68th Plenary Preview: Agency Guidance

This is a guest post authored by Nicholas Parrillo, a Professor at Yale Law School.  This post is the result of the author’s independent research and does not necessarily represent the views of the Administrative Conference or its Members, or the United States.

For an agency and the people it regulates, enabling legislation and regulations do not answer all questions.  They leave the officials with much discretion.  When the agency issues communications to the public on how it plans exercise that discretion, such communications are called “policy statements” (or sometimes “guidance”). 

Policy statements are essential and ubiquitous features of countless agency programs.  But because they are not regulations, they are supposed to be nonbinding—mere tentative articulations of the agency’s current thinking about what to do in individual adjudicatory or enforcement proceedings, subject to the agency’s case-by-case discretion and regulated parties’ individual arguments for doing things differently. 

Because of this requirement to be nonbinding, policy statements have been the subject of continuing controversy.  The concern is that agencies in reality are not tentative or flexible when it comes to using policy statements but instead follow them as if they were binding regulations, and regulated parties are under coercive pressure to do the same.  If policy statements are used as binding norms, this undermines the mandate of the Administrative Procedure Act (APA) that agencies should make general binding norms only through the exacting procedures of notice and comment rulemaking. 

In light of guidance’s importance and the concerns about it, the Conference contracted with me to conduct a qualitative empirical study of the subject.  I interviewed 135 individuals across agencies, regulated industries, and NGOs, and wrote up the findings in a report to the Conference.

While the critics are partly right in that policy statements are sometimes inflexible and regulated parties are often under strong pressure to follow them, this state of affairs results mainly from institutional factors that are either beyond the agencies’ control or result from the agencies being cross-pressured or under-resourced or operating by inertia—not usually because the agencies are engaged in bad-faith circumvention of the APA.  The problem with policy statements is largely an institutional problem that calls for an institutional response, not a problem of bureaucratic bad faith that calls for accusation and blame. 

Much of the concern about policy statements can be mitigated if agencies adopt institutional measures in favor of flexibility.  A recommendation approved by the Committee on Judicial Review, drawing upon my report and slated to be considered at the 68th Plenary Session, sets forth such measures, while acknowledging that these will in some cases have to be balanced against resource constraints and legitimate pressures on agencies from stakeholders and political overseers to provide some degree of consistency and predictability. 

The concern about policy statements can also be mitigated if agencies voluntarily allow for public participation in the formulation of such statements.  The recommendation sets forth techniques to allow such participation (up to and including soliciting written input from the public), as well as factors agencies should consider in deciding what level of participation is appropriate for any given policy statement, considering participation’s costs and its potential pitfalls.