There’s a law that prevents agencies from charging ahead with regulatory changes without seeking input from the public and the regulated community. It’s called the Administrative Procedure Act (APA), and it was designed to require agencies that want to make significant changes to their regulations to publish the proposed changes and answer criticisms on the record.
In 2009, the Environmental Protection Agency announced -- through a series of memoranda and letters -- a new system of review for certain Clean Water Act permits. These permits, called Section 404 permits, are needed by anyone that wants to build or modify a facility or undertake some other construction project that might have an effect on waters subject to federal jurisdiction. EPA later issued lengthy guidance making substantive changes to the requirements for permits for surface coal mining, also without going through notice-and-comment rulemaking.
The National Mining Association sued, and a federal district judge ruled that EPA had overstepped its authority and violated the APA. That ruling has been appealed to the D.C. Circuit, and the NAM and other business organizations filed an amicus brief supporting the trial judge’s decision. The brief described numerous instances where EPA and other regulatory agencies have issued regulatory requirements -- posing as guidance – that should be adopted by notice-and-comment procedures.
On July 11, 2014, the D.C. Circuit reversed, finding that the "Enhanced Coordination Process" and Final Guidance were procedural, not legislative rules, and therefore not subject to the APA. It also ruled that a court challenge was premature because the Final Guidance was not actually final agency action subject to litigation, because it did not subject regulated parties or state enforcement agencies to any requirements or liabilities. The Guidance can be legally ignored. If it is actually used to grant or deny a permit in the future, a law suit might then be appropriate.
The upshot of this ruling is that EPA can create guidance documents that regulated parties can legally ignore, but they do so at the risk of having to litigate over EPA's use of such guidance documents after a permit is denied. Changing regulatory requirements with guidance documents casts American businesses adrift in uncharted territory in terms of regulatory risk and stymies investment and economic growth. Agencies that fail to use proper rulemaking procedures make decisions without the insight, data and information of the regulated public, including the practical implications of alternative policy choices.