Contacts Between the Office of Management and Budget and Executive Agencies Under Executive Order No. 12,291

• Court: Department of Justice Office of Legal Counsel
• Decided: April 24, 1981
• Status: Published

Opinion

Contacts Between the Office of Management and Budget and Executive Agencies Under Executive Order No. 12,291

A gencies are not precluded from receiving, in the context o f inform al rulem aking, views or information outside the usual channels for public com m ent, notw ithstanding the ex parte contacts doctrine developed in the D .C. Circuit, and the Office o f M anagem ent and Budget (OM B) is under no duty to refrain from com m unicating w ith rulem aking agencies pursuant to its im plem entation o f Executive O rder No. 12,291.

The A dm inistrative P rocedure A c t’s provisions for judicial review and public participa­ tion in informal rulem aking m ay be construed to imply an agency obligation to disclose com m unications from outside the agency, including com m unications w hich o c cu r after the publication o f proposed rulem aking. T herefore, in order to reduce the danger o f reversal, such com m unication should be included in the adm inistrative file and the record for judicial review, at least to the extent that they are factual as opposed to deliberative in nature.

A rulem aking agency need not disclose substantive com m unications from O M B o r other federal agencies w hich form p art o f its deliberative process; how ever, the deliberative process does not extend to the legal o r policy view s o f persons outside o f executive o r independent agencies, even w hen they are transm itted by an agency acting as a conduit for the third party.

April 24, 1981

M EM ORANDUM OPIN IO N FO R T H E D IRECTO R, O FFIC E O F M A N A G EM EN T A N D BU DG ET

Your Office has requested the views of this Office regarding the legality of contacts which may occur between you and your staff and officials of executive agencies in the implementation of Executive Order No. 12,291, 3 C.F.R. 127 (1982) (Order). The Order generally requires these agencies to maximize the benefits and minimize the costs of regulations promulgated following informal rulemaking proceedings. Your Office is charged with ensuring compliance with these require­ ments by engaging in prepublication review of proposed and final rules and preliminary and final Regulatory Impact Analyses (RIA). In per­ forming this oversight role, you and your staff will presumably commu­ nicate on a regular basis with agency officials regarding the substance of proposed regulations. You might also wish to transmit to these agencies information or arguments received from other federal agencies or from non-federal parties. Some or all of these contacts might be

107 challenged, under the so-called “ex parte contacts” doctrine developed in the D.C. C ircuit.1 W e conclude that neither the ex parte contacts doctrine nor other generally applicable provisions of law impose any duties on you or your staff to refrain from communicating w ith rulemaking agencies. T he law is uncertain as to whether rulemaking agencies must disclose communications from your Office which occur after publication of a notice o f proposed rulemaking. In order to reduce the danger of rever­ sal, we believe that rulemaking agencies should include in the adminis­ trative file and the record for judicial review: (1) oral or written information from your Office of a purely factual nature; and (2) oral or written material received from an interested party outside the federal governm ent which influences the views your Office expresses to the agency. Your Office could assist rulemaking agencies in complying with these recommendations by following procedures similar to those described herein.

I. Ex Parte Contacts Doctrine

The D.C. Circuit has thrice addressed the question of ex parte con­ tacts in informal rulemaking. In Home Box Office, Inc. v. FCC, 567 F.2d 9 (D.C. Cir) (per curiam), cert, denied, 434 U.S. 829 (1977), inter­ ested private parties engaged in wide-spread, off-the-record communi­ cations with FC C Commissioners and staff regarding a proposed cable television rule. The court condemned the comments on several grounds, including the D ue Process Clause, the judicial review require­ ments o f the Administrative Procedure Act (APA), and what the court perceived to be a general need to ensure rationality and fairness in agency decision processes. In a broadly w orded dictum, the court stated that such communications would be improper even if the FCC disclosed them in the administrative file in time to allow public com­ ment and judicial review. The court also said that such comments would be permissible prior to publication o f a notice of proposed rulemaking. 567 F.2d at 59. In Action fo r Children’s Television v. FCC, 564 F.2d 458 (D.C. Cir. 1977), a different panel o f the D.C. Circuit refused to apply Home Box Office retroactively. In dictum, the panel severely criticized the Home Box Office rationale and expressed its view that the doctrine should be

1 Sangamon Valley Television Corp. v. United States, 269 F.2d 221 (D.C Cir. 1959); Home Box Office, Inc. v. FCC , 567 F.2d 9 (per curiam) (D.C. Cir.), cert denied, 434 U.S. 829 (1977); Action for Children's Television v. FCC, 564 F.2d 458 (D .C. Cir. 1977); United States Lines, Inc. v. FMC, 584 F.2d 519 (D.C. Cir. 1978); Hercules. Inc. v. EPA, 598 F.2d 91 (D .C. Cir. 1978); National Sm all Shipments Traffic Conference, Inc. v. IC C , 590 F.2d 345 (D.C. Cir. 1978); United Steelworkers o f America v. Marshall, 647 F.2d 1189 (D.C. Cir. 1980), cert denied sub nom. Lead Industries Ass'n v. Donovan, 453 U.S 913 (1981). W hile other circuits have not taken a clear position on ex parte contacts, the D.C. Circuit cases are particularly significant because so many federal regulatory actions are reviewed there and because, as a practical matter, the D.C. Circuit is often the court of last resort in light o f the Supreme Court's limited docket.

108 limited to a narrow class of cases involving competing private claims to a valuable privilege. Id. at 477. In United Steelworkers o f America v. Marshall, 647 F.2d 1189 (D.C. Cir. 1980), cert, denied sub nom. Lead Industries Ass'n v. Donovan, 453 U.S. 913 (1981), the D.C. Circuit limited the ex parte contacts doctrine in the context of intra-agency communications. While formulating a final rule regulating workplace exposure to airborne lead, the Assistant Secretary of Labor consulted closely with a staff attorney who argued for the agency staffs proposed standard. The Assistant Secretary also commissioned private consultants to review and analyze the record, and partly relied on these studies in formulating a final rule. The Court, per Chief Judge Wright, held that these off-the-record intra-agency com­ munications were permissible, even if slanted towards a particular view­ point,2 if they were part of the “deliberative process,” a concept closely analogous to the deliberative process exemption under the Free­ dom of Information Act (FO IA ).3 The doctrine developed in Home Box Office involves three distinct requirements: (1) a flat prohibition on agency receipt of views and information outside the usual channels for public comment; (2) a re­ quirement that such views and information, if received, be memorial­ ized and placed in the administrative file for public comment; and (3) a duty to place such views and information in the record for judicial review. In Vermont Yankee Nuclear Power Corp. v. N R D C , 435 U.S. 519 (1978), the Supreme Court severely undermined the Home Box Office doctrine. It held that, absent exceptional circumstances, a review­ ing court may not impose special rulemaking procedures beyond those set forth in the APA. We believe that Vermont Yankee is inconsistent with D.C. Circuit’s flat ban on agency receipt of views or information outside the usual channels for public comment. This purely procedural prohibition finds no support w hatever in the text or the legislative history of the APA. The APA contains no prohibition on such contacts in informal rule- making, although it has always prohibited them in adjudication,4 and a recent amendment provides penalties and remedies when they occur in adjudication or formal rulemaking.5 Early versions o f that amendment prohibited such contacts in informal rulemaking as w ell,6 but the provi­

2Compare Association o f National Advertisers, Inc. v . FTC, 627 F .2d 1151 (D.C. Cir 1979) (disquali­ fication for bias). 3 5 U .S.C § 552(b)(5) (1976). 45 U.S.C § 554(d) (1976). 5Government in the Sunshine Act, 5*U.S C § 557(d) (1976). *See S. 260, 93d Cong., 1st Sess 119 Cong. Rec. 647-51 (1973); H.R. 10000, 93d Cong., 1st Sess. 119 Cong. Rec 28,205 (1973); Hearings on Government in the Sunshine Before the Subcomm on Reorganization, Research, and International Organizations o f the Senate Comm, on Government Oper­ ations, 93d C o n g , 2d Sess. 189-254 (1974); Senate Comm, on Government Operations, 93d Cong., 2d Sess., Government in the Sunshine: Response to Subcomm. Questionnaire (Comm. Print 1974).

109 sion was deleted with the intention of leaving informal rulemaking unaffected.7 W e believe this history to be strong evidence that there is no basis for imposition by a court of a flat prohibition on agency receipt of views or information outside the ordinary channels. You and your staff may freely contact agencies regarding the substance of pro­ posed regulations, and m ay do so by way of telephone calls, meetings, or other forms of communication unavailable to members of the public. It is unclear whether the two other requirements of Home Box Office—that the substance of contacts be placed in the administrative file and the record for judicial review—can survive Vermont Yankee. These requirements might possibly be supportable, not as part of an “ex parte contacts” doctrine, but as implications o f the A P A ’s provisions for judicial review and for public participation in informal rulemaking, a question we discuss in the following section. W hat is clear, however, is that the disclosure obligations, if any, lie w ith the rulemaking agency and not with your Office. Your Office is therefore under no legal disability with respect to contacts w ith rulemaking agencies. A t most, your Office could adopt procedures as a m atter of policy to assist the agencies in complying w ith our recommendations or with rules fash­ ioned by the agencies themselves to address this issue.8

II. Disclosure Obligations of MnilemmaMiig Agencies

W e believe that, at least as a m atter of protection against reversal in the D.C. Circuit, rulemaking agencies should disclose in the administra­ tive file and the record fo r judicial review substantive communications from your Office to the extent that they are (1) purely factual as opposed to deliberative in nature, or (2) received by your Office from a source outside o f executive or independent agencies. This conclusion is

7 S. Rep. No. 354, 94th Cong., 1st Sess. 35 (1975); 121 Cong. Rec. 35,330 (1975) (remarks of Sen. Kennedy). 8Specific “ hybrid rulemaking” statutes may sometimes impose special' rules regarding contacts between your Office and rulemaking agencies. T he Clean Air A ct Amendments of 1977, for example, require that w ritten documents compiled during your Office’s review procedures be placed in the rulemaking docket prior to the promulgation o f a final rule. 42 U S.C. § 7607(dX4)(B)(ii) (Supp. Ill 1979). T hese docum ents are excluded from the record on judicial review. Id. § 7607(d)(4)(B)(ii). Two challenges to interagency participation in Clean A ir Act rulemaking are now pending in the D.C. Circuit. Sierra Club v. Costle, Nos. 79-1565 et al.\ American Petroleum Institute v. Costle, Nos. 79-1104 et a I. In those cases EPA officials m et with other Executive Branch officials to discuss a rule after the close o f the public comment period; the substance o f these meetings was not fully disclosed in the record for judicial review. The governm ent takes the position that EPA fully complied with the Clean A ir A ct’s requirements. The cases h av e been argued and await decision.0 Internal agency regulations, w hich have the force of law until repealed, may also limit contacts with your OfTice during rulemaking. Cf. 47 C.F.R. § 1 (1979) (FCC); 16 C.F.R. § 1012 (1979) (CPSC); 14 C .F.R . § 300.2 (CAB). °N ote: In Sierra Club v. Costle, 657 F.2d 298 (D.C. Cir. 1981), the court o f appeals held that “ the existence o f intra-Executive Branch meetings during the post-comment period . . . violated neither the procedures mandated by the Clean Air Act nor due process.” 657 F.2d at 408. In American Petroleum Institute v. Costle, 665 F .2d 1176 (D.C. Cir. 1981) cert, denied 455 U.S. 1034 (1982), the court o f appeals refused to consider the plaintiff's objection to E P A ’s post-comment period contacts w ith OMB, on grounds that this objection had not first been raised in the administrative proceedings. Ed.

110 based on a combination of possible disclosure requirements in the APA and a deliberative process exception. ‘

A. APA Provisions

The APA provides that judicial review of informal rulemaking shall be based on the “whole record.” 5 U.S.C. § 706. The Supreme Court has never clearly stated what types of material must be included in the record for judicial review. Traditionally, informal rulemaking proce­ dures were thought to leave the agency almost complete discretion as to what was included in the record; judicial review was correspond­ ingly narrow and deferential. More recently, the Supreme Court has stated that judicial review of informal agency action should be “search­ ing and careful,” 9 and that a reviewing court should remand a case to the agency if its determination is not “sustainable on the administrative record made.” 10 The relatively intensive judicial scrutiny implied by these statements seems incompatible with the traditional idea that the agency retains complete control over what goes in the record. Lower federal courts have expanded on the Supreme Court’s tentative state­ ments by inferring a requirement that the record for judicial review contain all material, whether factual, analytical, or argumentative, which is substantive in the sense that it might have influenced the agency’s decision.11 Finally, the Supreme Court in Vermont Yankee gave somewhat conflicting signals on the question.12 The Court’s em­ phasis on the agency’s discretion to structure its own procedures free of judicial interference suggests that this discretion should include the power to determine the content of the record for judicial review. On the other hand, the Court’s remand of the case to the D.C. Circuit for a determination of whether the rule was sustainable on the administrative record points to a more stringent record requirement.13 The state o f the law on this point is, in short, confused. We do not believe it to be particularly useful to attempt to predict whether the Supreme Court would require that substantive oral or written commu­ nications received by the agency be included in the record for judicial review. We would, however, recommend that agencies generally adopt

9Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). I0Camp v. Pitts, 411 U.S. 138, 143 (1973) (per curiam). 11See National Courier Ass'n v Board o f Governors, 516 F.2d 1229, 1241 (D .C C ir. 1975). See generally Portland Cement Ass'n v. Ruckelshaus, 486 F.2d 375 (D .C C ir 1973), cert, denied, 417 U.S. 921 (1974); Kennecott Copper Corp. v. EPA, 462 F.2d 846 (D .C . C ir 1972); International Harvester Co. v. Ruckelshaus, 478 F.2d 615 (D.C. Cir. 1973). C f Greater Boston Television Corp. v. FCC, 444 F.2d 841 (D .C . C ir 1970), cert, denied, 403 U.S. 923 (1971) 12Compare S tew art, Vermont Yankee and The Evolution o f Administrative Procedure, 91 H arv. L. Rev. 1805 (1978), with Byse, Vermont Yankee and the Evolution o f Administrative Procedure: A Some­ what Different View, 91 H arv. L. R ev 1823 (1978). 13O ne com m en ter has arg u ed that in light o f the adm inistrative record the C ourt should simply have affirm ed the agency ra th e r than rem anding. Breyer, Vermont Yankee and the Courts' Role m the Nuclear Energy Controversy, 91 H a rv L R ev. 1833 (1978).

in this course to avoid a substantial danger of reversal in the D.C. Circuit w ithout any assurance o f vindication in the Supreme C ourt.14 We would also recommend that agencies generally include substan­ tive oral or written communications in the administrative file for public comm ent and criticism, at least when these communications occur before the close o f public com m ent.15 A “public comment” requirement could be inferred from the A P A ’s provision for review on the whole record and its guarantee of an “opportunity to participate in the rule m aking,” 5 U.S.C. § 553(c). On the other hand, such a requirement comes perilously close to the type of extra-statutory procedure Vermont Yankee forbids courts to require of agencies. In addition, the opportu­ nity to comment on evidence in the record seems inconsistent with the realities o f informal rulemaking, clearly sanctioned by the APA, that interested parties can file comments on the last day of the comment period and thereby deprive others outside the government of a chance to comment unless the agency, in its discretion, chooses to reopen the file. The argum ent for public comment is considerably weaker than the case for placing substantive material in the judicial record; our judg­ ment is that the Supreme Court would not impose such a requirement. Nevertheless, the D.C. Circuit probably would require public com­ ment, 16 and the prospects of obtaining Supreme Court review of such a determination cannot be predicted.

B. Deliberative Process Exception

N otwithstanding these general recommendations, we believe that the rulemaking agency need not disclose substantive communications from your Office which form part of the agency’s deliberative process. A variety o f legal doctrines recognize a privilege against compelled dis­ closure o f the federal governm ent’s deliberations. The need for non­ disclosure is inherent in the President’s constitutional power to “take Care that the Laws be faithfully executed,” 17 by “supervising] the guid[ing]” executive agencies in their “construction of the statutes under which they act in order to secure that unitary and uniform execution of the laws which Art. II of the Constitution evidently contem plated in vesting general executive power in the President alone.” 18 Similar concerns undergird the constitutionally based privi­

14T he agency need not engage in unnecessary duplication o f material already contained in the record, however. 15 A case-by-case analysis may be required to determine whether the administrative file must be reopened to allow public comment on communications received after the close of the comment period. See E thyl Corp. v. EPA, 541 F 2d 1 (D.C. Cir.), cert, denied, 426 U.S. 941 (1976). lGSee Home Box Office, Inc. v. FCC, supra 567 F.2d 9; Ethyl Corp. v. EPA, supra, 541 F.2d 1. Cf. United States Lines, Inc. v. FMC, 584 F.2d 519 (D.C. Cir. 1978) (informal adjudication). 17 U.S. Const., Art. II, §3 See also U.S. Const., Art. II, § 2 (presidential power to require written opinions from heads of executive departments). Myers v United States, 272 U.S. 52, 135 (1926).

112 lege for certain deliberative communications within the Executive Branch,19 as well as the rule against probing an administrator’s mind in court absent a showing of bad faith or other exceptional circum­ stances.20 Congress has safeguarded the deliberative process by exempt­ ing deliberative documents from disclosure under the FOIA.21 Finally, the D.C. Circuit held the ex parte contacts doctrine inapplicable to deliberative process communications in United Steelworkers, supra. For similar reasons, we believe that oral or written communications which are part of the deliberative process need not be disclosed under any provisions of the APA. Deliberative process communications are those designed to aid the agency in determining its course based on the facts of record. They include analyses of these facts,22 legal and policy arguments,23 and factual data that cannot be reasonably segregated from deliberative material.24 They do not include oral or written factual data which can be reasonably segregated from deliberative material.25 Thus the rule- making agency need not disclose your Office’s legal and policy argu­ ments and analyses of the facts, but should generally disclose readily segregable factual material. Communications from executive or independent agencies are entitled to deliberative process protection. Your Office surely participates in the deliberative process when it exercises the power of the President dele­ gated to you to “supervise and guide” the agency by communicating factual analyses or legal and policy arguments. We believe the delibera­ tive process is also implicated when your Office acts as a “conduit” for views of other executive agencies, since these agencies are part of an integrated Executive Branch headed by the President. We reach the same conclusion with respect to independent agencies.26 Although largely freed of presidential oversight and supervision, these agencies are part of a unitary government which seeks as far as possible to coordinate its programs and policies.27

,3See United States v Nixon, 418 U.S. 683 (1974). 20See, e.g.. United States v Morgan, 313 U S 409, 422 (1941), National Courier Ass’n v. Board o f Governors, 516 F.2d at 1241-42. 21 5 U.S.C. § 552(b)(5); see generally N L R B v. Sears. Roebuck & Co.. 421 U.S. 132 (1975). 22See United Steelworkers o f America v. Marshall, supra, 647 F 2d at 1212 n.20, 1218. 23See, e.g., N L R B v. Sears, Roebuck & Co., 421 U.S. at 149 (exemption 5 protects attomey-client and attorney work-product privileges); EPA v. Mink, 410 U.S. 73, 91 (1973) (exemption 5 protects “ matters of law, policy or opinion”). 24See EPA v. Mink, 410 U.S. 73, 88 (1973); United Steelworkers o f America v. Marshall, supra, 647 F.2d at 1220; Mead Data Central, Inc. v. United States Department o f A ir Force, 566 F.2d 242, 260-61 ( D C Cir. 1977). 25See cases cited in note 24, supra. Also not within the deliberative process are communications which the agency adopts as the explanation for its action. See Renegotiation Board v. Grumman Aircraft Engineering Corp., 421 U.S. 168 (1975); N L R B v Sears, Roebuck & Co., supra, 421 U.S. 132 26 Deliberative process documents transmitted from an independent agency to an Executive Branch agency would be exempt from disclosure under FOIA. 5 U.S.C. §§ 552(b)(5), 552(e) 27Our conclusions in this regard are consistent with Recommendation 80-6 of the Administrative Conference o f the United States Regarding Executive Branch Communications in Informal Rulemak­ ing Proceedings Administrative Conference of the United States: Recommendations and Reports 27 (1980).

113 Our view is that the deliberative process does not extend to the legal or policy views of persons outside of executive or independent agen­ cies. These persons are not within the overall decision process of the rulemaking agency. Their views not being protected by a deliberative process exception, the rulemaking agency would be well advised to place these views in the administrative file and the record for judicial review if the views might affect the agency’s decision. Agencies should follow this procedure even if the views are transmitted by an executive or independent agency acting as a “conduit” for the third party. III. ©M® IPrmcedmiirss

As discussed above, your Office is under no legal obligation to limit its communications with rulemaking agencies. We also conclude that, as a matter of policy, the agencies should include in the administrative file and the record for judicial review substantive oral or written communi­ cations from your Office which (1) are purely factual in nature, or (2) are “conduit” transmissions of views or information from persons out­ side of executive or independent agencies. Your Office could assist the rulemaking agencies in the task of distinguishing what should be dis­ closed from what may be kept out of the public record, as follows: (1) Your Office could separate, as far as possible, purely factual material from arguments and analyses in oral or written com­ ments it makes to the rulemaking agency under the Order. A format could be developed for comments which clearly draws this distinction. The agency should generally be entitled to rely on your Office’s judgment that the transmitted material is delib­ erative rather than factual in nature. (2) With respect to “conduit” communications, the official re­ sponsible for commenting to the rulemaking agency could deter­ mine whether his views have been influenced by oral or written communications received from someone outside of executive or independent agencies. If so, your Office could require that the third party transmit this material to the rulemaking agency for inclusion in the administrative file and the record for judicial review. The official may transmit to the rulemaking agency a statement of your Office’s views, which need not be disclosed except to the extent it includes purely factual material. Alternatively, or in conjunction with these procedures, your Office could seek to ensure that rulemaking agencies follow the advice con­ tained in this memorandum. Agencies could institute a policy of disclos­ ing in the administrative file and the record for judicial review all material which your Office identifies as purely factual in nature, as well as the identified conduit material transmitted under (2) above. The agencies would have to develop procedures for memorializing the non- 114 deliberative parts of oral communications from your Office. Your Office could assist the agencies in following these recommendations by rendering informal advice or by more formal instructions.

T h e o d o r e B. O l so n Assistant Attorney General Office o f Legal Counsel