Rulemaking

Part III

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What is Formal Rulemaking?

A rulemaking conducted as a trial type hearing The agency support for the rule must be presented at

the hearing Interested parties may present and cross-examine

evidence History - grew out of rate making

Rate making affects a small number of parties The courts thought they should get due process

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Why avoid formal rulemaking?

The peanut hearings (FDA must do formal rulemaking in some situtations) Should peanut butter have 87 or 90% peanuts? 10 years and 7,736 pages of transcript

What was the concern in Shell Oil v. FPC? Formal rulemaking was impossibly time

consuming to use for regulating something changeable such as natural gas rates.

Why does just getting the right to be heard at a formal hearing benefit parties that oppose a rule?

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When is Formal Rulemaking Required?

Disfavored by the modern courts Must have magic statutory language or be required by the

agency's on rules Only when rules are required by statute to be "made

on the record after opportunity for an agency hearing" Lawyering tip

When would you want to argue that formal rulemaking is required?

What do you have to do to support you request?

The Procedures of Notice-and-Comment Rulemaking

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Putting the Notice in Notice and Comment

553(b) . . . The notice shall include — (1) a statement of the time, place, and nature of

public rulemaking proceedings; (2) reference to the legal authority under which

the rule is proposed; and (3) either the terms or substance of the proposed

rule or a description of the subjects and issues involved. . . .

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Notice of the Proposed RuleChocolate Manufacturers Ass’n v. Block

What did Congress tell the agency to do that resulted in these regs?

What did the proposed rule address? What about fruit juice? How was the final rule different from the proposed

rule?

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The Notice Problem

What was the CMA's claim? What was the agency defense? Does the rule have to be the same?

Why have notice and comment then? What is the logical outgrowth test? How would you use it in this case?

What did the court order in this case? What will the CMA do?

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Limits on Logical Outgrowth - Arizona Public Service Co. v. E.P.A.

What did the EPA propose that Indian Tribes be allowed to that states were doing?

During the comment period, what issue did the tribes raise?

How was the rule changed? What was the claim by plaintiffs? How did the court analyze the problem?

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What about Technical Information Underlying the Rule? (not in book)

Portland Cement v. Ruckelshaus, 486 F2d 375 (1973) The agency must disclose the factual basis for the

proposed rule, if it relied on scientific studies or other collections of information

Connecticut Light and Power v. NRC, 673 F2d 525 (1982)? The agency cannot play hide the peanut with technical

information Why is this a big deal in environmental regs? What are the potential downsides of this policy?

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Shelby Amendments to the Freedom of Information Act (not in book)

As we will learn later, the FOIA traditionally applied only to information in possession of government agencies Senator Shelby, at the urging of several business

lobbies, successfully extended FOIA to information produced by federally funded research and in the hands of universities

Why would business lobbies want access to this information, esp. in environmental rulemakings?

Why might such access be a problem for professors?

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Additions to the Published Record (not in book)

Rybachek v EPA EPA added 6000 pages of supporting info Court said the agency may supplement the rulemaking

record in response to comments asking for explanation

Idaho Farm Agency added a report to the record, then relied on it

in the final rule. The agency may not add new material and then rely on

it without given an opportunity to comment on it.

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Negotiated Rulemaking

What is this? What are the advantages? What are the public participation issues?

Ex Parte Communications

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Rulemaking

How does the notice provision in rulemaking change the issues in ex parte communications? How does the notice requirement eliminate the

ex parte communications issues for communications before the promulgation of the rule?

When are ex parte communications an issue? How can you cure this?

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Home Box Office, Inc. v. FCC

What was being regulated? Who were the contacts with? What did the court say should be avoided? If it is not avoided, what needs to be done?

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Bias and Prejudice

Remember the cases on bias of decisionmakers in adjudications?

Should these also apply to rulemaking? How does notice and comment change the

situation?

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Association of National Advertisers , Inc. v. FTC

FTC is adopting rules on TV advertising directed at children Chairman has written and spoken at length on the

evils of TV ads aimed at children Plaintiffs seek to disqualify him because of bias

Court held that plaintiffs must show clear and convincing evidence that he has an unalterably closed mind on matters critical to the rulemaking

No rulemaking has ever been overturned on the basis that a decisionmaker was unlawfully prejudiced.

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DC Federation of Civic Associations v. Volpe, 459 F.2d 1231 (D.C. Cir. 1971)

The Volpe test for whether a rulemaking may be overturned solely on evidence of Congressional pressure 1) was there specific pressure on the agency to

consider improper factors? 2) did the agency in fact change its mind because of

these considerations? How can the agency defend itself from a Volpe attack? What did the Court Rule when it applied Volpe to this

Case? Why is it proper for congressmen to comment on

proposed rules?

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Sierra Club v. Costle, 657 F.2d 298 (D.C. Cir. 1981)

Rule making on coal fired power plants Why is this controversial then and more so now?

Sierra Club claimed that the president influenced the agency Is that wrong? What is the cure?

Senator Bird also weighed in What do plaintiffs need to show to establish undue

influence? Why is an outcome test, combined with the record, a

good solution?

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What is the president's role in rulemaking?

Controls and supervises executive branch decisionmaking

How is the role different in adjudications? When should the president's contacts be

documented? When the statute requires that they be

docketed If the rule is based on factual information that

comes from such a meeting.

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Should State Rules Differ from Federal Rules on Notice and Comment?

Limited staff Greater reliance on the expertise of board members,

rather than staff Board may hear lots of testimony and review a lot of

info - they cannot afford the time and effort to put together volumes of supporting info for regs

Should state agencies have a reduced publication requirement?

Should they be able to publish rules without explanation and only have to explain if asked?

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Hybrid Rulemaking (Congressional Mandates) at the FTC

issue an advance notice of proposed rulemaking, which describes the area of inquiry under consideration and invites comments from interested parties;

send the advance notice and, 30 days before its publication, the notice of proposed rulemaking to certain House and Senate committees;

hold a hearing presided over by a hearing officer at which persons may make oral presentations and in certain circumstances to conduct cross-examination of persons;

include a statement of basis and purpose to address certain specified concerns;

and conduct a regulatory analysis of both the proposed and final rules that describes the proposal and alternatives that would achieve the same goal and analyzes the costs and benefits of the proposal and the alternatives.

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Executive Orders Regulating Rulemaking

What is the president's authority over rulemaking?

What about for independent agencies? Why should the president exercises authority

over rulemaking? Coordination of agencies? Assuring that the agencies carry out the

administration's objectives?

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Regulatory Analysis

What is CBA? Why is CBA sometimes very controversial,

especially for environmental regulations? What is the value of regulatory analysis? What is PBA?

(political benefit analysis) Why does it always trump CBA?

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Cost-benefit and Risk-benefit analysis

Justice Breyer's tunnel vision problem Each rule is seen without reference to all the other

regulations Why is this a problem in environmental law?

The cost of removing the last 5% of crap What about asbestos and brown fields? Why does HHS and the state continue to favor high

tech medicine over primary care? What is the CBA?

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What are areas where CBA can have adverse effects?

Do the costs and benefits always fall on the same group?

How does the diffuse and long term nature of benefits complicate CBA?

Should we use CBA for health regulations?

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Acronyms

OMB - Office of Management and Budget OIRA - Office of Information and Regulatory

Affairs

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Executive Order 12866

OIRA must review rules that have an impact of more than 100M aggregate or substantial impact on a segment of the economy or any thing else.

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The Regulatory Philosophy

Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people. In deciding whether and how to regulate, agencies should assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating.

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CBA under 12866

Costs and benefits shall be understood to include both quantifiable measures (to the fullest extent that these can be usefully estimated) and qualitative measures of costs and benefits that are difficult to quantify, but nevertheless essential to consider.

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Choosing Among Alternatives

Further, in choosing among alternative regulatory approaches, agencies should select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity), unless a statute requires another regulatory approach.

Pretty simple? :-)

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What must the agency provide OIRA - I

An assessment, including the underlying analysis, of benefits anticipated from the regulatory action (such as, but not limited to, the promotion of the efficient functioning of the economy and private markets, the enhancement of health and safety, the protection of the natural environment, and the elimination or reduction of discrimination or bias) together with, to the extent feasible, a quantification of those benefits;

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What must the agency provide OIRA - II

An assessment, including the underlying analysis, of costs anticipated from the regulatory action (such as, but not limited to, the direct cost both to the government in administering the regulation and to businesses and others in complying with the regulation, and any adverse effects on the efficient functioning of the economy, private markets (including productivity, employment, and competitiveness), health, safety, and the natural environment), together with, to the extent feasible, a quantification of those costs;

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What must the agency provide OIRA - III

An assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable nonregulatory actions), and an explanation why the planned regulatory action is preferable to the identified potential alternatives.

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12866 and Rulemaking

What if the statute says no CBA - can the president impose it anyway?

Why is there a special provision for analyzing impact on small businesses?

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Other Statutory Requirements

National Environmental Policy Act imposes requirements if the rule affects the environment

Regulatory Flexibility Act - small business Only direct effect Rules on small truck standards might affect small

business owners, but since it is directed at manufacturers, small business owners do not have standing

Paperwork Reduction act - every rule that requires reporting must be reviewed CDC newsletter cannot ask for reader feedback

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Congressional Review

Most rules, including those exempt from notice and comment, must be reported to Congress, which has 60 days to review them There is a provision for emergency rule

What can Congress do if it does not like the rule? When is this likely to happen? What about independent agencies?

Why does this law not violate separation of powers?

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Information Quality Act

requires OMB to adopt guidelines ensuring and maximizing the quality, objectivity, utility, and integrity of information (including statistical information) disseminated by Federal agencies

Why is this a redundant requirement? What could be the purpose of this requirement?

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Unfunded Mandates

What is an unfunded mandate? How is this stealth regulatory reform? Unfunded Mandates Act of 1995 - Agency must

do a CBA if the costs exceed 100M What would be the impact of banning unfunded

mandates? What are the types and impact of unfunded

mandates on public schools? Oregon's answer in land use

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What Are The Potential Effects On Agencies of These Mandates?

Who benefits? Who loses? What is the financial impact? Remember the rules:

Cost effective Effective regulation Due process and fairness to regulated parties

Pick two