Guidance on Guidance from the Administrative Conference of the United States

By notice in the Federal Register, the Administrative Conference of the United States published five new recommendations for regulators.  ACUS is an independent federal agency charged with convening experts from the public and private sectors to recommend improvements to administrative process and procedure, including those of such space regulators as the Federal Aviation Administration, the Federal Communications Commission, and the National Oceanic and Atmospheric Administration. ACUS intends its initiatives to promote efficiency, participation, and fairness in federal regulations.  In that regard the recommendation regarding policy guidance is worth looking at more closely.  The rest encompass plain language, marketable permits, learning from experience, and waivers and exemptions.

Defined.  First, what is a policy statement and how does it relate to administrative law?  Quoting from the 1947 Attorney General’s Manual on the Administrative Procedure Act, ACUS says:

General statements of policy under the Administrative Procedure Act (hereinafter policy statements) are agency statements of general applicability, not binding on members of the public, ‘‘issued . . . to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power.’’  Interpretive rules are defined as rules or ‘‘statements issued by an agency to advise the public of the agency’s construction of the statutes and rules which it administers.’’

Neither policy statements nor interpretive rules require public notice and comment, and agencies often refer to them as guidance.  The ACUS recommendation applies only to policy statements.  The FAA’s guidance falls into this category.

Improper treatment of guidance as mandatory.  ACUS took pains to note the many benefits of policy statements, including their flexibility and how much easier they are to issue than are regulations.  However, one drawback is that policy statements, too, acquire an improper, but nonetheless present, mandatory patina of their own:

…modern regulatory schemes often have structural features that tend to lead regulated parties to follow the policy statement’s approach even if in theory they might be legally free to choose a different course, because the costs and risks associated with doing so are simply too high. This is often the case if statutes or regulations (a) require a regulated party to obtain prior approval from an agency to obtain essential permissions or benefits; (b) subject a regulated party to repeated agency evaluation under a legal regime with which perfect compliance is practically unachievable, incentivizing the party to cultivate a reputation with the agency as a good-faith actor by following even non-binding guidance; or (c) subject the regulated party to the possibility of enforcement proceedings that entail prohibitively high costs regardless of outcome, or can lead to sanctions so severe that the party will not risk forcing an adjudication of the accusation.

Both launch and satellite operators may feel the pressure to follow non-binding guidance given that they need licenses from the FAA, the FCC, and NOAA.  At the FAA, an operator must renew its license every five years, if not more frequently, thus placing it in the position of undergoing repeated regulatory review.  The FAA’s Office of Commercial Space Transportation issues guidance, some in the form of Advisory Circulars, some other under names.

ACUS goes on to note that internal agency incentives may cause agency officials to treat the “guidance” in a policy statement as mandatory:

Officials who behave inflexibly may be seeking to balance the importance of being flexible against stakeholder demands to honor other, competing values that officials would be remiss to ignore. For example, if one regulated firm argues for a different approach from that in a policy statement and the agency approves, this may prompt other firms to criticize the agency for not keeping a level playing field among competitors; may cause other firms to lose faith in the agency’s consistency and predictability, which may render them less likely to trust and cooperate with the agency; and may open the agency to accusations of favoritism from non-governmental organizations (NGOs), the media, and congressional overseers.

In principle, one way an agency might reconcile these understandable pressures would be to prepare and disseminate written reasons when it approves an approach different from that in a policy statement, thereby making the same reasoning available to all similarly situated parties going forward. This transparency helps level the playing field, makes agency behavior more predictable, and diminishes concerns about favoritism. But agencies might still find inflexibility the easier course and adopt it by default, because reason-giving requires agency resources. Besides this, there are additional organizational reasons for inflexibility: Some agency offices, by reason of their usual day-to-day business, are socialized to be less receptive to stakeholder requests than others; higher-level officials have institutional reasons to back the decisions of their subordinates; and the distinction between binding and nonbinding policies is counter-intuitive for many officials, at least without substantial training.

Opportunity for public comment.  ACUS recommends considering public participation in the formulation of a policy statement such as guidance.  One benefit of allowing the public to comment on a draft is that  participation may help those who lack the resources to fight an enforcement action brought for a violation of a purportedly non-binding guidance.

ACUS advises treating its recommendation for public participation with care, because it sees drawbacks to implementing it too widely.  Specifically,

a broad mandate applied to a resource-strapped agency may cause the agency to fail to process and incorporate comments and instead leave many policy statements in published ‘‘draft’’ form indefinitely, which may at least partly defeat the purpose of participation and cause stakeholder confusion. Second, a broad mandate may so legitimize policy statements in the eyes of the agency that such statements could end up largely supplanting legislative rulemaking.

Both possibilities are real risks, and ACUS identifies them because they happen.

Publication of acceptable alternatives for transparency.  The specific recommendations start on page 61736, but one in particular bears mention.  ACUS recommends something that should be standard practice.  Specifically, when the agency accepts a proposal for a lawful approach other than what the guidance of a policy statement says is acceptable, and the new approach seems likely to apply to other situations and persons, the agency should share its decision and the reasons for it with other persons who might benefit from it.  (This sharing should, of course, be subject to protections for confidential business or personal information.)  The best way to share this information is through the Federal Register, but an agency’s website can also help ensure that people actually see it.