EPA's New Rule Limiting the Use of "Guidance" May Make It Easier, or Harder, to Defend Against Enforcement Actions

President Trump issued an Executive Order on October 9, 2019,¹ to make the use of guidance documents by federal agencies more transparent.  The Environmental Protection Agency subsequently promulgated a final rule, effective November 18, 2020, to clarify how it will manage guidance documents consistent with the Executive Order.²  Guidance are memoranda, policy papers, or other documents that articulate an agency’s interpretations of laws, regulations, or policies, that have been vetted and approved within the agency but were not subject to public comment, and that do not have the legal force of a regulation or a law.  Despite the fact that guidance is not legally enforceable, both EPA and the regulated community frequently rely on guidance to direct their decisions.  Sometimes defendants decry EPA’s use of guidance as legal authority, arguing that an agency should not be allowed to rely on unsanctioned interpretations in enforcement actions.  However, limiting EPA’s use of guidance may paradoxically lead to less transparency regarding Agency decisions and greater uncertainty in the regulated community.

The new rule limits the EPA’s ability to issue new guidance and to rely on existing guidance to support its decision-making process.  Under the rule, Guidance Documents are defined as EPA statements of general applicability, to have future effect on regulated parties, setting forth a policy on a statutory, regulatory, or technical issue, or an interpretation of a statute or regulation.³  Only those guidance designated by the EPA as “active guidance documents” and added to the EPA website as such may be cited, used, or relied on by the Agency.⁴  The rule also sets forth various general requirements, such as requiring minimum information, format, and disclaimers.⁵  If existing guidance does not meet those requirements, it will be withheld from the website until it is revised to meet the requirements, and therefore, it may no longer provide support for public or private decisions.

Previously, the public was at a disadvantage with respect to using guidance: some applied only within specified regions, some were not accessible online, some were online but illegible, and some were issued or rescinded without advanced notice.  The new rule will be very helpful in addressing Guidance accessibility.  For example, the rule clearly identifies which Guidance can be relied on and creates a central repository for these.  Only those documents considered “Active Guidance Documents” and available on the EPA Guidance Portal⁶  on the EPA website are authorized to impact Agency decision-making.  Any other policies, documents, or statements will only serve historical purposes.  New “significant guidance documents”⁷ must be published in the Federal Register, subject to a public notice and comment period prior to becoming effective.⁸  The public will also have an opportunity to request modifications to, withdrawal of, and reinstatement of previously rescinded Active Guidance Documents.⁹  Because so many in the private sector rely on current guidance to guide their compliance efforts, the potential to address concerns by removing existing guidance in the hopes of preventing an enforcement action is a tremendous benefit to the regulated community.

Once identified, guidance can still be difficult to understand and may not accurately interpret the law.  Whereas requirements under environmental statutes and regulations are subject to public scrutiny, comment, and debate, these safeguards do not exist with respect to guidance.  The regulated community has no input on the substance or procedures contained in a guidance document; it cannot raise questions about the meanings, applications, or legitimacy of the policy contained therein.  Instead, EPA’s interpretations and policies are generated completely insularly.  In fact, guidance may be developed by a very small group of people even within the agency.  There are no process requirements or system for creating guidance, which can become official without any advance notice to the public, yet EPA can, and often will, strictly conform to the guidance once it has been released internally.

Significantly, guidance is issued without the oversight or involvement of elected officials.  Many have argued that the issuance of guidance exceeds an agency’s authority as an administrative body.  Unless and until challenged in court, EPA may pursue a policy that conflicts with a law.¹⁰  The lack of transparency in the formulation of guidance not only puts businesses at a disadvantage, but also may lead to governmental action contrary to Congress’ intentions.  For these reasons, EPA’s new rule may help companies determine what they must do to avoid being sued by the government and to limit the agency’s ability to sue a company for violating the law.

On the other hand, there may be disadvantages to the new rule, which places restrictions on the use of guidance.  For example, the inability to rely on guidance won’t stop EPA from interpreting statutes and regulations, but will limit the public from having advance notice of such interpretations.  One of the Trump Administration’s arguments was that guidance was being used to create new obligations for the public, but that instead, guidance should only be used to clarify existing obligations,¹¹  but the distinction between a new obligation and the full breadth of an existing obligation is not necessarily clear.  Regulations are necessary to flesh out the meaning of laws.  Unfortunately, sometimes regulations themselves turn out to be confusing, to conflict with other regulations, or do not anticipate all potential ramifications, so guidance is necessary to flesh out the meaning and/or application of regulations. Businesses and individuals rely on guidance to inform their decisions about how to comply with environmental laws.  Without such direction, the regulated community may unintentionally violate the laws, subjecting themselves to injunctive relief, penalties, and other enforcement actions.¹²

Although no federal agency is legally bound by guidance, the existence of guidance does create at least a presumed interpretation to which an agency should be held.  Defendants in an enforcement action may assert that EPA cannot later take a position contrary to one previously published and applied.  EPA’s own penalty policies recognize that good faith reliance on previously released information should reduce a proposed penalty.  The absence of guidance will allow EPA to make an enforcement decision without any advanced notice of the basis for its claim.

Limiting EPA’s ability to use guidance may also result in a loss in consistency within the agency.  There is frequent turnover within EPA, especially at the upper management level; yet ideally, an agency should act in a consistent manner regardless of political changes.  Guidance serves to keep policy consistent from one management team to the next, as well as from one administration to the next.  Guidance also serves to improve consistency among the EPA regions.¹³  EPA is a massive agency, with a very large bureaucracy.  Written guidance communicates official agency policy that would otherwise be impossible to disseminate.  A company that operates in numerous regions must be able to demand that all of its facilities be subject to the same requirements.  Likewise, a company should be able to demand that its competitors located in a different region be subject to the same obligations that it must follow.  Without the ability to rely on published guidance, each region will be freer to devise its own interpretations of environmental laws and regulations.  This is particularly true since the new rule expressly prohibits mandatory language in guidance, unless the language is being used to describe a statutory or regulatory requirement or is addressed to EPA staff.¹⁴  At first blush, a stakeholder might think it better not to have any mandatory obligations, but the absence of such language may only serve to make the meaning less clear and open to conflicting interpretations.

Guidance serves to inform the public of its obligations and rights are, to advise the government in reaching a decision, and to ensure that EPA provides consistent decisions over time and throughout the various regions. Where the new rule increases access to and identification of guidance, as well as the opportunity to have input in the guidance themselves, the public will benefit.  Where the new rule results in a less advanced notice of agency policy or in inconsistent interpretations of the law, it could create more difficulty for the public to understand the rules of the game. The new regulations will be codified in 40 CFR Part 2 Subpart D.

[1] EO 13891 “Promoting the Rule of Law Through Improved Agency Guidance Documents” directs federal agencies to finalize regulations outlining processes and procedures for issuing guidance documents in order to create “an open and fair regulatory process that imposes new obligations on the public only when consistent with applicable law and after an agency follows appropriate procedures.”  84 FR 55237(October 15, 2020).

[2] 85 FR 66230 (October 19, 2020).

[3] 40 CFR Section 2.503.

[4] 40 CFR Sections 2.503, 2.504.

[5] 40 CFR Section 2.505.

[6] The EPA Guidance Portal can be found at www.EPA.gov/guidance.

[7] EO 12866 and EO 13891; 40 CFR Section 2.506.

[8] There are exceptions to the comment requirements for “good cause” in the event of an emergency where EPA must be able to issue guidance quickly.

[9] 40 CFR Section 2.507.

[10]The courts do provide a check against an agency’s discretion to interpret the law. Although federal agencies have generally been allowed deference to interpret their own regulations or statutes, the Supreme Court has recently narrowed the deference in various cases.  See, e.g. Kisor v. Wilkie, 588 U.S. 139 (2019) and United States v. Mead Corporation, 533 U.S. 218 (2000).

[11] EO 13891, Section 1.

[12] Because they are excluded from the definition of guidance documents, any advisory or legal opinion directed to a particular party in response to a specific question or circumstance will still be allowed under the new rule.  40 CFR Section 2.503(8).

[13] The EPA is administered by offices in 10 different geographical regions.

[14] 40 CFR Section 2.505(c).