USDA Publishes Final Rule on Review and Issuance of Agency Guidance Documents

USDA explains that the Final Rule was developed in response to President Trump’s October 9, 2019, Executive Order 13891, Promoting the Rule of Law Through Improved Agency Guidance Documents. As a departmental-level regulation, the Final Rule would apply to all USDA agencies.

Broadly speaking, the Final Rule differentiates between regular guidance documents and “significant guidance documents,” with the latter being subjected to heightened internal agency review, review by the White House Office of Management and Budget’s (OMB’s) Office of Information and Regulatory Affairs (OIRA), a cost analysis, and opportunity for informal notice and comment by the public. The Final Rule also introduces the concept of guidance that is “otherwise of importance to the Department’s Interests,” which is treated similarly in many ways to significant guidance. Under the Final Rule, guidance that has a significant economic impact, addresses USDA priorities, affects other agencies, affects entitlement programs, or raises novel legal or policy issues will receive heightened review.

Final Rule

General Overview and Key Definitions

The Final Rule defines two key types of guidance documents that will receive closer scrutiny under the Final Rule: (1) significant guidance, and (2) guidance that is otherwise of importance to the Department’s interests:

“Significant” guidance is defined to include guidance documents that may reasonably be anticipated to:

• have an annual effect on the economy of $100 million or more or adversely affect the economy;

• create inconsistency with actions taken or planned by another agency;

• materially alter the budgetary impact of entitlements, grants, user fees, or loan programs;

or

• raise novel legal or policy issues.

• Significant guidance documents must be reviewed by OBPA and OIRA before issuance and

• must be presented for informal public notice and comment.

• Guidance that is “otherwise of importance to the Department’s interests” is defined as guidance that, even if not considered “significant,” nonetheless may reasonably be anticipated to:

• Relate to a major program, policy, or activity of the Department or to a high-profile issue pending before the Department;

• Involve one of the Secretary of Agriculture’s top policy priorities;

• Receive significant press or Congressional attention; or

• Raise significant concerns from important constituencies, such as Congress, states or tribes, other Executive Branch departments, courts, public interest groups, or industry representatives.

Guidance that is otherwise of importance to the Department’s interests must be reviewed by the OBPA and optionally may be submitted for informal public notice and comment.

Cost Estimates

Agencies must make good faith efforts to estimate the likely economic impact of a guidance document and determine whether it may be significant. In explaining whether a document is considered “significant,” the agency must provide the same level of analysis that would be required for a determination of major/not major action under the Congressional Review Act (CRA).

When an agency determines that a guidance document will be significant, it must conduct and publish an assessment of the potential costs and benefits (which may entail a regulatory impact analysis) similar to that of a significant rulemaking, to the extent reasonably possible.

Procedures for Approval of Significant Guidance Document

If a guidance document is considered “significant” or “otherwise of importance to the Department’s interests,” it must undergo departmental review (via the USDA Office of Budget and Program Analysis (OBPA)) for approval by the Mission Area Under Secretary. Significant guidance must, and guidance otherwise of importance to the Department’s interests optionally may, be submitted to OMB OIRA for coordinated review. USDA and OBPA must also submit to OIRA a designation request (i.e., “not significant” or “significant”), and provide OIRA with an opportunity to review the request.

Notice and Comment Procedures

A proposed guidance document determined to be a “significant guidance document” must undergo what USDA describes as informal notice-and-comment. These informal notice and comment steps entail:

•  Publishing a notice in the Federal Register announcing that a draft of the proposed guidance document is publicly available;

• Posting the draft guidance document on the agency website;

• Inviting public comment on the draft document for a minimum of 30 days;

• Making the public comments available for public review on the agency website; and

• Preparing and posting a public response to major concerns raised in the comments, as appropriate, on its website, either before or when the guidance document is finalized and issued.

These informal procedures do not apply if USDA determines there is good cause that notice and public comment is impracticable, unnecessary, or contrary to the public interest.

Guidance documents that are not considered significant but are otherwise of importance to the Department’s interests may optionally be put through informal notice and comment.

General Guidance Requirements

The Final Rule also establishes general principles for guidance documents. The guidance must:

• Comply with any applicable laws and regulations;

• Be clearly identified as “guidance” and provide basic information about the nature of the guidance and the issuing agency;

• Only use mandatory language such as “shall,” “must,” “required,” or “requirement” if describing a statutory or regulatory requirement;

• Be written in plain English; and

• Include a clear and prominent disclaimer that it is not binding on the public and does not have the force of law.

We will continue to monitor USDA’s regulatory practices. Should you have any questions, please do not hesitate to contact us.

Authored by Gary Kushner, Brian Eyink and Christine Forgues

(1) 85 Fed. Reg. 34085 (June 3, 2020). The Final Rule states that it relates to internal agency management, and thus, pursuant to 5 U.S.C. 553(a)(2), notice of proposed rulemaking and opportunity to comment are not required.