Regulatory Reform – 10 Principles on Guidance

Recently, there has been much talk about the proliferation of regulations, both on a national and statewide basis.  President Obama mentioned it in his State of the Union speech and Governor Patrick referenced it in his Inauguration speech.

There is no doubt that there needs to be a serious review of many regulations at the state and federal levels.  Beyond traditional regulations, however, there is an area of “shadow” regulations that has been expanding through the state’s agencies – regulatory “guidance.”  NAIOP has been concerned for some time about the unlimited growth of guidance.  Guidance is taking on the power of statutes (which can only be enacted by the legislature and the Governor), and/or the authority of regulations (which must be promulgated by the agency under strict controls of the Administrative Procedures Act, including public hearing and provision for judicial review). The purpose of guidance should be to aid in the interpretation of previously existing rules and regulations; not to provide an alternative means to impose new rules without full notice and comment through “rule-making.”

Certainly, there is a place for appropriate guidance, so NAIOP would like to propose ten general principles to be followed when drafting and adopting regulatory guidance:

  1. Guidance should be issued to clarify the interpretation of existing rules and regulations.
  2. A second purpose would be to assist the agency in its review of applications and evaluation of a project’s ability to meet applicable performance standards.
  3. Guidance should be clear and user-friendly.
  4. Guidance documents should state expressly that they are for the purpose of “guidance only,” and that failure to follow guidance does not expose one to the denial of a permit application, penalties, or other sanctions.
  5. Under no circumstance should guidance expand the agency’s jurisdiction (subject matter or geographic) beyond that authorized by statute or regulation. 
  6. Guidance should be drafted with input from stakeholders. 
  7. Following internal and stakeholder review, the agency should submit the document for general public comment, allowing affected individuals to comment on the practical and procedural implications of the guidance.
  8. Agencies should add a three-year sunset clause to all guidance, after which it must either lapse or be reissued following an opportunity for stakeholder and public comment.
  9. All guidance should be clearly indexed and easily accessed on the agency’s web page.
  10. Guidance should be uniformly applied throughout all agency regional offices. Guidance should not be developed and issued by one region without the full support and backing of the entire agency.

In a recent blog, Seth Jaffe, a Partner at Foley Hoag, pointed out that this issue is clearly getting national attention with a recent court decision in National Mining Association v. Jackson.  The judge stated that EPA guidance was being treated as binding and that the guidance constituted “legislative rules because they seemingly have altered the permitting procedures under the Clean Water Act by changing the codified administrative review process.”  The Court found that EPA’s guidance exceeded its authority. 

Bottom line, to reduce the excessive cost of doing business in the Commonwealth, let’s make working on regulatory reform a priority. However, we must also make sure that we don’t offset those gains by piling on unnecessary guidance.

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