Stopping a Washington Shortcut

When a federal agency wants to change state policies, it doesn’t always need a new law or a formal rule. Sometimes, it just sends a letter.

Under the Biden administration, the Environmental Protection Agency (EPA) issued guidance describing how states should evaluate environmental and demographic impacts in permitting decisions.

Although by federal law such guidance is not legally binding, the EPA’s letter tacitly but clearly made receipt of EPA grants conditional on states' compliance with a set of administrative mandates for adopting federally prescribed grievance procedures and collecting and disclosing the race and ethnicity of permit applicants.

The EPA’s implied directives subsequently appeared in civil rights investigation letters and compliance reviews. In one instance, the EPA opened a discrimination investigation against the Tennessee Department of Environment and Conservation regarding permits it issued for a pipeline project. The investigation was eventually dismissed, but its real purpose — to bully other state environmental agencies into compliance — was accomplished. What’s more, the EPA specifically cited its guidance in its investigation closure letter, signaling to Tennessee and other states a new standard they need to follow, even though the “standard” was legally no more than a suggestion without underlying statutory authority.

The EPA’s guidance — which is not an isolated incident — functioned as an intrusion on state administrative sovereignty — dictating not just what states must achieve, but how they should organize themselves to achieve it. And while federal agencies most often use guidance to clarify regulations, this demonstrates a more sinister use that often goes unnoticed. According to new research by the Center for Practical Federalism, guidance weaponization against states was evident in enforcement actions and legal proceedings in areas such as election laws, climate initiatives, and gender identity policies.

Adhering to extralegal guidance can come at an unseen cost to the states. Federal guidance issued under the Obama and Biden administrations on SNAP benefits removed asset limits for recipients, discouraged strengthening eligibility measures, and discouraged states from policing their rolls. As a result, state payment error rates are soaring. Collectively, if states don’t adjust their policies soon to lower error rates, states will owe the federal government over $11 billion in penalties.

However, there are solutions that states can pursue to shine a light on federal guidance. Several states, including Tennessee, Oklahoma, Missouri, Arizona, and Utah, have recognized this problem and begun pursuing transparency reforms.

Utah has emerged as a leader among these states in guidance transparency, enacting two reforms in the past two years. In 2025, Utah lawmakers passed a reform requiring all state agencies to share the federal guidance they receive with the state legislature and make the guidance publicly available. As a result, Utah’s legislative Federalism Commission regularly reviews the guidance to determine whether it intrudes on Utah’s own autonomy and whether adoption is appropriate — with input from relevant agencies.

This year Utah went further. Lawmakers unanimously passed a second reform requiring state agencies to include a cost estimate whenever they consider implementing federal guidance. Both reforms provide a powerful tool for policymakers to conduct oversight of federal guidance, allow elected officials to productively work alongside agency partners to determine what makes sense for their state, and ensure that any de facto rulemaking attempts are stopped before it’s too late. In the case of the Biden EPA guidance, reforms like Utah’s would have been able to address the overstepping nature of guidance and protect against the costs associated with compliance.

When federal guidance veers into rulemaking or becomes the basis for legal enforcement actions, it is paramount that states have the muscle to push back.