DEMOCRATIZING RULE DEVELOPMENT.

• Author: Sant'ambrogio, Michael

ABSTRACT

Agencies make many of their most important decisions in rulemaking well before the publication of a Notice of Proposed Rulemaking (NPRM), when they set their regulatory agendas and develop proposals for public comment. Agencies' need for information from outside parties and openness to alternative courses of action are also generally at their greatest during these earlier stages of the rulemaking process. Yet regulatory agenda setting and rule development have received virtually no scholarly attention. The literature generally treats what happens before publication of the NPRM as a "black box" and suggests that agenda setting and rule development are primarily influenced by political considerations and pressure from well-organized groups. Other interested stakeholders, including regulatory beneficiaries, smaller regulated entities, state, local, and tribal governments, unaffiliated experts, individuals with situated knowledge of the regulatory issues, and members of the general public, are routinely absent.

While there is undoubtedly much truth to this understanding, a recent study we conducted for the Administrative Conference of the United States unearthed significant efforts by numerous federal agencies to engage the public long before the publication of an NPRM. The existing efforts, however, tend to be relatively unstructured, unsystematic, and ad hoc. Moreover, many opportunities for public engagement are voluntary and self-selecting, which do little to overcome the barriers to participation by traditionally absent stakeholders. Rule development thus warrants more systematic focus and attention to ensure that agencies fully engage all relevant stakeholders in each rulemaking in which they have relevant knowledge, experience, or views--thereby promoting the democratic aspirations of regulation.

This Article lays the theoretical and practical foundation for more fully democratizing rule development by envisioning what a robust institutional commitment to meaningful public engagement in agenda setting and rule development would entail and developing a structural framework for facilitating quality participation by traditionally absent stakeholders during these crucial early stages of rulemaking. Democratizing rule development would not only improve the quality and legitimacy of agency rules, it could also help to build a culture of civic participation to address the ailing health of our American democracy.

TABLE OF CONTENTS INTRODUCTION I. The Role of Public Engagement in Rulemaking II. The Black Box of Rule Development A. The Importance of Agenda Setting and Rule Development B. Limited Knowledge of Public Engagement Pre-NPRM C. Obstacles to Enhancing Public Participation in Regulatory Governance III. ACUS Study on Public Engagement in Rulemaking A. Existing Tools for Early Public Engagement B. Federal Agencies Utilize Many of These Tools C. Challenges and Successes D. Public Engagement with Rule Development Is Unstructured and Ad Hoc IV. Democratizing Rule Development A. Opening Up and Democratizing the Black Box 1. Institutionalizing Planning for Public Engagement 2. Developing and Deploying Public Engagement Expertise 3. Designating Resources for Public Engagement Efforts 4. Identifying Absent Stakeholders and Information 5. Conducting Targeted Outreach 6. Creating Meaningful Opportunities for Novices 7. Providing Public Interest Representation B. Benefits of Democratizing Rule Development 1. More Democratic than Alternative Models 2. More Timely and Useful Information 3. Supplementing Notice and Comment and Improving Judicial Review 4. Building a Culture of Civic Participation CONCLUSION INTRODUCTION

Public engagement with rulemaking enhances both the effectiveness and democratic legitimacy of policymaking by federal regulatory agencies. (1) While agencies possess substantial expertise, agency officials are not omniscient. They frequently need information from regulated industries, regulatory beneficiaries, unaffiliated experts, and citizens with situated knowledge of the field to fully understand regulatory problems and potential solutions, including their attendant costs and benefits. (2) The public may identify problems the agency has not seen, illuminate direct and collateral effects, propose solutions the agency has not considered, and identify unintended consequences of certain actions. Potential regulatory beneficiaries have first-hand knowledge about the problems agencies seek to address and the likely impact of potential solutions. (3) Regulated entities have information about the workability and costs of different proposals, collateral consequences, and the likelihood of achieving compliance. (4) The public may also clarify ambiguities that would undermine the agency's goals due to confusion regarding what a rule would require.

Public engagement also enhances the democratic legitimacy and accountability of federal agencies and the regulations they promulgate. (5) Agencies exercise immense policy-making authority without direct electoral checks. (6) Requiring agencies to consider and respond to public comments in a reasoned fashion improves the democratic legitimacy and accountability of agency action from a variety of theoretical views. Indeed, the democratic character of the notice-and-comment process established by the Administrative Procedure Act (APA) was one of the justifications for the turn from case-by-case adjudication to informal rulemaking as the preferred means of implementing policy during the post-war period. (7) The APA requires federal agencies to publish their proposals and give any interested member of the public the opportunity to comment with "data, views, or arguments." (8) Agencies are legally obligated to consider these comments and address salient issues raised by them in a reasoned fashion. (9)

Regulatory reformers seeking to enhance public participation in rulemaking have focused their efforts on broadening "the public" that participates in the notice-and-comment process. Although formally quite open and democratic, in practice well-organized groups of sophisticated stakeholders often dominate public participation in notice and comment. (10) While public interest organizations representing regulatory beneficiaries also participate, regulated entities and business groups tend to participate at significantly higher rates and have a disproportionate influence on the process. Typically absent, however, are most regulatory beneficiaries, smaller regulated entities, state, local, and tribal governments, unaffiliated experts, stakeholders with situated knowledge of the regulatory issues, and the general public. Moreover, on the rare occasions when agencies do receive large numbers of public comments, they tend to be the product of orchestrated campaigns by well-organized interest groups, provide largely duplicative information about pre-political preferences, and are of marginal value to agency rule writers. (11)

Much effort has been devoted to tackling these problems and enhancing the accessibility and democratic legitimacy of notice-and-comment rulemaking. Most recently, these efforts have focused on moving the legislative rulemaking process online and using social media and other web-based tools to encourage participation by a broader portion of the public. (12) There have even been some innovative efforts to target absent stakeholders with information or experience germane to particular rulemakings, foster deliberation among diverse interests concerning agencies' proposals, and educate rulemaking novices on how to participate effectively in the notice-and-comment process. (13)

Yet agencies make many of their most important decisions in rulemaking well before the publication of a Notice of Proposed Rulemaking (NPRM). Long before agencies publish their proposals, they set their regulatory agendas and decide which issues or problems they will and will not address. Then, during rule development, agencies determine which policy alternatives receive serious consideration and draft the precise details (and resulting trade-offs) of their proposed rules. These early decisions frame the issues that will be addressed during notice and comment and strongly influence the contents of promulgated regulations. (14) Indeed, there is a widespread perception that agencies are unwilling to make major changes to their policies once they have published an NPRM. (15) This may be a natural result of path dependence whereby agency officials who have already devoted substantial thought and effort to a problem are reluctant to reverse or dramatically change course relatively late in the day, (16) and it is a tendency that is likely reinforced by certain aspects of judicial and political review of agency rulemaking. (17)

Despite their importance, regulatory agenda setting and rule development have received virtually no scholarly attention to date. The literature generally treats what happens before publication of the NPRM as a "black box" and suggests that agenda setting and rule development are primarily influenced by political considerations and pressure from well-organized groups. To the extent this is true, agenda setting and rule development would reinforce and perhaps exacerbate the imbalances in participation that are evident in the notice-and-comment process. While efforts to improve notice and comment are therefore worthwhile, fully democratizing legislative rulemaking also requires enhancing public engagement with regulatory decision-making well before an NPRM.

This Article presents the first focused look at how federal agencies can enhance public engagement in agenda setting and rule development. Benefiting from unusual access provided by the Administrative Conference of the United States (ACUS), we spoke with dozens of agency officials involved in rulemaking and public engagement efforts across the administrative state. (18) This Article presents our findings...