Administrative Conference of the United States
FEDERAL AGENCY GUIDANCE:
AN INSTITUTIONAL PERSPECTIVE

October 12, 2017

Nicholas R. Parrillo
Yale Law School

This report was prepared for the consideration of the Administrative Conference of the United States. The opinions, views and
recommendation expressed are those of the author and do not necessarily reflect those of the members of the Conference or its
committees, except where formal recommendations of the Conference are cited.

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CONTENTS
Introduction ................................................................................................................................................. 4
A. The Argument of the Report ................................................................................................................ 7
B. The Scope of the Report: Two Notes ................................................................................................. 22
1. Policy Statements versus Interpretive Rules .................................................................................. 22
2. External Guidance versus Internal Guidance ................................................................................. 26
I. The Importance of Guidance................................................................................................................ 28
A. Reasons to Prefer Guidance to Case-by-Case Adjudication .............................................................. 28
B. Reasons to Prefer Guidance to Legislative Rulemaking .................................................................... 30
C. The Ubiquity of Guidance.................................................................................................................. 34
D. Stakeholders’ Demand for Guidance ................................................................................................. 35
II. Regulated Parties’ Incentives to Follow Guidance ........................................................................... 37
A. Pre-Approval Requirements .............................................................................................................. 37
B. Maintaining Relationships ................................................................................................................. 45
C. Intra-Firm Constituencies for Following Guidance ........................................................................... 56
D. The Prospect of a One-Off Enforcement Proceeding ........................................................................ 64
1. Probability of Detection ................................................................................................................. 65
2. Cost of the Enforcement Proceeding Irrespective of Outcome ...................................................... 66
3. Probability of a Violation Being Found ......................................................................................... 69
4. Cost of Sanction for a Violation ..................................................................................................... 71
E. When Incentives to Follow Guidance Are Weak ............................................................................... 76
1. FTC Consumer Protection .............................................................................................................. 77
2. CFPB Regulation of Nonbank Institutions ..................................................................................... 79
3. Ex Post Enforcement Against Permitless Discharges Under the Clean Water Act ........................ 81
4. OSHA Regulation Beyond Large Firms ....................................................................................... 83
III. Agency Flexibility and Inflexibility................................................................................................... 90
A. Legitimate Pressures for Consistency ................................................................................................ 93
1. Industry Preferences for Consistency ............................................................................................. 93
2. Demands for Consistency by NGOs, the Media, and Congress ..................................................... 98
3. Fear That Inconsistency Will Open the Floodgates ..................................................................... 101
B. Principled Flexibility: A Good Solution, in Principle ...................................................................... 103
C. Organizational and Resource-Based Obstacles to Principled Flexibility......................................... 107
1. Resources and Time Needed to Evaluate Departures................................................................... 107
2. Recording and Disseminating Departure Decisions ..................................................................... 114
D. Organizational and Resource-Based Obstacles to Any Kind of Flexibility..................................... 116
1. Officials’ Antagonism to Being Challenged ................................................................................ 116

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2. Superiors’ Institutional Motivations to Affirm Subordinates ....................................................... 120
3. Understanding of Rule/Guidance Distinction Is Not Intuitive ..................................................... 122
4. Nature of Relationships to Stakeholders May Affect Flexibility ................................................. 124
5. Training to Be Flexible ............................................................................................................... 127
E. Inflexibility by Reason of Agency Commitment to Guidance’s Substance ..................................... 128
IV. Deregulatory Guidance and Regulatory Beneficiaries .................................................................. 132
V. Public Participation in Issuance of Guidance .................................................................................. 137
A. Diverse Means of Stakeholder Participation ................................................................................... 139
B. Burden of Public Comment on Guidance Less Than Legislative Rulemaking................................ 143
1. Mandates for Cost-Benefit Analysis ............................................................................................ 143
2. Building a Record and Responding to Comments in Anticipation of Judicial Review................ 146
3. Taking Comment in Itself ............................................................................................................ 148
4. Drafting Challenges...................................................................................................................... 148
5. Dealing with Mobilized Stakeholders .......................................................................................... 149
C. Benefits and Costs of Notice and Comment for Guidance .............................................................. 150
1. Benefits: Better Technical Information? ...................................................................................... 150
2. Benefits: Better Political Information?......................................................................................... 153
3. Benefits: More Legitimacy? ......................................................................................................... 154
4. Costs: Expenditure of Time and Resources ................................................................................ 162
D. Should Notice and Comment Be Required for Guidance? .............................................................. 166
1. Models for Requiring or Encouraging Notice and Comment ...................................................... 167
2. The Danger that Agencies May Leave Guidance in Draft Indefinitely........................................ 171
3. The Possibility of Marginalizing Legislative Rulemaking ........................................................... 181
4. Against “One Size Fits All” ......................................................................................................... 185
VI. Proposed Recommendation ............................................................................................................ 186
Preamble ............................................................................................................................................... 186
Recommendation .................................................................................................................................. 193
Appendix: Methodology for Interviews ................................................................................................ 196
A. Overall Approach............................................................................................................................. 196
B. Locating Interviewees ...................................................................................................................... 198
C. Logistics of the Interviews .............................................................................................................. 202
D. Characteristics of the Interviewees .................................................................................................. 203
Acknowledgments ................................................................................................................................... 205

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INTRODUCTION1
Guidance—the umbrella category covering what the Administrative Procedure Act calls
“general statements of policy” and “interpretative rules”—is a ubiquitous and essential feature of
countless agency programs. It covers all general statements an agency issues announcing how it
proposes to exercise the discretion created by its enabling statutes and legislative rules, or
announcing how it interprets those enabling statutes or legislative rules.2 Because guidance is
not itself a legislative rule, it is conventionally said to be nonbinding—a mere tentative
announcement of the agency’s current thinking about what to do in individual adjudicatory or
enforcement proceedings, subject to the agency’s case-by-case discretion and regulated parties’
individual arguments for doing things differently.3 Because of this requirement to be
nonbinding, guidance has been the subject of continuing controversy. The concern is that
agencies in reality are not tentative or flexible when it comes to guidance but instead follow it as
if it were a binding legislative rule, and regulated parties are under coercive pressure to do the
same. The use of guidance as a binding norm undermines the mandate of the APA that general
binding policies should be made only through the exacting procedures of legislative rulemaking,
including notice and comment, in which the parties to be bound by a policy can participate in its

1

This Report cites observations and opinions by numerous interviewees. Some of these contain praise or criticism
of agency behavior. As I believe and hope will be clear from my presentation, I am often presenting interviewees’
opinions and observations as pieces of a mosaic, with findings and conclusions to be drawn from the totality of the
picture, not any one piece; or I am presenting them in an effort to identify the range of possibilities, interpretations,
or perspectives on a given issue. Given this, I do not necessarily mean to endorse every instance of praise or
criticism in every interview citation that appears in the Report.
2
The category of guidance would cover statements of this description if addressed to a generic class of regulated
parties and/or to agency staff with the understanding that it would affect their activities with respect to such a
generic class, and the category would even be conventionally understood to cover “opinion letters or letters of
interpretation” addressed to individual regulated parties if such documents are “reasonably anticipated to have
precedential effect and a substantial impact on regulated entities or the public.” Office of Management and Budget,
Final Bulletin for Agency Good Guidance Practices, 72 Fed. Reg. 3432, 3435 (2007).
3
At least, general statements of policy are conventionally thought to be nonbinding; the question of whether
interpretative rules are nonbinding is more uncertain. On the applicability of this Report to interpretative rules, see
infra notes text at 33-43. For an excellent review of the case law and institutional pronouncements indicating that
general statements of policy are to be nonbinding, see Ronald M. Levin, Rulemaking and the Guidance Exemption,
Admin. L. Rev. (forthcoming 2018), manuscript (July 21, 2017) at 22-36, available at
papers.ssrn.com/sol3/papers.cfm?abstract_id=2958267. Levin also makes a forceful argument that interpretive
rules, on the best reading of the law (viewed in light of policy considerations), are to be nonbinding, as well. Id. at
65-69.

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formulation before it is set in stone. Guidance, it is feared, allows the agency to make policy
without the participation of those affected and then effectively to bind them.4
This Report finds that, while the critics are partly right in that guidance is sometimes
inflexible and regulated parties are often under much pressure to follow it, this state of affairs
results mainly from institutional factors that are either beyond the agencies’ control or result
from the agencies being cross-pressured or under-resourced or operating by inertia—not usually
because the agencies are engaged in bad-faith circumvention of the APA. The problem with
guidance is largely an institutional problem that calls for an institutional response, not a problem
of bureaucratic bad faith that calls for accusation and blame. Much of the concern about
guidance can be mitigated if agencies adopt institutional reforms in favor of flexibility, though
these will have to be balanced against resource constraints and legitimate pressures on agencies
from stakeholders and political overseers to provide some degree of consistency and
predictability. The concern about guidance can also be mitigated if agencies voluntarily allow
for public participation in its formulation, up to and including voluntarily doing notice and
comment. But the tradeoffs involved in deciding whether to provide for this participation—and
the potential unintended consequences of it—are sufficiently complex and variable that it would
be unwise to have a government-wide requirement for notice and comment on guidance
documents, unless it covers only the very most extraordinary documents.
While there is already a very substantial academic literature on guidance, it focuses
almost entirely on judicial opinions and is concerned with defining the rule/guidance distinction
in a manner that is tractable for courts. That literature is important for judicial decisionmaking,
but it misses much about the everyday workings of guidance that pervade the administrative
state, for it focuses on the tiny fraction of guidance documents that get challenged in litigation,
and only on the kinds of facts about guidance that reach the courts.
My focus in this Report is different. I have sought to assess guidance’s essential role and
its sometime pathologies from the worm’s eye view: day-to-day operations of agencies and
regulated parties. My main sources are unstructured interviews with people from agencies,
industry, and NGOs. In all, I interviewed 135 individuals, with the vast majority of interviews
As Michael Asimow aptly stated: “If the public is denied an advance opportunity to influence a policy statement, it
should have a fair chance to persuade a decisionmaker to follow a different course when the discretionary function is
actually exercised in a subsequent investigation, formal or informal adjudication, or other proceeding.” Michael
Asimow, Nonlegislative Rulemaking and Regulatory Reform, 1985 Duke L.J. 381, 391.
4

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lasting for between 60 and 90 minutes each, all between September 2016 and July 2017. Of the
135 interviewees, 26% were in the agencies (all career officials), 48% in industry, 19% in NGOs
and unions, and 7% “other.” Of the people outside the agencies (that is, in industry, NGOs,
unions, or “other”), who totaled exactly 100, there were 58 former agency officials (of whom 35
had been career, 10 had been Democratic political appointees, and 13 had been Republican
political appointees). I located the interviewees through a chain-referral process, beginning with
a nucleus of well-networked individuals with diverse sectoral affiliations (ACUS agency
contacts and ACUS public members), asking them for names of knowledgeable people,
interviewing those people, asking those interviewees for yet more names, and so forth iteratively.
This method leverages the knowledge of people within the system to find out who the
knowledgeable people are; it is a method suited to a subject like the everyday workings of
guidance, which is relatively unexplored and fraught with “unknown unknowns.” Because
following up every single interview lead would have rapidly multiplied the interviewee pool
beyond what I could manage, I sought to strike a balance between breadth and depth, following
the chain-referral process for one “link” of the chain wherever it led, then following it for the
second “link” only for certain regulatory areas, and then for the third “link” only for two
agencies on which I wanted to go into particular depth (those being EPA, because of the
unmatched scale of its regulatory operations and its unmatched prevalence in legal controversy
over both guidance and legislative rulemaking, and FDA, given its heavy reliance on guidance
documents and its use of an unusually formalized process for issuing guidance).5 In the end,
24% of the interviewees were expert on EPA, 23% on FDA, and between 4% and 11% each on
OSHA, the Department of Energy, USDA, FAA, HHS (besides FDA), and the banking
regulatory agencies. (For a complete description of the study’s methods, see the Appendix.
Note that, for interviewees who wished their identities to remain confidential, I have arbitrarily
assigned male and female pronouns in alternating Parts of the Report—female for the
Introduction and Parts II and IV and male for Parts I, III, and V—to avoid giving information on
the identities of these sources.)

5

I also sought additional referrals on a supplemental basis to fill certain gaps in my understanding, yielding a small
number of interviewees, as fully described in Section B of the Appendix.

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A. The Argument of the Report
Here I lay out the argument of the Report, explaining its findings part by part and
showing how they fit in to larger debates on guidance and administration. (A more abridged
summary of the Report’s findings can be found in Part VI, in the preamble to my proposed
recommendations.)
The Report begins, in Part I, by discussing the importance of guidance. It is an essential
and ubiquitous instrument of administration across numerous agencies. Officials say they cannot
imagine a world without guidance. And while regulated parties are the source of complaints and
concerns about guidance, it must be emphasized that much and perhaps most guidance is issued
because regulated parties seek and demand it. The attractiveness of guidance to agencies and
regulated parties alike is understandable. Compared with purely case-by-case adjudication or
enforcement, guidance makes frontline agency decisionmakers more decisive and fast in their
decisions, saving time and resources for the agency and the regulated public. It also makes
agency decisionmaking more predictable, comprehensible, and uniform, shielding regulated
parties against unequal treatment, unnecessary costs, and unnecessary risk. Compared with
legislative rulemaking, guidance is better for dealing with conditions of uncertainty and for
making agency policy comprehensible to regulated parties who lack counsel. Further—and
interviewees cited this factor several times more than any other—the provision of guidance takes
less time and resources than legislative rulemaking. An agency making policy through guidance
gives up legally-binding status for that policy, but it simultaneously frees up resources to make
more policy on more matters. (Let me note, this Report assesses how agencies do and should
administer guidance, and the processes that agencies do and should follow for issuing guidance,
but it takes as given the fact that agencies are proceeding by guidance, and it does not answer the
prior question of whether an agency should proceed by guidance or instead by legislative
rulemaking to begin with. Addressing that question would require a body of research—at least
as extensive as the one offered here on how guidance actually works—on how legislative
rulemaking actually works, and whether it could be made to move faster and more cheaply.
Part I offers some suggestive evidence on how to make legislative rulemaking faster and
cheaper, but no more.)
The heart of the Report—Parts II and III—confronts questions about guidance’s capacity
to “bind” regulated parties and agencies themselves. These questions were the focus of one of
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the principal ACUS recommendations on guidance (Recommendation 92-2)6 and of one of the
principal ACUS reports on it, by Robert Anthony. In his report—a deep and formidable critique
of agencies’ use of guidance—Anthony declared that the “capital problem” was that “agencies
often inappropriately issue [guidance documents] with the intent or effect of imposing a practical
binding norm upon the regulated or benefited public.”7 These were his twin concerns: “intent”
and “effect.” He used that paired formulation repeatedly (sometimes substituting “purpose” for
“intent”).8 But of the two, his concept of a binding “effect” was not elaborately formulated or
analyzed,9 and it was clearly “intent” that drew most of his intellectual energy, for he believed
agencies’ abuses were quite often deliberate. As he wrote in one passage of this classic work:
[T]he agency may well have settled firmly upon its policies, with every intent of exacting
conformity from those affected. The fact that the policy is announced in a nonlegislative
document—and speaks of reserved discretion to act at variance with it—does not change
that intent. But under the D.C. Circuit’s test [which upholds a guidance document if it is
tentative], this tactic furnishes the agency with a convenient chance to have things both
ways: to impose a practical binding effect upon private parties, but also plausibly to argue
to the courts that the informal issuance and reserved discretion prove there was no
obligation to proceed legislatively. This strategy may through bureaucratic habit be
pursued in the best of faith. But in reviewing the cases one cannot avoid suspecting that
the agencies consider it easy to fool the courts on these points, or at least think it is worth
arguing, in the face of manifest reality, that their reservation of discretion means that they
have not bound the complaining members of the public.10

6

Recommendation 92-2, Agency Policy Statements, 57 Fed. Reg. 30,103 (July 8, 1992).
Robert A. Anthony, Interpretive Rules, Policy Statements, Guidances, Manuals, and the Like—Should Federal
Agencies Use Them to Bind the Public?, 41 Duke L.J. 1311, 1315 (1992) (emphasis omitted). The present Report is
primarily concerned with the issues addressed by the Anthony report and by Recommendation 92-2, and also, in
Part V of the present report, the public-participation issues addressed in Recommendation 76-5, Interpretive Rules of
General Applicability and Statements of General Policy, 41 Fed. Reg. 56,769 (Dec. 30, 1976); Michael Asimow,
Public Participation in the Adoption of Interpretive Rules and Policy Statements, 75 Mich. L. Rev. 520, 556 (1977).
There have also been ACUS reports and recommendations on other aspects of the guidance phenomenon.
Recommendation 2015-3, Declaratory Orders, 80 Fed. Reg. 78163 (Dec. 4, 2015); Emily S. Bremer, The Agency
Declaratory Judgment, 78 Ohio St. L.J. (forthcoming, 2017-18), available at
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955214; Recommendation 2014-3, Guidance in the
Rulemaking Process, 79 Fed. Reg. 35992 (June 25, 2014); Kevin M. Stack, Preambles as Guidance, 84 Geo. Wash.
L. Rev. 1252 (2016); Recommendation 71-3, Articulation of Agency Policies, 38 Fed. Reg. 19,788 (July 23, 1973);
Brice McAdoo Clagett, Informal Action—Adjudication—Rule Making: Some Recent Developments in Federal
Administrative Law, 1971 Duke L.J. 51.
8
Id. at 1328, 1355-59, 1373.
9
The longest discussion of binding “effect” is in id. at 1358-59, where it appears to refer to situations in which an
agency’s frontline decisionmakers treat a guidance document as dispositive of the questions that come before them.
10
Id. at 1360. See also E. Donald Elliott, Re-Inventing Rulemaking, 41 Duke L.J. 1490, 1490 (1992) (stating that
Anthony wanted courts to “go behind the objective terms of a statement of agency policy” to “speculate about
whether the statement was ‘really intended’ to bind the public”).
7

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Intent was not only Anthony’s primary focus; it was also the part of his critique that made
it into ACUS Recommendation 92-2, whereas the “effect” prong was deleted during the
Conference’s deliberations.11 The recommendation speaks in terms of intent, and the intentladen term attempt: “Agencies should not issue statements of general applicability that are
intended to impose binding substantive standards or obligations upon affected persons without
using legislative rulemaking procedures . . . . Specifically, agencies should not attempt to bind
affected persons through policy statements.”12
Anthony was correct to say that regulated parties often feel they have no practical choice
but to follow a guidance document (I stress that I say often, not always). Anthony was also
correct to say that such parties can be effectively shut out of all participation, for they can neither
engage in notice-and-comment on the policy when it is generally formulated nor exercise any
real choice or voice once the policy is applied to them individually. But I believe Anthony was
mistaken to view this phenomenon primarily in terms of the agency’s “intent” to produce this
unhappy outcome. Moreover, his focus on intent gave his report a tone of accusation and blame
when in fact the problem of guidance is largely one of institution-level behavior that nobody
fully intends: it requires an institutional-reform response rather than an indictment.
That regulated parties often (though not always) feel strong pressure to follow guidance
is absolutely true, but the origins of this fact usually lie not in some plot hatched by the agency
but instead in a series of structural features of modern regulation and of the legislation that
establishes it, nearly all of which are vastly beyond the control of the agency officials who are
issuing a guidance document.13 (The pressure I am discussing here is the kind that exists when
the guidance is operative, i.e., when the agency has not granted a regulated party’s request for a
dispensation from the guidance. Dispensations are addressed in Part III, to be summarized a bit
later.)

11

Peter L. Strauss, The Rulemaking Continuum, 41 Duke L.J. 1463, 1488 n.74 (1992) (recalling with respect to
Conference deliberations on the recommendation: “Focusing on the references to ‘independent basis’ in note 3 and
Part III of Recommendation 92-2, I would argue that I won; but Professor Anthony might claim he did. What is
clear is that the Recommendation applies to the situations Professor Anthony and I agree about—where the agency
tries to treat its policy as an independent source of obligation. [Anthony’s] wish to extend the [recommendation] to
‘practical effect’—our disagreement—was in my judgment rejected”).
12
ACUS Recommendation 92-2, point I.A (emphasis added).
13
Insofar as agency officials did play a role in bringing these structural features into being, it would involve a host
of official activities—such as advising Congress on major decisions in designing legislation—that go vastly beyond
what officials are thinking about with respect to a guidance document.

9

Part II of this Report discusses four of these structural features that incentivize regulated
parties to follow guidance documents when operative. First, legislation may require regulated
parties to obtain pre-approval, that is, to seek the affirmative assent of the agency in order to get
some legal advantage, like a permit or monetary benefit. If the advantage sought is important to
the party, and if the agency’s decision is uncertain and subject to delay, the incentive to follow
whatever the agency’s wishes appear to be (including guidance) can be overwhelming. Second,
the legislative scheme may subject the regulated party to continuous monitoring and frequent
evaluations by the agency. If the law is complex, the regulated party will inevitably end up
failing to comply with at least a few prohibitions or approval requirements. To insure against
this contingency, the party will invest in its relationship to the agency, that is, seek to build up
the agency’s trust and confidence in its good faith and cooperativeness, including by following
guidance. Third, the regulated firm is a “they,” not an “it,” and the last generation has seen rapid
growth in new cohorts of corporate personnel—most prominently “compliance officers”—whose
backgrounds, socialization, and career incentives arguably give them an especially strong
incentive to maintain good relations with the agency and therefore to follow guidance. Although
one may argue that this growth is driven partly by governmental pressure, that pressure emanates
mainly from the U.S. Sentencing Commission’s Organizational Guidelines and from DOJ
prosecutorial practice, not from any regulatory agency.14 Fourth, a regulated party subject to ex
post enforcement will have an incentive to follow guidance that increases with the probability of
detection of noncompliant behavior, the cost of an enforcement proceeding irrespective of
outcome, the probability of an unfavorable outcome, and the probable sanction in that event.
This fourth factor is probably the most obvious, but I must emphasize that its incentive power
cannot be simply assumed, for it varies greatly depending on the structure of the statute and the
agency. In some (though far from all) contexts, dynamics arise similar to those in coercive pleabargaining, meaning the regulated party cannot expect, without prohibitive risk, to get the
accusation meaningfully examined and adjudicated by an official distinct from the enforcement
personnel. This creates a strong incentive to avoid being accused in the first place.
Finally, in the fifth and last section of Part II, I identify certain areas of regulation—FTC
consumer protection, CFPB regulation of most nonbanks, EPA enforcement against permitless
discharges into protected waters, and OSHA regulation of most employers—as ones in which
14

The rise of compliance personnel has occurred largely in the years since Anthony wrote his report.

10

guidance is relatively less likely to be followed, according to interviews. I note that in all these
areas, the four structural features discussed above are mostly weak or absent. This finding
indicates that the pressure to follow guidance, though real, is far from universal. It is contingent
on factors like pre-approval, investment in firm-agency relationships, compliance personnel
cohorts, and certain structures of ex post enforcement.
If an agency official works within a statutory and regulatory structure where most or all
of these four factors are robust, then whatever that official issues in the form of guidance will
quite likely be followed by regulated parties. But that is not because of any “intent” on the part
of the official to bind anyone. The structural incentives to follow the guidance will operate on
regulated parties regardless of the official’s subjective state of mind. Of course it is possible that
an official may consciously recognize these structural incentives and consciously anticipate that
they will operate in a way that shifts regulated parties’ behavior toward what the guidance says.
Indeed it seems fair to assume that most high-ranking agency officials would be aware of these
factors. But if such knowledge disqualifies those officials from issuing guidance, on the ground
that this entails an impermissible intent to bind, then all agencies operating in areas where most
or all of the four factors listed above are robust (pre-approval requirements, long-term firmagency relationships, compliance cohorts in industry, and ex post enforcement) would be largely
disqualified from ever issuing guidance. That is to say, many and perhaps most agencies would
be disqualified from ever issuing guidance. That cannot be right.
Perhaps the real concern is that an official, wishing to implement a policy by one means
or other, will choose guidance as the vehicle rather than legislative rulemaking because he/she
knows guidance is less costly to issue yet likely for structural reasons to elicit nearly the same
alteration in regulated parties’ behavior. As a former EPA program office director said in a
recollection of such a scenario, “you’re aware of your leverage.”15 But this argument does not

Interview with Source 71, former EPA program office director. William Funk raised this issue of an agency’s
subjective awareness of its structural leverage in a brief theoretical discussion: “While these general statements of
policy cannot be used to bind persons, they may effectively coerce persons into compliance because of the fear of
agency enforcement or adverse agency rulings in adjudications. Or, they may provide assurance of a safe harbor
from enforcement to persons if they take certain actions. Thus, to an agency, if persons act on the basis of the
general statements of policy, these statements may be almost as effective as legislative rules.” William Funk, A
Primer on Nonlegislative Rules, 53 Admin. L. Rev. 1321, 1333 (2001). Funk later discussed a related point, that an
agency may be subjectively aware of structural barriers to judicial review and consciously take advantage of them in
deciding what policies to adopt through guidance: “Regulated entities, unable to obtain pre-enforcement review of a
questionable nonlegislative rule, are put in the unenviable position of having to conform to the questionable rule or
willfully act contrary to its terms. In many cases, the risk analysis will counsel in favor of complying with the rule,
15

11

turn on whether the policy is binding or not. Instead it turns on whether the policy is a “big
enough deal” that regulated parties should have been bound to it only through the formalities of
legislative rulemaking, rather than being bound to it by guidance reinforced by structural
incentives. In other words, the argument is a revival the old “substantial impact” doctrine that
identified any policy having a “substantial impact” on the public as one that had to go through
legislative rulemaking. But the courts rejected that doctrine decades ago in favor of the present
“binding effect” test—a rejection that Anthony himself did not question.16
If we really want to protect regulated parties from feeling strongly pressured to follow
guidance, we would have to reform quite substantially the structural features of the
administrative state that create strong incentives to discern and follow an agency’s wishes.
There are arguments for reforming those structural features, but these would have major
consequences and implicate a host of issues ranging well beyond the controversy over guidance.
Pre-approval requirements have been condemned by some as intolerable encroachments on
liberty,17 but abolishing them would entail radical rollbacks of health, safety, and environmental
regulation; more incremental reforms are also possible, but these, too, implicate wide-ranging
questions.18 The tendency of heavily-regulated businesses to invest in positive relationships to
their regulator may create dangers of coercion or favoritism, and there are obvious (if costly)
means of preventing those relationships from forming (as by rotating agency personnel), yet
doing so would dramatically increase information costs to the agency,19 and might incline it to
become more impersonal, exacting, and punitive.20 The rise of the compliance profession has
been attacked as a stealth reform imposed on corporate America by unelected and ill-informed

even when the doubts as to the lawfulness of the rule are substantial. Agencies act with the knowledge that their
nonlegislative rules may escape pre-enforcement review, and they may count on the coercive (extortionate) effect of
the unreviewable rule to achieve compliance even when they might be very reluctant to test the validity of their rule
in an actual enforcement action.” Id. at 1340.
16
The only mentions of “substantial impact” in Anthony’s article are in one quotation from a long string of
quotations on which he does not specifically comment, Anthony, supra note 7, at 1357 (quoting Levesque v. Block,
723 F.2d 182-83 (1st Cir. 1983)), and in a footnote where he notes the doctrine’s rejection, id. at 1376 n.370.
17
Richard A. Epstein, The Permit Power Meets the Constitution, 81 Iowa L. Rev. 407 (1995)
18
Eric Biber & J.B. Ruhl, The Permit Power Revisited: The Theory and Practice of Regulatory Permits in the
Administrative State, 64 Duke L.J. 133 (2014) (on the use of general permits).
19
Cf. Daniel Carpenter, Reputation and Power: Organizational Image and Pharmaceutical Regulation at the FDA
663 (2010) (“Firms’ reputations matter in part because a resource-constrained and uncertain regulator is compelled
to rely partially upon trust”).
20
If a regulator has a continuing series of interactions with a regulated party, it may need to be punitive only as a
last resort within a larger framework that begins (and usually ends) with presumptive mutual trust. See generally Ian
Ayres & John Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (1992).

12

DOJ prosecutors,21 but corporate compliance programs are now the norm across many industries
are considered by many to be a salutary development; in any case, they cannot be eliminated
without a major dislocation. And while there are proposals to reform administrative law
enforcement to make settlement bargaining less coercive—for example, to redraft statutes to
diminish liability and penalties or to establish more neutral, independent institutions to oversee
enforcement personnel22—these, too, have high costs and wide-ranging implications.
But if structural features will create a strong incentive to follow certain guidance
whenever the guidance is operative—a point we must take as given in the short to medium
term—there is still one escape hatch: the agency itself is in control of whether the guidance is
operative for any particular regulated party. Per the D.C. Circuit’s test, a policy qualifies as
guidance rather than a legislative rule if the agency “reserves discretion” to depart from it in any
given case. As Anthony memorably phrased it, this requires the agency to keep an “open mind.”
In his words: “If the agency genuinely maintains an open mind, so that an applicant has a
realistic chance to persuade [the agency] to adopt a different position [than the one in the
guidance] when the applicant’s particular case is passed upon, [then] the original [guidance] had
neither the intent nor the effect of imposing mandatory constraints on the applicant.”23 ACUS
Recommendation 92-2 elaborated this principle by declaring that an agency is supposed to afford
every regulated party a “fair opportunity” to seek departure from guidance “in an agency forum
that assures adequate consideration by responsible agency officials,” “at or before the time”
when the guidance is applied to the party.24 In the words of the D.C. Circuit, the guidance must
not be a “binding norm” but instead leave “the agency and its decisionmakers free to exercise
discretion.”25 The court held that a guidance document preserved the required discretion when it
ensured that “the agency’s position” on the subject matter of the guidance “remains flexible.”26

21

Sean J. Griffith, Corporate Governance in an Era of Compliance, 57 Wm. & Mary L. Rev. 2075, 2117-30 (2016).
Rachel E. Barkow, Overseeing Agency Enforcement, 84 Geo. Wash. L. Rev. 1129, 1143-50 (2016).
23
Anthony, supra note 7, at 1362. See also id. at 1329-30, 1374-75.
24
ACUS Recommendation 92-2, Point II.B.
25
Center for Auto Safety v. NHTSA, 452 F.3d 798, 806 (D.C. Cir. 2006) (quoting CropLife Am. v. Envtl.
Protection Agency, 329 F.3d 876, 883 (D.C. Cir. 2003)).
26
Id. at 809. For other helpful formulations of the agency’s obligation, see Anthony, supra note 7, at 1316 (“the
agency should stand ready to entertain challenges to the [guidance] in particular proceedings to which the document
may apply, and should observe a disciplined system for maintaining an ‘open mind’ when passing upon such
challenges”); Ronald M. Levin, Nonlegislative Rules and the Administrative Open Mind, 41 Duke L.J. 1497, 1500
(1992) (“The essence of the agency’s duty” is “first, to allow the challenger to present a case, and second, to respond
meaningfully to that case”).
22

13

Yet, in Anthony’s view, the agency’s mind was frequently closed, and intentionally so,
though it was easy for the agency to hide this fact:
Where the [guidance document] reserves discretion to decide cases individually and to
vary the standards, a challenger will find it difficult to show a resolve [on the agency’s
part] to apply the standards rigorously even if that is in fact the [agency’s] intention. Of
course the agency heads may be genuinely uncertain about what they will want to do
when cases arise. The trick is to distinguish their announcements in these situations of
authentic uncertainty (as to which legislative rulemaking is not required) from those
announcements where they do intend to do exactly what they say they are going to do (as
to which legislative rulemaking should be required, since the public will be bound).27
Thus, the focus on intent that generally informed Anthony’s view of guidance was especially
intense when it came to the agency’s open-mindedness and flexibility (or lack thereof).
Again, Anthony was correct that agencies are sometimes practically inflexible in their use
of guidance (sometimes, not always). And he was correct that agency inflexibility could have a
burdensome and coercive effect on regulated parties who wanted to do things differently from
the guidance. But again, I believe the focus on “intent” obscures more than it illuminates.
In Part III, I analyze the inflexibility that agencies sometimes exhibit when using
guidance, and I seek to break down the reasons for this inflexibility in a manner that is more
concrete, specific, and variegated than a monolithic concept of “intent” allows. One might
assume that flexibility is the path of least of resistance for an organization, such that any
inflexibility must reflect some conscious and nefarious plan. But that is wrong. Federal
agencies face a host of external pressures and internal dynamics that can make them naturally
inflexible. The very real fact of agency inflexibility can be mostly (though not entirely)
explained by agencies’ sensitivity to competing rule-of-law values that favor consistency, by
their lack of resources, and by their inertia in the face of unintended organizational tendencies
that foster rigidity.28

Robert A. Anthony, “Well, You Want the Permit, Don’t You?” Agency Efforts to Make Nonlegislative Documents
Bind the Public, 44 Admin. L. Rev. 31, 37 (1992).
28
Anthony did briefly acknowledge that agencies might act inflexibly for reasons other than an intentional plan to
bind regulated parties. Anthony, supra note 7, at 1364-65 (noting that agency staff may rigidly apply guidance
because it “is the quick and simple thing to do” and out of fear of “criticism” or “disapproval,” without elaborating
on who might be the source of such criticism or disapproval, and then reemphasizing the bad-faith scenario: “it can
often be quite clear that [the agency’s] nonlegislative document was intended to control the staff's basis for
decision”). Overall, Anthony placed far more emphasis on the intentional-plan scenario.
27

14

First off, we must recognize that agencies are quite often under active stakeholder
pressure to be inflexible (a.k.a., to be consistent) and that these stakeholder pressures spring from
legitimate concerns that agencies would be remiss to ignore. Most prominently, any regulated
firm that receives a favorable departure from guidance will put its competitors at a disadvantage,
and those competitors will protest. Further, they may come to lose faith in the predictability of
the agency and in the idea that the agency provides them a level playing field—a shift that may
cause them to withdraw from cooperation with the agency, thereby diminishing compliance and
making the whole regulatory program less effective. Meanwhile, individualized flexibility on
guidance, if it favors a particular regulated party, smacks of favoritism and thereby attracts the
negative scrutiny of the media, NGOs, and members of Congress. On top of all this, some
competitors of the firm that received the favorable departure from guidance will be stung by the
apparent unfairness and understandably ask, “why can’t I get this exception, too?” One
departure thus invites other requests for departure, and these requests eat up the agency’s
resources and pose the danger that any coherent policy will unravel. To prevent all this from
happening, the agency may simply deny departure requests to avoid opening the floodgates to
begin with.
Significantly, there is a way for an agency to maintain flexibility while addressing these
legitimate pressures for consistency: it can take the approach of principled flexibility.29 That is,
for each departure the agency makes, it gives a written explanation that is accessible to other
agency officials and to the public, with the understanding that the exception then becomes
generally applicable to like cases prospectively. The departure explanations accumulate to form
a body of evolving precedent. Principled flexibility helps refute accusations of favoritism,
cabins the rationale for each departure so as to avoid opening the floodgates to more requests,
promotes fairness among competitors by ensuring that all exceptions become generally available
on a prospective basis, and aids predictability because the obligation to provide a reason for each

My formulation of principled flexibility is inspired by two sources. One is Robert Kagan’s study of the Nixon
wage-price freeze (which is not about guidance but policy-application more generally), and particularly Kagan’s
distinction between the “judicial mode” of policy-application (corresponding to principled flexibility) and
“legalism” (corresponding to inflexibility). Robert A. Kagan, Regulatory Justice: Implementing a Wage-Prize
Freeze 91-96 (1978). The other source is Peter Strauss’s response to Robert Anthony’s ACUS study of guidance,
particularly Strauss’s suggestion that guidance be treated like agency adjudicatory precedent, with an APA-style
obligation to give reasons for any departure. Strauss, supra note 11, at 1472-73, 1485-86. See also John F.
Manning, Nonlegislative Rules, 72 Geo. Wash. L. Rev. 893, 933-37 (2004); Thomas W. Merrill, The Accardi
Principle, 74 Geo. Wash. L. Rev. 569, 598 (2006); Levin, supra note 3, at 28.
29

15

departure will tamp down the number of departures and make it easier to anticipate when
departures may happen. In some contexts (though certainly not all), principled flexibility may be
required by the APA’s arbitrary-or-capricious standard, though it is not practical to think judicial
enforcement will be the main driving force behind agencies’ adoption of it.
Crucially—and unfortunately—principled flexibility is not easy to implement, though
many agencies try. It takes resources and runs into certain managerial obstacles. Most
important, the reason-giving mandate means that every request for departure requires time and
money to evaluate. Regulated parties requesting departures can bear some of this cost, but
saddling them with it chills requests for departures to begin with (thereby increasing practical
inflexibility). And besides, the agency itself has to do some independent investigation.
Inflexibility resulting from the cost of evaluation and reason-giving manifests itself especially in
programs that combine a high volume of individual decisions, scant resources, and time pressure.
Further, the need for a higher-level official to sign off on each departure—which many agencies
require and many commentators and institutional pronouncements endorse—forces departures
through a bottleneck of political appointees and senior civil servants who have especially limited
time and lack fine-grained information about the matters they are reviewing. This renders
departures yet harder to grant. A former senior EPA official now in private practice, reflecting
on these factors, expressed frustration with EPA personnel’s rigid use of guidance but did not
accuse them of bad faith: “they feel stuck,” she said.30 Another interviewee—a former EPA
program office director—recognized that “theoretically” there was supposed to be an “out” when
administering a guidance document, but concluded that “programmatic” factors “overwhelmed”
that.31
On top of these organizational and resource-based obstacles to principled flexibility, there
are additional such obstacles that stand in the way of flexibility of any kind, principled or not.
Flexibility requires that regulated parties be able to go over the heads of frontline officials who
deny departures and act too rigidly, but such appeals may antagonize the frontline officials,
creating fears of retaliation (a fear that can still have consequences even if baseless). When
faced with appeals, higher-level officials have various institutional motives to back up their
subordinates irrespective of the merits of the case. More subtly, the rule/guidance distinction is

30
31

Interview with Source 52, partner in large law firm and former senior EPA official.
Interview with Source 71, former EPA program office director.

16

not intuitive to most people (except perhaps lawyers), and that lack of understanding can make
flexibility harder to achieve. In addition, the day-to-day business of a government office can
socialize its personnel to be less receptive to regulated-party requests, though sometimes more
receptive. Offices that have day-to-day habits of cooperating with industry (like program offices
engaged in rulemaking) tend to be more flexible on guidance-related matters than, say,
enforcement offices. Finally, it is possible to get agencies to be more flexible by giving training
on the rule/guidance distinction to their personnel, though this tends to be most effective when
the trainers are embedded relatively close to the decisionmakers and can monitor and counsel
them on an ongoing basis—something that is not cheap.
All that said, there are some instances in which agencies hold fast to guidance not
because of legitimate external pressures for consistency, nor because of inertia or resource
poverty in the face of organizational pathologies, but instead because agency personnel just think
the guidance is right. That is, they are committed to the substantive content of the guidance, and
they therefore close their minds to reconsideration or departure. Of the many reasons why
agencies are inflexible, this one is the most problematic. If an agency wants to shut off the
possibility of departing from a policy simply because it thinks the policy is right, that is the
archetypal scenario for legislative rulemaking.
In light of the findings in Parts II and III, what is to be done? In formulating new
recommendations on agency use of guidance, we must recognize that the pressure on regulated
parties to follow guidance when operative is often (though not always) substantial, but that this
pressure does not arise mainly from agencies’ intentional acts. We must recognize that agency
flexibility is a good aspiration, but it is not the path of least resistance, at least not when
undertaken in the principled manner for which agencies ought to strive. The implication is that
being flexible in a good way requires spending resources and undertaking active managerial
reform, meaning that agencies cannot, as a practical matter, be flexible on everything all the
time. Priorities must be set. In deciding which guidance documents warrant the most active
exertions in favor of flexibility, we should assign a higher priority to a document (a) the more it
is likely to alter regulated-party behavior when operative, given the incentives discussed in
Part II, (b) the less it is subject to the legitimate external pressures for consistency discussed at
the start of Part III, and (c) the more the agency clings to the document by reason of commitment
to the document’s substantive content. On this very last point (c), one may think I am being
17

utopian. If an agency thinks the substance of a guidance document is right, is that not the
scenario in which the agency would be least willing to keep an open mind? Not necessarily. For
one thing, as discussed at the end of Part III, the agency personnel who are committed to the
substance of a guidance document are often the political appointees or the career officials but not
both. If a strong norm in favor of flexibility can be articulated, it will sometimes be possible for
the politicals to effectively invoke the norm against the career officials and vice versa.
Part IV considers the peculiar phenomenon of deregulatory guidance, i.e., guidance that
promises, at least tentatively, to treat regulated entities favorably, as by suggesting that a certain
course of regulated-party conduct enjoys a safe harbor in permit applications or is a low priority
for enforcement. If this guidance shifts the status quo in a more industry-friendly direction, one
can expect regulated parties to alter their behavior so as to follow it, not because of any of the
quasi-coercive structural features discussed in Part II, but simply because it is what they want to
do. But if this happens, the people Congress intended to protect by regulation—regulatory
beneficiaries—may be harmed. Under D.C. Circuit case law, such beneficiaries can get the
guidance struck down if it is too rigid, meaning the agency must either go through legislative
rulemaking or rework the guidance to be more flexible (i.e., so that the agency, in any particular
enforcement or adjudicatory proceeding, remains “open-minded” to the possibility of treating the
regulated party more stringently than the deregulatory guidance suggests).
But is flexibility in deregulatory guidance really a useful remedy for regulatory
beneficiaries? Remember flexibility operates at the micro-level of individual adjudicatory and
enforcement proceedings. In most such proceedings, no regulatory beneficiaries are going to
show up. There will thus be nobody to make the requests for departure that are the lifeblood of
flexibility. It seems the best approach—except in the select areas where NGOs representing
beneficiaries have the practical capacity to participate in individual adjudication and
enforcement—is for agencies to seek to promote participation by regulatory beneficiaries by
soliciting such beneficiaries’ views (and the views of NGOs who represent them) on a wholesale
rather than retail basis, at the time when guidance is initially issued or modified at a general
level. This will usually be the form of participation most suited to NGOs’ limited resources.
Part V provides a general assessment of how and whether agencies should voluntarily
provide for public participation in the initial formulation and issuance of guidance documents, as
distinct from providing flexibility in the documents’ on-the-ground application once issued. This
18

form of participation may be especially suited to regulatory beneficiaries, as noted in Part IV, but
it can also be quite valuable to regulated parties and to the agency itself.
There are diverse means by which agencies can seek public input on the formulation and
issuance of a guidance document. The agency can reach out individually to selected
stakeholders whom it already knows; it can hold public discussions on developing the guidance
at stakeholder meetings, workshops, forums, roundtables, sessions at conferences, webinars, or
other such events (for which invitations will often be distributed through agency listservs); it can
use an advisory committee as a channel for public participation; or it can voluntarily undertake
notice and comment on a published draft of the guidance document before adopting the
guidance, which is the maximal option in terms of broad, open, and impersonal participation.
Note, however, that voluntary notice and comment on guidance is still usually much faster and
less costly than legislative rulemaking, since it does not involve the same demands in terms of
cost-benefit analytic requirements, record-building and voluminous responses to comments in
contemplation of judicial review, etc.
In deciding what level of public participation to seek on the issuance of guidance—and
especially in deciding whether to undertake voluntary notice and comment on it—an agency
must weigh several potential benefits and costs. One potential benefit is the technical
information that stakeholders may provide, which may greatly improve the guidance (e.g., by
helping the agency anticipate and account for potential implementation problems). That said,
broadening participation (with notice and comment being the maximum) may see diminishing
returns on this front, depending on how concentrated or diffuse the actors with useful
information are. If information is concentrated, then narrow outreach to a few stakeholders may
provide just as good technical information at much less cost.
A second potential benefit of notice and comment on guidance is that it gives the agency
better political information, that is, helps the agency anticipate which stakeholders may challenge
the guidance at a political or legal level, so the agency can make a better-informed decision on
whether to proceed and how, diminishing the likelihood of being overridden by Congress or the
courts. That said, there is enough inertia in agency-stakeholder interactions that, if the agency
refrains for seeking input and simply issues the guidance, stakeholders may acquiesce in a way
they would not if the agency were openly tentative about the initiative. Tentativeness can
sometimes invite resistance.
19

A third potential benefit of notice and comment on guidance is that it may increase the
legitimacy of the guidance and of the agency itself, in the sense of giving stakeholders a sense
that the agency issues guidance through a fair process in which they have “buy-in,” which may
increase stakeholder willingness to cooperate with and support the agency and its program.
There are at least three specific ways in which notice and comment can increase legitimacy,
though each has its complications and limits. First, notice and comment can give stakeholders
confidence that the agency understands and is responsive to their concerns. But this is a doubleedged sword, for under some circumstances notice and comment can come to seem like an empty
gesture and might therefore alienate stakeholders (e.g., if the agency rarely makes changes in
response to comments, or finds the cost of giving a response to comments prohibitive). Second,
notice and comment can foster legitimacy by deflecting charges that an agency is biased in terms
of which voices it is willing to hear. This point seems especially important for NGOs, some of
whose officials see notice and comment as leveling the playing field between them and industry.
Public comment also allays the fear that lurks in officials’ minds about being accused of
favoritism. Yet that very anxiety can lead agencies not only to undertake notice and comment
but also to close off any interchanges with stakeholders that occur outside the public-comment
process, which some industry representatives thought was counter-productive, since it prevents
iterative and informal dialogue that may be optimal for agency learning. Third, notice and
comment may increase legitimacy simply by broadening the pool of participants, as exemplified
by the fact that some draft guidance documents have recently been focal points for “mass
comment” campaigns sponsored by advocacy groups, rising to the tens of thousands of
comments. If the rulemaking context is any guide, however, agencies have tended to ignore such
mass comments, or to use them only in an opportunistic way; it is not entirely clear how agencies
can use such comments meaningfully, as they are not usually written to be part of a deliberative
and analytic decisionmaking process, as opposed to a plebiscitary one.
Against the potentially great yet uncertain benefits of notice and comment on guidance
(technical and political information and legitimacy), one must measure the costs, in time and
resources. Several interviewees pointed out that, if agency personnel responsible for guidance
expend effort to seek public input on the guidance they issue, they will have less capacity to
issue guidance on other subjects, leaving regulated parties adrift in some areas. One major
question is whether the agency should provide a response to the comments it receives: this
20

renders participation more meaningful, yet it greatly increases the cost to the agency. Further, it
is possible that the cost of participation may rise so high as to seriously hamper the agency’s
capacity to make policy at all, which may actually delegitimize the agency in the eyes of
regulatory beneficiaries—an unintended and extremely perverse consequence.
Thus, the potential benefits and costs of notice and comment on guidance are numerous,
they vary with context, and they are sometimes counter-intuitive. Notice and comment will often
be worth it, but deciding whether it is involves a context-specific judgment.
For this reason, decisions about whether to seek notice and comment on guidance should
be made document-by-document, or perhaps agency-by-agency, in the sense that an agency can
adopt a procedural rule requiring notice and comment for an objectively-defined broad category
of its guidance. But a government-wide requirement for notice and comment on anything but the
very most extraordinary guidance documents would be rash.32 Making decisions on participation
on a narrower basis allows for more learning about what works best, and it cabins the
consequences of any decisions that do not turn out well.
Further, broad mandates for notice and comment on guidance (even if only agency-wide
rather than government-wide) risk two major unintended consequences, which interviews
confirm have sometimes come to pass. First, if there is an agency-wide procedural rule requiring
notice and comment for a large category of guidance, and the agency lacks the resources to
process all the comments it receives on all the documents, the agency may end up leaving many
guidance documents in published “draft” form indefinitely, without officially adopting them.
When regulated parties have incentives to comply with whatever they perceive to be the
agency’s wishes (as described in Part II), those parties may take a draft guidance document to be
a reflection of those wishes, and they may therefore follow its content, regardless of its draft
status. This outcome defeats the purpose of notice and comment. And it can actually be even
worse than that. It is possible that most of the guidance documents left indefinitely in draft are in
that state because of the agency’s insufficient resources, while some remain indefinitely in draft
because there is too much disagreement within the agency to reach a decision about which
comments to accept. Regulated parties are well-advised to follow guidance that reflects the

The Office of Management and Budget’s Good Guidance Practices, calling for pre-adoption public comment on
“economically significant” guidance documents, appear to cover only a relatively tiny number of these very
extraordinary documents. See infra text and notes 650-658.
32

21

agency’s view but is held up due to lack of resources, but not to follow guidance that is held up
because the agency cannot come to any agreed-upon view. Yet it may be difficult for regulated
parties to tell what the reason is for the holdup of any particular draft. The result is that regulated
parties are left guessing, which increases their decisionmaking costs and the risks they bear and
un-levels the playing field among regulated competitors. In addition, indefinite draft status can
prevent the agency from achieving principled flexibility in its use of guidance, since whenever
the agency wants to depart from guidance, it will be tempting simply to say “it’s only a draft,”
rather than go to the trouble of articulating the real policy reason for departing.
A second major unintended consequence that may arise from a broad mandate for notice
and comment on guidance is that guidance may thereby become so legitimate—in the eyes of
agency officials and/or stakeholders or political overseers—that it may come near to replacing
legislative rulemaking altogether. This would not necessarily be a bad outcome; some critics
think legislative rulemaking’s process burdens have risen too high, and this would be a means of
radically reducing them. I take no position on this question, but there is no doubt that it is a
profound one. If we categorically adopt notice and comment for guidance on a broad basis, we
may find that this profound question effectively gets decided without us thinking about it, unless
we couple the participatory mandate with some safeguard to ensure that legislative rulemaking
continues to be undertaken for some substantial fraction of the agency’s policies.
While I advise that decisions about notice and comment on guidance should have a scope
no broader than an individual agency, I am not saying that such decisions should be left to the
agency itself. As we shall see, there are examples of congressional overseers and the White
House putting pressure on particular agencies with respect to their participation policies for
guidance, or even their participation decisions regarding individual documents. The demands of
congressional overseers and the White House play a salutary role on this subject, but those
demands are most likely to be well-conceived when pitched at a workable level of specificity.

B. The Scope of the Report: Two Notes
1. Policy Statements versus Interpretive Rules
This Report’s scope, in its broadest definition, includes all agency statements that fall
into the categories of “interpretative rules” or “general statements of policy” under § 553 of the
22

APA. “Interpretative rules” (which I shall call interpretive rules, following modern usage) were
defined in the Attorney General’s Manual on the Administrative Procedure Act as “rules or
statements issued by an agency to advise the public of the agency’s construction of the statutes
and rules which it administers.” “General statements of policy” (which I call policy statements,
for short) were defined in the Manual as “statements issued by an agency to advise the public
prospectively of the manner in which the agency proposes to exercise a discretionary power.”33
There is general agreement that policy statements are supposed to be nonbinding on the
public and on the agency, meaning regulated parties are entitled to a reasonable opportunity to
contest the policy statement in general or as applied to them, in contrast to a legislative rule,
which can be applied automatically.34 To be sure, there is much confusion and controversy on
what it practically means for a policy statement to be “nonbinding,” but there is at least
agreement on what the principle is, if not on how it cashes out in day-to-day work.
As to interpretive rules, the confusion and controversy operate at a more fundamental
level. There is not consensus—not among judges, not among officials, not among scholars—on
whether interpretive rules are supposed to be nonbinding in the way policy statements are. Some
circuit court opinions say interpretive rules are unlike policy statements in that they can be
binding, but others say the opposite; the divergence is not just between circuits, but within the
D.C. Circuit itself.35 Among my interviewees who spoke on the subject (nearly all current or
former officials), some said their agencies took the position that they could bind through
interpretive rules, but more were equivocal or uncertain or rejected this view outright.36 As to
Attorney General’s Manual on the Administrative Procedure Act 30 n.3 (1947).
On this general agreement, see Levin, supra note 3, at 18-42.
35
For an excellent critical discussion of this case law, see Levin, supra note 3, at 42-71. Cases indicating that
interpretive rules may bind include: American Mining Congress v. MSHA, 995 F.2d 1106, 1111 (D.C. Cir. 1993);
Syncor International Corporation v. Shalala, 127 F.3d 90, 94-96 (D.C. Cir. 1997); Metro. School Dist. v. Davila, 969
F.2d 485, 493 (7th ed. 1992). The line of reasoning in these cases seems to underlie recent dicta that interpretive
rules are “sometimes” final for purpose of judicial review prior to enforcement whereas policy statements can never
be. National Mining Association v. McCarthy, 758 F.3d 243, 251 (D.C. Cir. 2014). Cases indicating that
interpretive rules cannot be binding include: Association of Flight Attendants-CWA v. Huerta, 785 F.3d 710, 716-18
(D.C. Cir. 2015); American Tort Reform Association v. OSHA, 738 F.3d 387, 401, 404, 406 (D.C. Cir. 2013);
Vietnam Veterans of America v. Sec’y of the Navy, 843 F.2d 528, 537-38 (D.C. Cir. 1988).
36
The views expressed by interviewees on the binding or nonbinding status of interpretive rules—which are diverse
in the aggregate and sometimes qualified in themselves—were as follows:
● Regarding EPA: An EPA official said that an interpretive rule allowed the agency to choose one reading of a
statute or rule “definitively” and “generally” and to use mandatory language in a way that it could not in a policy
statement (though of course the interpretive rule itself could always be changed if circumstances changed). But she
added that EPA issued interpretive rules only “occasionally.” Interview with Source 99, EPA official. A second
interviewee, a former senior EPA official with cross-office responsibilities, recalled the agency proceeding by
interpretive rule for the specific reason that such a vehicle would be binding, though she said she only saw this
33
34

23

happen “once” during her tenure. Interview with Source 96, former senior EPA official with cross-office
responsibilities. A third interviewee, Carrie Wehling of the EPA Office of General Counsel, distinguished between
(a) non-required recommendations administered case-by-case and (b) interpretations, which she said were not caseby-case. She did not speak to the relative frequency of use of these two forms in EPA practice. Interview with
Carrie Wehling, EPA Office of General Counsel. A fourth interviewee, an official at the EPA Office of General
Counsel, said EPA would be “nervous” about relying on the premise that an interpretive rule could be binding, as
the case law on this point was “murky.” She added that, in most instances, a guidance document consisted of a
mixture of interpretive-rule material and policy-statement material that was hard to disentangle; a “pure” interpretive
rule was less common. Interview with Source 61, EPA Office of General Counsel official. See also Funk, supra
note 15, at 1332 (“general statements of policy can look like an interpretive rule, and often agencies claim both
exceptions when they are challenged”). A fifth interviewee, Adam Kushner, former EPA director of civil
enforcement, said the idea that interpretive rules could be binding had “never” come up in his years of EPA
enforcement work. Interview with Adam Kushner, Partner, Hogan Lovells; former EPA director of civil
enforcement. A sixth interviewee, a former EPA program office director, said interpretive rules were meant to be
enforceable from the start but then added, “that is a legal debate.” Interview with Source 71, former EPA program
office director.
● Regarding DOT: Kathryn Thomson, former general counsel of DOT, drew a distinction between policy statements
and interpretive rules, saying the latter could bind. Interview with Kathryn Thomson, Partner, Morrison and
Foerster; former general counsel, DOT; former chief counsel, FAA.
● Regarding the Department of Education: A civil rights advocate said that a clarification of the famous 1979
“policy interpretation” of Title IX was not meant to be merely “suggestive”; rather it was understood there would be
enforcement proceedings for noncompliance with it. Interview with Source 23, civil rights advocate.
● Regarding the Department of Energy: A DOE Office of General Counsel official said an interpretive rule did not
involve a reservation of case-by-case discretion in the way a policy statement did. Yet, she said, she could imagine
a regulated party making a successful showing that a different interpretation was necessary as to that party, e.g.,
because the party’s product could not possibly do something the interpretive rule assumed it could do. She could
not recall this actually coming up, possibly because the enabling statute provided other safety valves for such
eventualities (e.g., exception relief). Interview with Source 3, Department of Energy Office of General Counsel
official.
● Regarding CFPB: A former CFPB official who represents CFPB-regulated entities said that, to her knowledge,
CFPB had issued only two statements called “interpretive rules” that it asserted did not have to go through notice
and comment. Interview with Source 81, former CFPB official who represents CFPB-regulated entities.
● Regarding FDA: An FDA Office of Policy official explained that, under FDA’s Good Guidance Practices, all
guidance, whether interpretive in nature or not, was uniformly treated as nonbinding on the agency and the public.
For this reason, she said, the distinction between policy statements and interpretive rules did not matter much to
FDA. Interview with Source 25, FDA Office of Policy official. Notably, the 1997 legislation instructing FDA to
implement the Good Guidance Practices refers only to “guidance documents,” not to policy statements or
interpretive rules, and says such documents “shall not create or confer any rights for or on any person” and “shall
not be binding on [FDA].” 21 U.S.C. § 371(h)(1). One could argue that this legislation repeals the APA’s
distinction between policy statements and interpretive rules as to FDA.
● Regarding CMS: A former CMS division director, when discussing flexibility in guidance, said CMS thought
mostly in terms of interpretive rules, not policy statements, and viewed guidance as telling regulated parties how
they must proceed. Asked whether this treatment of interpretive rules was premised on case law suggesting that
interpretive rules could bind, she said “I guess” CMS thought of it that way, but really, it was a “fool’s errand” to
make sense of that case law. Also, later in the interview, she made clear that CMS often did entertain requests for
departures from guidance, although these had a higher chance of success if they were couched as requests for
reinterpretations of the guidance, as opposed to departures outright. Interview with Source 93, former CMS division
director.
● Regarding DOL: Marc Freedman, the U.S. Chamber of Commerce’s executive director of labor law policy, said
the Chamber assumed that, when DOL issued guidance, it intended to make that guidance “stick”—the Department
would not commit resources to issuing a document to which it would not adhere—but when asked about the theory
that interpretive status conferred power to bind, he said that “seems academic” and did not suggest DOL was
consciously operating on that theory. Interview with Marc Freedman, Executive Director of Labor Law Policy, U.S.
Chamber of Commerce.

24

scholarship, Anthony took the position that interpretive rules could be binding, on the ground
that they merely “restate[d] or explain[ed]” the content of a statute or legislative rule that was
itself binding.37 But other commentators have criticized that view.38 The most elaborate and
recent critique, by Ronald Levin, points out that treating interpretive rules in this manner
effectively deprives regulated parties of the opportunity for input both at the stage of
promulgation and at the stage of implementation. According to Levin, there is nothing special
about the interpretive status of an agency statement that justifies shutting out input in this way.
The act of interpretation is creative and discretionary,39 and a premise of our adversary system is
that decisionmaking on legal questions benefits from the input of affected parties.40 Notably,
Levin does not question that an interpretive rule can legitimately contain mandatory language,
insofar as it is glossing a statute or legislative rule that is itself mandatory, but he contends that
the agency is obligated to remain open-minded about departing from that interpretation in
response to regulated-party input.41
My aim in this report is to study the fraught question of how agencies can appropriately
issue and use statements that are supposed to be nonbinding. That is the subject that concerned
Anthony in 1992, which explains why Anthony (believing interpretive rules could bind) focused
his report mostly on policy statements.42 Indeed, Recommendation 92-2 focuses entirely on
policy statement and says nothing whatever about interpretive rules. My interest in “statements
that are supposed to be nonbinding” obviously covers all policy statements, but it also covers
interpretive rules insofar as people believe or assume (contra Anthony) that interpretive rules are
supposed to be nonbinding.
I think that my conclusions and recommendations will be helpful to any agency seeking
to figure out appropriate processes and uses for statements that it recognizes are supposed to be
● Finally, a large law firm partner, not a specialist on a particular agency, said the courts and the bar generally did
understand that interpretive rules could bind, and that was how most regulated entities approached the issue.
Interview with Source 68, partner in large law firm.
37
Anthony, supra note 7, at 1324. See also id. at 1313-14, 1323-26, 1375-78. Anthony did urge that, as a matter of
good government (not law), agencies should use notice-and-comment for any interpretive rule that “would 1) extend
the scope of the jurisdiction the agency in fact exercises, 2) alter the obligations or liabilities of private parties, or 3)
modify the terms on which the agency will grant entitlements,” so long as the change in interpretation was
“substantial” and “does not derive in an obvious way from established norms.” Id. at 1377-78.
38
E.g., Strauss, supra note 11, at 1478-79.
39
Levin, supra note 3, at 51. See also Manning, supra note 29, at 923-27.
40
Levin, supra note 3, at 52.
41
Id. at 67.
42
Anthony, supra note 7, at 1326.

25

nonbinding. Whether these conclusions and recommendations are applicable only to policy
statements or also to interpretive rules is a question for the agencies and, potentially, for the
Conference. I did not focus my research on the question of whether it was sound, as an
administrative matter, to confer binding status on statements couched as “interpretive.”43 The
question of how to issue and use statements once the agency decided they would be officially
nonbinding was demanding enough.
A word about terminology. In this report, I frequently use the term “guidance.” In
academic writing, this is an umbrella term that covers the APA § 553 categories of policy
statements and interpretive rules. In common usage among agency officials and stakeholder
representatives, “guidance” usually denotes agency statements that are supposed to be
nonbinding, thus covering (a) policy statements and (b) interpretive rules insofar as the speaker
thinks interpretive rules are nonbinding. I use the term “guidance” in this sense, that is, agency
statements that are meant to be nonbinding, though the exact scope of that category may differ
depending on the point of view of the agency or even the individual speaker. The point is to
capture how people grapple with the practical managerial challenge of using a statement
appropriately when they think it is not supposed to be binding.
2. External Guidance versus Internal Guidance
It is common to draw a distinction between guidance that is addressed internally to the
agency’s own officials and guidance that is addressed externally to regulated parties, but I have
put little emphasis on that distinction in this Report. Admittedly, one might think the distinction
would matter, given that the legal prohibition against binding status applies only to guidance that
binds regulated parties; the requirement of nonbinding status would therefore seem irrelevant to
internal guidance. But that is not so. One can imagine guidance that is nominally addressed to
agency officials even as it practically binds regulated parties. If a legislative rule says the agency
may grant a permit upon a showing of A or B, and a guidance document binds all the agency’s
adjudicators to grant the permit only upon a showing of A and never upon a showing of B, that
would seem to have a binding effect on any permit applicant who wanted to show B. As Michael
Asimow put it, a guidance document “might be addressed either to the staff or to the public
43

It was not an issue that jumped out in the interviews. While a majority of the 135 interviewees discussed the issue
of guidance’s binding or nonbinding effect in some way or other, only four brought up the idea that the interpretive
status of guidance entailed some special power to bind.

26

without any real difference in impact.”44 The key to discerning binding effect, as ever, is
whether regulated parties have a “fair opportunity” to seek departure from guidance “in an
agency forum that assures adequate consideration by responsible agency officials.”45 As the
Office of Management and Budget said in its 2007 Good Guidance Practices for executive
agencies, guidance can be mandatory if “addressed to agency staff” but only if its mandatory
terms “will not foreclose agency consideration of positions advanced by affected private
parties.”46 Thus, although a guidance document can bind frontline agency officials, avoidance of
an impermissible binding effect on regulated parties would seem to require that those parties
have a reasonable chance to appeal the guidance’s application to some higher-level official who
is not bound. As James Conrad said, “just as guidance must leave regulated entities free to
challenge it before the agency, a guidance must also leave agency staff at some level in the
hierarchy free to depart from it.”47
The focus of the Report is on how guidance affects parties outside the agency—and how
agency flexibility and public participation can help to mitigate or legitimate those effects—
regardless of whether the guidance is addressed internally or externally. Insofar as guidance is
truly internal in the sense of having no effect on outside parties, it is beyond the scope of this
Report.

44

Michael Asimow, Public Participation in the Adoption of Interpretive Rules and Policy Statements, 75 Mich. L.
Rev. 520, 556 (1977). William Funk articulated this point with respect to guidance binding on administrative law
judges. William Funk, Legislating for Nonlegislative Rules, 56 Admin. L. Rev. 1023, 1036 (2004) (“to allow
agencies to bind ALJs to the agency’s interpretations contained in nonlegislative rules would be effectively to give
those interpretations binding legal effect on persons outside the agency”); id. at 1037-38 (“If a general statement of
policy was binding upon ALJs, . . . the effect of a general statement of policy on a regulated entity would be
indistinguishable from the effect of a legislative rule”).
45
ACUS Recommendation 92-2, Point II.B. See generally Levin, supra note 3, at 26-36.
46
OMB Good Guidance Practices § II(2)(h), 72 Fed. Reg. 3432, 3440 (Jan. 25, 2007) (emphasis added).
47
James W. Conrad Jr., Draft Guidance on the Appropriate Use of Rules Versus Guidance, 32 ELR News &
Analysis 10721, 10724 (2002) (emphasis added). The American Bar Association has recommended that regulated
parties should have an “opportunity to challenge” only guidance “respecting which public reliance or conformity is
intended, reasonably to be expected, or derived from the conduct of agency officials and personnel; in particular,
enforcement manuals setting internal priorities or procedures rather than standards of conduct by the public are not
covered [by the recommendation in favor of opportunities for challenge], whether or not they have been in fact
published or otherwise made available to the public.” ABA Recommendation 120C, 118-2 Ann. Rep. A.B.A. 57-58
(Aug. 1993). How to tell whether regulated-party reliance or conformity is “reasonably to be expected” or “derived
from the conduct of agency officials and personnel”—and whether enforcement manuals could never fit these
descriptions—is an interesting question. A former SEC official noted that the SEC Enforcement Division
“scrupulously” follows its Enforcement Manual and that defense attorneys would “often” cite it. Interview with
Source 19, former SEC official.

27

I. THE IMPORTANCE OF GUIDANCE
Guidance is widely understood to be an essential instrument of federal administration.
Agencies and stakeholders often prefer it over case-by-case adjudication or legislative
rulemaking, for a variety of reasons. The result is that guidance is ubiquitous at most agencies.
Though regulated parties have sometimes complained of guidance’s abuse, they also very
frequently demand that it be issued.

A. Reasons to Prefer Guidance to Case-by-Case Adjudication
Agency officials and stakeholder representatives gave several examples of how
decentralized case-by-case adjudication or enforcement caused problems that could be solved if
only the agency provided more guidance. It was clear from these interviews that guidance
increases an agency program’s integrity and efficiency and shields regulated parties against
unequal treatment, unnecessary work, and unnecessary risk.
One example involved the USDA National Organic Program (NOP), which confers and
renews accreditations for nonfederal certifying organizations who effectively decide which
producers can use the USDA organic label. Guidance can help certifiers predict how NOP will
apply the relevant statutes and legislative rules when making accreditation decisions. The head
of NOP, Miles McEvoy, explained that, up to 2009, the program did not have the resources to
provide guidance beyond published responses to individual inquiries, which he said were
confusing because each answer was so specific to the question asked, and the answers did not
seem to align on related topics. Also, some regulated parties accessed this system, while others
did not, which was problematic. Only after a budget increase was it possible for NOP, in 2010,
to publish more general, comprehensive, and integrated guidance, which McEvoy said led to
much better information and clarity.48 An official at one of the certifying organizations said that
NOP’s increased provision of guidance had been helpful in getting the certifiers “all on the same
page,” which strengthened the “integrity” of the organic label, in contrast to the previous era
when there was more variation between certifiers, causing “disruptions” in the organic trade.49

48
49

Interview with Miles McEvoy, Deputy Administrator (for NOP), Agricultural Marketing Service, USDA.
Interview with Source 114, official at an organic certifier.

28

Another example, highlighting how adjudication in the absence of guidance can be
inefficient, comes from EPA’s administration of the Toxic Substances Control Act (TSCA), as
recently amended to provide that EPA must make up-or-down decisions on whether a new
chemical presents a unreasonable risk before it can be manufactured. According to Lynn
Bergeson, the managing partner of the law firm Bergeson & Campbell (which has a
specialization in chemical regulation), EPA frontline decisionmakers were reluctant to take
responsibility for green-light decisions; there was not enough guidance on how to make the
decisions, with the result that manufacturers’ applications got held up, resulting in a backlog,
causing industry to go “almost berserk.”50 In another EPA adjudicatory scheme, in which the
agency decides whether to approve state agencies’ grants of permits under the Clean Water Act,
the executive director of the Environmental Council of the States explained that state agencies
would like to have more up-front guidance from EPA on how it decides whether to approve. As
things stand, EPA staff sometimes have an “unwritten” policy view that goes against granting a
permit, resulting in EPA objecting to the permit or expressing discomfort with it in a manner that
delays any decision. These post-grant holdups are problematic for the state agencies because
they occur after the agencies have put in a lot of work on their decisions. More clear, up-front
guidance articulating EPA’s views would help.51
Further problems with guidance’s absence in case-by-case decisionmaking arise when the
context is enforcement. Bergeson explained that she was working to get EPA to ease up on
using enforcement as a means for policymaking under TSCA, urging the agency instead to
clarify changes in its interpretations of the law prior to bringing enforcement actions premised on
those changes (e.g., through a public workshop), as enforcement without this warning results in
disruption and reputational injury for the target firms.52 In the world of FDA enforcement,
Bradley Merrill Thompson, who has been counsel to trade associations dealing with FDA, urged
that FDA should provide more guidance on the obligations of medical device makers. As things
stand, he explained, a company can obtain guidance from FDA in the form of a confidential
50

Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell. Months after this interview, EPA
announced that the caseload on this matter was “back at the baseline and now in line with the typical active
workload,” in part due to a new procedural rule signed June 22, 2017. News Release, EPA Eliminates NewChemical Backlog, Announces Improvements to New Chemical Safety Reviews (August 7, 2017), available at
https://www.epa.gov/newsreleases/epa-eliminates-new-chemical-backlog-announces-improvements-new-chemicalsafety-reviews.
51
Interview with Alexandra Dapolito Dunn, executive director, Environmental Council of the States.
52
Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell.

29

letter that takes about two or three months to get, but the letter has the effect of locking the
company in to whatever facts the company provided in soliciting the letter. The development of
the product can later get “tied up in knots” because the company does not want to take the risk of
departing from the letter’s specifics (as the letter is not necessarily applicable to any other fact
pattern). More general, less fact-bound guidance would address this difficulty. In the absence of
more general guidance, a company not wanting to commit itself to a particular fact pattern in an
FDA letter must seek (in a typical case) an opinion from outside counsel that puts together
“small and remote pieces of the puzzle,” including FDA official speeches, reports to Congress,
and enforcement patterns (though there is not a complete public record of these), and does
effectively a risk assessment of the product seeking to imitate what FDA would do. Even with
all this material, it can be difficult to provide a clear answer.53

B. Reasons to Prefer Guidance to Legislative Rulemaking
Of course the advantages of guidance cited in the preceding Section could, in principle,
be achieved by announcing policy through legislative rulemaking. But interviewees gave
reasons why agencies and stakeholders often preferred guidance nonetheless. First, guidance is
better-suited to dealing with matters that involve uncertainty, either because the general matter
being regulated (or the agency’s understanding of the matter) is likely to change rapidly, or
because it is difficult to anticipate particulars that might arise in individual proceedings that
would justify an ad hoc adjustment.54 Second, guidance—because it is not legally binding—can
be written in language that is accessible to parties who need to know the agency’s view but lack

53

Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and Green.
These two factors were discussed jointly in Conrad, supra note 47, at 10725-10726. On uncertainty in the
agency’s general understanding, see Interview with Source 83, former senior FDA Office of Chief Counsel official
(stating that it is sometimes hard to do legislative rulemaking in a way that keeps up with changes in science);
Interview with Source 98, former EPA program office director (stating that one reason for guidance is that the
agency may not know the answers, and guidance makes it easier to revise or deviate); Interview with Coleen
Klasmeier, head of Sidley Austin’s FDA regulatory practice; former FDA OCC attorney (stating guidance is
appropriate in the context of rapidly evolving scientific inquiry); Interview with Miles McEvoy, Deputy
Administrator (for NOP), Agricultural Marketing Service, USDA (stating that the need to provide clarification in a
rapidly evolving industry made legislative rulemaking more difficult to use). On uncertainty about variation in
individual proceedings, see Interview with Eric Schaeffer, Executive Director, Environmental Integrity Project;
former director of civil enforcement, EPA (stating that while a certain guidance document offered enforcement
leniency in exchange for firms’ devising internal audit programs and self-reporting violations, enforcement under
the document still required case-to-case judgment and therefore should not have been done through legislative
rulemaking).
54

30

access to counsel, such as small employers regulated by OSHA,55 small water utilities regulated
by EPA,56 or small trucking firms regulated by FMCSA.57
Third—and interviewees raised this factor several times more than any other—guidance
takes less time and fewer resources to issue than does a legislative rule. Numerous interviewees
across multiple regulatory areas stated that guidance was less time-consuming and resourceintensive than legislative rulemaking,58 and many others viewed this disparity (or, at least, the
agency’s perception of the disparity) as a cause of agency use of guidance, though the
interviewees varied in the degree to which they cast the causal link as a conscious choice by
agency personnel, or a less-conscious tendency to gravitate toward less-costly means when
meeting demands for policymaking.59 Even interviewees who questioned the empirical premise
Interview with Chris Trahan Cain, health and safety director, North America’s Building Trades Unions; and
executive director, CPWR Center for Construction Research and Training.
56
Interview with Source 84, former EPA Office of Water official.
57
Interview with Source 12, 13, 14, and 15, FMCSA officials.
58
Interview with Source 103, former senior EPA Air Program office official (stating that rulemaking is unduly
cumbersome, and more resource-intensive than guidance); Interview with Source 99, EPA official (stating that
rulemaking takes an “excruciatingly” long time whereas the agency is “more nimble” on guidance); Interview with
Source 107, former senior FDA official (saying legislative rulemaking process is very time-consuming, whereas
guidance, even with voluntary notice and comment, is much more abbreviated); Interview with Janet Woodcock,
Director, Center for Drug Evaluation and Research, FDA (stating that guidance can be provided closer to “real time”
than can rulemaking, which takes a long time; by the time you complete a rulemaking, “the science may have
changed”); Interview with Source 27, FDA Office of Chief Counsel official (stating that whereas rulemaking was
criticized for being “ossified,” it was possible to get guidance “pretty quickly”); Interview with Source 72, former
senior Federal Reserve official who has counseled financial institutions (stating a solo Fed rulemaking would take 918 months whereas a solo Fed guidance would take 1 month); Interview with Jean Richardson, former chair,
National Organic Standards Board (stating that USDA National Organic Program guidance even with notice and
comment is much faster than legislative rulemaking); Interview with Jonathan Snare, Partner, Morgan Lewis; former
Deputy Solicitor (for OSHA), DOL (stating that an advantage to the agency of guidance is that it is less cumbersome
than rulemaking, which is especially cumbersome and lengthy); Interview with Kathryn Thomson, Partner,
Morrison and Foerster; former general counsel, DOT; former chief counsel, FAA (stating that guidance, even with
notice and comment, is much faster than legislative rulemaking); Interview with Source 122, FAA Office of
Rulemaking official (stating that guidance is way faster that legislative rulemaking, though it depends on the
complexity of the guidance).
59
Interview with Source 77, former senior HHS official (recalling that HHS sometimes used guidance instead of
rules when there was urgent demand for policy and it was hard to get rules out quickly); Interview with Eric
Schaeffer, Executive Director, Environmental Integrity Project; former director of civil enforcement, EPA (stating
that, if legislative rulemaking had been required for adoption of EPA’s “audit policy” offering leniency to firms that
devised internal audit programs, EPA would not have adopted the policy, partly because of the process costs of
rulemaking); Interview with Source 96, former senior EPA official with cross-office responsibilities (stating that, in
internal EPA discussions on whether to proceed by guidance or rulemaking, one of the factors in play was the
perception that rulemaking was cumbersome and guidance easier); Interview with Source 98, former EPA program
office director (stating that, as a manager, he would always prefer guidance to a legislative rule, partly because it
was hard to put out a rule); Interview with Carrie Wehling, EPA Office of General Counsel (observing that
legislative rulemaking in the last several years has become slower and more cumbersome even to do small things,
resulting in an increase in guidance); Interview with Source 18, former CFPB official (stating guidance is attractive
because it is quicker than legislative rulemaking); Interview with Source 82, congressional staffer (saying FDA
personnel say that legislative rulemaking is cumbersome and they will do guidance if they can); Interview with
55

31

that guidance is far more costly than legislative rulemaking acknowledged that the agency they
were discussing believed it was, and that this belief shaped agency behavior.60 (Process
differences between legislative rulemaking and the issuance of guidance are discussed in depth
in Section V.B below.)
To some degree, the time-and-resources factor is an element of the uncertainty factor
discussed above. If legislative rules could be made (and amended) rapidly and cheaply, then
agencies could easily use such rules even under conditions of uncertainty, since the rules could
be amended easily as the agency learned more.
But the time-and-resources factor is also its own, free-standing reason to prefer guidance.
Even if there is relatively little uncertainty, an agency may implement some policies by guidance
simply because the cheapness of guidance increases the number of policies an agency can
implement and, therefore, the degree to which it can fulfill what it considers to be its statutory
mission. As one former agency general counsel said, the capacity to make legislative rules is a
scarce resource, which means not all policy can be pushed through legislative rulemaking. A
political appointee deciding the agency’s agenda, facing short tenure and a limited discretionary
budget, will be acutely aware of this.61 To be sure, an agency opting for guidance on certain
policies thereby gives up legally-binding status for those policies, but as we shall see in Part II,
regulated parties often have strong incentives to follow guidance regardless of its legal status.
Agencies’ use of guidance to expand their policymaking capacity is a practice often criticized by
industry (as we shall see throughout this Report), but a great deal of policymaking is in
industry’s interest, either because of its substance or merely because it provides clarity.

Source 83, former senior FDA Office of Chief Counsel official (stating he appreciates why FDA likes guidance,
there being several reasons, one of which is that legislative rulemaking is laborious); Interview with Source 104, law
firm partner who deals frequently with FDA and CMS (saying FDA defaults to using guidance, that it is hard for
FDA to get rules out, and that FDA often says rulemaking is too hard); Interview with Source 24, trade association
official (stating that on the agency side the reason to proceed by guidance is to avoid red tape); Interview with
Daniel Troy, General Counsel, GlaxoSmithKline (stating FDA is averse to rulemaking because they think it takes
too long); Interview with Jake Lewin, President, CCOF Certification Services (stating that guidance is a legitimate
process especially when you cannot practically get rules made); Interview with Frank White, former Deputy
Assistant Secretary (for OSHA), DOL (stating that, as rulemaking has become more difficult, complex, and rare,
from a legal and political standpoint, guidance comes to substitute for rulemaking, with allegations that rulemaking
is being circumvented); Interview with Source 35, AFL-CIO official (stating that guidance is necessary because
rulemaking is so cumbersome and adversarial); Interview with Sources 12, 13, 14, and 15, FMCSA officials (stating
the agency has some preference for guidance because it is faster than rulemaking, which has many hurdles).
60
Interview with Coleen Klasmeier, head of Sidley Austin’s FDA regulatory practice; former FDA OCC attorney;
Interview with Source 20, former FDA official.
61
Interview with Source 69, former agency general counsel.

32

Regarding FDA, which industry has sometimes criticized for its overuse of guidance, an
executive at a drug manufacturer said he could see the argument “in the abstract” for why
legislative rulemaking was better, but he said sardonically that he preferred to know what FDA
was thinking “rather than wait twenty years” for a legislative rulemaking to finish. Guidance, he
said, is “the best you can do.”62
To be sure, this attitude fatalistically accepts the extreme costliness, in time and
resources, of legislative rulemaking. One might argue that legislative rulemaking can and should
be made less costly, or even that agencies are systematically overestimating its actual costs.
These are important questions, but they are beyond the scope of this Report. I take as given that
agencies, for a variety of reasons (including the cost of rulemaking), will produce guidance, and I
focus on how that guidance ought to be issued and administered.
Still—as an aside and an invitation to future research—I must note that the extreme
costliness of legislative rulemaking does not appear inevitable, for some agencies or offices
finish legislative rulemakings faster than others. This may seem surprising, given that agencies
are generally constrained by the same notice-and-comment process and the same kind of judicial
review. But as a few interviewees noted, constraints are not the whole story. There can be
differences in agencies’ or offices’ affirmative motivations to get rulemaking finished, often
driven by statutory and court deadlines, which, if frequent enough, can instill an agency or office
with a more general capacity for speed and decisiveness.
One example is EPA’s Air Program office. A former senior EPA official with crossoffice responsibilities said that that office was faster at rulemaking than EPA’s other major
program offices. “The more you do rulemaking, the less you fear doing it,” he said, noting that
the Air Program office did a higher volume of rules than any other, and it had routinized the
process in a way the others had not.63 A former senior official from the Air Program office
agreed that it was faster, putting out rules in two or three years while other EPA program offices
took four or five. That the Air Program office had turned itself into “a rule-writing machine”
was due, he said, to the Clean Air Act amendments of 1990, which set forth a clear set of
rulemakings that had to be done; the implementation process was written into the statute. He
emphasized the importance of court deadlines as a driving factor, triggered by deadlines in the

62
63

Interview with Source 108, executive at a drug manufacturer.
Interview with Source 96, former senior EPA official with cross-office responsibilities.

33

statute, meaning the office did not wait for consensus before acting, in the way that other offices
did.64
Another part of the bureaucracy that does legislative rulemaking relatively quickly is
CMS. A law firm partner who works frequently with CMS and FDA said that, whereas FDA
often used guidance when he believed it should have used legislative rulemaking, CMS was
much better about this; it was “more comfortable” with doing rules. One important reason, he
said, was that CMS was subject to statutory deadlines for many of its rules and simply had to get
them out. The experience of regularly having to meet these deadlines gave CMS a higher
“comfort level” with overriding controversy and just going ahead with a rule; its personnel were
willing to disagree with unhappy stakeholders and say “sue me,” with an understanding that the
disagreement was not to be taken personally. Even when making policy on matters not subject
to a statutory deadline, CMS would sometimes make policies on those matters and tack them on
to the rules that were deadline-driven.65
All that said, organizations like the EPA Air Program office and CMS appear to be
exceptional, and, even at those organizations, legislative rulemaking takes large amounts of time
and resources in an absolute sense. Reducing the cost of legislative rulemaking is potentially a
worthy mission for the future, but for now, we have little choice but to recognize guidance’s
relative attractiveness and think about how it should be issued and administered.

C. The Ubiquity of Guidance
Given that it is often more attractive than pure case-by-case adjudication or legislative
rulemaking, agencies use guidance very frequently and regard it as essential to their missions. A
former senior HHS official said it would be “impossible” to operate Medicare without
guidance.66 A former senior FDA official said, “I cannot imagine a world without guidance.”67
Guidance is “the bread and butter of agency practice,” said an EPA official.68 Providing it is an

64

Interview with Source 103, former senior EPA Air Program office official.
Interview with Source 104, law firm partner who deals frequently with CMS and FDA.
66
Interview with Source 77, former senior HHS official.
67
Interview with Source 80, former senior FDA official.
68
Interview with Carrie Wehling, Office of General Counsel, EPA.
65

34

“essential responsibility,” said a former OSHA official.69 Observers predicted that, if anything,
the role of guidance would grow in the future, as regulation becomes more performance-based:
when no particular means of compliance is specified in the legislative rule, regulated parties will
want the agency to suggest one.70
There is no comprehensive compilation of guidance, but everyone agrees its volume is
oceanic.71 Its provision is a “big part” of EPA operations in the aggregate, said an EPA
official.72 Medicare’s legislative rules are “the tip of the iceberg,” said a former senior HHS
official, and guidance is the iceberg.73 Nobody really knows the volume of agencies’ guidance,
said a trade association official, but it is orders of magnitude greater than that of legislative
rules.74

D. Stakeholders’ Demand for Guidance
It also seems that, for most regulated parties most of the time, guidance is a much-needed
resource that they would not want to do without—and may actively demand.75 Without
guidance, said Charles Samuels, counsel to the home appliance manufacturers’ association, we
would be “cast adrift” in terms of what the agency regulating us thinks.76 Even interviewees
who mounted very substantial critiques of what they considered the abuse of guidance
recognized that much guidance was nonetheless essential. Marc Freedman, the U.S. Chamber of
Commerce’s executive director of labor law policy, went into depth on what he considered
OSHA’s improper use of guidance but readily acknowledged that businesses sometimes
demanded guidance and that it was quite reasonable for the agency to provide it to clarify vague

69

Interview with Celeste Monforton, Lecturer, Department of Health and Human Performance, Texas State
University; Professorial Lecturer, Milken Institute School of Public Health and Health Services, George Washington
University; former legislative analyst, OSHA; former policy advisor, MSHA.
70
Interview with Source 122, FAA Office of Rulemaking official; Interview with Frank White, former Deputy
Assistant Secretary (for OSHA), DOL.
71
Strauss, supra note 11, at 1468-69; Peter L. Strauss, Publication Rules in the Rulemaking Spectrum: Assuring
Proper Respect for an Essential Element, 53 Admin. L. Rev. 803, 805 (2001) [hereinafter Strauss, Publication
Rules].
72
Interview with Source 61, EPA Office of General Counsel official.
73
Interview with Source 77, former senior HHS official.
74
Interview with Source 2, trade association official.
75
On the point that guidance’s function is largely to provide assurances that benefit regulated parties, meaning that a
focus on complaints or litigation about guidance may mislead as to its aggregate effects, see Strauss, supra note 11,
esp. 1474-75, 1483.
76
Interview with Charles Samuels, Partner, Mintz Levin (counsel to the Association of Home Appliance
Manufacturers).

35

legislative rules (the problem being if guidance effectively changed the legislative rules).77 A
congressional staffer noted that even those who argued that FDA improperly over-used guidance
on some subjects simultaneously wanted the agency to issue more guidance faster on other
subjects.78 Anthony himself acknowledged, if only very briefly, that guidance “generally serves
the important function of informing staff and the public about agency positions, and in the great
majority of instances is proper and indeed very valuable.”79
Indeed, it will often be harder for an agency not to issue guidance than to issue it, since
refraining from issuing guidance may require remaining resolutely silent in the face of regulated
parties’ entreaties for clarification. When regulated firms come to EPA saying they are confused
and need something explained, said a former program office director at the agency, “EPA’s
instinct is to answer the question.”80 Once the agency starts answering questions, it is hard to
keep those answers secret. The same interviewee gave an example of how EPA clarificatory
letters could be obtained by a regulated party through the Freedom of Information Act.81
Another former EPA program office director recalled that, once his office began issuing such
individualized answers in the form of letters, those letters got “passed around” among industry,
and parties besides the addressees began to rely upon them.82 And once guidance is being
provided to individuals who seek it, the agency begins to see that it would be more efficient and
fair to provide that guidance in the form of more general public documents. A former SEC
official recalled that, decades ago, he spent 30 hours per week on “phone duty,” answering the
inquiries of regulated parties who called in. The giving of advice in this ad hoc manner by
individual staff members, he said, was inferior to the provision of general guidance, toward
which the SEC more recently shifted. More general guidance was better because ad-hoc advicegiving led to inconsistency between answers, ate up more staff time, and created an unlevel

77

Interview with Marc Freedman, Executive Director of Labor Law Policy, U.S. Chamber of Commerce.
Interview with Source 82, congressional staffer. See also Interview with Source 25, FDA Office of Policy official
(acknowledging that FDA does not provide as much guidance as industry would like). But see Interview with
Source 73, general counsel of Fortune 500 company (arguing that really his industry’s preference is for legislative
rulemaking, which is easier to find out about, and does a better job of providing guardrails in which to act, so
industry can gear up for compliance).
79
Anthony, supra note 7, at 1317.
80
Interview with Source 71, former EPA program office director.
81
Id.
82
Interview with Source 98, former EPA program office director.
78

36

playing field among regulated parties, some of whom phoned while others did not.83 Thus,
unless an agency shuts itself off from stakeholder demands, or foregoes obvious means to
increase efficiency and fairness, it is going to end up issuing guidance.

II. REGULATED PARTIES’ INCENTIVES TO FOLLOW GUIDANCE
This Part analyzes four major factors that incentivize regulated parties to follow guidance
even if legally nonbinding: (A) pre-approval requirements, (B) investment in relationships to the
agency, (C) intra-firm constituencies for compliance beyond legal requirements, and (D) the
risks associated with one-off enforcement. The Part concludes (in Section E) with a discussion
of certain regulatory areas where these factors are weak or absent, and incentives to comply with
guidance are less.

A. Pre-Approval Requirements
Regulated parties have a strong incentive to follow guidance when they face a preapproval requirement, that is, when the relevant statutes and legislative rules require them to
obtain the affirmative assent of the agency in order to get some legal advantage, such as a permit,
license, accreditation, monetary benefit or reimbursement, etc.84 The strength of the incentive
varies with four factors.

83

Interview with Source 46, former SEC official. See also Asimow, supra note 4, at 388 (noting that guidance
“permits everyone who must deal with the agency equal access to vital information, thus diminishing the advantage
held by experienced professionals or former agency staff members”). See also Interview with Source 40, former
SEC official (describing SEC efforts to make guidance more generally available and transparent so as to provide
more equal access for regulated parties).
84
The strong incentive that regulated parties have to follow guidance in a pre-approval regime is briefly discussed
by Anthony, supra note 7, at 1340, and by Connor N. Raso, Strategic or Sincere? Analyzing Agency Use of
Guidance Documents, 119 Yale L.J. 782, 803-04 (2010). For an in-depth theoretical treatment of how pre-approval
regimes generally give agencies more leverage over regulated parties than do ex post enforcement regimes, see
Ashutosh Bhagwat, Modes of Regulatory Enforcement and the Problem of Administrative Discretion, 50 Hastings
L.J. 1275 (1999). Bhagwat provides a valuable frame for thinking about pre-approval schemes, particularly on how
pre-approval makes outright noncompliance easier to detect (id. at 1314-15), forces regulated parties to volunteer
information to agencies (id. at 1311-12), and shifts the cost of delay and inaction from the agency to regulated
parties (id. at 1295-1300). That said, Bhagwat says nothing about the rule-guidance distinction or how the leverage
associated with pre-approval makes it easier for agencies to influence regulated parties’ behavior without legislative
rulemaking (except for a passing reference to this issue, id. at 1306). Rather his focus, insofar as it goes to APA
issues, is on how pre-approval empowers agencies to make policy, by whatever means, that goes beyond the
enabling act or the arbitrary-or-capricious standard, as pre-approval’s incentives make it practically difficult for
regulated entities to seek judicial review (id. at 1304-10). Bhagwat makes a brief reference to FDA guidance but

37

First, the incentive increases with the importance of the sought-for legal advantage to the
regulated party. In the business context, think of FDA approvals for drug manufacturers or
Medicare reimbursements to healthcare providers, which determine their very survival. In the
individual context, think of lawful status for a deportable immigrant, which may determine his or
her livelihood and be necessary to family connections.
Second, the incentive to follow guidance increases with the uncertainty of obtaining the
agency’s assent in the absence of guidance. Uncertainty can be reduced or eliminated by highly
specific criteria set forth in statutes or legislative rules, or by a pre-application adjudicatory
process that tells the party what it must do before it goes down the wrong path, or simply by an
agency’s reputation for granting pre-approvals as a rubber stamp.85 But if the statute, legislative
rules, and application process leave a grey area—and if the agency has demonstrated the
gumption to deny requests that fall into that grey area—then regulated parties feel the need to
learn as much as they can about what the agency wants, however those wants are expressed.
Guidance becomes like water in the desert.
Third, the incentive to follow guidance increases with the marginal cost to the regulated
party of re-applying successfully after its initial application is denied, which cost includes any
non-reusable investment made in that initial application. If the re-application requires a costly
redo of the initial submission, or worse, investment in a different product or service to begin
with, that can mean a big loss of money and time. The prospect of such loss incentivizes the
party to simply follow guidance in the first go-around.
Fourth, the incentive to follow guidance increases the more discretion the agency has to
delay its pre-approval decision and, with it, the regulated party’s receipt of the legal advantage.
For a firm, time spent getting to market means the loss of profits and (potentially) competitive
advantage. The agency’s power to leverage delay can be reduced if the party is permitted to
enjoy the sought-for advantage while its application is pending, or if agency delay is subject to a
time limit or efficacious complaint system, or if the agency must decide requests in a queue. But
only to say that FDA has sometimes resisted providing it in clear form, id. at 1325-26 & n.156, not that FDA’s
preapproval authority renders its guidance practically binding.
85
For an argument that USDA has chosen not to scrutinize license renewal applications for regulated parties’
noncompliance under the Animal Welfare Act, thus causing a pre-approval scheme to operate as if it were an ex post
enforcement scheme, see Delcianna J. Winders, Administrative License Renewal and Due Process—A Case Study,
47 Fla. L. Rev. (forthcoming 2018), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2952062. See
also People for the Ethical Treatment of Animals v. USDA, 861 F.3d 502 (4th Cir. 2017) (upholding the approach
discussed by Winders).

38

otherwise, the regulated party is at the agency’s mercy and must do whatever it can to make the
agency’s decision as easy and comfortable as possible. Once again, the party must gain as
complete a picture as it can of what the agency wants, with guidance being an obvious source.
A classic pre-approval regime is the statutory requirement that drugs and medical devices
be approved by FDA as safe and effective before marketing. Consistent with this, interviewees
observed that FDA’s published guidance documents have extremely strong influence on how
drug and device makers go about designing studies and, concomitantly, how they go about
designing the drug or device itself in contemplation of needing to perform adequately in such
studies—decisions involving investments in the tens or hundreds of millions of dollars.86 Given
the nature of premarket approval, explained one food and drug industry attorney when discussing
conformity to guidance, an applicant must anticipate how FDA thinks; it would be “foolish” to
proceed with an application without following the agency’s guidance.87 According to a former
senior FDA official, there are two rules for obtaining premarket approval: “first, find out what
FDA wants”; and “second, do it and don’t argue.” What matters, said the former official, is
“what FDA wants,” and guidance is a very important source for finding that out. The guidance,
combined with other means of communicating FDA’s expectations before a drug maker invests
in the requisite studies, is something for which the former official thought applicants should be
grateful—“thank God I found out” that FDA would not accept this protocol “before I spent $100
million on it!”88 According to another former FDA official, companies’ investment in their
products is so large that they cannot depart from FDA guidance without a “gold-plated
assurance” from the agency that the course they propose will be acceptable.89 The general
counsel of GlaxoSmithKline stated that, especially on pre-market approvals (as compared with
other dealings between drugmakers and the agency), if FDA says, “jump,” you ask, “how

86

For an argument that FDA has used its leverage in the licensing context to extract concessions from companies
that effectively expand the agency’s power beyond what is allowed by statute (with some reference to the force of
guidance in this context), see Lars Noah, Governance by the Backdoor: Administrative Law(lessness?) at the FDA,
93 Neb. L. Rev. 89, 122-24, 130-37 (2014) [hereinafter Noah, Governance]. For additional discussion of FDA
extraction of concessions by way of its licensing powers, see Lars Noah, Administrative Arm-Twisting in the
Shadow of Congressional Delegations of Authority, 1997 Wis. L. Rev. 873, 876-84 (1997) [hereinafter Noah, ArmTwisting].
87
Interview with Source 92, food and drug industry attorney. The interviewee added that one could go to FDA
before submitting the application and “work something out” beforehand regarding departure from guidance; on that
process, see Part III below.
88
Interview with Source 110, former senior FDA official.
89
Interview with Source 20, former FDA official.

39

high?”90 When FDA has published a guidance document in draft for public comment and has
not yet made it final, said a trade association official, a company’s decision whether to comply
with the draft’s contents depends on the contents’ impact and on the company’s risk tolerance—
but, in the specific context of pre-market approval (as distinct from other FDA-industry
interactions), companies will always follow the draft’s contents, with almost no exception,
because pre-market approval decisions are discretionary and the draft represents FDA’s latest
thinking on the matter. It would be “folly” not to follow it.91
Importantly, this view of the relatively greater force of guidance in the pre-approval
context is shared not only by industry interviewees and former FDA officials but also by officials
at Public Citizen’s Health Research Group, a leading FDA watchdog. In discussing FDA
guidance on abuse-deterrent opioids, the Public Citizen advocates noted this guidance was an
example of FDA holding high leverage over industry because the context was pre-market
approval. It is on post-approval industry activities, they said, that industry compliance becomes
a serious problem.92
Although FDA review times have been subjected to statutory deadlines and targets and
thereby reduced since the 1990s, the amount of time it takes for FDA to decide an application is
still variable enough that observers think following guidance significantly helps a firm get more
quickly to market.93 As noted by a partner in a large law firm and former senior federal official,
approval is not an on/off switch, in part because FDA has great discretion on matters like delay;
companies will follow guidance to get their applications approved faster.94 Another former

90

Interview with Daniel Troy, General Counsel, GlaxoSmithKline.
Interview with Source 24, trade association official. I found additional evidence for guidance’s peculiar force in
pre-market approval in: Interview with Source 78, partner in large law firm and former senior federal official (noting
that, while exclusion from Medicare is always hanging over drugmakers’ heads, pre-market approval issues are what
cause companies to follow guidance all the time on a day-to-day basis); Interview with Coleen Klasmeier, head of
Sidley Austin’s FDA regulatory practice; former FDA OCC attorney (noting firms know they must follow certain
FDA guidance if it is in a licensing situation, since otherwise they will jeopardize the license); Interview with
Source 108, executive at a drug manufacturer (stating that whether to depart from guidance in the absence of a prior
assurance from FDA depends on a risk-based calculation that is very situation-dependent but noting that, in the
specific context of pre-market approval, it would be a pretty high risk to depart); Interview with Source 82,
congressional staffer (stating that guidance in the pre-market approval context gets close to the same level of
compliance as a legislative rule, given the investments involved, while there is maybe a little less compliance with
guidance in the post-approval context).
92
Interview with Michael Carome, Director, and Sammy Almashat, Research Associate, Public Citizen Health
Research Group.
93
On the effect of review deadlines for new drugs, see Daniel Carpenter et al., The Complications of Controlling
Agency Time Discretion: FDA Review Deadlines and Postmarket Drug Safety, 56 Am. J. Poli. Sci. 98 (2011).
94
Interview with Source 78, partner in large law firm and former senior federal official.
91

40

senior FDA official likewise said that on pre-market review the reason to follow guidance is to
obtain approval faster.95
As a former senior FDA official noted, agency personnel will engage in presubmission
correspondence and meetings with an applicant to clarify what they expect, thus reducing
uncertainty and helping the applicant avoid investing in protocols that will not meet with
approval. Mainly, however, these communications are a means of implementing and elaborating
FDA’s published guidance documents, which the agency cites and always follows in these
communications, albeit with some latitude for interpretation.96 And even with this back-andforth, FDA may refrain from answering some applicants’ questions, leaving them with nothing
except published guidance documents to fall back on. If a new drug applicant asks to proceed
differently than the guidance suggests, says a former FDA official, the agency will often reply,
“you can, but it will be a review issue,” that is, only after you invest large sums in certain studies
and submit the application will we decide whether those studies are acceptable.97 In either case,
the applicant ends up strongly incentivized to follow the guidance.
Pre-approval requirements with strong incentives to follow guidance are also in place in
several programs at EPA. Under the Federal Insecticide, Fungicide, and Rodenticide Act
(FIFRA), a maker of pesticides cannot sell a new product until it obtains registration from EPA,
which requires showing, by way of scientific studies, that the product is not unreasonably risky.
As explained by an EPA official, the office that makes FIFRA registration decisions issues
guidance to the pesticide makers on what studies to do and how. Following the guidance
provides assurance that EPA will consider the studies scientifically acceptable (although the
agency’s ultimate decision on registration depends on what the studies actually show). The
statute and legislative rules do not require a manufacturer to do the studies according to the
guidance, but it is unwise not to do them that way, since the office can more easily evaluate a
submission that does follow the guidance, so the manufacturer will obtain approval quicker.
Industry thus cares intensely about this pre-registration guidance. If the FIFRA office says it
wants something pre-registration, the manufacturer will do it. However, under FIFRA, most
types of pesticide registrations, once obtained, remain in place permanently (they are subject to

95

Interview with Source 80, former senior FDA official.
Interview with Source 110, former senior FDA official.
97
Interview with Source 20, former FDA official.
96

41

review every 15 years, but even then, if EPA discovers a problem, it can cancel the registration
only by undertaking a lengthy affirmative proceeding). Thus, the manufacturer prior to
registration is “on the outside looking in,” but once registration is done, if EPA wants something,
the manufacturer is in a strong position to say, “thanks, we’re not interested.” The incentive is
no longer there.98
A former senior EPA official with cross-office responsibilities, reflecting on the role of
guidance in different parts of the agency, singled out two offices where, in comparison to other
parts of EPA, there was both extensive use of guidance and general acceptance of guidance by
industry: (1) the office handling FIFRA, described above, and (2) the office handling the Toxic
Substances Control Act (TSCA), which likewise centers on pre-approval. The reason, she
confirmed, was that both offices were registration programs (i.e., pre-approval regimes). In both,
businesses understood that the agency had a broad mandate to approve individual compounds
and that they, as seekers of approvals, needed predictability about what tests and studies to invest
in. There was likely to be more industry “paranoia” about agency use of guidance at offices
where industry was not “under the thumb” of the agency as it was in the FIFRA and TSCA
offices.99
Of course there are pre-approval regimes in EPA programs other than FIFRA and TSCA.
Under the Clean Air Act, automakers cannot ship a new model car until the Office of
Transportation and Air Quality certifies that it meets tailpipe emissions standards. Whatever that
office says, observed a partner in a large law firm and former senior EPA official, the
automakers have to do it. It is not just the risk of a denial of certification that creates this
pressure, she explained, but the office’s discretion over how long to take with the decision. If the
agency just keeps asking questions, thereby deferring any decision, the delay by itself puts at risk
the company’s investment. This is especially true because auto industry investment decisions
must be made well in advance (as they go by model years). One can sue for a delay on the order
of five years, she noted, but not the one or two years that is enough for a competitor to get ahead.
However, this same interviewee pointed out that not all pre-approval regimes created equal
pressure to follow guidance. Under a different provision of the Clean Air Act, she noted, a pulp
and paper mill must obtain a new permit for its emissions every five years, but as long as the mill

98
99

Interview with Source 41, EPA official.
Interview with Source 96, former senior EPA official with cross-office responsibilities.

42

submits a good-faith application on time, the law provides for its old permit to stay in place until
the new one issues. Not bearing the burden of delay, the mill can push EPA relatively hard in a
way that the automakers are not willing to push EPA regarding tailpipe emission certifications.100
Another instance of pre-approval incentives to follow guidance can be found at the
Department of Agriculture’s National Organic Program (NOP), though this one exemplifies how
the incentives can be moderated in certain ways. The agency accredits nonfederal organizations
as “certifying agents” (certifiers), each with a five-year term, to do inspections of farms and
businesses to determine whether they can use the “USDA Organic” label. A certifier that fails to
get or maintain accreditation is out of business. As noted by a former chair of NOP’s National
Organic Standards Board (NOSB), the five-year renewal process involves an in-depth audit in
which NOP goes over the certifier’s records and conducts site visits to see if the certifier is in
conformity with all legislative rules. There is much guidance on just what NOP expects. The
legislative rules and the audit are complicated enough that NOP will inevitably find some
noncompliance that it will tell the certifier to correct. Though NOP cannot issue warnings of
noncompliance simply on the basis of guidance, it can issue warnings on the basis of applications
of the legislative rules that track the guidance. Certifiers thus have an incentive to follow the
guidance to avoid noncompliance warnings.101 But the incentive is somewhat blunted in that
(a) the certifier’s five-year accreditation is automatically extended for as long as the renewal
application process runs,102 and (b) NOP, upon finding noncompliance within that process, will
give the certifier time to correct it.103 Thus, this is not quite like FDA, where an applicant
defying guidance risks being denied outright and unable to sell its product.104 The certifier
departing from guidance is not immediately at risk of outright shutdown but will have a chance
to come into compliance if NOP should insist upon the course outlined in the guidance.105
However, explained the former NOSB chair, initial noncompliance findings can lead to
incremental sanctions short of losing accreditation, like fines.106 Plus, noted the president of a
100

Interview with Source 52, partner in large law firm and former senior EPA official.
Interview with Jean Richardson, former Chair, National Organic Standards Board, USDA.
102
7 CFR § 205.510(c)(2).
103
7 CFR § 205.507(a).
104
Of course the difference between FDA and NOP may be justified on the ground that the public-health
consequences of the marketing of unapproved drugs are more severe than of marketing bogus organic products.
105
If the certifier contests rather than complies after receiving the warning, “then you’re playing for all the marbles,”
in the words of one certifier president—that is, risking denial of accreditation, which can take away “your ability to
function.” Interview with Jake Lewin, President, CCOF Certification Services.
106
Interview with Jean Richardson, former Chair, National Organic Standards Board, USDA.
101

43

large certifier, the noncompliance warning itself can have collateral consequences like bad
publicity.107 Faced with this mix of incentives—and given the sense among certifiers that the
integrity of organic food is their common endeavor with NOP108—certifiers have strong reason
to follow guidance. NOP’s top official noted certain guidance documents about which certifiers
were complaining even as they complied with them “reluctantly.”109 Certifiers will push back
when the guidance is being formulated, but if and when it becomes final, they will “suck it up”
and try to comply and “make it work,” said the former NOSB chair.110
Beyond permission to sell a product or provide a service, the incentives of pre-approval
also kick in when a regulated party seeks money from the government. When it comes to
Medicare reimbursement, a former CMS division director said healthcare providers, in her
experience, would “leave no rock unturned” to find the latest guidance. The “typical attitude”
among attorneys in the area was to advise against making an investment in a manner not
consistent with Medicare guidance, even if the guidance made no sense. Medicare is famous for
punishments imposed through ex post enforcement by the HHS Office of Inspector General or
qui tam relators—False Claims Act penalties and treble damages, or even exclusion from the
program. But the former division director, when she began discussing why healthcare providers
follow Medicare guidance, first cited not the enforcement regime but instead the pre-approval
structure: providers want to get paid. They do not want to invest in a piece of equipment or a
service, bill for it, and then be denied. Non-payment, she said, is the “scenario feared” by
healthcare providers and is independent of the False Claims Act (which, she acknowledged, is
“also very scary”).111 To be sure, there is some guidance that pertains to the initial claimallowance stage and other guidance that pertains more to a subsequent audit where claims must
be supported with documentation, with the remedy being a clawback. Consistent with this, a
trade association official noted that healthcare providers’ conformity to CMS guidance varies
with the perceived probability of an audit.112

107

Interview with Jake Lewin, President, CCOF Certification Services.
Interview with Jake Lewin, President, CCOF Certification Services; Interview with Jean Richardson, former
Chair, National Organic Standards Board, USDA.
109
Interview with Miles McEvoy, Deputy Administrator (for NOP), Agricultural Marketing Service, USDA. Within
the overall mix of incentives, accreditation is said to be “pretty significant” and a “big deal.” Interview with Jake
Lewin, President, CCOF Certification Services.
110
Interview with Jean Richardson, former Chair, National Organic Standards Board, USDA.
111
Interview with Source 93, former CMS division director.
112
Interview with Source 24, trade association official.
108

44

B. Maintaining Relationships
Regulated parties will have a strong incentive to follow guidance if they are invested in
maintaining a good relationship with the agency. The need to maintain such a relationship arises
when a regulated party is monitored by an agency continuously and must interact with it
repeatedly under a regulatory scheme that is so complicated that the regulated party will
inevitably engage in some conduct that is arguably noncompliant with the relevant statutes or
legislative rules. (By noncompliant, I mean conduct for which the party would be liable in an
enforcement setting, or that would warrant denial of a sought-for advantage in a pre-approval
setting.) Under these conditions, if a regulated party wins the trust and confidence of the
agency—that is, builds a reputation with the agency for generally seeking in good faith to
comply and cooperate—then the agency is likely to (a) reduce its scrutiny of the regulated party,
thus diminishing the chance of the agency finding arguably noncompliant conduct to begin with,
and also diminishing the process costs borne by the regulated party of being scrutinized or
investigated, and (b) give the regulated party the benefit of the doubt if and when the agency
does discover arguably noncompliant conduct, by interpreting that conduct as relatively less
deserving of adverse consequences (e.g., as accidental rather than deliberate).113
The relationship between an agency and a regulated party may operate at one or more
levels. It may operate at an institutional and official level, if, say, the agency has an announced
policy of reducing the frequency of inspections for parties who have a good track record. Or the
relationship may be institutional and unofficial, e.g., if the agency has no announced policy but
its personnel (perhaps through internal word of mouth) have a common understanding that
certain parties are trustworthy and generally deserve to be cut some slack. Or the relationship
may be individual: a regulated party may have occasion to interact repeatedly with the exact
same inspector, permit-writer, etc., and that particular official’s past experience with the party
may color his or her perception of anything the party does. Even if the agency and its officials
do not treat regulated parties differently based on relationships, a regulated party may believe

113

Treatments of agency-regulatee relationships in the literature, from which this discussion draws, include:
Carpenter, supra note 19, at 662-84; Winston Harrington, Enforcement Leverage When Penalties Are Restricted, 37
J. Public Economics 29 (1988); David P. McCaffrey, Amy E. Smith, and Ignacio J. Martinez-Moyano, “Then Let’s
Have a Dialogue”; Interdependence and Negotiation in a Cohesive Regulatory System, 17 J. Pub. Admin. Res. &
Theory 307 (2006), esp. id. at 323.

45

that they do, and that mere belief may cause the regulated party to invest in building and
maintaining what it thinks is a good relationship.
Following guidance is often an important way for a regulated party to build up goodwill
and mutual trust with the agency or its officials (or, at least, to think it is doing so). Such
behavior signals to the agency that the regulated party is not seeking to push the edge of the law
but is instead sensitive toward, and respectful of, what the agency thinks is the preferred course
of conduct. It means the regulated party is not putting the agency to the trouble of figuring out
whether guidance-noncompliant behavior is still lawful.
A regulated party who feels the need to maintain a good relationship with the agency will
often be one who is subject to a pre-approval requirement, e.g., a large drug maker who must
repeatedly seek approvals from FDA. But relationship-building and pre-approval are
nonetheless logically distinct, and they do not perfectly overlap. A company might be subject to
ex post enforcement actions by an agency (rather than pre-approvals), but its operations might be
vast and complex enough—and reporting requirements robust enough—that technical violations
are detected with some frequency, so the company invests in good relations to the agency
enforcement office. Conversely, a firm might be subject to a pre-approval requirement for
something it does one-off, after which it does not expect to see the agency again. Most
interestingly, as we shall see, a regulated party that it subject to both pre-approval requirements
and ex post enforcement at the same agency may find or believe that its track record in ex post
enforcement affects the agency’s solicitude toward its pre-approval requests. If so, the agency’s
leverage on pre-approvals can be extended to other, non-pre-approval dealings between the
agency and the party (and to guidance on those latter dealings).
Banks are a prime example of regulated parties who are invested in good relationships to
agencies and thus are sensitive to guidance. When a bank is regulated by an agency, it will
regularly be subject to an examination by that agency. An agency exam team will visit the bank
for, say, three weeks, empowered to inspect whatever internal documents they want and
interview whichever bank employees they want, culminating in an exit interview between the
examiners and bank officials, then finally a report from the examiners to the agency.114 The
report will provide supervisory feedback and identify areas where the bank needs
improvement. Such feedback, particularly if the bank does not respond adequately, may result in
114

Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.

46

a number of supervisory responses, such as the agency downgrading the bank’s confidential
supervisory rating. This can trigger restrictions on the bank’s business, e.g., potentially weighing
on the bank’s ability to obtain the agency approval that is required to engage in certain
expansionary activities, such as opening new branches or undertaking a merger.115 If problems
caught during the examination are sufficiently bad and go uncorrected, the agency can bring a
public enforcement action that may result in fines, removal of officers, or ultimately the
shutdown of the bank by revocation of its charter.
A bank often has a relationship with not just one examining regulatory agency, but
several. OCC covers nationally-chartered banks; the Federal Reserve covers state-chartered
banks that are members of the Federal Reserve System, and also bank holding companies; FDIC
covers state-chartered banks that are not members of the Federal Reserve System; and CFPB
covers large banks (national or state) for consumer protection issues. As noted by a former
senior Federal Reserve official, a single bank will often be subject to regular examinations by
multiple agencies; one common combination would be the OCC (nationally-chartered), the Fed
(bank holding company), and CFPB (consumer protection issues). For each bank-agency
pairing, the usual time between examinations is one to three years, more or less. Thus it would
be common for a bank to have a multi-week examination by some agency or other about once a
year (with some variation depending on bank size, as the smallest institutions are examined less,
while the biggest ones have examiners on site year-round). Plus, banks interact frequently with
examining agencies outside the actual exams: weekly reports are not unusual, nor are phone calls
on a quarterly basis or whenever there is an adverse media report or major consumer complaint.
Notably, the various agencies often issue legislative rules and guidance jointly, or at least in
coordination with each other.116 Further, the agencies frequently reinforce one another in day-today administration. For instance, if one banking agency has authority to pre-approve a certain
transaction by a bank, it will have “no hesitation” in telling the bank—as a condition of the preapproval—to fix a problem that another agency has identified in an examination.117 To give one
example cited by an interviewee: CFPB made certain demands on a bank, the bank disagreed,
and OCC then said it would not allow the bank to grow until it settled with CFPB, on the ground

115

Interview with Source 51, Federal Reserve official.
Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.
117
Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
116

47

that a dispute with CFPB over bad consumer practices would undermine the bank’s safety and
soundness.118
Amid such intense interaction, banks consider it important to stay on the agencies’ good
side, and sensitivity to guidance is an important part of that. A former senior Federal Reserve
official, who has counseled financial institutions, emphasized that guidance’s role must be
understood against the backdrop of regular exams and the larger ongoing agency-bank
relationship. For one thing, the agencies have an official practice of examining a bank more
frequently when its past exams have gone worse. But, as the interviewee made clear, both
official practice and more intangible factors are in play. If I am a depository institution, said the
interviewee, “I have a great need to make sure that [the regulators] like me.” The interviewee
would tell bank clients, “If you lose the trust of the agency, nothing else matters,” “there is no
salvaging that.” In particular, clients were well-advised not to respond to the regulator “too
literally,” that is, too legalistically or technically, the distinction between guidance and
legislative rules being a legalistic point. Whenever the agency issues guidance, the interviewee
would advise, the bank should follow it or have a compelling reason why not; if an examiner
identifies an issue and asks, “did you see and review our guidance on this?,” the bank should not
reply, “it was only guidance” as opposed to a regulation.119 The rationale for generally following
guidance, said the interviewee, is that it is practically impossible for a bank to comply with all
legislative rules all the time, so you want the examiner to think that any mistakes you make were
made in good faith—that you are trying to comply. In particular, the bank must show that it has
internal procedures in place to check itself, the presence of which can show that any problems
the bank has are not systemic; these internal procedures are patterned on agency bulletins
(guidance), but it does not matter if these bulletins are “guidance or [legislative] rules or what.”
Banks do not want to cross their examiners, said the interviewee. You do not want to be the
bank that says, “this is just guidance.” Although examiners cannot cite a bank for not following
guidance per se, you do not want to make the examiners unhappy. You want the examiner to
“cut you a break if you screw up in some other way.”120
118

Interview with Source 81, former CFPB official who represents CFPB-regulated entities.
The interviewee also said, “I can’t tell” if clients take the advice, but did think depository institutions were in a
risky position if they did not comply with guidance.
120
Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.
Another interviewee, who held senior posts at CFPB and other federal agencies, likewise emphasized that the
examination function and a bank’s expectation of ongoing oversight form the basis for guidance’s influence, though
119

48

Former CFPB officials expressed similar views. According to one, the main reasons for a
bank to comply with CFPB guidance were that (a) the bank valued its relationship to the agency
and wanted to avoid conflict and (b) the bank wanted to avoid any activity that would invite
agency scrutiny, so as to avoid the costs of undergoing an additional examination, or worse, the
costs of undergoing an investigation.121 Another former CFPB official, who now counsels
CFPB-regulated entities, said that an agency can “make life miserable” for a bank in all sorts of
ways, and noncompliance on one dimension can have bad consequences on other dimensions.
The culture, said the interviewee, is to figure out what you’re supposed to do—to get any
guidance you can. She recalled one instance in which, during the examination of a bank she
counseled, the examiner criticized the bank for a regulatory violation by citing an article that he
(the examiner) had written in the Federal Reserve’s magazine. The interviewee and her
colleagues thought this was improper. But the bank opted not to resist, saying, “we don’t want to
fight with our examiner.”122 (On this point, it should be noted that the exam team a bank sees
may consist of the very same individuals from one exam to the next; agency headquarters will
sometimes switch examiners around, for fear of them getting too close to the institutions they
examine, but also sees some attraction in having the same people in place over time, as they
know what the bank is like and know who at the bank is knowledgeable.123)
That the bank-agency relationship promotes compliance with guidance is recognized not
only among former officials and industry counselors but also by an official I interviewed at a
nonprofit public policy research organization (who was formerly a consultant and product
manager in the consumer finance industry). Overall, she said, a bank’s relationship to its
regulators was “fundamental” to its business and was like that of a child to its parents, right
down to the point that parents can often get their children to change behavior by informal means
(“raising an eyebrow” rather than “spelling out rules”), much as an agency can do through
guidance. When it comes to guidance, observed the interviewee, you generally would not expect
a bank to stand on its formal legal privilege to depart from anything that is not a legislative rule.

she was somewhat more qualified in characterizing its level of influence. When guidance is issued, she said, most
banks accept that the issuing agenc(ies) expect banks to at least consider the guidance. That is, banks accept, even if
sometimes grudgingly, that they have to pay attention to the agencies. Banks read the guidance, and they usually do
more than read it. Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
121
Interview with Source 18, former CFPB official.
122
Interview with Source 81, former CFPB official who represents CFPB-regulated entities.
123
Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.

49

For a bank to make such a departure, there would have to be a lot of money at stake, and
following the guidance would have to constrain the bank on something core to its business
model. A bank would make sure not to “piss off” its regulator on something not essential to its
core business, because doing so would risk causing the agency to give “greater scrutiny” to that
core business. If (say) the business line opposed by the guidance amounted to $10 million or $20
million, that would not be worth antagonizing the agency, but if it were $100 million, it might be
worth it. The interviewee noted that many potential bank initiatives that could improve access to
financial services for the poor (for which she advocates) were in the former low-dollar category,
meaning guidance aimed at reducing a bank’s risk could practically block them (it being riskier
to lend to poor people).124
While banking is an especially strong example, the link between relationships and
guidance comes up at other agencies, notably EPA. For one thing, a regulated party may face
EPA pre-approval requirements on a repeated basis, meaning the incentives associated with preapprovals per se are coupled with the incentives associated with maintaining a trusting
relationship to the agency. At the FIFRA office, observed a DC large law firm partner who
represents pesticide makers there, a regulated company needs a “good relationship” with the
agency because, given the pre-approval scheme, “your livelihood depends on it.” He observed
close coordination on guidance between pesticide makers and that office. The TSCA office,
where he also represents applicants seeking pre-approval, is somewhat in the same position,
because the regulated party must go to that office “with hat in hand.” He compared these two
offices with OSHA, before which he also represents clients. With OSHA, people often note the
agency has so few inspectors in proportion to its jurisdiction that each employer regulated by
OSHA can be inspected only once every 70 years on average. But, he noted, the enforcement
capacity for FIFRA is even less proportionally than what OSHA has, yet there is a thick
relationship between the FIFRA office and regulated parties, because of the pre-approval
requirement (to which OSHA has nothing analogous).125 The same dynamic operates elsewhere
at EPA. A partner in a large law firm and former senior EPA official said that regulated parties
wanted to maintain a good relationship with EPA whenever they had continuing need for pre-

124

Interview with Source 131, official at nonprofit public policy research organization, formerly consultant and
product manager in consumer finance industry.
125
Interview with David Sarvadi, Partner, Keller Heckman.

50

approvals. She cited, inter alia, automakers seeking tailpipe emission certifications and electrical
utilities seeking approvals for modifications to facilities and selection of fuels.126
But it is not just within pre-approval regimes that regulated parties feel a need to maintain
relationships with EPA. The phenomenon arises, to some degree, in the realm of pure ex post
enforcement. Adam Kushner, who served as an environmental enforcement attorney at DOJ and
ultimately in career positions as director of EPA’s air enforcement division (2003-08) and of its
entire civil enforcement office (2008-12), said that since the 1990s corporations and
environmental enforcers had become more cooperative with each other. (This is consistent with
a secondary literature on the gradual acceptance of environmental regulation within many large
corporations.127) The more “forward-leaning” firms, he observed, will now work toward
settlements to ensure a “continuing good relationship” with EPA. Even outside actual
enforcement proceedings, noted Kushner, corporate executives will now just “call up” the
enforcement office; he remembered the CEO of one company initiating a meeting with him to
provide an update on the company’s activities, even though no enforcement was pending against
the company. Then, if and when an enforcement issue does arise for such a company, it has built
up “a level of trust” with the office. Kushner named specific companies that had come to be
particularly well-regarded within the agency (e.g., by volunteering for extra monitoring as part of
an EPA project to gather data on certain oil-refinery emissions). Those firms have now built
relationships with EPA that they do not want to disrupt. Of course, these companies can still
violate and there will still be enforcement against them, but it occurs against a backdrop of trust
and good faith.128 (Environmental violations, according to one classic analysis, are “usually
inadvertent.”)129 Similarly, a senior environmental counsel at a Fortune 100 company said that a
good relationship with EPA, built over time, is an “investment” that you may need to “cash in”
later. The interviewee cited the blurry line between civil and criminal violations in
environmental law and the great discretion officials have to pursue one or the other for a given
course of conduct; when criminal prosecutions occur for behavior not obviously criminal, it is

126

Interview with Source 52, partner in large law firm and former senior EPA official.
Marc Allen Eisner, Governing the Environment: The Transformation of Environmental Regulation 133-51
(2007); Andrew J. Hoffman, From Heresy to Dogma: An Institutional History of Corporate Environmentalism (2d
ed. 2001).
128
Interview with Adam Kushner, Partner, Hogan Lovells, former director of civil enforcement, EPA.
129
Harrington, supra note 113, at 32.
127

51

essentially because of a “bad relationship”—because someone at the company has “pissed
someone at the agency off,” by “stonewalling,” “being an a--hole.”130
The rise of these trust relationships is associated with adherence to guidance in several
ways. First, a company’s general adherence to guidance, said Kushner, strengthens the trust it
receives from the enforcement office.131 Second, guidance can be the means by which EPA
fosters mutually trusting exchanges between the agency and firms. For example, under a policy
statement known as the “audit policy,” adopted by EPA in 1995, if companies adopt internal
audit and compliance programs and self-disclose the violations discovered thereby, EPA makes a
(nominally nonbinding) promise that it will reduce penalties for those violations.132 A statistical
study of the period 1993-2003 found that firms that engaged in such self-disclosure of Clean Air
Act violations not only got reduced penalties for those violations but also enjoyed lessened
regulatory scrutiny going forward (i.e., fewer inspections) even when controlling for other
factors, suggesting successful investment in a larger trusting relationship. The study also found
that firms adopting internal audit systems had better environmental performance than otherwise
comparable firms, indicating that the policy does what EPA wants it to do.133 One might view
the “audit policy” as an especially transparent way of conveying what Kushner said was a
general tendency of the enforcement office to go easier on self-disclosed violations but to “dig
in” against violations that companies did not identify,134 information disclosure being a key
element of trust. Third, adherence to guidance pertaining to substantive conduct is often a
condition in EPA’s settlement offers,135 so guidance defines the conduct to which relationshipminded firms eager to settle are now willing to commit themselves.
The need for a good relationship in the pre-approval setting and for a good relationship in
the enforcement setting may be linked. A statistical study of EPA-supervised permitting in six

130

Interview with Source 119, senior environmental counsel at a Fortune 100 company.
Interview with Adam Kushner, Partner, Hogan Lovells, former director of civil enforcement, EPA.
132
The disclaimer of binding status for the most recent version of the policy is in Incentives for Self-Policing:
Discovery, Disclosure, Correction, and Prevention of Violations, 65 Fed. Reg. 19618, 19627 (April 11, 2000).
133
Michael W. Toffel & Jodi L. Short, Coming Clean and Cleaning Up: Does Voluntary Self-Reporting Indicate
Effective Self-Policing?, 54 J. Law & Econ. 609 (2011). Another study found that an earlier policy, started in 1991,
that invited firms to engage in voluntary reductions of emission of certain toxic chemicals, with only an “implicit[]”
offer of lessened regulatory scrutiny, did allow participating firms to reap the reward of lessened enforcement and
also caused those firms to improve environmental performance. Robert Innes & Abdoul G. Sam, Voluntary
Pollution Reductions and the Enforcement of Environmental Law: An Empirical Study of the 33/50 Program, 51 J.
Law & Econ. 271, 272 (2008).
134
Interview with Adam Kushner, Partner, Hogan Lovells, former director of civil enforcement, EPA.
135
Interview with Adam Kushner, Partner, Hogan Lovells, former director of civil enforcement, EPA.
131

52

states under the Clean Air Act and Clean Water Act in 1990-98 found that companies with less
noncompliance in their enforcement records received pre-approvals more quickly, controlling for
other factors.136 This may further explain why regulated parties want to invest in good
relationships and reputations (partly by following guidance) at the enforcement level: it may help
them at the pre-approval level, particularly with respect to delay, on which agency leverage can
be great.
FDA is another agency at which regulated parties follow guidance out of concern for
maintaining a relationship. A maker of drugs or devices will often need to seek pre-approvals
repeatedly and will be subject to ongoing monitoring and enforcement (e.g., inspections of
manufacturing practices). Daniel Carpenter, in a history of FDA drawn from archival and
statistical research, concludes that “[d]ifferent firms carry different reputations with the FDA,”
with some “trusted more, others less,” a dynamic that “often leads to greater regulatory trust of
larger and older firms, the companies whose histories and professionals are better known to FDA
officials.” Carpenter views this as largely salutary, or at least inevitable, for “a resourceconstrained and uncertain regulator is compelled to rely partially upon trust.”137 Taking a more
negative perspective, Lars Noah cites accusations from the 1990s that FDA retaliated against
firms that did not acquiesce to its extra-legal demands, and he argues that, “[w]hether or not such
charges are accurate, the perception leads companies to accede to the agency’s wishes.”138
Interviewees agreed that relationships mattered at FDA—and linked the building of
relationships with following guidance. A former senior official in the FDA Office of Chief
Counsel said companies were afraid to challenge the agency regarding guidance because the
guidance might pertain to one little issue, and if they “raised the wrath” of the agency on that
point, this might result in the agency finding some other problem with the company’s conduct.
A company with (say) thirty approved drugs at FDA could not afford to get “crosswise” with the
agency. Industry therefore does what the agency says.139 According to another former senior
FDA official, following guidance was helpful to firms that wanted to be proactive, particularly in
seeking to escape the scrutiny of FDA; if a company could show the agency that it was “on the

136

Christopher S. Decker, Corporate Environmentalism and Environmental Statutory Permitting, 46 J. Law & Econ.
103 (2003).
137
Carpenter, supra note 19, at 663.
138
Noah, Governance, supra note 86, at 123-24.
139
Interview with Source 83, former senior FDA Office of Chief Counsel official.

53

right track” in an area like manufacturing, the agency would grant it relief from inspections, so as
to focus resources on higher-risk firms.140 An official at a national public interest organization
observed that FDA guidance was useful in that it could move industry in a direction her
organization thought better; she cited the example of how FDA successfully used guidance to get
the makers of antibiotics to revise their animal growth promotion claims (a move that helps
reduce the risk of resistance to antibiotics). As to why the firms followed the guidance, she said
it was partly because they anticipated an eventual statute or legislative rule to the same effect,
but also because the firms were “repeat players” at FDA, dealing with the agency on multiple
issues, including pre-approvals, and needing to maintain relations at a reasonable level. The
issue covered by the guidance did not itself involve pre-approvals, but the companies’ need to
maintain relationships within the pre-approval context increased their willingness to follow
FDA’s wishes outside that context.141
Some interviewees, though agreeing that regulated parties perceived maintaining good
relationships (partly by following guidance) to be important for successful dealings with FDA,
thought this perception had little to no basis in the reality of FDA’s behavior. A partner in a
large law firm and former senior federal official said that firms depended for their business on
FDA approvals, and they therefore worried they had to do everything possible to maintain a
positive relationship with the agency, including follow guidance; this is what companies would
tell her. In reality, she contended, these fears about relationships are overblown. If a company
gets into an enforcement-related dispute with FDA, she said, the reviewers deciding preapprovals will not even know about it. The reviewers are straight shooters, impartial, and
focused on the science. Indeed, there are examples of them granting important pre-approvals to
companies even while the companies are involved in such disputes. Industry does fear that
tension with FDA on non-approval issues could “spill over” to pre-approval issues, but the fears
are overblown.142 Similarly, Coleen Klasmeier, the head of Sidley Austin’s FDA regulatory
practice, said that companies’ attitudes toward FDA’s pre-approval process and adherence to

140

Interview with Source 80, former senior FDA official.
Interview with Source 133, official at national public interest organization. One other interviewee stated that, if
following FDA guidance involves minor annoyance, a company will go along, because, as an FDA-regulated entity,
it does not want to antagonize the agency. Because the firm has so many interactions with the regulator, it does not
want to poke the regulator in the eye. But if guidance created a strong problem for the firm’s business, there might
be more willingness to challenge the agency. Interview with Source 82, congressional staffer.
142
Interview with Source 78, partner in large law firm and former senior federal official.
141

54

guidance therein had become increasingly relationship-minded and “touchy-feely” in recent
decades, “as if FDA approves drugs because they like you.” In truth, she insisted, companies
succeed or fail because of the data in each individual application, the same “as if it were
blind.”143 Likewise, Richard Naples, the chief regulatory officer of the Fortune 500 medical
device maker Becton Dickinson, said that while retaliation was perceived as a large risk, it was
“overblown”; it did not actually happen a whole lot, and when it occurred, was usually through
unconscious bias.144
Whereas companies’ relationships to FDA are generally a “big deal,” observed a trade
association official, there is more variation when it comes to CMS; some companies have
repeated and direct interactions, while others’ interactions are more attenuated.145 But where
relationships do exist at CMS, they seem to exhibit many of the same dynamics and ambiguities
as at the other agencies analyzed above, including with respect to guidance. CMS stakeholders
do have fears about preserving their relationships with the agency, said one healthcare industry
attorney. She considered these fears “overwrought”—CMS is “not Nixonian”—but
acknowledged that “other people have a different perception than me.” In any event, she did
think it was important, when engaged in a discussion or dispute with CMS program personnel
over adherence to guidance, to show one’s “good faith.” That meant not emphasizing the legal
distinction between guidance (nonbinding) and legislative rules (binding), but instead defending
your view on policy grounds, not just legal ones. You do not want CMS people to think you are
“overly legalistic”—throwing case law at them about the guidance/rule distinction does not send
a “good vibe.” The officials will reply, “You’re going to get me on a technicality? But you’re
still not doing the right thing” in terms of the goals of the program and “helping patients”!
(Interestingly, actually litigating against the agency—as distinct from engaging in outside-ofcourt discussions and disputes with program officials directly—does not present this problem,
because lawsuits are shunted off to HHS attorneys, and the CMS program officials do not follow
them.)146
I did not have a chance during interviews to get deep into questions about the importance
(or not) of relationships and their connection (if any) to guidance at the USDA National Organic
Interview with Coleen Klasmeier, head of Sidley Austin’s FDA regulatory practice; former FDA OCC attorney.
Interview with Richard Naples, Chief Regulatory Officer, Becton, Dickinson and Company.
145
Interview with Source 24, trade association official.
146
Interview Source 58, healthcare industry attorney (with over 15 years’ experience in the field).
143
144

55

Program or the Department of Energy appliance standards program. But I was told that, at NOP,
a certifier’s performance on one audit helps determine how frequently the agency will come back
for future audits,147 and that, at DOE, a company that is “known to be a problem” will get more
enforcement attention.148

C. Intra-Firm Constituencies for Following Guidance
The lion’s share of federal agency guidance pertains to firms rather than individuals, and
the firm is a “they,” not an “it.” Practical day-to-day decisions on a firm’s adherence to guidance
often fall to employees whose backgrounds, socialization, or career incentives may motivate
them to follow guidance more than would other people within the firm, particularly the firm’s inhouse counsel, to say nothing of its outside counsel. There is some evidence this is true for
regulatory affairs professionals and compliance officers. In addition, small firms who lack such
specialized personnel may nonetheless rely for guidance-related decisions on outside service
providers who themselves have particular capacities or motivations to follow guidance.
Begin with regulatory affairs (RA) professionals, who are prominent in FDA-regulated
firms. FDA’s acquisition in 1962 of statutory authority to regulate drugs for efficacy led, over
the next few decades, to the “credibility-based transformation of the pharmaceutical company”—
a fundamental reorganization of firms around their newly central goal of maintaining credibility
with FDA.149 One of the most important elements of this transformation was the advent and
expansion of the RA department, to serve as the interface between the company and the
agency.150 Destined to become “one of the most powerful offices” in the firm, the RA
department would “help coordinate various members and units of the company into a unified and
coherent ‘face’ for presentation to the FDA”; it would “reconcile conflicting claims,” “preserve
credibility by making sure that no [company employee] speaks too optimistically of the product,”
and “make sure that compliance means the same thing to all internal arms.”151 The RA
profession continues to grow, and the role of these departments has become less “paper-pushing”

147

Interview with Jean Richardson, former Chair, National Organic Standards Board, USDA.
Interview with Andrew DeLaski, Executive Director, Appliance Standards Awareness Project.
149
Carpenter, supra note 19, at 646.
150
Carpenter, supra note 19, at 644-46.
151
Carpenter, supra note 19, at 644, 662-63
148

56

and more “strategic,” including involvement in the early design of company products. RA
professionals usually have backgrounds in science or engineering, not law.152
In the view of Coleen Klasmeier, the head of Sidley Austin’s FDA regulatory practice
and formerly a career attorney in FDA’s Office of Chief Counsel, the role of RA professionals
powerfully shapes how FDA-regulated companies treat guidance. RA people, she observed, see
their mission as maintaining relations with FDA. They aim to understand the agency’s
expectations, distribute them within the firm, and ensure compliance. They are conflict-averse
and view disagreement with the agency as “failure.” By contrast, said Klasmeier, lawyers are
taught to believe that adversary processes are an appropriate way to make decisions. But it is the
RA professionals, not the lawyers, who “own” a company’s decisions about how to engage with
FDA, and the RA people see guidance as “the law,” no matter if counsel invoke the
rule/guidance distinction to say that it is not; that distinction is “not how their world operates.”
Klasmeier believed it would be unusual for RA people to have the ability or confidence to seek a
departure from guidance from FDA or to self-determine that the company would make such a
departure. It is the lawyers who would push back and say, “I know you think FDA will not like
this, but it is perfectly lawful, and we should still try to do it.” The result, given RA’s dominance
of the firm-FDA interface, is that many problems with guidance are never raised or ventilated to
begin with.153
Consistent with this, Daniel Troy, the general counsel of GlaxoSmithKline, observed that
RA personnel were very reluctant to challenge FDA. “What they really have,” he said, is their
“relationship” to the agency.154 A partner in a large law firm healthcare practice likewise found
RA professionals to be “very deferential” toward FDA, though she also noted that, in her
experience, in-house counsel were quite involved in the company’s processing of guidance; they
would train RA personnel and would look at guidance documents in conjunction with those
personnel.155
152

Interview with Richard Naples, Chief Regulatory Officer, Becton, Dickinson and Company.
Interview with Coleen Klasmeier, head of Sidley Austin’s FDA regulatory practice; former FDA OCC attorney.
154
Interview with Daniel Troy, General Counsel, GlaxoSmithKline.
155
Interview with Source 101, partner in large law firm healthcare practice. Another interviewee, in a line of
discussion that was more about different players’ understanding of the rule/guidance distinction than about their
willingness to take advantage of it and depart from guidance, said initially that lawyers and “some policy people”
were more sophisticated about the distinction, but then said variation in sophistication about the rule/guidance
distinction did not depend so much on people’s roles (lawyer versus RA versus compliance) as on whether the
company overall was invested in public policy issues; an RA shop could be very sophisticated about the issue.
Interview with Source 77, former senior HHS official.
153

57

Richard Naples, the chief regulatory officer of the Fortune 500 medical device maker
Becton Dickinson, agreed that RA professionals like himself had a different approach and role at
FDA than did the company’s lawyers (Naples’s background is in chemistry). He and his RA
colleagues would need to consult in-house counsel if they were to get into a dispute with an FDA
reviewer and escalate the matter to a higher level within the agency, or if they had to make a call
on whether something was lawful, but these instances were “few and far between.” RA people
would also consult in-house counsel to get an opinion on the meaning of a guidance document,
though the RA people themselves would make the final decision. Naples explained that he
generally did follow guidance documents (even when FDA had only issued them in draft) but
that he did approach reviewers to seek departures from such documents from time to time, noting
that one should take issue with only a targeted portion of the document, on the basis of wellprepared scientific reasoning, and in a manner to avoid “tick[ing] off” the reviewer (sometimes
by following the guidance in the instant proceeding while seeking a revision of it anonymously
through a trade association). If the reviewer refused a departure request, explained Naples, he
might then elevate the matter to a meeting between company personnel, the reviewer, and the
reviewer’s boss. Naples noted that “the last thing you want to do” is bring a lawyer to such a
meeting; he had brought lawyers to only a handful of FDA meetings in his 25-year career; and he
tried to avoid bringing lawyers to meetings, for it did not lead to a constructive solution.156 (For
his part, Troy, the GlaxoSmithKline general counsel, also said he would advise against bringing
a lawyer to a scientific meeting: “it’s like bringing a gun to a knife fight.”157)
RA professionals concentrated in the FDA realm are not the only intra-firm actors whose
attitudes may render the firm more amenable to guidance; another is the cohort of compliance
officers who now work in companies across many industries, perhaps most prominently in
healthcare and finance. New provisions in the U.S. Sentencing Guidelines in 1991 encouraged
firms to build compliance programs, and DOJ and other agencies have furthered the trend
through their enforcement activities, making the buildup of compliance infrastructure a condition
of settlement in prosecution and enforcement.158 Accordingly, “firms have gone on a hiring
spree to staff compliance, with large firms adding hundreds, even thousands, of compliance

156

Interview with Richard Naples, Chief Regulatory Officer, Becton, Dickinson and Company.
Interview with Daniel Troy, General Counsel, GlaxoSmithKline.
158
Griffith, supra note 21, at 2084-92.
157

58

officers at a time.”159 The scope of their mission is “greater than the enforcement of law and
regulation,” for they also administer “corporate ‘ethics’ policies” and guard against any kind of
“‘reputation risk’” to the firm.160 As to nuts and bolts, compliance officers assess the firm’s
environment, develop internal policies accordingly, disseminate those policies within the firm
(including training sessions), monitor employees’ adherence to internal policies, investigate
violations, and defend the compliance program from external review, including by regulators. 161
Many practitioners and proponents of compliance programs believe that compliance must
break free of “law” as a defining aspect of its mission. Many compliance officers have law
degrees, but a law degree is not a prerequisite for the job, and the field “may not necessarily be
owned by lawyers in the future and may still be up for grabs.”162 In terms of organizational
structure, “there is little uniformity to how corporations implement their compliance function.”163
In some firms, compliance is housed in or merged with the legal department, while in others, it is
autonomous, with a Chief Compliance Officer reporting directly to the CEO or even the board.
There is a fierce controversy over whether compliance should be separate from legal. 164
Compliance officers now have their own professional association and credentialing process, and
many want to have their own autonomous departments.165 At least two agencies, the SEC and
the HHS Office of Inspector General, have recently forced misbehaving corporations to establish
compliance departments separate from their legal departments.166
The rising power and autonomy of compliance officers could give them authority to
implement an emergent vision of “compliance” that is quite distinct from simply following law.
As one scholar observes, “part of the reason that regulators have sought to separate compliance
from the legal department” is that the “compliance function . . . is designed to inculcate norms of
behavior that exceed narrow legal obligations.”167 “The lawyers tell you whether you can do

159

Griffith, supra note 21, at 2077.
Griffith, supra note 21, at 2082. See also Donald C. Langevoort, Cultures of Compliance, 54 Am. Crim. L. Rev.
933, 942 (2017) (compliance operates on the theory that “without a values or ethics base to crowd out excess
legalism in compliance, compliance programs would predictably fall short”).
161
Robert C. Bird & Stephen Kim Park, The Domains of Corporate Counsel in an Era of Compliance, 53 Am. Bus.
L.J. 203, 214-15 (2016).
162
Michele DeStefano, Creating a Culture of Compliance: Why Departmentalization May Not Be the Answer, 10
Hastings Bus. L.J. 71, 102 (2014).
163
DeStefano, supra note 162, at 73; see also Griffith, supra note 21, at 2101-02.
164
Bird & Park, supra note 161, at 203-07.
165
DeStefano, supra note 162, at 110; Bird & Park, supra note 161, at 216-17.
166
DeStefano, supra note 162, at 103-04.
167
Griffith, supra note 21, at 2124-25.
160

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something,” said the HHS Inspector General’s Chief Counsel in 2009, “and compliance tells you
whether you should.”168 Proponents of an autonomous compliance function argue that letting the
legal department decide compliance matters will be “excessively legalistic” and “devalue the role
of firm culture.”169 As one corporate general counsel said of the distinction between legal and
compliance departments, “Legal tells you . . . what you literally need to do to comply with the
law. Compliance tells you what you should do to comply with the spirit of the law—may be
more than legally required.”170 One recent commentary on compliance applies this thinking to
the firm-agency relationship:
In a culture of integrity, a firm establishes not only rules that mandate internal
compliance with minimum regulatory requirements but also the principles and aspirations
that transcend those rules and establish a values-driven organization from the newest
employee to senior executives and the board of directors. . . .
Building a culture of integrity not only impacts the internal workings of the
organization but also influences how firms engage with regulators and external
stakeholders. Regulators, in many instances, have substantial discretion to select how and
under what conditions they should apply finite resources to meet statutorily defined
mandates and their own policy goals. A culture of integrity can enable a firm to benefit
from this discretion, creating a self-generating cycle of collaboration between regulators
and regulated firms that benefits both parties. The first step of the cycle is that firms
externally signal their genuine and long-term commitment to the goals of the regulatory
body. This may be accomplished by making public disclosures of firm practices and
commitments through voluntary social and environmental reporting, self-reporting and
self-policing, self-regulating beyond minimum requirements, and engaging in
nonexploitative behavior toward regulatory mandates. Regulators, in turn, respond to the
firm’s commitment to regulatory goals by allocating resources away from the monitoring
function and de-escalate toward a nonconfrontational posture.171
To the extent that compliance officers are in a position to determine a firm’s treatment of
guidance, this kind of professional orientation would presumably have a tendency to make them
follow guidance rather than invoke any distinction between it and a legally-binding legislative
rule. Whether compliance officers are in fact in such a position varies between corporations,

Quoted in Jim Edwards, Pfizer’s Lawyers Play Musical Chairs in Wake of Bextra Settlement, CBS News, Sept.
23, 2009, available at https://www.cbsnews.com/news/pfizers-lawyers-play-musical-chairs-in-wake-of-bextrasettlement.
169
Quoted in Bird & Park, supra note 161, at 206 (discussing this point of view).
170
Quoted in DeStefano, supra note 162, at 149.
171
Bird & Park, supra note 161, at 234-35.
168

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even within the same industry,172 and there is little public data on the matter.173 But there is
evidence in the interviews that compliance officers at least sometimes help determine
companies’ attitudes toward guidance—and that agency personnel interface with compliance
officers on guidance-related matters and may view those officers as a preferred interface. While
there is much room for future research on compliance officers’ role with respect to guidance, this
evidence deserves attention given the large and growing role of compliance officers in many
industries.
Among FDA-regulated firms (which employ both RA professionals and compliance
officers in separate capacities),174 a partner in a large law firm and former senior federal official
observed that “culture of compliance” was the buzzword, with compliance officers comprising a
whole organization of their own within the larger companies. Indeed compliance was now a
“whole industry” unto itself, often backed by corporate integrity agreements arising from
enforcement actions—an industry that “glorifies compliance separate from law.” “Compliance,”
explained the interviewee, does not mean “law”; it means “doing what the agency wants you to
do.” “Every once in a while,” she said, compliance with guidance might be “so problematic”
from a business perspective that you might then interrogate the guidance’s legal justification,
“but not usually.” She then gave an example of an FDA draft guidance document that she
considered inconsistent with the relevant legislative rule, but that industry tried to follow
anyway.175
As to banking, a former senior Federal Reserve official, who has counseled financial
institutions, described compliance officers affectionately as “geeky” people doing “thankless”
work who really tried hard to “get things right.” The interviewee said that if compliance officers
see guidance from the agency, they will incorporate it into their internal policies and procedures,

172

E.g., Interview with Source 131, official at nonprofit public policy research organization, formerly consultant and
product manager in consumer finance industry (observing that, in the banking industry, there is much variation, even
among banks of comparable size, on which categories of personnel—business line managers, compliance officers,
in-house counsel, government or regulatory affairs officers, etc.—interface directly with the agency on matters like
receiving and processing guidance).
173
Griffith, supra note 21, at 2100 (noting that questions about the organization and authority of compliance officers
“depend upon information that is not publicly available,” since firms “are not required to report information on
compliance in their public filings,” so there can be only a “glimpse” of compliance’s practice through sources like
interviews and surveys).
174
Interview with Coleen Klasmeier, head of Sidley Austin’s FDA regulatory practice; former FDA OCC official
(noting the distinct roles of these personnel).
175
Interview with Source 78, partner in large law firm and former senior federal official.

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since otherwise they would run the risk of scrutiny from examiners that they want to avoid. If
something is listed as a compliance issue in an agency bulletin, the compliance people would
generally add it to their list. Many compliance officers are not lawyers, and they “don’t care” if
a policy arises from guidance or a legislative rule. They want to answer the question, “what do I
have to do to comply?,” and they do not care about “theory,” i.e., whether something is a rule or
guidance.176 According to an interviewee who held senior posts at CFPB and other federal
agencies, Compliance Officers at CFPB-regulated entities would be the ones paying closest
attention to “what happens in the regulatory space,” including issuance of guidance. A
conventional view among banking regulators was that the quality of a company’s compliance
management system was the best predictor of the company’s compliance with law. CFPB
wanted a company’s compliance people to have “a seat at the table” in firm decisionmaking in
order to ensure that compliance issues are considered as business choices are made.177
As for healthcare insurers and providers, a healthcare industry attorney said that CMS, in
dealing with regulated companies, preferred to deal with compliance officers as the agency’s
interface, compared with other kinds of firm employees. Compliance officers, she noted, were
far less focused on the rule/guidance distinction than outside counsel would be. Their job was to
track new issuances from the agency and communicate them to whoever within the company
needed to know about them. The interviewee recalled giving a lecture to an assembled group of
compliance officers. The Administrative Procedure Act, she said, is “otherworldly” to these
people. They were taken aback that one would even engage CMS on whether it followed the
right procedures in adopting its own policies.178
Beyond the distinct RA profession in the FDA approval realm and the self-identified
compliance officers across multiple industries, there are other company personnel at the
operations level who may be the first or only audience for guidance within their firms but are not

176

Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.
Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
178
Interview Source 58, healthcare industry attorney (with over 15 years’ experience in the field). Another
interviewee said that, in her experience, CMS guidance was highly technical and went mainly to operations people
within regulated firms, typically with an in-house attorney involved, while compliance people were relatively less
involved than they would be with FDA guidance. Interview with Source 101, partner in large law firm healthcare
practice. Another interviewee—drawing from experience with CPSC, Department of Energy appliance standards,
and EPA’s Energy Star program—observed there was a tension within corporations between compliance people
(more conservative about adherence guidance) and marketing people (more aggressive), though he found in-house
counsel to be on the conservative side, even more so than the compliance people. Interview with Charles Samuels,
Partner, Mintz Levin (counsel to the Association of Home Appliance Manufacturers).
177

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lawyers and are not necessarily mindful of the rule/guidance distinction. The general counsel of
a Fortune 500 company explained that, while her firm is subject to much guidance from multiple
federal agencies regarding its products, her law department does not have anybody who
systematically searches for that guidance; there is so much of it that the law department does not
have the resources to find it. The intake and application of guidance is handled far more by the
company’s product safety, quality assurance, and regulatory staff, who are close to the operations
of the company and actually make the plants work. They are the ones plugged in to the relevant
agencies’ output of guidance. They are not lawyers, nor are they labeled “compliance” people.
They are frontline workers, part of the operations of the company. The interviewee said that, in
dealing with guidance, these people would follow a “meet or exceed” standard, that they had a
sense that “when the government tells you to do something, you do it,” and that they tended to be
rule-followers. She could not remember anyone ever coming to her and asking, “can we not
follow this guidance?” It was possible that operations people did have conversations about such
questions with agency personnel at the plant level, or even that they might approach some of her
in-house attorneys, but she added that many operations people considered guidance-governed
matters their own province, not that of the lawyers.179
Because some businesses are too small to have full-time compliance or RA specialists,
one might think that small businesses will follow guidance less. To some degree, that is true.
However, for certain business activities covered by guidance, a small firm may contract out to a
specialized service provider that gives the kind of full-time attention to the agency’s utterances
that a corporate compliance staff would. For example, observed a former CMS division director,
physician practices usually have no in-house compliance personnel, but they commonly
outsource their billing to specialized billing companies. These companies make an investment in
learning the highly technical CMS guidance on Medicare billing, and they follow it. Practices’
increasing reliance on these billing companies in recent years has had the effect of increasing the
practices’ compliance with guidance. Notably, HHS looks favorably on physician practices that
have billing companies compared to those that do not.180 Other intermediaries playing a similar
role with respect to guidance include “technical assistance providers” helping small water

179
180

Interview with Source 73, general counsel of Fortune 500 company.
Interview with Source 93, former CMS division director.

63

utilities regulated by EPA;181 consultants known as “field men” who advise organic wholesalers
regulated by USDA;182 and commercial testing laboratories hired by small appliance sellers
subject to the Department of Energy’s energy efficiency standards.183

D. The Prospect of a One-Off Enforcement Proceeding
Even if we put aside pre-approval requirements, relationships to the agency, and cohorts
of compliance people with peculiar sensitivity to the agency, there is still one other factor
potentially incentivizing compliance with guidance: the risk that the agency will sanction the
regulated party ex post for violating the relevant statute or legislative rule, in a one-off
enforcement proceeding.184 Because guidance suggests what the agency considers to be lawful
(or unlawful), or announces what conduct the agency will (or will not) enforce against, a
regulated party can greatly reduce the risk associated with enforcement by following guidance.
One might think reducing this risk, in itself, creates a strong incentive to follow guidance.
But that is much too crude. In fact, the magnitude of the enforcement-based incentive to
follow guidance is context-specific. The regulated party will compare the upside it sees in
guidance-noncompliant behavior with the downside, which varies with four factors: (1) the
probability of the agency detecting the regulated party’s guidance-noncompliant conduct and
initiating enforcement to begin with, (2) the potential cost of the resulting enforcement
proceeding irrespective of its outcome, (3) the probability that the proceeding will result in a
finding that the party violated the relevant legislative rule or statute, and (4) the potential cost of
sanctions attached to that finding.
I am not saying this out of some a priori view of regulated parties as calculating rational
actors. The factors listed above are just an assembly and analytic refinement of what many
interviewees told me. Indeed, an executive at a drug manufacturer was quite explicit that, in
deciding whether to follow FDA’s enforcement-related guidance, her company will do a risk
calculation. They consider, on the one hand, the benefit of guidance-noncompliant behavior to

181

Interview with Source 84, former EPA Office of Water official.
Interview with Miles McEvoy, Deputy Administrator (for NOP), Agricultural Marketing Service, USDA.
183
Interview with Charles Samuels, Partner, Mintz Levin (counsel to the Association of Home Appliance
Manufacturers).
184
By one-off, I mean to put aside the possibility that the enforcement proceeding could implicate a larger
relationship between the regulated party and the agency—a point already discussed in Section B above. This
Section focuses on the enforcement proceeding’s consequences in isolation from any larger relationship.
182

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their business and to the public health, and, on the other hand, the level of legal justification they
feel under the legislative rule or statute (“are we prepared to take a warning letter and defend
ourselves?”) and the “enforcement risk” (that is, the “probability” of enforcement “times” the
“damage” to the business in the event of enforcement).185
Let us consider in turn the four factors that contribute to the downside risk of departing
from guidance, with particular attention to how each of them can vary and change, making the
incentives arising from one-off enforcement quite specific to context:
1. Probability of Detection
This probability depends on many circumstances and can change over time. To start
with, detection becomes easier, and the incentive to follow guidance stronger, the greater the
agency’s resources and the fewer and more visible the regulated parties. Eric Schaeffer, the
former director of civil enforcement at EPA and now head of an environmental NGO, said
guidance could have a big impact in the context of a concentrated industry like makers of new
mobile sources of air pollution (cars), where there is only a small number of companies, as
compared with mobile sources modified in the after-market, where there are thousands of “chop
shops.”186 When regulated entities are numerous, detection tends to be less probable, though
there are means to try to make it more likely. For example, environmental regulation of
stationary sources of air pollution operates on a two-tiered system in which enforcement is
geared toward producing information: sources must regularly self-report emissions, with selfreported violations usually subject to minor penalties, but if sources deliberately avoid or falsify
reports, severe penalties like criminal prosecution are much more likely.187 When it comes to
Medicare, qui tam relators, whose role has increased greatly in the last two decades, provide
additional eyes and ears to the DOJ and to the HHS Office of Inspector General. And HHS and
its contractors also increasingly use “big data” techniques by which they target audits at
healthcare providers who are statistical outliers in their billing behavior.188 Under the

185

Interview with Source 108, executive at a drug manufacturer.
Interview with Eric Schaeffer, Executive Director, Environmental Integrity Project; former director of civil
enforcement, EPA.
187
Wayne B. Gray & Jay P. Shimshack, The Effectiveness of Environmental Monitoring and Enforcement: A Review
of the Empirical Evidence, 5 Review of Environmental Economics and Policy 3, 5 (2011). On criminal prosecution
for avoiding permitting (and with it reporting), see David M. Uhlmann, Prosecutorial Discretion and Environmental
Crime, 38 Harv. Environmental L. Rev. 159, 200-02 (2014).
188
Interview with Source 93, former CMS division director.
186

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Department of Energy’s appliance standards program, compliance is thought to be high because
the regulated firms all sell standardized products to the public, and they purchase and test each
other’s products to make sure no firm is getting a competitive advantage by cheating.189 It has
happened that a firm catching its competitor not complying will turn that competitor in to the
Department.190
2. Cost of the Enforcement Proceeding Irrespective of Outcome
A regulated party with a legal theory for why its behavior violates the guidance but not
the legislative rule may be vindicated once there is an actual agency adjudication of the question
(or judicial review thereof). But if the adjudication process itself is costly enough, then simply
following guidance may seem the better course ex ante.
The most obvious cost of a proceeding is that of being investigated and mounting a
defense. Direct legal bills came up briefly in the interviews.191 So did the seizure of computers
and records, which by itself could put some firms out of business.192 So did the opportunity cost
of defense. Kushner, the former EPA career official who rose to civil enforcement director, said
regulated firms were under a lot of pressure to settle—“I appreciated that I had a lot of leverage
when I was [at EPA]”—partly because of legal bills but more importantly because of the
distraction to the business internally, e.g., fighting an enforcement action meant “the top EHS
guy at a refinery” would have to focus on the litigation instead of the business’s operations.193 A
former SEC official similarly cited internal disruption to the business as a major reason to avoid
enforcement activity to begin with, regardless of its outcome.194
But the cost most frequently noted in the interviews was bad publicity—a cost that
appears to be real in some contexts but not all. Agencies often do announce their enforcement

189

Interview with Andrew DeLaski, Executive Director, Appliance Standards Awareness Project.
Interview with Sources 3, 4, and 5, Department of Energy Office of General Counsel officials.
191
Interview with Source 17, former OMB official.
192
Interview with Source 93, former CMS division director.
193
Interview with Adam Kushner, Partner, Hogan Lovells, former director of civil enforcement, EPA. One
interviewee briefly mentioned the power of FDA, through litigation by DOJ, to seize products on a preliminary
basis. Interview with Source 82, congressional staffer. Obviously this could be quite costly to the business
regardless of enforcement’s ultimate outcome. But apparently the seizure power is “rarely invoked.” Bhagwat,
supra note 84, at1293. See also Noah, Governance, supra note 86, at 125 (noting a few examples of firm
concessions in the face of seizure threats).
194
Interview with Source 19, former SEC official.
190

66

activities to the public, naming the parties targeted, and not always with many safeguards.195 But
do these announcements tangibly harm the targets? Since the 1990s, there have been many
statistical studies of how publicly-traded companies’ stock prices react to newsbreaks of agency
investigatory or enforcement actions (and also to media newsbreaks of company misconduct
likely to lead to such actions). The literature indicates that (a) when the alleged harm is to third
parties who do not transact with the target company, as is usually the case in environmental
regulation, the stock-price drop is of similar magnitude to the present value of government
penalties and private damages and settlements to be later incurred by the company, meaning the
publicity itself does not cause losses, but (b) when the alleged harm is to parties who do transact
with the target company, as with fraud that victimizes investors or consumers or product-safety
problems that harm consumers, the stock-price drop is greater—often much greater—than
anticipated penalties, damages, and settlements (e.g., seven times greater in SEC accounting
fraud cases). The difference, it seems, reflects the market’s expectation that consumers,
investors, and other potential counterparties will lose trust in the company, be less inclined to
transact with it, and demand more favorable terms to do so, thereby reducing the company’s
profits.196 Thus, bad publicity in itself is costly to regulated parties, but mainly in areas like
fraud and product safety, rather than environmental regulation.197 These statistical findings are
195

Nathan Cortez, Agency Publicity in the Internet Era, Report to the Administrative Conference of the United
States (Sept. 25, 2015).
196
For a review of the literature, by one of the leading economists on the topic, see Jonathan M. Karpoff, Does
Reputation Work to Discipline Corporate Misconduct?, in The Oxford Handbook of Corporate Reputation (Timothy
G. Pollock & Michael L. Barnett eds., 2012). The study of accounting fraud is Jonathan M. Karpoff et al., The Cost
to Firms of Cooking the Books, 43 Journal of Financial and Quantitative Analysis 581 (2008). A study published
after the 2012 review of market reactions to revelations of companies’ use of tax shelters finds no reputational effect
on stock prices, which is consistent with the rest of the literature, in that tax avoidance does not involve harm to
companies’ consumers, investors, or the like. John Gallemore et al., The Reputational Costs of Tax Avoidance, 31
Contemporary Accounting Research 1103 (2014). Another subsequently-published study finds some reputational
effect of allegations of bribery, less than for fraud but more than environmental violations. Vijay S. Sampath et al.,
Corporate Reputation’s Invisible Hand: Bribery, Rational Choice, and Market Penalties, Journal of Business Ethics,
published online July 11, 2016.
197
It is possible that bad publicity in the environmental context could eventually affect a firm economically if the
publicity operates through more contingent mechanisms like community suspicion of the firm in localities where it
needs to maintain and expand its facilities. A public interest organization official cited bad publicity as a reason to
comply with EPA guidance, saying it could operate at the national or local level. Interview with Source 56, official
at a public interest group. There is statistical support for the idea that corporations engage in cleaner environmental
behavior when located in more politically engaged local communities, even controlling for other factors. Markus
Kitzmueller & Jay Shimshack, Economic Perspectives on Corporate Social Responsibility, 50 Journal of Economic
Literature 51, 75 (2012). See also Interview with James Conrad, Conrad Law and Policy Counsel; formerly
Assistant General Counsel at the American Chemistry Council (noting the “hardest battles” for chemical
manufacturers involve local-government decisions like zoning and that a firm does not want trouble with EPA that
would spill over to the local level).

67

consistent with interviewee comments that companies would follow guidance to avoid the
reputational harm of a warning letter from FDA,198 or a noncompliance letter from the USDA
National Organic Program,199 or an enforcement proceeding by a banking regulator,200 or by the
SEC.201 SEC enforcement, noted a former official at that agency, is mutually reinforcing with
bad publicity in the financial press: bad press leads to enforcement, which causes leaks, which
leads to more bad press, and so forth in a vicious cycle. The commencement of an SEC
investigation, she said, is “a disaster from the word ‘go’” and can be nearly as bad as a judicial
finding of liability.202
But if publicly-traded firms are vulnerable to reputational harm from agency accusations
in areas like fraud and product safety, this is much less clear for smaller firms. There are
obviously no studies of capital-market reactions for them. And they are less likely to have
brands to protect. One public interest organization official believed that sensitivity about
reputation and brands incentivized large firms to follow guidance, but not small ones, for whom
reputation did not matter.203 Then again, small firms might be less able to bear the direct costs of
enforcement, such as legal bills, handing over records, etc.
Enforcement activity regardless of its outcome may also prompt follow-on lawsuits by
state attorneys general or class-action plaintiffs, though their incentivizing power is uncertain.
Three interviewees discussing FDA noted that a warning letter from the agency could prompt
such suits.204 Data on their effect is limited. As for the state attorneys general, the total value of
penalties they imposed on pharmaceutical firms from the takeoff of such suits in 2008 through
2015 seems large ($3.5 billion) but is less than one-sixth the sum of penalties imposed against
the industry in that same period by the federal government.205 As for class actions that follow on

Interview with Daniel Troy, General Counsel, GlaxoSmithKline (citing his company’s practice of closely
studying all FDA OPDP letters).
199
Interview with Jake Lewin, President, CCOF Certification Services.
200
Interview with Source 131, official at nonprofit public policy research organization, formerly consultant and
product manager in consumer finance industry. Compare Interview with Source 18, former CFPB official
(observing that reputational harm of a public accusation of racial discrimination would cause financial institutions to
change practices, but this was less true of accusations of lesser moral gravity).
201
Interview with Source 19, former SEC official; Interview with Source 40, former SEC official.
202
Interview with Source 19, former SEC official.
203
Interview with Source 56, official at a public interest group.
204
Interview with Daniel Troy, General Counsel, GlaxoSmithKline; Interview with Source 82, congressional staffer;
Interview with Source 83, former senior FDA Office of Chief Counsel official.
205
Calculations based on Sammy Almashat et al., Twenty-Five Years of Pharmaceutical Industry Criminal and Civil
Penalties: 1991 Through 2015 (March 31, 2016), at 43 (fig. 11), 45 (fig. 13).
198

68

enforcement, there seems to be little published data.206 A former senior official at the FDA
Office of Chief Counsel said, regarding consumer protection suits against the food industry
premised on FDA warnings letters that in turn rested on noncompliance with guidance, “the
Chobanis of the world can handle these lawsuits,” but “they hurt small companies.”207
Finally, especially as to large firms, we must consider that the mere initiation of
enforcement proceedings may severely impact individual employees of the firm in ways that
give those employees an incentive, ex ante, to ensure the firm’s compliance with guidance. In
banking, the start of an enforcement action can cause a bank to abandon whatever financial
product is the target of that action, damaging the careers of whichever bank employees had
developed the product. This means bank employees are reluctant to develop new products unless
there is some assurance from the agency that they are lawful, which the agency may not be
willing to provide before it sees the product in action. The result is that employees hold back,
following existing guidance unless the agency changes it.208
3. Probability of a Violation Being Found
A regulated party that departs from guidance and finds itself in an enforcement
proceeding will have to convince the agency not to read the relevant statute or legislative rule to
simply track the guidance. The prospect of doing this successfully depends upon the agency’s
flexibility—something that varies profoundly based on several factors, which I shall discuss in
Part III below.
In addition to the agency’s flexibility, another factor influencing the regulated party’s
prospect of success is whether, if the agency comes to an unfavorable conclusion, a court can be
convinced to overturn it. This raises the question of what deference courts give guidance, and
whether such deference discourages parties from departing from guidance to begin with.
Although scores of my interviewees discussed reasons why regulated parties would follow

For general background on “coattails class actions,” see Howard M. Erichson, Coattail Class Actions: Reflections
on Microsoft, Tobacco, and the Mixing of Public and Private Lawyering in Mass Litigation, 34 U.C. Davis. L. Rev.
1 (2000); Max Minzner, Should Agencies Enforce?, 99 Minn. L. Rev. 2113 (2015). There does not seem to be an
empirical literature on this subject apart from one study of the SEC. James D. Cox & Randall S. Thomas, SEC
Enforcement Heuristics: An Empirical Inquiry, 53 Duke L.J. 737 (2003).
207
Interview with Source 83, former senior FDA Office of Chief Counsel official.
208
Interview with Source 131, official at nonprofit public policy research organization, formerly consultant and
product manager in consumer finance industry.
206

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guidance, only four cited the prospect of judicial deference as one such reason.209 And only one
of these four interviewees spoke of deference more than briefly. Further, this interviewee was
the only one of the four to specifically raise the Auer or Seminole Rock doctrine that arguably
grants agencies a kind of super-deference when interpreting their own legislative rules through
vehicles like guidance. Notably, this interviewee was not a specialist on any particular
agency.210
Considering the furious academic debate that has occurred over judicial deference and
especially Auer in recent years, one might have expected deference to come up as a reason to
follow guidance in more interviews. Its modest showing may be due to the fact that judicial
deference to guidance is not as strong as we might assume. For one thing, agency win rates
under Auer have fallen in recent years so they are comparable with those under the alternative
deference regime of Chevron, perhaps indicating that Auer is not some all-powerful government
weapon.211 Plus, a recent study indicates that, in the U.S. circuit courts, over half the opinions
reviewing guidance documents’ interpretations of statutes or legislative rules do so not under the
strongly deferential Chevron framework or the supposedly super-deferential Auer framework,
but instead under the Skidmore framework, which offers the weakest deference of the three.212
But I suspect the modesty of deference’s role in shaping behavior is mainly due to factors
besides what courts do. For parties making an initial decision whether to follow guidance, the
prospect of judicial review is quite attenuated. The party’s conduct may not be detected, and
even if it is, sticking with the enforcement proceeding to the bitter end and then suing may not
seem worth it by reason of the proceeding’s costs (discussed above) or the risk of sanctions
(discussed below), to say nothing of other factors shaping compliance with guidance discussed
209

Interview with Source 68, partner in a large law firm; Interview with Source 38, AFL-CIO official; Interview
with Frank White, former Deputy Assistant Secretary (for OSHA), DOL; Interview with Richard Stoll, Partner,
Foley and Lardner. A fifth interviewee initially cited judicial deference to guidance as a reason for EPA-regulated
parties to ensure guidance was followed in proceedings where the agency might otherwise depart from it in favor of
industry (e.g., a permit proceeding). The interviewee suggested that a court hearing an NGO challenge might hold
the agency to its guidance—not at all the usual posture for deference. This interviewee then said the court
presumption in favor of guidance’s correctness could also apply if the reviewed agency action went against the
regulated party. Interview with Source 54, former EPA official.
210
Interview with Source 68, partner in a large law firm.
211
William M. Yeatman, An Empirical Defense of Auer Step Zero, 106 Geo. L.J. (forthcoming 2018), manuscript at
55, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2831651; Cynthia Barmore, Auer in Action:
Deference after Talk America, 76 Ohio State L.J. 813, 827 (2015).
212
The data for the three deference regimes are in Yeatman, supra note 211, at 51. But since the figures for
Chevron and Skidmore were obtained via sampling, one must scale them up on an approximated basis using the
ratios in id. at 25.

70

elsewhere (pre-approval, relationships, compliance personnel’s commitments, and the agency’s
level of flexibility).
4. Cost of Sanction for a Violation
The prospect of a severe sanction for a violation, if authorized by the statute and credibly
threatened by the agency, could incentivize a regulated party to follow guidance to begin with.
In this scenario, the anticipated sanction is so severe that even a very low probability of being
detected and losing an enforcement proceeding is too much to tolerate. Also, the regulated party
knows that, if it were to depart from guidance and be hit with an enforcement proceeding, any
legal arguments it might think up against the guidance’s reading of the law would be practically
irrelevant, because an adverse outcome is so catastrophic that one simply cannot take the risk of
going to a final disposition—one must accept whatever settlement offer the agency makes.213
Are any sanctions actually severe enough to trigger this scenario? If so, what are they?
The most convincing candidates are the sanctions that involve excluding the regulated
party from the industry altogether, which can easily put it out of business. In the case of the
HHS Office of Inspector General’s power to exclude firms and individuals from participation in
federal healthcare programs such as Medicare, the threat appears credible. In recent years HHS
OIG has annually excluded around 3,000 to 4,000 persons or firms (some permanently, others
not).214 The list of excluded entities is “peppered with the names of home health agencies and
[durable medical equipment] companies.”215 And while “[h]istorically” HHS OIG has “declined
to use” exclusion against hospitals, given the collateral consequences, there have been “rare
exceptions” showing the agency will pull the trigger.216 Hospitals that rapidly closed as a result
of exclusion include Chicago’s Edgewater Medical Center in 2001 (215 beds), Miami’s South
Beach Community Hospital in 2006 (146 beds), and Chicago’s Sacred Heart Hospital in 2013
(119 beds).217 The closings confirm that exclusion is “an organizational death sentence.”218
213

Barkow, supra note 22, at 1148, 1163-65.
Judith A. Waltz & Adam Hepworth, Medicare and Medicaid Administrative Enforcement, 2017 Health L.
Handbook 4 (May 2017), text at note 13.
215
Jonathan Feld & Howard O’Leary Jr., Criminal Prosecution of Hospitals: Unnecessary Treatment, 26 Health
Lawyer 1, 1 (2014).
216
Id. at 1.
217
Id. at 6-7 & n.2. For the number of beds at Edgewater, see Bruce Japsen, Edgewater Medical Center Succumbs
to Financial Woes, Chicago Tribune, Dec. 7, 2001. For the number of beds at Sacred Heart, see Andrew L. Wang &
Kristen Schorsch, Sacred Heart Hospital Closes, Crain’s Chicago Business, July 1, 2013.
218
Feld & O’Leary, supra note 215, at 1.
214

71

Further, exclusion is technically available against healthcare providers for any false claim against
the government, no matter how small.219 While HHS’s internal guidance and practice impose the
sanction far more narrowly, its technical availability confers great bargaining power on the
agency.220 A partner in a large law firm and former senior federal official, in explaining why
companies follow guidance, said the threat of exclusion is “hanging over” every firm. HHS OIG
officials, she recounted, will “yell at you in conference rooms” about “exclusion” if you don’t
admit wrongdoing; “maybe” OIG is “bluffing,” but “you can’t tell.”221 In an OIG enforcement
proceeding, notes one scholar, “the agency’s guidance [i.e., whether the provider followed the
guidance] will likely play a pivotal role in determining whether the law was violated,”222 not
least because OIG’s very power to induce settlement means that Medicare law gets made to a
large degree by OIG’s practice in settled enforcement proceedings, not by judicial
pronouncements in litigation.223 Thus are providers incentivized to follow guidance to begin
with, to avoid sanctions in an adjudication that (given the threat of exclusion) they cannot
practically contest. A law firm partner who deals frequently with CMS and FDA said she
expected HHS OIG to follow the agency’s guidance in deciding what conduct was subject to
enforcement, and she then said industry’s most serious concern was the False Claims Act, very
much including program exclusion.224

As relevant to the False Claim Act, the Secretary’s permissive exclusion authority under 42 U.S.C. § 1320a can
be invoked whenever “the Secretary determines [that the defendant] has committed an act,” 42 U.S.C. § 1320a7(b)(7), violating either 42 U.S.C. § 1320a-7a (the Civil Monetary Penalties Act) or 42 U.S.C. § 1320a-7b
(prohibiting inter alia false claims, fraud, and kickbacks). A single claim in violation of either provision is therefore
sufficient under the statute to trigger exclusion. See 42 U.S.C. § 1320a-7a(i)(2) (defining a “claim” as “an
application for payments for items and services under a Federal health care program”); 42 U.S.C. § 1320a-7b(a)
(imposing liability for “any false statement or representation of a material fact in any application for any benefit or
payment under a Federal health care program”). The regulations implementing the Secretary’s exclusion authority
do not provide further restrictions. The regulation implementing 42 U.S.C. § 1320a-7a permits the “OIG [to]
exclude any individual or entity that it determines has committed an act described in section 1128A of the Act.” 42
C.F.R. § 1001.901(a). Similarly, the regulation implementing 42 U.S.C. § 1320a-7b permits “the OIG [to] exclude
any individual or entity that it determines has committed an act described in section 1128B(b) of the Act.” 42
C.F.R. § 1001.951(a).
220
Joan H. Krause, A Conceptual Model of Health Care Fraud Enforcement, 12 J. Law & Policy 55, 66, 114, 13237 (2003).
221
Interview with Source 78, partner in large law firm and former senior federal official.
222
Krause, supra note 220, at 106.
223
Krause, supra note 220, at 113-32.
224
Interview with Source 104, law firm partner who deals frequently with CMS and FDA. Compare Interview with
Source 101, partner in large law firm healthcare practice (stating that, while exclusion is a major concern, criminal
prohibitions by themselves would be enough to motivate widespread compliance with guidance).
219

72

While healthcare program exclusion appears to be credible as a threat and effective as a
means to head off adjudication and incentivize regulated parties to follow guidance,225 we should
not assume that every statute establishing this kind of exclusionary sanction necessarily creates
the same kind of practical incentive. That is because, at times, extreme sanctions may be legally
available to the agency but not practically available, because the agency regards them as too
severe to use. Indeed, the sanctions may be “politically unavailable”: to impose them would
prompt a political backlash that the agency knows it cannot withstand.226
Besides exclusion, the sanction with greatest incentive power appears to be criminal
punishment.227 In federal healthcare programs, the number of jail sentences—though small
compared to the size of the industry—is great enough to be salient and to show the government
is not afraid to use imprisonment. In FY 2016, the results just for the nine-city DOJ-HHS
“Medicare Fraud Strike Force” were 290 defendants sentenced to prison, for an average of more
than four years each (over 1,000 years total).228 According to a partner in a large law firm
healthcare practice, the prospect of criminal prosecution was the main reason people in the
industry followed guidance (more important than exclusion, in her judgment), not least because
the failure to follow guidance was a “bad fact” with respect to criminal intent.229 A former CMS
division director, while viewing the need for timely payment as the immediate reason to follow
guidance, said there was a “built-in level of hysteria” about healthcare program enforcement,
ratcheted up by the “daily parade” of news stories about “indictments.” If a provider failed to

The threat of exclusion may also be a strong incentive at other agencies. An FAA official, discussing air carriers’
receptivity to guidance, said that “certificate action”—the power to suspend or revoke a carrier’s license to fly—was
“the club” that “drives and motivates behavior.” Interview with Source 10, FAA official. An interviewee who held
senior posts at CFPB and other federal agencies, explaining banks’ acceptance that they had to take guidance
seriously, noted that charter revocations for banks were rare, but they did happen. Interview with Source 90, person
who held senior posts at CFPB and other federal agencies.
226
Brigham Daniels, When Agencies Go Nuclear: A Game Theoretic Approach to the Biggest Sticks in an Agency’s
Arsenal, 80 Geo. Wash. L. Rev. 442, 452-54, 503-04 (2012). If the agency has the power to exclude and shut down
regulated parties but never actually pulls the trigger, there is a looming question as to whether (a) the regulated
parties so fear exclusion that they always satisfy the agency or (b) the agency so fears the blowback from imposing
exclusion that it engages in lax enforcement. For a series of case studies of threatened use of extreme sanctions in
environmental regulation that (on my reading) reflect an enduring ambiguity as to how much the regulated parties
fear the sanction and how much the agency fears pulling the trigger, see Brigham Daniels, Environmental
Regulatory Nukes, 2013 Utah L. Rev. 1505.
227
I focus on imprisonment because fines may be indemnified by the targeted individual’s firm. Marc A. Rodwin,
Do We Need Stronger Sanctions to Ensure Legal Compliance by Pharmaceutical Firms?70 Food & Drug L.J. 435,
446 (2015).
228
Health Care Fraud and Abuse Control Program: Annual Report for Fiscal Year 2016 at 10 (January 2017).
229
Interview with Source 101, partner in large law firm healthcare practice. See also Krause, supra note 220, at 109.
225

73

follow clear guidance, that would be “a huge bullseye on your back” and a “strong reason for the
government to proceed.”230
But while the threat of criminal prosecution can encourage compliance with guidance
where credible, it is not always credible. In OSHA regulation, the statute is drawn narrowly to
criminalize only conduct that is “willful” and causes an employee’s death, and there have been
only about twelve criminal convictions since 1970.231 Environmental regulation falls between
the Medicare and OSHA extremes: formal liability is broad, tracking numerous civil violations
with only a factual-knowledge requirement tacked on,232 but EPA and DOJ have exercised a
great deal of discretion to confine prosecutions largely to cases that have higher indicia of intent,
especially those involving deception or repeat violations.233 The result is annual incarceration
years on the order of 100.234 Even within a single regulatory area, criminal prosecution’s role
can vary over time. According to one account, the willingness of DOJ to seek criminal penalties
against executives of financial institutions fell considerably between the dot-com bust of 2001-02
and the financial crisis of 2008.235
The prospect of criminal prosecution of the firm could also be frightening enough to
encourage compliance with guidance, but again, this varies depending on the industry. After the
accounting firm Arthur Andersen collapsed in the wake of its indictment in 2002, many officials
came to believe that simply initiating a criminal prosecution would destroy any large company.
However, it appears this is only true of firms in contexts where prosecution poses a specific
threat to the firm’s business model, as in the accounting industry, where companies trade on their

230

Interview with Source 93, former CMS division director.
Eric J. Conn & Kate M. McMahon, OSHA Criminal Cases on the Rise, Federal Employment Law Insider
(February 2016). See also Sidney A. Shapiro & Randy Rabinowitz, Voluntary Regulatory Compliance in Theory
and Practice: The Case of OSHA, 52 Admin. L. Rev. 97 (2000) (noting, in a comparison of firms’ willingness to
take part in voluntary compliance programs under EPA and OSHA, that criminal penalties under OSHA regulation
are miniscule compared to those under EPA); id. at 143-44 (noting that issuance of OSHA guidelines has not
resulted in compliance with agency goals).
232
Uhlmann, supra note 187, at 167-71.
233
Uhlmann, supra note 187, at 193-214.
234
Enforcement Annual Results for Fiscal Year 2016, available at https://www.epa.gov/enforcement/enforcementannual-results-fiscal-year-2016 (93 years for sentenced defendants); Enforcement Annual Results for Fiscal Year
(FY) 2015, available at https://19january2017snapshot.epa.gov/enforcement/enforcement-annual-results-fiscal-yearfy-2015_.html; Fiscal Year 2014 EPA Enforcement and Compliance Annual Results at 11 (Dec. 18, 2014), available
at https://www.epa.gov/sites/production/files/2014-12/documents/fy-2014-enforcement-annual-results-charts-12-0814.pdf (providing data for FY 2010 to FY 2014).
235
Jesse Eisinger, The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives (2017).
231

74

perceived trustworthiness.236 An empirical study found that in 2001-2010 the federal
government obtained convictions of 54 publicly-traded firms, of which the vast majority
survived, and for the few that failed, the failure was not caused by conviction.237 That said,
where companies have Andersen-like vulnerabilities (as in finance), criminal prosecution or
conviction could amount to a corporate death penalty.238 Then again, DOJ has become so fully
committed to deferred-prosecution agreements in the finance sector that the threat may be
blunted.239
Barring an Andersen-like collapse, the most visible consequences of criminally
prosecuting a firm (or civilly enforcing against it) will be monetary penalties,240 raising the
question of whether the prospect of such penalties encourages the firm to comply with guidance.
There has in fact been a huge spike in federal criminal fines against organizational defendants
since about 2007,241 which some interviewees picked up on.242
The practical incentives created by these rising penalties for large publicly-traded firms
are somewhat doubtful, for two reasons. First, they are paid with the corporation’s money, not
with the money of individual executives who make decisions about corporate conduct.243
Theoretically, shareholders upset over a penalty could pressure the board to remove the
responsible executives. But shareholders are often diffuse and disorganized, and even if they are
not, the penalty would have to be large enough to get their attention. That brings us to the
second reason: monetary penalties against large firms, though seemingly large in a newspaper
headline, are often small in the context of the firm’s business. Despite penalty settlements
against pharmaceutical companies reaching into the billions of dollars, the sums paid are “often a
236

Gabriel Markoff, Arthur Andersen and the Myth of the Corporate Death Penalty: Corporate Criminal
Convictions in the Twenty-First Century, 15 U. Penn. J. Business L. 797, 827-34 (2013).
237
Markoff, supra note 236, at 818-27.
238
Gregory M. Gilchrist, The Special Problem of Banks and Crime, 85 U. Colo. L. Rev. 1, 28-32 (2014) (arguing
that banks have these characteristics).
239
Markoff, supra note 236, at 804-12; Matthew C. Turk, Regulation by Settlement, 66 U. Kansas L. Rev.
(forthcoming), manuscript at 5-9, 45 (April 17, 2017), available at
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2954047.
240
There can also be corporate integrity agreements that call for expansion of internal compliance infrastructure and
procedures (with possible outside monitoring) or injunctive relief.
241
Brandon L. Garrett, Too Big to Jail: How Prosecutors Compromise with Corporations 5 (2014).
242
Interview with Source 17, former OMB official (observing rising fines, both in headlines and for smaller firms);
Interview with Source 56, official at public interest organization (observing that “crime does not pay anymore,”
given increase in penalties in areas like the Clean Water Act, though not at OSHA, whose schedule of penalties
remains “pitiful” even after a 2016 increase).
243
Sonia A. Steinway, SEC “Monetary Penalties Speaks Very Loudly,” But What Do They Say? A Critical Analysis
of the SEC’s New Enforcement Approach, 124 Yale L.J. 209, 222 (2014); Rodwin, supra note 227, at 438.

75

manageable percentage of the revenue received from the particular product under scrutiny,”244
and “most” do “not significantly disrupt the pharmaceutical firm’s operations.”245 In particular,
settlements for these penalties “do not make clear the economic analysis on which the payment is
based,” e.g., they do not break out the portion of the money that is a disgorgement of profits so
that the figure could be compared with the overall profits on the product.246 In environmental
regulation, a senior environmental counsel for a Fortune 100 company said that an EPA civil
penalty would not be a factor for the company overall (though “maybe” it would be for the
individual facility concerned, as a profit-and-loss center within the company).247 In banking
regulation, said an official at a nonprofit public policy research organization (formerly a
consultant in consumer finance), the monetary penalties imposed were “not material” in most
cases: for a penalty to matter to a bank, it would have to be bigger than what an agency would
practically impose for conduct that was arguably legal.248 In the view of former Deputy Attorney
General David Ogden, large monetary penalties against corporations arise from the perverse
incentives of government enforcers to rack up “publicity, stats, and big money” rather than from
a serious effort to deter misconduct, which would require more onerous and risky prosecutions of
individuals.249
But while the run-up in penalties has doubtful effects on large firms, we know little about
whether it has also occurred in enforcement against smaller firms, and if so, whether it has
serious effects on their business and incentives. That is a good topic for future research.

E. When Incentives to Follow Guidance Are Weak
If pre-approval requirements, the need to maintain relationships, the prevalence of
compliance personnel, and high enforcement costs incentivize regulated parties to follow
guidance, then when these factors are weak or absent, we would expect regulated parties to
follow guidance less. Here I explore four areas where this appears to be the case: FTC consumer

244

Kevin Outterson, Punishing Health Care Fraud—Is the GSK Settlement Sufficient?, 367 New England Journal of
Medicine 1082, 1083 (2012).
245
Rodwin, supra note 227, at 438.
246
Rodwin, supra note 227, at 444.
247
Interview with Source 119, senior environmental counsel at a Fortune 100 company.
248
Interview with Source 131, official at nonprofit public policy research organization, formerly consultant and
product manager in consumer finance industry.
249
Quoted in Eisinger, supra note 235, at 200-01.

76

protection, CFPB regulation of nonbank institutions, enforcement of the Clean Water Act against
permitless discharges, and OSHA regulation beyond large employers.
1. FTC Consumer Protection
The consumer protection wing of the FTC operates by bringing federal court suits and
intra-agency complaints against violators of the consumer protection statutes and of the FTC’s
own legislative rules. David Vladeck, the former director of the FTC Consumer Protection
Bureau, expressed the view that FTC guidance is very limited as a means to change behavior of
regulated parties. On this point, he drew a distinction between truly noncompliant businesses
(like debt settlement scammers) and reputable ones (like major advertising agencies or retailers).
As to the debt settlement scammers, he said, changing their behavior en masse was not possible
for the FTC without legislative rulemaking. Even if the FTC issued guidance in the area, actual
enforcement required violations to be proven individually in each particular proceeding. Prior to
completing a rulemaking on the matter, the FTC did bring enforcement suits against about 25
debt settlement scammers, but these suits were “slogs,” because of the need for individualized
proof that the conduct violated the act. Some of the biggest scammers were enjoined, but the
chances of getting caught were “pretty low,” and therefore many other scams continued. Only
once it finished the rulemaking—defining what conduct violated the act in a manner that would
bind the courts—could the FTC bring “quick” enforcement actions, raising the probability of
liability. The rulemaking and the capacity for quick enforcement “turned the tide,” forcing the
scammers to abandon their schemes.
As to the major advertising agencies and retailers, said Vladeck, guidance was still
ineffective as a means to “move the goal posts” and actually change industry norms, since
individual enforcement actions (the means through which a norm change called for by guidance
would have to be enforced) tended to be winnable only against deviants who fell below an
already-accepted industry norm. Such suits did not suffice for doing “something aspirational.”
To be aspirational, you generally need legislative rulemaking, not guidance. (Vladeck did
observe an exceptional context in which FTC guidance did alter the behavior of reputable firms:
the 2009 guidance on claims about products appearing in endorsements, especially through
social media. But he noted that there, the guidance was only restoring a preexisting norm that

77

had been temporarily disrupted by the onset of product endorsements on social media. It was not
creating aspirational new norms that were unfamiliar to industry.)250
Consistent with Vladeck’s view of FTC guidance’s limited efficacy, a former CFPB
official who now represents CFPB-regulated entities observed that, when it comes to guidance,
regulated firms in her experience generally cared what CFPB thinks while caring little what FTC
thinks. In particular, she noted, mortgage servicers followed CFPB guidance more than they
followed FTC guidance.251
The low impact of FTC guidance, particularly as compared with CFPB guidance, can be
understood in terms of the factors discussed earlier in this Part. Whereas CFPB has effective
pre-approval leverage over many of its regulatees (particularly banks), in that the agency’s
identification of problems at a bank can interfere with the bank obtaining permission to
undertake a merger or expansion, the FTC does not have pre-approval authority in the area of
consumer protection. In addition, the FTC Consumer Protection Bureau’s interaction with
regulated parties is generally through enforcement; it does not have the kind of routinized repeat
interfaces with regulated parties that forge continuing relationships in (say) bank examination.
As to mortgage servicers specifically, CFPB has authority to conduct examinations of them, and
while it selects servicers for examination based on a set of risk-based priorities (unlike the more
routinized rotating schedule employed by OCC or the Federal Reserve for banks),252 the
mortgage servicing industry is subject to substantial CFPB examination scrutiny because the
great majority of its business is done by a small number of large firms,253 and large firms are
aware that CFPB has considered mortgage servicing a high priority for examination ever since
the agency was founded,254 and further that large firms within any high-priority industry are most

250

Interview with David Vladeck, Professor, Georgetown Law; former Director, Bureau of Consumer Protection,
FTC. Apart from noncompliant firms like debt settlement scammers and reputable firms like large advertising
agencies, Vladeck also discussed a third kind of business—exemplified by small makers of mobile phone apps—
who wanted to comply with the law insofar as they knew it, but were generally uninformed. Enforcement actions
would produce no general deterrence for these businesses, as they were diffuse and ignorant, so the best thing for the
FTC to do was “outreach.”
251
Interview with Source 81, former CFPB official who represents CFPB-regulated firms.
252
Steven Antonakes, Prepared Remarks of CFPB Director Steven Antonakes at the Exchequer Club (Feb. 18,
2015), https://www.consumerfinance.gov/about-us/newsroom/prepared-remarks-of-cfpb-deputy-director-stevenantonakes-at-the-exchequer-club/.
253
Government Accountability Office, Nonbank Mortgage Servicers: Existing Regulatory Oversight Could Be
Strengthened, GAO-16-278 (March 2016), at 11-13.
254
Interview with Source 90, person who held senior posts at CFPB and other federal agencies.

78

likely to be examined, other things being equal.255 Finally, in the realm of enforcement, the
probability of being detected and facing agency action differs between the two agencies. The
former CFPB official noted that whereas FTC devoted only a few attorneys to mortgage servicer
cases, the CFPB had whole units dedicated to that industry.256
2. CFPB Regulation of Nonbank Institutions
The CFPB has jurisdiction over two kinds of institutions. The first are banks (as well as
savings associations and credit unions) that have assets over $10 billion; there are about 150 of
these, covering 80% of the national banking market. The second are nonbanks, that is,
companies providing “consumer financial products or services” but do “not have a bank, thrift,
or credit union charter.”257 Nonbanks are further defined to include mortgage servicers, payday
lenders, debt collectors, private education lenders, consumer reporting agencies, remittance
transfer providers, and others. Altogether, they number “well over 15,000.”258
In terms of sensitivity to guidance, an interviewee who held senior posts at CFPB and
other federal agencies said there was a major divergence between banks and nonbanks (though
the interviewee also noted that among nonbanks, the relatively sophisticated firms—which were
usually, though not always, the large ones—were likely to behave more like banks).259 As to
nonbanks, she explained, the “value of guidance is less.” Whereas banks generally read
guidance and usually do more than read it, nonbanks are “more resistant to changing their
business practices in response to guidance.” The interviewee attributed this difference to several
factors, including pre-approval authority, continuous interaction and relationships, and
compliance infrastructure. Nonbank business operations, she explained, are not overseen at the
federal level in the same way as banks’. Unlike banks, nonbanks are not required to apply to a
federal regulator to carry out transactions that significantly impact their operations and growth
An institution’s market share is one of four factors deciding priority for examination. Antonakes, supra note 252.
Another of the four factors is the size of the product market, Antonakes, supra note 252, and “the mortgage market is
far and away the largest consumer credit market,” CFPB, Policy Priorities Over the Next Two Years, at 9 (Feb. 25,
2016), http://files.consumerfinance.gov/f/201602_cfpb_policy-priorities-over-the-next-two-years.pdf. The other
two factors are the product’s general potential for consumer harm and risks specific to the institution. Antonakes,
supra note 252.
256
Interview with Source 81, former CFPB official who represents CFPB-regulated firms.
257
Steve Antonakes & Peggy Twohig, The CFPB Launches Its Nonbank Supervision Program (Jan. 5, 2012),
https://www.consumerfinance.gov/about-us/blog/the-cfpb-launches-its-nonbank-supervision-program.
258
Antonakes, supra note 252.
259
This would particularly apply to mortgage servicing, which is a concentrated market to which CFPB has long
assigned a high priority for examination and enforcement.
255

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plans. Such transactions include mergers and acquisitions, as well as smaller transactions which
may impact the communities that they serve, such as opening or closing a branch location.
Moreover, nonbanks are typically licensed at the state level, which can be difficult to track. As a
result, the CFPB often has limited information about nonbank firms under its supervisory
jurisdiction, particularly those with smaller market shares. Whereas banks know their regulators
and seek them out, nonbanks often “hope the agency will never find them” and so are less likely
to structure their operations to meet federal compliance expectations. In other words, nonbanks
are “willing to take their chances.” The interviewee also drew a contrast between banks and
nonbanks in terms of “compliance culture.” Banks have “taken to heart” that they need a viable
compliance program, and it is common for all but the very smallest banks to have a full-time
compliance officer. Whether a nonbank has compliance personnel is “more a matter of
resources”; nonbanks may say, “we don’t have the money for a compliance program.”260
It should also be noted that all banks under CFPB jurisdiction are subject to examinations
by the agency, whereas many nonbanks under the agency’s jurisdiction are not subject to
examinations, only to ex post enforcement actions. When it comes to guidance, examination is
more effective at getting businesses’ attention. According to a former CFPB official who
represents CFPB-regulated entities, firms subject to examination “are more worried about
examination than enforcement.” Those firms know the examination is “surely coming.” They
will invest in compliance. By contrast, when it comes to a nonbank that is subject only to
enforcement and no examination, whether guidance is followed depends on “the compliance
culture of the firm,” or on whether it has private equity investors (who might insist on following
guidance). Without a compliance culture or such investors, such firms may be “whistling past
the graveyard” and are not worried enough to invest in compliance.261 The significance of
examinations is of interest because, if sufficiently frequent, they are more likely to result in the
buildup of a relationship between agency and firm than is mere enforcement.

260

Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
Interview with Source 81, former CFPB official who represents CFPB-regulated entities. An interviewee who
held senior posts at CFPB and other federal agencies noted that CFPB selects firms for examination through a riskbased set of priorities, meaning that some firms may be legally subject to examination but unlikely to actually see an
examiner on a regular basis. But some firms, she noted, would be aware they are a high priority for examination, if
they are relatively large participants in an area (such as mortgage origination or servicing) that CFPB has publicly
designated high priority; these firms would not ignore guidance in the way many nonbanks might. Interview with
Source 90, person who held senior posts at CFPB and other federal agencies.
261

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3. Ex Post Enforcement Against Permitless Discharges Under the Clean Water Act
The Clean Water Act (CWA) generally prohibits the discharge of any pollutant into the
“waters of the United States,” but the Army Corps of Engineers can grant permits for
discharges.262 The question of what pieces of property are “waters of the United States” and are
thus covered by the CWA has been the subject of uncertainty, controversy, and litigation for
decades. An owner uncertain about whether property is covered—and therefore whether (say)
development of the property requires a permit—can seek a jurisdictional determination from the
Corps to get that question answered. If the answer is yes, the owner needs to go through the
Corps’ permit application process in order to develop the property, and that process can be
costly. If the answer is no, the owner can go ahead without a permit. Alternatively, the owner
could refrain from seeking a jurisdictional determination to begin with and take the risk of
developing the property amid legal uncertainty. But in that case, EPA could bring a civil
enforcement suit against the owner and, if it turns out the property is covered, obtain injunctive
relief and civil penalties. Criminal penalties are also available if the defendant acted with
negligence or knowledge.263
Thus, there are two contexts in which owners may interact with regulators: (a) the
jurisdictional determination process, in which the owner seeks out the regulator in order to obtain
what is essentially a pre-approval, and (b) the ex post enforcement process, in which the EPA
roves the countryside in search of owners who are taking the risk of developing property without
seeking assurances. EPA and the Corps have repeatedly issued guidance on the general question
of what property constitutes “waters of the United States,” which simultaneously governs both
the Corps’ pre-approval decisions (jurisdictional determinations) and EPA’s decisions about
what discharges to enforce against ex post. One such guidance document was issued in 2003.264
Then, in 2006, the Supreme Court handed down a splintered decision in Rapanos v United States
that threw the meaning of “waters of the United States” into even greater uncertainty.265 EPA
and the Corps reacted by issuing guidance in June 2007 (modified in December 2008) that
identified large categories of property as falling into a grey area for which officials would have
to apply a fact-intensive test on whether the property’s waters had a “significant nexus” with
262

33 U.S.C. § 1311(a) , § 1344, § 1362(7), § 1362(12).
33 U.S.C. § 1319(c), (d).
264
Joint Memorandum, 68 Fed. Reg. 1991 (Jan. 15, 2003).
265
547 U.S. 715 (2006).
263

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“traditional navigable water.”266 During the Obama administration, EPA proposed a
modification to the guidance but withdrew it, then went through a full legislative rulemaking to
clarify the matter, only to have the rule blocked in court as the administration was near its end.
As explained by an attorney at an environmental NGO, the impact of guidance on CWA
administration, relative to what a legislative rule could do, depends on whether the context is
pre-approval or ex post enforcement. The “day to day administration” of the Act “in the backand-forth between owners and the Corps”—that being jurisdiction determinations and
permitting—“might not be all too different” if the policies to be implemented by the Corps
appeared in guidance or in a legislative rule. But in ex post enforcement—when an owner has
decided to make discharges without seeking the prior assurance of a jurisdictional
determination—“then the absence of a [legislative] rule has a real effect.” According to the
attorney, there had been “a lot of indication” during both the Bush and Obama administrations
that EPA and the Corps were focusing enforcement suits on property not in the grey area. But a
legislative rule could have eliminated the grey area: it could be “categorical and guaranteed,” and
it would often be the exclusive focus of the judge deciding the enforcement suit (whereas
guidance would have at most persuasive power, and then only “maybe”).267
In other words, guidance can be about as impactful as a legislative rule when the context
is pre-approval, since there the regulated party has sought out the agency and is seeking to get
the agency’s assent. But in ex post enforcement, the agency bears the burden of building its case
from the ground up. That case is already built automatically if the agency has a legislative rule
to rely upon, thereby allowing a large number of easy suits to be brought rapidly, increasing the
probability of detection and deterrence. But this is not possible if the agency has only guidance
in hand, since then it must work up each case individually, reducing the number of cases it can
bring overall. This can mean a low probability of detection for regulated parties if they are
numerous, as they are in the CWA context, thus reducing incentives to comply. (It also seems
reasonable to assume that the target class for enforcement—owners who opt against seeking

Clean Water Act Jurisdiction Following the U.S. Supreme Court’s Decision in Rapanos v. United States &
Carabell v. United States (June 5, 2007); Clean Water Act Jurisdiction Following the U.S. Supreme Court’s
Decision in Rapanos v. United States & Carabell v. United States (Dec. 2, 2008).
267
Interview with Source 97, attorney at an environmental NGO. See also Interview with Source 96, former senior
EPA official with cross-office responsibilities (stating that using guidance for CWA coverage would have less effect
than a legislative rulemaking, and it was hard to say how much weight it would have).
266

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jurisdictional determinations from the Corps—constitutes a self-selected group whose members
tend not to have repeated interactions with or strong relationships to the Corps or EPA.)
One refinement of this analysis is in order: If you want to strengthen an ex post
enforcement regime, you can achieve some though not all the benefit of a legislative rule if you
replace a less-clear guidance document with a more-clear guidance document. Though a moreclear guidance document will not bind the courts in the way a legislative rule would, it can
reduce the agency’s internal processing times in deciding which cases to initiate, thereby
allowing more cases to be brought, with some increase in detection and deterrence. The reverse
happened in the wake of Rapanos, when EPA and the Corps in 2007 issued guidance that
recognized larger grey areas and called for more fact-intensive individualized determinations in
those grey areas before enforcement could be initiated. As EPA’s director of water enforcement
wrote in an internal email in 2008, the agency lacked “sufficient resources” to make these
determinations, “thereby reducing oversight and increasing incentives for noncompliance.”268
The goal of the Obama administration’s proposed modification of the guidance was to narrow
(though it could not eliminate) some areas of uncertainty, thereby redressing the “systemic
underenforcement” of the CWA that had prevailed since the 2007 guidance, according to an
official at a public interest group.269
4. OSHA Regulation Beyond Large Firms
In contrast to the several areas where interviewees said regulated parties routinely
followed guidance—such as FDA approvals, EPA licensing programs, and bank examinations—
interviewees on OSHA gave, in the aggregate, a much less sanguine assessment.
Some interviewees said compliance with OSHA guidance was low, at least outside large
firms. Industry safety consultant John Newquist, who worked at OSHA for 29 years and rose to
assistant administrator of Region V (headquartered in Chicago), observed that the “average”
construction company or manufacturer would follow OSHA guidance “not at all.” It was “hard
enough” to comply with the actual legislative rules. Companies that followed guidance were
those with a high level of safety expertise; they tended to be large and to have good trade
268

Email from Mark Pollins to Randy Hill (Feb. 26, 2008), quoted in Memorandum from Majority Staff, Committee
on Oversight and Government Reform, to Chairman Henry A. Waxman, Re: Decline of Clean Water Act
Enforcement Program (Dec. 16, 2008), available at http://democratsoversight.house.gov/sites/democrats.oversight.house.gov/files/migrated/20081216113810.pdf.
269
Interview with Source 56, official at a public interest group.

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associations with high membership that disseminated the guidance, as in the case of oil refineries
and chemical plants, who watched guidance closely. By contrast, a manufacturer with say “300
employees” would have “very little expertise.” And even some big companies did not much
comply with OSHA guidance, as in food manufacturing.270 Adam Finkel, who served in career
positions at OSHA including regional administrator for the Rocky Mountain states, began his
discussion of motives for companies to comply with guidance by saying, “often they don’t
comply.”271 Baruch Fellner, the founding partner of Gibson Dunn’s OSH practice for the last 27
years, observed that most employers madea good-faith effort to protect employee safety in
substance but that the complex and arcane nature of OSHA rules and guidance caused most
employers not to engage much with the details of those rules and guidance, treating the prospect
of OSHA citations as “a cost of doing business”: “If OSHA finds me, I’ll pay the fine.” “Very
few” employers, he said, had access to the kind of expertise needed for the details of OSHA rules
and guidance, whether in-house or through consultants.272
Other interviewees said the level of employer compliance with OSHA guidance was
unknown. The health and safety director of North America’s Building Trades Unions said the
level of employer compliance with guidance was a “good question” and an unknown, though she
cited a pending study on what the construction industry was doing with a certain set of OSHA
recommended practices.273 A health and safety expert at a labor union said levels of compliance
were “all over the lot” and “hard to understand” and that “we don’t have a handle on actual
compliance.”274 Marc Freedman, the U.S. Chamber of Commerce’s executive director of labor
law policy, in discussing controversial draft guidance on noise reduction that OSHA proposed
and withdrew in 2010-11 and that the Chamber opposed, thought it was “hard to say” how many
employers would have taken such guidance seriously. He added “anecdotally” that “many”
employers had approached the Chamber upset about the proposed guidance, fearing it was a “big
ticket item.”275

270

Interview with John Newquist, Partner, Newquist Safety; former assistant regional administrator, OSHA.
Interview with Adam Finkel, Senior Fellow and Executive Director, Program on Regulation, University of
Pennsylvania; former regional administrator, OSHA.
272
Interview with Baruch Fellner, Partner, Gibson Dunn.
273
Interview with Chris Trahan Cain, health and safety director, North America’s Building Trades Unions; and
executive director, CPWR Center for Construction Research and Training.
274
Interview with Source 113, health and safety expert at a labor union.
275
Interview with Marc Freedman, Executive Director of Labor Law Policy, U.S. Chamber of Commerce.
271

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Yet other interviewees talked about employers who followed guidance but indicated that
their statements were not generalizable to OSHA’s vast jurisdiction. Frank White, the former
deputy head of OSHA and former president of a major health, safety, and environmental (HSE)
consultancy, said OSHA guidance had “pretty uniform and profound” influence on the Fortune
100 companies that made up virtually his entire clientele and that he advised them to follow it,
but he added that as companies got smaller, there was less compliance with guidance. According
to White, a medium or small company if acting in good faith would try to follow guidance, but
even then, it might not have the time or the systems in place to do it; and some employers were
simply uninterested in compliance.276 Jonathan Snare, an OSH partner at Morgan Lewis and
former deputy solicitor of DOL, said that larger companies with safety staff would keep up with
OSHA guidance and use it in their training, adding that he also had some experience with
smaller contractors in construction, who had some awareness of the OSHA website and would
use it to some degree.277 David Sarvadi, who spent more than 15 years as an industrial hygienist
before entering law and is now a partner in Keller Heckman’s OSH practice, said his clients took
guidance seriously and would ask him about it, but later in the interview, speaking about industry
more generally, he said compliance would depend on the topic, and he drew a contrast between
compliance on matters of substance—“if somebody will die, people care about that”—and things
like “paperwork exercises.”278 Celeste Monforton, an academic and safety advocate and former
OSHA legislative analyst, said that nobody looks systematically at employer compliance with
OSHA guidance and that she had seen no data on it. But her sense was that employers would
ignore guidance on an issue not governed by a legislative rule, though most would make an
effort to comply with a legislative rule if one was applicable, and employers would use guidance
in that context; on this point, she emphasized newly-promulgated legislative rules, which she
noted were rare. For these, she recalled seeing employers demand guidance from OSHA,
although she thought employers’ varying levels of interest in getting such guidance—or in
sometimes mounting political or litigation resistance to it—had little to do with their actual
probabilities of being inspected, and instead depended on which of them belonged to trade

276

Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL.
Interview with Jonathan Snare, Partner, Morgan Lewis; former Deputy Solicitor (for OSHA), DOL.
278
Interview with David Sarvadi, Partner, Keller Heckman.
277

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associations that were raising fear about OSHA to justify their own existence to their members
(more on that below).279
While not all these interviews are consistent, I take them in the aggregate to suggest that
OSHA guidance has a substantially lower impact on regulated-party behavior, at least beyond
large firms, than we have observed for several other agencies. I think this lessened impact is to
be expected because the four factors discussed above in Sections A through D are weak or absent
when it comes to OSHA:
First, OSHA has no pre-approval authority.
Second, OSHA does not have frequent interactions or continuing relationships with the
large majority of employers. OSHA’s inspection force is so small compared to the number of
employers in the 29 states where it administers the OSH Act that each employer can be inspected
on average something like once per century—a point cited by five interviewees.280 On this point,
Monforton drew a contrast between OSHA and the Mine Safety and Health Administration
(MSHA), where she had also worked. Mines were each inspected by MSHA four times per year,
got to know their inspectors individually, and received guidance “all the time” as part of the
accepted course of business. By contrast, she said, most employers never actually “meet”
OSHA; they only hear about it.281
Third, whereas compliance officers or RA professionals in areas like pharmaceutical or
banking regulation can constitute a force internal to the firm yet highly sensitive to the agency,
companies’ compliance infrastructure for workplace safety does not necessarily fit this pattern.
Outside large firms, compliance infrastructure for safety is usually thin to nonexistent.
According to White, the former deputy head of OSHA and HSE consultancy president, the role
of safety professionals inside corporations “fades out quickly” as they get smaller. Though it is

279

Interview with Celeste Monforton, Lecturer, Department of Health and Human Performance, Texas State
University; Professorial Lecturer, Milken Institute School of Public Health and Health Services, George Washington
University; former legislative analyst, OSHA; former policy advisor, MSHA.
280
Calculations of the time period vary but are all on the order of a lifetime or more. Interview with Chris Trahan
Cain, health and safety director, North America’s Building Trades Unions; and executive director, CPWR Center for
Construction Research and Training (140 years); Interview with Baruch Fellner, Partner, Gibson Dunn (125 years);
Interview with David Sarvadi, Partner, Keller Heckman (70 years); Interview with Jonathan Snare, Partner, Morgan
Lewis; former Deputy Solicitor (for OSHA), DOL (noting “low ratio” without giving a number); Interview with
Source 62, former senior OSHA official (140 years).
281
Interview with Celeste Monforton, Lecturer, Department of Health and Human Performance, Texas State
University; Professorial Lecturer, Milken Institute School of Public Health and Health Services, George Washington
University; former legislative analyst, OSHA; former policy advisor, MSHA.

86

hard to say where the exact threshold is, a full-time safety person would be “rare” in a company
below 500 to 1,000 employees.282 (Note that 53% of U.S. private sector employment is in firms
under 500.283) A former senior OSHA official likewise noted that many companies tasked their
HR people with handling safety even though they might have no training in it.284
That said, large companies do have safety departments staffed with full-time specialists.
According to White, safety personnel at the facility level in a Fortune 100 company would defer
to OSHA guidance and not distinguish it from a legislative rule, unless they encountered a
problem with it, reported the matter upward, and received authorization at the corporate level to
depart.285 But the interviews indicate that large corporate safety departments feel some
ambivalence toward OSHA guidance and may not serve as a pro-agency force as much as
compliance personnel in other areas of regulation. This is because safety professionals in large
corporations may feel they have—and may actually have—greater expertise in safety than
OSHA does. OSHA’s recommended practices, observed the health and safety director of North
America’s Building Trades Unions, did not have “much impact” on big companies because they
were “ahead of OSHA” already.286 Fellner, the OSH founding partner at Gibson Dunn, said that
ironically the large companies who were most sophisticated about their own workers’ safety
“know more than OSHA” and therefore got more frustrated with the shortcomings of OSHA
guidance.287 Likewise, White noted that large companies were more likely to have the expertise
necessary to question whether OSHA guidance was right.288
Fourth, guidance’s limited impact in OSHA regulation may be explained by the mostly
low expected costs to most employers of one-off OSHA enforcement. As already discussed,
OSHA has so few inspectors that the probability of inspection for the average employer is very
low, though we must qualify this by noting that large employers with many facilities have a

282

Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL. Compare Interview with
Jonathan Snare, Partner, Morgan Lewis; former Deputy Solicitor (for OSHA), DOL (noting “anecdotal[ly]” that he
has represented general contractors between 50 and 300 employees most of whom have at least one full-time safety
person and some may have two or three).
283
See the figures for 2016 in “Table F: Distribution of private sector employment by firm size class: 1993/Q1
through 2016/Q1, not seasonally adjusted,” U.S. Bureau of Labor Statistics, National Business Employment
Dynamics Data by Firm Size Class, available at https://www.bls.gov/bdm/bdmfirmsize.htm.
284
Interview with Source 62, former senior OSHA official.
285
Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL
286
Interview with Chris Trahan Cain, health and safety director, North America’s Building Trades Unions; and
executive director, CPWR Center for Construction Research and Training.
287
Interview with Baruch Fellner, Partner, Gibson Dunn.
288
Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL.

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higher probability of being inspected,289 as do employers subject to OSHA “emphasis programs”
for selected hazards.290 If and when inspections do happen and violations are found, the cited
firm’s cost of abating the hazard can potentially be high; this depends on the technological and
economic feasibility of the measures OSHA is seeking.291 But monetary penalties are low. Even
with an increase in 2016, said a public interest organization official, OSHA fines were still
“pitiful” in comparison to those under environmental statutes like the Clean Water Act.292
Officials at Public Citizen called OSHA fines “meaningless,” often in the range of $3,000 to
$5,000, occasionally rising to say $200,000.293 White, the former deputy head of OSHA, said
most citations are not litigated because it is not worth it, given the size of the fine.294 Also,
criminal convictions are vanishingly rare for OSH violations in comparison to environmental
regulation or healthcare programs.295 Consistent with this, the results of statistical studies asking
whether OSHA inspections and penalties produce deterrence are “more mixed” compared with
stronger statistical evidence of deterrence in environmental regulation, and they provide less
evidence that OSHA regulation has driven the historical decline in workplace injuries and
fatalities compared to stronger evidence for environmental regulation as a driver of companies’
improved environmental performance.296
If indeed most employers’ incentives to follow OSHA guidance are relatively low, there
must nonetheless be some explanation for the strong opposition that certain OSHA guidance
documents have elicited, from time to time, in litigation and on Capitol Hill. To a substantial
degree, it appears, this opposition is driven by industry association officials and outside counsel

289

Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL.
Interview with Jonathan Snare, Partner, Morgan Lewis; former Deputy Solicitor (for OSHA), DOL.
291
Interview with Baruch Fellner, Partner, Gibson Dunn.
292
Interview with Source 56, official at a public interest organization. See also Shapiro & Rabinowitz, supra note
231, at 109 (old schedule).
293
Interview with Michael Carome and Sammy Almashat, Health Research Group, Public Citizen. OSHA’s online
database of enforcement cases with $40,000+ penalties indicates that, if one includes the 21 states where state
agencies administer the statute, there have been 71 enforcement cases with initial penalties of $200,000 or more
between January 2015 and June 2017. Enforcement Cases with Initial Penalties Above $40,000,
https://www.osha.gov/topcases/allstates.html.
294
Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL.
295
See supra text and accompanying note 231.
296
James Alm & Jay Shimshack, Environmental Enforcement and Compliance: Lessons from Pollution, Safety, and
Tax Settings, 10 Foundations and Trends in Microeconomics 209, 239-41 (2014) (reviewing literature). There is
recent and strong evidence that OSHA achieves specific (as distinct from general) deterrence—i.e., the few
individual firms that are actually hit with penalties do have fewer injuries in the future—but even that finding
disappears when looking at firms greater than 250 employees. Amelia M. Haviland et al., A New Estimate of the
Impact of OSHA Inspections on Manufacturing Injury Rates, 1998-2005, 55 Am. J. Industrial Medicine 964 (2012).
290

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who believe certain OSHA guidance to be unlawful and unreasonable and not in the long-run
interest of employers (after all, at least some employers will be cited and could be hit with
substantial abatement costs, even if the probability is low ex ante for the large majority of
employers and thus often ignored by them). Fellner—founder of Gibson Dunn’s OSH practice
and a leading attorney for challenges to major OSHA initiatives like ergonomics regulation297—
explained that when OSHA guidance was opposed through litigation or congressional channels,
the main actors on the employer side were associations of businesses, some pan-industry that
were regularly involved and some industry-specific that became involved depending on the
subject matter, plus a few sophisticated individual companies. The associations, he said, would
try to inform their members of OSHA’s plans and solicit their support. But, he observed, it was
“difficult” to “kindle” companies’ interest in opposing OSHA guidance, even sophisticated
companies. For trade associations to extract support from their members on such a matter was
often “like pulling teeth.” If the association recognized the problem but the members did not, it
sometimes happened that an association would bring a challenge independently of its members,
or that just one or a few member companies would provide substantially all the funding for a
challenge by one or a few associations. A challenge to a widely-applicable OSHA policy,
Fellner explained, often depended on the initiative of outside counsel: it was not necessarily “the
employer going to the lawyer,” but “the lawyer going to the employer.” In Fellner’s view,
outside counsel or individual companies who initiated and took on the burden of these challenges
faced a “free rider problem” in that they were providing a good—the blocking of unlawful and
unreasonable regulation—whose benefits would extend far beyond the few actors who put in the
effort and resources to provide the good.298
Significantly, this view of the relationship between trade associations and outside counsel
leading the opposition to guidance, on the one hand, and employers actually subject to guidance,
on the other, was shared, to a substantial degree, by interviewees on the non-industry side. To be
sure, these non-industry interviewees had a different normative take on the phenomenon, and a
more jaundiced view of the motivations of the associations and outside counsel, but their basic
297

E.g., Industry Groups File Suit Against OSHA's Ergonomics Rule, EHS Today, Nov. 15, 2002 (referring to
Fellner as “industry’s chief counsel”).
298
Interview with Baruch Fellner, Partner, Gibson Dunn. Compare the U.S. Chamber of Commerce labor law
policy director’s statement that, “anecdotally,” “many” employers had approached the Chamber upset about
OSHA’s proposed noise reduction guidance in 2010 (later withdrawn), though it was “hard to say” how many
employers in general would have taken the guidance seriously. See supra text and accompanying note 275.

89

description of associations and outside counsel taking the initiative themselves, more than
reacting to the initiative of their members or clients, was similar. Monforton, the academic and
safety advocate and former OSHA legislative analyst, observed that trade associations and
OSHA defense firms would “stir the pot,” raising fear of an OSHA inspector “on every
doorstep,” even though this was not real. Associations did this, in her view, to maintain their
membership and justify their existence; it was their “business model.”299 Similarly, Finkel, the
former OSHA regional administrator, said on the subject of employer opposition to OSHA
guidance that trade associations had “incentives to pick fights” and that there was an “agency
problem” between the associations and their members.300
I should note that, assuming these interviews are accurate in indicating that the initiative
lies more with trade associations than with their members in challenges to OSHA guidance, this
dynamic would hardly be unique to industry. A recent study finds institutional arrangements that
can produce similar dynamics between advocacy groups and the persons they represent across
the political spectrum.301

III. AGENCY FLEXIBILITY AND INFLEXIBILITY
While many regulated parties have strong incentives to follow guidance when it is
operative, the agency can decide whether it should be operative or not in any given case. At the
request of a regulated party, agency officials can decide to depart from the guidance. If officials
maintain a reasonably open mind in deciding whether to do so, then we would not say that
regulated parties are “bound,” notwithstanding all the incentives described in Part II.
This Part explains why agencies sometimes do not keep an open mind—why they are
sometimes inflexible in their use of guidance. As discussed in the Introduction, inflexibility
usually does not connote some bad intent on the part of the agency to use guidance improperly.
Rather, as Section A explains, agencies are often under legitimate pressures to be consistent:
regulated entities want a level playing field and predictability; NGOs and members of Congress
299

Interview with Celeste Monforton, Lecturer, Department of Health and Human Performance, Texas State
University; Professorial Lecturer, Milken Institute School of Public Health and Health Services, George Washington
University; former legislative analyst, OSHA; former policy advisor, MSHA.
300
Interview with Adam Finkel, Senior Fellow and Executive Director, Program on Regulation, University of
Pennsylvania; former regional administrator, OSHA.
301
Miriam Seifter, Second-Order Participation in Administrative Law, 63 UCLA L. Rev. 1333, 1338-52 (2016).

90

are on the lookout for improper special treatment of industry players; and officials themselves
fear that a few departures will make it impossible not to grant more, opening the floodgates.
Theoretically, as discussed in Section B, the agency can remain flexible while meeting these
legitimate demands by adopting principled flexibility as its approach: making departures but
explaining them in a transparent manner and applying their reasoning to all like cases going
forward. Yet, as Section C shows, principled flexibility is unfortunately hard to implement,
especially because reason-giving is often costly. And there are yet other organizational obstacles
to flexibility of any kind, principled or not, as noted in Section D: officials’ antagonism when
challenged, superiors’ incentives to back their subordinates, the counter-intuitive nature of the
rule/guidance distinction, and the fact that some bureaucratic task environments are not
conducive to cooperation with regulated parties. These factors, along with those in Sections A
and C, probably explain most of the inflexibility we observe. Such factors operate without any
official bad faith: agencies would be remiss to ignore the legitimate demands described in
Section A, and the pathologies noted in Sections C and D are matters of resource poverty, inertia,
or lack of managerial initiative.
That said, it is possible for agencies to be inflexible because personnel are committed to
the substantive content of the guidance, as discussed in Section E. This motivation for
inflexibility is the most problematic: if an agency wants to shut off consideration of alternatives
to a policy simply because it thinks the policy is right, that is the classic case for legislative
rulemaking. Notably, the commitment to guidance’s substance is often concentrated among the
political appointees or the career officials but not both, suggesting that the one could check the
other’s inflexibility.
Before we proceed, I should note that this Part analyzes agency flexibility as a matter of
practical bureaucratic operations—an approach that contrasts with that of the courts in litigation
challenging guidance for impermissible binding status. The courts, when evaluating flexibility,
focus mainly on the text of a guidance document and whether it avoids mandatory wording
(“must,” “shall,” etc.) and contains wording allowing for departures. Indeed, convincing a court
to invalidate a guidance document based on evidence of its rigid implementation, when its text
suggests discretion will be preserved, is quite difficult, for it presents factual questions about onthe-ground bureaucratic behavior in a context (administrative law) where discovery is limited.302
302

Regarding limits on discovery, see Richard J. Pierce Jr., Administrative Law Treatise § 11.6 (2010).

91

As noted by Bradley Merrill Thompson, counsel to medical-device-maker associations, FDA has
become quite careful to avoid mandatory language in the text of its guidance documents. The
question in litigation challenging FDA guidance, therefore, would be whether the agency is
applying the document in an inflexible manner, which presents “issues of fact” that are “hard to
overcome.”303 Similarly, an executive at a drug manufacturer said that, in litigation, it would be
a “really uphill” battle to “pierce” the facially nonbinding language of an FDA guidance
document.304 Nor is FDA the only agency that is careful in its drafting. EPA’s Office of General
Counsel has become more vigilant in the last several years when vetting guidance documents to
ensure they are not couched in mandatory terms.305 Officials at FAA and the Department of
Energy were likewise mindful that mandatory language had to avoided.306 Eric Schaeffer,
former director of EPA civil enforcement and head of an environmental NGO, said that EPA’s
“OGC knows to put in boilerplate” disclaiming mandatory status, which would “usually satisfy a
court.”307
The courts’ focus on the text of guidance documents may reflect judges’ sense of their
own institutional competence: judges are better at examining documents than at evaluating the
behavior of complex bureaucratic institutions, especially when such evaluation might require
discovery against the federal government.308 Here in this Report, we are not bound by judicial
limits, and so we can embark on a richer exploration of agency (in)flexibility than appears in the
case law.

303

Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and Green.
Interview with Source 108, executive at a drug manufacturer.
305
Interview with Carrie Wehling, Office of General Counsel, EPA; Interview with Source 99, EPA official.
306
Interview with Sources 3, 4, and 5, Department of Energy Office of General Counsel officials; Interview with
Sources 8, 9, and 10, FAA officials.
307
Interview with Eric Schaeffer, Executive Director, Environmental Integrity Project; former director of civil
enforcement, EPA.
308
Cf. Levin, supra note 3, at 71 (“lawyers and judges depend heavily on judicial case law in defining the proper
uses and abuses of guidance documents, but courts may not always have enough information or perspective to assess
the elusive variables that bear on ‘practical binding effect.’ The questions that may arise include: Under what
circumstances has an agency offered the addressees of a guidance document a meaningful opportunity to contest it? .
. . How much influence may the document exert over agency staff or the public without being characterized as
exerting ‘practical binding effect’?”).
304

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A. Legitimate Pressures for Consistency
1. Industry Preferences for Consistency
If an agency behaves flexibly and grants an individual firm’s request for a departure from
guidance, that firm will be happy. But other firms in the industry—the competitors of the firm
that got the departure—may not be happy. They may see themselves being put at a competitive
disadvantage, and they may criticize and oppose the agency directly about that. Plus, in a
broader view, departures can weaken regulated firms’ sense that they are operating on a level
playing field, as well as their confidence that they can predict the agency’s behavior. This can
make them more defensive and less cooperative in dealing with the agency, which can reduce
compliance and make the agency’s work more difficult. Moreover, agency inconsistency makes
it harder for companies’ compliance officers and counsel to maintain credibility with their own
companies and clients, which can further weaken compliance. Altogether, these industry
preferences (and industry pressures) are substantial and legitimate reasons weighing against
departures from guidance in agency officials’ minds, potentially rendering their use of guidance
more inflexible.309
Consider EPA enforcement, for which guidance is key on multiple levels. EPA program
offices issue guidance regarding means of compliance, and that guidance colors the judgment of
the enforcement office and often helps decide what conduct that office will demand of a
defendant firm as a condition of settlement.310 Further, the enforcement office’s own guidance
provides a predictable framework for deciding what civil penalties and other sanctions to impose
on a firm for what conduct.311

309

Kagan observed similar linkages between industry competition, agency rigidity, and compliance in his study of
the Nixon wage-price freeze, although he was focusing on the interpretation and application of regulations instead of
guidance documents: “representatives of the regulated entities, while seeking accommodative rulings for
themselves, exerted cross-checking pressures”; “Businesses were alert to, and argued against, concessions to their
competitors and suppliers”; “formal equality of treatment [of regulated entities], most easily symbolized by
completely stringent rules, was assumed to be a quid pro quo that had to be paid [by the agency] to win
compliance.” Kagan, supra note 29, at 76-77. For statistical studies indicating the value for compliance of clarity
and consistency in regulation, see Peter J. May & Robert S. Wood, At the Regulatory Front Lines: Inspectors’
Enforcement Styles and Regulatory Compliance, 13 J. Public Admin. Research & Theory 117 (2003); Soren C.
Winter & Peter J. May, Motivation for Compliance with Environmental Regulations, 20 J. Policy Analysis & Mgmt.
675 (2001).
310
Interview with Adam Kushner, Partner, Hogan Lovells, former director of civil enforcement, EPA.
311
Id.

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Eric Schaeffer, who served in a career position as EPA’s director of civil enforcement
(1997-2002) and now heads an environmental NGO, said the agency can use guidance to
“demonstrate a level playing field” among firms in the regulated industry. “Despite” the APA’s
requirement that an agency using guidance must exercise discretion, “industry does not want
discretion”—it “wants a level playing field.” In a negotiation arising from an enforcement
proceeding, if EPA seeks something from the firm as a condition of settlement, the firm asks,
“will you require this of everyone else [in the industry]?”312
Similarly, Adam Kushner, who served in several career positions including civil
enforcement director at EPA (2008-12) and is now a partner at Hogan Lovells, observed that if
an agency in an enforcement proceeding departs from guidance in a way that favors the target
firm, other firms that previously were targeted and settled will say the shift is unfair because it
puts them at a competitive disadvantage. (Note that settlements, administrative and judicial, are
matters of public record, so competing firms can monitor each other’s deals.) EPA’s resources
are limited, so it cannot find all the violations itself—“you need industry to identify the pollution
for you.” Therefore the enforcement office must get firms to come “to the table” if they have
“screwed up,” which “is common.” Firms are more likely to disclose their violations to EPA and
settle—reducing the agency’s search and litigation costs—if they can (a) predict, in advance of
admitting what they have done, the penalties and sanctions they will bear and (b) believe that
coming clean and settling will not put them at a competitive disadvantage with respect to
competitors who did similar things. “If you’re not consistent and fair, [industry] won’t come to
the table.” Kushner recounted that as enforcement director he would tell companies, “you may
not like the civil penalty policy,” and even if you believe the policy is “arbitrary,” “at least it’s
applied the same across all cases”—“equal arbitrariness” for everybody who’s come before you.
Industry, he said, “gets that.”313

312

Interview with Eric Schaeffer, Executive Director, Environmental Integrity Project; former director of civil
enforcement, EPA.
313
Interview with Adam Kushner, Partner, Hogan Lovells, former director of civil enforcement, EPA. To be sure,
Kushner noted some points on which there might be variation between firms, particularly if (a) the agency was
newly addressing a problem and wanted to land one settlement quickly, as an example to the rest of industry, in
which case greater leniency might induce one early settlement, or (b) there is new learning about relevant
technology after some firms have settled on a certain issue but before others have done so on that same issue.
Kushner added that, even when firms asked for treatment specific to their situations, EPA might still insist on certain
control technologies or other arrangements in the interest of evenness with prior settlements. Id.

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One guidance document that Schaeffer and Kushner helped administer—the EPA “audit
policy” originating in 1995 that offered reduced penalties to companies who built internal audit
programs and disclosed violations discovered through them314—appeared to work according to
the principles of enforcement that Schaeffer and Kushner discussed. According to a statistical
study of the period 1993-2003, firms that took advantage of the audit policy needed fewer
inspections (saving government resources) and had better environmental performance even
controlling for other factors, indicating that a company’s internal program, presumably adopted
in reliance on the audit policy, actually caused better performance.315
As to FDA, interviewees expressed similar views about industry’s preference for
consistency and predictability in guidance. Coleen Klasmeier, the head of Sidley Austin’s FDA
regulatory practice and a former FDA Office of Chief Counsel attorney, said that, in her
experience, it was “far more common” for the complaint of industry to be that an FDA reviewer
was not following guidance than that the reviewer was following it too closely. Industry, she
said, just wants “certainty” and a “level playing field.”316 Similarly, a former senior FDA
official observed that, although some guidance had to be flexible because science is changing,
“flexibility” is not a “primary interest” for pharmaceutical companies; instead they “want
certainty”—“tell me what to do, and I’ll do it.” Guidance provides the certainty that investors
want.317 Another food and drug industry attorney said that, while a business might sometimes
seek flexibility in guidance, it would want FDA to be inflexible (and would complain to the
agency accordingly) if the company had followed guidance while its competitor was not doing
so. (He pointed out that, despite the confidentiality of FDA proceedings, companies had ways of
finding out if their competitors were enjoying departures from guidance, e.g., the information
might come out in public review documents or via disclosures in litigation.318) Consistent with
all this, it seems FDA itself does not perceive industry to be clamoring for flexibility. When
asked about inflexibility in guidance, an FDA Office of Policy official said the main issue with
guidance at FDA was not industry complaining about inflexibility, but rather industry being

314

Incentives for Self-Policing: Discovery, Disclosure, Correction, and Prevention of Violations, 65 Fed. Reg.
19,627 (2000).
315
Michael W. Toffel & Jodi L. Short, Coming Clean and Cleaning Up: Does Voluntary Self-Reporting Indicate
Effective Self-Policing?, 54 J. Law & Econ. 609 (2011).
316
Interview with Coleen Klasmeier, head of Sidley Austin’s FDA regulatory practice; former FDA OCC attorney.
317
Interview with Source 110, former senior FDA official.
318
Interview with Source 92, food and drug industry attorney.

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confused and critical about FDA’s use of draft guidance (a subject I discuss in Subsection V.D.2
below).319
We also see an industry preference for consistency in the views expressed by the Senior
Director, Regulatory Affairs, of the Association of Home Appliance Manufacturers regarding the
Department of Energy’s regulations on energy efficiency for appliances. This official explained
that, although the Department’s guidance does not necessarily have the force of law, in practice,
industry treats it as if it does and the Department consistently relies on its guidance. She was
supportive of this approach. When discussing departures from guidance, she emphasized those
that the agency makes on a public, wholesale basis for all firms (saying she had no observations
of ad hoc company-specific flexibility), and she said all guidance ought to be general and public.
If guidance is not public and general, then firms are not operating on a level playing field, and
that can be a disadvantage to all firms in the long run. Overall, she said, for the regulatory
program to be successful, stakeholders had to be able to rely upon the public guidance; otherwise
the guidance process would become “useless” and “meaningless.”320 (One might interpret this
interviewee’s view as being distinctly that of a trade association, aiming to represent the
common interests of all industry firms, rather than the view of an actual individual firm; but even
if that is the case, the fact that agencies so frequently deal with industry via trade associations
means that agencies will quite often hear the strong preference those associations express for a
level playing field.)
That firms may not seek (and may even oppose) departures from guidance makes sense
when we consider that quite often, a firm cares more about getting some answer about how to
proceed investment-wise than about the particular answer it gets. A former CMS division
director said that, in his experience, healthcare providers were more interested in knowing what

319

Interview with Source 25, FDA Office of Policy official. Another example is the USDA National Organic
Program, the very purpose of which is to preserve the integrity of the USDA organic label by maintaining a
consistent standard for organic production. Organic producers can choose whether to be certified by one USDAregulated certifier or another. As an official at one certifier put it, it was not good for the program if the producers
were “forum shopping” for more lenient certifiers, and NOP guidance could help prevent that by reducing variation
among the certifiers, thereby creating an “even playing field” among them. Interview with Source 114, official at an
organic certifier. Yet, noted the former chair of the National Organic Standards Board, there could be legitimate
reasons for the agency to be flexible on guidance, such as variations in agriculture across geographic regions, and
NOP did manage to provide thoughtful flexibility on such matters. But to do that, it had to “overcome” its “real
fear” of “accusations of favoritism.” Due to competition among certifiers, if one seemed to have more dispensations
from NOP than another, producers might gravitate to that certifier. Certifiers themselves could “get angry” over
“inconsistency.” Interview with Jean Richardson, former Chair, National Organic Standards Board, USDA.
320
Interview with Source 105, Senior Director, Regulatory Affairs, Association of Home Appliance Manufacturers.

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the rule is than in trying to get a more advantageous rule; their main fear is finding out they will
not be reimbursed for an investment they have already made.321 Similarly, James Conrad, a
regulatory consultant and formerly an attorney at the American Chemistry Council, said that, for
industry, what is most important is “certainty”—“you just want an answer.” A firm wants to
avoid investing in something and then having to switch later on.322 Insofar as firms make
investment decisions in reliance upon guidance, those investments can turn them into partisans
for future adherence to the guidance.
Inconsistency or unpredictability in agency use of guidance can be a problem especially
for industry compliance officers and industry counsel, for it may diminish their credibility with
their own companies or clients, weakening industry compliance overall. A senior environmental
counsel at a Fortune 100 company cited instances where EPA has issued guidance announcing
that some matter is a “low priority” for enforcement. Although one would think industry people
would be happy with that guidance, said the interviewee, “I’m not,” because with such guidance,
“I can’t tell [my company] that rules are rules.” Other companies will react to such guidance by
saying, “okay, it’s a low priority [for the agency], so we won’t do it [i.e., won’t comply].” If a
compliance person does not take this attitude, then he or she is put in the position of creating a
competitive disadvantage for his or her own firm. Such indefiniteness is therefore bad for
compliance, said the interviewee. Recalling discussions of this question at meetings of Fortune
500 industry compliance personnel, the interviewee estimated that companies were split about
evenly in their view on whether these indefinite announcements about “low priorities” in
enforcement were even desirable.323
Similarly, in the banking sector, an official at a nonprofit public policy research
organization, who was previously a consultant and product manager in consumer finance,
observed that business line people in banks were not “anti-regulation” or “pro-regulation” but
rather “pro-clarity” and “pro-consistency”: they say, “Tell what I can do and can’t do, and I’ll
devise a business model within that.” It drives the business line people “crazy” when a bank
compliance officer or in-house lawyer answers their questions by saying, with guidance in hand,

321

Interview with Source 93, former CMS division director.
Interview with James Conrad, Conrad Law and Policy Counsel; formerly Assistant General Counsel at the
American Chemistry Council.
323
Interview with Source 119, senior environmental counsel at a Fortune 100 company.
322

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“it depends.”324 Klasmeier, the head of Sidley’s FDA regulatory practice, warned that the use of
guidance on legal requirements (as distinct from scientific matters) breeds “nihilism” and
“cynicism” within industry regarding compliance. It was hard for a lawyer to get a commercial
organization to comply without “something specific to point to,” like a 65 mile per hour speed
limit, as compared to the “unclarity” that she believed characterized too great a portion of FDA
guidance.325
When it comes to guidance, industry complains about inconsistency not only from one
company to another, but also across different geographic areas and across different agencies that
regulate the same subject matter. The animating factor here, one assumes, is that there are
economies of scale when it comes to compliance, which firms cannot exploit if they are denied
uniformity. An official at the FDA Office of Regulatory Affairs, which supervises the agency’s
field inspectors, said the office hears complaints about variability across parts of the country, say
from a single company that operates in multiple locations. These complaints can prompt FDA to
do an internal review of its guidance.326 Officials at Airlines for America, the principal airline
trade association, said there was a general concern about consistency among FAA inspectors. 327
In banking, where a single firm may be regulated simultaneously by several different agencies,
the companies want “uniform answers” and “consistency.” Agencies like OCC, the Federal
Reserve, and FDIC respond to this demand by producing a large amount of their guidance in
consultation with each other, often through an inter-agency working group to formulate a
document. CFPB has joined these efforts when consumer protection issues are involved.328
2. Demands for Consistency by NGOs, the Media, and Congress
The criticism and antagonism that an agency may suffer for making ad hoc departures
from guidance arise not only from industry but also from NGOs, the media, and Congress. That
is because an individualized departure from guidance can potentially be viewed as some kind of
special favor, carrying an implication of impropriety. This perception may be entirely
unwarranted on the particular facts, but it draws force from a legitimate general concern about ad

324

Interview with Source 131, official at nonprofit public policy research organization, formerly consultant and
product manager in consumer finance industry.
325
Interview with Coleen Klasmeier, head of Sidley Austin’s FDA regulatory practice; former FDA OCC attorney.
326
Interview with Source 28, official at Office of Regulatory Affairs, FDA.
327
Interview with Sources 64, 65, 66, officials at Airlines for America.
328
Interview with Source 90, person who held senior posts at CFPB and other federal agencies.

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hoc departures from ordinary policy and unequal treatment of regulated parties. In any event, the
criticism will happen. The media can be expected to play up allegations of favoritism and
impropriety because of their newsworthiness. NGOs and members of Congress may have
various motives for criticizing: they may think the guidance appropriately stringent in substance
and see departures as lamentable efforts to undermine it, or they may view the agency (or the
larger presidential administration) as an adversary who deserves to be sharply questioned. But
whatever the actual motives, it is the appearance (at least) of inconsistency and special treatment
that gives the criticism its resonance. To be sure, agencies vary in how much attention is paid to
their activities by non-industry groups, by the media, and by congressional overseers. But the
more such attention they get, the more they have another reason to protect themselves from
potential criticism by adhering to guidance.329
This dynamic seems strong at EPA—unsurprisingly, as that agency faces an especially
diverse assembly of interest groups and is highly visible to the media and Congress. A partner in
a large law firm and former senior EPA official said that, in his experience, EPA was quite often
inflexible on guidance, to his frustration, and he gave three reasons for this inflexibility: (a) the
agency desired to be fair, and to be perceived as fair; (b) agency officials were driven by fear or
concern about being criticized by congressional overseers, inspectors general, etc., and uniform
adherence to guidance provided a shield against accusations of favoritism; and (c) a departure
from guidance would usually require some kind of sign-off from a political appointee, which
meant that responsibility would have to be taken by officials with relatively high visibility to
Congress, the media, etc. For a single company to ask for a one-off departure from a guidance
document was “essentially an exception request,” and officials would be concerned about
accusations of “favoritism” or a “special deal,” with the main audience being Congress—any
deviation from existing policy is fodder for oversight—and also the media. Even if the
proceeding in which the departure occurred were not public, word of it would sometimes be let
slip by EPA staff (especially if they distrusted the political appointee making the decision), or,

As Kagan wrote in his study of the Nixon wage-price-freeze, a “regulatory program” is “more likely to maintain
a relatively stringent stance” when, among other things, it “experiences high public visibility” and “is confronted
with a more balanced pressure group structure,” i.e., when it faces more (and more diverse) pressure groups than just
an industry trade association. Kagan, supra note 29, at 68. See also id. at 13, 77. Anthony noted briefly that agency
staff might adhere rigidly to guidance because doing so made them “relatively invulnerable to criticism” and to
“disapproval for departing from established positions,” but he did not elaborate on these points, e.g., did not say who
the sources of the criticism or disapproval might be. Anthony, supra note 7, at 1364.
329

99

“stupidly,” by the company benefiting from the departure. And even if the official
decisionmaker was a career official, that person would check with the political appointee above
him/her regarding the departure, as a matter of self-protection. The interviewee made clear that
all these incentives for inflexibility could operate quite independently of what any official
thought about the guidance’s substance and the merits of the departure request. Officials might
even tell the requesting party, “You’re right, but there’s nothing I can do for you.”330 A senior
environmental counsel at a Fortune 100 company expressed a similar view. Seeking a favorable
departure from guidance from EPA, he said, was hardly “worth the time and effort.” The
agency’s inflexibility arose from an “unhealthy symbiotic relationship” between the agency,
NGOs, and Congress, which instilled in EPA officials a “fear” of being considered wrong and
getting “pilloried.” The mentality was to fear and avoid second-guessing by Congress, NGOs, or
local community groups—to avoid being asked, why did you allow a departure “here and not
there?”331 Consistent with this, several interviewees cited NGOs’ tendency to challenge one-off
departures from EPA guidance, whether in intra-agency proceedings,332 EPA-supervised state
agency proceedings,333 or litigation.334
For an NGO perspective on this dynamic, consider the views of Andrew DeLaski,
executive director of the Appliance Standards Awareness Project, the principal NGO dealing
with federal regulation of the energy efficiency of appliances, administered by the Department of
Energy. On whether he expects the Department to adhere to its guidance, he said, “yes, I
presume these are the rules,” even if they do not technically have the “force of law.” Any
variance from the guidance in an individual case, he believed, would amount to a “modification”
of the guidance. If such modification were made without transparency, “that would bother me.”
It would create an appearance of “special treatment,” an “unlevel playing field,” and a “fairness
problem,” which could undermine the “standing and integrity of the program” in the eyes of the
public and of policymakers. “I don’t want the program to get a black eye.” DeLaski was acutely
330

Interview with Source 52, partner in large law firm and former senior EPA official.
Interview with Source 119, senior environmental counsel at a Fortune 100 company. See also Interview with
David Hawkins, director, climate program, Natural Resources Defense Council; former Assistant Administrator, Air
Program Office, EPA (stating that one of the three causes of EPA’s tendency to adhere to guidance was
congressional scrutiny, along with fear of litigation challenges and agency political leadership’s commitment to the
guidance’s substance). Like interviewees in this study generally, Hawkins was speaking for himself and not on
behalf of any organization.
332
Interview with Source 103, former senior official at EPA Air Program Office.
333
Interview with Source 128, employee at environmental NGO.
334
Interview with Source 54, former EPA official.
331

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aware that one-off departures could raise the ire of competitors of the benefiting firm, and he saw
this as raising bigger dangers. He drew an analogy to an incident (not directly involving a
guidance document, at least at first) in which refrigerator manufacturers discovered that one of
their competitors was opportunistically administering a required energy-efficiency test less
stringently than they were, upon which they “cried bloody murder.” The Department redressed
this unfairness by issuing guidance to ensure uniform administration of the procedure. Had the
Department failed to ensure uniformity in this way, said DeLaski, the disadvantaged
manufacturers might have sought redress at the political level, and the unfairness could have
been used as a rationale for deregulation. While DeLaski recognized that guidance sometimes
had to be changed in contexts where legislative rulemaking was impractical, he wanted all
changes to be public, transparent, and generally applicable, with reasons stated, thus allowing
watchdog groups like his own to play a role, and also protecting competitors and the program’s
integrity.335
3. Fear That Inconsistency Will Open the Floodgates
If an agency accedes to one firm’s request for a departure from guidance, many firms
may object that this amounts to ad hocery and unfairness, as discussed in Subsection 1 above.
But some firms (perhaps some of the same ones!) may view the grant as an opening to seek
similar special dispensations for their own benefit. It is easy to laugh about the industry
opportunism evident here. A food and drug attorney, asked whether he wanted FDA to be more
flexible on guidance, wryly replied, “Depends on my client and what they want.”336 But again, a
demand for the same favorable treatment that your competitor received springs from a legitimate
concern about fairness. That legitimate concern makes it hard for agencies to ignore such
follow-on requests. Yet addressing them is both costly and dangerous to the agency—costly
because the entreaties take up officials’ scarce time and multiply the possibilities for accusations
of the kind described in Subsections 1 and 2 above, and dangerous because, if the agency fails to

335

Interview with Andrew DeLaski, executive director, Appliance Standards Awareness Project.
Interview with Source 92, food and drug industry attorney. A senior environmental counsel at a Fortune 100
company amusedly observed that industry talks about how the agency should be flexible, then “in the same breath”
demands consistency: companies want “flexibility when it helps them” and “consistency when it helps them.”
Interview with Source 119, senior environmental counsel at a Fortune 100 company. The president of an organic
certifier regulated by the USDA National Organic Program said he was ambivalent about maintaining the generality
and clarity of guidance, on the one hand, and having opportunities for individual tailoring, on the other. Interview
with Jake Lewin, President, CCOF Certification Services.
336

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draw the line and acquiesces in the rising tide of exception requests, it risks ending up with
guidance that no longer has any meaning or usefulness. It is no surprise that some agencies act
inflexibly from the outset, to avoid opening the floodgates to more entreaties.337
This issue loomed large in interviews on HHS. According to a former CMS division
director, the making of an exception for one healthcare provider will prompt follow-up requests
from others, for “there are no secrets”: word that the agency made an exception will get out
somehow. Because exceptions produce follow-on requests, initial requests are resisted by CMS
career officials. They often fall on “deaf ears.” The officials believe that “saying ‘no’ to
everybody is fair,” and they find guidance easier to administer if they are consistent—they will
not have to spend time going to meetings to hear “hard luck stories.” In contrast to the career
people, CMS political appointees are less worried about administrative problems that will arise
from inviting other providers to ask for exceptions, so they are somewhat more likely to grant
exceptions, although the fact that political appointees rely upon briefing from the career staff
means even they usually go along with the staff’s wish to follow guidance.338 Similarly, a
former HHS Office of General Counsel official said that one reason for the difficulty of getting
departures from guidance at CMS was that, although a healthcare provider’s attorney would
strive to define the client’s departure request as being unique, there really were no unique
situations; there would always be some other provider who would want the same dispensation.
Hence officials faced with such requests felt concern about having to make a call that could
potentially pertain to a large number of providers, which raised a fear of having to generalize.339
A former senior HHS official said that, when officials at the Department are asked to make a
departure from guidance, they want to be fair, and they ask themselves, “do we really want to
give an answer to this one firm, without putting all firms on notice?” They could address this
concern by undertaking a general clarification of the guidance. But that takes resources, which
may be too much to spend if they are not getting this same question repeatedly. The result may
be that the agency does nothing in response to the request.340
We see similar reactions at other agencies. Frank White, the former deputy head of
OSHA and former president of a major HSE consultancy, characterized OSHA as generally

337

See also supra note 309.
Interview with Source 93, former CMS division director.
339
Interview with Source 67, former HHS Office of General Counsel official.
340
Interview with Source 77, former senior HHS official.
338

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skeptical of requests for departures from guidance, in part because, if the agency grants one,
other employers will ask, “why can’t we do that, too?” The dispensation may end up governing
the whole industry.341 At FDA, observed the chief regulatory officer of a Fortune 500 medical
device maker, reviewers and their bosses are “thoughtful” but “cautious” about making
exceptions to guidance, as they are mindful of precedent and want to avoid a “slippery slope.”342
At EPA, a former senior official in the Air Program Office, when discussing flexibility in
guidance, recalled being in charge of several innovation task forces in which he tried to help
regulated firms obtain agency assurance that alternative means they proposed for compliance
with regulations (using new technology) would be acceptable to the agency. EPA’s Office of
General Counsel was concerned that, if the agency allowed one firm to use an alternative
approach, it would become harder to say “no” to other firms seeking other departures. OGC, he
said, tried to “rein me in.”343

B. Principled Flexibility: A Good Solution, in Principle
In principle, the problems described in the preceding Section can be largely overcome if
the agency engages in principled flexibility. By this, I mean that agency officials make
departures from guidance, but for each departure, they give a written explanation that is
accessible to other agency officials and to regulated parties, with the understanding that the
exception thereby becomes generally applicable to like facts going forward. The departure
explanations form a body of rationally evolving precedent that informs future decisions about
departure requests.344 (Obviously this description is an ideal type: an agency could approach this
ideal to varying degrees depending on the proportion of departures that get explanations, the
depth and quality of those explanations, the care with which they are consulted in the future, etc.)
If principled flexibility can actually be implemented (and there are major challenges to
doing so, discussed in Sections C and D below), it serves as a good response to the legitimate
pressures for consistency that an agency faces. As to the fear that departures will reduce agency
predictability and make regulated parties less cooperative, the obligation to give public reasons

341

Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL.
Interview with Richard Naples, Chief Regulatory Officer, Becton, Dickinson and Company.
343
Interview with Source 103, former senior EPA Air Program Office official.
344
My formulation of principled flexibility is inspired by the works of Robert Kagan and Peter Strauss, as noted in
supra note 29.
342

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will restrain officials from making many departures, thus preserving a good deal of stability; and
while some departures would still be made, the growing body of precedents would reduce
uncertainty about what they would be. As to the concern that departures would unlevel the
playing field among competitors, the incentive that reason-giving creates for moderate stability
would, again, be helpful. And the general applicability of all exceptions to like facts on a
prospective basis would reduce unfairness. As for accusations of favoritism and impropriety, the
publication of explanations renders back-room deals less plausible, and the general applicability
of the exception makes favoritism less feasible. Further, as DeLaski noted, public reasons and
generality help preserve a regulatory program’s “standing and integrity” and make it easier for a
wider range of stakeholders to weigh in, reducing their suspicion and alienation.345 Finally, as to
the risk of inviting follow-on requests, the public explanations provide a means for the agency to
cabin the exception, e.g., by emphasizing unusual aspects of the requesting party’s situation. As
a former EPA program office director said, you “explain an exception” in order to avoid
“opening the floodgates.”346 A former EPA official likewise said the agency would gather
specific information on a requesting party’s situation to “avoid opening the floodgates” to others
asking for the same treatment.347
The factors that counsel an agency to engage in principled flexibility are not just the
political and organizational pressures documented in Section A, but also, to at least some degree,
legal pressures. If the guidance pertains to agency adjudicatory proceedings, then, if any
adjudicatory orders have actually been issued in accordance with the guidance, a subsequent
departure from the guidance would require a reasoned explanation, because any departure from
adjudicatory precedent is subject to the APA’s prohibition against decisionmaking that is
“arbitrary” or “capricious.”348 David Hawkins, former head of EPA’s Air Program office, said
the agency’s latitude diminished as more adjudicatory decisions were made under a guidance
document, and if there were then a departure from the guidance (and from the prior
adjudications), stakeholders would say, “we’ll sue you if you have no justification for this.”

345

See supra text at note 335.
Interview with Source 98, former EPA program office director.
347
Interview with Source 54, former EPA official.
348
5 U.S.C. § 706(2)(A). On the agency’s obligation to explain departures from its own adjudicatory precedents,
see Atchison, Topeka, and Santa Fe Railway Company v. Wichita Board of Trade, 412 U.S. 800, 806-09 (1973)
(Marshall, J., plurality opinion).
346

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Such litigation risk, said Hawkins, was one of the main reasons EPA adhered to guidance.349
This raises the question of whether the agency would face the risk of a lawsuit if it departed from
a guidance document prior to there being any adjudicatory orders under it.350 Leading
commentators have argued that a guidance document should have the same status as an
adjudicatory order for purposes of the agency’s obligation to explain subsequent departures, but
they do not cite direct authority for this actually being the law.351 D.C. Circuit case law on the
question is not entirely clear.352
But even if the doctrine does require a reasoned explanation for departing from a
guidance document, we should not exaggerate the effect of legal pressures in getting agencies to
adopt principled flexibility. The prohibition against unexplained departures from guidance
(which exists at least when there have been prior adjudications tracking the guidance) is likely to
be under-enforced. Departures from guidance requested by regulated parties will favor those
parties, and if the agency grants one without explanation, the plaintiff would have to be a
disadvantaged competitor or a regulatory beneficiary, who will not always come forward. And
even if a departure from guidance disfavors the regulated party that is the subject of the
349

Interview with David Hawkins, director, climate program, Natural Resources Defense Council; former Assistant
Administrator, Air Program Office, EPA. Like interviewees in this study generally, Hawkins was speaking for
himself and not on behalf of any organization. See also Interview with Source 93, former CMS division director
(noting litigation risk of an arbitrary-or-capricious challenge if agency made exception to guidance).
350
The absence of any adjudications is hardly unheard of: in some of the contexts described in Part II where the
incentives to follow guidance are strong, it may be that all regulated firms follow the guidance and thus never force
an adjudication.
351
For arguments that guidance should have this status, see Strauss, supra note 11, at 1472-73, 1485-86; Manning,
supra note 29, at 933-37. For an argument coming nearer to the idea that guidance does have this status, see
Thomas W. Merrill, The Accardi Principle, 74 Geo. Wash. L. Rev. 569, 598 (2006).
352
In one case, the D.C. Circuit said that, while a “pattern” of adjudications under a certain guidance document
“might give rise to an obligation to explain a sudden reversal,” the document at issue was, in itself, “too vague to
impose a duty of explanation standing alone,” Vietnam Veterans of America v. Secretary of the Navy, 843 F.2d 528,
539 (D.C. Cir. 1988), which seems to leave open the question of whether a less-vague guidance document could by
itself impose such an obligation. In another case, the D.C. Circuit seemed to proceed on the premise (which it did
not question) that a guidance document could impose an obligation to explain a departure, though it concluded on
the merits that the agency’s adjudicatory decision was not in fact a departure. Community for Creative NonViolence v. Lujan, 908 F.2d 992, 995-96 (D.C. Cir. 1990). In a later case, the D.C. Circuit said that two “policy
statements” by FERC had “no precedential effect” and “no precedential value,” though it also said (apparently
without making any distinction) that the statements were not “binding precedent” and had “no binding effect.”
Panhandle Eastern Pipe Line Company v. FERC, 198 F.3d 266, 269-70 (D.C. Cir. 1999). The court was unclear as
to whether, by “precedential,” it meant: (a) absolutely prohibiting departures in future cases or (b) imposing an
obligation to explain departures in future cases. Also, the “policy statements” at issue were of a peculiar variety:
they were adjudicatory orders that were yet to become final when they were mooted by a settlement. Later still, the
D.C. Circuit suggested that agencies within adjudicatory proceedings have some explanatory obligation with respect
to guidance when it held that “[i]f . . . the agency changes its policy statement before the [adjudication] is complete,
it must explain why the pending [adjudication] should be decided on the basis of the old versus the new policy.”
Consolidated Edison Company of New York v. FERC, 315 F.3d 316, 323 (D.C. Cir. 2003).

105

adjudication, that party may have various incentives to refrain from suing, which may track the
incentives not to rock the boat described in Part II.353 Further, a great deal of guidance pertains
not to adjudicatory decisions but to enforcement decisions—a species of agency action that is
presumptively committed to the agency’s discretion and not subject to judicial review at all.354
Therefore, insofar as agencies adopt principled flexibility, it will, to a great degree, be
organizational and political factors that drive them to it, not just legal ones. But even if the threat
of an actual lawsuit is not looming, the inclination of some agencies (or at least their lawyers) to
adopt principled flexibility is probably shaped by the general importance of reason-giving in the
legal culture of the federal administrative state. An attorney at the EPA Office of General
Counsel said that, although guidance is not binding on the agency, deviating requires a
“rationale.”355 A former agency general counsel declared that, in general, “if you make an
exception,” you “need a principled reason” for why the present case is different. “You can’t
depart without justification of the deviation,” and the justification you give ought to alter the
guidance “for everybody.”356
Consistent with these kinds of views, several agencies prefer to frame flexibility on
guidance as reinterpretation of the guidance document, rather than as an outright departure from
it.357 Interpretation by its nature cabins the exception-making process and forces it into a
reasoning idiom, e.g., by encouraging the official to look to the guidance’s purpose. According
to a former CMS division director, if you can, you should couch your request for an exception as
an interpretation of the guidance, because if you argue that the guidance is “flat out wrong” and
“bad policy,” your “odds” of winning an exception “go way down.”358 A former HHS Office of
General Counsel official went farther, observing that no CMS employee would simply say, “you
need not follow the guidance because it’s not binding”; instead officials would proceed either by
giving an interpretation of the guidance or by actually amending it.359 Richard Stoll, of Foley
and Lardner, said that at EPA a regulated party’s “best” strategy was to “distinguish” a guidance

353

See also the concerns about retaliation discussed in Subsection III.D.1 infra.
Heckler v. Chaney, 470 U.S. 821 (1985).
355
Interview with Source 61, EPA Office of General Counsel official.
356
Interview with Source 69, former agency general counsel.
357
Cf. Kagan, supra note 29, at 102 (noting that flexibility in the Nixon wage-prize freeze was conceived of as
interpretation).
358
Interview with Source 93, former CMS division director.
359
Interview with Source 67, former HHS Office of General Counsel official.
354

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document rather than actually challenge it.360 A former senior FDA official warned that you
were not living in the “real world” if you said to FDA, “this guidance is wrong, we’ll do it
differently, do you agree?” Instead you should seek flexibility through interpretation.361
Jonathan Snare, the former deputy solicitor of DOL, said that while OSHA sometimes will
accept proposals for outright departures from guidance, flexibility is usually couched as an
interpretation or application of the guidance in light of some unanticipated circumstance.362

C. Organizational and Resource-Based Obstacles to Principled Flexibility
Despite its promise as a means to reconcile the agency’s legal obligation to be flexible
with legitimate pressures on the agency to be consistent, principled flexibility is an expensive,
logistically challenging process to carry out and manage. Here we consider those expenses and
challenges—and how the inability to address them may cause the agency to fall back on
inflexibility. I should emphasize, the problems described in this Section—which involve
agencies sometimes being inflexible because they lack the resources and internal structures to
engage in much deliberation on proposed departures from guidance—underscore that these
agencies take the view that any flexibility must be principled. That view is laudable. The
trouble is that the deliberation and explanation required by principled flexibility can be hard to
undertake, so agencies may default to inflexibility.
1. Resources and Time Needed to Evaluate Departures
Coming to a defensible decision on whether a specific course of conduct fulfills the
requirements of a more general legislative rule or statute can be costly in time and money. It
may involve—to give a few examples—scientific or mechanical engineering research, predictive
judgments about employee behavior and the rate of workplace accidents, assessments of how
much a certain combination of training and incentives raises the likelihood of financial
institution employees engaging in fraud, etc. Such determinations are exactly what an agency
needs to make in deciding what should be the content of guidance in the first place—and also in
deciding whether a proposed departure from guidance is acceptable.

360

Interview with Richard Stoll, Partner, Foley and Lardner.
Interview with Source 110, former senior FDA official.
362
Interview with Jonathan Snare, Partner, Morgan Lewis; former Deputy Solicitor (for OSHA), DOL.
361

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Often these costs are borne to a large degree by the regulated party who seeks the
departure. In other words, the agency will entertain a request for departure so long as the
regulated party makes its case. The very cost of making the case has the effect of inducing many
regulated parties to follow the guidance by default. For example, an advisory circular issued by
the FAA purports to set forth one way of complying with a legislative rule, said an official at the
airlines’ trade association, but the circular “instantly” becomes the “most attractive” means of
compliance because, in order to do something different, the regulated entity would have to make
a showing that its alternative path is compliant, effectively “redoing” all the research and testing
FAA had done but for a different course of action. Thus, while a circular is officially just “a”
means of compliance, it often becomes “the” means of compliance.363 As FAA officials said,
following guidance is “the easy way.”364 Similarly, a former EPA program office director said
you do what the agency suggests “if it seems halfway reasonable,” since merely coming up with
an alternative is costly.365
Interviewees differed on whether this practical incentive for regulated parties not to seek
departures amounted, in itself, to an unacceptable kind of inflexibility. A trade association
official said that following guidance was a “fast track” to obtaining the agency’s approval, which
he considered a “legal grey zone” in terms of whether regulated entities were effectively
coerced.366 Former senior DOT official Neil Eisner, however, noted that agencies inevitably
lacked the resources to identify all acceptable means of compliance, but that was no reason they
should not help regulated parties by identifying some acceptable means, even if this inevitably
created some practical incentive to follow the course the agency identified.367 That said, it is
surely an important exercise of power when the agency opts to enshrine one means of
compliance in a guidance document rather than another means, since the various means on the
menu may have different costs and benefits for different stakeholders. As a former senior EPA

363

Interview with Source 66, official at Airlines for America.
Interview with Sources 8, 9, and 10, FAA officials. See also Interview with Kathryn Thomson, Partner, Morrison
and Foerster; former general counsel, DOT; former chief counsel, FAA (stating that FAA makes departures from
guidance but they can be really time-consuming).
365
Interview with Source 71, former EPA program office director. See also Interview with Source 79, former senior
EPA official (noting that the cost of showing an alternative to be compliant creates an incentive to follow guidance).
366
Interview with Source 2, trade association official.
367
Interview with Neil Eisner, consultant; former Assistant General Counsel for Regulation and Enforcement, DOT.
See also Strauss, supra note 11, at 1481 (arguing it is more appropriate to frame guidance as saving money for
regulated parties who follow it than as imposing a cost on those who seek alternatives, given that the agency is under
no obligation to provide any guidance in the first place).
364

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official noted, the alternatives from which the agency chooses in formulating guidance may
consist of (say) pollution-control technologies that are sold by different companies: for the
company whose method is selected, the guidance serves as a kind of “advertisement.”368
But even if we accept that a regulated party should bear the burden of making the case for
departure, a good deal of expense will still fall on the agency itself. This is because agencies
cannot and do not take at face value a regulated party’s case for departure. According to a
former EPA program office director, there will be some distrust between the agency and a
regulated party seeking to diverge from guidance. The party is asking for a “break,” and officials
will fear they are not getting the whole story of what the consequences would be. The officials
will feel they have to do some investigation of their own.369 Similarly, Frank White, the former
deputy head of OSHA and HSE consultancy president, noted that when a company asks OSHA
for an assurance that some departure from guidance is acceptable, the officials are concerned
about the risk that, in the narrow setting of a meeting with company representatives, they cannot
be sure if the relevant factual questions about safety have been answered correctly. They fear
missing something and being blamed if an accident occurs.370 Hence officials feel they must
either do more investigation independently, or simply reject the request.371
The costs to the agency of investigating and weighing requests for departures can be
significant, and they compete with other resource demands on the agency. Reopening an issue,
observed a trade association official, involves a serious commitment of time and personnel in the
face of other priorities, so there is institutional reluctance to go back over existing guidance.372
An EPA Office of Water official said it was a “work prioritization issue” whether his outfit could
respond to stakeholders asking for revisions to guidance.373 Lynn Bergeson, the managing
partner of Bergeson & Campbell, which has a specialization in chemical regulation, said

368

Interview with Source 79, former senior EPA official.
Interview with Source 71, former EPA program office director.
370
Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL.
371
Besides this, there is another argument against agency passivity regarding departures from guidance: the more
officials passively rely on industry initiative in deciding what departures to make, they more they may give an
advantage to the subset of firms with the capacity to identify and argue for alternative courses of conduct. Kagan,
supra note 29, at 16 (noting that more sophisticated firms are more in a position to take advantage of regulatory
flexibility). That said, principled flexibility can mitigate this problem by ensuring that, once a departure from
guidance is approved, it is disseminated to all regulated parties, consistent with protection of confidential business
information. E.g., FAA has a process for doing this. Interview with Sources 8, 9, 10, FAA officials.
372
Interview with Source 2, trade association official.
373
Interview with Source 42, EPA Office of Water official.
369

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resources were a “huge issue” in determining whether officials in EPA’s FIFRA and TSCA
offices would be flexible on guidance.374 Indeed, deciding departures from guidance can take up
so many resources that some regulated parties may strategically exploit this fact to interfere with
the agency’s operations. David Hawkins, the former head of EPA’s Air Program office, recalled
that during his tenure, one of the automakers filed several requests for clarification per month, to
keep the office staff busy with the company’s agenda and keep them “off task.”375
The ratio of agency resources to the volume of work is key in determining how much the
agency can really deliberate on individualized requests for departures. Resources determine how
much time the agency can spend on a request, and, as Robert Kagan writes, “the crush of time
forces the decision maker into a stereotyped search for solutions to the problem” and into
“selective perception of the situation,” not appreciating all the subtleties and equities.376 If
decisions to which the guidance pertains are high in volume, said a former EPA program office
director, “you just cannot treat every case as unique,” for then it would be “impossible to do the
work.”377 At FDA, a former senior official in the Office of Chief Counsel said the ratio of
agency employees and resources to the volume of applications was a factor in making the Office
of New Drugs (OND) relatively more flexible on guidance than the Office of Generic Drugs
(OGD). OGD had to approve an order of magnitude more applications than OND each year.
Although a given drugmaker would often deal repeatedly with the same few officials at OGD in
application after application (thus creating a relationship), there was comparatively little time for
interaction and deliberation on any single application. By contrast, at OND, there could be far
more time spent in back-and-forth on a particular application. Time for interaction on a
particular application was key to getting more flexibility on that application. The interviewee
added that the difference in levels of flexibility between OND and OGD was also caused by a
difference in the nature of the two offices’ work: OND dealt with brand new clinical data,
whereas OGD’s decisionmaking is more “mechanical” by nature. Despite this, he said, OGD’s
work still involved matters of judgment that would benefit from greater flexibility if only OGD

374

Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell.
Interview with David Hawkins, director, climate program, Natural Resources Defense Council; former Assistant
Administrator, Air Program Office, EPA. Like interviewees in this study generally, Hawkins was speaking for
himself and not on behalf of any organization.
376
Kagan, supra note 29, at 132. On the tradeoff between speed and fact-finding procedure, see id. at 107, 129.
377
Interview with Source 71, former EPA program office director.
375

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were resourced and managed to provide it. He believed OGD had gone too far in the direction of
a “checklist” approach.378
The inflexibility that tends to come with high volume and a consequent “checklist”
approach helps explain why the Obama administration was forced to undertake a very official
and public effort to alter the guidance on the Clean Water Act’s coverage (an effort that attracted
intense political resistance and eventually forced the administration to rely exclusively on
legislative rulemaking to try to make the changes it sought). Whether a piece of property is
covered by the Clean Water Act is decided by the Army Corps of Engineers through a
jurisdictional determination (JD). The Corps must issue JDs on the order of 50,000 per year.379
To implement guidance on such a high volume of determinations, explained an official at an
environmental NGO, it is necessary to reduce the guidance to a checklist, to render it usable by
the Corps’ large number of field personnel. The Corps did this for the guidance that was handed
down during the Bush administration; it was manifested in a form that was filled out by Corps
staff and available to the property owner applying for the JD. When the Obama administration
came to power, it wanted to change the Corps’ approach to JDs.380 In a different context, the
administration might have been able to do so through informal flexibility without officially
altering the guidance document; as we shall see, in some contexts, agency leadership’s issuance
of a mere draft guidance document can alter the behavior of front-line officials and regulated
parties, who get the signal that the draft reflects the current leadership’s real wishes.381 But when
the Obama administration issued its draft guidance on the Clean Water Act, the behavior of
frontline Corps personnel did not change, according to the environmental NGO official. The
checklist form, still reflecting the Bush-era guidance, made their behavior sticky. Had deviations
occurred, the checklist format would have made them plain, and any of the numerous property

378

Interview with Source 83, former senior FDA Office of Chief Counsel official. It should be noted that another
interviewee said that OGD tended to be flexible (without drawing a direct comparison to OND), but he added that he
was not speaking from “very deep knowledge” about OGD, as most of his company’s dealings were with OND.
Interview with Source 108, executive at a drug manufacturer. Another interviewee said his impression was that
OGD was more flexible than OND, but he added that his impression might be “colored” by the fact that he dealt
mostly with OGD and not OND. Interview with Source 92, food and drug industry attorney. On the importance of
face-to-face interaction between officials and regulated parties in diminishing legalistic stringency, see Kagan, supra
note 29, at 138, 151-52.
379
Calculation based on Clean Water Rule: Definition of “Waters of the United States,” 80 Fed. Reg. 37054, 37065
(2015).
380
Interview with Source 97, attorney at environmental NGO.
381
See infra Subsection V.D.2.

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owners with stakes in the matter might have blown the whistle.382 Thus, once again, volume
tends to keep agency personnel in compliance with officially-existing guidance.
Another key factor limiting agencies’ practical capacity to evaluate potential departures
from guidance is that high-level officials usually have to be involved in the process. OMB’s
Good Guidance Practices say that “[a]gency employees should not depart from significant
guidance documents without appropriate justification and supervisory approval.”383 FDA
definitely requires this,384 and officials confirm the requirement is followed, on the
understanding it means the employee must go up one level, to his/her boss.385 As to EPA, a
partner in a large law firm and former senior EPA official said that an exception to guidance
would need signoff from a senior person, usually a political appointee, or a career official who
would check with the relevant political appointee for self-protection.386 A former EPA official
said that frontline staff would not do a “stretch” argument on their own and would check with
their superiors.387 And of course, if a regulated firm seeks a departure from frontline personnel
and gets nowhere, its only hope is to elevate the matter to higher-level officials and entreat them
to override the frontline staff.
High-level officials, when asked to sign off on a departure and especially when asked to
overturn a lower-level decision denying a departure, typically do not have the time to deliberate
very deeply on the request. Appealing upward through FDA’s internal hierarchy, warned the
former senior Office of Chief Counsel official, was difficult because higher-level officials had
“even less time” than the low-level ones who just denied your request.388 When you seek a
departure from guidance from frontline officials, said a regulatory policy executive at a drug
manufacturer, you will usually get no response (because even the frontline people don’t have
enough time), and then if you appeal up the chain, you are dealing with people who are “very
busy” and you are basically “begging” them; you need to be “reasonable” and “polite.”389 A
former HHS Office of General Counsel official said seeking departures from CMS was very
382

Interview with Source 97, attorney at environmental NGO.
OMB Good Guidance Practices, § II(1)(b), 72 Fed. Reg. 3440 (2007). See also Strauss, supra note 11, at 1483
(urging that guidance be binding on low-level officials, with higher-level officials given authority to make
departures if reasoned).
384
21 CFR § 10.115(d)(3).
385
Interview with Source 25, FDA Office of Policy official.
386
Interview with Source 52, partner in large law firm and former senior EPA official.
387
Interview with Source 54, former EPA official.
388
Interview with Source 83, former senior FDA Office of Chief Counsel official.
389
Interview with Source 109, regulatory policy executive at a drug manufacturer.
383

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challenging in part because an official high enough to have the requisite authority would have
“limited time.”390 Bergeson, managing partner of Bergeson & Campbell, said regarding
flexibility in guidance that senior officials at EPA might not be aware of problems three levels
below them; they were “busy.”391
At EPA, explained the large-firm partner and former senior EPA official cited earlier,
who went into depth on the process, a company could try to elevate a particular issue to a higher
level of the agency by seeking a meeting with a political appointee, which would usually be an
audience for up to one hour to “make your pitch,” but the kinds of issues that deserve such
elevation, given how busy political appointees are, are only those that involve “programmatic
risk,” i.e., decisions whose outcome could alter large numbers of other decisions or otherwise
disrupt the agency’s operations. An individual interpretation of a guidance document would not
meet this threshold, so a meeting would be possible “very seldom.” Instead the company would
ask the frontline official to talk to the high-level official, but in that case, you can never be sure
how the staff will represent your position to the boss.392
Two additional interviewees on EPA emphasized not just high-level officials’ limited
time, but also their limited information. A former EPA program office director explained that,
although higher-level officials were more mindful than frontline officials of a policy’s broad
consequences for industry, they knew less about technical matters and were likely to defer to
lower-level officials on those. In an example that takes this point to an extreme, the interviewee
mentioned that he had seen people get denied by a frontline official and then go directly to the
White House, which is “the stupidest thing” for actually getting the outcome you want, since at
the White House you’re “almost guaranteed to get someone who has no idea what you’re talking
about.” Nonetheless, he observed, going to the White House was “surprisingly common.” In his
own experience running a program office, he said it was impossible to overturn the decisions of
one’s staff routinely. Rather one should overturn the staff only on a decision that had
“programmatic impact,” that is, would “damage” or “disrupt” the program itself. If he merely

390

Interview with Source 67, former HHS Office of General Counsel official.
Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell.
392
Interview with Source 52, partner in large law firm and former senior EPA official. See also Interview with
Richard Stoll, Partner, Foley and Lardner (stating that while a regulated party entreating EPA on any matter may
attempt to elevate the matter above the lowest level in the office hierarchy, such elevation is rarely successful, and
that elevation would be even rarer regarding a departure from guidance); Kagan, supra note 29, at 138-39 (noting
that higher-level decisionmakers, pressed for time, may turn away requests for advice from lower-level ones).
391

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thought a decision was wrong, in the sense of being different from the one he would’ve reached,
that was not enough.393 Another interviewee, also a former EPA program office director, said
that in reviewing the individualized forms of written guidance that his staff provided (which I
assume would have included any materials that reinterpreted or altered preexisting guidance), he
found he had “no independent ability” to know if the staff had gotten the right answer; he just
deferred to the staff and signed off. To try to control the staff’s decisionmaking on such matters
would have taken up too much of his time and that of other senior managers, given other things
they had to do, especially legislative rulemaking.394
Because resource-constrained agencies find it difficult to allocate the amount of
employee time and energy to individualized requests for departures that would allow for
principled flexibility in dealing with them, the best bet for a regulated party is often to find other
regulated parties who want the same kind of departure and band together with them. Such
collective action can convince the agency that the matter is worth substantial staff time and
resources, which a one-off departure request is not. According to a former CFPB official, if
you’re an individual financial institution seeking a departure from guidance, you “won’t get
anywhere” with CFPB; you need to go through the trade association, and may need to pressure
CFPB for years.395 Bergeson said that, if a client were having difficulty obtaining a departure
from guidance, she would advise the client to “band together” with others, as by going to the
trade association, since proceeding “one-off” is “ineffectual,” since EPA could not spend too
much time and money on a request for just one firm.396 The large-firm partner and former senior
EPA official cited earlier likewise stated that, although an individual departure from guidance
would not warrant elevation to a political appointee at EPA, it might if a trade association leaned
on the agency.397
2. Recording and Disseminating Departure Decisions
On top of the logistical challenge of deliberating on requests for departures from
guidance, principled flexibility also requires the agency to ensure that reasoned decisions on
those departures are recorded and disseminated. First off, this means deciding what constitutes a
393

Interview with Source 71, former EPA program office director.
Interview with Source 98, former EPA program office director.
395
Interview with Source 81, former CFPB official who represents CFPB-regulated entities.
396
Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell.
397
Interview with Source 52, partner in large law firm and former senior EPA official.
394

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“departure decision” for purposes of principled flexibility. There is so much communication
between agency officials and regulated parties regarding guidance, much of it oral, that some of
it will have to be considered de minimis. While Andrew DeLaski, the executive director of the
Appliance Standards Awareness Project, said he hoped the Department of Energy was being
public and transparent about all departures from guidance,398 attorney Charles Samuels, counsel
to the home appliance manufacturers’ trade association, noted that, while DOE is more formal
than other agencies in its communications regarding guidance, there are still oral conversations
between the agency and industry in the nature of “can you explain this to me?,” which are
couched as involving interpretations of the guidance, not waivers of it.399
Assuming that a more-than-de-minimis universe of departures can be defined, there is the
task of documenting those departures and recording explanations for them, however cursory
(e.g., they might briefly reference other exceptions made earlier and justified at greater length).
Agencies seem to vary as to whether they document departures. An FDA Office of Policy
official noted that when a frontline official departing from guidance goes to check with his/her
supervisor (as required), this also entails documenting the departure.400 But it is not clear how
much these decisions are disseminated. According to a former senior FDA official, if a firm
succeeds in obtaining a departure from guidance in one meeting on one matter with some FDA
officials, that does not necessarily benefit other stakeholders who were not at the meeting, and
might not help the firm in dealing with other FDA personnel in the future.401 Richard Naples,
the chief regulatory officer at Becton Dickinson, said a company could have a departure from
guidance memorialized so that it could be invoked in future proceedings; otherwise it could not
be if the staff changed.402 Regarding OSHA, Celeste Monforton, the academic and safety
advocate and former OSHA legislative analyst, said we just don’t know how much OSHA
personnel are departing from guidance (e.g., how frequently inspectors are being flexible in

398

Interview with Andrew DeLaski, executive director, Appliance Standards Awareness Project.
Interview with Charles Samuels, Partner, Mintz Levin (counsel to the Association of Home Appliance
Manufacturers).
400
Interview with Source 25, FDA Office of Policy official.
401
Interview with Source 80, former senior FDA official.
402
Interview with Richard Naples, Chief Regulatory Office, Becton, Dickinson, and Company.
399

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setting up abatement plans with employers, which would most likely happen if there were
complex equipment), because there is no database of such departures.403
The dissemination of information about departures beyond the firm has to be structured
to protect confidential business information. This is especially important because departures
from guidance are often premised on regulated firms using new technologies, which may be
proprietary. Some agencies have established mechanisms for doing this. For example, FAA
negotiates departures from guidance premised on new technology through an “issue paper
process” that protects proprietary information. Once the use of the new technology reaches a
certain level of maturity, the agency publishes a “policy statement” that provides a template for
how to use the new technology, for the benefit of the whole industry, without revealing
proprietary information.404

D. Organizational and Resource-Based Obstacles to Any Kind of Flexibility
Besides the logistical challenges to setting up a regime of principled flexibility, discussed
above, there are several additional factors that help determine the degree to which an agency
using guidance shows any kind of flexibility, whether or not that flexibility is coupled with
principled explanations forming a body of precedent. An agency striving for flexibility will have
to manage each of these factors, one way or other.
1. Officials’ Antagonism to Being Challenged
If a frontline official has authority to consider a regulated party’s request for a departure
from guidance but rejects it, the regulated party can appeal to a higher-level official to get the
rejection overturned. Further, if a frontline official adheres to guidance with improper rigidity,
some agencies provide that a regulated party can complain to higher-level officials; for example,
FDA says, “If you believe . . . that someone at FDA treated a guidance document as a binding
requirement, you should contact that person’s supervisor in the center or office that issued the
guidance document. If the issue cannot be resolved, you should contact the next highest

403

Interview with Celeste Monforton, Lecturer, Department of Health and Human Performance, Texas State
University; Professorial Lecturer, Milken Institute School of Public Health and Health Services, George Washington
University; former legislative analyst, OSHA; former policy advisor, MSHA.
404
Interview with Sources 8, 9, 10, FAA officials.

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supervisor.”405 However, interviewees said that regulated parties at FDA and sometimes
elsewhere were reluctant to go up the chain of command for fear of antagonizing the officials
whose decisions they sought to override, particularly when they knew they would have to deal
repeatedly with those same officials. This issue is similar to the point discussed in Section II.B
above about how regulated parties’ investment in relationships with individual officials may
incentivize them to follow guidance, except that here we are talking about incentives to refrain
from appealing the denial of a departure, not about incentives to follow guidance in the first
instance.
Concerns about antagonizing officials were most prominent in interviews on FDA.
Bradley Merrill Thompson, counsel to associations of device-makers and author of the petition
that helped prompt reform of FDA guidance practices in the 1990s, said in his experience FDA
reviewers showed very little flexibility on guidance and that companies were extremely reluctant
to go over the reviewers’ heads, since this was unlikely to produce a positive result and would
irritate the reviewer, possibly affecting the decision on the application at issue and future ones.
For many kinds of products, there were only a handful of reviewers assigned, so it was not
unusual to get one person as reviewer over and over.406 A former senior FDA Office of Chief
Counsel official concurred that, in the device area, companies “don’t want to rock the boat.”407
William Schultz, former FDA Deputy Commissioner for Policy, said companies were “very shy”
about complaining about the review functions of FDA, because individual reviewers had so
much power. Companies knew they might see the same reviewer again on another matter and
did not want to mess up their relationship with him/her.408 On the drugs side, Daniel Troy, the
general counsel of GlaxoSmithKline, gave the example that his company was deep into
respiratory treatments; FDA had only one respiratory office, and “we can’t make them mad,”
though the company could have a constructive scientific dialogue with them.409 According to an
executive at a drug manufacturer, appealing up the chain after receiving a negative response or

405

21 C.F.R. § 10.115(o).
Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and Green.
407
Interview with Source 83, former senior FDA Office of Chief Counsel official.
408
Interview with William Schultz, Partner, Zuckerman Spaeder; former FDA Deputy Commissioner for Policy
(1994-98); former HHS General Counsel (2011-16).
409
Interview with Daniel Troy, general counsel, GlaxoSmithKline.
406

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no response regarding departure from guidance involved the risk of antagonizing the frontline
official, adding that one had to be “upfront” with the official about the escalation.410
Some interviewees observed that, while retaliation was widely feared, it was not as
common as, or took a different form than, was widely understood. As to devices, Richard
Naples, the chief regulatory officer at device maker Becton Dickinson, said escalation had to be
carried out in a manner to preserve the company’s relationship with the reviewer, given that the
firm would need approval of many products over the long run. Preserving the relationship meant
being careful to treat the reviewer with respect and working openly with the reviewer on every
step of the escalation, including arranging a joint meeting with the reviewer and the reviewer’s
boss. “Retaliation,” said Naples, is “widely” perceived as a “large risk” at FDA, but he
considered the fear “overblown.” Retaliation “doesn’t actually happen a whole lot,” and when it
does, it is usually through “unconscious bias.”411 Troy, of GlaxoSmithKline, said there was a
perception that FDA would retaliate, and “there is some of that”; a “few” people do retaliate, but
the perception was “stronger than the reality.” The issue, he explained, is not “deliberate”
retaliation but “unconscious” retaliation—that the official you seek to override “may not cut you
a break” in the future. The fear of unconscious retaliation, said Troy, was not exaggerated.412
The fear of retaliation extends from pre-market review to enforcement and inspections,
where there is also repeat play. An official at FDA’s Office of Regulatory Affairs, which
oversees the inspectors, said regulated firms did fear “retribution” from the inspectors and were
therefore reluctant to complain up the chain of command. The idea of complaining “scared”
firms because they knew they would see the inspector again.413 Troy, general counsel of
GlaxoSmithKline, said you have to be really careful with appeals within FDA, because all the
companies are “repeat players,” and you want to avoid antagonizing not only the reviewers but
also the inspectors, as whoever inspects your facility this year might also do so in the future. 414
A former senior FDA official said regulated firms dealing with reviewers or inspectors feared
that if they said something negative about an official, including on rigid adherence to guidance, it
would harm their relationship with him/her, if they needed to deal with the official again down

410

Interview with Source 108, executive at a drug manufacturer.
Interview with Richard Naples, Chief Regulatory Officer, Becton Dickinson.
412
Interview with Daniel Troy, general counsel, GlaxoSmithKline.
413
Interview with Source 28, official at FDA Office of Regulatory Affairs.
414
Interview with Daniel Troy, general counsel, GlaxoSmithKline.
411

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the road. He recalled that, during his tenure at FDA, he would urge public audiences of
stakeholders to tell him if they thought they were not being treated fairly, but he found that
people were “afraid” to report, because of the idea of “negative repercussions”: only a couple of
complaints would come in per year. This was frustrating, he said, because if FDA had received
more complaints, it would have enabled the agency to train its employees better.415
Some interviewees pointed out ways in which FDA was addressing, or might address, the
fear of retaliation. The drug manufacturer executive cited FDA’s formalization of a “Dispute
Resolution Process” in recent years, saying the formality had made escalation “more accessible”
and reduced companies’ fear.416 The official at FDA’s Office of Regulatory Affairs noted the
office now had an ombuds to help with the matter.417 (There are also ombuds at other
components of FDA.) William Schultz, former FDA Deputy Commissioner for Policy,
suggested perhaps FDA could periodically solicit companies for anonymous feedback to see
whether they thought reviewers were treating guidance flexibly.418
Beyond FDA, interviews indicated some concern among regulated parties about
relationships and repeat play, if not outright retaliation. A former EPA program office director
said that a company deciding whether to appeal an official’s denial of a proposed departure
would “absolutely” consider damage to their relationship with the official as part of the calculus,
though some officials are more likely than others to take it personally.419 Lynn Bergeson,
managing partner of Bergeson & Campbell, said that appealing within EPA on behalf of a client
expends some of the law firm’s “political capital.”420 A former senior HHS official said that for
a firm wanting a departure from guidance, a “key” consideration was whether the matter was
worth “making a fuss about”: the firm knew it would deal repeatedly with the agency and had to
“pick [its] battles” and would think about its “long-term relationship” to the agency. Companies
were concerned that raising a fuss frequently would be viewed as “negative.”421 In banking
regulation, a former CFPB official said that if a bank sought a departure from guidance in the
415

Interview with Source 80, former senior FDA official.
Interview with Source 108, executive at a drug manufacturer. See also Khushoo Sharma et al., An FDA Analysis
of Formal Dispute Resolution in the Center for Drug Evaluation and Research: 2003 Through 2014, 50 Therapeutic
Innovation and Regulatory Science 697 (2016).
417
Interview with Source 28, official at FDA Office of Regulatory Affairs.
418
Interview with William Schultz, Partner, Zuckerman Spaeder; former FDA Deputy Commissioner for Policy
(1994-98); former HHS General Counsel (2011-16).
419
Interview with Source 71, former EPA program office director.
420
Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell.
421
Interview with Source 77, former senior HHS official.
416

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course of an examination, it would go first to the examiner, and if that were unsuccessful, over
the examiner’s head to the examiner-in-charge, but such a move was “delicate,” because “ticking
off” the examiner could have “bad consequences.” There were further rungs of the agency’s
hierarchical ladder one might climb, but that runs the risk of “damaging” one’s relationship to
the agency.422
The most common remedy for this problem is for companies to seek assurances regarding
departures from guidance anonymously, often through trade associations. Naples, the chief
regulatory officer of Becton Dickinson, said that a company, if worried about “ticking off” an
FDA reviewer, might follow the problematic guidance in a particular application proceeding but
also seek, through the trade association, to urge the agency to rethink the guidance’s application.
The trade association, in its communications with FDA, could give examples of the problem, but
with company and product names removed.423 Similarly, a former senior FDA official said firms
could effectively complain about rigid adherence to guidance if they proceeded through a trade
association that could “mask” their identity.424 A former agency general counsel, discussing how
to avoid a chilling effect on firms seeking departures, said, “that’s why God invented trade
associations”—to avoid “jeopardy to the relationship” between individual firms and the
agency.425
2. Superiors’ Institutional Motivations to Affirm Subordinates
Because higher-level officials are the ones who must decide whether to overturn frontline
officials’ refusals to depart from guidance—and who must hear complaints about frontline
officials being overly rigid—it matters whether these higher-level officials are more or less
inclined to back the frontline officials. Interviewees identified certain organizational motivations
that higher-level officials had to affirm their subordinates, independent of the merits of the
question.
First, higher-level officials have to work with, rely upon, and retain their subordinates
and therefore cannot take too great a risk of alienating them. Those institutional needs have to be
considered in any decision on overturning a subordinate’s decisions. It cannot just be the merits,

422

Interview with Source 81, former CFPB official who represents CFPB-regulated entities.
Interview with Richard Naples, Chief Regulatory Officer, Becton Dickinson.
424
Interview with Source 80, former senior FDA official.
425
Interview with Source 69, former agency general counsel.
423

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as it might be in the case of an appellate court reviewing a trial court. Regarding FDA, the
agency’s former Deputy Commissioner for Policy, William Schultz, said it was “hard” for an
FDA manager not to support the reviewers under his/her supervision; “it’s not like an appellate
judge overturning a trial judge.”426 Bradley Merrill Thompson, counsel to device makers’ trade
associations, noted that when a higher-level FDA official reviewed his/her subordinates’
decisions, the official was “not like” an appellate judge, who operates “external[ly]” to the trial
court whose decision is under review. It was difficult to hire FDA reviewers, explained
Thompson, as they were not well-paid. Higher-level officials did no want to “drive out” the
reviewers by embarrassing them.427 A former EPA program office director recalled that he
refused to listen to entreaties to overturn his subordinates unless the regulated party had first
checked with the lower-level official and tried to get the decision changed there; it was
imperative that regulated parties “work through channels” and give frontline officials a chance to
correct themselves. (He added that “many” supervisors at EPA took the same approach.)
Further, he noted, there was just a limit to how much a supervisor feels he/she can overturn staff;
if you do it in one instance, you become, for that reason alone, less likely to do it in the next
instance.428 Similarly, a former CMS division director observed that political appointees,
reviewing a request to depart from guidance, would “usually” follow the briefing from staff
opposing departure, in part because they “don’t want to undermine the confidence of their
subordinates.”429
Second, higher-level officials are concerned about maintaining the credibility of their
own frontline officials vis-a-vis external audiences, including industry. In explaining why FDA
managers backed their reviewers, Thompson specifically noted that they wanted to be supportive
on an “external-facing issue” like requests for departures from guidance and wanted to avoid
“castigating” subordinates in view of the “outside world.”430 The former EPA program office
director said you must give your subordinates an “envelope” in which to operate freely, and not

426

Interview with William Schultz, Partner, Zuckerman Spaeder; former FDA Deputy Commissioner for Policy
(1994-98); former HHS General Counsel (2011-16).
427
Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and Green.
428
Interview with Source 71, former EPA program office director. See also Interview with Richard Stoll, Partner,
Foley and Lardner (noting that at EPA superiors tend to back their subordinates, so you “rarely” get success by
going up the agency hierarchy).
429
Interview with Source 93, former CMS division director.
430
Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and Green.

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second-guess them simply because you would’ve made a different decision, “especially if you
are supervising supervisors.”431
Against this background, one former agency general counsel said political appointees had
to make an effort to “show” stakeholders that they were willing to overrule the staff. He
suggested that a political appointee refrain from signing off on guidance in the first place, instead
having the staff issue it on their own responsibility, which would make it less difficult for the
appointee to depart in the future.432 (An alternative strategy would be to prohibit frontline staff
from departing from guidance, so that departure decisions would be made in the first instance at
the higher level, without the baggage of reviewing somebody’s decision below; but this presents
obvious resource and bottleneck problems.)
A possible way to mitigate this problem is to have frontline officials’ inflexibility on
guidance dealt with by a higher-level official who is not their own boss. A former FDA Office
of Chief Counsel official recognized that a director of an FDA center would want to back his/her
own subordinates, but things could differ when someone from the Chief Counsel’s office became
involved laterally. He explained how, in his time in the Office of Chief Counsel, he would
resolve disputes and correct misimpressions about guidance in parts of the agency that were
separate from his own. To be sure, he noted, he was doing all this “ad hoc”; “not everyone knew
to call me.” He suggested FDA ombuds could play the role.433
3. Understanding of Rule/Guidance Distinction Is Not Intuitive
The distinction between legislative rules and guidance—that some policies are to be
followed absolutely while others are to be followed unless you hear a good argument
otherwise—is counter-intuitive to many people, and it can be counter-intuitive to agency
employees. Because this distinction is not something that people understand automatically,
whether they actually grasp and apply it can vary with their professional background.
Several interviewees agreed that the rule/guidance distinction was more easily understood
by lawyers than by people of other professional backgrounds. Janet Woodcock, the director of
FDA’s Center for Drug Evaluation and Research, said a “pitfall” of using guidance was the
difficulty of making sure the staff understood that it was nonbinding; she and others were
431

Interview with Source 71, former EPA program office director.
Interview with Source 69, former agency general counsel.
433
Interview with Source 83, former senior FDA Office of Chief Counsel official.
432

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“always having to correct [staff members] on that.” It was a challenge, she said, to “get that
level of sophistication” into all the staff. The scientists who largely populate FDA were “not
great” at seeing the distinction, as compared to lawyers. The difference between legal and
scientific backgrounds was “very significant” in whether people grasped the distinction, she
said.434 Similarly, a former senior FDA Office of Chief Counsel official said that, although he
“loved” the people at FDA and thought they did “great work,” they were mostly “nonlawyers”
and did not “appreciate” the difference between legislative rules and guidance. Notwithstanding
the notices of nonbinding status emblazoned on all FDA guidance documents and the use of nonmandatory language throughout such documents, the rule/guidance distinction was “lost on
people” at FDA. During his tenure, he recalled, he “often” had to remind agency officials not to
enforce guidance as a rule, having conversations about the matter “about twice a month”; it was
a “never ending issue.”435 (This seems to be a matter of how rank-and-file personnel are
socialized before they arrive at the agency and not of the “tone at the top” at the agency: the
Office of Chief Counsel official said that an FDA center director would understand the
distinction in a way lower-level nonlawyers would miss,436 and another former FDA official said
senior officials would view guidance as more fluid than would frontline staff.437)
Interviewees on other agencies also said lawyers were more likely to get the distinction
than other agency personnel. A former senior HHS official said some in the Department “really
don’t get” the difference between rules and guidance. The lawyers were more sophisticated
about it, but the “line level people” who interfaced with industry were less so.438 A former EPA
program office director said the tendency to treat guidance as mandatory had to do with the fact
that the implementers were not lawyers. If lawyers were involved in implementation, they would
know to treat guidance as a kind of burden-shifting mechanism: the regulated party can do things
differently if it shows the alternative is still compliant.439 Former senior DOT attorney Neil
Eisner said that whether an agency respected the principle that guidance was nonbinding may
depend partly on the status of lawyers within the agency.440 In banking regulation, an

434

Interview with Janet Woodcock, Director, Center for Drug Evaluation and Research, FDA.
Interview with Source 83, former senior FDA Office of Chief Counsel official.
436
Interview with Source 83, former senior FDA Office of Chief Counsel official.
437
Interview with Source 20, former FDA official.
438
Interview with Source 77, former senior HHS official.
439
Interview with Source 71, former EPA program office director.
440
Interview with Neil Eisner, consultant; former Assistant General Counsel for Regulation and Enforcement, DOT.
435

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interviewee who held senior posts at CFPB and other federal agencies said that, although the
banking regulators emphasized to their examiners that guidance was not a rule, he was not sure
that everybody understood the enforcement implications of this difference, as there were
thousands of examiners across the banking agencies, many of them not lawyers.441 But not all
observers had the same view. A Federal Reserve official observed that, in his experience, the
Fed’s examiners did appreciate the distinction.442
Interestingly, there was a divergence among the interviewees on just what the effect of a
scientific background was on agency employees’ understanding of the rule/guidance distinction.
As noted above, Woodcock viewed the distinction as a lawyerly concept that scientists were less
suited to grasp, as did the FDA Office of Chief Counsel official. But others saw science as
having a different valence. A partner in a large law firm healthcare practice who deals
extensively with FDA and CMS said that, of the two, FDA was more flexible on guidance,
which he attributed in part to the fact that while CMS was focused on business and payment
issues, FDA was focused on science, and “science means dialogue.”443 Indeed, one might argue
that the scientific method—which calls for a skeptical, questioning, inductive, and constantly
self-revising attitude toward knowledge—could be quite consistent with empirically-minded
flexibility in policy. Consistent with this idea, a former FDA official said that, in his experience,
FDA was relatively less flexible on guidance on matters of public policy like promotion or
marketing than on matters of science: the more “purely scientific” the matter, the more FDA
would consider an alternative means of compliance.444 A congressional staffer observed the
same distinction, with FDA more flexible on scientific than policy matters.445
4. Nature of Relationships to Stakeholders May Affect Flexibility
Flexibility happens (or fails to happen) in the context of an interaction between agency
officials and regulated party personnel. The way in which these groups of people are
accustomed to interact can influence whether guidance is flexibly applied. Their patterns of
interaction vary depending on the component of the agency and the nature of its work. In

441

Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
Interview with Source 51, Federal Reserve official.
443
Interview with Source 101, partner in large law firm healthcare practice.
444
Interview with Source 20, former FDA official.
445
Interview with Source 82, congressional staffer.
442

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particular, there is a striking distinction, across multiple areas of regulation, between program
offices and enforcement offices.
Several interviewees with diverse perspectives agreed that EPA’s civil enforcement
office adheres more closely to guidance than do EPA’s program offices. To a large degree, this
is probably due to the legitimate pressures in favor of consistency that I discussed in Section A
above, which have peculiar power in the realm of enforcement. As former EPA civil
enforcement directors Eric Schaeffer and Adam Kushner stated, adherence to guidance levels the
playing field for industry, which is what industry generally wants. Further, as Kushner
emphasized, consistent application of guidance provides the predictability of penalties and the
insurance against competitive disadvantage that are necessary to solve the special challenge
facing the enforcement office: it must coax otherwise hard-to-detect violators to come forward,
disclose their violations, and settle.446
But apart from these legitimate pressures for consistency, there appears to be another
reason for the enforcement office’s closer adherence to guidance: enforcement people are not
socialized to the kind of routine cooperative give-and-take with industry that program offices
have on matters like rulemaking. Kushner himself pointed this out. The program offices have
more “affinity” with industry than does the enforcement office because the program offices must
interact with industry in order to move their business forward, particularly to finish rulemakings
that will (ideally) not be challenged in court. This attitude carried over to the program offices’
provision of guidance, which Kushner viewed as mostly (though not entirely) an effort to make
legislative rules more “comfortable” for industry and avoid conflict with industry.447 From the
opposite perspective, a former senior official in EPA’s Air Program office said essentially the
same thing. This official, in discussing why his office was more flexible than the enforcement
office, spoke of the “collaborative process” that was established between the officials and
stakeholders, mainly through the task of rulemaking, in which officials engaged in “shuttle
diplomacy” among industry players and NGOs in a manner that helped “mutual understanding”
among the different sides and made litigation less likely. Further, the program office people, as
the ones who developed the rule with industry, had a deeper appreciation of industry’s
challenges and frustrations, which furthered flexibility in shaping and using guidance after the

446
447

See supra text at notes 310-315.
Interview with Adam Kushner, Partner, Hogan Lovells, former director of civil enforcement, EPA.

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rule’s promulgation. The enforcement office, by contrast, needed to “hit” its “numbers,” he
said.448
Two other interviewees with yet other perspectives confirmed the distinction. Lynn
Bergeson, managing partner of Bergeson & Campbell, said the EPA enforcement office’s
inflexibility on its penalty guidance was a point “of unique frustration” that “we all whine
about.”449 The executive director of the Environmental Council of the States said the
enforcement office was most strict in its adherence to guidance of any component of EPA
headquarters: “they don’t mess around.”450
A similar divergence between enforcement and program functions is evident in
healthcare regulation. One law firm partner observed that the HHS Office of Inspector General
and the Department of Justice were less flexible regarding guidance than CMS or program
offices at FDA; he attributed the difference to the fact that regulated firms had a more personal
relationship with CMS and FDA.451 Looking at FDA’s internal components, a drug company
executive observed more flexibility on guidance in the review divisions, which were devoted to
the essentially collaborative mission of getting drugs out the public, and less flexibility in
components related to advertising and promotion, which were more adversary.452
And in the world of chemical manufacturing, James Conrad, an industry consultant who
has represented chemical manufacturers in dealings with several different agencies, observed that
the Drug Enforcement Administration was the least flexible of these. DEA conceives of itself as
a criminal law enforcement agency, but some legitimate industries are partly regulated by DEA
because their medicinal or chemical products can be used to make illegal drugs (especially
meth). DEA has a tendency to view regulated parties through the lens of criminal law
enforcement rather than administrative law.453

Interview with Source 103, former senior official in EPA’s Air Program office.
Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell.
450
Interview with Alexandra Dapolito Dunn, executive director, Environmental Council of the States.
451
Interview with Source 104, law firm partner who deals frequently with CMS and FDA.
452
Interview with Source 108, executive at a drug manufacturer. Another interviewee likewise observed that FDA’s
enforcement components were more rigid in using guidance, but attributed the difference to the greater geographic
dispersion of these components and the consequent need to control them. Interview with Source 107, former senior
FDA official.
453
Interview with James Conrad, Conrad Law and Policy Counsel; formerly Assistant General Counsel at the
American Chemistry Council.
448
449

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5. Training to Be Flexible
Whether or not officials have professional backgrounds or day-to-day interactions suited
to flexibility, one might be able to make them more flexible through training. Multiple FDA
officials said preventing reviewers from treating guidance as binding was a matter of training the
reviewers in the various centers on the rule/guidance distinction.454 Woodcock, the director of
FDA’s Center for Drug Evaluation and Research, observed that the Office of Generic Drugs had
difficulty with the distinction before she established an Office of Generic Drug Policy (a “policy
shop”) within OGD within the last five years. This policy shop, staffed partly by lawyers, has
been tasked with not letting guidance be treated as binding at OGD, both through general
training and through ad hoc input to frontline officials in the event of industry complaints.
Woodcock believed that, in order for this kind of initiative to be effective, it had to be “at the
grassroots,” that is, embedded within the particular office, as distinct from CDER’s overall
policy shop, which provides a “final common pathway” for all decisions that come out of OGD
and the other components of CDER but is not actually embedded within any of those
components. In undertaking an initiative like getting guidance to be nonbinding, she said, it was
necessary to designate specific people as responsible for the initiative and to hold them
accountable.455
At EPA, there appears to be some variation in whether the rule/guidance distinction is
part of the training of employees who will apply guidance documents. One EPA Office General
Counsel official said that, although OGC often tells agency personnel that guidance is
nonbinding, he has not observed any training of personnel on the issue.456 But another EPA
Office General Counsel official said that OGC had done some trainings for program offices on
certain guidance documents, which do involve the point that decisionmakers are not bound to
follow the guidance.457

454

Interview with Source 25, FDA Office of Policy official; Interview with Source 31, FDA Center for Devices and
Radiological Health official.
455
Interview with Janet Woodcock, Director, Center for Drug Evaluation and Research, FDA, plus follow-up email
exchange.
456
Interview with Source 70, EPA Office of General Counsel official.
457
Interview with Source 61, EPA Office of General Counsel official.

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E. Inflexibility by Reason of Agency Commitment to Guidance’s Substance
This Part so far has catalogued the numerous reasons why an agency might behave
inflexibly regardless of the substantive content of a guidance document, but it is also possible for
an agency to follow guidance inflexibly because officials are committed to the guidance’s
substantive content. In other words, they think the guidance contains the right policy and
therefore should not be open to question. From the perspective of the Administrative Procedure
Act and the values behind legislative rulemaking, this is the most problematic reason for
inflexibility on guidance. If an agency thinks a policy must be rigidly followed and
reconsideration foreclosed simply because the policy is right, that is the archetypal scenario
calling for legislative rulemaking. The other reasons for inflexibility discussed earlier in this
Part can be explained as reactions to legitimate pressures for consistency that involve hard
tradeoffs among competing rule-of-law values (Section A) or as the result of organizational
problems and resource constraints that agencies may able to overcome only with creative new
managerial efforts or more money (Sections C and D). Not so with the agency’s commitment to
guidance’s substance. This is the most questionable reason for inflexibility, and it is therefore
the one that agencies are most obligated to avoid and resist, including by expending the resources
and taking the managerial initiative necessary to ensure principled flexibility.
Is this prescription utopian? Commitment to guidance’s substance is the most
problematic reason to be inflexible, but is it not also the strongest reason to be inflexible?
Urging agencies to preserve open-mindedness precisely in the cases where they most strongly
believe they are right may seem like a hopeless call for self-denial, unless we think bureaucrats
are angels.
There is some truth to this counsel of despair, but it is not as hopeless as it seems. The
agency is a “they,” not an “it.” Insofar as substantive commitment drives an agency’s rigid
adherence to guidance, that commitment sometimes emanates from the political appointees or
from the career officials but not both. This raises the possibility that, if a norm against
substance-driven inflexibility is recognized, the political appointees can invoke that norm to
check the behavior of the career officials and vice versa. And that is to say nothing of the
possibility that external overseers (congressional committees or inspectors general) can invoke
the norm.

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Before proceeding, I should emphasize two points. First, some of the interviewee
comments cited below directly indicate that a substantive commitment to guidance’s substance
drove an agency to be inflexible or otherwise to circumvent notice and comment, but most of
them indicate merely that substantive commitment was one factor counseling adherence to
guidance, which could in principle drive the agency to point of close-minded inflexibility, even if
it did not actually get there. Second, while commitment to guidance’s substance is the most
problematic reason for an agency to be inflexible, we must see this reason in perspective. It
comes up in several interviews, but not a great number, and it proves to be only one of the many
reasons for inflexibility identified throughout this Part. This indicates that, if and when we
observe inflexibility on the part of an agency, we should not presume, without further evidence,
that it is due to agency personnel’s belief that the guidance’s substantive content is right. There
are so many other potential causes.
Consider first interviewees’ comments on inflexibility driven by commitment to
guidance’s substance on the part of political appointees. There was often ambiguity in these
comments about just how explicitly the appointees conveyed a preference for rigid adherence to
the officials implementing the guidance; sometimes, at least, it seems implementing officials
adhere to guidance out of sensitivity to political appointees’ perceived wishes without receiving
direct orders on the point. According to a former senior HHS official, if something is a “top tier
policy priority” for the “leadership” of the agency, that will influence what officials do regarding
departures from guidance, “how they posture” and how they try to make the guidance
“effectively binding.”458 A former CFPB official said that officials’ willingness to give
assurances about whether a departure from guidance would be acceptable depends on several
factors, one of which is the “attitude” of the agency’s “leadership,” that is, the official’s “sense”
of what the political leaders care about; this changes the official’s “comfort level” with giving
assurances about departures.459 At EPA, David Hawkins, the former head of the Air Program
office, said the tendency to adhere to guidance and to precedent was driven by the risk of an
arbitrary-or-capricious judicial challenge, by congressional scrutiny, and—of interest to us
here—by the agency’s policy in favor of what the guidance says, usually meaning the “political
appointees.” Hawkins gave the example of a public memo he sent to the Air Program office

458
459

Interview with Source 77, former senior HHS official.
Interview with Source 81, former CFPB official who represents CFPB-regulated entities.

129

staff, without notice and comment, whereby he proposed giving a “harder look” on approvals of
state implementation plans under the Clean Air Act regarding acid rain—an issue on which EPA
had previously been laissez-faire.460 Richard Stoll, of Foley and Lardner, stated that, although
EPA was generally flexible on guidance when presented with the right data, there were instances
of inflexibility caused by “political pressure from the top.” He cited an instance in which the
Administrator was lobbied for tougher treatment of industry under RCRA’s boiler and industrial
furnace rules. In apparent response to the lobbying, EPA issued a guidance document that some
of the regional offices began telling companies to follow, until EPA backed down in the face of a
judicial challenge. He also noted that, where EPA had a clear goal from the top like promotion
of wind and solar power, it would show less flexibility and construe ambiguities in guidance in
the direction of that policy view.461 Lynn Bergeson, managing partner of Bergeson & Campbell,
in discussing EPA adherence to guidance, noted that some policies were “driven” by
“supercharged political appointees” and reflected the values of “the current administration.”462
Now consider what interviewees said about inflexibility driven by commitment to
guidance’s substance on the part of career officials. In some cases, interviewees did not cast
career officials as being self-consciously rigid or committed, but instead as having a lessconscious attachment to a policy because they had helped to develop it. According to
Thompson, counsel to device-maker trade associations, FDA reviewers were inflexible on
guidance for several reasons, including that they “often” had “helped write” it, meaning they had
a “sense of ownership” of it.463 Likewise, a former CMS division director said CMS career
officials usually preferred to adhere to guidance, for a variety of reasons, one of which was that
they had a “sense of ownership” of it because they had “often” helped to write it.464 This is not
to say that career officials writing guidance always feel closely committed to it. Richard Stoll, of
Foley and Lardner, recalled dealing with a career official at EPA who had written key guidance
on boilers and industrial furnaces under RCRA and “took all the calls” from stakeholders about

460

Interview with David Hawkins, director, climate program, Natural Resources Defense Council; former Assistant
Administrator, Air Program Office, EPA. Like interviewees in this study generally, Hawkins was speaking for
himself and not on behalf of any organization.
461
Interview with Richard Stoll, Partner, Foley and Lardner.
462
Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell.
463
Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and Green. See also Interview with Source
112, former senior FDA career official (noting that, for a disease-specific guidance document, the FDA review
division applying the document would have been involved in writing the document).
464
Interview with Source 93, former CMS division director.

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departures from and interpretations of the document he had written: he “leaned left but was
reasonable.”465
Other interviewees recalled career officials being more self-conscious in seeking to get
their favored policies implemented through adherence to guidance. Regarding the SEC, a former
official said that career staff, who write and have final approval on much guidance, were
relatively less receptive than political appointees to requests for departures from guidance,
because of the “strong views” those staff members held. The staff, he said, had a “long term
plan” of how SEC regulation should operate that they sought to articulate through a variety of
agency communications even as political appointees came and went.466 Coleen Klasmeier, head
of Sidley Austin’s FDA regulatory practice and a former FDA Office of Chief Counsel attorney,
recounted that after FDA in 2006 issued the Physician Labeling Rule (telling drug makers what
prescribing information to include in their applications for pre-market approval), the agency
rapidly issued about twenty guidance documents, which everybody knew would have to be
followed because of pre-approval incentives. This stream of guidance was perceived by many as
an “end run” by FDA career officials around the actual legislative rule approved by the Bush-era
OMB.467 To give another example, a former agency general counsel recalled that the career
officials at his agency would try to get higher-level officials to sign off on guidance documents
in a way they hoped would “bind” those officials and get them “committed” to policies
articulated in the documents that the career officials thought were “the right answer.” In this
way, the career officials sought to get the policy as “definite” as it could be. The interviewee
admired these career officials for being “highly motivated” and “trying to do what is right,” but
he also believed they failed to acknowledge “competing considerations” and did not see the
“larger” consequences of the paths they sought to take. He therefore resisted signing off on
guidance proposed by the staff, instead forcing them to issue it on their own responsibility, so
that he could allow the policy to develop experimentally and allow reactions to flow in from
stakeholders and Congress. He would then sign off at what he considered “the proper stage of
policy evolution.”468

465

Interview with Richard Stoll, Partner, Foley and Lardner.
Interview with Source 19, former SEC official.
467
Interview with Coleen Klasmeier, head of Sidley Austin’s FDA regulatory practice; former FDA OCC attorney.
468
Interview with Source 69, former agency general counsel.
466

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It is also possible for agency inflexibility to arise from the demands of the “regulatory
environment”—a more amorphous source of substantive commitment than identifiable political
appointees or career officials, but a source of such commitment nonetheless. A former senior
Federal Reserve official who has counseled financial institutions said that said agency officials’
willingness to depart from guidance depended partly on “the regulatory environment,” which, he
noted, was more intense in the present era than it had been in, say, the year 2000. Scrutiny on
banking regulation was high from external institutions like Congress and public interest groups.
The banking regulators were under significant stress to prevent another financial meltdown. In
this environment, he judged, banks could get approval for a departure if they were saying
compliance was operationally unworkable or would create some other risk, but not if they were
saying the guidance was bad policy or challenging the guidance itself.469

IV. DEREGULATORY GUIDANCE AND REGULATORY BENEFICIARIES
The courts have made clear that a guidance document cannot bind regulated parties.
They have also said that a guidance document cannot bind the agency itself, and this principle
obtains even when the agency is binding itself in a manner that benefits regulated parties, as by
binding the agency not to enforce against them, or binding the agency to grant them permits. In
Community Nutrition Institute v. Young, the D.C. Circuit struck down FDA guidance on the
levels of food contaminants below which the agency would not bring enforcement actions
against food producers, saying the FDA had impermissibly “bound itself” to the guidance in a
manner that prevented notice-and-comment participation by people who might be harmed by
contaminated food.470 More recently, in General Electric Company v. EPA, the same court
struck down EPA guidance on how companies should seek approval of methods for cleanup of
certain toxic substances, in part because the document impermissibly “appears to bind the
Agency to accept applications” using a certain toxicity factor, implying “that the use of that
value will not be questioned” in the agency’s decision process for granting permission: “an
applicant reasonably could rely upon that implication.”471 Despite the fact that the challenger

469

Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.
Community Nutrition Institute v. Young, 818 F.2d 943, 948 (D.C. Cir. 1987).
471
General Electric Co. v. EPA, 290 F.3d 377, 384 (D.C. Cir. 2002). See also United States v. Texas, 809 F.3d 134,
171-76 (5th Cir. 2015), aff’d by an equally divided court, 136 S. Ct. 2271 (2016).
470

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was not even a regulatory beneficiary but a company seeking permission from EPA—that is, the
very kind of party that could benefit from such a safe harbor—the court viewed this as a reason
to find the guidance binding and therefore unlawful.
Though counter-intuitive and sometimes criticized, this line of case law—effectively
outlawing absolute safe harbors in guidance documents—goes to a legitimate concern. If it were
possible for an agency to bind itself through a guidance document so long as the policy therein
was permissive rather than mandatory toward regulated parties, the effect would be to exempt
much of deregulation from the requirements of legislative rulemaking and from direct
participation by the beneficiaries of regulation and the NGOs who seek to represent their
interests.472 The flipside of the courts’ approach is that even when a regulated party follows
guidance to the letter, that cannot be a legal guarantee that it has complied with the law. This
principle is widely recognized across agencies. FDA announces that its guidance documents “do
not legally bind the public or FDA” and that “FDA employees” can “depart from guidance
documents” if they have “appropriate justification and supervisory concurrence.”473 An official
at FDA’s Office of Regulatory Affairs (which oversees inspectors) cautioned that even if a firm
does follow guidance, that is not a guarantee that it has complied with the statute.474 At EPA, an
official recognized that it would be unlawful for guidance to create an absolute safe harbor; she
explained how the agency instead used “weaselly words” like “highly likely” instead. 475
That said, the prohibition against legally-impregnable safe harbors in itself probably does
not much determine the practical reliability of guidance. As William Funk writes, even though
the case law encourages agencies to write guidance documents with “caveats” disclaiming any
472

The problem of deregulatory guidance and regulatory beneficiaries has been analyzed mainly with respect to the
practical availability of judicial review, for if regulated parties follow safe-harbor guidance, there will never be an
enforcement proceeding in which the guidance could be tested. Strauss, Publication Rules, supra note 71, at 817;
Nina A. Mendelson, Regulatory Beneficiaries and Informal Agency Policymaking, 92 Cornell L. Rev. 397, 420-24
(2007); Mark Seidenfeld, Substituting Substantive for Procedural Review of Guidance Documents, 90 Texas L. Rev.
331, 344 (2011). In a critique of Community Nutrition, Ron Levin argues that, when an agency deregulates through
guidance that is permissive toward regulated parties, non-regulated interested persons deprived of a notice-andcomment rulemaking proceeding in which to comment on the deregulatory policy have no legal right to force noticeand-comment rulemaking yet would be able to submit a petition for rulemaking to have the guidance document
changed, to which the agency would be legally bound to respond. Levin, supra note 3, at 32-33. As Levin
acknowledges, this is not the course taken by the D.C. Circuit or other courts (though the Supreme Court has yet to
weigh in). Whatever the correct legal doctrine, the approach I propose at the end of this Part is a means of achieving
the functional goal that Levin and the Community Nutrition court seem to share: allowing regulatory beneficiaries a
voice, some way or other, in deregulatory agency decisionmaking.
473
21 C.F.R. § 10.115(d)(1), (3).
474
Interview with Source 28, Official at FDA Office of Regulatory Affairs.
475
Interview with Source 99, EPA official.

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guarantees, “[a]s a practical matter, . . . the agency ‘winks;’ that is, it lets it be understood that
you can rely on the policy statement and avoid enforcement if you act in conformance with the
policy statement.”476 This is indeed how some agencies operate, particularly regarding
individualized forms of guidance on which the receiving party is especially likely to rely. At the
SEC, for example, official legal reliability is weak, but de facto reliability is strong. A regulated
party who requests and receives a no-action letter from a division of the SEC regarding the
permissibility of some transaction “can consider the letter a promise that the division staff will
not bring that particular transaction to the Commission’s attention for enforcement action,”
although this promise does not amount to much legally: it “probably would not constitute a basis
for legal estoppel.” Nonetheless, regulated parties “highly value no-action letters, undoubtedly
because the Commission appears to have never proceeded against the recipient of a no-action
letter who acted in good faith on the letter’s advice.”477 More generally, “many securities law
practitioners and their clients consider no-action letters a source of de facto law.”478
At DOT, Neil Eisner, the former Assistant General Counsel for Regulation and
Enforcement, said that, notwithstanding guidance’s lack of binding legal effect on the agency, he
could not recall the Department ever, in an enforcement context, going back on any of the
numerous guidance documents that were issued from headquarters. DOT officials’ reticence to
go back on guidance, he explained, was not because they believed themselves legally constrained
from doing so, but because defeating reliance on guidance would not be good government
practice. That said, he believed the agency did need to be practically willing to go back on
guidance in the event of rogue behavior by field personnel (though such situations, he noted,
were “not common”). For example, when a field inspector provided guidance to a company that
was more industry-friendly than, and contrary to, guidance issued in writing by a headquarters
official designated to do so by agency regulation, headquarters stopped him, and if the company
(which was sophisticated and should have known better) had acted on this bogus guidance, an

476

Funk, supra note 15, at 1335.
Donna M. Nagy, Judicial Reliance on Regulatory Interpretations in SEC No-Action Letters: Current Problems
and a Proposed Framework, 83 Cornell L. Rev. 921, 943 (1998) (emphasis added) (analyzing 17 C.F.R. § 202.1 and
related provisions). See also Interview with Source 19, former SEC official (stating that she was not aware of any
instance in which a no-action letter was not honored in the enforcement context, although the agency might
aggressively distinguish a no-action letter).
478
Nagy, supra note 477, at 924-25.
477

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enforcement action would have been lawful and appropriate, though the agency would have gone
easier on a less-sophisticated company.479
At OSHA, the Field Operations Manual, which covers matters like what civil penalties an
inspector should impose on an employer, states that its contents “are not enforceable by any
person or entity against the Department of Labor or the United States.”480 Yet Baruch Fellner,
the founding partner of Gibson Dunn’s OSH practice, observed that if OSHA field personnel
deviated from the Field Operations Manual in a manner unfavorable to an employer (say, on
levels of penalties), the employer could contest the citation and “hold [OSHA’s] feet to the fire”
and make it follow the Manual. The higher levels of the agency passing on contested citations
were consistent in following the Manual, “to the extent humans can be consistent.”481
Of course, the fact that guidance’s doubtful legal protection can translate into strong
practical protection, as with SEC no-action letters or DOT headquarters guidance or the OSHA
Manual, does not mean it will always do so. It is a matter of the agency’s organizational and
political choices, which can vary. EPA guidance appears somewhat less practically reliable. A
senior environmental counsel to a Fortune 100 company said that EPA guidance would protect
you against enforcement “98%” but “not 100%.”482 An EPA official commenting on guidance
for how to do FIFRA applications said it came with the “caveat” that EPA could change its mind,
though she said the agency would not “deviate cavalierly.”483
While it might well be better government practice for agencies to provide more legallyironclad bases for reliance—ACUS has recommended as much by urging agencies to make
greater use of binding declaratory orders484—the consultant on that project acknowledged that
technically-nonbinding guidance documents “[m]ore often than not . . . meet the immediate
needs of both agencies and regulated parties, furnishing reliable guidance with little burden
imposed upon the agency.”485
Taking as given the now-prevailing view that guidance cannot impose officially-binding
limits on regulation, we should ask whether this mandate for nonbinding status actually serves
479

Interview with Neil Eisner, consultant; former Assistant General Counsel for Regulation and Enforcement, DOT.
OSHA Field Operations Manual (Aug. 2, 2017), ABSTRACT-3.
481
Interview with Baruch Fellner, Partner, Gibson Dunn.
482
Interview with Source 119, senior environmental counsel at Fortune 100 company.
483
Interview with Source 41, EPA official.
484
ACUS Recommendation 2015-3, 80 Fed. Reg. 78163 (2015).
485
Emily S. Bremer, The Agency Declaratory Judgment, 78 Ohio St. L.J. (forthcoming, 2017-18), manuscript at 13,
available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955214.
480

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the goal that cases like Community Nutrition Institute sought to pursue—that is, to allow
beneficiaries of regulation a voice in agencies’ deregulatory decisions.486 The reaction of
agencies to cases like Community Nutrition Institute has often been not to do legislative
rulemaking (which surely would allow regulatory beneficiaries a voice) but instead to disclaim
more strongly the binding status of guidance.487 Assuming arguendo that we should take those
disclaimers at face value, what is the good they do for regulatory beneficiaries? Presumably the
disclaimers render the deregulatory guidance nonbinding, meaning the agency must be flexible
in administering it—that is, not automatically give industry the benefit of a lighter regulatory
touch in every inspection, permit application, etc. But as we saw in Part III, what animates
agency flexibility day-to-day is that regulated parties in individual enforcement and adjudicatory
proceedings—or in individual entreaties in anticipation of such proceedings—ask the agency to
make departures. It is the agency’s responsiveness to these micro-requests that largely
constitutes flexibility. But when guidance is deregulatory, who plays the role of the requestmaking company? Even if the agency would be responsive and flexible if asked, who will do the
asking?
It is not as if every regulatory enforcement action or permit proceeding has an NGO on
the other side seeking more stringent treatment of the industry party. To be sure, sometimes an
NGO is present at the micro-level. This is perhaps most common in some parts of environmental
regulation: interviewees gave examples of NGOs taking part in disputes about guidance in
informal conversations at the EPA Air Program office regarding industry requests for
departures;488 in EPA-supervised state agency permit proceedings under the Clean Air Act;489
and in EPA proceedings on whether to override state permits under that same act.490 But in
486

My discussion here is partly inspired by a line of scholarship on a distinct but related issue: whether and how
regulatory beneficiaries can obtain judicial review of deregulatory guidance documents. See Strauss, Publication
Rules, supra note 71, at 817; Mendelson, supra note 472, at 420-24; Seidenfeld, supra note 472, at 344. Further,
Mendelson argues we should seek to ensure regulatory beneficiaries’ participation in guidance development by
conferring on them a right to petition agencies to revise or repeal guidance documents. Mendelson, supra note 472,
at 438-44. Levin argues that regulatory beneficiaries have such a right under existing law. Levin, supra note 3, at
33 n.157.
487
E.g., Richard M. Thomas, Prosecutorial Discretion and Agency Self-Regulation: CNI v. Young and the Aflatoxin
Dance, 44 Admin. L. Rev. 131, 153 (1992).
488
Interview with Source 103, former senior official at EPA Air Program Office.
489
Interview with Source 128, employee at environmental NGO.
490
Interview with David Hawkins, director, climate program, Natural Resources Defense Council; former Assistant
Administrator, Air Program Office, EPA. Like interviewees in this study generally, Hawkins was speaking for
himself and not on behalf of any organization. See also Interview with Source 54, former EPA official (discussing
NGO judicial challenges to EPA permit proceedings and the role of guidance therein).

136

many regulatory areas, NGOs will play little to no role in individual proceedings. They may lack
any legal right to get involved, may lack the resources to contest or even find out about the
proceedings, and the proceedings may be confidential and/or involve rapid settlements. Thus
NGOs will often have no opportunity to press for flexibility case-by-case.
In these areas, a better means of ensuring the salutary goal of Community Nutrition
Institute is to allow regulatory beneficiaries and NGOs an opportunity to contest the agency’s use
of the guidance document wholesale, not retail. This is the means of participation most
commensurate with NGOs’ limited resources and the practical inability of some of them to
monitor anything more than the most salient things an agency does.491 Eisner said that, during his
tenure at DOT, he never heard of an NGO becoming involved in an individual adjudication or
enforcement action, but he had certainly seen NGOs get involved in legislative rulemakings and
in participatory processes that DOT voluntarily undertook when issuing guidance documents.
The best time for NGOs to get involved, he observed, was when guidance was first issued, not
when it was individually applied.492

V. PUBLIC PARTICIPATION IN ISSUANCE OF GUIDANCE
Because the factors discussed in Parts III and IV will sometimes prevent regulated parties
and regulatory beneficiaries from benefiting from flexibility on guidance at the implementation
phase, it is natural to ask whether this problem could be mitigated by inviting them to participate
at an earlier stage—to ask for their input when guidance is formulated and issued, at a general
level, in the first place. Part IV set forth an argument in favor of such participation for regulatory
beneficiaries, and this Part will evaluate the idea more broadly, for both regulatory beneficiaries
and regulated parties, with attention to how participation should be implemented.
Section A notes there are many different levels at which participation can occur, e.g., the
agency may reach out to handpicked stakeholders, may set up a broader stakeholder meeting,
may proceed through an even broader advisory-committee process, or (the broadest option)
undertake voluntary notice and comment on a draft of the guidance document. As noted in

On limits of NGOs’ monitoring capacities, with respect to rulemaking, guidance, and judicial review, see
Mendelson, supra note 472, at 424, 430.
492
Interview with Neil Eisner, consultant; former Assistant General Counsel for Regulation and Enforcement, DOT.
491

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Section B, notice and comment on a guidance document is not the same as legislative
rulemaking; it is less costly in a variety of ways. Section C then examines the benefits and costs
of notice and comment for guidance, emphasizing how they vary greatly depending on context.
Notice and comment will often be worth it, but it is hard to state generally when.
I conclude in Section D by considering the wisdom of a government-wide requirement of
notice and comment for a large category of guidance documents. I take the view that such a
mandate, if extended beyond the most extraordinary guidance documents, would be unwise, not
only because of the variability discussed in Section C, but also because of certain risks on which
Section D goes into depth, particularly (i) the danger that a resource-strapped agency facing such
a broad mandate may leave guidance indefinitely in published draft form, defeating the purpose
of public comment and—insofar as regulated parties face the strong incentives to follow
guidance noted in Part II—placing those parties in a difficult and confused position; and (ii) the
possibility that a strong mandate for public comment on guidance could have the effect of
legitimating a wholesale shift away from legislative rulemaking—an outcome that might be good
or bad, but in any event profound enough that we must debate it on a higher plane than that of
talking about guidance.
Before we begin, some background is in order regarding participation in the formulation
of guidance at FDA, an agency that plays an especially prominent role in this Part. FDA
operates under a set of Good Guidance Practices (GGPs), which are procedural rules initially
adopted by the agency in early 1997,493 specifically authorized and required by Congress later
that year,494 and then repromulgated, without fundamental changes, in 2000.495 Under the GGPs,
FDA generally conducts pre-adoption notice and comment for all its “Level 1” guidance
documents, which are defined broadly as those that “(i) Set forth initial interpretations of
statutory or regulatory requirements; (ii) Set forth changes in interpretation or policy that are of
more than a minor nature; (iii) Include complex scientific issues; or (iv) Cover highly
controversial issues.”496 This notice-and-comment mandate—unusual among agencies in its
breadth and specific statutory basis—does not exhaust FDA’s means for investing guidance with
493

62 Fed. Reg. 8961 (1997). The notice and comment provision appears in id. at 8968.
111 Stat. 2296, 2368 (1997), codified in 21 U.S.C. § 371(h). The quotation is from § 371(h)(1)(C)(i).
495
65 Fed. Reg. 56468 (2000), codified mainly in 21 C.F.R. § 10.115.
496
21 C.F.R. § 10.115(c)(1). For guidance other than “Level 1,” FDA also invites public comment, post-adoption.
21 C.F.R. § 10.115(g)(4)(C). More generally, FDA is willing to receive comments on any guidance document at
any time. 21 C.F.R. § 10.115(g)(5).
494

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stakeholder input, but the mandate does mean that FDA has arguably the richest experience of
any agency with public participation on guidance, illuminating a host of advantages and
challenges that come with it.

A. Diverse Means of Stakeholder Participation
Although a guidance document can remain an intra-agency secret until the day it
becomes official,497 agencies frequently seek outside input on such documents before making
them operative. Agencies typically have discretion to decide the form and amount of that input.
It can range from confidential targeted outreach to public meetings to advisory-committee
proceedings to the solicitation of public comment.498
The most confined sort of participation is targeted outreach to stakeholders whom the
agency selects. Such contacts have been noted in the literature by Nina Mendelson, who argues
that they are likely to be predominantly with industry rather than other stakeholders499—a point
for which the interviews offer some support, though it is fragmentary and mixed. At FDA,
officials will sometimes hold meetings on formulation of guidance (prior to publication of a
draft) with industry players, including trade associations, individual companies, or physician
groups, all of which are subject to a general FDA meeting-disclosure policy.500 Officials at
Public Citizen said they had never given, nor tried to give, this kind of pre-draft input, but they
guessed FDA had such interchanges with industry.501 At EPA, said an Office of General
Counsel official, if the reach of the guidance document was relatively narrow, the agency might
just do targeted outreach to industry and environmental groups.502 In administering the Safe
Drinking Water Act (SDWA), for which the states are co-regulators, EPA may send the draft
document to all the state governments,503 or to (say) a half-dozen states that know the issue.504
According to an official at a public interest organization working on immigrants’ rights, his group had no
forewarning of DHS’s Deferred Action for Childhood Arrivals until it was made official on June 15, 2012; it was
“the best-kept secret in town,” the DHS Secretary was secretive about it, and key House and Senate staff had no
warning. Interview with Source 45, official at public interest organization working on immigrants’ rights.
498
See generally Interview with Source 61, EPA Office of General Counsel official (stating that the development of
each guidance document involves “some level” of outreach).
499
Mendelson, supra note 472, at 427-28.
500
Interview with Source 24, trade association official. This is, of course, in addition to FDA’s routinized taking of
public comment on guidance once it is published in draft. See infra text at notes 659-662.
501
Interview with Michael Carome and Sammy Almashat, Public Citizen Health Research Group.
502
Interview with Source 61, EPA Office of General Counsel official.
503
Interview with Carrie Wehling, EPA Office of General Counsel official.
504
Interview with Source 84, former EPA Office of Water official.
497

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According to Lynn Thorp of Clean Water Action, the office administering SDWA is keen to get
diverse stakeholder feedback and will ask the public-health NGOs it knows for help in finding
other public-health NGOs.505 OSHA sends drafts of guidance documents to “key players,”506
and has made alliances with industry associations on certain guidances, such as the National
Staffing Association (for temps).507 An interviewee who held senior posts at CFPB and other
federal agencies said that the banking regulatory agencies, in formulating guidance, would often
reach out to trade associations to say, “help us understand Topic X better,” as these associations
are able to gather information from their members, and the agencies have found that bank trade
association members may be more willing to share operational information with the government
when they can do so without the risk that it will draw regulatory scrutiny, e.g., when it is
aggregated with information collected from a number of institutions without identifying any. To
balance the industry perspective; the banking agencies reach out to the main consumer protection
groups in the same way.508 A former senior Federal Reserve official said that, before issuing a
guidance document, he might phone people at some financial institutions, on a confidential basis
(not for them to report up the chain within their institutions), to ask them if he was missing any
implications the guidance would have.509 An official at a nonprofit public policy research
organization said that, relative to CFPB, prudential banking regulatory agencies like the Fed
were, in his experience, not proactive in seeking non-industry input (though they were always
receptive to meetings when he sought them).510
A broader form of participation on guidance’s development consists of more capacious
stakeholder meetings, workshops, forums, roundtables, discussions at conferences, or webinars;
these vary in their breadth of participation and how much they satisfy stakeholders. According
to Lynn Bergeson, managing partner of Bergeson & Campbell (which has a specialization in
chemical regulation), EPA “often” does stakeholder meetings related to guidance when
administering TSCA, FIFRA, and parts of the Air Program, which are valuable, though they are
usually in DC (unless it is a huge initiative with meetings around the country) and thus limited to
505

Interview with Lynn Thorp, Campaigns Director, Clean Water Action.
Interview with Adam Finkel, Senior Fellow and Executive Director, Program on Regulation, University of
Pennsylvania; former regional administrator, OSHA.
507
Interview with Source 36, AFL-CIO official.
508
Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
509
Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.
510
Interview with Source 131, official at nonprofit public policy research organization, formerly consultant and
product manager in consumer finance industry.
506

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attracting “beltway people” and trade associations, although EPA tries hard to “grow” the group
of stakeholders, e.g., through webinars.511 A former EPA Office of Water official observed that
the agency conducted public meetings, call-in sessions, and webinars on the formulation of
guidance under SDWA, though he had observed some controversy (e.g., with a major trade
association) over whether full-blown notice and comment was needed for certain guidance.512
FDA, for its part, sometimes obtains early input on guidance through a public meeting, noted a
trade association official.513 According to an FDA Office of Policy official, the agency has held
workshops on guidance, pre-draft and post-draft.514 CMS, said a partner in a large law firm
healthcare practice, takes input on guidance at policy forums, though it could do more.515 CFPB,
observed an official at a nonprofit public policy research organization, was more proactive than
the prudential banking regulators in seeking out non-industry input, including from consumer
and research groups, e.g., through roundtables.516
Advisory committees are potentially a venue through which stakeholders can help to
develop or amend guidance. A striking example is the National Organic Standards Board
(NOSB), which advises the USDA National Organic Program on the regulation of organic
certifiers. The NOSB has been a focal point in the development of high-stakes NOP guidance on
the question of how frequently certifiers must undertake costly peer evaluations of their
inspectors in the field. As recounted by former NOSB chair Jean Richardson, NOP asked NOSB
to address this question, and NOSB took public comment on it. NOSB then recommended that
evaluations be every 3-5 years, but NOP eschewed this advice and wrote the guidance to suggest
inspections every year, then sent some actual noncompliance warnings that tracked the guidance.
Certifiers were dismayed, and they and other stakeholders used NOSB proceedings to express
themselves, and the NOSB ultimately engaged in dialogue with NOP to seek a modification of

511

Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell. See also Interview with Source 61,
EPA Office of General Counsel official (noting public meetings and webinars).
512
Interview with Source 84, former EPA Office of Water official.
513
Interview with Source 24, trade association official. This is, of course, in addition to FDA’s routinized taking of
public comment on guidance once it has been published in draft.
514
Interview with Source 25, FDA Office of Policy official. See also Interview with Source 31, official at FDA
Center for Devices and Radiological Health (noting stakeholder meetings on guidance).
515
Interview with Source 101, partner in large law firm healthcare practice
516
Interview with Source 131, official at nonprofit public policy research organization, formerly consultant and
product manager in consumer finance industry.

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the guidance.517 NOP ultimately granted this, backing off its every-year stance.518 In general,
although NOP routinely takes public comment on guidance documents directly, stakeholders can
also submit comments on a routine basis through the NOSB’s proceedings (on guidance among
other topics), and those NOSB proceedings see a higher volume of comments than do the
solicitations by NOP on guidance directly.519 This can make NOSB the venue for public input
on NOP guidance. Richardson said the board was unlike other advisory committees she had sat
on elsewhere in the government, because the organic community was so deeply engaged—a
level of input that was “almost ridiculous,” with something like 2,000 written submissions and
two full days of “open mic” at every public meeting, with a lot of this participation being on
guidance, as in the example above.520 Jake Lewin, president of a large certifier, said NOP was
good at listening to public comment through the NOSB channel.521
USDA NOP is not the only program in which an advisory committee serves as a conduit
for stakeholder participation on guidance. Several committees at EPA play this role, including in
the offices administering the SDWA,522 and FIFRA.523 OSHA’s National Advisory Committee
is asked to review some guidance,524 as are some FDA advisory committees.525
Generally, the broadest and most impersonal means of participation in the issuance of
guidance is solicitation of public comment. The agency can do this through its own website, as
the FAA normally does for many of its advisory circulars.526 Or it be done through the Federal
Register and the regulations.gov website, as with FDA.527 Other agencies alternate between
these venues depending on the document. EPA uses one or the other and opts for the Federal
Register the more (a) the guidance is highly significant, (b) the demand for the guidance allows

517

Interview with Jean Richardson, former chair, National Organic Standards Board, USDA.
NOP 2027, Instruction: Personnel Performance Evaluations, NOP 2027 (Effective March 6, 2017), available at
https://www.ams.usda.gov/sites/default/files/media/2027.pdf
519
Interview with Miles McEvoy, Deputy Administrator (for NOP), Agricultural Marketing Service, USDA.
520
Interview with Jean Richardson, former chair, National Organic Standards Board, USDA.
521
Interview with Jake Lewin, President, CCOF Certification Services.
522
Interview with Lynn Thorp, campaigns director, Clean Water Action (noting role of National Drinking Water
Advisory Council in issuance of guidance, as well as ad hoc working groups and advisory committees).
523
Interview with Source 41, EPA official (noting role of the FIFRA Scientific Advisory Panel, whose reports
effectively serve as a kind of guidance for agency and industry on emergent scientific questions).
524
Interview with Source 36, AFL-CIO official.
525
E.g., Interview with Source 30, official at FDA Center for Biologics Evaluation and Research (noting guidance
may go through an advisory committee).
526
Interview with Kathryn Thomson, Partner, Morrison and Foerster; former general counsel, DOT; former chief
counsel, FAA; Interview with Sources 64, 65, and 66, officials at Airlines for America.
527
Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and Green.
518

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for the additional time that Federal Register publication requires, (c) the likely level of public
interest in the guidance warrants Federal Register publication, and (d) the affected community
cannot be easily reached through means other than the Federal Register.528
The pros and cons of soliciting public comment on guidance will be the focus of the rest
of this Part. In figuring out these pros and cons, we must remember that the baseline is not
necessarily zero public participation. It is, rather, the less-elaborate but sometimes effective
forms of participation just discussed.

B. Burden of Public Comment on Guidance Less Than Legislative
Rulemaking
If the agency is going to solicit public comment on guidance, why not just go the whole
nine yards and proceed by legislative rulemaking, thus getting the benefit of legally-binding
force? The reason is that the actual taking of public comment is only a fraction of the burden
that legislative rulemaking imposes, and even if one focuses on the taking of comment alone, it is
often less burdensome for guidance than for rulemaking. Thus, for most agencies at least,
“notice-and-comment guidance” is considerably faster and less expensive than notice-andcomment rulemaking.
In discussing why legislative rulemaking takes the amount of time and resources that it
does, interviewees prominently cited five aspects of the process, all of which are either absent or
less costly when the process is voluntary notice and comment for guidance. In roughly
descending order of prominence, the factors were: (1) mandates for cost-benefit analysis; (2) the
prospect of judicial review and the consequent need to build a record and respond to comments;
(3) the actual taking of comments; (4) technical challenges in drafting; and (5) dealing with
stakeholders mobilized by the agency proceedings.
1. Mandates for Cost-Benefit Analysis
Before significant legislative rules can be proposed or finalized by executive agencies,
they are reviewed by the President’s Office of Management and Budget to ensure, inter alia, that
the agency engaged in appropriate cost-benefit analysis. OMB also reviews executive agencies’

528

Email from Carrie Wehling, Office of General Counsel, EPA.

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“significant” guidance documents.529 The relevant Executive Order’s definition of “significant”
is, in many ways, open-ended.530 According to an official at EPA’s Office of General Counsel,
the decision on which guidance documents to submit to OMB for review is made at the senior
management level of the agency, by political appointees, and the handling of the question
changes depending on who is in the relevant agency-manager and OMB positions.531
Generally, interviewees thought OMB review was less likely for guidance than for
legislative rules and, when it occurred, less time-consuming. A former senior official at EPA’s
Air Program office said he thought OMB review of guidance took less time than of legislative
rules.532 Lynn Thorp of Clean Water Action observed that OMB scrutiny of EPA guidance was
less than that for legislative rules.533 A former senior FDA official noted that OMB was not
much engaged with the agency’s day-to-day scientific guidance,534 while a former senior FDA
career official said many FDA guidance documents did not go through OMB at all.535 William
Schultz, former HHS General Counsel, in discussing differences between the notice-andcomment process for rulemaking and the notice-and-comment process for guidance, cited OMB

529

Peter R. Orszag, Director, OMB, Memorandum for the Heads and Acting Heads of Executive Departments and
Agencies: Guidance for Regulatory Review (March 4, 2009) (stating that, during the period 1993-2007, “OIRA
reviewed all significant proposed or final agency actions, including significant policy and guidance documents” and
that “[s]uch agency actions and documents remain subject to OIRA’s review under Executive Order 12866”). See
also Anthony, supra note 7, at 1318 n.23 (quoting Memorandum from the Vice President to the Heads of Executive
Departments and Agencies on the Regulatory Review Process (March 22, 1991): “The Administration has
consistently interpreted the Executive Order [on regulatory review] to include all policy guidance that affects the
public”).
530
Executive Order 12866, § 3(f) (“‘Significant regulatory action’ means any regulatory action that is likely to result
in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a
material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health
or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise
interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of
entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel
legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in this
Executive order.”).
531
Interview with Carrie Wehling, Office of General Counsel, EPA.
532
Interview with Source 103, former senior official at EPA Air Program Office.
533
Interview with Lynn Thorp, campaigns director, Clean Water Action. A somewhat more qualified view appeared
in Interview with Source 96, former senior EPA official with cross-office responsibilities (stating that, in internal
agency deliberations on whether to proceed by rulemaking or guidance, there was a perception that guidance may be
easier to get through OMB, but interviewee was not sure that was true anymore, though historically people
perceived it to be true).
534
Interview with Source 107, former senior FDA official.
535
Interview with Source 112, former senior FDA career official. See also Interview with Source 24, trade
association official (stating that FDA legislative rules would go through OMB “always,” but guidance “not
necessarily”).

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delays, which he said can be severe.536 Daniel Troy, general counsel of GlaxoSmithKline and
former chief counsel of FDA, said one reason for FDA personnel’s preference for guidance over
legislative rulemaking was that it avoided OMB review.537 At USDA NOP, which does notice
and comment on “most” of its guidance,538 the head of the program cited OMB review as one of
a few factors that makes legislative rulemaking generally slower than guidance.539 Richardson,
the former chair of the National Organic Standards Board, said legislative rulemaking was
greatly delayed by agency economic analysis in contemplation of OMB review, which was not
done for guidance; and whereas OMB was a focal point for private lobbying regarding legislative
rules, causing further delay, this was not true of guidance. The result was that legislative
rulemaking took “much longer” than guidance even when the latter went through public
comment.540 At DOT, said the former general counsel Kathryn Thomson, guidance, even with
public comment, was “much faster” than legislative rulemaking, mainly because it was not
necessary to do cost-benefit analysis in contemplation of OMB review; OMB would accept a fast
process for guidance more than it would for a legislative rule.541 At the Department of Energy
appliance standards program, recalled a former Department division director, OMB could delay
or accelerate legislative rulemaking depending on the administration’s calendar and politics, but
guidance was not subjected to OMB review.542
In banking regulation, where most of the agencies are independent and therefore not
subject to OMB review, economic analysis can still cause legislative rulemaking to take longer
than guidance, as such analysis may be required on some matters by statute or agency practice.543
An interviewee who held senior posts at CFPB and other federal agencies said that at the
independent banking agencies (i.e., those not funded with tax revenues and not subject to OMB
536

Interview with William Schultz, Partner, Zuckerman Spaeder; former FDA Deputy Commissioner for Policy
(1994-98); former HHS General Counsel (2011-16).
537
Interview with Daniel Troy, General Counsel, GlaxoSmithKline.
538
Interview with Miles McEvoy, Deputy Administrator (for NOP), Agricultural Marketing Service, USDA (noting
that “most” guidance is “Level 1” under the NOP’s guidance practices, for which NOP does notice and comment).
539
Interview with Miles McEvoy, Deputy Administrator (for NOP), Agricultural Marketing Service, USDA.
540
Interview with Jean Richardson, former chair, National Organic Standards Board, USDA. See also Interview
with Miles McEvoy, Deputy Administrator (for NOP), Agricultural Marketing Service, USDA (noting that internal
USDA economic analysis, though valuable, takes time and is a reason why legislative rulemaking takes longer than
guidance).
541
Interview with Kathryn Thomson, Partner, Morrison and Foerster; former general counsel, DOT; former chief
counsel, FAA.
542
Interview with Michael McCabe, former division director, Department of Energy.
543
On statutory requirements, see David W. Perkins & Maeve P. Carey, Cost-Benefit Analysis and Financial
Regulator Rulemaking, CRS Report R44813, at 7-8 (April 12, 2017).

145

review), where cost-benefit analysis may be required by statute, that analysis would be done for
legislative rulemaking but not for guidance, which helped explain why the former took longer.544
A former senior Federal Reserve official noted that, while the Fed’s legislative-rulemakingspecific cost-benefit analysis was “sometimes a bit skippy,” the CFPB did voluminous costbenefit analysis, because of its fear of D.C. Circuit case law striking down SEC action for
violating cost-benefit requirements.545
2. Building a Record and Responding to Comments in Anticipation of Judicial Review
The advent of “hard look” judicial review in the 1970s, ratified by the Supreme Court in
State Farm,546 pushed agencies to develop voluminous administrative records to support their
legislative rules and to devote countless hours to writing long preambles responding minutely to
public comments. An EPA official—in comparing legislative rulemaking (which he said took an
“excruciatingly” long time) with guidance (on which he said the agency was “much more
nimble”)—said that a “huge” difference between the two was the time spent developing the
administrative record and replying to comments, both of which he placed under the heading of
“judicial review accountability,” that is, the agency’s “fear” of investing in a legislative rule only
to have it struck down in court. EPA lawyers, he explained, were “vigilant” about ensuring that
the administrative record was “all there,” including the development of supporting documents,
with all data gathered and analyzed, which took a “ton of time.” Likewise, lawyers were vigilant
in making sure the agency accounted for all comments. By contrast, “very little” of this was
required for EPA guidance. There might be some accompanying materials, but it was “very
rare” to do a full supporting foundation, in part because much of the necessary information
would already have been gathered for a prior relevant legislative rulemaking, or would have
bubbled up from the implementation process for that prior legislative rule. And even if EPA
took public comment on a guidance document and responded (which it sometimes did), “we’re
coasting along the surface” compared to what is done for a legislative rulemaking preamble.547
A former senior official at the EPA Air Program Office concurred that, for guidance, supporting
material did not need to be gathered because it had already been assembled in prior legislative

544

Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.
546
Motor Vehicle Manufacturers’ Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983).
547
Interview with Source 99, EPA official.
545

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rulemakings, and public comments did not need to be addressed at the same level of detail as for
legislative rulemaking.548
There is a similar dynamic at FDA, which has a policy of taking public comment on a
very large proportion of its guidance documents.549 A former senior FDA official explained the
difference. Legislative rulemaking required support for everything in the record and a timeconsuming response to comments, and the costs of this process had been part of the agency’s
drive since the 1990s to rely more upon guidance, for which the process, even with public
comment, was much more “abbreviated.” Whereas legislative rules were “law” and had to be
supported, the agency in issuing guidance felt more free not to develop a voluminous record, and
the comments on guidance did not require the kind of response that was required on legislative
rules. The fact that FDA was sued much more on legislative rules than on guidance, he said, was
surely part of this.550 Similarly, a congressional staffer observed that, although FDA took public
comment on guidance, it generally did not give any response to comments, meaning there was
not the same kind of “State Farm obligation” as for legislative rulemaking, and so the process
did not ensure the same careful consideration of stakeholder views.551 A former senior FDA
official thought the lack of a requirement to respond to comments was a crucial and salutary
feature of FDA’s process for guidance: if you required a preamble, you might as well do
legislative rulemaking, and the whole thing would become “unworkable.”552 A former senior
FDA career official, discussing the difference between legislative rulemaking and guidance, said
responding to all substantive comments in a rulemaking in writing for publication added
“significantly” to the time spent.553 Overall, said an FDA Office of Chief Counsel official,
whereas legislative rulemaking was criticized for being “ossified,” it was possible to issue
guidance “pretty quickly.”554

548

Interview with Source 103, former senior EPA Air Program Office official. But see Interview with Source 96,
former senior EPA official with cross-office responsibilities (noting that for one proposed guidance document—
defining Clean Water Act jurisdiction—much technical work was done in support of it, and also for the later
legislative rulemaking).
549
On FDA’s policy, see infra text at notes 659-666.
550
Interview with Source 107, former senior FDA official.
551
Interview with Source 82, congressional staffer.
552
Interview with Source 110, former senior FDA official.
553
Interview with Source 112, former senior FDA career official. See also Interview with William Schultz, Partner,
Zuckerman Spaeder; former FDA Deputy Commissioner for Policy (1994-98); former HHS General Counsel (201116) (citing response to comments as one reason legislative rulemaking is slower than guidance at FDA).
554
Interview with Source 27, FDA Office of Chief Counsel official.

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Elsewhere, too, the research and analytic demands are less for guidance than for
legislative rulemaking. At OSHA, said the former deputy solicitor of DOL, guidance was faster
than legislative rulemaking in part because of judicial decisions requiring that the agency in each
rulemaking make a showing of significant risk and technological and economic feasibility.555 By
contrast, headquarters might have a regional office draft a guidance document, noted John
Newquist, a former assistant administrator of OSHA’s Region V (headquartered in Chicago).556
3. Taking Comment in Itself
The actual publication of the draft rule/guidance and the taking of comments on it (as
distinct from the work of responding to those comments) takes time and effort in itself, but this
time and effort did not figure nearly as prominently in the interviews as did cost-benefit analysis,
record-building, or responding to comments. And in any event, the burden of taking comment
per se tends to be less for guidance documents than for legislative rules. At the banking
agencies, said an interviewee who held senior posts at CFPB and other federal agencies, the
comment period tends to be shorter for guidance, and the comments fewer.557 The comment
period was also said to be shorter for guidance at the USDA National Organic Program, 558 and in
EPA clean water regulation.559 Comments were said to be less voluminous on guidance
compared to legislative rules at FDA.560
4. Drafting Challenges
Legislative rules are typically harder to draft than guidance, which adds further to the
time and resources they demand. Because legislative rules are mandatory, said an EPA official,
you “sweat each detail,” seeking to account for all factors and contingencies, since once the rule
is promulgated, “we can’t go back to it for 15 years.” Guidance, he said, does not involve the
same sweating of details.561 As to FDA, a former senior career official there said that, in writing
guidance, you need not be as careful on wording as on a legislative rule, because the language is
not binding and is described as reflecting the current thinking of the agency; you are therefore
555

Interview with Jonathan Snare, Partner, Morgan Lewis; former Deputy Solicitor (for OSHA), DOL.
Interview with John Newquist, Partner, Newquist Safety; former assistant regional administrator, OSHA.
557
Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
558
Interview with Jake Lewin, President, CCOF Certification Services.
559
Interview with Lynn Thorp, campaigns director, Clean Water Action.
560
Interview with Source 107, former senior FDA official.
561
Interview with Source 99, EPA official.
556

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more free to put in details, use narrative form, Q&A form, and plain language, since the
document is not “set in stone.” He recalled one subject on which he and his colleagues initially
sat down to write a legislative rule and found it impossible to start with “codified language,”
given the complexity of the matter; he therefore suggested handling the problem by writing
guidance, as a “dry run,” before drawing up binding requirements.562 In banking regulation, an
interviewee who held senior posts at CFPB and other federal agencies said that guidance was
“easier” to write and could be written “faster” than a legislative rule because “you don’t need to
nail everything down,” as the aim is to warn regulated parties to pay attention to certain risks, not
prescribe mandatory requirements.563
5. Dealing with Mobilized Stakeholders
The length, officially-binding status, and public salience of legislative rulemaking make
it a focal point for the mobilization of interest groups to pressure the agency and enlist political
allies in Congress, the White House, and elsewhere.564 This, in turn, makes legislative
rulemaking expensive to the agency in terms of political capital. An official at a public interest
organization working on immigrants’ right said that, in his experience seeking favorable policies
from DHS, he had found that legislative rulemaking tended to “exhaust all [the agency’s]
political capital,” more than issuing guidance did. Legislative rulemaking allowed time for the
opponents of an initiative to marshal their forces. If an agency and its stakeholder allies sought
to proceed by legislative rulemaking, he said, they were “declaring a grand war” and had to be
prepared for greater opposition.565 A former Department of Energy division director, explaining
why there was “no comparison” between the processes for legislative rulemaking and guidance,
emphasized that the “politics” of the former process “slowed it down,” for whenever the
proceeding seemed to veer in a direction that one interest group did not like, that group would
marshal evidence and political support to stop the process, enlisting friendly members of
Congress or the White House.566 With respect to the USDA National Organic Program, the

562

Interview with Source 112, former senior FDA career official.
Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
564
Raso, supra note 84, at 799-800; William F. West, Formal Procedures, Informal Processes, Accountability, and
Responsiveness in Bureaucratic Policy Making: An Institutional Policy Analysis, 64 Public Admin. Rev. 66, 72-73
(2004).
565
Interview with Source 45, official at public interest organization working on immigrants’ rights.
566
Interview with Michael McCabe, former division director, Department of Energy.
563

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president of an organic certifier, in discussing factors that slowed legislative rulemaking,
immediately cited the agency’s internal process for economic analysis (not applicable to
guidance), which he said could become a “pawn” in political clashes between different parts of
the industry, in which members of Congress might be involved.567

C. Benefits and Costs of Notice and Comment for Guidance
Given that public comment on guidance is not nearly as burdensome as for legislative
rulemaking, the question of whether to take such comment—instead of opting for no
participation or one of the lesser forms of participation noted in Section A—turns on the benefits
and costs. The benefits most prominently mentioned by interviewees were that public comment
can provide the agency with better technical and political information and can vest the agency’s
policymaking with more legitimacy, inducing stakeholders to “buy in.” The costs are time and
resources, possibly sapping the agency’s capacity to provide guidance in the first instance.
Below, I evaluate how these benefits and costs vary across agencies and contexts, with particular
attention to how the benefits, while undoubtedly real in some circumstances, cannot always be
counted on.
1. Benefits: Better Technical Information?
An oft-cited reason for taking public comment on guidance is that industry people and
other stakeholders outside the agency have information that could lead to better policy design,
e.g., about unforeseen implementation problems.568 A former senior Federal Reserve official
said it was wrong to issue guidance without prior public comment, because “nobody is that
smart.” That is, no agency knows enough to design guidance without first getting outside
perspectives on how the policy will actually work. Public comment, he said, really helps make
“better policy.”569 A former senior FDA official emphasized that FDA often had a lack of
understanding of how things worked internally at regulated companies, and for those instances,

567

Interview with Jake Lewin, President, CCOF Certification Services.
This is a classic reason given for the taking of comment on legislative rulemaking. Michael A. Livermore et al.,
Computationally Assisted Regulatory Participation, 93 Notre Dame L. Rev. (forthcoming 2018), manuscript at 7,
available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2970222 (reviewing literature).
569
Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.
568

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the agency’s practice of taking comment could fill knowledge gaps and have a real impact.570
Jonathan Snare, former deputy solicitor of DOL, said notice and comment could help with the
problem that OSHA sometimes did not understand how a guidance document would practically
impact employers.571 Kathryn Thomson, former general counsel of DOT, said the agency’s
practice of often taking public comment on guidance made the agency’s approaches “smarter”
and “better informed.”572 According to Charles Samuels, who represents the appliance
manufacturers’ trade association before the Department of Energy, notice and comment
improves the quality of guidance.573
But this rationale for public comment must be scrutinized, particularly because the
agency could sometimes acquire most or all of the knowledge gained through public comment
through a cheaper, faster, and more targeted form of outreach, perhaps bilateral conversations or
stakeholder meetings. According to a former agency general counsel, you should do notice and
comment on guidance only if you think a lot of people will be interested and you will get a lot of
good input. As a counter-example, he recalled how he represented a trade association for an
industry consisting of a small number of large companies with concentrated expertise. The
association met with agency officials to provide input on a guidance document. In that meetingroom, he said, “you had the benefit of all the intelligence you’d have gotten” through full-blown
notice and comment, meaning that such expanded participation would have been a “waste.”574
Similarly, a senior environmental counsel at a Fortune 100 company said that while public
comment on EPA guidance could lead to a “better product,” it was not always necessary. 575
Targeted outreach sometimes tells you all you need to know. The general counsel of a Fortune
500 company, expressing frustration that agency officials often wrote impractical guidance
documents, meaning they did not really understand what the regulated companies were doing,
said industry people would react by thinking, “If only [the officials] had called a few of us!”576

570

Interview with Source 80, former senior FDA official. See also Interview with Source 109, regulatory policy
executive at a drug manufacturer (making similar point).
571
Interview with Jonathan Snare, Partner, Morgan Lewis; former Deputy Solicitor (for OSHA), DOL.
572
Interview with Kathryn Thomson, Partner, Morrison and Foerster; former general counsel, DOT; former chief
counsel, FAA.
573
Interview with Charles Samuels, Partner, Mintz Levin (counsel to the Association of Home Appliance
Manufacturers).
574
Interview with Source 69, former agency general counsel.
575
Interview with Source 118, senior environmental counsel at a Fortune 100 company.
576
Interview with Source 73, general counsel to Fortune 500 company.

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What is public comment’s marginal contribution to the agency’s knowledge beyond what
it would glean from, say, a stakeholder meeting? Discussing this point, Lynn Bergeson,
managing partner of Bergeson & Campbell, who deals especially with the EPA offices on TSCA
and FIFRA, observed that, whereas a stakeholder meeting would normally be located in DC and
attract trade associations, national NGOs, and associations of state agencies, it would usually not
include parties outside DC: regional stakeholder groups, state agencies without DC associations
(or not aligned with their DC associations), mid-sized businesses, or start-ups. These same kinds
of stakeholders were also less likely to be on EPA’s listservs, meaning they could miss guidance
that was published for comment only on the EPA website and announced on the listservs, as
distinct from the Federal Register, which they were less likely to miss.577
The agency has to ask itself how much it would learn from otherwise-excluded
stakeholders like those listed above. That will depend on the particular matter at issue. The
question will never be fully answerable; indeed, the answer will have to be somewhat arbitrary,
for the agency must guess about the existence of knowledge it has not yet sought.578 The
question bears some similarity to the one addressed in a recent study by Cynthia Farina and her
colleagues, about when an agency that is already engaged in notice-and-comment rulemaking
through the Federal Register should seek input from people who would not comment without
prompting. Farina et al. argue that the agency should not seek more participation simply for
participation’s sake. “Many (perhaps most) rulemakings do not need more public
participation—or don’t need it enough to justify the expenditure of resources required to get
participation of value. The topics are too specialized, technical, or narrow to generate public
interest or the affected stakeholder groups are already participating in the conventional
process.”579 Instead the agency should seek broader participation when it has reason to think
otherwise-silent parties possess useful “situated knowledge,” that is, “information about impacts,
problems, enforceability, contributory causes, unintended consequences, etc. that is known by
the commenter because of lived experience in the complex reality into which the proposed
regulation would be introduced.”580 Farina et al. give the example of small-business truck
577

Interview with Lynn Bergeson, Managing Partner, Bergeson & Campbell.
For discussion of this challenge in agency decisionmaking generally, see Jacob Gersen & Adrian Vermeule, Thin
Rationality Review, 114 Mich. L. Rev. 1355, 1388-93 (2016).
579
Cynthia R. Farina et al., Rulemaking vs. Democracy: Judging and Nudging Public Participation That Counts, 2
Mich. J. Environmental & Admin. Law 123, 147 (2012).
580
Id. at 148.
578

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drivers affected by DOT policy regarding on-board recorders of hours of service, or travelers
with disabilities affected by DOT policy on accessibility of air travel facilities.
While efforts to glean knowledge from a broader range of participants are worthy, we
should not be overly sanguine in our hope that agency policymaking will be seriously influenced
by stakeholders who are not already somehow known to the agency. Even in full-blown
legislative rulemaking, there is reason to doubt this happens. By the time a notice of proposed
rulemaking is published, the agency has usually made a significant investment in the version of
the policy set forth in the notice, and changes occurring as a result of input during the comment
period tend to be incremental. Only prior to the notice is the policy truly plastic, and while the
agency often takes a great deal of stakeholder input in the pre-notice phase, that input necessarily
comes from parties whom agency officials already know to call up, or who already inhabit the
agency’s listservs, or who already attend the relevant conferences, etc., as distinct from the more
diffuse regulated public that keeps tabs on the Federal Register. Because of this, genuine
influence on rulemaking in its more plastic phase is largely confined to the “usual suspects.”581
2. Benefits: Better Political Information?
Besides technical information to improve the guidance document’s policy design, public
comment can also reveal political information that increases the agency’s chance of winning any
kind of political or legal controversy or negotiation over the guidance.582 According to
Thomson, the former DOT general counsel, notice and comment on guidance served as a means
to “test the political waters,” allowing the agency to anticipate “hurdles” and identify which
stakeholders would “push back.” This information would give the agency a better idea on
whether to move forward on the policy at all, or whether legislative rulemaking would be

581

West, supra note 564, at 70-74. For more on this dynamic, see Wendy E. Wagner, Administrative Law, Filter
Failure, and Information Capture, 59 Duke L.J. 1321, 1366-69, 1380-83 (2010); Richard Stoll, Effective EPA
Advocacy 73 (2d ed. 2014); Elliott, supra note 10, at 1492-93. Cf. Keith Naughton et al., Understanding
Commenter Influence During Agency Rule Development, 28 Journal of Policy Analysis & Management 258 (2009)
(finding substantial commenter influence at the advance notice of proposed rulemaking stage). That said, part of the
reason for the rigidity of a notice of proposed rulemaking is that the agency fears any major change would result in
judicial invalidation for lack of sufficient notice, West, supra note 564, at 73, so perhaps the unavailability of
preenforcement judicial review for most guidance documents could render published draft guidance more plastic
than an NPRM, giving more practical openness to the commenting process for guidance than we find for legislative
rules.
582
Cf. Livermore et al., supra note 568, at 8 (reviewing literature), on rulemaking. See also Farina et al., supra note
579, at 138 (noting that the existence of mass comment on a rulemaking can itself be a signal to the agency’s
political appointees regarding the politics surrounding the policy, if not its substance).

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necessary. In taking comment on guidance, she said, DOT wanted to find out where the
“landmines” were.583 According to James Conrad, the regulatory consultant, EPA uses public
comment on guidance to “smoke out opposition” while the agency can still respond, and to make
an informed decision on whether to fight for the policy.584
While notice and comment can serve this function well, it can also backfire. The key
point is that agency policy and industry behavior involve a certain amount of inertia. If the
agency springs new guidance on industry without public comment, one possibility is that
industry will fight back and bring political or legal pressure to get the guidance withdrawn or
invalidated, in which case the agency would have been better off seeking public comment in the
first place, so it could have backed off and avoided a costly fight, or better-prepared itself for
combat, or reached a compromise before the atmosphere was poisoned.585 But alternatively, if
the agency springs new guidance without public comment, the forces of inertia might cause
industry simply to go along with it, because the cost of compliance is not quite worth the fight.586
Charles Samuels, a partner at Mintz Levin who deals with guidance at the Department of Energy,
Consumer Product Safety Commission, and EPA, explained that if the agency reveals its plan
before making it operative, that may open the way for industry to make a political attack on the
policy, perhaps enlisting Congress to bring pressure. But if the agency makes the guidance final
immediately upon revealing it, industry may let it go.587 Getting operative guidance rolled back
can be harder than fighting a proposal that is tentative by its own terms. Being tentative can
invite resistance.
3. Benefits: More Legitimacy?
Broad participation through notice and comment may increase the legitimacy of the
document and of the agency itself, that is, the degree to which stakeholders view the agency as
making policy by a fair process in which they have some buy-in, which may incline them to be

583

Interview with Kathryn Thomson, Partner, Morrison and Foerster; former general counsel, DOT; former chief
counsel, FAA.
584
Interview with James Conrad, Conrad Law and Policy Counsel; formerly Assistant General Counsel at the
American Chemistry Council.
585
E.g., Nina A. Mendelson, Should Mass Comments Count? 2 Mich. J. Environmental & Admin. L. 173, 181
(2012) (example of this kind of scenario involving the Coast Guard).
586
Raso, supra note 84, at 799.
587
Interview with Charles Samuels, Partner, Mintz Levin (counsel to the Association of Home Appliance
Manufacturers).

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more cooperative with and supportive of the agency.588 A former senior Federal Reserve official
said that taking comment on guidance, even if the agency does not follow the comments, “adds
legitimacy.”589 According to a former senior EPA official with cross-office responsibilities, “we
gained more legitimacy” by doing notice and comment on significant guidance.590 In this
Subsection, I will consider three specific mechanisms by which public comment can foster
legitimacy, and I note potential limitations on each.
The first mechanism by which notice and comment on guidance may promote legitimacy
is by creating a sense that the agency is responsive to stakeholders, fostering mutual trust among
stakeholders and the agency. Samuels believed that notice and comment could be helpful “if you
want to build consensus” on guidance.591 Richard Naples, the chief regulatory officer of Becton
Dickinson, observed that the FDA’s policy of taking public comment on a large category of its
guidance documents allowed for a “meaningful dialogue” with regulated firms.592 An official at
a national public interest organization said that FDA accepted his organization’s comments “not
infrequently,” and he found the agency “responsive.”593 Regarding the USDA National Organic
Program, the president of one certifier found NOP, despite his disagreements with the agency, to
have an “open mind” and to be “fairly responsive” and “fairly reasonable” regarding comments
on guidance.594 An official at another certifier, describing NOP’s notice and comment process
for guidance, said that NOP might not incorporate all changes the certifiers wanted, but had an
“open ear,” resulting in an “overall positive experience.”595
But it is possible for stakeholders to view the agency’s solicitation of public comment on
guidance as a formal gesture without substance, in which case notice and comment does not

588

Cf. Livermore et al., supra note 568, at 8-9 (on rulemaking).
Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.
590
Interview with Source 96, former senior EPA official with cross-office responsibilities.
591
Interview with Charles Samuels, Partner, Mintz Levin (counsel to the Association of Home Appliance
Manufacturers).
592
Interview with Richard Naples, Chief Regulatory Officer, Becton, Dickinson, and Company.
593
Interview with Source 133, official at national public interest organization.
594
Interview with Jake Lewin, President, CCOF Certification Services.
595
Interview with Source 114, official at an organic certifier. Other interviewees’ assessments were more middling
or mixed. Officials at Public Citizen thought FDA’s level responsiveness to their comments was variable, and that it
was hard to explain why it varied. Interview with Michael Carome and Sammy Almashat, Public Citizen Health
Research Group. Daniel Troy, general counsel of GlaxoSmithKline, found FDA’s responsiveness to comment
“quite variable.” Interview with Daniel Troy, General Counsel, GlaxoSmithKline. Richard Stoll thought that,
regarding public comment on guidance, EPA was very responsive when it came to technical or factual issues, but on
major policy issues (such as defining Clean Water Act jurisdiction), “you won’t get anywhere,” because the political
appointees want to do things a certain way. Interview with Richard Stoll, Partner, Foley and Lardner.
589

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nurture legitimacy and may breed cynicism and alienation. This reaction may turn on several
factors, including how often the agency actually makes changes based on comments and whether
the agency issues a written response to comments (which agencies often do not do for guidance,
by reason of prohibitive cost, as I shall discuss in the next Subsection). At EPA, said former
civil enforcement director Eric Schaeffer, now head of an environmental NGO, officials
sometimes undertook notice and comment on guidance “just to cover themselves,” which left
stakeholders “frustrated.” He noted that sometimes the agency took comment on guidance
without giving a response, simply announcing the final guidance without acknowledging changes
or why they were made, which he considered “irritating” and “insulting.”596 An executive at an
environmental services firm said that one EPA office with which he frequently dealt took public
comment on guidance but did not actually pay attention to the input, which was frustrating to
regulated firms.597 A former EPA official said “nobody has faith” that EPA is actually looking at
the comments submitted on guidance. He generally had not seen more than minor changes to a
guidance document as a result of notice and comment. The exercise felt like the agency was
doing notice and comment just to say they’d done it—“check the box.” That said, the
interviewee later cited one document, the 2011 guidance on Best Available Control Technology
to reduce CO2 from bioenergy production, that he thought well-received because there had been
“a lot” of public participation in its formulation and EPA had “listened to both sides.”598
Meanwhile, at FDA, a former official there said a major disadvantage of guidance, compared to
legislative rulemaking, was that FDA generally gives no written response to comments, thereby
cutting out a “huge” part of the process of agency-industry dialogue. In cases where industry
comments do not get incorporated into the guidance document, “nobody knows” why. More
generally, said the interviewee, FDA’s preference for guidance over legislative rulemaking
“reduces industry acceptance” of FDA policy.599 As for OSHA, said U.S. Chamber of
Commerce executive director of labor law policy Marc Freedman, public comment on guidance

596

Interview with Eric Schaeffer, Executive Director, Environmental Integrity Project; former director of civil
enforcement, EPA. But see supra text at note 547, 639 (other interviewees stating that EPA usually does give some
response to public comment on guidance).
597
Interview with Source 106, executive an at environmental services company.
598
Interview with Source 54, former EPA official.
599
Interview with Source 20, former FDA official.

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was “rare,” and Freedman said he never saw the agency under the Obama administration make a
change in response to a Chamber comment: “I’m jaded about this.”600
The second mechanism by which notice and comment on guidance can enhance
legitimacy is by deflecting charges of selectivity, favoritism, or bias regarding whose voices the
agency hears. In contrast to targeted outreach (in which the agency handpicks its interlocutors)
or stakeholder meetings (whose attendance may depend on which stakeholders are engaged
enough to be on the right listserv or travel to DC), notice and comment is the most general, open,
and impersonal means of seeking participation.
NGO representatives considered the openness of notice and comment on guidance to be
an important means of leveling the playing field with industry. An official at a national public
interest organization that seeks to influence FDA guidance said that the “formal mechanism” of
notice and comment was “really beneficial” to his organization, because his organization did not
have the same “intimate” lobbying relationship with FDA that industry players had, nor the
resources to “always be there all the time” the way industry could be.601 Notably, the openness
of notice and comment can be valuable to non-industry groups even if they never actually submit
a comment in a specific proceeding. Andrew DeLaski, executive director of the Appliance
Standards Awareness Project (ASAP), which advocates for energy efficiency in appliances and
has the Department of Energy’s appliance standards as a major area of focus, stated that his
group had never actually commented on a Department guidance document. However, noted
DeLaski, his group was aware of the Department’s practice of generally posting guidance
documents for public comment before finalizing them, and his group did monitor those drafts.
Guidance documents were potentially concerning to his group, for a business seeking guidance
might be “testing” for a “loophole” in a legislative rule, and a guidance document could be an
“implicit weakening” or “backdoor loosening” of the rule. In the event that such concerns arose,
the Department’s transparent process meant that ASAP could object. This, said DeLaski, was an
improvement over the less transparent, more ad hoc approach to guidance that the Department

600

Interview with Marc Freedman, Executive Director of Labor Law Policy, U.S. Chamber of Commerce. Baruch
Fellner, founding partner of Gibson Dunn’s OSH practice, had a similar view of OSHA’s taking of meetings with
stakeholders: he found them “more C.Y.A. than substantive,” meaning the agency wanted to be able to say it
engaged in stakeholder dialogue, but did not actually listen to stakeholder views, such that guidance’s ultimate
content was predictable: “I haven’t seen them have an epiphany moment” in which they change their mind about a
guidance document’s content. Interview with Baruch Fellner, Partner, Gibson Dunn.
601
Interview with Source 133, official at national public interest organization.

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had followed before it adopted notice and comment circa 2009. In addition, the opportunity to
monitor and comment (even if never exercised) gave DeLaski “some confidence” that all
regulated firms were getting the same answer to the same question, which he considered
important for the integrity and political standing of the program.602
Notice and comment on guidance also allays the anxiety that officials themselves feel
that someone may accuse them of being cozy with industry or improperly influenced.603 That
anxiety can be quite real.604 The general counsel of a Fortune 500 company, bemoaning the fact
that agency officials writing guidance had too little understanding of internal regulated-firm
operations, thought it valuable for officials to attend industry conferences, but said that officials
were concerned about “being caught” in such settings.”605 Frank White, the former deputy head
of OSHA and former president of an HSE consultancy, observed that OSHA, when making any
kind of contact with stakeholders on the formulation of guidance, was “very sensitive” about
meeting with employers without labor representatives being present. Indeed, White said that, in
his private practice representing employers, he would try to team up with labor representatives
and bring them along to meetings with OSHA to make the officials “more comfortable.” Notice
and comment rulemaking, he noted, provided this comforting balance “automatically.”606 So, of
course, would notice and comment on guidance.
Yet ironically, the very openness, transparency, and impersonality of notice and comment
arguably detracts from some stakeholders’ capacity to contribute to agency policy and their sense
of “buy-in.” An example is FDA. While FDA’s procedures contemplate that the agency will
take public comment on guidance documents once they are published in draft form, the
procedures also say the agency “can seek or accept early input” on guidance prior to formulating
or publishing a draft.607 In fact, the procedures say that anyone outside FDA “can submit drafts

602

Interview with Andrew DeLaski, executive director, Appliance Standards Awareness Project. That said, DeLaski
did not have a problem with notice and comment occurring through the Department’s website and listserv, rather
than the Federal Register, since the website and listserv probably reached all the players who would have anything
to add in this technical area. Id.
603
Cf. Mendelson, supra note 472, at 424-33 (arguing that targeted outreach tends to advantage industry over
beneficiaries).
604
Cf. West, supra note 564, at 70 (discussing agency officials’ concerns about ex parte contacts in the legislative
rulemaking process).
605
Interview with Source 73, general counsel at Fortune 500 company.
606
Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL.
607
21 C.F.R. § 10.115(g)(1)(i).

158

of proposed guidance documents for FDA to consider.”608 Yet it proves difficult, as a political
matter, for FDA to sustain—alongside notice and comment—the kind of fluid, intimate, informal
dialogue contemplated by this provision. Naples, Becton Dickinson’s chief regulatory officer,
explained that, while he supported the FDA’s notice-and-comment policy and believed it had
done much good, it also had unfortunately resulted in FDA having less interaction with industry
than it should prior to publishing a draft guidance document, due to agency personnel’s “fear of
favoritism” and the sense of FDA lawyers that such pre-draft contacts were somehow
inappropriate despite being expressly permitted by agency procedures; consumer and patient
groups would criticize the contacts as “dirty” and as conduits for “undue influence.” FDA feared
the appearance of working too closely with industry. This limitation on dialogue was
unfortunate because “guidance needs science,” and “the companies have the science.” For
officials to formulate draft guidance in ignorance of industry knowledge was inefficient and
ended up creating more work later in the process.609 Other interviewees agreed that, despite
FDA’s extraordinary commitment to notice and comment on guidance, genuine communication
between agency and industry could be blocked by political fear of operating outside that process.
Bradley Merrill Thompson, counsel to device-maker trade associations, said that FDA’s failure
to communicate with industry on a pre-draft basis was a continuing problem and was currently
(as of October 2016) at a “low point,” in part because Commissioner Robert Califf, having been
subjected to “absurd” accusations about coziness with industry during his confirmation hearings,
was “sensitive” about the matter.610 Relatedly, Daniel Troy, general counsel of
GlaxoSmithKline, said that while he recalled a few times when a trade association submitted
draft guidance documents to the agency (as the FDA procedures expressly permit), “politics
these days” were “very challenging” for that kind of submission. It “looks like capture.”611 An
FDA Office of Policy official confirmed that the agency “rarely” sees industry submit draft
guidance.612 Janet Woodcock, Director of FDA’s Center for Drug Evaluation and Research,
likewise said outside submissions of draft guidance were “very uncommon,” partly because

608

21 C.F.R. § 10.115(f)(3).
Interview with Richard Naples, chief regulatory officer, Becton, Dickinson, and Company.
610
Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and Green.
611
Interview with Daniel Troy, General Counsel, GlaxoSmithKline.
612
Interview with Source 25, FDA Office of Policy official.
609

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parties might fear an “appearance of impropriety,” though she thought industry had many ways
to participate besides this.613
A similar dynamic may occur at parts of EPA. An executive at an environmental services
firm said that, while EPA over the last few decades had increasingly sought public comment on
drafts of guidance documents, the agency was decreasingly receptive to input from industry prior
to any version of guidance being published. He regarded this as unfortunate, because input
outside of notice and comment on a particular draft was more “free flow” and “back and forth”
and was thus more informative to the agency. By the time a draft was formulated and published,
he noted, EPA would already be “defensive” about the draft.614 This interviewee’s observation is
consistent with academic literature on legislative rulemaking indicating that, although a draft rule
is supposed to be the focal point for agency-stakeholder dialogue, the agency’s very act of
preparing the draft and achieving internal agreement on it causes the agency to become more
invested in the draft’s content and less willing to make changes.615
The third mechanism by which notice and comment on guidance could increase
legitimacy is by simply getting a larger number and wider range of stakeholders (especially
regulatory beneficiaries) to participate. In particular, public comment on guidance makes
guidance susceptible to the same kinds of “mass comment campaigns” that have become a
salient (if statistically rare) feature of legislative rulemaking. For example, searches of the
regulations.gov website yield approximately fifty draft guidance documents that EPA chose to
publish for public comment through the Federal Register in the period 2011-2014,616 and of
these, eight were subject to mass-comment campaigns yielding at least 5,000 comments each,
with five that exceeded 40,000 comments.617 These avalanches of comments might serve as
613

Interview with Janet Woodcock, Director, FDA Center for Drug Evaluation and Research. See also Interview
with Source 80, former senior FDA official (noting FDA sometimes encourages submission of draft guidance and
that it has happened); Interview with Source 20, former FDA official (noting that in some instances industry does
submit draft guidance while in others it seeks influence by more indirect means; and that in any case the agency
tends to “hunker down” and stop communicating with stakeholders at some point in the formulation process before
publishing a draft).
614
Interview with Source 106, executive at an environmental services company.
615
West, supra note 564, at 72. Compare Naughton et al., supra note 581 (finding more influence at the advance
notice of proposed rulemaking stage).
616
Note these searches would not pick up guidance documents that EPA published for public comment on its own
website.
617
For each of these eight documents, one can calculate a very rough number of mass-comment-campaign
comments by going to the webpage for the document’s docket folder and subtracting the count of unique comments
appearing in the parenthetical after the “Comments (View All)” heading from the count of total comments under the
heading “Comments Received*.” But note the difference will not exclude comments that were part of a mass-

160

prima facie evidence that notice and comment is making the formulation of guidance more
legitimate in a democratic sense—in terms of the mass public’s sense of ownership of what the
agency does.
But some scholars of legislative rulemaking—where mass comment has been studied for
several years—have argued that, if we operate from a conception of democratic legitimacy
befitting administrative policymaking, the value of mass comments is dubious. As noted by
Farina and her colleagues, “high-volume commenting almost always stems from action
campaigns by one or more advocacy groups.” The “primary purpose of the [groups’]
campaigns,” say Farina et al., “is persuasive, not educational,” based on appeals to emotion,
hyperbolic language, and “selective deployment of facts.” The comments arising from the
campaigns do not fit the paradigm of deliberative democracy—pluralist and open yet also
evidence-based and rational—that has historically characterized agency policymaking, as distinct
from a raw plebiscitary model of policy choice. Treating commenting as a plebiscite is dubious
for the additional reason that comments are not a representative sample of the population or
electorate.618 In fact, as Nina Mendelson has said, comments from the mass public often state

comment campaign insofar as the individual commenters personalized their comments. On the tendency to “slightly
personalize” comments in mass-comment campaigns, see Farina et al., supra note 579, at 141. The eight
documents, with counts, are:
● Draft Guidance on Identifying Waters Protected by the Clean Water Act, EPA-HQ-OW-2011-0409
(230,625 minus 3,878 equals 226,747).
● UIC Permitting Guidance for Oil and Gas Hydraulic Fracturing Activities Using Diesel Fuels—Draft,
EPA-HQ-OW-2011-1013 (97,147 minus 2,732 equals 94,415).
● Updates to Protective Action Guides Manual: Protective Action Guides (PAGs) and Planning Guidance
for Radiological Incidents, EPA-HQ-OAR-2007-0268 (68,350 minus 2,213 equals 66,137).
● Benefits of Neonicotinoid Seed Treatments to Soybean Production Docket Fold, EPA-HQ-OPP-20140737 (41,571 minus 938 equals 40,633). (This document is an assessment of the benefits of certain seed
treatments to soybean production, conducted as part of EPA’s “periodic review of pesticide registrations.”
The notice inviting comment, posted October 22, 2014, is prefaced with the word “Guidance.”)
● Solicitation of Public Comments re: Guidance on Improving EPA Review of Appalachian Surface Coal
Mining Operations Under CWA, NEPA and EJ Executive Order, EPA-HQ-OW-2010-0315 (63,601 minus
810 equals 62,791).
● Notice of availability of the 2012 Recreational Water Quality Criteria, EPA-HQ-OW-2011-0466 (10,513
minus 218 equals 10,295).
● Consideration of Spray Drift in Pesticide Risk Assessment, EPA-HQ-OPP-2013-0676 (5,596 minus 118
equals 5,478).
● Pesticides; Consideration of Volatilization in Pesticide Risk Assessment: Notice of Availability and
Request for Comment, EPA-HQ-OPP-2014-0219 (15,442 minus 18 equals 15,424).
Examples of mass public comment on guidance documents have been noted previously in the literature, going back
as far as 2003. E.g., Mendelson, supra note 472, at 432.
618
Farina et al., supra note 579, at 137-45. See also Michael Herz, “Data, Views, or Arguments”: A Rumination, 22
Wm. & Mary Bill of Rights Journal 351, 371 (2013) (noting consensus among scholars that legislative rulemaking is
not plebiscitary).

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value choices rather than make evidence-based arguments, and agencies “generally appear to be
impatient with and unresponsive to value-based commenting.”619 Indeed, agencies may be
“overwhelmed and annoyed” by masses of comments that are costly to process yet seemingly of
little use in decisionmaking, meaning the campaigns can even backfire in winning agency
assent.620 Or if agencies do embrace mass comments, they are opportunistic about it: “When [the
agencies’] conclusion has strong support in the [mass] comments they tend to note that fact, and
when it does not they tend to glide over it.”621 If mass comment continues to grow, we may be
headed toward one of two problematic outcomes: agencies’ unresponsive or opportunistic
treatment of mass comments will aggravate public cynicism, or the agencies will be forced to
adopt more of a plebiscitary approach to policymaking, which is not something for which notice
and comment is designed or suited.622
4. Costs: Expenditure of Time and Resources
Notice and comment on guidance will take agency resources and cause some delay,
compared with narrower and less-formal means of taking input. Public comment on guidance,
said a former agency general counsel, was “usually a good investment,” but came at “some
cost.”623 Samuels, counsel to the home appliance manufacturers’ association, noted that it takes
“manpower.”624 According to an EPA official, one of EPA’s criteria for whether to take public
comment on guidance was the need for speed: if the guidance was needed right away, that was a
reason to forego comment.625 A former senior EPA official with cross-office responsibilities
said a drawback of notice and comment on guidance was the processing time.626 An interviewee
who held senior posts at CFPB and other federal agencies said the targeted outreach to industry
trade associations, public interest groups, and consumer advocates that was common for banking

619

Nina A. Mendelson, Rulemaking, Democracy, and Torrents of E-Mail, 79 Geo. Wash. L. Rev. 1343, 1367
(2011).
620
Herz, supra note 618, at 373.
621
Herz, supra note 618, at 372. For an argument that the FCC genuinely took account of public sentiment
expressed in mass comments in the net neutrality rulemaking, see Lauren Moxley, E-Rulemaking and Democracy,
68 Admin. L. Rev. 661 (2016).
622
Livermore et al., supra note 568, at 14. Mendelson argues that the most rational and defensible agency approach
to mass comment is to treat it as an invitation to further assessment or deliberation. Mendelson, supra note 619, at
1371-79.
623
Interview with Source 69, former agency general counsel.
624
Interview with Charles Samuels, Partner, Mintz Levin.
625
Interview with Source 99, EPA official.
626
Interview with Source 96, former senior EPA official with cross-office responsibilities.

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agencies formulating guidance was “much faster” than the process that banking agencies would
typically undertake when they did voluntary notice and comment on guidance (that is,
administering a public notice and comment period, making an appropriate record of the
comments received, and publishing the outcome).627 A former senior Federal Reserve official
who has counseled financial institutions said he thought CFPB ought to undertake notice and
comment on guidance more, estimating it would add three to five months to the process for a
given document.628
The cost of notice and comment in time and money presents a tradeoff: it will delay
issuance of the guidance at issue and possibly also burn up agency resources that could be used
to produce guidance on yet other subjects. Since much guidance responds to industry demand
for clarity, this is a tradeoff for industry, as well. A former CFBP official who represents CFPBregulated entities put the “tradeoff” thus: “industry wants input,” but it also “wants guidance,”
and more input means less guidance.629 An executive at a drug manufacturer warned that adding
more process for FDA guidance would make the agency less inclined to issue it and slow things
down; industry needed to know what the agency was thinking.630 John Newquist, the former
assistant administrator of OSHA’s Region V (headquartered in Chicago), said the agency would
benefit from more stakeholder input on guidance, but he said this risked making the issuance of
guidance more like legislative rulemaking, which at OSHA is notoriously slow and onerous, and
if that happened, you would never have any guidance.631 Celeste Monforton, the academic and
safety advocate and former OSHA legislative analyst, said that OSHA guidance was high in
volume, diverse, and often based on local conditions, meaning that putting most of it out for
comment was not feasible: “industry just wants the answer.”632 An official at a nonprofit public
policy research organization, formerly a consultant and product manager in the consumer finance
industry, said that a well-run banking regulatory agency should be interested in seeking a broad
range of outside viewpoints, but you cannot really force an agency to care about such input, and
adding process burdens to the issuance of guidance risked taking away the value of guidance,
627

Interview with Source 90, person who held senior posts at CFPB and other federal agencies.
Interview with Source 72, former senior Federal Reserve official who has counseled financial institutions.
629
Interview with Source 81, former CFPB official who represents CFPB-regulated entities.
630
Interview with Source 108, executive at a drug manufacturer.
631
Interview with John Newquist, Partner, Newquist Safety; former assistant regional administrator, OSHA.
632
Interview with Celeste Monforton, Lecturer, Department of Health and Human Performance, Texas State
University; Professorial Lecturer, Milken Institute School of Public Health and Health Services, George Washington
University; former legislative analyst, OSHA; former policy advisor, MSHA.
628

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that is, the capacity to change industry behavior for the better through informal nudging based on
agency judgment.633 A former HHS Office of General Counsel official, while urging that CMS
do notice and comment for more of its guidance, said he recognized that this had to be traded off
against the fact that more process would slow things down, especially since it was already hard
to get guidance out of CMS to begin with.634
When it comes to the time and resources spent on notice and comment, a key variable is
whether the agency opts to issue a written response to the comments (the written response, in the
context of legislative rulemaking, being one of the costliest elements of the process). A former
agency general counsel, while declaring notice and comment usually a good investment for
guidance, said it was “key” that there was no obligation to respond to the comments—a point he
said kept down process costs more than any other factor, including the absence of OMB
review.635 Consider FDA, which does not obligate itself to give any response to comments on
guidance and generally gives none.636 When FDA first adopted its policy in favor of notice and
comment on guidance in the 1990s, recalled a former senior official there, personnel were “often
unhappy” with the policy, and it was “key” for obtaining their “buy-in” that the policy did not
require a response to comments like that required for legislative rulemaking.637 William Schultz,
who served as FDA Deputy Commissioner for Policy in 1994-98, recalled that the agency’s
centers were “upset” about the new policy, and the staff feared that the new policy would “really
impede” their work; the absence of a response requirement, he said, was important for “selling”
the policy to the staff.638 Meanwhile, at EPA, officials usually do give a response to comments
on guidance,639 though much less in-depth than for legislative rulemaking.640 DOT and the

633

Interview with Source 131, official at nonprofit public policy research organization, formerly consultant and
product manager in consumer finance industry.
634
Interview with Source 67, former HHS Office of General Counsel official.
635
Interview with Source 69, former agency general counsel.
636
Interview with Source 24, trade association official; Interview with Michael Carome and Sammy Almashat,
Public Citizen Health Research Group; Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and
Green.
637
Interview with Source 107, former senior FDA official.
638
Interview with William Schultz, Partner, Zuckerman Spaeder; former FDA Deputy Commissioner for Policy
(1994-98); former HHS General Counsel (2011-16).
639
Interview with Richard Stoll, Partner, Foley and Lardner.
640
See supra text at note 547.

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USDA National Organic Program also give responses when they do take notice and comment on
guidance.641
Ironically—but crucially—the costs of notice and comment can rise high enough that
such participation comes to be viewed as an obstacle to agency policymaking, which in turn
delegitimizes the entire agency policymaking process in the eyes of some stakeholders. In other
words, notice and comment becomes, not a costly investment in legitimacy, but a factor that kills
legitimacy, at least for part of the community. At OSHA, said one AFL-CIO official, employers
had succeeded over the years in “shutting down” legislative rulemaking, to the point where
promulgating a major rule can take 10 to 20 years.642 This comment is consistent with academic
work indicating that, particularly at OSHA, judicial review imposed process costs that
dramatically slowed legislative rulemaking in the course of the 1970s and 1980s.643 Efforts in
recent years to beef up the process for issuing OSHA guidance and thereby make it more like
legislative rulemaking, argued the AFL-CIO official, would make it “not feasible to run the
government.”644 The whole challenge to guidance, said a second AFL-CIO official, was an
“industry-generated” effort to get OSHA to “stop doing its job.”645 The first AFL-CIO official
did not see notice and comment on guidance as a good-faith effort to broaden participation at a
procedural level, but instead as a disguised substantive attack on workplace safety regulation per
se. “The objection” to guidance, he said, “is not really about process but substance.” It was an
effort to weigh down guidance with the same “baggage” as legislative rulemaking, out of a
substantive objection “to all government regulation.”646 Even lesser forms of participation were
subject to this critique. If OSHA held a stakeholder meeting on a guidance document, said the
second AFL-CIO official, “it would be a disaster,” opening the way for industry associations to
try to “shut down” the initiative through “scare tactics” and the invocation of “extreme” fact
situations.647 “If you create an event,” said a third AFL-CIO official, “you create a target.”648

641

Interview with Kathryn Thomson, Partner, Morrison and Foerster; former general counsel, DOT; former chief
counsel, FAA; Interview with Miles McEvoy, Deputy Administrator (for NOP), Agricultural Marketing Service,
USDA.
642
Interview with Source 36, AFL-CIO official.
643
Thomas O. McGarity, Some Thoughts on “Deossifying” the Rulemaking Process, 41 Duke L.J. 1385, 1387-88,
1392-93, 1400-03 (1991).
644
Interview with Source 36, AFL-CIO official.
645
Interview with Source 35, AFL-CIO official.
646
Interview with Source 36, AFL-CIO official.
647
Interview with Source 35, AFL-CIO official.
648
Interview with Source 37, AFL-CIO official.

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Given AFL-CIO officials’ view of notice and comment on guidance as favoring industry,
one might think that, if OSHA were to incur the cost of offering such process on a guidance
document, the agency would increase its credibility with employer groups whom the AFL-CIO
often opposes. But that is hardly guaranteed. Marc Freedman, the U.S. Chamber of
Commerce’s executive director of labor law policy, recounted how OSHA in October 2010 made
the rare move of seeking public comment on a draft guidance document, this one pertaining to
occupational noise exposure. The document favored expansive engineering controls that would
be costly to employers compared with the alternative of personal protective equipment. The
Chamber thought the new policy required legislative rulemaking and was unsound as a matter of
substance. It commissioned an economic analysis for its comment, which it expected would
have no impact on OSHA, and submitted a preliminary comment on Jan. 18, 2011, pending full
comments to come in March. But suddenly, on Jan. 19, 2011, OSHA withdrew the draft.
Freedman, who attributed the withdrawal at least in part to intervention by OMB (which he said
had not heard of the guidance before it was published), said the whole episode “made us
suspicious of OSHA guidance going forward.”649 In other words, Freedman’s view that the draft
contained broad and wrongheaded policy and was an inappropriate use of guidance offset any
increased credibility that OSHA might have hoped to achieve by voluntarily taking public
comment on the initiative.

D. Should Notice and Comment Be Required for Guidance?
The preceding Section indicates that the benefits of notice and comment on guidance
(though hardly certain) may be substantial enough to offset the costs in many situations. If
notice and comment is worth it for at least some guidance, that raises the question of whether
whole agencies, or even the entire government, should have policies requiring its use. This
Section considers that question. I begin by noting several existing models for requiring notice
and comment, with particular attention to one in which a single agency adopts an agency-wide
mandate for notice-and-comment on a large category of its guidance. I then point out the danger
that, if an agency adopts such a policy for a large enough category of guidance as to strain the

649

Interview with Marc Freedman, Executive Director of Labor Law policy, U.S. Chamber of Commerce. For the
Chamber’s preliminary comment, see document ID OSHA-2010-0032-0079 on regulations.gov. For announcement
of the withdrawal, see OSHA National News Release No. 11-74-NAT (Jan. 19, 2011).

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agency’s resources, the result may be that guidance remains in draft indefinitely, defeating the
purpose of notice and comment and—if the regulatory program entails strong incentives to
follow guidance—causing confusion and risk for stakeholders. I also consider the possibility
that strong policies in favor of public comment for guidance (especially if ratified by Congress or
the White House) could have the effect of legitimating the replacement of legislative rulemaking
by guidance. Given the variability of public comment’s benefits and costs (discussed in
Section C) and the risks discussed in this Section, I conclude that it is best to proceed documentby-document, or at most agency-by-agency, and that a government-wide mandate for public
comment on a large category of guidance would be imprudent given our present knowledge.
1. Models for Requiring or Encouraging Notice and Comment
Let us begin by considering existing models for requiring or encouraging notice and
comment on guidance. We shall first consider OMB’s mandate for notice and comment on
certain guidance documents across all executive agencies, then agency-specific approaches.
OMB’s mandate is broad in terms of the agencies covered but narrow in terms of the
documents covered. Its Good Guidance Practices of 2007 generally require that all executive
agencies engage in pre-adoption notice and comment (with a response) on any guidance
document that is “economically significant,”650 i.e., that “may reasonably be anticipated to lead
to an annual effect on the economy of $100 million or more or adversely affect in a material way
the economy or a sector of the economy.”651 To appreciate the narrowness of coverage, consider
the annual number of OMB reviews of “economically significant” regulatory actions (for which
the criteria nearly track those for economically significant guidance documents,652 though of
course the regulatory actions category also includes legislative rules, proposed legislative rules,
650

OMB Good Guidance Practices § IV.
OMB Good Guidance Practices § I(5).
652
OMB’s criteria for what makes a regulatory action “economically significant” consist of the first of the four items
in the definition of “Significant regulatory action” in Executive Order 12866 § 3(f), which reads: “Have an annual
effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal
governments or communities” (emphasis added). Maeve P. Carey, Counting Regulations: An Overview of
Rulemaking, Types of Federal Regulations, and Pages in the Federal Register, CRS Report R43056, at 10-12 (Oct.
4, 2016). See also Leland E. Beck, Economically Significant: A Threshold Snapshot of OMB’s Regulatory Docket,
Federal Regulations Advisor (Aug. 9, 2013), available at www.fedregsadvisor.com/2013/08/09/economicallysignificant-a-threshold-shapshot-of-ombs-regulatory-docket. As you can see by comparing the quoted text with the
OMB Good Guidance Practices’ criteria for economically significant guidance documents, the criteria for
economically significant regulatory actions add disjunctively a few triggers to the $100 million trigger and the
“adversely affect” trigger that we find in the Good Guidance Practices.
651

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and other rulemaking-related vehicles besides guidance). Annual OMB reviews of economically
significant regulatory actions averaged 109.8 in the calendar years 2011-2015.653 Technically,
this category of OMB reviews is supposed to include each year’s economically significant
guidance documents,654 but in fact, an examination of lists of all the OMB reviews reveals only
two in the entire period 2011-2015 that were designated as reviews of guidance documents (the
vast majority being designated proposed rules or final rules).655 This does not necessarily mean
that economically significant guidance documents across all executive agencies in 2011-2015
“really” numbered only two. Maybe there were more, but they did not get formally designated
as such by OMB, or the agencies did not report them as such.656 Still, it does seem fair to
assume—given the interstitial nature of guidance—that the number of economically significant
guidance documents would be substantially less than the number of economically significant
legislative rules. That suggests their average annual number across the whole range of executive
agencies would be well under 109.8. To appreciate how tiny this number is compared with the
total number of executive agency guidance documents, consider that at FDA alone, the number
of final guidance documents presently operative that were issued in the past 20 years is about
1,600, that is, roughly 80 per year (and that excludes documents that were issued but later
withdrawn).657 Thus, at least if we guesstimate the amount of covered guidance by extrapolating
from how OMB designates and counts economically significant rules,658 the OMB notice-andcomment requirement applies only to the tip of the guidance iceberg.

653

Calculations based on the years 2011-2015 in Table 4 in Carey, supra note 652, at 11-12.
On the inclusion of guidance documents and legislative rules in the “economically significant” reviews, see
Carey, supra note 652, at 12.
655
Lists of OMB reviews of economically significant regulatory actions for all five years from 2011 to 2015 were
obtained through year-specific queries to the Historical Reports database available at
www.reginfo.gov/public/do/eoHistoricReport. The numbers of actions listed for each year are identical or nearly
identical to the figures in Table 4 in Carey, supra note 652, at 11-12. The two actions listed as guidance are both
EPA actions regarding the scope of Clean Water Act jurisdiction; their respective “Completed” dates are 04/27/2011
and 09/17/2013. EPA did take public comment on this guidance. Draft Guidance on Identifying Waters Protected
by the Clean Water Act, Docket EPA-HQ-OW-2011-0409, available at regulations.gov.
656
See Statement of Paul R. Noe, Vice President, Public Policy, American Forest & Paper Association, Before
Senate Committee on Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and
Federal Management, “Examining the Use of Agency Regulatory Guidance, Part II,” June 30, 2016, at 8 (arguing
that “clearly [agencies] have not” complied with the OMB Good Guidance Practices).
657
That count is drawn from a search, conducted February 5, 2017, of FDA’s online database of guidance, searching
for final guidance documents still operative (excluding bioequivalence recommendations) for which dates were
assigned in the database itself or could be assigned through simple online research.
658
There is some bureaucratic political gaming that goes into what legislative rules are actually reviewed by OMB.
Jennifer Nou, Agency Self-Insulation Under Presidential Review, 126 Harv. L. Rev. 1755 (2013).
654

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When OMB’s narrow requirement is not in play, agencies have discretion in deciding
when to take public comment on guidance. Given this latitude, there are three patterns of agency
behavior: (1) adopt a policy of taking public comment on one or more large categories of
guidance documents; (2) take public comment on a large number of guidance documents but let
them be chosen on a more ad hoc, decentralized basis; or (3) reserve notice and comment only
for exceptional guidance documents.
The first model—to have a policy of notice and comment on one or more large categories
of guidance documents—is exemplified by FDA’s Good Guidance Practices (GGPs), a set of
procedural rules adopted by the agency in February 1997.659 Subsequently Congress in
November 1997 passed a specific statutory mandate for such procedural rules (including to
“ensure public participation [in guidance’s formulation] prior to implementation”),660 and the
procedural rules were repromulgated, without fundamental changes from the original, in 2000.661
Under its GGPs, FDA generally must conduct pre-adoption notice and comment for all “Level 1”
guidance documents, which are defined broadly as those that “(i) Set forth initial interpretations
of statutory or regulatory requirements; (ii) Set forth changes in interpretation or policy that are
of more than a minor nature; (iii) Include complex scientific issues; or (iv) Cover highly
controversial issues.”662 FDA’s initial adoption of the GGPs in February 1997 had several
causes. The agency’s use of guidance documents had been increasing rapidly in the 1990s
because of the increasing complexity of the relevant science, and there was a felt need to
regularize the documents’ use.663 There had been internal reform initiatives in parts of FDA
prior to the advent of the agency-wide GGPs.664 What immediately precipitated their
formulation and adoption was a petition from the Indiana Medical Devices Manufacturers
Council,665 combined with pressure from congressional overseers.666

659

62 Fed. Reg. 8961 (1997). The notice and comment provision appears in id. at 8968.
111 Stat. 2296, 2368 (1997), codified in 21 U.S.C. § 371(h). The quotation is from § 371(h)(1)(C)(i).
661
65 Fed. Reg. 56468 (2000), codified mainly in 21 C.F.R. § 10.115.
662
21 C.F.R. § 10.115(c)(1). For guidance other than “Level 1,” FDA also invites public comment, post-adoption.
21 C.F.R. § 10.115(g)(4)(C). More generally, FDA is willing to receive comments on any guidance document at
any time. 21 C.F.R. § 10.115(g)(5).
663
Interview with Source 110, former senior FDA official.
664
Interview with Source 27, FDA Office of Chief Counsel official; Interview with Source 112, former senior FDA
career official.
665
Cited in 62 Fed. Reg. 8961 (1997).
666
Interview with William Schultz, Partner, Zuckerman Spaeder; former FDA Deputy Commissioner for Policy
(1994-98); former HHS General Counsel (2011-16).
660

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Another agency following this pattern is the USDA National Organic Program. In the
Introduction to its Handbook (effective March 2011), NOP promised it would generally take preadoption public comment on all “Level 1” guidance documents, which it defined as those that
“set forth interpretations of NOP statutory or regulatory requirements, changes in interpretation
or policy, or address unusually complex or highly controversial issues.”667 Most NOP guidance
documents are Level 1.668
The second model is to take public comment on a large number of guidance documents
but select them on an ad hoc, decentralized basis, not according to a broad pre-defined category.
EPA follows this approach. According to an EPA official, the final decision whether to take
public comment on a guidance document is normally made by the Assistant Administrator who
runs whichever program office is developing the guidance (e.g., the Air Program office, the
Water office, etc.), although most commonly the guidance is actually signed by an official one
level down, who runs the relevant component of the program office. The program office is more
likely to opt for public comment (a) the more it thinks it will learn from comments, (b) the less
time pressure there is to issue the guidance, and (c) the less the guidance could easily be changed
if problems with it are encountered later.669 The decision whether to take public comment, said
an EPA Office of General Counsel official, is really a policy decision, not a legal decision. The
Office General Counsel plays an advisory role, but it is really up to the program people. 670
While EPA has gone through a general shift toward notice and comment, each program office
has gone at its own pace.671 But the overall result of these many program-office decisions is that
notice and comment for guidance is now a familiar thing at EPA. It may be impossible to put a
percentage on it, since the forms of EPA guidance are so numerous and variable that the
denominator is hard to define. Interviewees gave impressionistic takes on how common it was.
One former EPA official said the breakdown between guidance with and without public
comment was something like “fifty-fifty.”672 An attorney at an environmental NGO said notice
and comment for guidance is “not the norm” at EPA but “not unusual.”673 (Another agency
667

USDA National Organic Program, Program Handbook: Guidance and Instructions for Accredited Certifying
Agents and Certified Operations, Introduction (effective March 9, 2011) at 1.
668
Interview with Miles McEvoy, Deputy Administrator (for NOP), Agricultural Marketing Service, USDA.
669
Interview with Source 99, EPA official.
670
Interview with Source 61, EPA Office of General Counsel official.
671
Interview with Source 71, former EPA program office director.
672
Interview with Source 54, former EPA official.
673
Interview with Source 97, attorney at environmental NGO.

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commonly taking public comment on guidance without a highly objective agency-wide policy is
DOT, according to a former general counsel who said the agency had “evolved” toward doing it
“often.”674)
A third approach is to undertake notice and comment for guidance only for exceptional
matters, with no set policy on when to do it. This appears to be the pattern at OSHA675 and
CMS.676
2. The Danger that Agencies May Leave Guidance in Draft Indefinitely
If an agency seeks to take and process comments on guidance documents—especially
under a mandate covering a large enough number of documents as to strain the agency’s
resources—there is a danger that the agency will not process the comments for a substantial
number of documents and refrain from finalizing them, leaving them in published “draft” status
indefinitely. Such an outcome can partly or wholly defeat the purpose of notice and comment.
And it can potentially create further problems by channeling agency policy into a “draft” format
whose status is ambiguous and confusing to regulated parties.
Something approaching this pattern has occurred, at some times and in some contexts, at
FDA. While the FDA GGPs are an important innovation that have done much good—and may
well be the optimal arrangement for FDA itself—we must carefully consider the difficulties FDA

674

Kathryn Thomson, Partner, Morrison and Foerster; former general counsel, DOT; former chief counsel, FAA.
See also Interview with Sources 64, 65, and 66, officials at Airlines for America (stating that FAA usually provides
for notice and comment on common forms of guidance called advisory circulars). The DOT website states:
“Although the OMB Bulletin does not require us to seek comment on other guidance documents, we may
voluntarily do so. The DOT has sought comment on many draft guidance documents in the past, and we will
continue to do so in the future when we deem it appropriate. We will place a copy of the guidance document on
which we are seeking comments in [the Federal Document Management System] and use it for the filing of any
comments when we do so.” Public Feedback on DOT Guidance Documents, available at
https://www.transportation.gov/regulations/public-feedback-dot-guidance-documents.
675
Interview with Frank White, former Deputy Assistant Secretary (for OSHA), DOL (“virtually” never; no set
process for seeking input); Interview with Celeste Monforton, Lecturer, Department of Health and Human
Performance, Texas State University; Professorial Lecturer, Milken Institute School of Public Health and Health
Services, George Washington University; former legislative analyst, OSHA; former policy advisor, MSHA
(historically not, though it happened a couple of times under Obama); Interview with Marc Freedman, Executive
Director of Labor Law Policy, U.S. Chamber of Commerce (“rare,” with noise exposure guidance in 2010 being
exception).
676
Interview with Source 67, former HHS Office of General Counsel official (“rarity,” no formal process for it);
Interview with Source 93, former CMS division director (by and large no stakeholder input on manual changes); but
see Interview with Source 58, healthcare industry attorney (noting a few matters on which statutes require notice and
comment on guidance).

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has encountered regarding long-term draft status before we contemplate broader adoption of
something like the FDA model.
FDA guidance documents not infrequently remain in published draft form for years
before they are finalized or withdrawn.677 In a submission to a Senate committee on March 9,
2015, FDA reported that, for guidance documents finalized between June 1, 2009, and June 30,
2014, the median time between draft publication and finalization was 743 days at the Center for
Biologics Evaluation and Research (CBER), 710 days at the Center for Drug Evaluation and
Research (CDER), and 797 days at the Center for Devices and Radiological Health (CDRH).678
In addition, FDA reported a list of guidance documents that were still pending in draft since
before Dec. 31, 2013 (i.e., for more than 14 months at the time of the report), and these
numbered 10 at CBER, 77 at CDER, and 52 at CDRH.679 As FDA has not compiled comparable
data since 2015,680 my research assistants and I used the agency’s comprehensive online database
to locate all guidance documents that were finalized between July 1, 2014, and February 5, 2017,
and for which we could find a date of prior draft publication. We found 208 documents fitting
this description and calculated the time to finalization for each of them. We found that,
compared with the Senate submission, median days to finalization had risen at CDER, by 116, to
826; had fallen at CBER, by 181, to 562; and had fallen at CDRH, by 269, to 528. (The median
for joint CDRH/CBER guidances, which were almost as numerous as CBER guidances and for
which there was no comparable number in the Senate submission, was 710 days.)681 In addition,
we counted guidance documents that were still pending in draft since before November 5, 2015
(i.e., for 15 months or more at the time we gathered data on February 5, 2017). These numbered
4 at CBER, 93 at CDER, and 22 at CDRH. While these figures indicate some speedup at CDRH
since 2015,682 it seems that finalization of FDA guidance still often takes substantial periods of
time.

677

This has been previously noted in secondary literature. Noah, Governance, supra note 86, at 103-05; Erica
Seiguer & John J. Smith, Perception and Process at the Food and Drug Administration: Obligations and Trade-Offs
in Rules and Guidances, 60 Food & Drug L.J. 17, 31 (2005).
678
Letter from Thomas A. Kraus, Associate Commissioner for Legislation, FDA, to Sen. Lamar Alexander (March
9, 2015), at 12.
679
Calculated from id., Appendix I.
680
Interview with Source 25, FDA Office of Policy official. FDA has not confirmed the figures that I report in the
remainder of this paragraph.
681
All these calculations exclude bioequivalence recommendations.
682
On measures that CDRH has taken to speed the development of guidance, see Letter from Thomas A. Kraus,
Associate Commissioner for Legislation, FDA, to Sen. Lamar Alexander (March 9, 2015), at 6.

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Interviewees on FDA frequently expressed concern about the amount of time guidance
remains in draft. An FDA Office of Policy official readily acknowledged that this was an
industry concern.683 A former senior FDA career official said the agency did “not do a good job”
on finalizing draft guidance, which could remain in draft “many years.”684 A former FDA
official said it was a “prevalent” phenomenon at FDA that guidance remained in draft a long
time.685 A partner in a large law firm healthcare practice observed there were “many” FDA
guidances that had been pending “several years.”686 A trade association official said FDA could
go for “years” without finalizing draft guidance and might “never” finalize it.687 A partner in a
large law firm and former senior federal official observed that FDA has a tendency to leave
guidance in draft “indefinitely.”688 The delay was cited not only by current and former officials
and industry people but also by advocates at Public Citizen, who said there was “often a huge lag
time” between draft and finalization, and “often” the document was “never” finalized but just
stayed in draft.689 Long-term draft status had “always been a problem,” said a former senior
FDA official.690 It was “confounding” for stakeholders according to another former senior FDA
official,691 and a “significant frustration,” according to a congressional staffer.692 Stopping at the
draft stage, which FDA “often” did, was “problematic” and “troubling,” said a former FDA chief
counsel.693
FDA’s tendency to leave guidance in draft arises mainly from the interaction of two
factors: (a) the agency has very limited resources to process comments and make revisions and
finalization decisions for the large category of documents covered by the notice-and-comment
mandate of the GGPs and (b) the strong incentives that FDA-regulated parties have to comply
with final guidance are largely applicable to draft guidance as well, meaning the agency has
relatively little incentive to finalize, since the draft by itself already sends a pretty clear signal of
the agency’s wishes and will often be followed by regulated parties. From the agency’s

683

Interview with Source 25, FDA Office of Policy official.
Interview with Source 112, former senior FDA career official.
685
Interview with Source 20, former FDA official.
686
Interview with Source 101, partner in large law firm healthcare practice.
687
Interview with Source 24, trade association official.
688
Interview with Source 78, partner in large law firm and former senior federal official.
689
Interview with Michael Carome and Sammy Almashat, Public Citizen Health Research Group.
690
Interview with Source 107, former senior FDA official.
691
Interview with Source 80, former senior FDA official.
692
Interview with Source 82, congressional staffer.
693
Interview with Daniel Troy, General Counsel, GlaxoSmithKline.
684

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perspective, finalizing guidance expends resources with relatively little upside. Given all the
demands on FDA staff, it is no surprise they do not give it a high priority.
Let us examine these two factors in turn, starting with FDA’s limited resources to finalize
guidance. Reading comments and coming to a rational decision about whether and how to
incorporate them (even without writing a response to the comments) takes time. The parts of
FDA charged with these tasks are “way under-resourced and under-staffed,” said a partner in a
large law firm healthcare practice,694 and they simply do not have enough resources to finalize all
drafts, according to a former senior FDA official.695 FDA personnel responsible for finalization
face competing demands, not the least of which is (often) the writing of guidance on matters for
which there is not yet even a draft document—matters on which industry may be demanding new
draft guidance more loudly than it is demanding finalization of existing drafts. As FDA itself
stated in a 2011 report, it was a serious question “how the Agency should balance the need to
publish new draft guidance against the desire to complete final guidances that are already out in
draft, given limited Agency resources for guidance development.”696 Janet Woodcock, the
director of CDER, said that while her center made an effort either to finalize draft guidance or
withdraw it, the staff sometimes said, “we have other things to do.”697 A former senior FDA
career official recalled that CDER’s internal policy shop tried to get the reviewers to finalize
draft guidance, but the reviewers did not see it as a high priority, given everything else they had
to do. Once guidance was published in draft, that addressed the need to provide guidance on
FDA’s expectations on that particular issue, and finalizing the draft guidance that was already
out was less important than other projects, such as conducting reviews or preparing new draft
guidance on other topics.698 Bradley Merrill Thompson, the device maker association counsel,
recounted how personnel from CDRH told him that they had no intention of moving to finalize
some draft guidance, because Congress had not given them the resources to do so. They felt they
had the means to finalize existing drafts or write new drafts on other matters, but not both.699 In
694

Interview with Source 101, partner in large law firm healthcare practice.
Interview with Source 80, former senior FDA official.
696
Food and Drug Administration Report on Good Guidance Practices: Improving Efficiency and Transparency
(December 2011) at 16. Indeed, Congress in recent years has increasingly enacted statutory requirements for the
issuance of guidance. Communication from Source 25, FDA Office of Policy official.
697
Interview with Janet Woodcock, Director, Center for Drug Evaluation and Research, FDA.
698
Interview with Source 112, former senior FDA career official
699
Interview with Bradley Merrill Thompson, Member, Epstein, Becker, and Green. While reporting officials’
views, Thompson added he believed they were mistaken to see the problem in such zero-sum terms: the finalization
process could be streamlined if FDA took the initiative to do it, he said.
695

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general, said a former FDA official, FDA personnel think draft guidance is “good enough”: they
work hard to formulate the draft, and the draft gives regulated parties what they need to know
about agency thinking and stops them from asking questions about what the agency wants, thus
taking away the perceived need for more explanation from the agency.700 An FDA Office of
Policy official said that people at FDA were “sensitive to the issue” and did “the best we can,”
but they had to balance a “complex set of considerations” about “resources and priorities.”701
Now consider the second factor: regulated parties’ incentives to comply with guidance
regardless of whether its status is draft or final.702 As discussed in Part II, FDA-regulated
companies are often seeking pre-market approval for their products, and in that context, they
have reason to follow any indication of the agency’s wishes, whatever its format. Facing draft
guidance, said a former senior FDA official, regulated firms would say, “I’ll do this [i.e., what
the draft suggests] because it will get me through the process”—will “get me what I need from
FDA.”703 A trade association official singled out pre-market approval as a context in which
firms would follow draft guidance; it would be “folly” not to follow it, even in draft.704 Even
outside the pre-approval context, some firms are sufficiently invested in their continuing
relationship to FDA (also discussed in Part II) that they will follow agency wishes, including
draft guidance, to preserve that. According to a partner in a large law firm healthcare practice, “a
lot” of his clients follow draft guidance, which “often” has the same effect on them as a
legislative rule; the clients are worried about “antagonizing FDA” and their “good relations” to
the agency.705 A partner in a large law firm and former senior federal official said companies
were “hungry” for any and all indications of what FDA wants, so they “often” did not distinguish
in practice between draft and final guidance.706 Richard Naples, the chief regulatory officer of
Becton Dickinson, said FDA reviewers could be expected to behave consistently with draft

700

Interview with Source 20, former FDA official. See also Interview with Source 78, partner in large law firm and
former senior federal official (stating that FDA officials have a lot to do, must balance many priorities, and are
buffeted by events, so finalizing draft guidance is often not the highest priority).
701
Interview with Source 25, FDA Office of Policy official.
702
See Noah, Governance, supra note 86, at 104-05 (briefly noting that “draft or final guidance still often operate as
de facto requirements”).
703
Interview with Source 107, former senior FDA official.
704
Interview with Source 24, trade association official.
705
Interview with Source 101, partner in large law firm healthcare practice. See also Interview with Source 104, law
firm partner who deals frequently with FDA and CMS (recalling an instance in which FDA took enforcement action
based on draft guidance regarding products labeled “for research use only”).
706
Interview with Source 78, partner in large law firm and former senior federal official.

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guidance and that his company followed it, departing only by the same procedures they would
follow for departing from final guidance (i.e., seeking a meeting with officials beforehand to
convince them to sign off on the departure).707 Asked whether he would advise a client to follow
FDA draft guidance, a food and drug industry attorney said, “you know it’s where FDA is” and
reflects what the staff are “thinking,” regardless of whether it is draft or final.708 Only two
interviewees made more qualified statements about the tendency to follow draft guidance: an
executive at a drug manufacturer said a draft would have “less authoritative” status than a final
guidance and could be subject to “pushback,” adding that for an approval, draft status would
“somewhat” alter the compliance calculus—it was “not black and white”;709 and the trade
association official (cited above for the view that firms would surely follow draft guidance for
approvals) said that outside the approval context a firm would only be “likely” to follow a draft,
and compliance would depend more on the firm’s risk tolerance.710
FDA’s resource limitations and regulated firms’ incentives combine to disincline FDA
personnel to finalize guidance. As former FDA Deputy Commissioner for Policy William
Schultz explained it, the structure of the regulatory scheme gives the agency leverage to get the
firms to comply with a draft, and once industry is complying, the staff see relatively less reason
to make the effort to finalize the document, as competing demands are vying for their time.711
If that were the entire story, one might say that the consequence of indefinite draft status
is to defeat, at least partly, the purpose of notice and comment. But in fact, the consequences go
beyond that. Indefinite draft status can have the further effect of undermining the transparency
of what the agency’s policy is, leading to inconsistency and inequality in the counseling and
decisionmaking of regulated parties. The reason for this effect is that, while the cause of the
agency’s failure to finalize draft guidance is usually limited resources, it can be something else,
such as uncertainty or disagreement within the agency about what policy to pursue. As a former
FDA official said, a document could get stuck in draft either because it is a low priority resourcewise or because FDA has found it to be more controversial than anticipated.712 Naples, of
707

Interview with Richard Naples, Chief Regulatory Officer, Becton, Dickinson, and Company.
Interview with Source 92, food and drug industry attorney. See also Interview with Source 20, former FDA
official (stating that industry conforms to draft guidance).
709
Interview with Source 108, executive at a drug manufacturer.
710
Interview with Source 24, trade association official.
711
Interview with William Schultz, Partner, Zuckerman Spaeder; former FDA Deputy Commissioner for Policy
(1994-98); former HHS General Counsel (2011-16).
712
Interview with Source 107, former senior FDA official.
708

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Becton Dickinson, said he thought limited resources could be the cause of delay, but it could also
be because there was “no broad agreement” on what the guidance should say. 713 Another former
senior FDA official said guidance could be stuck in draft because the agency realized problems
with the document and was leaving it in draft while trying to “reset”; relatedly, it could be due to
a change of heart resulting from a new presidential administration.714
Here lies the problem. Whereas regulated parties are well-advised to follow draft
guidance if it captures the agency’s view and remains non-final merely because of resource
limitations, those parties are not well-advised to follow draft guidance if it remains non-final
because the agency is uncommitted to its content by reason of uncertainty or disagreement.
The trouble is how to tell which is which—a matter of uncertainty and guesswork for
regulated parties and other stakeholders. A regulatory policy executive at a drug manufacturer
explained that his firm would treat draft guidance as FDA policy if the draft had not received
many public comments or attracted complaints, for under those circumstances, one could infer
that the document was just a low priority resource-wise. Alternatively, a guidance might be so
controversial that it could not be finalized, and his firm would not follow that kind of draft
document. Overall, he said, he would rely on a draft guidance document if it had been “out there
a while” and was not controversial and if there were individual FDA adjudicatory decisions
consistent with it. As between the two kinds of draft guidance, “you have a sense of which it is,”
though “not always.”715 Similarly, an executive at a (different) drug manufacturer said that his
company, in deciding whether to follow draft guidance, would consider, among other things,
whether it seemed to be a mere “trial balloon” floated by the agency, or was instead consistent
with FDA practice.716 Coleen Klasmeier, the head of Sidley Austin’s FDA regulatory practice,
said that, in counseling clients, she had to judge whether a draft guidance document represented
current FDA thinking that the agency would follow, or was instead a “trial balloon.” Clients
should rely upon the former but not the latter. The latter tended to be on more controversial
subjects (e.g., implicating the First Amendment), while the former tended to be on regulatory

713

Interview with Richard Naples, Chief Regulatory Officer, Becton, Dickinson, and Company.
Interview with Source 80, former senior FDA official. Some interviewees added that FDA might keep guidance
in draft in order to avoid judicial review, as one reason among others for not finalizing. Interview with Source 78,
partner in large law firm and former senior federal official; Interview with Source 92, food and drug industry
attorney; Interview with Source 101, partner in large law firm healthcare practice.
715
Interview with Source 109, regulatory policy executive at a drug manufacturer.
716
Interview with Source 108, executive at a drug manufacturer.
714

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science. But it was not always easy to tell. For example, if FDA floated draft guidance as a trial
balloon, received pushback in comments, and then simply left the draft sitting there, that could
mean FDA intended to follow the draft itself, or that it intended to follow a course that was
modified according to the sentiments expressed by those who pushed back. Ambiguities like
these, said Klasmeier, made it difficult to counsel clients.717
On the NGO side, advocates at Public Citizen were similarly perplexed. They recalled
how FDA had issued a draft guidance on off-label communication in February 2014, against
which Public Citizen orchestrated a campaign of opposition, with an overwhelming majority of
comments going against the draft. In response, the FDA simply left the document in draft, in
which status it was still pending at the time of our interview (October 2016), after two years and
eight months. FDA, observed the Public Citizen advocates, has a tendency to engage in this kind
of ambiguous delay. They said they “can’t explain” the behavior and think it strange. “Maybe,”
they said, FDA did “not want to come down” and take a position “amid competing comments.”
They added that they did not know how this draft guidance was affecting regulated-party
behavior, thought they would’ve liked to find out.718
As one would expect, the level of confusion and anxiety that regulated parties feel about
draft guidance’s status appears to diminish the more they have access to other sources of
information about what the agency really thinks. According to an FDA Office of Policy official,
device makers were more disturbed by long-term draft status and more inclined to pressure FDA
to finalize than were drug makers. The reason, posited the official, was that the different
structure of the approval processes for devices and drugs (at CDRH and CDER respectively)
meant that drug makers had more opportunity for “constant dialogue” with agency personnel and
were engaged in a more “hands-on” process with them.719 Device makers, it seems, had to rely
more on published communications, so the ambiguities of draft guidance mattered more to them.
Whatever these subtleties, it seems that in general regulated parties not uncommonly find
FDA’s thinking hard to discern by reason of guidance remaining in draft. This uncertainty has
costs. As a former senior FDA official said, it opens the door for agency officials and regulated
firms to see things differently and misunderstand each other.720 Further, noted a partner in a
Interview with Coleen Klasmeier, head of Sidley Austin’s FDA regulatory practice.
Interview with Michael Carome and Sammy Almashat, Public Citizen Health Research Group.
719
Interview with Source 25, FDA Office of Policy official.
720
Interview with Source 80, former senior FDA official.
717
718

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large law firm healthcare practice, the ambiguity of draft guidance created a situation where
some companies followed it and others did not, depending on their risk tolerances. This, he said,
was unfair. There was not a “level playing field.”721
FDA is not the only agency that has left guidance in ambiguous draft status for long
periods of time. DHS’s Citizenship and Immigration Services, for example, took up notice and
comment for some of its guidance documents but, as of 2013, more than a quarter had been
pending in draft for more than a year.722
The same phenomenon happens at least somewhat at EPA. That agency, like FDA, is
strapped for resources on guidance matters. A partner in a large law firm and former senior EPA
official noted that EPA had become more stretched in terms of staffing and budget in the last 25
years. Under these constraints, he said, if a draft guidance document is out there “and it works,”
and the process to finalize it is costly, then the agency must move on and “shoot the next wolf at
the door.”723 Perhaps most strikingly, a very important EPA guidance document for
administration of the Clean Air Act has been in “draft” for 27 years. This is the New Source
Review Workshop Manual, Prevention of Significant Deterioration and Nonattainment Area
Permitting, also known as “The Puzzle Book,” which to this day has each of its 322 pages
stamped “Draft October 1990.”724 The document governs EPA-supervised state agency
permitting decisions on new power plants. An environmental NGO employee observed that state
agencies and EPA generally followed the Puzzle Book “very closely.” This is no surprise given
the pre-approval requirement. Normally the utility company and the state agency just wanted the
permit to go through and not be halted by EPA review. Yet, in some instances, a well-connected
utility would, for some business reason, want a departure from the Puzzle Book. In that case, the
guidance’s draft status (despite its age) would always make an appearance for one paragraph of
the utility’s brief. And if the state agency and EPA agreed to the departure, they would invoke
the draft status to help justify it. But really, said the NGO employee, it was hard to pin down
what difference the draft status made. What actually made a departure more likely, in his

721

Interview with Source 101, partner in large law firm healthcare practice.
Jill E. Family, Easing the Guidance Document Dilemma Agency by Agency: Immigration Law and Not Really
Binding Rules, 47 U. Mich. J. Law Reform 1, 50 (2013).
723
Interview with Source 52, partner in large law firm and former senior EPA official.
724
The document is available at https://www.epa.gov/sites/production/files/2015-07/documents/1990wman.pdf. For
background, see Richard G. Stoll, Effective EPA Advocacy 64 (2d ed. 2014). I learned of the “Puzzle Book”
nickname from Interview with Adam Kushner, Partner, Hogan Lovells; former EPA director of civil enforcement.
722

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experience, was whether a well-connected utility really wanted a guidance-noncompliant permit
for a new plant, especially a coal-fired one. Asked why EPA had never finalized the draft, he
said it was because EPA feared that, if finalized, the document would be challenged as a
legislative rule. Considering that the document was already enjoying a high degree of
compliance from state agencies and utilities, finalization did not seem worth the risk to EPA.725
The story of the Puzzle Book points up another problem with longstanding draft
guidance. Insofar as such a document effectively becomes real guidance for an adjudicatory
process (as will often happen if there is a pre-approval requirement), its draft status is always
available to be opportunistically invoked whenever the agency wants to make a departure for
some other reason. Draft status interferes with truly principled flexibility in the use of guidance,
that is, flexibility where the reasons for departures are stated in an upfront, rational manner.
Importantly, it is possible for an agency to prevent regulated parties from developing any
expectation that they ought to comply with draft guidance, even if the draft is public for a long
period, and even if the regulated parties are subject to something approaching pre-approval. At
the USDA National Organic Program, noted former NOSB chair Jean Richardson, draft guidance
might take two years to finalize, and yet certifiers generally would not begin following it before
its effective date. Richardson, who was aware of FDA’s draft guidance problems and the
tendency of FDA-regulated firms to follow FDA drafts, drew an express contrast with NOP draft
guidance, adding that she did not have a perfect answer as to why the two regulatory schemes
differed in this way. She suggested it was because NOP would not “ding” a certifier for
engaging in behavior that was inconsistent with draft guidance, and the certifiers were aware of
this.726 Likewise, an official at a certifier said that historically a draft guidance and final
guidance were just viewed differently, without an expectation that the former be followed.727
This contrasts with the approach at FDA, where the understanding is that reviewers may, through
their discretion in case-by-case adjudication, treat a particular issue in the same way that a draft
guidance document does, though of course they may not rely upon the draft guidance document
in doing so.728 It seems the USDA National Organic Program engaged in a kind of self-denying
725

Interview with Source 128, employee at environmental NGO.
Interview with Jean Richardson, former chair, National Organic Standards Board.
727
Interview with Source 114, official at a certifier. However, the interviewee added that, at a 2016 training session
for certifiers, NOP made a statement that draft guidance should be viewed as guidance. This “caused some
heartburn” among the certifiers, he said. Id.
728
Interview with Source 25, FDA Office of Policy official.
726

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behavior, refusing to send a noncompliance letter on the basis of an understanding of an issue
that was the same as the understanding set forth in draft guidance, unless and until the draft was
finalized. But perhaps FDA, being a public-health guardian on life-and-death issues, feels that
such self-denial would be irresponsible. Some issues are too important not to treat in the most
up-to-date manner, even if not all the participatory formalities have been carried out.
3. The Possibility of Marginalizing Legislative Rulemaking
There has been innovation at FDA not only in the participatory procedures established for
guidance, but also in the elevation of guidance as a means of general policymaking. FDA does
operate under statutory requirements to use legislative rulemaking on certain specified matters,
and there are examples of the agency voluntarily carrying out legislative rulemakings even
outside such statutory mandates.729 But for the mine run of policymaking, it is a widespread
view among FDA specialists outside the agency that guidance has now eclipsed legislative
rulemaking as the dominant approach (though this view is contested from within FDA itself).730
“Nowadays,” wrote food and drug scholar Lars Noah in 2014, “it seems, legislative rulemaking
[at FDA] only happens when Congress insists on that course of action.”731 A former senior FDA
official stated outright that FDA only does legislative rulemaking when there is a specific
statutory requirement to do so or when the agency is amending a preexisting legislative rule.732
Advocates at Public Citizen Health Research Group said they now assumed that guidance, not
legislative rulemaking, was how FDA would address any “major” issue.733 A congressional
staffer said FDA, as between guidance and legislative rulemaking, now generally did everything
by guidance unless a statute forced it to proceed by legislative rulemaking.734
Consistent with this, the agency is said to use guidance more expansively than other
agencies. This point was made by several practitioners who each deal intensively with both FDA
and CMS. A law firm partner who works frequently with the two agencies explained how they

729

Interview with Source 112, former senior FDA career official (giving examples of legislative rulemaking not
mandated by statute in the areas of physician labeling, pregnancy labeling, and combination drugs).
730
Communication from Source 25, FDA Office of Policy official (stating that FDA does not intend guidance
documents to as replacements for binding legislative rules, noting for example that many such documents serve to
clarify existing legislative rules).
731
Noah, Governance, supra note 86, at 114.
732
Interview with Source 110, former senior FDA official.
733
Interview with Michael Carome and Sammy Almashat, Public Citizen Health Research Group.
734
Interview with Source 82, congressional staffer.

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differed. According to him, FDA had well-established procedures for notice and comment on
guidance, which was praiseworthy, but FDA was also more likely to use guidance when it
should have used a legislative rule, which was frustrating. CMS, he said, was “almost the
opposite”: much of its guidance had no notice and comment or inadequate notice and comment,
but it was much more inclined to do legislative rulemaking, instead of defaulting to guidance like
FDA.735 A partner in a large law firm healthcare practice stated, similarly, that CMS used
guidance appropriately to fill gaps in preexisting legislative rules, whereas FDA used guidance
more aggressively, as a substitute for legislative rulemaking, not just interpreting preexisting law
but going beyond it.736 A partner in another law firm healthcare practice observed that CMS did
a good job of doing legislative rulemaking and keeping guidance confined to its appropriate role
of illuminating the legislative rules while remaining consistent with those rules, whereas FDA
would use guidance more aggressively to regulate in the absence of a rule and even to act
inconsistently with a statute.737 According to a trade association official, CMS sought to ensure
that the most important matters were addressed by legislative rulemaking and was constantly
making legislative rules, whereas FDA “almost never” issued legislative rules and did guidance
instead.738 A former senior FDA official said that CMS “never” faced the industry complaints
about its use of guidance that FDA had.739 Advocates at Public Citizen, while not comparing
FDA to CMS, did find FDA aggressive in its use of guidance, stating that FDA could issue a
guidance document that would “eviscerate” a legislative rule already in place.740
Is there a connection between FDA’s expansive use of guidance, on the one hand, and its
well-established (indeed congressionally blessed) procedures for public participation in the
formulation of guidance, on the other? This is a complicated question about FDA’s institutional
development, and many interpretations are possible. One former senior FDA official believed
that the agency’s dramatic shift toward guidance was inevitable, given the explosion in scientific
complexity that occurred in the 1990s, and the GGPs were simply a means of regularizing and

735

Interview with Source 104, law firm partner who deals frequently with FDA and CMS.
Interview with Source 101, partner in large law firm healthcare practice.
737
Interview with Source 91, partner in law firm healthcare practice.
738
Interview with Source 24, trade association official.
739
Interview with Source 107, former senior FDA official.
740
Interview with Michael Carome and Sammy Almashat, Public Citizen Health Research Group.
736

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improving a form of administrative communication that had already become central to the
agency’s work before 1997.741
Other interviewees, however, suggested that FDA’s degree of reliance on guidance has
been taken farther, or at least has been sustained, partly because the GGPs and the congressional
mandate behind them have heightened FDA personnel’s sense of guidance’s legitimacy. An
FDA Office of Policy official said the agency did not have to “worry” about the distinction
between legislative rulemaking and guidance in the way other agencies did: FDA’s liability
exposure was lessened by the notice-and-comment process for guidance and by its specific
statutory authorization, and the transparency of the process meant stakeholders had less reason to
sue.742 Indeed, Congress has continued to give extraordinary treatment to FDA guidance since
1997. In 2011, for example, new legislation ordered FDA to make certain policies by rule or
guidance—a move that one scholar called a “peculiar concession about their
interchangeability.”743
Other interviewees similarly thought the GGPs had conferred special legitimacy on
guidance in FDA’s eyes, but they had a different normative take, contending that this was a bad
thing and an overreading of the relevant legislation. Klasmeier, the head of Sidley’s FDA
regulatory practice, argued that the GGPs and the legislation had made FDA “overly confident”
in the success of its guidance program, with the result that the agency was now handling
“everything under the sun” by guidance. The existence of the GGPs, she believed, did not make
it lawful for the agency to dispense with legislative rulemaking to the degree it had.744 A
congressional staffer said the GGPs had made guidance seem so robust to FDA staff that they no
longer saw a reason to use legislative rulemaking, despite the absence of OMB or judicial
review. Applying the FDA model to other agencies, he posited, could encourage those agencies
to rely on guidance more than they otherwise would. He added that blessing guidance through
authorizations and processes contained in legislation or executive orders tended to make
guidance seem more legitimate, not least in the eyes of Congress and the White House, thereby
diminishing agencies’ tendency to use legislative rulemaking.745 William Schultz, who served as
741

Interview with Source 110, former senior FDA official.
Interview with Source 25, FDA Office of Policy official.
743
Noah, Governance, supra note 86, at 108.
744
Interview with Coleen Klasmeier, head of Sidley Austin’s FDA regulatory practice; former FDA OCC attorney.
745
Interview with Source 82, congressional staffer. The interviewee acknowledged that, for the scientific and
technical matters that made up much of FDA’s work, the shift toward guidance made more sense, but he believed
742

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FDA Deputy Commissioner for Policy (1994-98) and HHS General Counsel (2011-16) said that,
although FDA personnel had initially resisted the GGPs in 1997, they now “totally endorsed”
them—“probably to a fault,” he added, for he had recently seen instances in which he felt FDA
had “gone too far” in using guidance.746
I am not saying that, if legislative rulemaking across the government were largely or
entirely abandoned in favor of guidance issued through FDA-like processes, that would
necessarily be a bad thing. I take no position on that question. There are serious arguments on
both sides. In favor of shifting away from legislative rulemaking, one may cite the long line of
scholarship indicating that, at least at some agencies, the intensely participatory and analytic
regulatory process that originated around the 1970s undermined agencies’ capacity to carry out
their statutory mandates.747 Against this background, one might argue that a shift from
legislative rulemaking toward relatively-participatory guidance would constitute a salutary return
to a more relaxed and workable pre-1970 regulatory process and, perhaps, to what Congress
really intended when it enacted the APA in 1946. Soon after FDA adopted its GGPs, Todd
Rakoff wrote of the new framework: “It would not be far-fetched to rephrase [the GGPs] by
saying that the FDA now proposes to issue its important regulations mostly in accordance with
the notice-and-comment rulemaking procedure set forth in the APA, as it was understood before
1970.”748
But whether you think a shift away from legislative rulemaking would be good or bad,
there is no doubt it presents a profound and portentous choice, even as applied to one agency, to
say nothing of the whole government. FDA’s simultaneous proceduralization and elevation of
guidance suggests (though it hardly proves) that a strong mandate for notice and comment on an
agency’s guidance may embolden the agency to use guidance more expansively. That possibility
should give pause to anyone advocating for such a mandate. Adopting it obligates us to think
through just how far-reaching the consequences might be, and whether we think them good.

FDA’s inclination to use guidance had gone too far in areas where it was not justified by scientific and technical
considerations. Interview with Source 82, congressional staffer. See also Interview with Coleen Klasmeier, head of
Sidley Austin’s FDA regulatory practice; former FDA OCC attorney (making a similar point).
746
Interview with William Schultz, Partner, Zuckerman Spaeder; former FDA Deputy Commissioner for Policy
(1994-98); former HHS General Counsel (2011-16).
747
E.g., Jerry L. Mashaw & David L. Harfst, The Struggle for Auto Safety (1990); McGarity, supra note 643;
Wagner, supra note 581.
748
Todd D. Rakoff, The Choice Between Formal and Informal Modes of Administrative Regulation, 52 Admin. L.
Rev. 159, 169 (2000).

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4. Against “One Size Fits All”
As this Part shows, a series of questions ought be addressed in determining whether
public comment is appropriate for a given guidance document and, even more importantly, for a
large category of guidance documents. What is the distribution of information within the
stakeholder community? and how broadly is useful information diffused beyond stakeholders
already reachable through low-cost targeted invitations? Does targeting disproportionately
exclude the views of non-industry parties (who are least likely to have a chance to challenge the
guidance at the implementation phase)? Is the perception of bias or favoritism a problem for the
program, and will targeting invitations for input aggravate it? Would the contemplated guidance
benefit more from focused stakeholder response to a set proposal, or from more free-ranging
discussion that allows for iterative learning—and would providing for the former crowd out the
possibility of the latter? What resources are available to agency personnel tasked with
processing comments and finalizing guidance? If resources are few, and incentives to follow
guidance strong, is the agency prepared to provide clarity to stakeholders on whether they should
understand draft guidance to reflect current agency expectations? Are stakeholders willing to
accept lessened provision of guidance as the price for more participation in the formulation of
guidance that is provided? Finally, how comfortable are agency personnel and stakeholders with
using formalized public participation on guidance as a substitute for legislative rulemaking?
Answers to these questions are likely to vary document by document and will certainly
vary agency by agency. Given this variation—and the consequences of getting things wrong—it
would be rash to adopt a government-wide requirement of notice and comment for a large
category of guidance documents (i.e., for something substantially beyond the OMB GGPs’ focus
on the most extraordinary guidance). Experimenting agency by agency allows for more learning
and cabins the consequences of failure. As Neil Eisner argued, a “one-size-fits-all” approach to
participation in the issuance of guidance does not take sufficient account of how much agencies
vary in their tasks, resources, and capacities.749
This is not to say that agency-by-agency decisions will be left to the agencies. Congress
and the White House have already demonstrated their capacity to shape public participation on

749

Interview with Neil Eisner, consultant; former Assistant General Counsel for Regulation and Enforcement, DOT.
For a similar argument that participation on guidance should be decided on an agency-specific basis, see Family,
supra note 722, at 27-31.

185

guidance in a tailored, agency-specific manner. As noted above, FDA’s initial adoption of the
GGPs in February 1997 was driven in part by pressure from congressional overseers.750 As to
EPA, a former senior official with cross-office responsibilities recalled how OMB pressured the
agency to take public comment on certain key guidance documents when OMB felt it was
appropriate. He remembered that some EPA career officials strongly opposed public comment
on certain documents, but the OMB people insisted, and “we knuckled under.”751 Congress and
the White House have been wise to apply this pressure in areas confined enough that one can
make an informed judgment about the consequences and control the damage if things go wrong.

VI. PROPOSED RECOMMENDATION
Preamble
Guidance consists of agency statements of general applicability, not binding on members
of the public, that advise the public of the manner in which the agency proposes to exercise a
discretionary power or of the agency’s construction of the statutes and legislative rules it
administers. [NOTE FROM CONSULTANT TO THE JUDICIAL REVIEW COMMITTEE: As
drafted, this opening sentence would make the Recommendation applicable to both policy
statements and interpretive rules as those terms are used in APA § 553(b). It is possible that,
instead, the Recommendation should apply only to policy statements (as Recommendation 92-2
did), and not to interpretive rules.752 The law is clear that policy statements are to be
nonbinding, meaning that this Recommendation’s focus on how agencies should handle
nonbinding documents is clearly applicable to policy statements. But the law is unclear as to
whether interpretive rules are to be nonbinding. On this confusion, see the Report, Introduction,
Subsection B.1. Notwithstanding the unclarity of the law regarding the nonbinding status of
interpretive rules, the Conference might decide that agencies should, as a matter of good
government, treat interpretive rules as having the same nonbinding status—that is, entailing the
same aspiration for the agency to keep an “open mind”—as policy statements have. I do not
think the findings in the Report compel this view, but neither do they preclude it. (For
750

See supra text at note 666.
Interview with Source 96, former senior EPA official with cross-office responsibilities.
752
In that case, the word “guidance” throughout the Recommendation could be replaced with “policy statements.”
751

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elaboration, see the Report, Introduction, Subsection B.1.) Alternatively, the Conference could
remain agnostic as to whether interpretive rules should be treated as nonbinding but suggest that
each agency apply the approach set forth in this Recommendation to interpretive rules insofar as
the agency itself thinks interpretive rules should be treated as nonbinding.]
Guidance is an essential instrument of administration across numerous agencies.
Compared with adjudication or enforcement in which there is nothing to go by except statutes
and legislative rules, guidance can make agency decisionmaking faster and less costly, saving
time and resources for the agency and the regulated public. It can also make agency
decisionmaking more predictable and uniform, shielding regulated parties against unequal
treatment, unnecessary costs, and unnecessary risk and promoting compliance with law.753
Compared with legislative rulemaking, guidance is generally better for dealing with conditions
of uncertainty and for making agency policy comprehensible to regulated parties who lack
counsel. Further, the provision of guidance often takes less time and resources than legislative
rulemaking, freeing up the agency to address more issues within its statutory mission.754
Despite its usefulness, guidance is sometimes criticized for coercing members of the
public, as if it were a legislative rule, notwithstanding its officially nonbinding status. Although
an agency issuing guidance may act with no coercive purpose, structural features of certain
regulatory schemes may deprive regulated parties of any practical choice but to follow the
guidance. These features include the following:

--The law may require regulated parties to obtain the affirmative assent of the agency
(pre-approval) in order to get some legal advantage, like a permit or monetary benefit. If
the advantage sought is important to the party, and if the agency’s decision is

See Report, Section I.A. See also ACUS Recommendation 71-3 (“Agency policies which affect the public
should be articulated and made known to the public to the greatest extent feasible. To this end, each agency which
takes actions affecting substantial public or private interests, whether after hearing or through informal action,
should, as far as is feasible in the circumstances, state the standards that will guide its determination in various types
of agency action, either through published decisions, general rules or policy statements other than rules.”).
Additional prior ACUS Recommendations regarding guidance, apart from the one just cited and others to be
referenced specifically in this preamble, include Recommendation 2015-3, Declaratory Orders, 80 Fed. Reg. 78163
(Dec. 4, 2015); and Recommendation 2014-3, Guidance in the Rulemaking Process, 79 Fed. Reg. 35992 (June 25,
2014).
754
See Report, Section I.B.
753

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discretionary and subject to delay, the incentive to follow whatever the agency’s wishes
appear to be (including guidance) can be overwhelming.755

--The regulatory scheme may subject the regulated party to frequent monitoring and
evaluation by the agency. If the law is complex, regulated parties may inevitably fail to
comply with at least a few of its requirements. To insure against this contingency, a
regulated party may invest in its relationship to the agency, that is, seek to build up the
agency’s trust and confidence in its good faith and cooperativeness, including by
following guidance.756

--A regulated party subject to ex post enforcement will have an incentive to follow
guidance that increases with the probability of detection of guidance-noncompliant
behavior, the cost of an enforcement proceeding irrespective of outcome, the probability
of an unfavorable outcome, and the probable sanction in that event. In some (though far
from all) contexts, it may be that the regulated party cannot expect, without prohibitive
risk, to get the accusation meaningfully examined and adjudicated by an official distinct
from the enforcement personnel. This creates a strong incentive to avoid being accused
in the first place, as by following guidance.757

In addition, guidance may operate on the beneficiaries of a regulatory statute or
legislative rule as if the guidance were itself a legislative rule. The guidance can operate this
way if it promises to treat regulated parties less stringently than the statute or legislative rule
would. Such guidance may cause regulated parties to take advantage of the new latitude by
shifting their behavior in a direction that does harm to the beneficiaries. The guidance may thus
effectively deprive the beneficiaries of the protection of the governing statute or legislative
rule.758
While these legislative-rule-like effects on regulated parties and regulatory beneficiaries
may obtain whenever the guidance is operative, we must remember that the agency itself

755

Report, Section II.A.
Report, Section II.B.
757
Report, Section II.D.
758
Report, Part IV.
756

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controls whether the guidance is operative in any given instance. If the guidance remains truly
tentative, in that the agency affords members of the public a fair opportunity to seek modification
of or departure from the guidance in any given instance, then the guidance does not operate like a
legislative rule. Paragraph 1 articulates this principle; in so doing, it follows ACUS
Recommendation 92-2,759 but it expands the applicability of the principle from regulated parties
to members of the public more generally, so as to include regulatory beneficiaries who may be
harmed if denied a fair opportunity to seek relief from deregulatory guidance.760 Paragraph 2
clarifies that, although guidance can permissibly bind some agency employees,761 guidance
cannot bind those employees in a manner that forecloses the fair opportunity called for
Paragraph 1.762 (For example, the guidance could bind officials at one level of the agency
hierarchy, with the proviso that officials at a higher but still accessible level can authorize
departure from the guidance.) Paragraphs 3, 4, and 5, set forth minimum practical measures to
ensure the fair opportunity is provided.763
Despite the aspiration to be flexible, agencies are sometimes inflexible in their use of
guidance, and the guidance can therefore have a coercive, legislative-rule-like effect on members
of the public. One might think flexibility is the path of least of resistance for an agency, so
inflexibility must reflect some bad-faith intent on the part of the agency. But that is not so. The
very real fact of agency inflexibility can be explained to a large degree (though not entirely) by
agencies’ sensitivity to competing rule-of-law values that favor consistency, by their lack of
resources, and by their inertia in the face of unintended organizational tendencies that foster
rigidity.764 Paragraph 6 sets forth additional measures (beyond the minimum in Paragraphs 3-5)
that agencies may take in order to maintain flexibility despite these factors that tend toward
inflexibility.
On this point, we must recognize that agencies are often under active stakeholder
pressure to be inflexible (i.e., to be consistent) and that these stakeholder pressures spring from
759

ACUS Recommendation 92-2, paragraph II.B.
Note also that Paragraph 1’s phrase “to particular conduct” indicates that agencies should be open to requests for
departures from regulated parties not only during an enforcement proceeding, but also before one has begun (and
before the regulated party has engaged in the conduct that would be subject to such a proceeding).
761
ACUS Recommendation 92-2, paragraph III.
762
Report, Introduction Section B.2. The approach taken is similar to that in OMB Good Guidance Practices
§ II(2)(h).
763
Notices of nonbinding status and avoidance of mandatory language are already common practice at some
agencies. See Report, Part III, preface.
764
See generally Report, Part III.
760

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legitimate concerns that agencies would be remiss to ignore entirely. For one thing, if a
regulated party obtains a favorable departure from guidance, this may put the party’s competitors
at a disadvantage, and they may protest. Further, they may come to lose faith in the
predictability of the agency and in the idea that the agency provides them a level playing field—a
shift that may cause them to withdraw from cooperation with the agency, thereby diminishing
compliance and making the whole regulatory program less effective. Meanwhile, individualized
flexibility on guidance, if it favors a particular regulated party, may seem like favoritism and
thereby attract the negative scrutiny of the media, NGOs, and members of Congress. On top of
all this, some competitors of the party that received a favorable departure from guidance may
view it as unfair and ask why they themselves cannot get the same exception. One departure
may therefore invite other requests for departure, and these requests can eat up the agency’s
resources and pose the danger that any coherent policy will unravel. To prevent all this from
happening, the agency may simply deny departure requests to avoid opening the floodgates to
begin with.765
However, as set forth in Sub-paragraph 6(a), there is a way for an agency to maintain
flexibility while addressing these legitimate pressures for consistency: it can take the approach of
principled flexibility. That is, for each departure the agency makes, it can give a written
explanation that is accessible to other agency officials and to the public, with the understanding
that the exception then becomes generally applicable to like cases prospectively. The departure
explanations can then accumulate to form a body of evolving precedent. Principled flexibility
helps refute accusations of favoritism, cabins the rationale for each departure so as to avoid
opening the floodgates to more requests, promotes fairness among competitors by ensuring that
all exceptions become generally available on a prospective basis, and aids predictability because
the obligation to provide a reason for each departure will tamp down the number of departures
and make it easier to anticipate when departures may happen.766 All that said, as Paragraph 6
recognizes, principled flexibility can be challenging to implement. The need for reason-giving
means that every request for departure requires time and money to evaluate, and the giving of
reasons must be reconciled with legitimate needs for confidentiality.767

765

Report, Section III.A.
Report, Section III.B.
767
Report, Section III.C.
766

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On top of these organizational and resource-based obstacles to principled flexibility, there
are additional obstacles that stand in the way of flexibility of any kind, principled or not: the
antagonism of some officials toward being challenged; the institutional motives of higher-level
officials to back their subordinates; the counter-intuitive nature of the rule/guidance distinction
for many people; and the fact that some agency offices, by reason of their principal day-to-day
business, may be socialized to be less receptive to stakeholder requests than others.768 Subparagraphs 6(b) through 6(f) set forth additional measures that agencies may take in order to
maintain flexibility in the face of these obstacles, recognizing again that such measures take
agency resources and managerial initiative.
All that said, there are some instances in which agencies refuse to entertain requests for
departures from guidance not because of legitimate external pressures for consistency, nor
because of inertia or resource poverty in the face of organizational pathologies, but instead
because agency personnel just think the guidance is right. That is, they are committed to the
substantive content of the guidance, and they therefore close their minds to reconsideration or
departure. Of the many reasons why agencies are inflexible, this one is the most problematic. If
an agency wants to shut off the possibility of departing from a policy simply because it thinks the
policy’s substantive content is right, that is the archetypal scenario for legislative rulemaking.769
Because being flexible often requires agency resources and managerial initiative,
agencies cannot, as a practical matter, be flexible on everything all the time. Priorities must be
set, as recognized in Paragraph 7. In deciding which guidance documents warrant the most
active exertions in favor of flexibility, agencies should assign a higher priority to a document
(a) the more it is likely to alter regulated-party behavior when operative;770 (b) the more the
value of the document to the agency lies in its choice of substantive content;771 and (c) the less it
is subject to legitimate stakeholder pressures for consistency.772

768

Report, Section III.D.
Report, Section III.E.
770
On structural features of certain regulatory schemes that tend to cause guidance to alter regulated-party behavior,
see Report, Part II. On how deregulatory guidance can alter regulated-party behavior in a way that affects
regulatory beneficiaries, see Report, Part IV.
771
Report, Section III.E. Although one might think an agency’s commitment to a guidance document’s substantive
content would make it a fool’s errand to encourage the agency to be flexible on that guidance, one must remember
that the agency is a “they” not an “it.” Some intra-agency offices or categories of personnel may be less committed
to the guidance’s substantive content than others, and therefore they may check each other, if a strong norm in favor
of flexibility can be articulated. This point is elaborated in Report, Section III.E.
772
On these legitimate stakeholder pressures for consistency, see Report, Section III.A.
769

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Whereas the Paragraphs discussed so far focus mainly on agencies’ administration of
guidance in individual proceedings, Paragraphs 8 and 9 address agencies’ processes for adopting
guidance to begin with—wholesale rather than retail—and especially the role of public
participation in those processes. It is often appropriate for agencies to invite public participation
when considering whether to adopt guidance, through means such as outreach to selected
stakeholders, stakeholder meetings and webinars, advisory committee proceedings, or voluntary
use of notice-and-comment procedures.773 ACUS Recommendation 76-5 says that agencies
should undertake pre-adoption notice and comment on a guidance document when the document
is “likely to have substantial impact on the public” and when it would not be “impracticable,
unnecessary, or contrary to the public interest to use such procedures.”774 Broad participatory
measures at the time of a guidance document’s adoption may be of value to the agency, to
regulated parties, and especially to regulatory beneficiaries and organizations representing them,
for beneficiaries often (if not always) lack the opportunity and resources to participate in the
individual adjudicatory or enforcement proceedings in which a guidance document will be
applied.775
In choosing a level of public participation that is appropriate to a guidance document’s
likely impact and is practicable, an agency should weigh several factors, as set forth in
Paragraph 8. Broader participation is more appropriate the greater the guidance’s likely impact,
which can be gauged according to the factors discussed earlier in this preamble.776 Broader
participation may increase the agency’s access to useful technical or political information,
though it may reach the point of diminishing returns.777 It may increase stakeholders’
willingness to accept the policy of the guidance and their sense of “buy-in,” although relatively
more formalized means of participation (such as notice and comment) may cause the agency to
become invested in a formal proposal, which may sometimes diminish opportunities for agency

773

On the variety of forms of participation, see Report, Section V.A. Note that voluntary notice and comment on a
guidance document generally does not involve nearly the same costs as notice and comment on legislative
rulemaking. See Report, Section V.B.
774
ACUS Recommendation 76-5, paragraph 1. Recommendation 76-5 also states, in Paragraph 2, that agencies not
undertaking notice and comment for adoption of a guidance document prior to adoption should undertake it soon
after adoption, though an agency “may omit these post-adoption comment procedures when it incorporates in the
interpretive rule or policy statement a declaration, with a brief statement of reasons, that such procedures would
serve no public interest or would be so burdensome as to outweigh any foreseeable gain.”
775
See Report, Part IV and also text at notes 601-602.
776
See supra within this preamble text at notes 755-758.
777
Report, Subsections V.C.1 and V.C.2.

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learning.778 Broader forms of participation also have costs that may reduce agencies’ resources
for other tasks, including provision of guidance on other subjects, and may even slow agency
policymaking processes to the point of alienating part of the stakeholder community.779
Given the complexity of these potential costs and benefits and their tendency to vary with
context, Paragraph 9 suggests that decisions about whether and how to seek public participation
on guidance should be made on a document-by-document or agency-by-agency basis.780
Paragraph 9 does not suggest any government-wide requirement for notice and comment on
guidance documents, which, unless confined to the very most extraordinary guidance
documents,781 would be rash. This is due not only to the complex cost-benefit considerations
discussed above but also because broad mandates for notice and comment on guidance risk two
additional unintended consequences. First, a broad mandate applied to a resource-strapped
agency may cause the agency to fail to process and incorporate comments and instead leave
many guidance documents in published “draft” form indefinitely, which may at least partly
defeat the purpose of notice and comment and cause stakeholder confusion.782 (Paragraph 9
suggests measures to head off this possible result.) Second, a broad mandate may so legitimize
guidance in the eyes of agency personnel and political overseers that guidance will end up
largely supplanting legislative rulemaking.783

Recommendation
Guidance Documents Not to Bind the Public
1. An agency should not treat a guidance document as if it were a legislative rule binding on the
public. Instead the agency should afford the public a fair opportunity to seek
(a) modification of the guidance document in general, including rescission;

778

Report, Subsection V.C.3.
Report, Subsection V.C.4.
780
Some agencies have adopted procedural rules requiring notice and comment for large and well-defined categories
of their guidance documents, while others have undertaken notice and comment for a large number of guidance
documents but selected those documents on a decentralized, ad hoc basis. Report, Subsection V.D.1.
781
The Office of Management and Budget’s Good Guidance Practices calls for pre-adoption public comment on
“economically significant” guidance documents, but this appears to cover only a very small number of quite
extraordinary documents. See Report, text and accompanying notes 650-658.
782
Report, Subsection V.D.2.
783
Report, Subsection V.D.3.
779

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(b) departure from the guidance document as applied in a particular proceeding or to
particular conduct in the case of a request from (i) a regulated party subject to the
proceeding or contemplating the particular conduct or (ii) any other interested person
participating in the proceeding.
2. An agency may treat a guidance document as binding on some of its own employees (e.g., on
officials at one level in the absence of higher-level officials’ permission to depart) but should
ensure that this does not interfere with the fair opportunity called for in Paragraph 1.
Minimum Measures to Avoid Binding the Public
3. A guidance document should prominently state that it is not binding on members of the public
and explain how members of the public can seek modification of or departure from the guidance
document, per Paragraph 1, including the identity and contact information of officials authorized
to decide such requests.
4. A guidance document should not include mandatory language unless the agency is using that
language to describe a statutory or regulatory requirement, or the language is addressed to
agency employees and will not foreclose agency consideration of positions advanced by
members of the public.
5. The agency should instruct all employees applying guidance documents or advising on the
basis of them not to give any indications to members of the public inconsistent with Paragraphs
1-4.
Additional Measures to Avoid Binding the Public
6. In order to avoid binding the public and to provide a fair opportunity for modification or
departure, an agency should, subject to considerations of practicability and resource limitations
and the priorities described in Paragraph 7 below, consider additional measures, including the
following.
(a) Agencies may promote flexibility in a principled fashion, taking due account of needs
for consistency and predictability, by ensuring that each departure from a guidance
document in a particular situation is accompanied by a written explanation, accessible to
other agency personnel and to the public (consistent with needs for confidentiality),
which shall become the default policy for all like situations under that guidance
document in the future.
(b) Agencies may assign the authority to grant departures from a guidance document to a
component of the agency that is likely to engage in open and productive dialogue with
persons who may seek modifications or departures, such as a program office that is
accustomed to dealing cooperatively with regulated parties and regulatory beneficiaries.
(c) Agencies, when authorizing frontline officials to make departures from a guidance
document, may direct appeals of adverse decisions by such officials to a higher-level
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official who is not the direct superior of those frontline officials, in order to diminish the
role played by a superior’s institutional motivation to back his/her subordinates.
(d) Agencies may invest in training and monitoring of frontline personnel to ensure that
they (i) understand the difference between legislative rules and guidance; (ii) treat
parties’ requests for departures in an open and welcoming manner; (iii) understand that
departures from guidance, if undertaken according to the proper procedures for approval
and justification, are appropriate and will not have adverse employment consequences for
them; and (iv) are not to take personally, or retaliate against, a party’s decision to seek
departure from guidance or to appeal to a higher level of the agency when denied such a
departure.
(e) Agencies may set up channels for anonymous requests for approvals of departures
from a guidance document based on stated facts.
(f) Agencies may set up channels for anonymous feedback from members of the public
on whether they perceive that requests for departures from a guidance document are
given reasonable consideration.
Priorities in Deciding When to Take Additional Measures
7. Because the additional measures in Paragraph 6 are likely to take up agency resources, it will
be necessary to set priorities for which guidance documents are most in need of such additional
measures. In deciding when to take additional measures, an agency should assign a higher
priority to a guidance document—
(a) the more likely the guidance is to alter the behavior of regulated parties, either
because they have strong incentives to comply with guidance or because the guidance
practically reduces the stringency of the regulatory scheme compared to the status quo;
(b) the more the value of the guidance to the agency lies in its adoption of one substantive
approach instead of other substantive approaches that have been recently tried or
seriously urged upon the agency;
(c) the less the value of the guidance to the agency or to stakeholders lies in consistency
or predictability per se, irrespective of its substantive content.

Public Participation in Adoption of Guidance Documents
8. When an agency is contemplating adopting a guidance document, it should solicit an
appropriate level of public participation before adopting the document, which may include
outreach to selected stakeholder representatives, stakeholder meetings or webinars, advisory
committee proceedings, or notice and comment (with or without a response to comments). In
deciding what level is appropriate, the agency should consider:

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(a) the likelihood that the document will alter the behavior of regulated parties, either
because they have strong incentives to comply with guidance or because the guidance
would practically reduce the stringency of the regulatory scheme compared to the status
quo;
(b) the likely increase in useful information available to the agency from broadening
participation, keeping in mind that non-regulated parties may offer different information
than regulated parties and that non-regulated parties will often have no opportunity to
provide input regarding guidance other than at the time of adoption
(c) the likely increase in policy acceptance from broadening participation, keeping in
mind that non-regulated parties will often have no opportunity to provide input regarding
guidance other than at the time of adoption, and that policy acceptance may be less likely
if the agency is not responsive to stakeholder input
(d) whether the agency is likely to learn more useful information by having a specific
agency proposal as a focal point for discussion, or instead having a more free-ranging and
less formal discussion
(e) the practicability of broader forms of participation, including notice and comment,
keeping in mind that broader participation may slow the adoption of guidance and may
diminish resources for other agency tasks, including the provision of guidance on other
matters
9. An agency may make decisions about the appropriate level of participation document-bydocument or by rules assigning certain participatory procedures to general categories of
documents. If an agency opts for the latter, it should consider whether resource limitations may
cause some documents to remain in draft for substantial periods of time and, if so, should either
(a) make clear to stakeholders which draft guidance documents, if any, should be understood to
reflect current agency thinking or (b) provide in each draft guidance document that, at a certain
time after publication, the document will automatically either be adopted or withdrawn.

APPENDIX: METHODOLOGY FOR INTERVIEWS
A. Overall Approach
I located interviewees through a chain-referral process, beginning with a nucleus of wellnetworked individuals with diverse sectoral affiliations (ACUS agency contacts and ACUS
public members) who could point me to people, inside and outside of federal agencies, who were
knowledgeable from experience about federal agency use of guidance. I believe the chainreferral method was preferable to an alternative method of drawing a random sample of
interviewees from a defined population. The state of academic knowledge about guidance’s role
196

in federal administration did not provide much basis even for guesswork about what the relevant
populations would be, or what biases they might entail. It is only in the course of the study, for
example, that I learned about the potentially different attitudes toward guidance within agencies
between program offices and enforcement offices, or within regulated industry between
compliance officers, in-house counsel, and outside counsel. The chain-referral method—
essentially using the knowledge of people within the system to identify who has relevant
knowledge—is better-suited to the early stage of development of scholarship on guidance’s
practical role in administration. It is a method suited to identifying and beginning to trace
“unknown unknowns.” My hope is that this chain-referral interview study provides a provisional
yet broad “map” of the subject matter, which future scholars—sometimes using more structured
methods involving defined populations and random sampling—can employ as a guide to test
more specific hypotheses.
The interviews were unstructured. Each began with an open-ended invitation for the
interviewee to discuss the subject of federal agency guidance based on his/her experience, and
the conversation went from there. I believe the unstructured format, like the chain-referral
process, was the approach best-suited to the early stage of our learning about this subject. A
method more similar to a survey, with pre-written questions asked on a uniform basis, could not
have accounted for the numerous aspects of the subject that I learned about only in the course of
doing the interviews. Again, I hope that the aspects of the problem identified through this more
exploratory approach will later serve as the basis for future studies that can test more concrete
hypotheses with more defined questions. Given the nature of my method, I have relied very little
in my analysis upon quantitative reasoning (e.g., comparing the number of interviewees who said
X to the number who said Y), because the interviews themselves had no uniform structure. It
should also be noted that, because of the constraints of the Paperwork Reduction Act, any use of
standardized questions would have made it impossible to interview any persons outside the
federal government. That would have been a great loss, as the non-federal interviewees provided
invaluable insights into guidance’s role from a stakeholder perspective. It was also extremely
helpful to hear from people outside government who had previously been in government and
could reflect upon their service from a distance.

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B. Locating Interviewees
The chain-referral process of finding interviewees proceeded in several “rounds.” As I
went from round to round, I tried to strike a balance between breadth and depth. Early on, I
interviewed anyone who was referred to me with knowledge of guidance at any federal agency.
As the rounds went on, I narrowed my focus to fewer and fewer agencies. The aim was to obtain
some knowledge of a wide range of agencies and more in-depth knowledge of a few agencies.
The agencies on which I went into the most depth, as I shall discuss below, were FDA and EPA.
The reason to focus on FDA was the extraordinary importance of guidance at that agency and its
use since 1997 of an unusually formalized process for issuing guidance, the FDA Good
Guidance Practices. The reason to focus on EPA was the unmatched scale of its regulatory
operations (in terms of benefits and costs) and its unmatched prevalence in legal controversy
over both guidance and legislative rulemaking.
I began the chain-referral process in August 2016 by seeking a group of “first-round”
interviewees. I sought out these interviewees through five channels:
(1) ACUS staff and I approached ACUS contacts at 17 agencies and asked them to
arrange interviews between me and agency officials who could speak to the subject of guidance
from experience.784 Six of the contacts responded and arranged interviews. These were at FDA,

784

Regarding selection of the 17 agencies: In beginning to solicit interviewees in August 2016, I wanted to focus on
agencies that made the most use of guidance and legislative rulemaking in their operations. There is no official
government-wide accounting of agency guidance documents. I therefore consulted one official metric of agency
rulemaking activity, plus a privately-compiled metric of agency guidance activity.
The official metric of agency rulemaking activity was the annual OMB Report to Congress on the Costs
and Benefits of Federal Regulations for 2015 (published March 2016). It gave all the executive agency components
that promulgated one or more “major rules” in FY 2004-2014 and how many. Id. at 8-12. It also listed all the
independent agencies that promulgated major rules in the same period, and how many. Id. at 97. I made a list of
entities in the two categories that had 5 or more major rules in the covered period (13 executive agency components
or independent agencies in all).
The privately-compiled metric of agency guidance activity was a count of the number of “significant
guidance documents” listed on executive agency websites (pursuant to the OMB Good Guidance Practices from
2007), compiled from those websites by the Competitive Enterprise Institute (CEI) in a report critiquing agency use
of guidance. Clyde Wayne Crews Jr., Mapping Washington’s Lawlessness: A Preliminary Inventory of
“Regulatory Dark Matter” at 23 (Dec. 2015). The numbers were as of August 2015. I checked a few of the report’s
numbers against current agency websites as of August 2016, and the numbers were very close (discrepancies small
enough that they could result from changes between August 2015 and August 2016). I also checked the totals
against a similar compilation from individual agency websites that appeared in Raso, supra note 84, at 813. The
ranking of agencies by use of guidance that I gleaned from Raso’s data was pretty similar to the CEI report, except
that HHS seemed to have reduced its listed guidance documents by a lot. I made a list of all executive agency
components in the CEI compilation that had 15 or more significant guidance documents in force (13 in all, 2 of
which overlapped with the OMB list).

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EPA, USDA, the Department of Energy, DOT (including officials at FAA, NHTSA, and
FMCSA), and the Federal Reserve. The agency officials thus interviewed totaled 31. (For the
remaining eleven agencies that we approached but that did not participate in the study, I
excluded, in all rounds of interview solicitations, any referral to an individual who was at that
time an official at any of those agencies. To seek to interview such people would have been to
circumvent the ACUS agency contact. The numbers reported throughout this Appendix exclude
all referrals to officials at those eleven agencies.)
(2) On top of directly arranging interviews between me and agency personnel, two of the
six responding ACUS agency contacts referred me (without directly arranging interviews) to
individuals, both inside and outside the federal government, who could speak to the subject of
guidance from experience. These individuals totaled four. I contacted all four, and three agreed
to be interviewed.
(3) I approached all public members of ACUS as of August 2016 who had not spent their
careers primarily in academia. These totaled 18. I asked each of them to refer me to individuals
outside the federal government who could speak to the subject of federal agency guidance from
experience. Of the 18 members, 15 responded, and 11 gave names. These names totaled 50. I
contacted all 50, and 31 agreed to be interviewed; a few of these 31 people took the initiative of
bringing along colleagues to meet/talk with me who also wanted to be interviewed (totaling 3),
so the total number of interviewees yielded by this channel was 34.

Although these sources rested on agency self-reporting that was quite possibly imperfect, I felt comfortable
going ahead with the combined lists compiled from the two metrics, because the agencies listed matched my
impressionistic sense of places in federal administration where guidance was important. I relied on the metrics to
provide an objective check on my impressions.
The agencies and agency components from the two lists numbered 24, but because ACUS contacts
generally operated at the agency level rather than the component level, we ended up approaching the contacts at all
the agencies of which these components formed parts. Those agencies totaled 15 (which reflects the fact that we
treated HHS and FDA as separate agencies, because they have separate ACUS contacts). The 15 agencies were:
CFTC, CFPB, USDA, Department of Education, Department of Energy, DHS, DOL, DOT, EPA, FCC, Federal
Reserve, FDA, HHS, NRC, and SEC.
Several weeks into the interviews, ACUS staff and I approached ACUS contacts at two additional agencies,
resulting in a total of 17 agencies solicited. The two additional agencies were the FTC and OCC. I decided to
approach FTC because, based on one early interview, it seemed to offer—in its consumer protection activities—an
interesting contrast with many other agencies in terms of its very broad jurisdiction combined with focus on ex post
enforcement. I decided to approach OCC because, in an early interview, someone discussing CFPB made
interesting comparisons to the prudential bank regulators, including OCC, which I thought should be further
pursued.

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(4) I approached one person to whom I was referred by a consultant on a previous ACUS
project, as being highly knowledgeable from experience about guidance. This person agreed to
be interviewed.
(5) I approached one individual who I learned from the press had long been a leading
advocate on guidance-related matters at one agency. This person agreed to be interviewed.
The five channels described above yielded a total of 70 interviewees (31 from channel 1;
three from channel 2; 34 from channel 3; one from channel 4; and one from channel 5). Readers
may want to know the response rate. For channel 1, I am not able to calculate a response rate,
because solicitations for interviews were conducted by the ACUS agency contacts, and I do not
know what response rates they experienced. For the remaining channels (2, 3, 4, and 5), the
aggregate response rate was 64%, that is, 36 people agreed to be interviewed out of 56 solicited
across those channels.785
These 70 interviewees were the first-round interviewees. In addition to interviewing
them, I generally asked all of them to name other persons they thought could speak to the subject
of guidance from experience. (I did not ask this of the FDA officials to whom was I introduced
through channel 1, because FDA’s ACUS contact was extraordinarily generous in arranging for
me to meet with nine FDA officials; asking all of them for referrals would have multiplied the
number of FDA-related interviewees to an unmanageable degree, given that I was aiming to
cover several agencies in addition to FDA.)
Many of the first-round interviewees did provide me with names, which provided the
basis for locating the second-round interviewees. I decided that I had to be selective in
contacting people for this second round, both to economize on time and to avoid letting the study
become too scattered across too many agencies—to give the study some depth as well as breadth.
I therefore narrowed my solicitations according to the agencies with which the named persons
seemed to be experienced, based on what the referrer said. In particular, I solicited all named
persons experienced with the six agencies participating through their ACUS contacts (FDA,
EPA, USDA, the Fed, the Department of Energy, and DOT, although, at DOT, I narrowed my
search to FAA alone, for the sake of manageability); and I also solicited all named persons
outside the federal government who were experienced with three of the agencies that did not

785

The number 56 is the sum of the denominators for channels 2, 3, 4, and 5, and the number 36 is the number of
initial respondents, which excludes the 3 people who were brought along to the interview sessions as colleagues.

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participate: HHS (besides FDA), OSHA, and CFPB. I chose HHS because I wanted at least
some depth on a benefit-administering agency (the interviews mostly pertained to Medicare). I
chose OSHA because its guidance had attracted much attention in congressional oversight and
litigation, which I found interesting because the agency seemed to lack the same kind of leverage
over regulated parties and thick relationships with them that characterize several other agencies.
I chose CFPB because first-round interviews about that agency and the Fed suggested that
financial-services regulation would be an interesting way to balance the predominant focus of
most of the other agencies on science, medicine, and engineering. The named persons who met
these criteria totaled 58. I contacted all 58, and 32 agreed to be interviewed, for a response rate
of 55%. Of those 32 interviewees, a few took the initiative of bringing along colleagues to
meet/talk with me who also wanted to be interviewed (totaling 4), so the total number of
interviewees yielded was 36.
These 36 interviewees were the second-round interviewees. I generally asked all of them
to name other persons they thought could speak to the subject of guidance from experience.
Many of them did give names, which provided the basis for locating the third-round
interviewees. In this third round, I was even more selective, contacting all persons experienced
with EPA and FDA, plus all persons outside the federal government experienced with OSHA or
CFPB. (I focused on EPA and FDA for the reasons noted earlier. I focused on OSHA and
CFPB because, of all the agencies on which the second round focused, I was most puzzled about
them.) The named persons who met these criteria totaled 40. I contacted all 40, and 23 agreed to
be interviewed, for a response rate of 58%.
These 23 interviewees were the third-round interviewees. With this round completed, the
total number of interviewees was well over one-hundred, and I ceased seeking referrals on a
general basis.
However, I did seek to expand the interviewee pool further with two supplemental
rounds, which were as follows:
First, I felt that I needed to get more of an industry perspective on OSHA. I had learned
much about OSHA from the eleven interviewees who discussed the agency during the first three
rounds, but only two of these people had employer-side experience, and I had various
puzzlements about OSHA guidance’s role that I thought might be partly resolved by hearing
more employer perspectives. Therefore, of the four third-round interviewees experienced with
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OSHA, I asked for more names. Some of the interviewees gave names on the employer side,
which totaled 4. I contacted all 4, and all 4 agreed to be interviewed.
Second, I felt that I needed to learn more about NGOs’ perspectives on guidance at
agencies besides EPA (the chain-referral process had already produced several EPA-related
NGO interviewees). Therefore, I specifically sought names of NGO personnel who could speak
to the subject of guidance from (a) two public members of ACUS experienced with agencies
besides EPA and (b) two ACUS contacts at agencies besides EPA. Of these four ACUS people,
three gave names, which totaled 7. I contacted all 7, and two agreed to be interviewed.
The total number of interviewees for the entire project was 135. This is the total of the
first round (70), second round (36), third round (23), supplemental round for employer
perspectives on OSHA (4), and supplemental round for NGO perspectives on agencies besides
EPA (2).
A few notes about rules I followed through all stages of the chain-referral process: First,
at every stage, I excluded any referral that was duplicative of a prior referral; the various
numbers reported above exclude all duplicates. Second, in the course of obtaining referrals, I
was occasionally given the names of academics. Because I wanted to focus the study on people
who could speak about guidance from direct experience, I contacted these academics only if
(a) they had spent their careers not primarily in academia but in other sectors that gave them
more direct experience with guidance or (b) they had been in a federal government post within
the preceding five years. Otherwise I excluded academics from the people I contacted; those
excluded academics do not appear at all in the various numbers reported above.

C. Logistics of the Interviews
All interviews were conducted between September 2016 and July 2017. The individuals
interviewed totaled 135. Several of the interviews were conducted in groups: four in pairs, two
with three people, three with four people, and one with nine people. Because of the group
interviewing, the total number of initial interviews was less than 135; it was 110. However, I
conducted 13 follow-up interviews (all one-on-one, with 11 individuals subject to one follow-up
and one to two follow-ups). Therefore the total number of interviews (initial plus follow-up) was
123. Of these 123, 35 were in person (including all those with more than two interviewees), and
88 were by phone. I took detailed handwritten notes on all interviews but did not record them in
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any other way. The vast majority of all the initial interviews ran between 60 and 90 minutes,
with some running shorter (there were about three as short as 20 minutes), approximately offset
by some that ran longer (a few to two hours). The follow-up interviews were mostly shorter, in
the 20 to 30 minute range.

D. Characteristics of the Interviewees
The breakdown of the 135 interviewees by the agency most discussed in the interview
(always on the basis of the interviewee’s experience) is as follows:
EPA
FDA
OSHA
Dept of Energy
USDA
FAA
HHS (besides FDA)
bank regulation (CFPB or Federal Reserve)
no particular agency
FMCSA
SEC
DOT
NHTSA
Dept of Education
DHS
FTC
TOTAL

32
31
15
10
8
7
7
6
5
4
3
2
2
1
1
1
135

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The breakdown of the 135 interviewees by sectoral affiliation is as follows:

industry786
current agency officials
NGOs787
labor organizations
state or local government788
academia789
congressional staff
retired790
think tanks
TOTAL

65
35
20
6
4
2
1
1
1
135

The breakdown of the 135 interviews according to whether they worked or are working
in a federal agency, and in a political or career position within that agency, is as follows:

current career officials
former career officials
former political appointees (Democrat)
former political appointees (Republican)
none of the above
TOTAL

35
35
10
13
42
135

786

This includes people working at regulated firms, trade associations, industry associations, law firms representing
regulated firms, or consulting firms serving regulated firms.
787
Organizations in the NGO category were comprised mostly of progressive advocacy organizations and more
rarely of public policy research organizations that seek to influence federal administration. No organization in the
NGO category was industry-aligned.
788
This includes people working for associations of state or local government agencies.
789
For interviewees who are currently academics but spent most of their careers in another sector, I have listed them
as being in that other sector.
790
This category includes only people who retired after a career in the federal civil service. Retired people who
ended their careers in another sector are listed as being in that sector.

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Note that I have counted an interviewee as having prior federal agency service only if that
service was closely related to the agency the interviewee discussed during the interview (e.g., an
interviewee would be counted as having prior service if he/she served at DOJ frequently
representing the agency discussed, but not if he/she served in a non-medical position in the Navy
and then embarked on a separate, post-military career in the pharmaceutical industry). In the
vast majority of cases, an interviewee listed as having prior agency service did that service at the
exact same agency discussed in the interview.
If an interviewee served in both a career and a political position, I counted him/her as
political. The chart takes account only of service in federal agencies, not service on
congressional staff.

ACKNOWLEDGMENTS
It is a pleasure to recognize the many people who have helped me with this endeavor,
while of course absolving them of responsibility for anything I have said. I am grateful to the
Conference for providing me with the opportunity to work on the project, in particular to Gisselle
Bourns, staff counsel for the project; Reeve Bull, research chief; and Alissa Ardito, formerly of
the Conference staff, who was instrumental in getting the project started and allowing me to
work on it. Paul Verkuil, during his tenure as Chairman of the Conference, generously invited
me to visit its offices and meet the staff before this particular project was even contemplated.
I am indebted to several fellow scholars for their advice on the project and the report:
Cary Coglianese, Cynthia Farina, Ron Levin, Jerry Mashaw, Ricky Revesz, Jason Schwartz,
Kevin Stack, Wendy Wagner, Chris Walker, and participants in the faculty workshop at
Vanderbilt Law School and the “Complying with Law” conference at Loyola University Chicago
School of Law.
ACUS agency contacts performed the invaluable service of identifying, and often setting
up interviews with, agency officials knowledgeable about the subject matter. Public members of
ACUS did the same in identifying other knowledgeable interviewees. Sarah Ryan, during her
tenure as empirical methods librarian at Yale Law School, provided important guidance on the
project’s methodological approach. In the quantitative research for the project, as well as some
of the legal research, several excellent student research assistants at Yale Law School were
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instrumental: Juliana Brint, Katie Choi, José Argueta Funes, Samir Doshi, Julia Hu, Arjun
Ramamurti, Christine Smith, Isra Syed, and Garrett West. I am grateful to Cynthia Farina and
the Cornell eRulemaking Initiative for generously sharing data with me on EPA rulemaking
activity that provided valuable context for thinking about public participation in EPA issuance of
guidance.

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