	Regulatory Guidance Is a Tool for Agency Communication

One of the main purposes of guidance is to explain and help regulated  parties comply with agency regulations. As shown in figure 1, guidance  may explain how agencies plan to interpret regulations. Even though not legally binding, guidance documents can have  a significant effect on regulated entities and the public, both because of  agencies’ reliance on large volumes of guidance documents and because  the guidance can prompt changes in the behavior of regulated parties and  the general public. OMB defines “significant guidance documents” as guidance with a broad  and substantial impact on regulated entities. Agencies Issued a Wide Variety of Guidance Serving Multiple Purposes

		Agencies Used Many Terms for Non-significant Guidance

The selected components we reviewed differed in both the terminology  they used for their external non-significant guidance documents and in  the amounts of non-significant guidance they issued. The components issued varying amounts of guidance ranging from 10 to  more than 100 documents issued by a component in a single year. Agencies Issued Non- significant Guidance Serving Multiple Purposes

Agencies have used guidance for multiple purposes, including explaining  or interpreting regulations, clarifying policies in response to questions or  compliance findings, disseminating suggested practices or leadership  priorities, and providing grant administration information. Agencies Weighed Various Factors When Choosing Whether to Issue a Regulation or Guidance

Officials considered a number of factors before deciding whether to issue  guidance or undertake rulemaking. Among these factors, a key criterion  was whether officials intended for the document to be binding (in which  case they issued a regulation). Agencies Can Ensure More Effective Guidance Processes through Consistent Adherence with OMB Requirements and Stronger Internal Controls

		Agencies Did Not Always Adhere to OMB Requirements for Significant Guidance

We found that agencies did not always adhere to OMB requirements for  significant guidance. Education and  USDA had written procedures for the approval of significant guidance as  directed by OMB. We found  that Education, USDA, and DOL consistently applied OMB’s public  access and feedback requirements for significant guidance, while HHS  did not. However, the  departments and components typically had not documented their  processes for internal review of guidance documents. To improve agencies’ guidance processes, we recommended that the  Secretaries of USDA, HHS, DOL, and Education strengthen their  components’ application of internal controls by adopting, as appropriate,  practices developed by other departments and components, such as  assessment of risk; written procedures and tools to promote the  consistent implementation and communication of management directives;  and ongoing monitoring efforts to ensure that guidance is being issued  appropriately and has the intended effect. USDA, Education, HHS, and  DOL generally agreed with the recommendations. Only 6  of the 25 components we reviewed had written procedures for the entire  guidance production process, and several of these components  highlighted benefits of these procedures for their guidance processes. Officials from all components could describe standard review practices to  provide management the opportunity to comment and ensure that its  comments were addressed by program staff. Most component officials told us that  they conferred with other affected components or federal departments  to ensure consistency during the development of guidance. Regularly Evaluate Whether Issued Guidance is Effective and Up to Date

Nearly half of the components we reviewed did not regularly evaluate  whether issued guidance was effective and up to date. 2. Processes should be established to collect feedback on both the  substance and clarity of guidance, to communicate this feedback to the  appropriate officials, and to maintain applicable feedback to inform future  guidance and revisions of guidance.
Why GAO Did This Study

Regulatory guidance is an important tool agencies use to communicate timely information about regulatory and grant programs to regulated parties, grantees, and the public. Guidance provides agencies flexibility to articulate their interpretations of regulations, clarify policies, and address new issues more quickly than may be possible using rulemaking. The potential effects of guidance and risks of legal challenges underscore the need for consistent processes for the development, review, dissemination, and evaluation of guidance.
This statement discusses four key questions addressed in GAO's April 2015 report on regulatory guidance: (1) what it is; (2) how agencies use it; (3) how agencies decide whether to use guidance or undertake rulemaking; and (4) steps agencies can take to ensure more effective guidance processes. To conduct that work, GAO reviewed relevant requirements, written procedures, guidance, and websites, and interviewed agency officials.

What GAO Found

What is regulatory guidance? One of the main purposes of guidance is to explain and help regulated parties comply with agencies' regulations. Even though not legally binding, guidance documents can have a significant effect on regulated entities and the public, both because of agencies' reliance on large volumes of guidance documents and because the guidance can prompt changes in the behavior of regulated parties and the general public.
How do agencies use regulatory guidance? The four departments GAO reviewed—Agriculture (USDA), Education (Education), Health and Human Services (HHS), and Labor (DOL)—and the 25 components engaged in regulatory or grant making activities in these departments used guidance for multiple purposes, such as clarifying or interpreting regulations and providing grant administration information. Agencies used many terms for guidance and agency components issued varying amounts of guidance, ranging from about 10 to more than 100 guidance documents each year. Departments typically identified few of their guidance documents as “significant,” generally defined by the Office of Management and Budget (OMB) as guidance with a broad and substantial impact on regulated entities.
How do agencies determine whether to issue guidance or undertake rulemaking? According to officials, agencies considered a number of factors when deciding whether to issue a regulation or guidance. However, the key criterion in making the choice was whether they intended the document to be binding; in such cases agencies proceeded with regulation.
How can agencies ensure more effective guidance processes that adhere to applicable criteria? All four departments we studied identified standard practices to follow when developing guidance but could also strengthen their internal controls for issuing guidance.
Agencies addressed OMB's requirements for significant guidance to varying degrees. Education and USDA had written departmental procedures for approval as required by OMB. DOL's procedures were not available to staff and required updating. HHS had no written procedures. In addition, USDA, DOL, and Education consistently applied OMB's public access and feedback requirements for significant guidance, while HHS did not.
In the absence of specific government standards for non-significant guidance—the majority of issued guidance—the application of internal controls is particularly important. The 25 components GAO reviewed addressed some control standards more regularly than others. For example, few components had written procedures to ensure consistent application of guidance processes. However, all components could describe standard review practices and most used tools to document management approval of guidance. Not all components conferred with external nonfederal stakeholders when developing guidance. Finally, nearly half of the components GAO reviewed did not regularly evaluate whether issued guidance was effective and up to date.

What GAO Recommends

GAO is making no new recommendations in this statement. In the April 2015 report, GAO recommended steps to ensure consistent application of OMB requirements for significant guidance and to strengthen internal controls in guidance production processes. The agencies generally agreed with the recommendations.