Late last year, the U.S. Department of Justice (DOJ) took a quiet but significant step in implementing the current Administration’s regulatory reform agenda.  Shortly before Christmas, DOJ made two significant additions to the Justice Manual (formerly known as the U.S. Attorneys’ Manual).  The revisions incorporate the substance of two recent DOJ directives that have limited DOJ lawyers’ use of so-called subregulatory agency guidance documents.  

1. First, the Sessions Memo, signed by then-Attorney General Jeff Sessions on November 16, 2017, prohibited DOJ from issuing guidance documents that purport to regulate persons or entities outside the Executive Branch. 

2. Second, the Brand Memo, signed by then-Associate Attorney General Rachel Brand on January 25, 2018, built on the Sessions Memo by directing DOJ attorneys to eschew relying on agency guidance documents as the legal basis for pursuing affirmative civil enforcement actions, including actions “to recover government money lost to fraud or other misconduct or to impose penalties for violation of Federal health, safety, civil rights or environmental laws.”

Together, these two memos – and now the Justice Manual provisions that largely codify them – have placed significant limitations on DOJ attorneys’ leeway to use informal guidance documents to seek to regulate private parties (or other persons and entities outside the Executive Branch[1]) or otherwise to impose liability on them beyond the mandates of duly promulgated federal statutes and regulations.  At the same time, the new Manual provisions make clear that there are circumstances in which DOJ may properly use informal guidance documents in litigation against private parties.

Summary

The new revisions to the Justice Manual are codified in two adjoining areas in Title I (“Organization and Functions”) of the Manual – JM 1-19.000 and JM 1-20.000.  The Manual codifies the substance of both the Brand Memo and the Sessions Memo without any major omissions.  To the extent that the new Manual provisions add to the substance of the Brand and Sessions Memos, the new additions appear to be fairly modest and straightforward.  Among the most significant additions are Justice Manual provisions that enumerate some discrete categories of cases in which it is permissible for DOJ lawyers to use agency guidance documents in litigation.

1. JM 1-19.000 (“Limitation on Issuance of Guidance Documents”) incorporates the main provisions of the Sessions Memo.  JM 1-19.000 provides that “[a]gency guidance documents may not be used as a substitute for regulation and may not be used to impose new requirements on persons outside the Executive Branch except as expressly authorized by law or contract.”[2]  JM 1-19.000 implements this principle by forbidding DOJ from issuing guidance documents that purport to create rights or obligations that bind persons or entities outside the Executive Branch, or that “create binding standards” for determining compliance with regulatory or statutory requirements.  To ensure compliance with this policy, and to ensure “that persons and entities outside the Executive Branch are aware that guidance documents are not binding,” JM 1-19.000 directs DOJ lawyers to follow various requirements in crafting and issuing guidance documents.

2. JM 1-20.000 (“Limitation on Use of Guidance Documents in Litigation”) incorporates the main provisions of the Brand Memo, extending the principles of JM 1-19.000 (and thus of the Sessions Memo) to litigation involving other federal agencies.  In a step beyond the Brand Memo (which applied by its terms to affirmative civil enforcement actions), JM 1-20.000 applies to both civil and criminal enforcement actions.  JM 1-20.000 provides that such actions “must be based on violations of applicable legal requirements, not mere noncompliance with guidance documents issued by federal agencies.”  JM 1-20.100.  This means that “the Department should not treat a party’s noncompliance with a guidance document as itself a violation of applicable statutes or regulations,” and that “[t]he Department may not bring actions based solely on allegations of noncompliance with guidance documents.”  Id.    

At the same time, JM 1-20.000 does not bar all DOJ uses of guidance documents.  After stating the general principles quoted above, the Manual provides that “[t]he Department may continue to rely on agency guidance documents for purposes, including evidentiary purposes that are otherwise lawful and consistent with the Federal Rules of Evidence, that do not treat such documents as creating by themselves binding requirements that do not already exist by statute or regulation.”  JM 1-20.100.  The Manual then enumerates five categories of “specific, but not exhaustive, illustrations of appropriate uses of guidance documents,” id. 1-20.200:

(a) Guidance documents may be used as evidence of scienter, notice, knowledge, or mens rea. 

“Where a guidance document describes a relevant statute or regulation, the Department may use awareness of the guidance document (or its contents) as evidence that the party had the requisite scienter, notice, or knowledge of the law.  Additionally, in some circumstances, the Department may use a guidance document (or its contents) to establish mens rea, where for example a party has submitted a false claim that is contrary to fact, but was crafted in a way that otherwise appears to be consistent with a guidance document, or where a party’s deliberate indifference to a guidance document is probative of deliberate indifference to the requirements imposed by statute, regulation, or other obligation (e.g., a contract or certification).”  JM 1-20.201. 

(b)  Guidance documents may be used as evidence of professional or industry standards or practices and of duties, customs, or practices with respect to government agencies. 

Professional or industry standards or practices:  “The Department may use a guidance document as probative evidence that a party has satisfied, or failed to satisfy, professional or industry standards or practices relating to applicable statutory or regulatory requirements.”  JM 1-20.202.  Noting that “[t]his rationale applies more broadly in the healthcare arena,” the Manual gives two illustrations of this category of permissible uses of guidance documents: 

(1) In Controlled Substances Act cases, the CDC Guideline for Prescribing Opioids for Chronic Pain may be used to show that prescriptions were made or opioids dispensed without a legitimate medical purpose and outside the usual course of professional practice.  Id.

(2) In cases involving claims for improper Medicare or Medicaid billing, “statements of professional standards such as CMS’s Medicare Benefit Policy Manual or Local Coverage Determinations” may be used to show that procedures billed to Medicare or Medicaid were not medically reasonable and necessary.  Id.

Duties, customs, or practices with respect to government agencies:  “Similarly, in certain types of government fraud and government insider trading cases, the government sometimes must establish the existence of a duty (such as a duty of confidentiality or a duty to disclose with respect to certain information) and/or a breach of that duty.  To do so in such cases, it may rely on agency guidance documents as evidence of the existence of that duty.  This rationale exists more broadly in cases where the government must prove a duty, custom, or practice with respect to a government agency.  Such reliance on guidance documents does not impart to those guidance documents the force of law any more than use of an internal corporate manual to prove a duty, custom, or practice with respect to a private corporation would impart to that manual the force of law.”  JM 1.20-202.  This discussion seems to contemplate litigation involving alleged misconduct by government employees and government contractors.

(c) Guidance documents may be used as evidence of scientific or technical processes. 

“The Department may cite and use a guidance document reflecting scientific or technical processes that are generally accepted in a particular field to support a claim that a certain action is, or that a factual or expert witness is rendering an opinion that is, consistent or inconsistent with those processes.”  JM 1-20.203.  In principle, this might simply mean that such a guidance document should be given the same kind of evidentiary status that the document would be given if it had been promulgated outside the government.

(d) Guidance documents may be used as evidence of a party’s compliance (or failure to comply) with guidance.

“The Department may cite a guidance document where a party’s compliance, or failure to comply, with the agency guidance is itself relevant to the claims at issue.”  JM 1-20.204.  The Manual gives three illustrations of this category of permissible uses of guidance documents:

(1) “when a provider falsely certifies compliance with a guidance document, and the certification is material to an agency’s payment decision, the false certification to obtain a payment may be offered to establish the elements of falsity, materiality, and scienter”;

(2) “when a company falsely represents to investors or auditors that it has complied with all relevant SEC guidance on a particular issue, the false representation properly may be offered to prove securities fraud”; and

(3) “when a government contract or provider agreement requires compliance with some agency guidance document, … violations of that guidance undertaken with the requisite mental state may expose individuals to liability.”  JM 1-20.204.

(e) Guidance documents may be used to provide legal or factual context. 

“The Department may also use agency guidance documents to provide relevant legal or factual context in briefs and other filings.  For example, in the background section of a brief, the Department may cite a manual to explain how an agency processes payments.”  JM 1-20.205.

Discussion

In many respects, the new Justice Manual provisions simply track the memos that they largely codify.  Nonetheless, a few basic observations are in order.

First, the Justice Manual’s descriptions of permissible uses of guidance documents (set forth in JM 1-20.200 – JM 1-20.205) are largely new.  At the same time, the descriptions, as a general matter, seem unsurprising, and also seem carefully delimited.  Although the specifics of particular categories of permissible uses can be debated (and the bounds of some categories doubtless remain to be clarified), none of the provisions that describe these categories appears to create an obvious risk of vitiating the basic principle that guidance documents may not be used to regulate private parties.

For example, nothing in the new Justice Manual provisions allows DOJ litigators to seek deference to agency guidance documents as interpretations of statutes or regulations.  Invoking any such deference would seem to be in considerable tension with the principle that agency guidance cannot be used to impose new legal obligations on persons and entities outside the Executive Branch.[3]

Second, as was the case for the Sessions Memo and the Brand Memo themselves, the logic of the Justice Manual provisions that codify these memos seems to extend well beyond the confines of affirmative civil enforcement actions.[4]  The principles set forth in the new Manual provisions seem equally applicable, for example, to DOJ defensive litigation in which a private party (or state, local, or tribal government entity or official) has challenged a decision of an Executive Branch agency that purports to impose liability for the alleged violation of prohibitions memorialized solely in the agency’s guidance documents (or in the agency’s interpretations thereof).  It will be useful to see how DOJ litigators and DOJ leadership will handle such issues as they arise.

Third, DOJ continues to take action to implement the letter and spirit of the new Justice Manual provisions.  On December 21, 2018, the Acting Attorney General issued a press release announcing the Justice Department’s rescission of “69 additional guidance documents that are unnecessary, outdated, inconsistent with existing law, or otherwise improper.”[5]  The press release relies on the Sessions Memo (as well as on E.O. 13,777 (Feb. 24, 2017) (“Enforcing the Regulatory Reform Agenda”)).  As quoted in the press release, the Acting Attorney General emphasized the Executive Branch’s duty to follow Congress’s “specific process for implementing regulations” and describes the rescission as part of an ongoing “effort to restore the rule of law and our constitutional order.”

Finally, one should keep in mind that DOJ has long taken the position that the Justice Manual is merely “internal DOJ guidance,” that it does not “create any rights, substantive or procedural, enforceable at law by any party in any matter civil or criminal,” and that it places no “limitations … on otherwise lawful litigation prerogatives of DOJ.”  JM 1-1.200.  Nonetheless, counsel for private parties are certainly free to cite the provisions of the Manual in discussions with DOJ attorneys, just as they were free to do so with respect to the DOJ memos that gave rise to the Manual provisions. 

Conclusion

By incorporating the main directives of the Brand and Sessions Memos into the Justice Manual, DOJ has given those directives an added measure of staying power.  Although DOJ is free to revise the Manual whenever DOJ leadership sees fit to do so, any such revisions would typically be undertaken through a comprehensive review process within DOJ, and thus presumably would not be undertaken lightly.  See JM 1-1.200, 1-1.300.  In the coming months, it will become clearer whether DOJ intends to continue to build on the deregulatory thrust of the two memos, and also whether any problems arise in applying and implementing DOJ’s newly enumerated categories of permissible uses of subregulatory guidance documents. 

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Andrew Varcoe is a partner and strategic adviser to clients at Boyden Gray & Associates, PLLC, in Washington, DC, a law, strategy, and public policy firm founded by Ambassador and former White House Counsel C. Boyden Gray.  He has extensive experience with litigation, environmental, energy, natural resources, and administrative law matters and serves as Chairman of the Executive Committee of the Federalist Society's Environmental Law & Property Rights Practice Group.

 

[1] Such persons and entities may include state, local, and tribal government officials and agencies. 

[2] JM 1-19.000 defines guidance as “any agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statute or regulation, other than a substantive action by an agency that promulgates or is expected to promulgate a regulation.”  JM 1-19.000 (citing E.O. 12,866, Regulatory Planning and Review, § 3(e), 58 Fed. Reg. 51,735 (1993)).  The Manual’s definition expressly excludes

- “decisions, orders, or other documents issued in adjudicatory actions that do not purport to or have the effect of binding anyone beyond the parties to the adjudication”;

- “documents informing the public of the agency’s enforcement priorities or factors the agency considers in exercising its prosecutorial discretion”; and

- “internal directives, memoranda, legal and strategy monographs, or training materials for agency personnel directing them on how to carry out their duties, positions taken by an agency in litigation, or legal advice provided by the Department.”

[3] Notably, on December 10, 2018, the U.S. Supreme Court granted certiorari in Kisor v. Wilkie, a case that presents the question whether the Court should overrule Auer v. Robbins, 519 U.S. 452 (1997), and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945).  Auer and Seminole Rock are regularly cited for the proposition that if an agency’s regulation is ambiguous, courts should defer to an agency’s reasonable interpretation of that regulation.  In its unsuccessful opposition to certiorari in Kisor, the Justice Department did not expressly defend Auer/Seminole Rock deference.  It remains to be seen whether, in its merits brief before the Court or at oral argument, DOJ will abandon or soften its previous adherence to Auer and Seminole Rock.

[4] Cf. Brand Memo 1 (“The principles from the [Sessions Memo] are relevant to more than just the Department’s own publication of guidance documents.”); JM 1-20.000 (extending Brand Memo principles to criminal enforcement actions). 

[5] The 69 documents comprise 59 “open letters,” eight rulings issued by the Bureau of Alcohol, Tobacco, and Firearms (ATF) (now the Bureau of Alcohol, Tobacco, Firearms, and Explosives), a “Dear Colleague” letter (“on Nondiscriminatory Administration of School Discipline dated Jan. 8, 2014”), and an “Overview” (“of the Supportive School Discipline Initiative dated Jan. 8, 2014”).