Despite attacks from conservatives, guidance documents help agencies and regulated firms comply with the law.
The spirited conservative attack on regulatory guidance is both puzzling and hypocritical. Admittedly, agencies sometimes issue guidance to avoid the quicksand of informal rulemaking. But the law makes clear that without full-dress procedure, guidance can never replace rules and statutes in enforcement actions. Remedying agency overreach in the rare circumstances when enforcement cases are based primarily on guidance is a straightforward legal matter—defendants have only to tell their problems to a judge. Given the acute problems of hollow government and browbeaten civil servants these days, an irate defendant likely need only threaten to sue to compel an agency’s general counsel to back down.
The attack on guidance, like many other aspects of the latest chapter in the ongoing war on regulation, is also hypocritical. A huge swath of regulation was designed and is implemented to protect one kind of business activity from incursion by another. In the same vein, by far, regulated firms that are staunch allies of the deregulators are the largest group benefitting from guidance. Were we able to convene a conference of the leading regulatory counsel and lobbyists for businesses, administer a dose of truth serum, and ask who had requested guidance on behalf of a client during their careers, I doubt more than a handful of people would say they had not.
Hundreds of pleas for guidance have been advanced in the past few months, but perhaps the most telling one—both because of the requester and the substance of the request—is the U.S. Chamber of Commerce’s letter to the Internal Revenue Service (IRS) pleading for various interpretations of the new tax law. Drafted solely by members of the Republican congressional leadership and officials of the Trump Administration, the law contains dozens of mistakes and opaque provisions worth very large amounts of money. As the Chamber of Commerce recognizes, only by issuing guidance can the IRS settle confusion and disputes before 2019 taxes are due.
But on November 16, 2017, U.S. Attorney General Jeff Sessions announced that when the U.S. Department of Justice (DOJ) issues guidance, it must be accompanied by a statement that the document does not have the “force or effect of law.” He added, in a ferocious tone, that guidance documents “should not be used for the purpose of coercing persons or entities outside the federal government into taking any action or refraining from taking any action beyond what is required by the terms of the applicable statute or regulation.” Given that the memo merely restated well-understood and otherwise uncontroversial black letter law, the Sessions memo was hardly earth-shattering. But it had the desired effect of creating the illusion of having solved a problem where none existed and cast its author in the falsely noble light of restoring order to a system that was already orderly.
This edict was developed further in a memorandum issued by Associate Attorney General Rachel Brand on January 25, 2018, shortly before she left the DOJ. The Brand memo in effect instructed government attorneys to reject requests from agencies to undertake enforcement actions that depend on guidance and that lack adequate statutory and regulatory authority to support their causes of action. One notable, very small, exception is that DOJ prosecutors can use evidence that a person read the guidance document to demonstrate that a defendant had knowledge of a legal requirement, as long as the guidance merely explained the statute or regulation containing the requirement in question.
Of course, knowledge is not an element that needs to be proved in civil cases, although the existence of such evidence may make courts more comfortable. Proving that defendants in criminal cases actually read a guidance document is likely to be difficult, especially if they are managers who have officially delegated compliance to underlings. And, although the complexities of proving mens rea—a guilty mind—are far beyond my scope here, showing that a given defendant studied all relevant compliance documents is often unnecessary under the legal doctrines of gross negligence and willful blindness. Under these doctrines, ignorance of the law is not a defense.
Guidance documents are far more likely to be used to give regulated parties a safe harbor from enforcement actions than they are as affirmative cudgels to prove culpability. This reality is not new, but it does reveal the sparse justification for the present hyperventilation over the subject.
A “practitioner insight” column published in Bloomberg BNA—Is Agency Guidance the Low-Hanging Fruit for Regulatory Reform?—demonstrates this unfortunate phenomenon of panic over guidance. Written by Hunton & Williams partner Andrew J. Turner and associate Alexandra Hamilton, the piece announces unnecessarily that agencies issue a great deal of guidance, as demonstrated by the case Appalachian Power Co. v. EPA, a 2000 decision by the U.S. Court of Appeals for the D.C. Circuit that set aside a guidance document on the grounds that it “significantly broadened” a 1992 Clean Air Act rule. So far, so good—the case exemplifies what courts ordinarily do under administrative law when guidance is challenged. But after explaining the recent Sessions and Brand memos, the authors leap to the overwrought conclusion that the new DOJ guidance policy represents a “marked shift from past practice” and presages the Trump Administration’s focus on a new “target for efficient regulatory reform.” Someone should tell the Chamber of Commerce about this new day.
As more careful observers of administrative law learned long ago, almost any procedural rule sometimes supports what advocates are trying to do and sometimes works against them. To condemn all guidance as the tool of the overly zealous who comprise the imaginary deep state is foolish. Many, if not most, of the firms that request guidance are engaged in nothing more than a well-meaning effort to stay in compliance. Conversely, agency staff who craft such documents are doing their best to interpret the law honestly. Getting rid of all guidance, as opposed to using it in a thoughtful way, will cause more harm than good. If either participant harbors more sinister motives, the courts hover in the near background, ready to curtail regulatory under-reach and overreach.
Conservative administrations produce conservative guidance, and liberal administrations produce liberal guidance. An outright war on guidance is likely to have consequences that will not make the private bar or its clients happy.