Guidance on Guidances

I’ll wrap up our conversation about the administrative state not with grand theory, but in a more mundane register: with some legal points about so-called “guidances,” which seem to have become a flash-point for critics of the administrative state. My aim is to dispel some misconceptions which seem especially prevalent among nonlawyers. Hence I limit myself to settled legal propositions.

  1. Guidances are typically either agency statements of policy, for example enforcement policy, or else agency interpretations of binding statutes and binding administrative rules. Such binding rules are often (although not always) promulgated using notice-and-comment procedures, which allow any interested person to comment, and which oblige agencies to respond to material comments.
  2. In either case, guidances do not bind anyone by themselves. They implement or interpret underlying statutes or binding administrative rules that went through more elaborate procedures (or that, in the case of some rules, were validly exempted therefrom). It is not legally possible for an agency to use a guidance to create new legally binding obligations on regulated parties, except to the extent that underlying statutes and valid regulations already do so.
  3. Guidances are expressly exempted from the legal requirement that administrative rules must be made through (at least) the notice-and-comment process. See Section 553(b)(3)(A) of the Administrative Procedure Act of 1946. That exemption represents a judgment by Congress about appropriate procedure, a judgment embodied in express statutory text; it was not created by executive order or agency fiat.
  4. If a party believes that the agency has wrongly classified an action as a guidance, when it is really a binding rule or when the agency is treating it as binding, the party may challenge the agency’s action in court on procedural grounds in an appropriate case (assuming the law otherwise allows the party to proceed in court). Although guidances are sometimes said to have an in terrorem effect that frightens away would-be challengers, such cases are the routine stuff of administrative law litigation in the federal courts. The U.S. Court of Appeals for the District of Columbia Circuit decides them all the time.
  5. If and when a guidance was properly exempted from notice-and-comment, it is because the guidance lacks “legal effect.” Because guidances lack legal effect, they do not improve or otherwise change the agency’s legal position. A regulated party is always free to argue that it does not fall within the terms of the underlying statute or binding regulation that the guidance is interpreting or implementing.
  6. Even if a guidance was properly exempted from notice-and-comment procedure, it may be challenged on any number of grounds. The leading ones are (1) that it represents a substantively invalid interpretation of the underlying regulation, or (2) that the agency’s policy or interpretation was inadequately reasoned or justified (“arbitrary and capricious”). As to the former challenge, the agency will receive deference under Auer v. Robbins (1997) when the underlying law is ambiguous, but the court may always decide that the agency’s interpretation is clearly wrong.
  7. The function of guidances is to guide – to give regulated parties and all the world notice of the agency’s views. In their absence, the agency would be free to take the same legal position, just without offering guidance to that effect. The absence of guidances does not mean less law; it means less guidance, less legal certainty, less clarity for regulated entities.

Also from this issue

Lead Essay

  • Philip Wallach describes rising skepticism about the administrative state in our representative government. But what can be done about it? Populists promise to return the government to the people, and yet effective government in the modern world to a high degree requires technical expertise. Libertarians have a telling diagnosis of the problem, says Wallach, but few workable solutions. If Congress is to regain control of the sprawling administrative state, it will have to demonstrate that it is willing and able to govern instead.

Response Essays

  • Clyde Wayne Crews finds much to agree with in Philip Wallach’s diagnosis of administrative sprawl. But then he asks: Why not rein it in? Other countries have done so, and we have even taken some important and bipartisan steps in that direction before. The bureaucratic pretense of expertise has never been so clearly exposed as it is today, and we should take the opportunity to improve the regulatory environment before incipient technologies, like autonomous cars and commercial drone transport, are caught in the regulatory web.

  • Adrian Vermeule openly doubts that the administrative state faces a legitimacy crisis. He observes that Congress itself created the administrative state, and that it remains firmly in control of its creature. Moreover, the public appears fairly content with the administrative state that we have, and certainly shows no inclination to scrap the whole thing. Both these observations should count, he suggests, in any consideration of the administrative state’s legitimacy. In short, there is no crisis here, and no radical solutions are warranted.

  • John Hasnas does not think that the administrative state can be reformed. But it can be outpaced. This, he says, offers hope for libertarians, whereas politics does not. The administrative state is inherently slow to adjust to new social developments, and liberty will always exist just a few steps ahead of it.