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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.

Reader Discussion

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on October 23, 2014 at 11:10:59 am

This seems kind of Funky! Is Funk an admirer of Rube Goldberg? So here we go and *tack on* a definition of a "rule" such that the *rule* must announce itself as a *rule* In theory this should defang it. A hungry wolf simply announcing itself as a *hungry wolf* should not cause me to drop my guard.

What is it about this Funky requirement will prevent the agency from continuing to *subtly* inform the affected party that Federal funds may be at risk? or that *fishing expeditions* as to compliance in the *rule* defined (or general) compliance area may not be initiated?
No, let's just go and *tack on* more definitions that will after a suitable period be *worked around* by the agency so that it will be time for another new definition or rule.
At least with Goldberg's creations the *dominoes* finally fell over.

No, the real answer is as R. Richard suggests in comments to your previous posts - cut the damn legs off the beast - limit the opportunity for creative *motivational fulfillment* on the part of agency, political and factional actors.

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gabe
on October 23, 2014 at 11:16:40 am

Oops: should read "R. Richard's comments on Greve's post on Constitutional congress"

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gabe
on October 23, 2014 at 15:27:39 pm

Requiring agencies to announce rules are nonlegislative will stop some agencies from purporting to enforce nonlegislative rules. But the key features of the reform are the latter two: allowing for judicial review of the rule and eliminating deference for interpretive rules of legislative regulations.

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Mike Rappaport
on October 23, 2014 at 21:18:04 pm

Well, maybe Funk’s proposal wouldn’t hurt anything, but it’s hard to get very excited.

1. Ensure that non-legislative rules are labeled as such: Under current law there’s a clear distinction: No agency policy has the force of law unless adopted via the APA. Funk’s proposal would seem distinguish between two categories of policies that do not have the force of law: Policies that do not have the force of law and bear a label declaring them as such, and policies that do not have the force of law, but are not labeled as such. What’s the point?

If we adopt Funk’s proposal, I could imagine every agency printing new stationary with fine print across the bottom saying something like, ”Unless otherwise specified, this document does not state a rule and does not have the force of law.” And this would help – how?

Your premise is that people are intimidated by an agency’s threat to bring an enforcement action. That threat would remain, whether or not it came with a label saying “Not a rule!”

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nobody.really
on October 23, 2014 at 21:20:00 pm

2. Give courts authority to review rules that have actual legal or practical effect: As far as I can tell, courts already have authority to review rules that have legal effect.

As for practical effect – not sure what this would entail. For example, would the EPA be barred from telling someone to cease polluting or be subject to an enforcement action? Presumably that could have a practical effect of discouraging pollution. Could I sue to stop the local police from providing a DARE program at the local high school, on the theory that such programs were not adopted pursuant to the APA, and might be having the practical effect of discouraging drug use?

Bottom line: Free speech can sometimes have an effect; that’s why we value it so much as to keep it free. I’m not sure we want to invite courts into policing speech.

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nobody.really
on October 23, 2014 at 21:20:56 pm

3. Remove Chevron deference for agency interpretations of their own statutes: I find this theoretically justified – and I suspect it would have almost no practical effect. Agencies get Chevron deference to the extent that a statute’s application in a given situation is ambiguous. So a court is confronted with a statute that is ambiguous. How will the court interpret the statute in the absence of a presumption in favor of the agency? Who knows? Given the arcane nature of many regulatory statutes and the level of expertise in the agency, I’d guess the court will be likely to defer to the agency in any event.

Thus, in the absence of Chevron, I expect courts would have to draft a couple more paragraphs explaining why the agency’s interpretation is the correct one, rather than reaching the conclusion with a single citation. But I suspect most of the time we get to the same place either way.

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nobody.really
on October 24, 2014 at 11:25:09 am

Here, here!!!

Absotively correct!

This changes nothing - even the so-called "elimination of Chevron defense - which is probably closer to a "dimunition" rather than an elimination.
And so what if a statute or rule is subject to judicial review - we already have that for legislative enactments - that seems to have worked out rather well, wouldn't you say? So what shall be the standard of this review - shall we have strict scrutiny, so-so scrutiny or "modified, limited, hangout scrutiny"(apologies to Tricky Dick and the boys).
Rappaport seems content to accept the current state of affairs, if only we coax it into the judiciary's corral. I am a little more concerned with the breeders of these rules that compel us to construct such a corral.
Just stop breeding! It only grows the Administrative State and the Judiciary and their collective and corrosive influence!

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gabe
on October 24, 2014 at 15:22:16 pm

Am I misunderstanding this?

The proposal it to give the Court authority over the Executive actions. Or the proposal accepts that Executive actions are really legislation.

Either way, I don't like it. The former expands the Court's authority beyond its constitutional limit by injecting the Court into the affairs of the Executive via legislation. The latter accepts the belief that the Constitution is a lost cause, the Executive has become the legislator, so just play along and let the Court rule on Executive legislation.

This proposal is not going very far, I would hope.

I would much rather see the Court become more objective to the Executive and Legislature by reforming the method of the appointment of Justices. And I would much rather see a truly neutral authority policing the actions of the Executive and Legislature.

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Scott Amorian

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