Reforming Nonlegislative Rules

In my last post, I noted the problem of nonlegislative rules – rules, such as guidance documents, announced by administrative agencies that are not required to go through the procedural check of notice and comment and are usually not subject to judicial review.  These nonlegislative rules are greatly favored by administrative agencies because these rules allow the agencies to circumvent the ordinary checks on them.  Good governance requires that this loophole be closed.

The key feature about nonlegislative rules is that they are supposed to be non-binding.  In contrast to a legislative rule, no one is required to follow a nonlegislative rule.  In essence, they are simply supposed to provide information to the public about how the agency plans to interpret the law or exercise its policy discretion.  This is what is said to justify not following notice and comment and not being subject to judicial review.

The problem is that nonlegislative rules often have a real effect as a matter of practice.  For example, the guidance by the Department of Education announcing that the preponderance of the evidence standard should be used for sexual assault cases came in a nonbinding guidance, but of course many colleges have been pressured into adopting it for fear that the Department might otherwise take action against it, risking the federal funds it receives and the reputational hit it would take for being seen as violating Title IX.

But entirely forbidding nonlegislative rules is not a desirable solution, because these rules can often provide useful information to the public.  So what should be done?

William Funk has a proposed legislative reform that would help address these problems.  It is short and worth reading.  Let me just summarize the highlights.

First, Funk’s bill defines a nonlegislative rule.  In particular, the bill requires that the nonlegislative rule state that it is a nonlegislative rule “issued for guidance purposes and does not have binding effect on any person outside the agency. . . . If the rule does not contain the statement, it is not [a nonlegislative] rule and therefore not within the exception to the requirement for notice and comment.”  In this way, the bill makes clear what is a legislative rule and what is not, and helps the public know which rules it is not bound by.

Second, the bill specifically allows for judicial review of nonlegislative rules when they have a practical or legal effect on a person.  Thus, nonlegislative rules that have an influence on the public will be subject to judicial review.

Third, the bill would also eliminate some of the deference that agencies are now provided.  At present, an agency is entitled to strong deference when they issue a (nonlegislative) rule interpreting a legislative regulation.  The bill would eliminate this strong deference.

This proposed statute may not seem to concern the most exciting of issues.  But the subject it addresses involves an enormous amount of power for agencies.  Passing the bill would significantly cut back on the exploitation by administrative agencies of a significant loophole in the law.