Federal agencies may face legal risk if they only provide constructive notice of regulatory changes through publication and “availability” of the FOIA.
Many federal agencies run significant legal risks by providing inadequate notice of significant regulatory changes. This is one of the conclusions we have reached after a year of study for the Administrative Conference of the United States (ACUS).
The purpose of the study was to examine how agencies notify significant regulatory changes so that ACUS can decide whether or not to recommend improvements. We interviewed a wide range of interested parties: agency staff, regulated parties, beneficiaries of regulation, business groups, public interest NGOs, trade unions, micro-enterprises, etc. As a result of deliberations informed by our study, ACUS adopted a recommendation earlier this year that provides guidance to agencies on how to provide more effective notification strategies.
We found that most agencies are complying well with the requirement of the Administrative Procedure Act to publish proposed legislative rules in the Federal Register. According to our interviews, however, the formal notice by publication in the Federal Register— a government publication that has 70,000 to 95,000 pages each year — is not enough to provide real advice to many potentially interested parties. It’s not just a matter of good governance. When agencies do not provide effective notice, but could easily do so using modern means such as email distribution lists to parties they know have an interest, they expose themselves to legal risk. important.
The United States Supreme Court has ruled that implied notice by publication is not always sufficient to comply with constitutional due process requirements. In Mullane v Central Bank of Hannover, a state law permitted a party bringing a lawsuit to provide disguised notice by publication. Although the bank previously communicated with interested parties by mail, when filing a lawsuit, it provided only implied notice by posting. The Supreme Court has ruled that where a person has previously communicated with a data subject through another more efficient means and could easily do so again, implied notice by posting does not satisfy the due process requirement to provide notice. “reasonably calculated” to provide actual notice “under all of the circumstances.”
An appellate court has held that these principles apply when the executive announces regulatory policies that can reasonably be expected to affect the behavior of those affected.
Additionally, the late Justice Lewis Powell noted that it is “totally unrealistic” to assume that “more than a fraction” of the people and organizations affected by a settlement, particularly small business owners scattered across the country, would know that it was published in the newspaper. Federal Register– or even know what Federal Register is. He therefore expressed doubts that it would be constitutional to prevent the judicial review of a regulation 30 days after its publication.
In this series of cases, other inexpensive, modern and more efficient means of communication, such as e-mail distribution lists or posting on websites, webinars and press releases, may be necessary to complete the publication of a rule in the Federal Register.
Yet, although Federal Register publication is not always sufficient, in many cases it is effective. For this reason, the US Congress and the President have repeatedly asked agencies to make guidance materials available, including in the Federal Register. For example, the Freedom of Information Act (FOIA) requires agencies to publish “statements of general policy or interpretations of general application”.
In addition, the Office of Management and Budget issued a Guidance Good Practices Bulletin, asking agencies to post important guidance documents on agency websites. President Donald J. Trump issued two executive orders to make the advice more available. The ACUS has also made recommendations along the same lines.
Although some agencies have complied with these transparency guidelines, most agencies have not complied with these requirements in practice. Many agencies have taken the position that guidance documents are “available” if someone who knows about them can request them under the FOIA. Unfortunately, as we note in our study, courts have condoned this broad non-compliance by ruling only that if the agency has not made the guidance document available, the agency cannot rely on the document in court. This does not entail any real sanction for the agencies because, at least in legal theory, the guidance documents do not impose binding legal requirements.
Making the guidance available on agency websites would be a simple way to inform the public and stimulate voluntary compliance, but agencies seem reluctant to do so. Some agencies issued guidelines when the Trump administration asked them to do so by executive order, but removed them again when the Biden administration revoked the order.
Why are agencies allergic to making their guidance documents public?
One of our interview subjects solved the riddle by observing that ex-agency employees are more valuable in the private sector if they are aware of agency practices and policies that are not accessible to the public. This idea reflects a tenet of organizational economics: managers in any organization may be tempted to maximize their own personal well-being rather than the goals of the organization.
The legal risk we describe is an important finding of our research, although it is only part of what we learned. We also learned that larger groups with more resources are more satisfied with agency notification practices than groups with fewer resources. But we’ve also found that even well-resourced organizations struggle to keep up with regulatory changes that emerge from guidance documents, court decisions, and other documents that agencies may not publish in the marketplace. Federal Register.
Based on our research, ACUS has adopted Recommendation 2022-2. The recommendation notes that the target audiences for different types of agency notices differ, so there is no one-size-fits-all approach. Agencies should, however, proactively develop notice plans that identify potentially interested parties, assess techniques for providing effective notice, and include procedures and measures to regularly assess the effectiveness of their notice procedures. Agencies should then update their notification strategies based on this assessment.
Some specific tools agencies should consider to provide better advance notice include:
- create summaries and user manuals that synthesize dispersed agency policies;
- publish more material on agency websites;
- improve instructions on how to access information on agency websites;
- engage with intermediary organizations; and
- increase face-to-face engagement using webinars and video conferencing technology.
Publicizing significant regulatory changes is not just about reducing legal risk. Agencies have an interest in providing real notice, as opposed to merely constructive notice, in particular by increasing voluntary compliance and facilitating public participation and acceptance. By more effectively using the techniques of modern technology described above, agencies can ensure that many more interested parties receive real notice of significant regulatory changes.
This essay is part of a three-part series on the United States Administrative Conference, titled Use of Technology and Entrepreneurs in the Administrative State.