Promoting the Rule of Law Through Improved Agency Guidance Documents

Background

Prior to its revocation, the executive order issued under the Trump administration had a substantial impact on the regulatory landscape. It mandated that federal agencies place all guidance documents in a searchable database to enhance transparency and accountability. The intent was to ensure that these documents, which often carried significant weight even though they were non-binding, would only be issued following a more rigorous process akin to formal rulemaking. This approach significantly altered how agencies like the Environmental Protection Agency (EPA) and the Department of Labor (DOL) could issue guidance, requiring them to offer the public a more accessible way to provide feedback. By requiring a public comment period and necessitating that comments be considered, the order was meant to increase public participation in policymaking.

The order also had a direct effect on how agencies enforced their policies. It stipulated that guidance documents could not be enforced as if they were laws themselves, mitigating the often implicit threat that non-compliance might bring enforcement action. This was particularly significant in sectors like healthcare and financial services, where agencies often relied on guidance to clarify complex regulatory obligations. For instance, businesses operating under the Food and Drug Administration (FDA) oversight saw a shift in how compliance was assessed, as guidance-driven compliance was somewhat relaxed without a formal rulemaking process.

Additionally, the order had operational repercussions within federal agencies, necessitating significant adjustments in their internal processes. Agencies had to allocate additional resources for integrating guidance documents into specified databases, reviewing existing documents, and ensuring compliance with the new procedures. This reallocation often shifted resources away from other operational areas, causing a strain, particularly on those agencies with extensive regulatory reach like the Department of Health and Human Services (HHS). Moreover, the need to delineate what constituted a "significant guidance document" meant that agencies had to collaborate closely with the Office of Management and Budget (OMB), which could delay the issuance of needed guidance in rapidly evolving policy areas.

Reason for Revocation

The revocation of this executive order was part of a broader policy shift under the Biden administration, which aimed to restore regulatory enforcement as a tool for achieving public policy outcomes. The order's rescindment on January 20, 2021, came on the heels of a broader attempt to reinvigorate federal regulatory frameworks that, critics argued, had been unduly constrained. This was part of an overarching ideological shift towards reinforcing federal oversight to address systemic concerns such as climate change, healthcare, and consumer protection.

President Biden's decision was driven by the necessity to allow agencies greater flexibility in issuing guidance without undergoing protracted processes ill-suited for urgent issues. Biden's administration saw regulatory guidance as a vital instrument for quick policy adaptation, especially in critical areas like environmental standards and public health advisories. By overturning the restrictions imposed by the Trump-era directive, the Biden administration sought to empower federal agencies to react nimbly to emergent challenges.

The Biden administration's approach reflected a fundamental belief in the competency of agencies to use guidance to fill gaps left by Congress's legislative efforts, thus enabling executive branch components to act on critical issues efficiently. This restoration of agency discretion aimed to boost the ability of the government to enact detailed policy actions swiftly without being overly constrained by procedural burdens intended to curtail executive overreach.

Furthermore, the revocation was seen as a return to a more conventional understanding of administrative law, emphasizing the role of agencies as expert bodies capable of crafting technically sound and timely policy advisories. Biden's reversal can be construed as an endorsement of the traditional administrative state, where agencies play a crucial role not just in rulemaking but also in ongoing policy development through guidance.

Winners

The revocation of the order favored various advocacy groups, particularly those focusing on environmental protection and public health. These groups saw the return to less restrictive guidance issuance as a boon, enabling federal agencies to enforce regulations addressing climate change and pollution without the procedural delays that might weaken such efforts. For instance, environmental advocacy organizations such as the Sierra Club benefited from agencies like the EPA having fewer procedural barriers to issuing guidance on emissions standards and environmental compliance.

Public interest organizations, particularly those involved in consumer protection, also stood to benefit from the shift. The Consumer Financial Protection Bureau (CFPB), for example, gained enhanced capacity to offer guidance on deceptive practices and consumer rights without being encumbered by onerous procedural requirements. This helped mitigate practices within financial sectors deemed harmful to consumers, offering more robust citizen safeguards.

Additionally, sectors heavily reliant on federal oversight, such as healthcare and pharmaceuticals, found the regulation rollback advantageous. With the FDA regaining the ability to issue timely guidance on drug approvals and safety protocols, companies like Pfizer and Moderna could more rapidly adapt to emerging medical standards without waiting for exhaustive rulemaking procedures. This agility was particularly critical during pandemic responses, where swift regulatory updates could mean the difference between life and death.

Losers

On the other hand, industries wary of increased regulatory scrutiny found the revocation less favorable. Enterprises within the fossil fuel sector, such as coal and oil companies, were particularly sensitive to abrupt changes in environmental guidance, which could impose unforeseen compliance costs. These industries, which had previously relied on the predictability of protracted rulemaking processes to slow the imposition of stringent regulations, found themselves under increased regulatory pressure.

Small businesses could also potentially face increased uncertainty and compliance burdens due to more frequent and rapid guidance changes. Unlike larger corporations, smaller enterprises often lack the resources to frequently adjust to new regulatory environments. The removal of the procedural safeguards that mandated broad public commentary and feedback meant that such businesses had less input and longer adjustment periods to regulatory changes enacted through guidance.

Moreover, the revocation had implications for legal practitioners and compliance officers, whose roles became more challenging with the resurgence of guidance documents. They need to keep abreast of the frequent and often complex updates issued by federal agencies, potentially increasing compliance costs and operational complexities as entities seek to align with the revised regulatory landscape. This shift heightened the need for continuous legal oversight and adaptability, marking a departure from the more stable regulatory environment propagated under the previous administration.