CHAPTER 6 FEDERAL AGENCY RULEMAKING AND ADJUDICATIONS
| Jurisdiction | United States |
FEDERAL AGENCY RULEMAKING AND ADJUDICATIONS
Hogan Lovells
Denver, CO
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ELIZABETH H. (LIZ) TITUS practices in Hogan Lovells US LLP's Denver, Colorado, office. She represents clients in the energy and natural resources industries, including mining companies, oil and gas producers, and midstream companies, on a diverse variety of matters. She represents clients with operations on both private and public lands and provides advice regarding commercial issues, surface use, permitting requirements, and regulatory compliance. Liz has represented clients in regulatory enforcement actions before various federal and state agencies, including the Interior Board of Land Appeals (IBLA), the Federal Mine Safety and Health Review Commission (FMSHRC), Colorado Minded Land Reclamation Board (MLRB), the Colorado Oil Gas Conservation Commission (COGCC), and the Occupational Safety and Health Review Commission (OSHRC). Liz represents energy clients in both state and federal court in commercial disputes and in class actions. Liz also advises clients on the compliance with the National Environmental Policy Act (NEPA), National Historic Preservation Act (NHPA), Mine Safety and Health Act (MSHA), and Surface Mining Control and Reclamation Act (SMCRA).
Introduction
The Administrative Procedure Act (APA) describes the type of actions that an administrative agency may take, which fall into two distinct categories – rulemaking and adjudication.1 And, both rulemaking and adjudication are subject to judicial review by the federal courts.2 This paper provides an overview of the administrative rulemaking and adjudication process and procedure and discusses the avenues to obtain judicial review of those actions.
I. Rulemaking
A. Rules Defined.
The APA describes rules as 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." While this definition is somewhat opaque, typically, agency rules are forward-looking pronouncements that are intended to address a particular program, legislative mandate, or class of circumstances that are broadly applicable.3 There are various types of rules including legislative rules, interpretive rules, procedural rules, and general statements of policy. This paper will first discuss the process for the creation and implementation of legislative rules, which, once finalized, have the force and effect of law,4 and will then address new requirements for agency policy statements and guidance.
B. Legislative Rules: Informal vs. Formal Rulemaking
Legislative rules may be promulgated in two ways – through either informal or formal rule making. Informal or "notice and comment" rulemaking is the method that agencies use most frequently and will be discussed in detail below. Formal rulemaking is rare and only occurs only when an agency is required by statute to promulgate rules "on the record after the opportunity for an agency hearing."5
The APA requires that an agency provide interested persons with notice of a new rule and the opportunity for those persons to submit comments, objections, and alternatives. These requirements apply to new rules and the amendment or repeal of existing rules. Accordingly,
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notice and comment rulemaking generally consists of three parts: (1) publication in the Federal Register of a notice of proposed rulemaking, (2) an opportunity for the public to provide comments, and (3) publication of the final rules with responses to the comments and a statement basis and purpose.6
C. Notice and Comment Rulemaking
The APA requirements for informal, notice and comment rulemaking are expressed in 5 USC § 553(b) and (c). Section 553(b) requires that the notice provide three things: (1) the "time, place, and nature of public rule making 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."7
With regard to the comment proportion, the APA simply requires that:
the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose. 8
From these statutory requirements, federal agencies have developed a relatively straightforward process for the promulgation of legislative rules.
1. Getting Started – Authority, Initiation of Rulemaking, and Notice
Ultimately an agency's authority to engage in rulemaking flows from Congressional action – i.e. Congress passes legislation that either explicitly or implicitly requires an agency to engage in rulemaking. An agency may also commence rulemaking on its own initiative in order to address a particular issue, implement a new policy, or to update existing rules. An interested person may also petition "for the issuance, amendment or repeal of a rule."9 However, all of these actions must fall within the agency's statutory authority to act.
Before an agency publishes a notice of proposed rulemaking, sometimes agencies will publish an advance notice of proposed rulemaking. This process is technically outside of the process required under the APA and, thus, arguably allows the agency additional flexibility and the opportunity to receive input before it publishes a proposed rule. Through this process, for
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example, an agency may solicit input from industry stakeholders and local communities before publishing a proposed rule.
The rulemaking process formally commences when the agency publishes the notice of proposed rulemaking in the Federal Register, which includes a preamble that identifies the authority from which the agency is taking action, a draft of the proposed rule (or a "description of the subject and issues involved,") and instructions for public comment.10 The preamble will also include various economic and other analyses to demonstrate that the agency undertook the required consideration of the economic, social, environmental, and governmental impacts of the proposed rule.
2. Public Comment
The Notice of Proposed Rulemaking will also make clear the period for public comment. The APA does not prescribe a particular amount of time for public comment. Typically, federal agencies will usually provide a minimum 30-day public comment period. In the case of a complex rulemaking, the period for comments can extend to 60 days or more.
Although an agency may hold a public hearing to gather public comment, most often written comments are solicited and considered. All comments received on the proposed rule are included in the record. As described below, if the rule is later challenged, a court will review the record to determine if the agency acted within its authority. Moreover, failure to submit comments could preclude a request for judicial review of the rule as it may be viewed by the court as failure to exhaust administrative remedies.11
3. Finalizing the Rule
After the close of the comment period, the agency begins it consideration of the comments. The APA does not require that the agency act to finalize the rule within any certain amount of time and this process may take a number of weeks, months, or even years. The APA does, however, require that the agency provide responses to the comments it receives in the preamble of the final rule. In the response to comments, the agency may finalize the rule without changes, make certain modifications, or even forgo the rule entirely. If changes are made to the rule, the agency must consider whether those amendments require additional notice and comment. An agency is not required to reissue notice and comment for every alteration.12 The questions the agency must consider in this circumstance are whether the final rule is a "logical outgrowth of the proposed rule" and whether "interested parties could have anticipated the final
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rulemaking from the draft."13 Lastly, the APA provides that final rules are not effective until 30 days after their publication in the Federal Register.14
D. Exceptions to Notice and Comment Rule Making
Agencies regularly take actions that have rule-like qualities that are exempt from notice and comment rulemaking. For example, agencies publish and update manuals, handbooks, memoranda, and other guidance documents that provide instructions to agency officials administering various programs. And, in doing so, do not often alert the public or provide insight into the policy making process. This is because the APA provides that certain types of guidance are excepted from the notice and comment process. Given the burden and time-intensive process of notice and comment rulemaking, agencies often issue this guidance under the exceptions to process under the APA.
Section 553(b)(3)(A) exempts "interpretive rules, general statements of policy [and] rules of agency organization, procedure and practice" from notice and comment requirements. Interpretive rules and statement of policy are rules designed to explain an agency's construction of the statutes and rules that it administers.15 These rules, however, do not have the "force and effect of law" and are not accorded that weight in the adjudicatory process."16 These rules can become effective immediately upon their publication in the Federal Register.17 Accordingly, it is significantly less burdensome on an agency to issue these types of rules. And, not surprisingly, courts are frequently asked to determine whether these types of rules, in their substance, fit into an exempt category or whether these are actually legislative...
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