[Congressional Record Volume 168, Number 199 (Wednesday, December 21, 2022)]
[Senate]
[Pages S9767-S9769]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


     
     
                                    GAO RULING
     
       Mrs. CAPITO. Madam President, on December 16, 2021, the Deputy 
     Administrator of the Federal Highway Administration issued a 
     memorandum, entitled ``Information: Policy on Using Bipartisan 
     Infrastructure Law Resources to Build a Better America.''
       I wrote a letter asking the U.S. Government Accountability Office--
     GAO--to determine whether this memo was a ``rule'' and subject to the 
     Congressional Review Act, CRA. On December 15, 2022, I received a 
     reply, in which the GAO general counsel concludes that the 2021 memo 
     ``meets the [Administrative Procedure Act] definition of a rule and no 
     exception applies. When an agency rule has the effect of inducing 
     changes to the internal policy or operations choices of the regulated 
     community, that rule has a substantial impact on the rights and 
     obligations of non-agency parties. Thus, the Memo is a rule under CRA 
     and is subject to the submission requirements.''
       I ask unanimous consent that the decision from GAO, dated December 
     15,
     
     [[Page S9768]]
     
     2022, be printed in the Congressional Record following my remarks.
       The decision I am now submitting to be printed in the Congressional 
     Record is the original document provided by GAO to my office. I will 
     also provide a copy of the GAO decision to the Parliamentarian's 
     office. Based on Senate precedent, my understanding is that the 
     publication of the GAO legal opinion in today's Record will start the 
     ``clock'' for congressional review under provisions of the CRA.
            There being no objection, the material was ordered to be 
          printed in the Record, as follows:
     
                             U.S. Government Accountability Office,
     
                                                        Washington, DC.
     
                                     Decision
     
          Matter of: Federal Highway Administration--Policy on Using 
              Bipartisan Infrastructure Law Resources to Build a Better 
              America
          File: B-334032
          Date: December 15, 2022
     
     
                                      DIGEST
     
            GAO was asked whether the Federal Highway Administration's 
          (FHWA) Information: Policy on Using Bipartisan Infrastructure 
          Law Resources to Build a Better America (Memo) is a rule for 
          purposes of the Congressional Review Act (CRA). The Memo sets 
          out FHWA's preferred projects for funding under the 
          Infrastructure Investment and Jobs Act. When an agency rule 
          has the effect of inducing changes to the internal policy or 
          operations choices of the regulated community, that rule has 
          a substantial impact on the rights and obligations of non-
          agency parties.
            CRA requires all agency rules to be submitted to Congress 
          and the Comptroller General before they take effect. CRA 
          incorporates the Administrative Procedure Act (APA) 
          definition of a rule for this purpose with certain 
          exceptions. FHWA did not submit the Memo under the Act. We 
          conclude the Memo is a rule for purposes of CRA because it 
          meets the APA definition of a rule and no exceptions apply.
     
     
                                     DECISION
     
            On December 16, 2021, the Federal Highway Administration 
          (FHWA) issued a memorandum to agency officials entitled 
          Information: Policy on Using Bipartisan Infrastructure Law 
          Resources to Build a Better America (Memo). Department of 
          Transportation, Federal Highway Administration Memorandum, 
          Information: Policy on Using Bipartisan Infrastructure Law 
          Resources to Build a Better America (Dec. 16, 2021), 
          available at https://www.fhwa.dot.gov/bipartisan-
infrastructurelaw/building_a_better_america-
policy_framework.cfm (last visited Sep. 6, 2022). We received 
          a congressional request for a decision as to whether the Memo 
          is subject to the Congressional Review Act (CRA). Letter from 
          Senator Shelley Moore Capito to Comptroller General (Feb. 10, 
          2022). For the reasons described below, we conclude it is.
            Our practice when rendering decisions is to contact the 
          relevant agencies to obtain their legal views on the subject 
          of the request. GAO, Procedures and Practices for Legal 
          Decisions and Opinions, GA0-06-1064SP (Washington, D.C.: 
          Sept. 2006), available at https://www.gao.gov/products/
gao_06_1064sp. Accordingly, we reached out to FHWA to obtain 
          the agency's legal views. Letter from Assistant General 
          Counsel, GAO, to Chief Counsel, FHWA (Feb. 22, 2022). We 
          received FHWA's response on April 5, 2022. Letter from Chief 
          Counsel, FHWA, to Assistant General Counsel, GAO (Apr. 5, 
          2022) (Response Letter).
     
     
                                    BACKGROUND
     
          FHWA Project Selection Process
            States ultimately select which transportation projects will 
          receive FHWA-administered funding. See 23 U.S.C. Sec. 145. 
          These projects are approved for implementation using this 
          funding through a two-step process. First, states are 
          required to develop statewide transportation improvement 
          programs (STIP) which include a prioritized list of projects 
          the state proposes for federal funding. 23 C.F.R. 
          Sec. 450.218. States develop them in accordance with their 
          statewide transportation planning process, which must reflect 
          the consideration of specific planning factors. 23 C.F.R. 
          Sec. 450.206. Typically, only projects in an approved STIP 
          are eligible for FHWA-administered funding. 23 C.F.R. 
          Sec. 450.222. FHWA's approval is generally restricted to a 
          determination of whether the STIP is based on a statewide 
          transportation planning process that meets relevant statutory 
          and regulatory requirements. 23 C.F.R. Sec. 450.220.
            Second, the state selects projects from the approved STIP 
          to implement using FHWA-administered funding. 23 C.F.R. 
          Sec. 450.222. To authorize the implementation of a project, 
          the state and FHWA must execute a project agreement. See 23 
          U.S.C. Sec. 106; 23 C.F.R. 630.106. The agreement can be 
          executed only after applicable federal requirements are 
          satisfied. 23 C.F.R. Sec. 630.106.
          FHWA's Policy Memo
            On November 15, 2021, the Infrastructure Investment and 
          Jobs Act (IIJA) was enacted into law, providing funding for 
          various modes of surface transportation such as highways, 
          transit, and rail. See e.g. Pub. L. No. 117-58, 
          Sec. Sec. 11101(a)(1), 30017, 135 Stat. 429,443, 912. This 
          funding included about $350.7 billion for FWHA to administer, 
          mostly under title 23.
            To aid in implementing IIJA and to announce a preferred 
          prioritization for projects that ``Build a Better America'', 
          FHWA issued the Memo. Specifically, FHWA stated:
     
       The intent of the guidance also is to ensure that the funding and 
     eligibilities provided by the [IIJA] will be interpreted and 
     implemented, to the extent allowable under statute, to encourage States 
     and other funding recipients to invest in projects that upgrade the 
     condition of streets, highways and bridges and make them safe for all 
     users, while at the same time modernizing them so that the 
     transportation network is accessible for all users, provides people 
     with better choices across all modes, accommodates new and emerging 
     technologies, is more sustainable and resilient to a changing climate, 
     and is more equitable.
     
            Memo, at 1. To accomplish these goals, FHWA instructed 
          agency officials to encourage state officials and other 
          stakeholders to select projects that meet FHWA's priorities. 
          See Id. at 3 (``FHWA staff shall emphasize to our planning 
          and project selection and project delivery stakeholders that 
          the resources made available under the [IIJA] can and should 
          be applied to modernize all eligible streets, highways, and 
          bridges--not just those owned and operated by [s]tate 
          departments of transportation.''). In the Memo, FHWA 
          acknowledged states ultimately make the final decisions on 
          what projects get funded, but that the Memo would attempt to 
          influence state decisions. Id. at 6 (``Although [s]tates and 
          other [f]ederal-aid recipients ultimately select projects 
          consistent with [statute], this [Memo] will inform that 
          decision-making.'').
          Congressional Review Act
            CRA, enacted in 1996 to strengthen congressional oversight 
          of agency rulemaking, requires federal agencies to submit a 
          report on each new rule to both Houses of Congress and to the 
          Comptroller General for review before a rule can take effect. 
          5 U.S.C. Sec. 801 (a)(1)(A). The report must contain a copy 
          of the rule, ``a concise general statement relating to the 
          rule,'' and the rule's proposed effective date. Id. Each 
          House of Congress is to provide the report on the rule to the 
          chairman and ranking member of each standing committee with 
          jurisdiction. 5 U.S.C. Sec. 801 (a)(1 )(C). CRA allows 
          Congress to review and disapprove rules issued by federal 
          agencies for a period of 60 days using special procedures. 5 
          U.S.C. 802. If a resolution of disapproval is enacted, then 
          the new rule has no force or effect. Id.
            CRA adopts the definition of rule under the Administrative 
          Procedure Act (APA), 5 U.S.C. Sec. 551 (4), which states that 
          a rule is ``the whole or a part of an agency statement of 
          general or particular applicability and future effect 
          designed to implement, interpret, or prescribe law or policy 
          or describing the organization, procedure, or practice 
          requirements of an agency.'' 5 U.S.C. Sec. 804(3). CRA 
          excludes three categories of rules from coverage: (1) rules 
          of particular applicability; (2) rules relating to agency 
          management or personnel; and (3) rules of agency 
          organization, procedure, or practice that do not 
          substantially affect the rights or obligations of non-agency 
          parties. Id.
            FHWA did not submit a CRA report to Congress or the 
          Comptroller General on the Memo. In its response to us, FHWA 
          stated the Memo was not subject to CRA because it restates a 
          preexisting statutory or regulatory requirement for 
          informational purposes. Response Letter, at 2. FHWA further 
          argued that even if it did meet the definition of a rule 
          under APA, the Memo falls within the CRA exception for a rule 
          of agency organization, procedure, or practice that does not 
          substantially affect the rights or obligations of non-agency 
          parties. Id. For the reasons explained below, we disagree. We 
          find the Memo meets the definition of a rule under the APA 
          and that no exception applies. Thus it is subject to CRA.
     
     
                                    DISCUSSION
     
            At issue here is whether the Memo is a rule for purposes of 
          CRA. First, we must look to see if it meets the definition of 
          a rule under APA. We conclude it does. We next must analyze 
          whether any exception applies. We conclude none apply. 
          Therefore, we conclude the Memo is a rule for purposes of 
          CRA.
            The Memo meets the APA definition of a rule. First, the 
          Memo is an agency statement, as it is a memo from senior 
          leadership to agency offices on actions employees should take 
          in implementing IIJA. See Memo, at 3 (``FHWA staff shall 
          emphasize to our planning and project selection and project 
          delivery stakeholders that the resources made available under 
          the [IIJA] can and should be applied to modernize all 
          eligible streets, highways, and bridges--not just those owned 
          and operated by [s]tate departments of transportation.''). 
          Second, it is of future effect, as it provides guidance for 
          projects to be funded by the Act. See Id. at 2-3 (``Projects 
          to be prioritized include those that maximize the existing 
          right-of-way for accommodation of non-motorized modes and 
          transit options that increase safety, accessibility, and/or 
          connectivity.''). Finally, it proscribes policy, as it 
          announces a preference for certain types of projects and 
          instructs agency employees to encourage funding recipients to 
          select these types of projects. See Id. at 2, 4-6.
            FHWA argues the Memo is not a rule because it is an 
          internal document that does
     
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          not impose a new requirement or change the underlying 
          federal-state relationship established in law; instead, FHWA 
          contends that it does nothing but restate longstanding 
          statutory and regulatory requirements. See Response Letter, 
          at 1-2. We disagree with this characterization. The Memo 
          instructs FHWA staff to encourage states and decision-makers 
          to select certain projects for funding based on FHWA's stated 
          preferences. See Memo, at 4-6.
            We previously concluded that where an agency describes 
          actions the regulated community could take to ensure 
          compliance with the law, such statement is a rule for 
          purposes of CRA. See B-331171, Dec. 17, 2020. In B-331171, 
          the Department of Housing and Urban Development (HUD) issued 
          a guidance document containing a step-by-step guide housing 
          providers could follow to ensure they complied with 
          applicable requirements of the Fair Housing Act. Id. at 3. We 
          determined that when an agency provides extra information to 
          aid with statutory compliance, the agency has done more than 
          restate the law; it has implemented law. Id. at 4-5. Here, 
          FHWA went beyond simply restating existing legal 
          requirements; it expressed a policy preference in the Memo 
          and took steps to implement that preference. Thus, as in B-
          331171, the Memo meets the APA definition of a rule. Having 
          concluded the Memo meets the APA definition of a rule, we now 
          must decide whether any of the CRA exceptions apply. First, 
          the Memo is not a rule of particular applicability, as it 
          applies to all potential grantees for all potential projects. 
          Second, it is not a rule of agency management or personnel. 
          While the Memo is addressed to agency officials and provides 
          instructions to agency personnel, its main focus is the 
          potential projects of potential grantees and other funding 
          recipients. Thus, it goes beyond merely relating to agency 
          matters and does not qualify for the exception. This leaves 
          the exception for rules of agency organization, procedure, or 
          practice that do not substantially affect the rights or 
          obligations of non-agency parties.
            FHWA contends the Memo falls within the exception for rules 
          of agency organization, procedure, or practice that do not 
          substantially affect the rights or obligations of non-agency 
          parties because the Memo does not bind funding recipients, as 
          they are free to choose to fund any projects that are legally 
          permissible under IIJA. See Response Letter, at 2-3. While 
          the Memo is nonbinding, it does not qualify for the 
          exception.
            We have determined previously that agency rules that 
          encourage the regulated community to change internal 
          operations or policies have a substantial impact on non-
          agency parties and thus do not qualify for the exception. See 
          B-330843, Oct. 22, 2019. In B-330843, we determined that 
          several Federal Reserve memoranda to bank examiners outlining 
          matters to search for during bank examinations were rules. 
          Id. at 7-8. Also, as mentioned previously, we more 
          specifically determined that agency rules that recommend 
          specific actions, such as best practices the regulated 
          community should take, do not qualify for the exception. B-
          331171 at 4-5. Here, FHWA clearly expresses a preference for 
          specific types of projects and emphatically states the Memo 
          will inform decision-making. Memo at 4-6. Similar to HUD in 
          B-311171, by describing its preferred projects in the Memo, 
          FHWA hoped to induce its regulated community, potential 
          funding recipients, to select those projects. Because FHWA 
          used the Memo to try to induce the regulated community to 
          change their internal priorities, the Memo had a substantial 
          effect and thus does not qualify for the exception.
            FHWA argues agency rules that only regulate how the agency 
          communicates with the public do not have a substantial impact 
          on non-agency parties and thus qualify for the exception. 
          Response Letter, at 2, 4. FHWA cites our decision in B-
          291906, Feb. 28, 2003, as authority for this proposition, 
          arguing that its Memo is similar to the agency action at 
          issue in that decision. Id. at 2. We disagree; the decision 
          does not stand for the proposition FHWA states. In that 
          decision, we determined a Department of Veteran Affairs (VA) 
          memorandum stopping agency advertisement of veterans benefit 
          programs qualified for the exception. Id. at 5. We came to 
          this conclusion because no veteran was being denied the right 
          to enroll in a benefit program and no enrolled veteran was 
          being dropped. Id. at 3. Veterans were still advised of their 
          benefit rights as required by statute. Id. VA never took 
          active steps to try and alter veterans' behavior. Any changes 
          in enrollment were due solely to the choices of the veterans, 
          as opposed to the facts here. FHWA admits the purpose of the 
          Memo is to get funding recipients to select projects FHWA 
          prefers. Response Letter, at 3. Thus the agency is taking 
          active steps to encourage funding recipients to alter their 
          behavior, and these changes would be taken at the behest of 
          FHWA. When an agency rule actively attempts to induce the 
          regulated community to take preferred steps, the rule has a 
          substantial impact on the regulated community and does not 
          qualify for the third CRA exception.
            We acknowledge that states could potentially ignore the 
          preferences that FHWA articulated in the Memo and still 
          receive funding from the agency to implement the projects 
          they prioritize and select, provided that applicable federal 
          requirements have been met. However, because the Memo 
          specifies a goal to inform decisionmaking and goes beyond 
          simply restating the requirements in the law, consistent with 
          our case law, the Memo has a substantial impact despite the 
          non-binding nature of FHWA's preferences and FHWA's lack of a 
          direct role in the selection process. See B-331171, Dec. 17, 
          2020; B-330843, Oct. 22, 2019.
     
     
                                    CONCLUSION
     
            The Memo meets the APA definition of a rule and no 
          exception applies. When an agency rule has the effect of 
          inducing changes to the internal policy or operations choices 
          of the regulated community, that rule has a substantial 
          impact on the rights and obligations of non-agency parties. 
          Thus, the Memo is a rule under CRA and is subject to the 
          submission requirements.
                                                 Edda Emmanuelli Perez,
          General Counsel.
     
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