Rulemaking for the Federal Student Loan Programs

1
Rulemaking for the Federal Student Loan Programs

• Barry W. Stevens
• Vice President and Counsel for Regulation and
  Legislation
• NCHELP

2
What We Will Cover

• I. Context 
• A. Rulemaking by Federal agencies
• 1. General
• 2. For Federal education programs
•   B. Negotiated rulemaking
• 1. General
• 2. For Federal education program

3
What We Will Cover (cont).

• II. Rulemaking for the Federal student loan
  programs
•   A. Current requirements
•   B. Implementation
•   1. 1999
•   2. 2000 and 2002
•   3. In the future

4
What We Will Cover (cont.)

• III. Tips on making the process work
•  IV. Discussion

5
Rulemaking by Federal Agencies

• Rulemaking v. Adjudication
•   Rulemaking regulates future conduct of
  persons through an agency statement that
  implements, interprets, or prescribes law or
  policy.
•    Adjudication determines past and present
  rights and liabilities.

6
Informal v. Formal rulemaking

• Informal rulemaking involves relatively minimal
  procedures .
• Formal rulemaking is required by statute to be
  on the record after opportunity for an agency
  hearing.

7
Informal rulemaking procedures

• Notice of Proposed Rulemaking (NPRM) published in
  Federal Register
• Opportunity for participation by interested
  persons
• Publication of final rule with basis and
  purpose
• 30-day delayed effective date

8
Rulemaking for Federal education programs

• EDs use of APA informal rulemaking is limited by
  agency-specific statutes
•   General Education Provisions Act (GEPA)
•   Department of Education Organization Act
  (DEOA)
•   Program- or subject matter-specific statutes,
  including Higher Education Act (HEA)

9
Examples of education-specific rulemaking
limitations

• Pucinski Amendment (1968)
• Richardson memorandum (1971)
• GEPA sec. 431 (1974)
• DEOA sec. 414(b) (1979)

10
Negotiated Rulemaking

• A brief history
•   State experimentation since early part of 20th
  century
•   60s and 70s rulemaking increasingly
  complex and contentious
• 1980 joint hearings by two Senate committees
  first bill to establish statutory reg-neg
  framework introduced

11

• 1982 Georgetown Law Journal article by Philip
  Harter first Administrative Conference of the
  United States recommendation for reg-neg
  procedures
• 80s use of reg-neg procedures by FAA, EPA,
  OSHA first reg-neg provisions for education
  programs enacted
• 1990 Negotiated Rulemaking Act of 1990 enacted

12
Negotiated Rulemaking Act of 1990 classic
reg-neg

• General
•   Procedures supplement those of APA.
• Procedures are discretionary.

13

• Convening
•   Agency evaluates need for a negotiating
  committee.
•   Agency may use outside convener to help
  assess feasibility, identify persons who would be
  significantly affected by rule, and identify
  issues of concern.

14
Committee membership

•   Agency publicizes its plan to form a
  negotiating committee.
•   Affected persons who believe their interests
  will not be effectively represented may apply or
  nominate others for membership.
• Agency decides.

15
Establishment of committee

• Agency may decide to form or not to form
  committee.
• Membership generally limited to 25 persons,
  including agency representative.

16
Negotiation

•   Committee seeks to reach consensus on a
  proposed rule.
•   Agency representative has the same rights and
  responsibilities as other members.
•   Committee may use an impartial facilitator.
•   Committee may adopt procedures for its
  negotiations.
•   At conclusion, committee sends agency a
  report, including any consensus-based proposed
  rule.

17
Negotiated rulemaking for Federal education
programs

• Early requirements
•   1988 demonstration reg-neg required for some
  Elementary and Secondary Education Act
  regulations
•   Late 80s two other limited reg-neg
  requirements enacted for certain education
  programs

18
Requirements for higher education programs

• Higher Education Amendments of 1992 regional
  meetings and reg-neg required for some student
  aid programs
• OBRA of 1993 Reg-neg required for second-year
  DL Program regulations and for recovery of excess
  GA reserves

19

• Higher Education Amendments of 1998 expanded
  public participation and reg-neg requirements for
  higher education programs
• Higher Education Relief Opportunities for
  Students (HEROS) Act of 2003 exempted from
  reg-neg Secretarial revisions of student aid
  requirements due to war or national emergency

20
Rulemaking for the Federal Student Loan Programs

• Rationale for enactment
• Process under 1992 statute generally
  well-received by participants
• Collaborative process enhances the understanding
  of all parties of the issues involved
• Need for more meaningful input into
  regulations by all types of program participants

21
Statutory requirements Sec. 492, HEA, enacted as
part of Higher Education Amendments of 1998

• Permanent, mandatory negotiation of all Title
  IV proposed rules unless impracticable,
  unnecessary, or contrary to the public interest.
• Department must provide for discussion and
  exchange of information with affected parties
  before developing the proposed rule.

22

• Non-Federal negotiators must be chosen from among
  nominees of affected parties.
• Consensus-based proposed rules must be
  published unless negotiations are reopened or
  written explanation is provided to negotiating
  committee.
• Clear and reliable record of agreements
  reached must be kept.

23

• All generally-applicable requirements for final
  regulations apply.
• Full rulemaking process must be completed within
  one year of enactment of provision being
  implemented

24
Implementation -- 1999

• Public input solicited through Federal Register
  notice and three regional hearings.
• Outside facilitators employed to manage meetings,
  record agreements, and promote negotiations
  selected by agency and retained at committees
  discretion.
• Protocols negotiated at organizational meeting
  prior to negotiations.
• www.ed.gov/policy/highered/reg/hearulemaking/1999/
  index.html

25
Outcomes

• Four negotiating committees met for five sessions
  each.
• Eleven major NPRMs published.
• Full consensus reached on all NPRMs except on two
  minor issues.
• Final rules published within statutory timeframe.
• Relatively muted public comment.
• One lawsuit filed challenging provision of final
  rule.

26
Implementation -- 2000 and 2002

• 2000
• Process fundamentally unchanged.
• Five NPRMs published two with full consensus,
  two with partial consensus one with no
  consensus.

27

• 2002
• Deregulation initiative. Process revised to
  limit size of committees and duration of
  negotiations.
• Two NPRMs published one with full consensus one
  without.

28
Implementation in the future

• One-ED review of reg-neg business process
• Reauthorization implications

29
Tips on making the process work

• A. Providing advice and recommendations
• B. Nominating participants
• C. Setting up internal processes
•   1. Document review
•   2. Briefing the vertical hierarchy
•   3. Negotiating strategy

30

• D. Substantive preparation
• E. Staying current 
• F. Using the facilitators
• G. Working off-line
• H. Trusting the process
• 1. Bargaining
• 2. Patience

31
Questions and Discussion _______
32
Barry W. StevensVice President and Counsel for
Regulation and LegislationNCHELPwww.nchelp.org
bwstevens_at_nchelp.org202-822-2106