The White House Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) issued memorandum M-20-31 on August 31, 2020, on the implementation of Section 6 of Executive Order (EO) 13924, “Executive Order on Regulatory Relief to Support Economic Recovery.” This article explains the guidance, why it may prove useful to know about its content, and how to leverage the guidance successfully in future enforcement actions and adjudications.
Section 6 of the EO directs the “heads of all agencies” to “consider the principles of fairness in administrative enforcement and adjudication” enumerated in the EO and to “revise their procedures and practices in light of them, consistent with applicable law and as they deem appropriate in the context of particular statutory and regulatory programs and the policy considerations identified in section 1 of this order.” The memorandum requests that agencies coordinate with OIRA staff to issue any needed final rules by November 26, 2020 (absent a waiver granted by the administrator), with a request for public comment that agencies may consider in any future revisions.
To assist in implementing Section 6, the memorandum suggests certain “best practices” as the agencies review their existing procedures and prepare any needed revisions. These include, among others, the government should bear the burden of proving an alleged violation of law; administrative enforcement should be prompt and fair; administrative adjudicators should operate independently of enforcement staff on matters within their areas of adjudication; all rules of evidence and procedure should be public, clear and effective; penalties should be proportionate, transparent and imposed in adherence to consistent standards and only as authorized by law; administrative enforcement should be free of improper government coercion; liability should be imposed only for violations of statutes or duly issued regulations, after notice and an opportunity to respond; and administrative enforcement should be free of unfair surprise. For entities subject to enforcement scrutiny, these are wonderful precepts to live by!
The guidance is best understood with reference to EO 13924, which directs federal agencies to undertake certain steps in response to the economic implications of COVID-19. As noted above, Section 6 of the EO identified ten areas agencies were to consider, but set forth little direction on how best to do so. The guidance fills in the blanks. While the guidance relates to the impacts of COVID-19, the plain language makes clear the “best practices,” and signals a clear invitation to rely on enforcement discretion well beyond COVID-19-related enforcement situations.
Agencies have until November 26 to issue final rules incorporating Section 6 principles. Whether in fact any will is unclear. The election will have passed and depending upon the results, the guidance will either continue to resonate with federal officials, or not.
However, unless and until the guidance is withdrawn, entities subject to enforcement may want to at least leverage its language to achieve a more favorable enforcement outcome. Consider, for example, the best practice to ensure all penalties are “proportionate” and “transparent.” Often the calculation of penalties is difficult to understand, not transparent and done inconsistently despite the existence of penalty policies. Similarly, the best practice to ensure administrative adjudications are “prompt” is game changing — or could be. Administrative enforcement actions, particularly under laws like the Toxic Substances Control Act that rely heavily on science, can proceed with glacial speed. Regional EPA offices often must rely upon EPA headquarters staff for scientific support and direction, thus prolonging cases and delaying resolution. The guidance is a convenient reference document to cite when pushing for a faster pace. Finally, the guidance stresses the need to avoid unfair surprise by preceding enforcement action with a warning. This, too, is a useful precept to advance if an enforcement action is seemingly sudden and its initiation without warning.
As noted, if the administration changes in November, this guidance may not survive long-term. Assuming it does, the best practices espoused are defense words to live by. Entities that find themselves in actions brought by the government may wish to read the guidance and hold the government’s feet to the proverbial fire. The best practices are solid principles to point to in leveraging a favorable result in cases that are a surprise, where penalties seem disproportionate, and where resolution is delayed.