Agency Guidance

Question 1

Instances When Agency Guidance Likely to Come Up

Answer 1

• new admin -> facing policy disputes w/ previous + trying to figure out how to start shift to your admin
• when a new condition in the world renders existing understanding of your regulations outdated (scrambling to apply existing regulations to things like climate change, changes from AI, etc.)

Question 2

Substantive Rule/Legislative Rule

Answer 2

• rules issued by agency pursuant to statutory authority + which implement the statute
• have the force + effect of law
• these are the classic regs that require notice and comment
• need to be published

Question 3

Interpretive Rules

Answer 3

• rules or statement used by agency to advise public of agency’s construction of the statute + the rules which it administers
• shouldn’t be doing something new, should just be a clarification
• NO notice and comment, but do need to be published

Question 4

General Statement of Policy

Answer 4

• statements issued by agency to advise public prospectively of the manner in which the agency proposes to exercise a discretionary power
• technically no APA process requirements, but agencies publish as a practical matter

Question 5

Distinction Between the Various Types of Agency Docs

Answer 5

• Prof essentially said very difficult to tell (said may necessitate reliance on methods like “I know it when I see it”)
• legislative rule vs. non-legislative particularly important under the APA b/c of notice and comment

Question 6

Appalachian Power Company v. EPA - Facts

Answer 6

• D.C. Cir. 2000
• Title V of 1990 Amendments of Clean Air Act – states must submit permits to EPA for approval (think otherwise fines, feds can take over process)
  ->If EPA objects to permits within 45 days, the state may not issue these permits
• Permits contain requirement for periodic monitoring –> unclear whether these trumped existing non-periodic monitoring for certain polluters
• EPA issued guidance doc for in 1992 – said need periodic monitoring even where source already subject to a different non-periodic monitoring
• States believe for certain sources they could fulfill the reg with a req for just a single test if that’s what the other regime allowed, vs EPA guidance saying a single test wouldn’t fulfill guidance + would in certain circumstances need more stringent reqs than otherwise applicable state and fed reqs

Question 7

Appalachian Power Co - EPA’s First Arg

Answer 7

• a little circular -> saying not a reg b/c it’s adjustable guidance, not the final decision on the matter + therefore not reviewable by the court
• basically along the lines of we called it guidance + no notice + comment, so therefore not a reg
  -court rejects this - says test is a functional one

Question 8

Appalachian Power Co - Functional Analysis

Answer 8

• legislative rule = Something from which legal consequences will follow, something where rights + obligations have been determined
• Real-world signs – if state entity is required to act
  -> Key thing = is EPA going to enforce this interpretation -> look at what’s happening in the field, if you’re making the state change its behavior to comply, it’s a final rule
  -> Technically nothing has happened yet, but they’re imagining

Question 9

Appalachian Power Co - Attributes of a Final Agency Action

Answer 9

• consummation of agency’s decision-making process + one in which rights or obligations have been determined or from which legal consequences will flow
• court also rejects argument that it’s not final cause agency can always revise the guidance

Question 10

Appalachian Power Co - Quotes Re Legislative Rule

Answer 10

• Whether or not rule is binding is “functional test”; “the elements of the Guidance petitioners challenge consist of the agency’s settled position, a position it plans to follow in reviewing State-issued permits, a position it will insist State and local authorities comply with in setting the terms and conditions”
• “If an agency acts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative rule, if it bases enforcement actions on the policies or interpretations formulated in the document, if it leads private parties or State permitting authorities to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency’s document is for all practical purposes `binding.’”

Question 11

Appalachian Power Co - Interpretive Rule

Answer 11

• Not interpretive rule clarifying existing regulation: “we are convinced that elements of the Guidance those elements petitioners challenge significantly broadened the 1992 rule [from logical reading of regulation]…In directing State permitting authorities to conduct wide-ranging sufficiency reviews and to enhance the monitoring required in individual permits beyond that contained in State or federal emission standards even when those standards demand some sort of periodic testing, EPA has in effect amended [the existing rule]. This it cannot legally do without complying with the rulemaking procedures…”
• Prof’s takeaway- interpretive rule can only offer an interpretation of regulation that narrows the impact of the regulation it is interpreting and does NOT broaden it.

Question 12

Appalachian Power Co - Boilerplate Language

Answer 12

• EPA essentially tries to include a savings clause (“intended solely as guidance and do not represent final action and cannot be relied upon to create…”) -> court doesn’t buy it, labels matter less than practical effect
• Boilerplate language is irrelevant: If it quacks like a final agency decision, it is final agency decision
• court also points to the verbs connoting finality (commands, requires, orders, dictates)

Question 13

Appalachian Power Co - Takeaway

Answer 13

• functional test for guidance vs legislative rule
• regardless of what agency claims a doc is, court gets to decide based on projected effect (can’t evade notice and comment with labels)

Question 14

National Mining Association v. McCarthy - Facts

Answer 14

• State permits for surface mining under Clean Water Act
• EPA needs to approve or not object to permits states want to issue for surface mining (CWA is designed to ensure surface mining doesn’t do too much to pollute navigable waters)
• 2011 – final guidance related to issuance of these permits
  -> Surface mining was raising salinity of water bodies such that they were more likely to conduct electricity (not great for aquatic life)
  -> EPA deals with this evidence by issuing final guidance
  -> Guidance recommends conductivity levels not exceed a certain level for Appalachia

Question 15

National Mining Association - General Statement of Policy Quote

Answer 15

• “An agency action that merely explains how the agency will enforce a statute or regulation—in other words, how it will exercise its broad enforcement discretion or permitting discretion under some extant statute or rule—is a general statement of policy.”

Question 16

National Mining Association - Legislative Rule Quote

Answer 16

• “An agency action that purports to impose legally binding obligations or prohibitions on regulated parties—and that would be the basis for an enforcement action for violations of those obligations or requirements—is a legislative rule”

Question 17

National Mining Association - Core Factors Distinguishing Legislative Rules vs Guidance

Answer 17

• 1) The most important factor concerns the actual legal effect (or lack thereof) of the agency action in question on regulated entities.
• 2) Another factor in our case law concerns the agency’s characterization of the guidance. The Final Guidance repeatedly states that it “does not impose legally binding requirements.” The Final Guidance also notes that it is “not intended to direct the activities of any other Federal, State or local agency or to limit the exercise of their legal authority.”
• 3) Our cases also have looked to post-guidance events to determine whether the agency has applied the guidance as if it were binding on regulated parties.

Question 18

National Mining Assoc - Application to Facts

Answer 18

• EPA repeatedly concedes no legal effect
• state authorities are free to ignore the guidance, according to the ct (no legally binding reqs to obtain a permit)

Question 19

National Mining Assoc - Arg that the Guidance Practically Imposes Reqs?

Answer 19

• ct looks at what has happened thus far - no ev that agency has relied on it for enforcement, no order compelling a regulated entity to do anything yet
• EPA can’t rely on the guidance, would need to make the litigation about whether or not you met the standard set in the regulation (not whether you exceeded the conductivity levels that EPA thinks too high)
• EPA would have to posture its arguments in litigation in reference to solely the regulation, not to the guidance

Question 20

National Mining Assoc - Possibilities for Regulated Entity

Answer 20

• Prof suggested not entirely a satisfactory outcome - you’re likely to comply w/ guidance anyway than go through litigation + bear risk of failure

Question 21

Appalachian Power Co - How could EPA have changed its guidance?

Answer 21

• follow the game plan from National Mining Association
• incentivize but not impose the guidance (“recommend”)
  -> EPA can change language to be less harsh
  -> Guidance in NMA can nonetheless change behavior even if not binding
• use of selective enforcement (and threat of delaying permits) to pressure private sector to comply

Question 22

Opinion Letters

Answer 22

• private guidance to members of regulated community
• company goes to agency to ask for guidance -> dept issues opinion letter to requesting entity
  -> if co follows opinion letter advice, employer can’t be held liable (get out of jail free card, even if ct rules agency interp was erroneous)

Question 23

Perez v. Mortgage Bankers - Facts

Answer 23

• 2015
• Fair Labor Standards Act: Everyone entitled to overtime pay, except for “Certain classes of employees” “employed in a bona fide executive, administrative, or professional capacity … or in the capacity of outside salesman ….” (“administrative” exemption)
• bank trying to figure out if mortgage loan officers exempt from overtime reqs -> got op letter saying they don’t qualify (they do get overtime
• 2004 -> Secretary promulgates new regs interpreting FLSA through notice and comment, including def of administrative exemption
  -> said ex did not apply to those whose primary duty is selling financial products, but didn’t specifically address mortgage loan officers (some uncertainty)
• 2006 - Sec issues another letter saying mortgage loan officers WERE covered by exemption
• 2010 - flips again - Wage and Hour Administrator issues new guidance (Administrator’s Interpretation) -> says they AREN’T exempt -> Mortgage Bankers Assoc files lawsuit

Question 24

Mortgage Bankers - Holding

Answer 24

• refused to reach whether change in policy needs to be promulgated through legislative rule (because respondent did not argue)
• Interpretive Rule - When a federal administrative agency first issues a rule interpreting one of its regulations, it is generally not required to follow the notice-and-comment rulemaking… Thus court overrules Paralyzed Veterans, which had held that agency must use the APA’s notice-and-comment procedures when it wishes to issue a new interpretation of a regulation that deviates significantly from one the agency has previously adopted (Paralyzed Veterans is NOT consistent with the APA)

Question 25

Mortgage Bankers - Takeaway

Answer 25

-honestly unclear, + not Prof’s fave case anyway
- BUT think point was that you don’t need to do notice and comment just because you’re issuing a new interpretation of a reg that deviates significantly from a way you previously interpreted it
-> Prof then pointed out they never reached issue of whether leg or interp rule b/c petitioner had waived it
- So, you CAN change interpretations without notice and comment

Question 26

Mortgage Bankers - Hypo of If they Hadn’t Waived the Legislative Rule Arg

Answer 26

• Probably not a legislative rule: Policy flip flopping and back and forth does not seem to expand the regulation; it is merely interpreting the reg in a different way
• Even if it changes the company’s legal obligations, those changes are due to change in interpretation of the existing regulation, not expansion of it.
• Factors: Consummation of agency’s policy process (yes), BUT does not impose legally binding obs

Question 27

Auer Deference

Answer 27

• Chevron for agency regs
• the deference agencies get when interpreting own regs, but only when ambiguity or uncertainty
• rationale - agencies in a better position to interpret own regs

Question 28

Kisor v. Wilkie - Holding

Answer 28

• upholds Auer, but also adds a gloss/clarifies its scope
• Kagan plurality (does not get five votes for full-throated embrace of Chevron’s logic)

Question 29

Kisor - Rationale

Answer 29

• “We have explained Auer deference (as we now call it) as rooted in a presumption about congressional intent—a presumption that Congress would generally want the agency to play the primary role in resolving regulatory ambiguities.”

Question 30

Kisor - Kagan’s Constraints on Auer

Answer 30

• “regulation is genuinely ambiguous”
• agency’s reading must be “reasonable”
• must be agency’s authoritative or official position
• wheelhouse doctrine - agency’s interpretation must in some way implicate its substantive expertise
• “agency’s reading of a rule must reflect “fair and considered judgment” to receive Auer deference…court should decline to defer to a merely ‘convenient litigating position’ or ‘post hoc rationalizatio[n]’”
• more deference when there’s more process involved - don’t definitively need notice and comment, but it’s one example of when there’s some kind of notice (interpretation can’t create unfair surprise for regulated community - probably can’t change position on which parties relied)

Question 31

Kisor - Chevron

Answer 31

• Kavanaugh and Chief Justice – even though Gorsuch wanted to overturn Auer, Chief says controlling opinion is not so far away from Gorsuch view, + say no one hoping for Chevron deference to survive should get too excited
• Concurrences saying not affirming Chevron, + majority of justices don’t sign on to Kagan’s part about principles underlying the deference

Question 32

Advantages of Guidance

Answer 32

• speed
  -> promulgating regs = LENGTHY process - need proposal, then notice + comment, then final, then period of time until effective
  -> added issue of if you have a new admin coming in, you might not be able to finish promulgation (currently seeing a lot of big Biden regs for this reason)
• stakeholders may get demanding + impatient -> want to do something to show you’re working on the problem

Question 33

Downsides of Guidance

Answer 33

• much less consequential in terms of changing behavior
  -> if you go into enforcement action, you can’t rely on guidance
• might not fully satisfy stakeholders
• super impermanent - can be changed swiftly, much less resilient
• the greater the impact it has, the less likely it is to be legal
  -> if you then get shut down in litigation, you’d need to propose a rule from scratch
  -> guidance isn’t just a format you’re choosing, it changes the substance you’re able to include -> can be hard to tell how far you can go on substance, + serious consequences if you get it wrong
• notice and comment can help issue land better w/ public (since opportunity for input)
  -> also might gain valuable input
  -> Prof did note though that you CAN do outreach for guidance + she did always advise agencies to do this

Question 34

Ideas for How to Insulate Guidance from Legislative Rule Allegations

Answer 34

• Don’t use too much directive language (use think about/consider, don’t use “must”)
• Instead of caveat that it’s not binding at the end, try to sprinkle it through
• If you put it out under the Deputy Assistant Director name, it looks more guidance-y – lower level makes it look slightly less forceful