Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication

Background

Before its revocation, Executive Order 13892 was hailed by proponents as a necessary measure to ensure transparency and predictability in administrative enforcement. Agencies were required to establish violations of law through laws and regulations, not through ambiguous guidance documents. It restricted agencies from applying non-published or non-standardized criteria in enforcement actions, which ostensibly reduced instances of what some perceived as capricious enforcement. Specifically, it constrained the use of guidance documents that had not undergone notice-and-comment rulemaking as de facto laws, compelling agencies to instead adhere to statutes and rules already subjected to public scrutiny. Thus, it aimed to safeguard individuals and businesses from what they regarded as "unfair surprise" by ensuring advance notice of the rules they would be judged upon.

The executive order also mandated formal opportunities for regulated parties to contest legal and factual determinations before enforcement actions. This requirement was perceived as enhancing procedural fairness by providing a platform for stakeholders to present defenses and seek clarifications before the imposition of penalties. While seen as a significant step in promoting transparency, this provision posed operational challenges for agencies, as it necessitated additional resources and time to engage in pre-enforcement dialogues. Additionally, by mandating agencies to adopt and publish procedures for civil administrative inspections, the order sought to ensure that enforcement activities were consistent, transparent, and devoid of arbitrariness.

Moreover, agencies were encouraged to foster cooperative compliance and information sharing with the private sector, aiming to create a more collaborative regulatory environment. By proposing mechanisms for voluntary self-reporting of regulatory violations in exchange for penalty reductions or waivers, it aspired to reposition enforcement bodies as partners rather than adversaries. However, the effectiveness of these incentives was dependent on the willingness of regulated parties to trust the balance offered between self-disclosure and enforcement leniency. In this sense, the order sought to remodel the dynamic between regulators and those they regulated, although outcomes varied across sectors.

Reason for Revocation

President Biden's repeal of the order on his first day in office signified a strategic shift in administrative governance, markedly reversing the deregulatory and transparency-focused agenda of the Trump administration. The revocation was part of a larger policy pivot towards strengthening regulatory oversight, emphasizing accountability, and ensuring robust enforcement of federal regulations. The outgoing executive order, with its restrictions on the use of guidance documents and preemptive requirement for standard setting, was perceived as impeding swift agency action, particularly in areas requiring urgent intervention such as public health, environmental protection, and financial regulation.

This ideological shift was rooted in the Democratic administration’s stance that the previous order unnecessarily fettered regulatory bodies, potentially impeding their ability to enforce laws effectively and responsively. By removing these procedural constraints, Biden aimed to restore what he viewed as a necessary flexibility for federal agencies to interpret and apply regulations expansively to safeguard public interests. This change was particularly accentuated in areas like environmental protection and consumer safety, where advanced notice and rigid rulemaking processes were seen as hindering timely policy responses.

The broader administrative philosophy underscored by the Biden administration placed value on expert agency judgment, often emphasizing data-driven policy over rigid regulatory frameworks. In this context, guidance documents were viewed not as instruments of arbitrary enforcement but as vital tools for efficient and informed governance. The removal of constraints around the issuance and use of such documents was intended to realign agency operations with the administration's policy goals, empowering agencies to employ their expertise more dynamically.

Additionally, the revocation was symbolic of Biden’s resolve to restore public trust in federal governance, seeking to reassure stakeholders that federal agencies would operate transparently, yet assertively in advancing regulatory objectives. While potentially reducing predictability for some stakeholders, the administration argued that the recalibration of enforcement strategies would enhance public welfare and ensure that regulatory frameworks met evolving societal challenges.

Winners

The repeal of the executive order primarily benefited regulatory agencies, granting them broader discretion in enforcement and policy application. By eliminating constraints on the use of guidance documents, agencies such as the Environmental Protection Agency (EPA) and the Consumer Financial Protection Bureau (CFPB) regained the flexibility to enact and enforce policies with a reduced bureaucratic burden. This change enabled more dynamic responses to emerging public concerns, particularly in domains where regulations are rapidly evolving, such as environmental safeguards and financial consumer protection.

Environmental advocacy groups and public health organizations stood to gain from the revocation, as it facilitated proactive enforcement of laws dealing with climate change and health safety without protracted procedural roadblocks. The regulatory emphasis on transparency and fairness was exchanged for a model prioritizing timely intervention, often considered necessary for addressing pressing societal problems like carbon emissions reduction and toxic exposure prevention.

Businesses with a vested interest in stringent regulatory frameworks, particularly those in sectors like renewable energy, also potentially benefitted from the policy redirection. By allowing agencies to employ guidance efficiently, the regulatory landscape favored industries aligned with administration priorities, facilitating smoother transitions to regulations incentivizing sustainable practices. As federal agencies streamlined processes to foster environmental and health compliance, these sectors experienced favorable operating conditions conducive to growth and innovation.

Losers

The revocation adversely impacted industries and businesses that prioritized regulatory predictability and were cautious of inadvertent non-compliance with changing agency interpretations. Sectors with significant regulatory exposure, such as oil, gas, and chemicals, faced increased uncertainty as agencies gained latitude to issue guidance without prior notice. For these sectors, the rollback of procedural guarantees in enforcement actions risked exposing them to unpredictable oversight liabilities and retrospective penalty impositions.

Small businesses, in particular, perceived the removal of the order as diminishing procedural protections originally designed to shield them from volatile regulatory climates. These enterprises often lack resources to navigate complex compliance landscapes effectively, and retraction of explicit advance notices in regulatory enforcement added to their operational burden. As agencies resumed leveraging guidance documents to shape enforcement, these businesses found it challenging to maintain compliance while anticipating and adapting to nuanced policy changes.

Moreover, legal practitioners specializing in regulatory compliance encountered a transformed advisory environment, as the fluidity in agency guidance put pressure on their role as compliance forecasters. With federal agencies retaining discretionary interpretation powers, legal advisors saw increased demand for continuous monitoring and analysis of agency actions, amplifying the complexity and resource requirements of compliance strategies for their clients.