President Donald Trump's executive orders aimed at reining in the use of guidance by federal agencies like the U.S. Environmental Protection Agency could slow the gears of the federal bureaucracy. That could also make it harder for executive branch agencies to issue new guidance that advances the White House's deregulatory agenda, according to one industry expert. At the same time, however, one of the orders could give agencies a one-time opportunity to ditch previous guidance that does not conform with the Trump administration's regulatory approach, according to a regulatory policy advocate.

The Oct. 9 orders seek to limit federal agencies' use of so-called guidance documents to interpret and implement regulations. The first order, entitled "Promoting the Rule of Law through Improved Agency Guidance Documents," would require federal agencies to review their guidance documents and rescind guidance that it determines "should no longer be in effect."

Under the order, agencies are also required to stipulate that guidance documents are not legally binding in most instances and allow the public to petition for withdrawal or change of agency guidance. The White House also directed agencies to make rules providing for at least 30 days of public notice and comment before issuance of a final guidance document. In addition, the order requires agencies to establish webpages with links to all effective guidance documents and prohibits them from relying on guidance that is not posted online.

The second order, "Promoting the Rule of Law through Transparency and Fairness in Civil Administrative Enforcement and Adjudication," encourages greater self-reporting by industries that violate federal regulations and for agencies and businesses to resolve such enforcement disputes as early as possible. The order also directs agencies to establish procedures for reducing penalties when industry self-reports violations.

The order on guidance documents "provides a very clear signal … that all the agencies are expected to follow notice-and-comment procedures when developing new regulatory requirements, and when agencies seek to enforce standards, the expectation is those will be standards embodied in regulations and not only in informal agency documents," said Jeff Wood. Now a partner at Baker Botts, Wood served as the Acting Assistant Attorney General for the U.S. Justice Department's Environment and Natural Resources Division during the first two years of the Trump administration.

Wood said limits on the use of guidance documents "were not as clear" in the past and that agencies would frequently issue letters or even create new web pages that contained legal requirements without first providing public notice and opportunity for comment. As an example, the Obama administration placed a frequently-asked-questions document on the EPA's website that classified fire hydrants as subject to federal lead reduction laws that resulted in "hundreds of millions of dollars in unfunded mandates," Wood said.

Turning to the Clean Air Act and Clean Water Act, agencies have often issued letters with legal interpretations that the agencies later cited in litigation to support their arguments. "This set of executive orders should clarify, at least for this administration … that these documents cannot be the basis for law enforcement efforts unless and until notice-and-comment processes are followed," Wood said.

But the orders contained some broad carve-outs and exclusions. Restrictions on significant guidance documents will apply to materials that "raise novel legal or policy issues," a designation that will be up to agencies to decide. The guidance order also does not pertain to criminal or civil enforcement cases.

Wood said the new White House orders, combined with the Trump administration's other regulatory reform efforts, "will slow down the bureaucracy" at federal agencies and require "greater transparency in the rulemaking process." Although the push for notice-and-comment on guidance documents could increase bureaucracy in some areas, the administration is willing to make that trade, he said.

'A backdoor way to rescind'

The order requiring agencies to review and potentially rescind their existing guidance could also benefit industry, said Amit Narang, a regulatory policy advocate at the consumer advocacy group Public Citizen.

"Basically this [executive order] is giving agencies a one-time chance to rescind whatever guidance documents they want without going through any type of public process," Narang said Oct. 10 in an interview.

Narang also pointed to the order's requirement that all effective guidance be posted online as another way for agencies to escape regulatory interpretations established under previous administrations.

"If an agency, say the EPA for example, wants a backdoor way to rescind an existing guidance document, it could decide not to post it and claim that because it's not posted it's not in effect," Narang said. While acknowledging the executive orders could chill the use of guidance at some agencies, Narang said he does not expect the orders to significantly impact the EPA's broader approach to environmental regulation.