CHAPTER 7 CONTROL OF INFORMAL AGENCY RULEMAKING BY CONGRESS AND THE PRESIDENT
| Jurisdiction | United States |
(Nov 1981)
CONTROL OF INFORMAL AGENCY RULEMAKING BY CONGRESS AND THE PRESIDENT
Cavington & Burling
Washington, D.C.
It has become a commonplace to observe that informal rulemaking is the way that the federal regulatory agencies conduct their most important business.1 The reasons are not hard to identify. For the agency, such rulemaking has the advantage of efficiency and relative simplicity. A single rule of general application disposes of innumerable individual cases. Moreover, the notice-and-comment procedures provided under the Administrative Procedure Act2 institutionalize the regulatory trial balloon; they allow the agency to broach an idea and learn pretty well how it will be received, without necessarily embracing it. Best of all perhaps, from the standpoint of the administrator, he, rather than the participants' lawyers, controls the pace of things. Thus, whether or not one agrees with Professor Davis's view of informal rulemaking as a consummate achievement of modern political science3 , it is pretty clear that such rulemaking is in the ascendency.
It is no coincidence that even while rulemakings have taken on greater importance as a means of making policy, both the White House and the Congress have sought increasingly to influence, or even to control, the outcome of these proceedings. Regulatory rulemaking is, to paraphrase the expression, simply too important to be left to rulemakers.
There are, of course, the traditional means by which the legislators and Presidents have tried to steer the agencies' actions. Congressional committees hold both "oversight" and "budgetary" hearings at which the agencies are called upon to account for their actions in past proceedings and, often told in no uncertain terms how to dispose of pending ones.4 The President, for his part, can exercise his appointive powers to be sure that the regulators share his general political outlook. And he can make his views known directly to the agency on matters that he deems especially important.5
These indirect forms of influence, however, have apparently not sufficed, and both the President and the Congress have sought out blunter methods. One instrument more and more favored by Congress for this purpose is the "legislative veto". And President Reagan has now required in Executive Order No. 122916 that, among other things, certain agency rulemaking actions be reviewed beforehand by the
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Office of Management and Budget. My purpose here is to consider these efforts and challenges to their constitutional validity, as well as some of their practical and procedural implications for those participating in rulemaking proceedings.
I. Departures From APA Procedure
A. Section 553
It is probably best to start with informal rule-making in its "pure" APA form, as set out in 5 U.S.C. § 553. Unless the substantive regulatory statute provides otherwise, all rulemakings not requiring an on-the-record hearing, whether conducted by an agency that Congress has designated as independent, or by an agency within the executive branch, are governed by Section 553. For lawyers accustomed to the procedural complexities of judicial or administrative evidentiary proceedings, informal rulemaking under Section 553 is a paradigm of simplicity. The agency formulates, and publishes in the Federal Register, a rulemaking proposal, usually entailing an amendment to the Code of Federal Regulations. The proposal is accompanied by an explanation of the agency's reasons for advancing it. The agency sets a specified period in which interested persons may submit written comments and, perhaps, reply comments; while there is sometimes an opportunity for the submission of such comments in oral form at a public hearing, there is no sworn testimony, no submission of evidence as such, and no cross-examination. The agency deliberates and issues a decision, including at least a brief statement of its reasoning for either adopting or rejecting the main arguments advanced in the comments. Unless there is a compelling need for more immediate effectuation, the new or modified rule cannot take effect less than 30 days after its adoption, during which time those aggrieved may seek a stay from the agency and, if unsuccessful there, in the courts.
On review, the standards of 5 U.S.C. § 706 apply. The agency's action will be examined to determine whether it was adopted under the procedures specified in Section 553, whether it lies within the authority delegated by Congress, and whether it is not "arbitrary and capricious", that is, either lacking an adequately reasoned explanation, or relying on facts not supported in the record. For the purposes of determining whether the decision is arbitrary
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and capricious, the courts will look to the agency's own explanation, as stated when the rule on review is adopted.7 The judges must take on its face the regulators' explanation of why they acted as they did.
In general terms, then, Section 553 puts the agency in the position of a trial-level court whose actions may be appealed "vertically," on legal grounds, to an appellate court. In the presence of the straightforward ground rules set out by Section 553, the lawyer's craft lies almost entirely in fashioning substantive arguments. Only rarely will serious procedural questions arise.
B. Legislative Veto
The "legislative veto" as applied to rulemaking injects an element of "horizontal" review on other than purely legal grounds and thus complicates the process I have just described. The term refers to procedures set forth in certain statutes by which Congress, or either house, or even a committee of either house is empowered to override action taken by an independent administrative agency, or by an agency or officer within the executive branch. Typically, a legislative veto provision will require that, before taking effect, the proposed action be submitted to the Congress for review; if, within a specified period of time, either house (or both, or a committee, as the statute may provide) adopts a resolution of disapproval, the action will be nullified. Legislative veto provisions often apply to actions other than rulemakings. The statute under which Congress may review, and prohibit, certain proposed arms sales to foreign countries is an example that has recently attracted public attention.8
There is nothing particularly novel about the legislative veto. A veto provision appeared in a 1932 executive reorganization act.9 Such provisions have, however, become particularly common in the past few years.10
There are some fairly compelling arguments as to why legislative veto provisions in regulatory rulemaking constitute poor policy. President Carter, for example, pointed out that Congress lacks the time to give proper scrutiny to a complex technical regulation; that legislative vetoes further slow down the regulating process; that they breed uncertainty as to ultimate outcome; that they may lead to deadlock where action of some sort is agreed by all to be
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necessary; and that the very possibility of a veto may induce regulators to forego the advantages of rulemaking in favor of case-by-case adjudication, where the veto does not apply.11 More broadly, a veto provision in the regulatory context may reflect a lack of time or lack of grounding in the subject matter that prevents Congress from articulating specific standards in delegating authority to an agency or officer. Instead, the Congress indulges in a broad, often vague, delegation, telling the agency, in effect, to "do something" about a perceived problem, and, not knowing what the agency will actually do, reserves to itself the power to say that whatever was done was wrong.
Objections to the legislative veto have gone beyond matters of policy. Presidents have consistently taken the position that the veto as applied to "ongoing substantive programs" is unconstitutional.12 The arguments against the validity of the veto will vary somewhat with the nature of the particular veto provision at issue. Generally, however, opponents of the veto argue that it bridges impermissibly the separation of powers required by the Constitution. In vetoing an agency action, it is said, the Congress undertakes executive or judicial powers reserved to the other branches. Moreover, to the extent that it is performance of a legislative function, the veto improperly evades the Presidential veto, and, in the case of the one-house veto, also conflicts with bicameralism; such at least is the argument.
The contrary contention is that Congress has the power to delegate authority to the agencies unconditionally and that it can accordingly delegate the lesser power to act upon a condition, including the condition that Congress itself, or one of its constituent bodies, not disapprove. The presidential veto and bicameral requirements are fully met, the claim goes, when the legislation providing for the veto is passed by both houses and referred to the President.
Until December, 1980, no court had accepted the view that the legislative veto is, in any particular form, unconstitutional. In fact, although there have been separate or dissenting opinions addressing the question,13 no decision had directly adjudicated the validity of a veto provision. In Chadha v. Immigration and Naturalization Service,14 however, the Ninth Circuit held that the specific veto provision before it, allowing either house to overrule the admission by the Attorney General of certain individual
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aliens into the United States as permanent residents, was in conflict with the doctrine of separation of powers, and thus unconstitutional. Last month, the Supreme Court granted certiorari.
Moreover, a challenge to the constitutionality of the legislative veto in the specific context of Section 553 rulemaking is pending in the Court of Appeals for the...
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