Rulemaking
Part I
Uniformity



Rules set up a general framework that treats
all parties uniformly
Rules are the fairest way to make big
regulatory changes
If the agency does not have rules, it can
change enforcement policy from case to
case, and is also at the mercy of judges to
accept or reject agency standards
2
Adoption of National Standards


National standards can be adopted through
agency rules, harmonizing practice across
jurisdictions
 National building codes
 CDC guidelines on food sanitation
 Recommendations of the Advisory Committee
on Immunization Practices
LA and building codes
3
Agency Efficiency


While a rulemaking can be expensive and time
consuming, it can settle issues which might
otherwise have to be litigated in every
enforcement case
Rulemaking can also eliminate many hearings by
resolving factual questions
 In disability cases, rules can be used to
establish what constitutes a disability, rather
than making it as case by case determination.
4
Downside of Rulemaking




Trials can be more flexible in the individual cases
Rules can be so abstract or overbroad that they are
expensive or difficult to follow
 Like statutes
Adjudications are useful when you are not sure
what the rule should be and need more info and a
chance to experiment
Does not do away with the need for adjudications
5
Agency Oversight



You can control the outcome of rulemaking
much easier than that of adjudications
 Not Dependant on ALJs
 Why is this especially important in LA?
More input from across the agency
 Input from the public as well
Directly controlled by agency policy makers
6
Rulemaking Ossification


The courts and legislatures have increased the
burden on rulemaking, especially in states
 Rulemaking has gotten so complex and time
consuming it has lost some of its value
 Complicated by regulatory conflict and
incompetent agency practice
Rulemaking can go on for years
 What is the legal value of a proposed rule that has
not been finalized?
 The Medicare anti-kickback regulations were
delayed for years between the proposed rule and
the final rule
7
What is a Rule?
Definition of a Rule



APA 551(4)
 (4) 'rule' means 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 and includes the approval or prescription for the future
of rates, wages, corporate or financial structures or
reorganizations thereof, prices, facilities, appliances, services
or allowances therefor or of valuations, costs, or accounting,
or practices bearing on any of the foregoing;
Not a clear definition
Things that are not adjudications or licensing
9
Functional Definitions



Critical term is general applicability
Remember the standards for a hearing?
If you do not get a hearing, and there is no special
exception such as an emergency or national
security, it is probably a rule
10
LA Definition


6) "Rule" means each agency statement, guide, or requirement for
conduct or action, exclusive of those regulating only the internal
management of the agency and those purporting to adopt, increase, or
decrease any fees imposed on the affairs, actions, or persons regulated
by the agency, which has general applicability and the effect of
implementing or interpreting substantive law or policy, or which
prescribes the procedure or practice requirements of the agency.
"Rule" includes, but is not limited to, any provision for fines, prices or
penalties, the attainment or loss of preferential status, and the criteria or
qualifications for licensure or certification by an agency. A rule may be
of general applicability even though it may not apply to the entire state,
provided its form is general and it is capable of being applied to every
member of an identifiable class. The term includes the amendment or
repeal of an existing rule but does not include declaratory rulings or
orders or any fees.
11
How do you make a Rule?



Publish the proposed rule and what it is based on
for public comment
 The Federal Register and LA Register are where
rules are published first
Review and address public comments and publish
these along with any modifications in the rule
Codify the rule after it is effective
 Rules are Codified in Code of Federal
Regulation and the LA Administrative Code
12
Why Have Public Participation?





Public participation has great political benefit in broadening the
acceptability of the rules.
Public comments can identify technical and legal problems with
the rules
Publication of proposed rules allows politicians to become
involved to protect the interests of their constituents
Public participation limits executive power and makes it more
palatable to the courts to have agencies making laws
While the agency may take comments at hearings, it is usually
done in writing.
13
Exemptions to Notice and Comment
Requirements
Is notice and comment a constitutional
requirement?
Military and foreign affairs



Why exempt these?
Limiting the term of residence for Iranian
nationals after the hostage incident
 National security issues?
Extending asylum to persons subject to
reproductive restrictions in China
 Was this just an individual benefit or part of a
foreign policy?
15
Agency Procedures



Like the code of civil procedure
Does not change the substantive rights of the
parties
Does not change the regulated behavior, only the
process in agency procedures
16
Actions where Secrecy is Important



Wage and price controls
Bidding on contracts
Negotiations on land purchases and sales
17
Emergency Proceedings




Emergency Rules
 http://www.state.la.us/osr/osr.htm
Interim Final Rules
 Published and in effect, but will be modified after
comments are in.
Calculations and other non-discretionary rules
Technical corrections
 Can require notice and comment if the correction
causes a different result
18
Non-APA Requirements





APA is the default if there is no other statutory
guidance
National Environmental Policy Act imposes
requirements if the rule affects the environment
Regulatory Flexibility Act - small business
Executive Order 12866 - more $100M impact
The book calls these hybrid rulemaking, do no
confuse this with court imposed hybrid
rulemaking as in Vermont Yankee
19
Beginning Rule Making



Why was the court willing to order the agency to
make a rule in the Regulators?
Why do agencies often fail to follow
congressional direction to make rules?
What is a request for a rulemaking and what does
it force the agency to do?
20
553(b) - Exceptions to Notice
Requirements



1) Interpretative rules, general statements of
policy, and rules of agency organization,
procedure, and practice; and
2) Rules when the agency finds for good cause
that notice and public procedure are
impracticable, unnecessary, or contrary to the
public interest.
No notice means no comment under 553(c)
21
Exception 1 - Interpretative Rules


It is only explaining the law or providing
guidance for action
 Prosecution guidelines
 IRS audit guidelines
Since they do not change the law, they have
no legal effect
 Does that mean you can ignore them?
22
How do you know if it an Interpretive Rule
or a Legislative Rule?


Why would an agency want to use an interpretive
rule rather than a legislative rule?
 What is the risk to the agency if they do and the
court disagrees?
What is the benefit to the regulated parties of
interpretive rules?
 What if the agency is prevented from providing
guidance documents?
23
What is the Nature of the Enabling Act?


Very general laws
 Little effective guidance in the statute
 Makes any interpretative rule more likely to
been seen as a legislative rule
Very specific laws - like the ADA
 No room for legislative rules
 Everything is guidance
24
EPA Example - Wetlands



EPA makes a rule that states that the term “waters
of the United States” (which defines the
jurisdiction of EPA under the Clean Water Act)
includes wetlands that potentially provide habitat
to migratory birds.
Is this an interpretative rule or a legislative rule?
Can we tell just looking at the rule?
25
What Do We Need to Know?




Will the agency say that the rule is binding?
The substantial impact test
 How might this rule affect the buyers of
wetlands?
 Is this a substantial impact?
What is the agency's defense?
Is the substantial impact test circular?
26
The “Legally Binding” or “Force of Law”
Test




What is the enforcement test?
What do we need to know to tell whether the agency can
enforce the law without this rule?
 Is the agency required to define wetlands?
 Was the agency doing enforcement before this rule?
Under this test, is this an interpretative rule?
What if statute allows the agency to define toxic
substances that cannot be dumped into lakes?
 Would a list of these substances be legislative?
27
General Policy or Specific Requirements?


Remember, 553(b) does not require notice and comment
for general policy statements
Assume the statute says that in licensing actions, a
physician must reply to agency request for information in
a reasonable time.
 Would a requirement that this be in 7 days be a policy
statement or a rule?
 Why does the inclusion of specific factual information
undermine the claim that it is a general policy
statement?
28
How High do I Build the Fence?
Hoctor v. USDA, 82 F.3d 165 (7th Cir. 1996)


Statute requires the agency to adopt rules for the safe
housing of dangerous animals
 Agency uses notice and comment to promulgate a rule
requiring that reasonable precautions be taken to
prevent the escape of the animals
 Agency then issues guidance saying that a reasonable
precaution would be an 8 foot fence
Interpretation or legislation?
 How could the agency enforce the provision without
the height rule?
29
Junk in the Park: United States v.
Picciotto, 875 F.2d 345 (D.C. Cir. 1989)


Can the agency use notice and comment to
promulgate a legislative rule that says that the
agency can add other requirements in specific
situations without notice and comment?
 Why or why not?
What if the rule just says that nothing can be
brought to the park that would be disruptive or
impede public access?
30
Consistency, the Hobgoblin of
Interpretative Rules


What is the result if an interpretative rule is inconsistent
with a legislative rule?
 Using an interpretative rule to change a calculation
established by a rule
Some courts also find that an interpretative rule cannot
be changed with a subsequent interpretative rule, but can
only be modified by a legislative rule
 Why is logically inconsistent?
 This is not widespread in the courts
31
Other Factors


Publication in the FR
 Must interpretative rules be published in the
FR?
 What does failure to publish indicate?
 Does this make sense?
Is it important that the agency clearly label the
rule as interpretative?
32
Federal Mine Safety and Health Act
Example


Secretary has the statutory right to sue both the
mine owner and the mine operator for violations
of the Act.
Secretary publishes a policy statement explaining
that the agency can and will sue both of them for
infractions, depending on the nature of the
infraction.
 Does this require notice and comment?
 Why?
33
Corps of Engineers Example


Corps issues a guidance document saying that
one way to qualify for a wet lands development
certificate is to promise to restore 2X as much wet
land as you fill
 Does this need notice and comment?
 Why?
What if the Corps will only issue permits to people
who agree to this?
 How would you prove this?
34
Coercion: Chamber of Commerce v. U.S. Dept.
of Labor, 174 F.3d 206 (D.C. Cir. 1999)


DOL made a policy statement that it would reduce
inspections of workplaces that adopted an OSHA
suggested safety plan that exceeded federal
minimums
 Is this really voluntary?
 Does coercion make this a binding rule?
What about DOJ guidance that a corporate
compliance plan will count as mitigation under the
Sentencing Guidelines?
35
How does the Agency Treat the Rules?



Assume the agency says the statement is only an
enforcement guideline
What if the employees doing the enforcement
always follow the guideline?
 Does this change its legal status?
What position do these decisions on guidance put
the agency in when the regulated parties or the
public asks what the guidelines mean?
36
Can Interpretative Guidance be
Retroactive?




Why would be a problem if rules were retroactive?
Why does the ban on retroactive rules not apply
to interpretive rules?
If interpretive rules cannot change legal rights,
does retroactive really mean anything?
Could congress create an exception to the APA
and allow a retrospective rule?
37