Rulemaking
Part III
Procedural Rules
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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.
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Substantial Impact Test for Procedural
Rules
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The Department of Health and Human Services
changed the method by which home health
providers could obtain reimbursement for
expenses under the Medicare Program. In
particular it required that they submit their
requests in a new format and to regional
intermediaries, rather than to HHS directly.
How did plaintiffs argue that this was a legislative
rule, rather than a procedural rule?
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Inspection or Prosecution Guidelines
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OSHA adopts a plan for deciding which employers
to inspect.
A selected employer contests the rule, saying that
OSHA inspections are expensive and time
consuming, thus this has a substantial impact.
Is this a successful argument?
 Why, or why not?
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‘‘Encoding a Substantive Value
Judgment’’ Test.
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The D.C. Circuit uses what it described as asking
whether an agency’s rule ‘‘encodes a substantive
value judgment or puts a stamp of approval or
disapproval on a given type of behavior.’’
 Is this really a different standard than substantial
effect?
 Does this look like the standard for guidelines,
such as in the Hoctor case?
Limited to the DC Cir. and does not seem to make
much difference.
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Notice and Public Procedures Are
Impracticable, Unnecessary, or Contrary
to the Public Interest
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Actions where Secrecy is Important
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Wage and price controls
Bidding on contracts
Negotiations on land purchases and sales
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Emergency Proceedings
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Emergency Rules
 http://doa.louisiana.gov/osr/emr/emr.htm
 Misused in LA
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
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What is Formal Rulemaking?
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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?
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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?
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When is Formal Rulemaking Required?
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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?
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The Procedures of Notice-and-Comment
Rulemaking
Continued from the first and second
classes
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The Logical Outgrowth Test: Chocolate
Manufacturers Ass’n v. Block
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What is WIC?
What evil substance in what food did the
proposed rules propose to regulate?
How was the final rule different from the proposed
rule?
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The Notice Problem
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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 if a new proposed rule
includes them?
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Limits on Logical Outgrowth - Arizona
Public Service Co. v. E.P.A.
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What did the EPA propose that Indian Tribes be
allowed to do that states were doing?
State plans are subject to judicial review
 Why did the tribes object to this in comments?
How was the rule changed?
What was the claim by plaintiffs?
How did the court analyze the problem?
 Why shouldn't have been a surprise?
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Procedures for Rules that do not need
Notice and Comment
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http://biotech.law.lsu.edu/Courses/study_aids/adl
aw/552_update.HTM
What if the agency does not publish the document
in the FR, but puts it on the Internet?
 Except to the extent that a person has actual
and timely notice of the terms thereof...
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What about Technical Information
Underlying the Rule? (not in book)
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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 hide technical information.
Why is this a big deal in environmental regs?
What are the potential downsides of this policy?
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Additions to the Published Record (not in
book)
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Rybachek v EPA
 EPA added 6000 pages of supporting info when
responding to comments
 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
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What is this?
Why is often used in environmental rulemaking?
What are the advantages?
What are the public participation issues?
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