Pres. Trump’s Latest Effort to Limit Federal Agency Guidance – Two New Executive Orders

By Eric J. Conn and Beeta B. Lashkari

Late last year, on October 9, 2019, President Trump issued two Executive Orders (“EOs”) that could have a dramatic impact on the way OSHA and other executive agencies operate:

  1. Executive Order 13891, the Executive Order on Promoting the Rule of Law Through Improved Agency Guidance Documents (Guidance Documents EO); and
  2. Executive Order 13892, the Executive Order on Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication (Transparency EO).

These EOs were designed to, according to the President:

“protect Americans from out-of-control bureaucracy and stop regulators from imposing secret rules and hidden penalties on the American people. . .”

In a nutshell, the Guidance Documents EO mandates that the public be provided with an opportunity to comment on proposed guidance and interpretive documents (similar to what is required under the Administrative Procedures Act for rulemaking).  It requires notice and publication of guidance, and the creation of a comprehensive online database where all such guidance must be housed and easily searched.

The Transparency EO focuses on agency enforcement actions.  Most significantly, it requires agencies to provide all parties potentially subject to an enforcement action the opportunity to engage with the agency over the merits of the action prior to commencement of the enforcement action. It also:

  1. prevents agencies from enforcing standards that are not public and that would cause unfair surprise to the regulated entity (i.e., no enforcement relying on guidance documents that are not created and maintained pursuant to the Guidance Documents EO);
  2. requires the publication of any potential new or expanded jurisdiction in the Federal Register;
  3. mandates the development of procedures for encouraging voluntary self-reporting in exchange for penalty reductions; and
  4. requires that agencies adhere to standards in the Paperwork Reduction Act when asking regulated parties for information without a formal subpoena or investigative demand.

The two new Executive Orders align with the President’s business-friendly agenda, making it more difficult for regulators to engage in backdoor rulemaking (i.e., supplementing or changing regulations via the issuance of guidance documents developed without public input), and easier for businesses to keep track of the regulatory requirements with which they must comply, and to head off enforcement actions before they begin.

How will the Executive Orders change the OSH regulatory landscape, and what should employers expect next?

As anyone who tracks OSHA rulemaking knows, the OSHA rulemaking process is a long and arduous one, averaging over a decade from beginning to end for promulgation of all but the simplest regulations. In part, this is because OSHA is required to comply with the process requirements of the APA, including, among other obligations, the requirements that all rules be published in the Federal Register for public review; that time be provided for the public to review and comment on a proposed rule; obligations to review, consider, and respond to all significant comments; and the obligation to submit the proposal (after any appropriate revisions based on public comment) to the Office of Management and Budget’s Office of Information and Regulatory Affairs (for significant rules) for review.

Historically, OSHA’s issuance of guidance documents carried with it none of the process requirements associated with rulemaking, and often occurred with little or no public transparency. That may make be appropriate where guidance documents do not create or change the regulations they are interpreting.  If guidance simply clarifies existing rules that have already had the benefit of going through the APA rulemaking process, public review and transparency may be less necessary.

However, OSHA has come under scrutiny for effectively developing new regulatory obligations via the issuance of guidance documents, foregoing the arduous rulemaking process.  Probably the most well-known example of this is the Agency’s 2015 dramatic revision of its interpretation of the “retail facilities exemption” to coverage under the Process Safety Management (PSM) standard, rescinding 23-year precedent regarding the scope of that exemption. That interpretation revision was ultimately vacated by the US Court of Appeals for the D.C. Circuit because OSHA’s 2015 definition of a retail facility “amount[ed] to a standard” and therefore could not be revised without the process afforded under the APA. See  Agricultural Retailers Ass’n & Fertilizer Inst. v. United States Department of Labor, No. 15-1326 (D.C. Cir. Sept. 23, 2016).  The new Guidance Documents EO will prevent OSHA from further “Ag-Retailer” type rulemaking activity under the guise of guidance development.  The Executive Order mandates that OSHA provide the most fundamental aspects of APA process when developing guidance documents.

At this incipient stage, it is unclear what if any impact the Guidance Documents EO will have on OSHA. One effect could be to dampen the agency’s interest in issuing guidance. Certainly, OSHA is likely to take a harder look before it issues further guidance that does anything but supplement or clarify an existing rule.  Interestingly, even though many expected to see a reduction in the number of standard interpretations issued when Trump took office, as we have previously reported, no significant drop occurred. For example, the Agency issued 45 standard interpretations in 2016 under the Obama Administration, and 38 in 2018 under the Trump Administration.  Under the direction of the President’s new EO, however, we may see far less guidance issued by OSHA.

Regarding President Trump’s EO related to enforcement transparency,  it may have a dramatic impact on the OSHA’s enforcement process.  As we understand it, OSHA will be required to provide employers the opportunity to object to all allegations of violation of OSHA standards, on the merits, before any citation issues.  Real engagement with OSHA in advance of citation issuance could allow employers to protect their record from the many flawed citations issued by OSHA each year. The devil is in the details, however. At this stage, it is unclear whether this Executive Order will provide employers a real and effective opportunity to defend their record pre-citation, or whether this EO will result in little more than the a souped-up closing conference, where theoretically employers can challenge the citations OSHA inspectors plan to recommend, but in practice, have no real opportunity to affect the inspector’s recommendations. 

Under the terms of the Guidance Documents EO, OMB issued an implementing memorandum on October 31, 2019.  Additionally, under the terms of the Transparency EO, OMB is currently seeking comment, due March 16, 2020, on ways to improve and reform regulatory enforcement and adjudication.  This comment period provides employers an opportunity to provide direction to OMB (and by extension to OSHA) on regulatory reforms that will better safeguard due process in the regulatory enforcement and adjudication settings.  If anyone is interested in commenting, please let us know if we can help you fashion an effective set of comments to ensure that employers receive the full benefits of these two new interrelated Executive Orders.

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