On January 25, 2018, Associate Attorney General Rachel Brand issued a memorandum (the “Brand Memo”) limiting the use of agency guidance documents in affirmative civil enforcement cases. The memorandum builds on Attorney General Jeff Sessions’ November 16, 2017 memorandum prohibiting DOJ from promulgating guidance documents that create rights or obligations that are binding on regulated parties. When DOJ issues a guidance document with voluntary standards, it must also contain a statement that noncompliance is not subject to future DOJ enforcement actions. The Brand Memo makes clear that this principle also applies to other agencies’ guidance documents. In other words, agency guidance, in and of itself, cannot create new binding legal requirements.
Essentially the policy will prohibit agencies from making an end run around notice and comment rulemaking by simply issuing guidance memoranda to create “de facto regulations.” Such agency guidance includes any agency statement of general applicability and future effect, advising outside parties about legal rights and obligations. For example, the Department of Health and Human Services Office of Inspector General has issued guidance on kickbacks and the Food and Drug Administration has issued guidance on procedures, compounding, and labelling. Agency guidance does not include adjudicatory actions, public agency enforcement priorities, or factors considered in exercising prosecutorial discretion. It also does not include internal directives, memoranda, or training materials for agency personnel; positions taken by DOJ in litigation; or advice provided by the Attorney General or Office of Legal Counsel. Under this definition, for example, the Brand Memo is not agency guidance.
Going forward DOJ will not enforce requirements created by agency guidance documents in civil actions. Relatedly, DOJ will not use noncompliance with an agency guidance to “presumptively or conclusively” establish violations of applicable law or regulations in affirmative civil enforcement cases. Agency guidance will continue to be used to “simply explain or paraphrase” statutory and regulatory mandates. Further, evidence a party read agency guidance may help establish the party had knowledge of the mandate, which may be relevant in assessing whether a person “knowingly” acted in violation of the law.
The Brand Memo is limited to civil enforcement actions – any DOJ lawsuits to recover government funds lost to fraud or misconduct, or to impose penalties for violations of Federal health, safety, civil rights, or environmental laws. This includes False Claims Act litigation. But, while the memo itself does not extend to criminal actions, its logic certainly does. If agency guidance creating de facto regulations are improper in a civil context, it will be difficult for DOJ to argue that they are fair game in criminal actions.
Ultimately, the Brand Memo puts government contractors in a better position when negotiating and defending False Claims Act cases where they are accused of violating a Government policy as part of a so-called “conspiracy” to defraud the U.S. Government. And civil prosecutors have one less tool in their enforcement toolbox. This may spur agencies to pursue formal notice and comment rulemaking to ensure that their positions have the force of law, rather than relying on policy memoranda which are easily issued, but which will carry less weight.