Guidance documents—you can’t live with them; you can’t live without them. That’s the way many people in both industry and the larger environmental community feel. Regulations often are unclear or open-ended, and guidance can provide greater clarity and a hope for consistent treatment. On the other hand, the lack of formal notice-and-comment procedures and the problematic nature of judicial review of guidance provide less protection against agency stretches of regulatory or statutory language.
Guidance documents are found in several variations—guidance memoranda, interpretive rules, enforcement manuals, and statements of policy. There are three recurring legal issues with respect to guidance documents. One is whether guidance documents are judicially reviewable on a pre-enforcement basis. A second is whether what the agency claims is a guidance document is really an interpretive policy exempt from the requirement for notice-and-comment rulemaking or is an invalid legislative rule that should have gone through notice and comment. And the third is what deference courts should give to such guidance documents. Interestingly, the Supreme Court has never addressed the first two issues despite a plethora of conflicting cases in the lower courts, and its decisions regarding the last issue of appropriate deference have been inconsistent and confusing.
The Administrative Procedure Act (APA) requires agencies to use notice-and-comment rulemaking in order to promulgate regulations, but it exempts from that requirement “interpretative rules [and] general statements of policy. . . .” The APA, however, does not define these terms, and courts have struggled in their attempts to distinguish them from ordinary regulations. The D.C. Circuit has characterized the distinction as “a hazy continuum,” American Hosp. Ass’n v. Bowen, 834 F.2d 1037, 1045 (D.C. Cir. 1987), and “enshrouded in considerable smog” General Motors Corp. v. Ruckelshaus, 742 F.2d 1561, 1565 (D.C. Cir. 1984) (en banc).
Moreover, courts sometimes add to the confusion by treating interpretive rules and statements of policy as equivalents, when really they are quite different. As Judge Silberman explained it, “An agency policy statement does not seek to impose or elaborate or interpret a legal norm. It merely represents an agency position with respect to how it will treat—typically enforce—the governing legal norm. By issuing a policy statement, an agency simply lets the public know its current enforcement or adjudicatory approach. [...] An interpretative rule, on the other hand, typically reflects an agency’s construction of a statute that has been entrusted to the agency to administer. The legal norm is one that Congress has devised; the agency does not purport to modify that norm, in other words, to engage in lawmaking.” Syncor Int’l Corp. v. Shalala, 127 F.3d 90, 94 (D.C. Cir. 1997).
Alas, even where it is easy to state clearly the difference between mere policy statements and interpretive rules, it is difficult to apply this fine distinction in practice. For example, in the ubiquitous Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (Chevron), the Environmental Protection Agency (EPA) had by regulation defined “stationary source” in the Clean Air Act (CAA) to include “all of the pollutant-emitting activities which belong to the same industrial grouping, ... located on one or more contiguous or adjacent properties, and ... under the control of the same person (or persons under common control) except the activities of any vessel,” 40 C.F.R. § 51.18(j)(1)(ii) (1983), or in other words to authorize a “bubble” over contiguous facilities. Yet, while here the agency had adopted this definition using notice-and-comment rulemaking, it could just as well have issued, without notice and comment, a guidance document—an interpretive rule stating its interpretation of the term “stationary source” as including contiguous facilities.
When is a guidance document truly “final” and does pre-enforcement review exist?
Last year the D.C. Circuit struggled with the reviewability of a guidance document in Natural Resources Defense Council v. EPA, 643 F.3d 311 (D.C. Cir. 2011). There EPA was continuing its attempts under the CAA to marry its new 8-hour ozone standard with the CAA’s requirements regarding non-attainment, which were premised upon EPA’s former 1-hour standard. Having engaged in rulemaking twice to deal with this problem and having its solutions rejected first by the Supreme Court in Whitman v. American Trucking Ass’ns, 531 U.S. 457 (2001), and then by the D.C. Circuit in South Coast Air Quality Management District v. EPA, 472 F.3d 882 (D.C. Cir. 2006), EPA tried to thread the needle this time through the use of a guidance document. The Guidance, issued in the form of a memorandum from EPA headquarters in January 2010, instructed regional directors to consider alternative state programs for non-attainment areas rather than the statutorily mandated program and in addition to allow an alternative to certain fees required of emitters in severe non-attainment areas. The EPA Guidance memorandum purported to allow states to choose between the statutory mandated program and an unspecified alternative program, but only if the alternative was ‘no less stringent’ than the statutorily mandated program. This portion of the Guidance was termed the “program alternative.” The other portion of the Guidance essentially allowed a forgiveness of mandatory CAA fees, something termed by the Court as the “attainment alternative.”
When challenged by the Natural Resources Defense Council (NRDC), the government utilized what the D.C. Circuit termed “all three arrows” in its jurisdictional quiver: that the NRDC lacked standing, the guidance was not final agency action, or that even if it was, it was not ripe for judicial review. Judge Tatel, writing for a unanimous panel, first found that NRDC had standing because members of NRDC would be injured by the EPA’s Guidance as a result of the delay it would cause in improving their air quality in various regions. As to finality and ripeness sufficient to merit judicial review, the court said these issues turned on the same question: “whether the Guidance announces a binding change in the law.”
The government argued that the Guidance did not change the law because regional directors always had the authority to consider such alternatives; the Guidance merely assured uniform interpretation and treatment of such proposed alternatives. That was the rub according to the D.C. Circuit; before the Guidance a regional director could have interpreted the statute and regulations so as not to allow the alternatives even to be considered, but now they had no such ability. The Guidance constrained their discretion, thereby making a binding change in the law and constituting final agency action. Moreover, because the question presented was purely legal, the issue was also fit for judicial resolution and hence ripe for decision. This much makes sense. Agencies should not be able to escape judicial review when they issue guidance documents that have a substantial, practical effect on persons.
Next the court considered whether the Guidance memorandum was an interpretive rule or statement of policy or an invalid legislative rule because it had not been adopted after notice and comment. The D.C. Circuit said the answer was “easy”—the Guidance was a legislative rule that required notice and comment. It could not be a statement of policy, because statements of policy cannot bind either the agency or the public. Here the Guidance bound regional directors to consider alternatives. Nor could it be an interpretive rule because nothing in the CAA, EPA’s regulations, or case law authorized EPA to accept alternative plans, and therefore there was simply no legislation for EPA to “interpret.”
This was not the end. After deciding that the Guidance was unlawful on procedural grounds, the court was asked to decide the merits: could EPA adopt the alternatives if it went through notice and comment? The court deferred with respect to the program alternative, saying that the statute did not preclude such an alternative, but it ruled that the attainment alternative, which allowed for an avoidance of statutory fees, was precluded by the CAA. But what do these conclusions say about the court’s decision that the Guidance was procedurally invalid as an interpretive rule or statement of policy? Obviously, if the statute precludes the attainment alternative, the Guidance on this point could not be valid regardless of the procedure used to adopt it. The proper sequence should be to consider the substantive validity before the procedural validity, because only if the Guidance could be substantively valid would its procedural validity have any relevance.
On the other hand, with respect to the program alternative, if the statute did not preclude the agency from adopting it, then why was the Guidance procedurally flawed on this point? If EPA was correct in its interpretation of the CAA alternatives, then there would have been an adequate basis in the absence of the Guidance for the agency to take the action it did. Thus, it is not clear why the Guidance was not an interpretive rule exempt from notice and comment.
Exactly HOW much deference is due to agency guidance?
The final legal question posed by guidance documents—what deference courts should give to them—was not addressed expressly by the court of appeals. If the agency makes the interpretation in a regulation adopted after notice and comment, Chevron deference applies, but if the interpretation occurs in a guidance document, whether Chevron deference applies is unclear. In Christensen v. Harris County, 529 U.S. 576 (2000), the U.S. Supreme Court stated unequivocally that “interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law ... do not warrant Chevron-style deference.” But two years later in Barnhart v. Walton, 535 U.S. 212 (2002), the Court in an opinion by Justice Breyer, who dissented in Christensen, denied that Christensen established an absolute rule, saying instead that Chevron deference might well extend to such interpretations depending upon the interpretive method used and the nature of the question at issue. Indeed, in Barnhart the Court concluded that the guidance document in that case was due Chevron deference because of “the interstitial nature of the legal question, the related expertise of the Agency, the importance of the question to administration of the statute, the complexity of that administration, and the careful consideration the Agency has given the question over a long period of time.” These contradictory messages and the inherent fuzziness of the Barnhart test leave lower courts in a quandary, a quandary the D.C. Circuit may yet have to resolve if EPA adopts the same interpretation of the “program alternative” yet again.