Rulemaking

1
Rulemaking

• Part II

2
Procedural Rules

• Procedural rules are exempt from notice and
  comment
• The form of an application for benefits is
  procedural
• The facts that the claimant has to establish to
  get the benefits are substantive
• A procedural rule can become substantive if the
  change in procedure has a substantial impact on
  the regulated parties.
• Procedural change for submitting bills by home
  health providers imposed a huge logistic and
  financial cost.

3
OSHA Guidance for Targeting and Carrying out
Inspections

• Being inspected does have a substantial impact on
  the employer
• Does this guidance document require notice and
  comment?
• Does it change the legal rights of the employers?

4
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

5
Why avoid formal rulemaking?

• The peanut hearings (FDA must do formal
  rulemaking in some situations)
• 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?

6
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?

7
The Procedures of Notice-and-Comment Rulemaking
8
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. . . .

9
Notice of the Proposed Rule Chocolate
Manufacturers Assn v. Block

• What did Congress tell the agency to do that
  resulted in these regs?
• WIC
• What did the proposed rule address?
• Cereal
• What about fruit juice?
• How was the final rule different from the
  proposed rule?

10
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?

11
Limits on Logical Outgrowth - Arizona Public
Service Co. v. E.P.A.

• What did the EPA propose that Indian Tribes be
  allowed to do 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?

12
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?

13
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?

14
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.

15
Negotiated Rulemaking

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

16
Ex Parte Communications
17
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?

18
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?

19
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.

20
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?

21
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?

22
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.

23
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?

24
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.