in the Federal Register.

106

The RFA’s requirements are “[p]urely procedural”

and so “requires nothing more than that the agency file a [final regulatory flexibility

analysis] demonstrating a ‘reasonable, good-faith effort to carry out [RFA’s] mandate’.”

107

Still, RFA sets out “precise, specific steps the agency must take.”

108

And reviewing courts

will assess whether the agency’s analysis “addressed all of the legally mandated subject

areas.”

109

Substantial compliance is not authorized.

110

Accordingly, where an agency fails

to address one of those mandated subjects, a reviewing court will remand to the agency to

conduct the analysis required by RFA.

111

While courts deferentially review the substance of an agency’s final regulatory

flexibility analysis for the purposes of assessing compliance with RFA, the fact remains

that the agency must state the need for and objectives of the rule. That requirement also

enforces discipline on the agency, requiring it to have a clearly stated objective and

rationale for its rules. The requirement of publication in the Federal Register suggests that

there is a minimum guidance function enforced by RFA as well.

At a minimum, both the APA and the RFA require the agency to provide a

statement of the need for the rule and the rule’s objectives in light of the authorizing

statute’s aims. Preambles that do not include those statements do not satisfy their guidance

function and thus should be procedurally invalid.

2. Separately Issued Documents

Section 212 of SBREFA requires agencies to publish a “small entity compliance

guide” at the same time as the publication of the final rule (or as soon as possible

final rules and interim final rules should include preambles explaining the rule’s purpose and grounds);

Ronald M. Levin, Direct Final Rulemaking, 64 GEO. WASH. L. REV. 1, 16-18 (1995) (noting direct final rules

and interim final rules include functional equivalent of statement of basis and purpose), which could also be

viewed as having the same minimum guidance function.

105

5 U.S.C. § 604 (2012).

106

5 U.S.C. § 604(a)(6)(b) (2012).

107

United States Cellular Corp. v. FCC, 254 F.3d 78, 88 (D.C. Cir. 2001).

108

Nat’l Tel. Co-op. Ass’n v. FCC, 563 F.3d 536, 539-40 (D.C. Cir. 2009).

109

Id.

110

Aeronautical Repair Station Ass’n v. FAA, 494 F.3d 161, 178 (D.C. Cir. 2007) (remanding to FAA

inadequate FRFA but not staying effect of rule).

111

See id. at 177-78.

thereafter) and no later than when the rule becomes effective.

112

These guides shall

“explain the actions a small entity is required to take to comply with a rule,”

113

which

“shall include a description of actions needed to meet the requirements of a rule, to enable

a small entity to know when such requirements are met,”

114

and include descriptions of

procedures that “may assist a small entity in meeting” the rule’s requirements.

115

These

guides must be written “using sufficiently plain language likely to be understood by the

affected small entities.”

116

These compliance guides must be easily accessible on the web

site of the agency, and distributed to known industry contacts, such as affected

associations.

117

E. What May Not Be Included in Contemporaneous Guidance?

1. Restrictions on Guidance in the Code of Federal Regulations

Only those rules that have “general applicability and legal effect” may be codified

in the regulatory text of the Code of Federal Regulations.

118

The regulations implementing

this statutory requirement define documents have “general applicability and legal effect” to

mean “any document issued under proper authority prescribing a penalty or course of

conduct, conferring a right, privilege, authority, or immunity, or imposing an

obligation.”

119

Thus, the codified text of the CFR may not include guidance, though

agencies may include notes and examples with their codified text, or guidance in

appendices to codified text.

120

2. Preamble-Specific Restrictions

a. Restriction on Preemption Statements. Perhaps the most straightforward

and recent restriction on the guidance statements that may be made in preambles is

President Obama’s Memorandum for the Heads of Executive Departments and Agencies

112

Small Business Regulatory Enforcement Fairness Act, Pub. L. No. 104-121, § 212(a), 110 Stat. 873,

codified at 5 U.S.C. § 601 nt. (2012).

113

Id. § 212(a)(4).

114

Id. § 212(a)(4)(B)(i).

115

Id. § 212(a)(4)(B)(ii).

116

Id. § 212(a)(5). The Plain Writing Act of 2010, Pub. L. No. 111, 124 Stat. 2861, codified at 5 U.S.C. §

301 nt. (Supp. V 2011), also imposes a plain writing requirement on documents that “explain[] to the public

how to comply with a requirement the Federal Government administers or enforces.” Id. § 3.

117

Id. § 212(a)(2).

118

44 U.S.C. § 1510(a) (2006); 1 C.F.R. § 8.1 (2013) (the Code of Federal Regulations shall contain each

Federal regulation of general applicability and legal effect); see also Wilderness Soc. v. Norton, 434 F.2d

584, 596 (D.C. Cir. 2006) (the CFR may contain only documents having general applicability and legal

effect).

119

1 C.F.R. § 1.1 (2013).

120

FEDERAL REGISTER DRAFTING DOCUMENT HANDBOOK, supra note 52, at 7-9 (discussing use of

appendices to clarify but not to impose substantive obligations).

on Preemption.

121

This Memorandum directs executive agencies not to include statements

in regulatory preambles to the effect that the agency intends the regulation to preempt state

law unless preemption provisions are also codified in the regulation’s text.

122

b. Statements Without Corresponding Rules. There is some authority

supporting the principle that statements in the preamble to a final rule that do not pertain to

any aspect of the rules adopted are nullities in the sense that they are not validity issued

even as explanatory statements. This principle arose in a D.C. Circuit decision’s review of

a drafting error in an EPA rule. The D.C. Circuit was confronted with a statement in the

preamble referring to EPA’s “final rule concerning high wind events” which states that

“ambient particulate matter concentrations due to dust being raised by unusually high

winds will be treated as due to uncontrollable natural events.”

123

The final regulatory text,

however, did not make any reference to high wind events or “ambient particulate matter

concentrations,”

124

an oversight that EPA characterized as a drafting error. The court held

that in view of this error, “the high winds event section of the preamble is a legal

nullity.”

125

While it is unclear how broad this principle is, at a minimum, the principle

appear to apply to statements that refer to rules that do not exist. Such statements are

nullities in the sense not being validly issued. It would seem a reasonable extension of

this principle to apply it to statements exceed the scope of the rules adopted, for instance,

by suggesting compliance obligations that extend beyond the scope of the rules.

2. Restrictions Applicable to Preambles and Separately Issued Documents

a. Subterfuge Legislative Rules. Neither a preamble nor a separately issued

guidance document may contain a legislative rule. As a matter of blackletter law, under

APA § 553, a “legislative” rule must be subject to notice-and-comment whereas

interpretative statements and general statements of policy are not.

126

Thus, if a preamble or

guidance document includes a statement that is a legislative rule, the rule is procedurally

invalid under section 553. While the differences in legal effect and procedural

requirements for legislative and nonlegislative rules are straightforward, distinguishing

121

Preemption: Memorandum for the Heads of Executive Departments and Agencies, 74 Fed. Reg. 24,693,

24,693-94 (May 20, 2009), available at http://www.gpo.gov/fdsys/pkg/FR-2009-05-22/pdf/E9-

12250.pdf#page=1.

122

Id. at ¶ 1.

123

Natural Res. Def. Council v. EPA, 559 F.3d 561, 565 (D.C. Cir. 2009) (quoting the preamble).

124

Id.

125

Id.

126

5 U.S.C. § 553(b)(3)(A); 5 U.S.C. § 553(b)(3)(A) (2012). “Legislative” or “substantive” rules are those

that “‘grant rights, impose obligations, or produce other significant effects on private interests,’ or which

‘effect a change in existing law or policy.’” Am. Tort Reform Ass’n v. OHSA, 738 F.3d 387, 395 (D.C. Cir.

2013) (citations omitted).

between legislative and nonlegislative rules is a notoriously difficult issue.

127

Courts rely

on a collection of doctrinal factors, including the “agency’s label,”

128

the practical impact

on those covered by the rule,

129

and a legal effect test,

130

which looks to whether the rule

imposes legal rights or obligations.

131

Numerous formulations of these and other factors

are found in the courts of appeals.

132

With regard to statements in preambles challenged as legislative rules, courts must

wade into those same muddy waters. Interestingly, despite numerous challenges to

language in preambles as improper legislative rules, courts have consistently held that

statements in preambles are interpretive rules or general statements of policy, and thus

procedurally valid.

133

Because of the blurry lines of the distinction between legislative and

nonlegislative rules, it is difficult to tell whether this consistent practice is a result of the

caution exercised by agencies in their preambles to avoid any mandatory or binding

statements or simply a more relaxed judicial review of statements in preambles than in

separately issued guidance documents. Given that courts frequently invalidate separately

issued guidance documents, the trend is notable.

127

See, e.g., David L. Franklin, Legislative Rules, Nonlegislative Rules, and the Perils of the Short Cut, 120

YALE L.J. 276, 278 (2010) (suggesting there is perhaps “no more vexing conundrum in the field of

administrative law than the problem of defining a workable distinction between legislative and nonlegislative

rules.”).

128

See, e.g., Warshauer v. Solis, 577 F.3d 1330, 1337 (11th Cir. 2009) (the agency’s “characterization of the

rule is relevant”).

129

Cent. Tex. Tel. Coop., Inc. v. FCC, 402 F.3d 205, 214 (D.C. Cir. 2005) (noting that court had used a

substantial impact test); see also William Funk, A Primer on Nonlegislative Rules, 53 ADMIN. L. REV. 1321,

1325 (2001) (noting strain of cases looking to substantive impact on the regulated).

130

See, e.g., Miller v. Cal. Speedway Corp., 536 F.3d 1020, 1033 (9th Cir. 2008) (legislative rules “create

rights, impose obligations, or effect a change in the law”).

131

Troy Corp. v. Browner, 120 F.3d 277, 287 (D.C. Cir. 1997).

132

See, e.g., Am. Mining Cong. v. Mine Safety & Health Admin., 995 F.2d 1106 (D.C. Cir. 1993) (listing the

following factors: “(1) whether in the absence of the rule there would not be an adequate legislative basis for

enforcement action or other agency action to confer benefits or ensure the performance of duties, (2) whether

the agency has published the rule in the Code of Federal Regulations, (3) whether the agency has explicitly

invoked its general legislative authority, or (4) whether the rule effectively amends a prior legislative rule.”).

133

See, e.g., Troy Corp. v. Browner, 120 F.3d 277, 287 (D.C. Cir. 1997) (EPA’s premabular statement

“merely informed the public that the agency would exercise its discretion by considering exposure only for

low toxicity chemicals” and thus was a general policy statement); Fertilizer Institute v. EPA, 935 F.2d 1303,

1308-09 (D.C. Cir. 1991) (holding that EPA’s rule in its preamble was interpretive because it represents “the

agency’s attempt to interpret the meaning of a statutory provision”); Barrick Goldstrike Mines, Inc. v.

Whitman, 260 F. Supp. 2d 28, 38 (D.D.C. 2003) (“In this case, the interpretation [contained within the

preamble] . . . is within the scope of the regulation”); Bd. of Trustees of Knox Cnty. Hosp. v. Shalala, 959 F.

Supp. 1026, 1031 (S. D. Ind. 1997) (“Rather than create or destroy substantive rights, the [preambular] policy

simply clarifies what the Secretary believes the regulation means and explains how the Agency will apply

it.”); OSG Bulk Ships v. United States, 921 F. Supp. 812, 824 n.11 (D.D.C. 1996) (explaining that an

interpretation within the preamble does not transform the preamble into a legislative rule); Comité de Apoyo a

los Trabajadores Agrícolas v. Solis, No. 09-240, 2010 U.S. Dist. LEXIS 90155 at 47 (E.D. Pa. Aug. 30,

2010) (holding that the preambular language was an interpretation because the language was “very closely

tied” to the definition included in the regulation and “expressly purports to be an interpretation of that

definition”).

b. Consistency with Regulations and Statutes. Most obviously, statements

in preambles (as well as separately issued documents) must be consistent with the

regulations they explain and the statutes they implement. Both of these points are

illustrated in Cuomo v. Clearing House Association, LLC.

134

There, the Court held that the

interpretation of a regulation in the Comptroller of the Currency’s statement of basis and

purpose was inconsistent with the regulation’s text as well as the underlying statute, and

therefore invalid. “This passage in the statement of basis and purpose,” the Court

commented, “resting upon neither the text of the regulation nor the text of the statute,

attempts to do what Congress declined to do: exempt national banks from all state banking

laws, or at least state enforcement of those laws.”

135

F. Reviewability of Contemporaneous Guidance

Contemporaneous guidance is reviewable in court if it constitutes “final agency

action”

136

and satisfies the requirements of ripeness.

137

Statements in regulatory text

presumably would not face distinctive reviewability issues. Likewise, the reviewability of

separately issued guidance is solely a matter of application of general principles of finality

and ripeness, for which there are existing treatments.

138

But what about guidance provided

in preambles? Is preamble guidance reviewable?

The short answer is that guidance in preambles has been found to be both final

and ripe, and thus subject to review. Perhaps the most prominent example of a decision

concluding that language in a preamble is reviewable is the Supreme Court’s decision in

Whitman v. American Trucking Associations.

139

While the statements at issue concerned

the agency’s interpretation of a statute, not its own regulations, the decision reveals clearly

that statements in regulatory preambles, just like other forms of guidance, may be

reviewable if they are final and ripe.

140

After soliciting comment on an interim

134

557 U.S. 519, 129 S. Ct. 2710 (2009).

135

Id. at 2720; see also Home Concrete & Supply, LLC v. United States, 634 F.3d 249, 256–57 (4th Cir.

2011) (rejecting the IRS’s interpretation contained in the preamble to a regulation because it was “contrary to

the clearly and unambiguously expressed intent of Congress and must fail”); Barrick, 260 F. Supp. 2d at 36

(“Because the preamble to the 1988 rulemaking is inconsistent with the plain language of the regulation, see

Auer, 519 U.S. at 461, it is invalid. Accordingly, subject to the concentrations of toxic chemicals it contains,

Barrick’s waste rock may be eligible for the de minimis exemption.”).

136

5 U.S.C. § 704 (providing that final agency action is reviewable).

137

There are, of course, elements to the availability of review, including standing, but finality and ripeness

are the post germane to assessing reviewability of contemporaneous guidance.

138

See, e.g., Lubbers, supra note 30, at 398-402 (discussing whether guidance is “final” agency action);

Mendelson, supra note 2, at 421-24 (identifying heightened obstacles for regulatory beneficiaries to obtain

review of guidance documents).

139

531 U.S. 457 (2001).

140

See id. at 478.

implementation policy for national ambient air quality standards (NAAQS) under the

Clean Air Act, the EPA published an explanatory preamble to its final ozone NAAQS,

including a sectioned entitled “Final decision on preliminary standard.” In that section of

the preamble, the EPA stated that it had reconsidered its proposed interpretation and “now

believes that the Act should be interpreted such that the provisions of subpart 2 continue to

apply” to certain areas of the country that fall below ambient air quality standards. “As a

consequence,” the preamble stated “the provisions of subpart 2 . . . will continue to apply

as a matter of law for so long as an area is not attaining [requisite air quality standard].”

141

In Whitman, the Supreme Court had no difficulty concluding that these statements

were reviewable. As to finality, the Court concluded that these statements marked “the

consummation of the agency’s decisionmaking process,” a decision bolstered by the fact

that in subsequent rulemakings, the EPA had denied requests to reconsider the issue,

explaining “to disappointed commentators that it’s earlier decision was conclusive.”

142

to ripeness, under the standard of Abbott Laboratories v. Gardner looking to the “fitness of

the issues for judicial decision” and the “hardship to the parties of withholding court

consideration,”

143

the Court concluded that the issue of statutory interpretation presented

and the hardship on states that would be imposed justified review under the Clean Air

Act’s special authorization for preenforcement review,

144

and declined to opine on whether

the statement would be ripe in a case brought under APA § 704.

145

The standard for final agency action under APA § 704 is well established: “A final

agency action is one that marks the consummation of the agency’s decisionmaking process

and that establishes rights and obligations or creates binding legal consequences.”

146

Applying this standard to statements in preambles, the D.C. Circuit has commented that

“[w]hile preamble statements may in some unique cases constitute binding, final agency

action susceptible to judicial review, . . . that is not the norm.”

147

Still, the D.C. Circuit has

141

62 Fed. Reg. 38873 (1997), discussed in Whitman, 531 U.S. at 478.

142

531 U.S. at 478-79.

143

Id. at 479 (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967)).

144

531 U.S. at 479.

145

Id. at 479.

146

Natural Res. Def. Council v. EPA, 559 F.3d 561, 564 (D.C. Cir. 2009) (citing Bennett v. Spear, 520 U.S.

154, 177-78 (1997)).

147

Id. (citing Kennecott Utah Copper Corp. v. Department of Interior, 88 F.3d 1191, 1222-23 (D.C. Cir.

1996); see also Natural Res. Def. Council v. EPA, 706 F.3d 428, 432 (D.C. Cir. 2013) (affirming same). For

decisions denying review of statements in preambles on finality or ripeness grounds, see, e.g., Nat’l Envtl.

Dev. Ass’ns. Clean Air Project v. EPA, 686 F.3d 803, 808-09 (D.C. Cir. 2012) (preamble not final); Natural

Res. Def. Council v. EPA, 559 F.3d 561, 565 (D.C. Cir. 2009) (preamble not ripe); Clean Air

Implementation Project v. EPA, 150 F.3d 1200, 1208 (D.C. Cir. 1998) (preamble not final nor ripe);

Kennecott Utah Copper Corp., 88 F.3d at 1222-23 (extensive discussion of preamble not being final nor

ripe); Florida Power & Light Co. v. EPA, 145 F.3d 1414, 1420 (D.C. Cir. 1998) (preamble neither final nor

ripe).

held that statements in preambles are final and ripe for review on numerous occasions,

including with regard to statements of regulatory interpretation.

148

A critical factor in

making this determination is the language of the preamble. On the one hand, language that

is not definitive (such as “may,” “might” and “could”),

149

hypothetical or non-specific,

150

conjectural,

151

or characterizes the views as preliminary,

152

or promises future binding

action,

153

all counsel against reviewability. On the other hand, language which is clear, not

conjectural, and not qualified, makes it “fair to infer that [the agency] intended the

statements to create binding legal consequences.”

154

Thus, the appearance of the statement within a preamble does not bar review.

155

Rather, the reviewability of guidance within a preamble, like the reviewability of guidance

generally, depends upon the finality and ripeness analysis, which for these purposes often

“converge.”

156

Ultimately, then, it is the content of the guidance, not its regulatory

location, that determines its reviewability.

G. Standard of Judicial Review

For many years, there was little movement in the judicial doctrine first associated

with Bowles v. Seminole Rock & Sand Co.

157

and now more consistently identified with

Auer v. Robbins

158

that an agency’s construction of its own regulation is “controlling

unless ‘plainly erroneous or inconsistent with the regulation.’

”

159

While Auer still

provides the general standard applicable to an agency’s interpretation of its regulations—

regardless of the document type in which those interpretations appear—the Supreme Court

has carved out an exception for post hoc interpretive positions, and several Justices have

indicated an interest in revisiting the merits of the doctrine altogether. The fact that the

148

See, e.g., Natural Res. Def. Council v. EPA, 571 F.3d 1245, 1252 n.2 (D.C. Cir. 2009) (holding that

statements in EPA’s preamble final because they represented a consummation of the agency’s process, have

binding consequences); La. Envtl. Action Network v. EPA, 172F.3d 65, 69 (D.C. Cir. 1999) (holding

language in preamble final under RCRA, 42 U.S.C. § 6976(a)(1)); Chem. Waste Mgmt. v. EPA, 869 F.2d

1526, 1533 (D.C. Cir. 1989) (holding that regulatory interpretation in preamble was final); see also Cent. &

Sw. Servs. v. EPA, 220 F.3d 683, 689 n.2 (5th Cir. 2000) (concluding EPA preamble interpreting a statute

was final action and ripe); Select Specialty Hosp.-Akron, LLC v. Sebelius, 820 F. Supp. 2d 13, 26 (D.D.C.

2011) (preamble binding and reviewable).

149

Kennecott Utah Copper, 88 F.3d at 1222.

150

Id. at 1223.

151

Nat’l Envtl. Dev., 686 F.3d at 808.

152

Natural Res. Def. Council, 706 F.3d at 433.

153

Am. Petroleum Inst. v. EPA, 684 F.3d 1342, 1354 (D.C. Cir. 2012).

154

Natural. Res. Def. Council, 571 F.3d at 1252 n.2.

155

Kennecott Utah Copper, 88 F.3d at 1223.

156

Id.

157

325 U.S. 410 (1945).

158

519 U.S. 452 (1997); see supra note 7 (discussing naming conventions for this doctrine).

159

Auer, 519 U.S. at 461.

recent limitations on Auer have all been directed to post hoc guidance suggests that

contemporaneous guidance—whether provided in a preamble, appendix, or separately

issued document—has a stronger footing for maintaining Auer deference.

While there has been a longstanding critique of Seminole Rock/Auer deference,

160

current interest in the doctrine comes from the disjunction between the scope of application

of Auer deference and Chevron deference created by the Supreme Court’s decision in

Mead. In Mead, the Court constricted the application of Chevron deference to statutes that

grant lawmaking authority to the agency and to agency actions which exercise that

authority.

161

Under Mead, notice-and-comment rulemaking is presumptively eligible for

Chevron deference, whereas guidance documents are not.

162

Mead thus denies deference

to an agency’s statutory interpretation that appears in a guidance document or litigation

brief, whereas a guidance document or litigation brief interpreting an agency regulation

would still qualify for deference under Auer. This disjuncture has prompted a call for

constricting the scope of application of Auer so that it would apply only to those

documents to which Chevron would apply under Mead, that is, those produced by

relatively formal processes.

163

Despite the logic that an agency’s regulatory interpretation issued informally

should not receive deference if its statutory interpretation would not, the Supreme Court

has generally accorded Seminole Rock/Auer deference to agency interpretations advanced

in litigation briefs. As recently as 2011, for instance, the Court concluded twice that

agency amicus briefs qualify for Seminole Rock/Auer deference, rejecting the argument

that under Mead and Christensen they should not.

164

But, in 2012, in Christopher v.

SmithKline Beecham Corp.,

165

the Court declined to grant Seminole Rock/Auer deference

to an agency’s position taken in a litigation brief based in part on the concern that doing so

160

John F. Manning, Constitutional Structure and Judicial Deference to Agency Interpretations of Agency

Rules, 96 COLUM. L. REV. 612, 618 (1996) (challenging Seminole Rock deference and proposing a model of

independent judicial evaluation of regulations that would place greater reliance on agencies’ explanatory

statements)

161

United States v. Mead Corp., 533 U.S. 218, 226-27 (2001).

162

Id. at 229.

163

Thomas W. Merrill & Kristin E. Hickman, Chevron’s Domain, 89 GEO. L.J. 833, 900 (2001) (“Seminole

Rock deference should at a minimum be subject to the same limitations that apply to the scope of Chevron

deference.”); Matthew C. Stephenson & Miri Pogoriler, Seminole Rock’s Domain, 79 GEO. WASH. L. REV.

1449, 1484-96 (2011) (arguing that Mead’s logic for constraining Chevron’s scope of application extends to

Seminole Rock).

164

See Pliva, Inc. v. Mensing, 131 S. Ct. 2567, 2575 n.3 (2011) (relying on brief of United States); Chase

Bank USA, N.A. v. McCoy, 131 S. Ct. 871, 883–84 (2011) (rejecting argument that agency amicus brief was

not entitled to deference under Auer, and according deference to the interpretation contained in the brief).

165

132 S. Ct. 2156 (2012).

would undermine fair notice of the regulation’s requirements.

166

The Court reasoned that

reliance on Auer in these circumstances would “frustrat[e] the notice and predictability

purposes of rulemaking,” quoting Justice Scalia’s concurrence in Talk America, Inc. v.

Michigan Bell Telephone Co.,

167

in which Justice Scalia first declared his interest in

reconsidering Auer. The Court’s explanation suggested that it viewed the distinction

between guidance issued ex ante and post hoc as meaningful, at least with regard to

interpretations announced in enforcement proceedings:

It is one thing to expect regulated parties to conform their conduct to an

agency’s interpretations once the agency announces them; it is quite another

to require regulated parties to divine the agency’s interpretations in advance

or else be held liable when the agency announces its interpretations for the

first time in an enforcement proceeding and demands deference.

168

In March 2013, three Supreme Court Justices publically indicated an interest in

reconsidering Auer in Decker v. Northwest Environmental Defense Center.

169

There, Chief

Justice Roberts and Justice Alito announced they would be receptive to reconsideration of

Auer deference in an appropriate case,

170

and Justice Scalia filed an opinion concurring in

part and dissenting in part arguing for overruling Auer deference.

171

But even if the Court were to revisit the doctrine, based on the reasoning in

Christopher v. SmithKline Beecham Corp., the Court appears to view guidance rendered

contemporaneously with the issuance of the rule (or even guidance offered prior to

enforcement) as standing on a different footing than post hoc interpretations produced in

litigation. If this is right, then contemporaneous guidance—especially that in a preamble,

regulatory text or appendix—stands in the strongest stead for deference under Auer: It

furnishes the agency’s authoritative interpretation at the time the rule become effective,

and thus allows parties as much fair notice as they receive about the rule itself.

It is worth noting that an assumption underlying this discussion is that Auer, not

Chevron, provides the currently governing standard of review for an agency’s statements

in its preamble to a final rule about the purpose and effect of its regulations. At least one

166

See id. at 2166–68 (concluding that “general rule” of granting Auer deference to interpretations in

litigation briefs did not apply in these circumstances of the case in view of fair notice concerns).

167

131 S. Ct. 2245, 2266 (2011).

168

Id.

169

133 S. Ct. 1326 (2013).

170

Id. at 1338 (Roberts, C.J., and Alito, J., concurring) (noting that it “may be appropriate to reconsider”

Seminole Rock/Auer in another case); id. at 1339, 1442 (Scalia, J., concurring in part and dissenting in part)

(arguing that the Court to overturn Seminole Rock/Auer).

171

Id.

court of appeals, however, has concluded that a statement’s about the application of its

regulations in a preamble to a final rule are entitled to receive Chevron deference under

Mead.

172

If statements of this sort in a preamble receive Chevron deference just as

statements in regulatory text does, there would be little need for courts to invoke Auer as a

standard of review for statements about the meaning of regulations in preambles because

those statements would be reviewable directly under Chevron.

H. Summary Table

Table 1 (below) provides a summary of the legal regime applicable to

contemporary guidance addressed thus far. Readers may draw different inferences from

this compilation, but one striking feature is the extent of the overlap in the requirements

applicable to contemporaneous guidance, whether it appears in a preamble, regulatory text,

or separately issued document. In Table 1, cells on each row that are identical are

highlighted; but even where the requirements are not identical, in many cases there is

significant practical overlap.

To illustrate the scope of overlap in requirements, use Table 1 to compare

economically significant guidance issued in a preamble (column 1) and in a separately

issued document (column 3). The requirements of issuance are the same (row 1); the

requirements for revision are the same (row 2); they are both subject to OIRA review (row

3); and the same standards of judicial review (rows 6 & 7); the only difference is what

content must be included or excluded.

Table 1: Summary of Legal Regime Applicable to Contemporaneous Guidance

Guidance in Preamble

Guidance Published in

the Code of Federal

Regulations (in notes,

examples, or

appendices)

Guidance Separately

Issued

1: Process Requirements

for Issuance

For covered agencies, if

“significant,” or

“economically

significant” under OMB’s

Good Guidance Bulletin,

then it must comply with

the GGP, including

notice and comment for

Notice-and-comment

required

For covered agencies, if

“significant,” or

“economically

significant” under OMB’s

Good Guidance Bulletin,

then it must comply with

the GGP, including

notice and comment for

172

See Tibble v. Edison Int’l, 711 F.3d 1061, 1071 (9th Cir. 2013), amended by 729 F.3d 1110 (9th Cir.

2013) (“As for Mead’s second consideration [that the agency have exercised its authority to bind with the

force of law], we do not view the fact that the interpretation appears to in a final rule’s preamble as

disqualifying it from Chevron deference.”).

economically significant

guidance.

economically significant

guidance.

2: Process Requirements

for Revision

If “definitive,” then

revision must proceed

through notice-and-

comment under Alaska

Prof. Hunters.

Notice-and-comment

required

If “definitive,” then

revision must proceed

through notice-and-

comment under Alaska

Prof. Hunters.

3: Subject to OIRA

Regulatory Review?

Yes, for covered agencies

for all significant

regulatory actions.

Yes, for covered

agencies for all

significant regulatory

actions.

Yes, for covered agencies

for all significant

regulatory actions.

4: What must be

included?

i. Under the APA, a

statement of the purpose

of the rule in light of

statutory objectives, and

ii. Under RFA, a

statement of the need for

the rule and its

objectives.

No requirements other

than those with a

statutory basis.

Agency must publish

compliance guide for

rules with significant

effects on small entities

under SBREFA.

5: What may not be

included?

i. Statements preempting

state law without

regulatory text that

preempts.

ii. Interpretations without

corresponding regulatory

text.

iii. Statements that are

binding legislative rules

iv. Statements that

contradict the regulatory

text or statute.

The CFR text may

contain only statements

of general applicability

and legal effect, as

defined by 1 CFR 1.1.

i. Statements that are

binding legislative rules,

or including mandatory

language

ii. Statements that

contradict the regulatory

text or statute.

6: Is it reviewable in

court?

Yes, if “final agency

action” and ripe for

review.

Yes, pre-enforcement

review routinely

available.

Yes, if “final agency

action” and ripe for

review.

7: What standard of

review applies?

Auer deference (with a

stronger basis than post

hoc guidance)

Auer deference (with a

stronger basis than post

hoc guidance)

Auer deference (with a

stronger basis than post

hoc guidance)

IV. Agency Practices for Providing Contemporaneous Guidance

Given the significant overlap in the legal requirements governing contemporaneous

and guidance, agencies will frequently have significant discretion as to whether to include

the same statement in a preamble, regulatory text (or appendix), or in a guidance document

issued alongside the rule. How do agencies make this choice? More specifically, what

forms of contemporaneous guidance do agencies actually provide? This Part provides a

description and illustrative compilation of the ways in which agencies use each of these

forms of contemporaneous guidance. It first introduces, in Table 2, a menu of agency

practices with illustrative examples. These categories are relatively straightforward; the

text following Table 2 provides a narrative description of examples that fall within these

categories.

The scope of federal rulemaking is vast, and it is important to note that this Report

makes no claim to be a completely comprehensive identification of the ways in which

agencies issue contemporary guidance. Rather the Report identifies the most significant

uses of contemporaneous guidance, isolating a menu of types of contemporaneous

guidance with illustrative examples. Such a menu is sufficient to provide a means for

agencies to consider their own practices in relation to those of other agencies, and also

identify some problems and outliers in agency practices. The Report also makes no

attempt to quantitatively assess the frequency with which agencies use particular forms of

contemporaneous guidance.

Table 2: Menu of Agency Contemporary Guidance Practices

Type

Location

Format

Discussion

Guidance in

Preamble

Background

Discussion

Primarily Narrative Statement

Some agencies provide long

narrative discussions

without structuring them in

accordance with the rule’s

structure.

Includes Section-by-Section Analysis

In addition to general

discussion, some preambles

include analysis that

matches the structure of

rule.

Relying Primarily on Grounds Stated

in NPRM

Some preambles incorporate

portions of the discussion in

the NPRM or other prior

notices.

Purpose Stated in View of Statutory

Objectives

Most preambles provide an

independent assessment of

the rule’s purposes in

relation to statutory

objectives

Purpose Statement Solely Mirroring

Statutory Language (or Otherwise

Inadequate)

Some agencies give this

statement short shift, stating

the purpose solely by

Type

Location

Format

Discussion

parroting statutory language.

Response to

Comments

General Responses

Some preambles provide

general narrative discussions

of comments without much

organizational structure.

Section-by-Section Analysis

Some preambles structure

the response to comments in

section-by-section.

Question-and-Answer

Some structure preambles

response to comment

questions in a Q & A

format.

Detailed Examples

Some preambles provide

detailed examples to

illustrate how the rule

applies.

Preamble as Rule

Some preambles treat the

preamble and regulatory text

interchangeably.

Guidance included

in the CFR

Regulatory Text

Notes and Example Applications

Some regulatory text

includes examples to guide

application.

Appendix

Official Commentary in Appendix

Some appendices include an

official interpretive

commentary

Examples in Appendix

Some appendices include

example applications.

Question-and-Answer Format in

Appendix

Some appendices are

structure with Q & A

Technical Guidance in Appendix

Some appendices include

technical guidance.

Separately Issued,

Contemporaneous

Guidance

Compliance Guides,

FAQs, and Other

Documents

B. Preambles as a Vehicle for Guidance

Agencies have long treated the preambles to their regulations, which “statements of

their basis and purpose,” as a means of providing guidance about the meaning and

application of their rules. Agencies organize their preambles—and the guidance they

provide—in different formats, many of which are familiar to agency lawyers and

practitioners of administrative and regulatory law.

1. Background Sections

The preamble to federal rules typically appears under the Supplemental Information

heading in the Federal Register.

173

Most agencies provide extensive narrative commentary

on the rule, its procedural history, factual and legal grounds and aims in subsection of the

Supplement Information entitled Background Discussion.

174

This section typically

includes content that would constitute guidance, and agencies organize it in many different

ways, frequently using one or more of the following formats.

a. Preamble Composed Primarily of Narrative Statement. One common

format of the Background Discussion section is a narrative statement. A recent preamble

produced by the Occupational Health and Safety Administration (OSHA) for a rule

adopted to conform to the United Nations’ Globally Harmonized System of Classification

and Labelling of Chemicals (GHS) reflects this structure.

175

The preamble consists of

general narrative in sections entitled, for instance, “Events Leading to the Revised Hazard

Communication Standard” and “Overview of the Final Rule and Alternatives

Considered.”

176

In these sections, OSHA generally explained the impact and motivation for

the rule, but did not organize its discussion in accordance with the particular sections of the

rule.

177

b. Section-By-Section Format. Agencies also organize background

discussions of preambles in a section-by-section format. While agencies also use the

section-by-section format to structure a response to comments, as discussed below, in the

background discussion, the section-by-section analysis is not explicitly responding to

comments.

173

See FEDERAL REGISTER DOCUMENT DRAFTING HANDBOOK, supra note 104, at 2-8 (directing that

extended discussion of the rule belongs in the Supplemental Information section).

174

See id. at 2-17.

175

Hazard Communication, 77 Fed. Reg. 17,574, 17,574 (March 26, 2012) (to be codified at 29 C.F.R. pts.

1910, 1915, 1926).

176

Id. at 17,577, 17,579, 17,693.

177

Id.

The Consumer Protection Financial Bureau (CFPB) adopted this approach in a rule

amending Regulation E, which implements the Electronic Fund Transfer Act.

178

In the

preamble, the agency provides a section-by-section analysis which is subdivided

numerically and by topic with subsections such as “Section 1005.2 Definitions” and

“Section 1005.3 Coverage.”

179

In the Coverage subsection, for instance, the agency

explains changes to the regulation without engaging specific comments: “Currently, §

1005.3(a) states that Regulation E generally applies to financial institutions. Section

1005.3(a) is revised to state that the requirements of subpart B apply to remittance transfer

providers. The revision reflects the fact that the scope of the Dodd-Frank Act’s remittance

transfer provisions is not limited to financial institutions.”

180

c. Agency Reliance on Grounds Stated in NPRM. Agencies vary as to how

much they rely upon discussions in the NPRM (or other prior notices) to provide a

statement of the rule’s basis and purpose or treat the preamble to the final rule as a

freestanding document that provides a comprehensive statement of the rule’s basis and

purpose. Agencies frequently refer the readers to explanations, proposals, or studies

published in the NPRM. Agencies occasionally specifically incorporate particular aspects

of the legal reasoning or analysis provided in the NPRM.

181

Agencies also rely upon

reasoning and discussions in the NPRM for a more comprehensive summary of the rule’s

basis, purposes and effects.

182

In contrast, agencies also frequently treat the preamble as a

relatively comprehensive and stand-alone statement of the grounds of the rule, referring to

the NPRM only as necessary to explain how the agency’s reasoning has shifted, how the

agency has responded to comments, or to appreciate the procedural history of the rule.

178

Electronic Fund Transfers (Regulation E), 77 Fed. Reg. 6,194, 6,194 (Feb. 7, 2012) (to be codified at 12

C.F.R. pt. 1005).

179

Id. at 6,204–6,205.

180

Id. at 6,205.

181

See, e.g., Eligible Obligations, Charitable Contributions, Nonmember Deposits, Fixed Assets,

Investments, Fidelity Bonds, Incidental Powers, Member Business Loans, and Regulatory Flexibility

Program, 77 Fed. Reg. 31981 (May 31, 2012) (to be codified at 12 C.F.R. pts. 701, 703, 713, 721, 723, 742)

(“For the reasons discussed below the Board is adopting the amendments almost exactly as proposed. As

such, the Board does not restate the legal analysis it presented in the NPRM’s preamble and incorporates it

by reference here in this rulemaking.”); Crewmember Identification Documents, 74 Fed. Reg. 19135, 19139

(Apr. 28, 2000) (to be codified at 33 C.F.R. pt. 1360) (“We received no public comments that would alter our

assessment of impacts in the NPRM. We have adopted the assessment in the NPRM as final.”).

182

See, e.g., Medicare Program: Review of National Coverage Determinations and Local Coverage

Determinations, 68 Fed. Reg. 63692 (Nov. 7, 2003) (to be codified at 42 C.F.R. pts 400, 405, 426); id. at

63693 (“For further discussion of the claims appeal process please consult the proposed rule.”); id. (“For the

full discussion of NCDs please consult our proposed rule at 67 FR 54535 published on August 22, 2002.”);

id. (“The provisions described in bullets two through four above constitute coverage provisions. For further

information on LMRPs please consult our proposed rule at 67 FR 54535.); Practices and Procedures, 77

Fed. Reg. 62,350, 62,350 (Oct. 12, 2012) (to be codified at 5 C.F.R. pts. 1200, 1201, 1203, 1208,

1209) (“[r]eaders desiring a more detailed summary of the amendments proposed by the MSPB

should consult the proposed rule.”).

d. Purpose Statements. Agencies typically provide a statement of the

purpose of the regulation in the Summary and/or in the Supplemental Information sections

of their preambles to their substantive rules, that is, those that have independent legal

effect. These statements vary widely in terms of their level of specificity and clarity.

Many statements clearly indicate the purpose of the regulation in light of the statute’s

objectives, the agency’s powers, and its past regulatory history.

183

Rather than providing an independent assessment of the purpose of the rule in light

of the statute, some preambles state the purpose of their regulations in terms that largely

mirror statutory language. For instance, a Department of Labor rule establishing the

uniform national threshold for the employment rate for veterans included a purpose

statement that largely mirrored the statutory language requiring the agency to promulgate

the rule.

184

In the preamble, the Department of Labor stated “[w]e undertook this

Rulemaking in accordance with 38 U.S.C. 4102A(c)(3)(B) (as enacted by the Jobs for

Veterans Act) which requires the Department to establish that threshold rate by

regulation.”

185

Then the agency wrote “Section 4(a)(1) of the JVA amended 38 U.S.C.

4102A to require that the Secretary of Labor ‘establish, and update as appropriate, a

comprehensive performance accountability system . . . and carry out annual performance

reviews of veterans employment, training, and placement services provided through

employment service delivery systems, including through Disabled Veterans’ Outreach

Program specialists and through Local Veterans’ Employment Representatives in States

receiving grants, contracts, or awards under this chapter.”

186

After the agency recited what it was required to do by statute, the agency turned to

discussing details of the rule, such as its definition of critical terms, but did not provide an

independent statement reflecting the agency’s choices about how best to implement the

statutory requirement.

187

2. Response to Comments

a. General Responses. Agencies frequently provide guidance about the

meaning and application of their regulations in a dialogue with commenters in the

preamble. They do this in different formats. Sometimes they do this in the course of a

183

Exemption of Work Activity as a Basis for a Continuing Disability Review, 71 Fed. Reg. 66,840, 66,840

(Nov. 17, 2006) (to be codified at 20 C.F.R. pts. 404, 416).

184

Uniform National Threshold Entered Employment Rate for Veterans, 78 Fed. Reg. 15,283, 15,283 (Mar.

11, 2013) (to be codified at 20 C.F.R. pt. 1001).

185

Id. at 15,284.

186

Id.

187

Id.

general response to comments. For instance, in a Department of Veterans Affairs (DVA)

rule implementing the DVA’s medical foster home program, a commenter asked whether

the spouse of a married veteran could move into the medical foster home with the veteran

or if the rule forced couples to live apart.

188

The DVA answered that “[n]othing in the

regulation would preclude a spouse of a veteran from living in the same medical foster

home as the veteran. Such an arrangement would be a matter of agreement between the

spouse of the veteran and the medical foster home caregiver.”

189

In this preamble, the DVA

provided this and other guidance in response to comments without topical headings.

Agencies, however, often organize their general responses to comments by topic.

For example, in a Department of Treasury and U.S. Customs and Border Protection (CBP)

rule defining “members of a family” for purposes of filing a customs family declaration,

the agencies responded to commenters in topical sections.

190

In the “Definition of

Resident” section, a commenter posed a question about whether the definition of “resident”

as used by CBP in this context was the same as “permanent resident” as used in the

immigration law context.

191

The agencies responded that “[t]he term ‘resident’ for

purposes of this regulation is not the same as ‘lawful permanent resident’ in immigration

law. For customs purposes, pursuant to 19 CFR 148.2, persons arriving from foreign

countries are divided into two categories: (1) Residents of the United States returning from

abroad and (2) all other persons (i.e., visitors).”

192

b. Section-by-Section Analysis. Agencies also provide guidance in the

course of responding to comments through a section-by-section analysis. The Equal

Employment Opportunity Commission (EEOC) used this format in a rule implementing

Title II of the Genetic Information Nondiscrimination Act.

193

The EEOC offered guidance

pertaining to numerical sections of the regulation, including “Section 1635.1 Purpose”

followed by “Section 1635.2 Definitions—General.”

194

In “Section 1635.3(a) Family

Member,” the EEOC confronted a commenter’s suggestion that medical information

obtained from one employee should not be considered family medical history of a family

188

Medical Foster Homes, 77 Fed. Reg. 5,186, 5,187 (Feb. 2, 2012) (to be codified at 38 C.F.R. pt. 17); see

also State Official Notification Rule, 77 Fed. Reg. 39112 (June 29, 2012) (to be codified at 12 C.F.R. pt.

1082) (the following statement was the closest to a statement of purpose in the summary of the final rule: “In

drafting the Final Rule, the Bureau endeavored to create a process that would provide both the Bureau and,

where applicable, the prudential regulators with timely notice of pending actions and account for the

investigation and litigation needs of state regulators and law enforcement agencies.”).

189

Id.

190

Members of a Family for Purpose of Filing CBP Family Declaration, 78 Fed. Reg. 76,529, 76,529 (Dec.

18, 2013) (to be codified at 19 C.F.R. pt. 148).

191

Id. at 76,530.

192

Id.

193

Regulations Under the Genetic Information Nondiscrimination Act of 2008, 75 Fed. Reg. 68,912, 68,912

(Nov. 9, 2010) (to be codified at 29 C.F.R. pt. 1635).

194

Id. at 68,913.

member who also works for the same employer.

195

The EEOC rejected this suggestion,

writing, “[w]e do not think Congress could have intended that an employee not be

protected from the discriminatory use or the disclosure of his or her genetic information

just because the employer obtained it from a family member who was also an

employee.”

196

The Small Business Administration (SBA) also utilized the section-by-section

analysis format in a rule defining a new category of small business investment companies

(SBICs).

197

Under the heading of “Section 107.50—Definitions,” the SBA responded to a

number of commenters that suggested changing the proposed definition of “Early Stage

SBIC,” by writing “SBA . . . believes the commenters’ contrasting points of view

illustrate the benefits of maintaining the flexibility that the proposed definition provided.

SBA expects that some management teams will focus exclusively on early stage

companies, while others will opt for a mixed portfolio.”

198

This rule also includes a

“General Comments” section where the SBA responds to comments that impact broad

issues in the rule.

199

Agencies frequently combine two formats in their rules as the SBA

did here.

c. Question-And-Format. Another method agencies use to respond to

comments is the question and answer format. The Railroad Retirement Board (RRB) used

this approach in a rule that removes a listing of impairments from its regulations and

explains how the RRB will determine disability.

200

The preamble is divided into sections

including, “What Programs Will the Final Rule Affect?” and “How Is Disability

Defined?”

201

In the section, “How Does This Final Rule Address That Problem?”, the RRB

responds to commenters by stating “[t]he Board has reviewed the comments and the

amendments to section 220.178(c)(1) and agrees that the second sentence could be

confusing. We have modified that sentence to make it clear that in a continuing disability

review, the claimant's current severity will be compared to the standard that was used to

make the original, or ‘comparison point decision.’”

202

Unlike the SBA rule, question and

answer format is the only format used in this preamble.

195

Id. at 68,915.

196

Id. at 68,916.

197

Small Business Investment Companies—Early Stage SBICs, 77 Fed. Reg. 25,042, 25,042 (April 27,

2012) (to be codified at 13 C.F.R. pt. 107).

198

Id. at 25050.

199

Id. at 25043.

200

Removal of Listing of Impairments and Related Amendments, 74 Fed. Reg. 63,598, 63,598 (Dec. 4, 2009)

(to be codified at 20 C.F.R. pt. 220).

201

Id.

202

Id. at 63,599–63,600.

A Social Security Administration (SSA) rule revising medical criteria used for

evaluating digestive disorders utilized a combination of the question and answer format,

section-by-section analysis, and general response to comments format.

203

The preamble

begins with sections entitled, “Why are we revising the listings for digestive disorders?”

and “What general changes are we making that affect both the adult and childhood listings

for digestive disorders?”

204

Then, within these larger sections, SSA includes subsections

with questions associated with particular regulatory text sections, such as “5.00D—How

do we evaluate chronic liver disease?”

205

Next, SSA includes a “Public Comments” section

that is a general response to comments.

206

Guidance appears throughout these different

formats. For instance, in the “Public Comments” section, one commenter suggested that all

individuals who require feeding through intravenous or gastrostomy tubes should be

considered not able to work under the rule, but the SSA responded that “we do not think it

appropriate to presume disability in all individuals who need such treatment; we must

evaluate most situations on a case-by-case basis.”

207

d. Detailed Examples. A fourth method that agencies use to provide

guidance in preambles while responding to comments is through the use of detailed

examples. These can be incorporated within any of the other three formats discussed

above. The Department of Education included detailed examples in a rule amending the

Direct Loan Program.

208

The agency wrote “[t]he following two examples illustrate the

operation of the final regulations” and then “Example 1: Borrower A and Borrower B are

both enrolled half-time and both enrolled in the fall term only. Borrower A receives a

Direct Subsidized Loan in the amount of the annual loan limit and Borrower B receives a

loan for less than the annual loan limit.”

209

Following this introduction to the example, the

Department of Education included a chart and a few paragraphs explaining how the

hypothetical borrowers would be impacted by the regulation.

210

The Centers for Medicare and Medicaid Services (CMS) also used detailed

examples in the preamble to a rule establishing guidelines for Accountable Care

Organizations (ACOs).

211

For instance, commenters expressed confusion over a proposed

203

Revised Medical Criteria for Evaluating Digestive Disorders, 72 Fed. Reg. 59,398, 59,398 (Oct. 19, 2007)

(to be codified at 20 C.F.R. pts. 404, 416).

204

Id.

205

Id at 59,399.

206

Id. at 59,407.

207

Id. at 59,409.

208

William H. Ford Federal Direct Loan Program, 79 Fed. Reg. 3,108, 3,108 (Jan. 17, 2014) (to be codified

at 34 C.F.R. pt. 685).

209

Id. at 3,114 – 3,115.

210

Id. at 3,115.

211

Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg.

67,802, 67,802 (Nov. 2, 2011) (to be codified at 42 C.F.R. pt. 425).

requirement that the governing bodies of ACOs at least 75% controlled by Medicare-

enrolled entities. CMS responded with an example: “For example, if a hospital, two

physician groups, and a health plan formed an ACO, the hospital and two physician groups

must control at least 75 percent of the ACO governing body.”

212

This example is

embedded in a general response to comments section, but agencies frequently use

examples and incorporate them in various formats.

3. Preambles the Appear to Bind

Rather than articulating the basis and purpose of the regulatory text or providing

guidance on how to comply with it, some preambles make statements that appear or

purport to have legal effect.

A complex rulemaking by the Centers for Medicare and Medicaid Services (CMS)

provides an example of the slippage that can occur between the preamble and the text of

the rule.

213

In the rule, CMS revised requirements for the way in which long-term care

hospitals transfer patients to hospitals within them (“hospitals within hospitals”) or

affiliated satellite hospitals. In the preamble to its final rule, CMS noted in response to

comments that it provided a 4-year transition prior for the implementation of the new

requirements and also provide for certain hospitals to be “grandfathered,” treating the first

year as “hold harmless.”

214

The preamble went on to state, “we are requiring that even for

grandfathered facilities, in the first cost reporting period, the percentage of discharges

admitted from the host hospital may not exceed the percentage of discharges admitted from

the host hospital in its FY 2004 cost reporting period.”

215

The final rule, however, “omitted the limitation that grandfathered facilities in the

first year of the transition period would not be allowed to exceed the percentage of patients

admitted from the host during fiscal year 2004 cost reporting period.”

216

The preamble

thus stated a requirement about the percentage of permissible admissions to hospitals

within hospitals and satellite facilities that did not appear in the rule.

On its own initiative, CMS issued a correcting amendment to the rule to conform

the rule to its preamble’s statement of the requirements applicable to grandfathered

212

Id. at 67,819–67,820.

213

Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2005

Rates, 69 Fed. Reg. 48916 (Aug. 11, 2004) (to be codified at 42 C.F.R pts. 403, 412, 413, 418, 460, 480, 482,

483, 485, 489).

214

Id. at 49196.

215

Id.

216

Select Specialty Hosp.-Akron v. Sebelius, 820 F.Supp.2d 13, 23-24 (D.D.C 2011).

institutions,

217

which correcting amendment was upheld from procedural and substantive

challenges.

218

C. Guidance in Regulatory Text and Appendices

Agencies provide guidance about the meaning and application of their regulations

in the regulatory text published in the Code of Federal Regulations (CFR) and in

appendices attached to final rules. While guidance in the regulatory text appears, by

definition, in the Code of Federal Regulations, guidance in appendices is sometimes only

published in the Federal Register and other times published in the Code of Federal

Regulations. Agencies use different formats to provide guidance in the regulatory text and

appendix, including through official commentary, examples, notes, and technical guidance.

The following sections illustrate the various ways agencies offer guidance in the regulatory

text and appendix.

1. Guidance Published in the CFR

a. Examples in Regulatory Text. Agencies provide guidance in material

published in the CFR, most often in the form of notes and examples. For instance, the

Department of the Treasury provided illustrative examples in a rule on mergers,

acquisitions, and takeovers by foreign persons.

219

In § 800.215 (a)–(b), the regulatory text

defines a “foreign person” as “(a) Any foreign national, foreign government, or foreign

entity; or (b) Any entity over which control is exercised or exercisable by a foreign

national, foreign government, or foreign entity.”

220

After this text, there are five examples

217

Id.

218

Id. at 27 (concluding that the agency was not required to go through another round of notice-and-comment

to issue its correcting amendment and that the amendment was not arbitrary nor capricious); see also Natural

Res. Def. Council v. EPA, 559 F.3d 561, 565 (D.C. Cir. 2009) (invalidating requirements stated in preamble

that did not correspond to or interpret a section of the rule). In some cases, agencies make statements in their

preambles that appear to be binding in part because they use mandatory language and do not make a

reference the regulatory text, even when the regulatory text provides a basis for the obligations discussed.

See, e.g., Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed.

Reg. 67,802, 67,898-99 (Nov. 2, 2011) (to be codified at 42 C.F.R. pt. 425) (in a section headed “Final

Decision” the preamble stated “if an ACO [Accountable Care Organization] fails to achieve the minimum

attainment level on at least 70 percent of the measures in each domain, we will give the ACO a warning, an

opportunity to resubmit and re-evaluate the following year. If the ACO continues to underperform in the

following year, the agreement would be terminated,” without referring to 42 C.F.R. § 425.502(d)(2)(ii)). It is

preferable to for mandatory statements of this kind in preambles to cite the regulatory provisions that give

rise to those obligations.

219

Regulations Pertaining to Mergers, Acquisitions, and Takeovers by Foreign Persons, 73 Fed. Reg. 70,702,

70,702 (Nov. 21, 2008) (to be codified at 31 C.F.R. pt. 800).

220

Id. at 70,720.

illuminating the “foreign person” definition.

221

Example 4 states that “[c]orporation A is

organized under the laws of a foreign state and is owned and controlled by a foreign

national. A branch of Corporation A engages in interstate commerce in the United States.

Corporation A (including its branch) is a foreign person. The branch is also a U.S.

business.”

222

After the examples, the rule proceeds to the next regulatory provision.

223

The Merit Systems Protection Board (MSPB) provided guidance through examples

in the regulatory text of a rule updating MSPB’s adjudicatory practices and processes.

224

its rule addressing the filing of appeals, the Board notes that “[a]n appellant is responsible

for keeping the agency informed of his or her current home address[.]”

225

Following the

rule’s text, the Board provided examples “to illustrate the application of this rule.”

226

The

three enumerated examples include: “Example A: An appellant who fails to pick up mail

delivered to his or her post office box may be deemed to have received the agency

decision. Example B: An appellant who did not receive his or her mail while in the hospital

may overcome the presumption of actual receipt. Example C: An appellant may be deemed

to have received an agency decision received by his or her roommate.”

227

2. Guidance in Appendices

a. Official Commentary in Appendix. Some agencies incorporate official

commentary, official interpretations, or designated interpretive guidance into appendices.

The Equal Employment Opportunity Commission (EEOC) included official interpretations

in a rule implementing the equal employment provisions of the ADA Amendments Act of

2008.

228

In the preamble to the final rule, the EEOC explained the function of the official

interpretations:

The appendix addresses the major provisions of the regulations and explains

the major concepts. The appendix as revised will be issued and published in

the Code of Federal Regulations with the final regulations. It will continue

to represent the Commission’s interpretation of the issues discussed in the

221

Id.

222

Id.

223

Id.

224

Practices and Procedures, 77 Fed. Reg. 62,350, 62,350 (Oct. 12, 2012) (to be codified at 5 C.F.R. pts.

1200, 1201, 1203, 1208, and 1209).

225

Id. at 62,364.

226

Id.

227

Id. (appearing in 5 C.F.R § 1201.22 (2012).

228

Regulations To Implement the Equal Employment Provisions of the Americans With Disabilities Act, as

Amended, 76 Fed. Reg. 16,978, 16,978 (March 25, 2011) (to be codified at 29 C.F.R. pt. 1630).

regulations, and the Commission will be guided by it when resolving

charges of employment discrimination under the ADA.

229

The appendix entitled “Appendix to Part 1630—Interpretive Guidance on Title I of the

Americans with Disabilities Act” includes a lengthy introduction on the development of

the ADA followed by a section-by-section analysis of the provisions promulgated in the

regulation.

230

For instance, in the appendix under “Section 1630.2(l) – Regarded as

Substantially Limited in a Major Life Activity”, the EEOC wrote “[c]overage under the

‘regarded as’ prong of the definition of disability should not be difficult to establish.”

231

The EEOC states that these interpretations will guide it when resolving employment

discrimination charges under the ADA.

232

The Consumer Financial Protection Bureau (CFPB) also included official

interpretations at the end of Regulation X, a rule implementing the Real Estate Settlement

Procedures Act (RESPA).

233

After appendices with technical guidance, there is a section

entitled “Supplement I to Part 1024—Official Bureau Interpretations.”

234

In this

supplement, the CFPB explains that “[t]his commentary is the primary vehicle by which

the [Bureau] issues official interpretations of Regulation X. Good faith compliance with

this commentary affords protection from liability under section 19(b) of [RESPA].”

235

the EEOC rule above, this supplement included section-by-section interpretations of the

regulation.

236

For instance, in the supplement the CFPB interpreted the regulatory

provision § 1024.36 on investigation and response requirements.

237

Specifically, the

agency interpreted “information not available” as occurring when: “(i.) [t]he information is

not in the servicer’s control or possession, or (ii) [t]he information cannot be retrieved in

the ordinary course of business through reasonable efforts.”

238

b. Examples in Appendix. The EEOC appendix that provided interpretive

guidance on the ADA Amendments Act of 2008 also incorporated examples.

239

In the

appendix, the EEOC wrote: “[f]or example, an individual who is denied a promotion

229

Id. at 16979.

230

Id. at 17003.

231

Id. at 17014.

232

Id. at 16978.

233

Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation X), 78 Fed. Reg.

10,696, 10,696 (Feb. 14, 2013) (to be codified at 12 C.F.R. pt. 1024).

234

Id. at 10,887.

235

Id.

236

Id.

237

Id. at 10,891.

238

Id.

239

Regulations To Implement the Equal Employment Provisions of the Americans With Disabilities Act, as

Amended, 76 Fed. Reg. 16,978, 17,016 (March 25, 2011) (to be codified at 29 C.F.R. pt. 1630).

because he has a minor back injury would be ‘regarded as’ an individual with a disability if

the back impairment lasted or was expected to last more than six months.”

240

The EEOC

offered numerous examples in this appendix.

A joint rule by a group of agencies (Treasury, SSA, DVA, RRB, and OPM) on

garnishment of accounts containing federal benefit payments utilized examples in an

appendix to the final rule.

241

For instance, one of the appendices entitled “Appendix C to

Part 212—Examples of the Lookback Period and Protected Amount” stated “the following

examples illustrate the definition of protected amount.”

242

There are then five examples

that explain how hypothetical scenarios fit within the definition of protected amount.

243

Here is an excerpt of example 4: “Since the $2,000 sum of the two benefit payments posted

to the account during the lookback period is less than the $3,000 balance in the account

when the account review is performed, the financial institution establishes the protected

amount at $2,000 and places a hold on the remaining $1,000 in the account in accordance

with State law.”

244

The appendices were published in the CFR.

245

c. Question and Answer Format in Appendix. Agencies provide guidance

in appendices through the question and answer format. The Social Security Administration

promulgated a rule revising medical criteria for evaluating visual disorders in which

revisions adopted consisted almost exclusively amendments to the appendix appearing in

the CFR.

246

After the preamble, the agency posed and answered a series of questions in the

appendix.

247

Questions included, for instance, “How do we evaluate visual disorders?” and

“How do we define statutory blindness?”

248

In response to the question “What are visual

disorders?”, the agency wrote “Visual disorders are abnormalities of the eye, the optic

nerve, the optic tracts, or the brain that may cause a loss of visual acuity or visual

fields.”

249

These questions and answers in the appendix were published in the CFR.

250

The Department of Education also provided guidance in an appendix through the

question and answer format in a rule implementing the Family Educational Rights and

240

Id.

241

Garnishment of Accounts Containing Federal Benefit Payments, 78 Fed. Reg. 32,099, 32,110 (May 29,

2013) (to be codified at 31 C.F.R. pt. 212).

242

Id. at 32,109.

243

Id. at 32,109–32,110.

244

Id. at 32,110.

245

See 31 C.F.R. § 212 app. A, B & C (2013).

246

Revised Medical Criteria for Evaluating Visual Disorders, 78 Fed. Reg. 18,837, 18,837 (March 28, 2013)

(to be codified at 20 C.F.R. pt. 404).

247

Id. at 18,839.

248

Id.

249

Id. at 18,834

250

20 C.F.R. § 404, Subpart P, app. 1 (2013).

Privacy Act (FERPA).

251

After the regulatory text, the Department of Education included a

document on “Guidance for Reasonable Methods and Written Agreements” in Appendix

252

The Department of Education structured this guidance document as a series of

questions and answers.

253

Questions included: “What is the Family Educational Rights and

Privacy Act?” and “What do I do if the terms of the written agreement are violated?”

254

response to the latter question, the agency answered “[i]f the entity to which you have

disclosed PII from education records without consent . . . violates the terms of the written

agreement, you should evaluate your options under the penalty and termination provisions

of the agreement . . . .”

255

Interestingly, before the appendices to the FERPA rule, the

Department of Education wrote “Note: The following appendices will not appear in the

Code of Federal Regulations.”

256

(The agency did not further explain its choice to exclude

the appendices from the CFR.)

d. Technical Guidance in Appendix. Agencies sometimes include technical

guidance in appendices to final rules. For instance, the CFPB utilized this approach in

Regulation X discussed above.

257

After the regulatory text, the CFPB attached appendices

with model forms and sample language for use by regulated entities.

258

Appendix MS-2

contained a model form of a notice of transfer of loan servicing for a servicer to provide to

a borrower.

259

An excerpt of this model form read: “[Name of present servicer] is now

collecting your payments. [Name of present servicer] will stop accepting payments

received from you after [Date].”

260

These model forms were published in the CFR.

The Department of Education’s rule implementing FERPA also includes technical

guidance in appendices.

261

FERPA requires educational institutions to annually notify

parents and eligible students of their rights under FERPA.

262

To facilitate this requirement,

Appendix B attached to the final rule includes a “Model Notification of Rights under

251

Family Educational Rights and Privacy, 76 Fed. Reg. 75,604, 75,645 (Dec. 2, 2011) (to be codified at 34

C.F.R. pt. 99).

252

Id.

253

Id.

254

Id. at 75,645, 75,653.

255

Id. at 75,653.

256

Id. at 75644. So long as the material is reasonable available, as it was in this case, this practice complies

with recommended practices on incorporation by reference. See Admin. Conf. of the United States, Agency

Policy Statements, Recommendation 2011-5, ¶ 1, 77 Fed. Reg. 2257, 2258 (Jan. 17, 2012) (recommending

that material incorporated by reference be reasonably available).

257

Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation X), 78 Fed. Reg.

10,696, 10,886 (Feb. 14, 2013) (to be codified at 12 C.F.R. pt. 1024).

258

Id.

259

Id. at 10,877.

260

Id. at 10,886.

261

Family Educational Rights and Privacy, 76 Fed. Reg. 75,604, 75,654 (Dec. 2, 2011) (to be codified at 34

C.F.R. pt. 99).

262

Id. at 75608.

FERPA for Elementary and Secondary Schools.”

263

The model form begins with

“[FERPA] affords parents and students who are 18 years of age or older (‘eligible

students’) certain rights with respect to the student’s education records” and then the model

form enumerates those rights.

264

As noted above, the appendices to the FERPA rule were

not published in the CFR.

D. Separately Issued Contemporaneous Guidance

Agencies frequently issue guidance or draft guidance in the form of separately

issued documents at the same time that they issue their rules. This practice has the benefit

of giving regulated parties as much notice as possible at the time the rule promulgated

about the agency’s interpretation of the rule and advice about compliance with it.

The Nuclear Regulatory Commission (NRC) provides a recent example an agency

issuing detailed guidance alongside a new rule. At the time the NRC issued a rule

amending its regulations regarding the security requirements for the transportation of

radioactive material,

265

it also issued an extensive guidance document to assist in the

implementation of these requirements.

266

The implementation guidance provided

comprehensive treatment of the approaches and methods that the agency deemed

acceptable in complying with the regulations,

267

framing this guidance in an accessible

question-and-answer format. The practice of issuing a freestanding guidance at the same

time a rule is promulgated is particular helpful where, as in the case of the NRC rule,

the

preamble makes reference to (and providing links to) the accompanying guidance.

268

Even when agencies choose not to issue a separately designated guidance

document, as noted above, for rules with significant impacts on small entities, SBREFA

requires agencies to issue a form of contemporaneous guidance, “small entity compliance

guidance,” before the regulation becomes effective to explain what actions are necessary

for a small entity to comply with the regulation.

269

263

Id. at 75654.

264

Id.

265

Nuclear Regulatory Commission, Physical Protection of Byproduct Material, Final Rule, 78 Fed. Reg.

16922 (Mar. 19, 2013).

266

U.S.N.R.C., Office of Federal and State Materials and Environmental Management Programs,

Implementation of Guidance for 10 C.F.R. Part 37 “Physical Protection of Category 1 and Category 2

Quantities of Radioactive Material,” NUREG-2155 (Feb. 2013).

267

Id. at 1.

268

See Physical Protection of Byproduct Material, 78 Fed. Reg. at 16922.

269

Small Business Regulatory Enforcement Fairness Act, § 212(a)(4)(B)(i), 5 U.S.C. § 610 (2006)

In 2001, GAO issued a report concluding that many agencies were failing to fully

comply with these requirements of SBREFA.

270

Based on an examination of rulemaking

in 1999 and 2000 for seven agencies (the Department Commerce, CMS, FDA, HHS, EPA,

FCC, and SEC), the GAO study concluded that agencies were applying different standards

for when a rule affected small entities triggering the obligation to prepare a guide,

271

were

not designating their products as “compliance guides,”

272

were failing to explain the

compliance actions required,

273

and did not meet the contemporaneous deadlines set by the

Act,

274

among other difficulties. Interestingly, there is no central clearinghouse for these

compliance guides or for the agency websites on which they appear.

V. Recommendations to Federal Agencies

This Part sets forth recommendations to federal agencies with regard to the use of

contemporary guidance. Some of these recommendations apply to all rulemaking agencies

and others pertain to specific agencies and practices; some suggest relatively substantive

reforms, such as how preamble are drafted, and others pertain to how agencies can increase

the accessibility of their contemporary guidance. These recommendations are clustered

under five headings: (1) preamble drafting, (2) integrating preambles into policies on

guidance and collections of guidance, (3) electronic presentation of regulations, (4)

tailoring the location of guidance to the practices of those regulated, and (5) small entity

compliance guides.

1. Preamble Drafting

Rec. 1.1. The statement of “basis and purpose” produced in the preamble to

final rules should state the purpose of the rule and how it advances statutory objectives in a

way that goes beyond merely repeating statutory language.

Discussion: Recommendation 1.1 is based on the principle that an agency’s own

statement of the purposes of the rule in light of statutory objectives is a necessary element

of the “statement of [] basis and purpose” under APA § 553 and “a statement of the need

for, and objectives of, the rule” under the Regulatory Flexibility Act (RFA).

275

This

principle follows from judicial interpretations of the APA and RFA discussed above

270

U.S. GOV’T ACCOUNTABILITY OFFICE, GAO 02-172, Compliance Guide Requirement Law Little Effect

on Agency Practices (2001).

271

Id. at 14.

272

Id. at 23.

273

Id. at 24.

274

Id. at 28.

275

5 U.S.C. § 604 (2012).

(Section III(D)(1)). At a basic level, a statement of a rule’s purpose and how it advances

statutory objectives orients all interpretation of the rule, and demonstrates the agency’s

discharge of the statutory powers with which it is vested. The vast majority of agencies

and rulemakings admirably comply with this basic requirement, but not all do.

Accordingly, it is worth highlighting this fundamental duty.

For those concerned about the burden this recommendation might place on

agencies, it is worth emphasizing three points. First, this is a fundamental requirement of

the APA and RFA, but one for which there is not active judicial enforcement for many

rules. Second, compliance with this recommendation should not be unduly burdensome.

For small and routine rulemakings, the agency could comply with this recommendation

with a sentence or two of explanation. Third, this recommendation addresses only those

rules that proceed through notice and comment. Regulations that merely restate the

language of statutes they implement need not proceed through notice and comment,

276

and

therefore fall outside this recommendation (along with rules exempted from notice and

comment for other reasons).

Rec. 1.2. Agencies generally should organize their preambles to include a

section-by-section analysis in which the organization of the preambular analysis

corresponds to the organization of the final rules to facilitate identification of the

discussion the agency has provided as to each provision of the rule.

Discussion: The increased justificatory demands on preambles, as discussed

above (Section II(B)), have contributed to the length and complexity of these documents.

Recommendation 1.2 is the organizational equivalent of a requirement for plain language

in government documents.

277

It reflects the common sense idea that when the analysis in

the preamble includes a section-by-section treatment corresponding to the sections of the

rule adopted, it is easier for those reading the preamble to locate the most highly pertinent

discussion. Of course, reading a section-by-section analysis is no excuse for not reading

the entire preamble in order to understand its context and cross-cutting implications. But a

section-by-section organizational structure reduces the search costs for those seeking to

understand the operation and justification for particular aspects of an agency rule. In other

words, a well-organized preamble reduces the cost of locating its guidance.

276

Gray Panthers Advocacy Cmm., 936 F.2d 1284, 1291 (1991) (“when regulations merely restate the statute

they implement, notice-and-comment procedures are unnecessary”).

277

See, e.g., Memorandum for the Heads of Executive Departments and Agencies on “Plain Language in

Government Writing” (June 1, 1998), 63 Fed. Reg. 31,885 (June 10, 1998); Plain Writing Act of 2010, Pub.

L. No. 111, 124 Stat. 2861, codified at 5 U.S.C. § 301 nt. (Supp. V 2011) (imposing plain writing

requirements on many government documents including those that explain how to comply with a

requirement the federal government administers).

Rec. 1.3. Agencies should strive for preambles to their final rules to be

comprehensive statements of each rule’s basis and purpose. In preambles to final rules,

agencies should generally avoid relying on discussions of the basis and purpose of the rule

provided in the Notice of Proposed Rulemaking (or in other prior notices) in ways that

require the reader of the final preamble to integrate two or more discussions of the rule’s

basis and purpose.

Discussion: Recommendation 1.3 addresses the practice of incorporating

background discussions of the policy, basis, and objections provided in the Notice of

Proposed Rulemaking (and other prior notices) in the final preamble. The Government

Printing Office charges agencies per page they print in the Federal Register,

278

so agencies

have some financial incentive to incorporate prior analyses in a final preamble as opposed

to restating them. Moreover, sometimes rules and their supporting analysis change very

little in the comment process. Relying on prior discussions can also save agency drafters

time. Notwithstanding these considerations, the practice of relying on discussion in

previously published notices impedes the guidance function of the final rule’s preamble.

With extensive reliance on prior statements of the rule’s basis and purpose, the final

preamble can become merely a placeholder and signpost to other discussions that need to

be integrated with the text of the final preamble. Requiring the public and regulated parties

to integrate two or more separate and partial discussions of the basis and purposes of the

rule reduces the utility of the final preamble for guidance purposes. This suggests that

agencies should, at a minimum, consider whether incorporating or relying upon prior

discussion will impede the guidance function of their preamble, and generally avoid such

incorporation when it requires a reader to integrate two or more treatments.

279

At a more

general level, the guidance function of the final preamble is best served when the preamble

provides a comprehensive statement of the rule’s basis and purpose. Accordingly, when

feasible, agencies should strive for the preamble to the final rule to be a comprehensive and

free-standing explanation of the rule.

Rec. 1.4. Agencies should not make statements of general applicability that

are intended to have legal effect, such as statements imposing binding substantive

standards or obligations, in preambles to final rules.

278

The fees for Federal Register publication in FY 2014 are as follows: MS Word submission: $477/per

page, $159/per column; Manuscript Copy: $522/per page, $174/per column; Camera Copy: $522/per page,

$174/per column. See Government Printing Office, Circular Letter No. 885 to Printing and Publishing

Officials of the Federal Government (May 31, 2103) (available at

http://www.gpo.gov/pdfs/customers/cir885.pdf) (last visited March 31, 2014).

279

Fewer burdens are imposed on the reader when the agency adopts the entire previous statement of the

basis and purpose for the rule. In those cases, much less integration of two separate discussions is required.

Discussion: While preambles may be authoritative sources of guidance, as

discussed above, under the APA, preambles should not include legislative rules; if a

preamble were to include a legislative rule, that rule would be procedurally invalid under

APA § 553. ACUS Recommendation 92-2 states that agencies should “not issue

statements of general applicability that are intended to impose binding substantive

standards or obligations upon affected persons without using legislative rulemaking

procedures (normally notice-and-comment).”

280

Recommendation 1.4 makes clear that this

general prohibition on including statements that are intended to have legal effect applies to

statements in preambles to final rules.

This recommendation also finds support in OMB’s Good Guidance Bulletin. The

Bulletin prohibits agencies from using mandatory language in guidance documents unless

“the agency is using these words to describe a statutory or regulatory requirement, or the

language is addressed to agency staff and will not foreclose consideration by the agency of

positions advanced by affected private parties.”

281

The Bulletin gives “shall,” “must,” and

“requirement” as examples of prohibited mandatory language. Recommendation 1.4

highlights that the prohibition applies to all statements that purport to specify legal effects,

not just those singled out by the mandatory language identified in OMB’s Good Guidance

Bulletin.

2. Integrating Preambles into Policies on Guidance and Collections of

Guidance

Rec. 2.1. Agencies should mention preambles to their final rules as sources of

guidance in their general compilations of guidance and on their webpages devoted to

guidance. Agencies should also develop ways to integrate the guidance content of their

preambles into their general compilations of guidance and their webpages devoted to

guidance.

Discussion: The preambles to final rules are often the most important sources of

guidance about the rule’s meaning and effects. For agencies covered by OMB’s Good

Guidance Bulletin, the Bulletin requires “each agency to maintain on its Web site . . . a

current list of its significant guidance documents in effect.”

282

These pages typically

define guidance and provide a topical and/or chronological listing of the agency’s guidance

documents, with links. Based on a review of those executive agencies which have issued

280

Admin. Conf. of the United States, Agency Policy Statements, Recommendation 92-2, 57 Fed. Reg.

30,103 (June 18, 1992).

281

OMB’s Good Guidance Bulletin, supra note 1, at 3440.

282

See id. at Section III.1

an economically significant rule in the last 15 years,

283

only the Department of

Transportation mentions preambles as sources of guidance on its webpage devoted to

guidance. Recommendation 2.1 seeks to improve the visibility of preambles as sources of

guidance by recommending that, at a minimum, agencies mention preambles to final rules

on their guidance web pages and integrate them into their general compilations of

guidance.

There is not likely to be a uniform way to integrate the guidance content of

preambles into agency’s web-based summaries of guidance. (One promising format is

providing hyperlinks from the regulatory text to guidance in preambles and other guidance

documents, a suggestion addressed in Recommendation 3.1.) Regardless of the format, by

endeavoring to integrate the guidance content of their preambles into their topical and

other treatments of guidance, the agencies will not only assist the public in identifying this

content but also will be spurned to consider how the guidance content of their preambles

relates to the guidance they later provide. This process may encourage agencies to make

self-conscious choices about the allocation of their guidance content between final

preambles and later issued guidance documents, and may help to overcome perceptions

that preambles concern only the legal sufficiency of rules and thus need not be considered

as part of the way in which the agency provides guidance about the meaning of its

regulations.

Mentioning preambles as sources of guidance and working to integrate the

guidance in preambles into presentations of agency guidance will promote the visibility of

this guidance regardless of the type of agency. Accordingly, this recommendation applies

not only to those agencies covered by OMB’s Good Guidance Bulletin but to all agencies

that provide compilations or summaries of their guidance.

Rec. 2.2. To the extent agencies have policies on issuing guidance, those

policies should address the guidance content of preambles to their final rules. For

agencies covered by OMB’s Good Guidance Bulletin, their policies should address

compliance with the Bulletin’s procedural requirements applicable to guidance documents

for significant and economically significant guidance included in preambles to final rules.

Discussion: As discussed above, preambles to final rules provide an important

source of guidance, and so agency policies on issuing guidance should address them.

Doing so will encourage agencies to make choices about the kind of guidance that they

provide in preambles and in other documents. It will also encourage agencies to consider

283

This list of agencies is drawn from LEWIS & SELIN, supra note 17, at 132 Table 20. The web pages for

these agencies were visited in March 2014.

how they envision those affected by their regulations integrating these different sources of

guidance. The recommendation does not independently suggest that agencies develop

policies on guidance, only that those with policies reassess them to address guidance

provided in preambles.

Agencies covered by OMB’s Good Guidance Bulletin must have policies for the

approval of guidance.

284

As the analysis above suggests (Section II(A)), guidance that

those covered agencies provide in preambles to final rules, if significant, is subject to the

procedural requirements of the Bulletin. As a result, conscientious compliance with that

Bulletin (or careful monitoring of compliance with it by the Office of Management and

Budget) would require evaluating whether guidance provided in preambles triggers any of

the process or other requirements of the Bulletin.

3. Electronic Presentation of Regulations

Rec. 3.1. Working in conjunction with the Office of the Federal Register and

the Government Printing Office, agencies should develop electronic versions of their

regulations which include hyperlinks to relevant guidance in the rules’ final preambles as

well as to other relevant guidance documents.

Discussion: The electronic presentation of regulations can integrate agency

guidance with their regulations by providing hyperlinks to relevant guidance in preambles

to final rules as well as to other relevant guidance documents. This can improve the public

and regulatory entities access and understanding of agency regulations and agency

guidance.

The Consumer Financial Protection Bureau has piloted a new online tool,

“eRegulations,”

285

with the aim of improving access to and understanding of final rules.

286

The tool provides navigable links to defined terms, official commentary, previous and

proposed versions of the rule, as well as section-by-section analysis in regulatory

preambles.

287

This tool is an important step in realizing the possibilities of the internet and

hypertext formats to improve understanding of regulations. In particular, because this tool

provides links to relevant sections of preambles to final, it clearly highlights the guidance

function of preambles and also reduces the costs associated with accessing this preamble

284

See OMB’s Good Guidance Bulletin, supra note 1, at 3440.

285

E-Regulations, http://www.consumerfinance.gov/eregulations/1005 (last visited Mar. 21, 2014).

286

See Stephanie J. Tatham, CFPB’s eRegulations tool promises to help users navigate federal regulations,

ADMINISTRATIVE FIX BLOG, (Oct. 22, 2013, 6:11 PM), http://www.acus.gov/newsroom/administrative-fix-

blog/cfpb%E2%80%99s-eregulations-tool-promises-help-users-navigate-federal.

287

See id.

guidance. This format provides a promising way of integrating the guidance content of

preambles with other guidance, and associating it with the relevant provisions of the rule.

Adoption of such hyperlink tools may also influence the way in which preambles

are drafted, in particular by giving agencies incentives to write preambles with

organizational structures (as suggested by Recommendation 1.2 above) that track the rule’s

sections so that they can support intelligible hyperlinks. Substantive knowledge of the

agency’s preambles and guidance is necessary to provide reliable links to the portions most

relevant to each provision of a rule. Accordingly, this work will require detailed

involvement and supervision by general counsel for each agency. In addition, the Office of

the Federal Register and the Government Printing Office should be encouraged to work

with agencies to make available electronic versions of agency regulations with these

hyperlinks to supplement the official versions of the Federal Register and Code of Federal

Regulations that the Office of the Federal Register maintains.

4. Tailoring the Location of Guidance to the Practices of Those Regulated

Rec. 4.1. Where the regulated population is (1) primarily the public and (2) is

understood to rely primarily on the codified text of the regulation to understand their

regulatory compliance obligations, agencies should consider including guidance (such as

notes and example applications) in the text of the Code of Federal Regulations or in an

appendix to the Code of Federal Regulations, as opposed to including it only in a separate

guidance document or a preamble.

Discussion: Most members of the public and many regulated parties have little

knowledge of administrative government, much less the distinction between a “regulation”

and “guidance.” Members of the public frequently and reasonably seek the simplest way

to find out what the law requires. When the agency publishes guidance in the form of

examples, technical advice, or official interpretations, it can improve the accessibility of

this content if it is published in the Code of Federal Regulations, either as a note or

example in the text or as an appendix.

Recommendation 4.1 suggests that when the public is the primary regulated

audience and the agency has reason to believe that the public relies primarily on the Code

of Federal Regulations to ascertain its obligations, the agency should consider including

that guidance in the Code of Federal Regulations (CFR). One possible downside of

publishing guidance in the CFR is that the public will take it too seriously, treating it as

binding (not just as authoritative guidance).

288

This is a real risk, and so agencies issuing

guidance in the CFR should clearly designate that it is nonbinding.

Publishing guidance content in the CFR also imposes an additional process burden

on the agency. But, as noted above, as long as Alaska Professional Hunters remains good

law, the agency would have to proceed through notice-and-comment to revise any

authoritative guidance, so issuing it in the CFR does not increase the agency’s revision

cost, only its cost for issuance. This recommendation encourages agencies to make case

specific determinations about when the benefits of publishing guidance content in the CFR

are outweighed by the increased cost, delay, or other problems that publishing it in the

CFR can pose.

5. Small Entity Compliance Guides

Rec. 5.1. Agencies should reassess how they display their small entity compliance

guides on their websites to ensure that these guides are in an “easily identified location”

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as required by the Small Business Regulatory Enforcement Fairness Act of 1996

(SBREFA).

Rec. 5.2. The Small Business Administration should work with agencies to

develop guidelines for posting small entity compliance guides on agency websites in ways

that make them easily identifiable.

Rec. 5.3. The Small Business Administration should maintain a webpage with

links to agency webpages that host agency’s small entity compliance guides.

Discussion of 5.1-5.3: While many agencies post the small entity compliance

guides required by SBREFA in an “easily identified location” on their websites, for many

other agencies these guides are difficult to find. Indeed, searching the websites of the 21

agencies that have issued an economically significant rule in the past 15 years,

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only four

agencies (Labor, State, Transportation, and EPA) have an identified web page devoted

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For instance, the Department of Energy decided to delete guidance that had appeared as an appendix in

the C.F.R. and publish the same in an updated form on its web site. See Energy Conservation Program: Test

Procedures for Electronic Motors and Small Electric Motors, 77 Fed. Reg. 26608, 26623-24 (May 4, 2012)

(to be codified at 10 C.F.R. pt. 431). The Department noted that his change “does not change the legal effect

or authority of appendix A as appendix A was a ‘Policy Statement’ that merely provided users with guidance

as to DOE’s interpretation of existing statutes and regulations.” Id. Placing this content in freestanding

guidance, the Department explained will allow the Department “to respond more efficiently to questions” and

also “eliminate any potential confusion as to the legal effect of appendix A.” Id.

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5 U.S.C. § 601 nt. § 212(a)(2(A) (2012).

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See LEWIS & SELIN, supra note 17, at 132. Web searches of these agency websites conducted in March,

April, and May 2014.

either to displaying these guides or acknowledging the responsibility of producing them.

It does not make sense to require agencies to produce these guides, as SBREFA does, and

not follow through on making them readily accessible. In this regard, agencies should be

encouraged to evaluate where they are posting these guides on their web sites, as provided

in Recommendation 5.1, to ensure they are easily located.

Recommendation 5.2 encourages the Small Business Administration (SBA) to take

a leadership role in coordinating among agencies and developing policies on uniform and

best practices for agencies presenting small entity compliance guides on their websites.

Because these guides are directed to small entities, the Small Business Administration is a

logical leader for this endeavor. The assistance of the Office of Management and Budget

would also be welcome in assisting SBA in coordinating among agencies on a set of

guidelines.

Recommendation 5.3 goes a step further and recommends that SBA host a

clearinghouse with links to agency webpages that contain their small entity compliance

guides. Such a clearinghouse would provide a backstop for small entities searching for

these guides; it would allow them to easily find where these guides are located for each

agency, and may also alert them to other useful guides. Because these guides are directed

to small entities, and the SBA already maintains a webpage with information about

SBREFA, the SBA is a logical home for this clearinghouse.

Maintaining this clearinghouse would also create a welcome additional incentive

for agencies to comply with the requirements of SBREFA. As noted above, GAO’s 2001

report, Compliance Guide Requirement Law Has Little Effect on Agency Practices,

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found that many agency compliance guides were not complying with all the requirements

of this provision of SBREFA. A collection of links to agency webpages with these guides

will make it easy for agencies to compare their guides to those produced by other agencies,

and may create some pressure toward greater consistency in meeting the requirements

SBREFA establishes. It will also provide an informal monitoring mechanism for

Recommendation 5.2 which urges SBA to work with agencies to enhance the visibility of

these guides.

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U.S. GOV’T ACCOUNTABILITY OFFICE, GAO 02-172, COMPLIANCE GUIDE REQUIREMENT HAS HAD LAW

LITTLE EFFECT ON AGENCY PRACTICES (2001).

Conclusion

Given that regulations produced through notice-and-comment account for many

more binding legal norms than statutes, the interpretation of these regulations is a critical

question for administrative governance. One critical source for understanding the meaning

and application of regulations is agency’s own guidance.

Agencies routinely provide guidance in the context of rulemaking. There is some

minimum guidance function inherent in an agency’s statement of basis and purpose in a

regulation’s preamble. But in many cases, agencies provide considerably more preamble

guidance about the meaning of the regulation in the preamble. Agencies also do so in the

regulatory text (including appendices that may be published in the CFR) and separate

documents. Despite the ubiquity of contemporaneous guidance, it has been largely

neglected in the long-running debate on the use of guidance by agencies.

This Report seeks to take some initial steps in overcoming this neglect. It does so

by pursuing three goals. First, by documenting the scope of contemporaneous guidance

and its varieties, the Report aims to provide agencies with resources for making deliberate

choices about the use of guidance in rulemaking. Second, by describing the legal regime

applicable to contemporaneous guidance the Report aims to inform and prompt evaluation

of current practices. Third, by tracing the implications of the neglect of the guidance

function of preambles and use of regulatory text for guidance, the Report teases out several

recommendations to improve the utility and accessibility of these forms of guidance.

Acknowledgment

I would like to thank Michael Snow, Jason Sowards, and Robin Frazer for excellent

research assistance. I am also grateful to Funmi Olorunnipa and Gretchen Jacobs for

extremely helpful guidance, as well as the government lawyers who generously responded

to my inquiries.