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EPA Proposes Rule to Formalize Guidance Document Process

EPA Proposes Rule to Formalize Guidance Document Process

On May 19, 2020, the Environmental Protection Agency (“EPA”) released a proposed rulemaking that would codify the EPA’s practice under the Trump administration’s Executive Order 13891 “Promoting the Rule of Law Through Improved Agency Guidance Documents.” This proposed rule is the latest in a number of steps by the Trump administration to limit the use of agency guidance and promote formal rulemaking. If this rule is promulgated and survives judicial review, its reforms will not be undoable by another executive order though this revision will lack the permanence of a “notice and comment” rulemaking.1 Among other notable elements, the EPA has proposed to apply formal notice-and-comment requirements before issuing “significant” guidance.

The EPA also proposes to formalize the content and format of guidance, significant guidance, and guidance-related petitions to the agency. The proposed rule would have the potential to cool the issuance of significant guidance because of the increased time and effort necessary for the EPA to finalize such guidance and may encourage EPA, when determined to provide regulatory clarity, to more often use rule-making, given that the relative burdens of guidance and rule-making will become more equalized. Moreover, it would afford the public a contemporaneous window into the development of agency guidance and allow the regulated community to share facts and opinions germane to what a term or phrase in a statute means. In any event, if adopted, the proposed rule offers the public greater ability to affect EPA guidance than ever before. Comments on the proposed rulemaking are due June 22, 2020.

Analysis

On October 9, 2019, the President Trump issued Executive Order 13891 (“Order 13891”), which represented a sea change in how the federal government organizes, issues, and evaluates interpretative guidance. Among other things, Order 13891:

  1. Defined guidance and significant guidance;
  2. Mandated that agencies establish searchable websites with an indexed database linking all guidance documents in effect;
  3. Mandated that agencies review guidance documents and rescind those guidance documents that they determine should no longer be in effect;
  4. Mandated that agencies state that guidance documents are non-binding;
  5. Mandated that agencies create and implement procedures and processes for the withdrawal or modification of particular guidance;
  6. Mandated that agencies issue a memorandum identifying guidance documents that they consider exceptions from Order 13891 and presumptions about which guidance documents are “significant”;
  7. Increased procedures for “Significant Guidance Documents”—30 days’ notice-and-comment period; and
  8. Required that significant guidance be approved by an agency head or agency component head appointed by the President.

On October 31, 2019, the Office of Management and Budget issued a memorandum instructing agencies on how to comply with Order 13891 and providing further clarification on, among other things, what guidance is affected, how significant guidance will be treated, and how agencies should set up their online guidance portals.

On February 28, 2020, the EPA rolled out its guidance portal pursuant to Order 13891, which includes decades worth of official guidance for each of the EPA Headquarters Office and the EPA Regional Offices. The portal includes: (1) a point of contact for general comments, and (2) a page for the public to petition the EPA to withdraw or modify a guidance document.

The EPA’s May 19, 2020 proposed rule is “intended to increase the transparency of EPA’s guidance practices and improve the process used to manage EPA guidance documents.” The proposed rule essentially codifies Order 13891.

The process for issuing “guidance.” The EPA defines the term “guidance document” expansively to include any agency statement intended to have a future effect on the behavior of regulated parties regarding policy or agency interpretation regarding statutory, regulatory, or technical issues. The proposal creates a number of requirements for the format and content of new guidance, including, but not limited to: requiring that certain language and citations be applied, prohibiting mandatory language, and including an explicit disclaimer that guidance does not carry the force of law. Notably, the proposed rule carves out a number of exceptions to the rule—for example, guidance intended to apply to EPA personnel and positions taken in litigation. Also, any guidance proposed by EPA Regional Offices must receive concurrence from the relevant presidentially appointed EPA official before issuance. There are no notice-and-comment procedures for issuing normal guidance.

The process for issuing “significant guidance.” The new rule proposes what amounts to a mini-notice-and-comment process for new, modified, or withdrawn significant guidance. “Significant guidance document” is defined as:

a guidance document that may reasonably be anticipated to: (i) Lead to an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (ii) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (iii) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or, (iv) Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles of E.O. 12866 [Regulatory Planning and Review].

Proposals to adopt significant guidance will be noticed in the Federal Register. Much like the normal notice-and-comment procedure for legislative rules, the public may comment for no fewer than thirty days on significant guidance, which will be posted on a public forum (either the Federal eRulemaking Portal or the EPA website). After this period, the EPA will “respond to major public comments and identify in the required Notice in the Federal Register how the public may access the comments received and the Agency’s response.” This proposed rule does not, however, apply to guidance issued where: (1) the public health, safety, environment or some other emergency would “make it impracticable to delay issuance of the guidance document,” (2) a statutory or judicial requirement compels the EPA to immediately issue a guidance document, or (3) the EPA finds for “good cause that notice and public comment is impracticable, unnecessary, or contrary to public interest.” The EPA Administrator or other presidentially appointed EPA official must approve significant guidance.

Public petitions. The EPA is proposing procedures to allow the public to petition for the withdrawal or modification of active guidance documents. The public can submit such petitions on paper or through the EPA’s guidance portal. The proposed rule lays out a number of format and content requirements for public petitions. It also requires the EPA to respond to petitions within ninety days. The EPA notes that it will provide a single response to duplicative petitions. The EPA is not, however, required to implement changes within a prescribed time period.

Issues for which the EPA is requesting comment. The EPA is soliciting comment on a number of issues including:

  1. how best to inform the public that guidance has been issued, modified, or withdrawn;
  2. whether the issuance of a modification or withdrawal of a significant guidance document should be announced through the Federal Register and be subject to a 30-day public comment period;
  3. whether the procedural rule should specify any other information elements that should be addressed in a petition to modify or withdraw an active guidance document; and
  4. whether it should create unified public petition procedures, similar to those proposed in this rule for guidance documents, for EPA rulemakings.

Comments on the proposed rulemaking are due June 22, 2020.

Conclusion

Parties who regularly find themselves consulting guidance, relying on guidance, constrained by guidance, or advocating for changes in guidance should consider this rule-making proposal and how it will affect them. Greater public access, increased formalization, and increased process regarding guidance has both potential positives and negatives. Regulated parties are often frustrated that guidance is “de facto” law that a regulated party feels little ability to resist, even when thinking the guidance does not match or misstates underlying regulatory requirements. Securing greater process and public input could help to limit this from occurring. On the other hand, guidance sometimes can provide a degree of compliance security, making clear that certain business and operational practices will be considered sound by the Agency, particularly in newly emerging regulatory areas. Slowing or frustrating the issuance of guidance in those circumstances may work to a regulated party’s disadvantage. Weighing these considerations, and the frequency with which each is confronted, can help a party determine its views on this proposal.

1 The EPA proposed the rule pursuant to its “housekeeping authority” under 5 U.S.C. § 301 and explicitly noted that the proposed rule was one of agency organization, procedure, or practice that does not require notice and comment. Instead, the EPA stated that it is seeking public comment “as a matter of good government.” A future president would have the power to issue a revised regulation without going through notice and comment. In addition, Congress could overturn this rule under the Congressional Review Act.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.