President Signs Executive Orders Regarding Transparency in Federal Guidance and Enforcement

On October 9, 2019, the President signed two executive orders (EOs), entitled “Promoting the Rule of Law Through Improved Agency Guidance Documents” (1st EO) and “Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication” (2nd EO), which are intended to increase the transparency of federal guidance documents and limit their use in enforcement actions.

The 1st EO generally requires federal agencies to improve the transparency of federal guidance documents and revise the process for issuing such documents.  Specifically, the 1st EO provides that within 120 days of the date the Office of Management and Budget (OMB) issues a memorandum implementing the 1st EO, each federal agency must post on its website a comprehensive searchable database that contains all guidance documents (or links to all such documents) in effect from the agency.  During that 120-day period, each agency must also review its guidance documents and rescind the documents that it determines should no longer be in effect.

In addition, the 1st EO provides that within 300 days of the date on which the OMB issues an implementing memorandum, each federal agency must finalize regulations, or amend existing regulations as necessary, to set forth the process for issuing guidance documents.  That process must include:

• A requirement that each guidance document clearly state that it does not bind the public, except as authorized by law or as incorporated into a contract;
• Procedures for the public to petition agencies for the withdrawal or modification of a particular guidance document; and
• For “significant guidance documents,” which include guidance documents that lead to an annual effect on the economy of $100 million or more or adversely affect the economy in a material way, provisions, in part, requiring: (i) a period of public notice and comment of at least 30 days before issuance, and a public response from the agency to major concerns raised in the comments, (ii) approval on a non-delegable basis by the agency head or by an agency head appointed by the President before issuance, and (iii) review by the Office of Information and Regulatory Affairs before issuance.

The 2nd EO, which compliments the 1st EO, generally seeks to prevent regulated persons from being subjected to civil administrative enforcement actions or adjudications without prior public notice of both the enforcing agency’s jurisdiction over the particular conduct at question and the legal standards applicable to that conduct.  Additionally, the 2nd EO provides that an agency may not treat noncompliance with a standard of conduct announced solely in a guidance document as itself a violation of applicable statutes or regulations.  Moreover, the 2nd EO states that when an agency takes an administrative enforcement action or otherwise makes a determination that has legal consequence for a person, it may apply only standards of conduct that have been publicly stated in a manner that would not cause unfair surprise.

Some of the other key provisions of the 2nd EO include the following:

• Any decision in an agency adjudication, administrative order, or agency document on which an agency relies to assert a new or expanded claim of jurisdiction (e.g., a claim to regulate a new subject matter), must be published in the Federal Register (or in the agency’s website database discussed above) before the conduct over which jurisdiction is sought occurs;
• If an agency intends to rely on a document arising out of litigation (other than a published opinion of an adjudicator), such as a brief, a consent decree, or a settlement agreement, to establish jurisdiction in future  administrative enforcement actions or adjudications involving persons who were not parties to the litigation, it must publish that document in the Federal Register (or in the agency’s website database discussed above) and provide an explanation of its jurisdictional implications;
• Within 120 days of the date of the 2nd EO, each agency that conducts civil administrative inspections must publish a rule of agency procedure governing such inspections, if such rule does not already exist;
• Within 180 days of the date of the 2nd EO, each agency must submit a report to the President demonstrating that its civil administrative enforcement activities and other actions comply with the Small Business Regulatory Enforcement Fairness Act; and
• Within 270 days of the date of the 2nd EO, each agency, to the extent practicable and permitted by law, must propose procedures to: (i) encourage voluntary self-reporting of regulatory violations by regulated parties in exchange for reductions or waivers of civil penalties, (ii) encourage voluntary information sharing by regulated parties, and (iii) provide pre-enforcement rulings to regulated parties.