Rulemaking: How Government Agencies Write Law and Make Policy.

• Author: Croley, Steven P.

INTRODUCTION

In Whit Stillman's recent film, Barcelona, the buffoonish and not-so-well-read naval attache, Fred, questions his shy-but-sophisticated cousin, Ted, about several review essays he had just read, triggering the following amusing exchange:

Fred: Maybe you can clarify something for me. Since I've been waiting for the fleet, I've read a lot.

Ted: Really?

Fred: And one of the things that keeps cropping up is this about "subtext." Plays and those songs -- they all have subtext, which I take to mean a hidden message or import of some kind. So "subtext" we know. But what do you call the message or meaning that's right there on the surface, completely open and obvious? They never talk about that. What do you call what's above the subtext?

Ted: .... The text.

Fred: Okay. That's right! But they never talk about that.(1)

Rulemaking, by Neil Kerwin,(2) offers much text worth talking about. Indeed, Rulemaking, billed largely as an introduction to a crucial yet underappreciated facet of lawmaking, intended for students and practitioners of public administration, political science, and public policy (pp. xi-xii) -- Kerwin could have justifiably added law to the list -- is mostly text; most of its message is "right there on the surface." By design, the book is part primer, part literature review, part research project, and part call to scholarly arms. Though not without its imperfections, it succeeds on all of these fronts: Rulemaking is not only a helpful introduction to the "hows" (note its subtitle) and "whys" of rulemaking, but also a significant contribution to the scholarly literature on rulemaking. That contribution is not the only reason administrative law scholars should resist any temptation to pass over an introductory book published by a nonacademic press, however, for Rulemaking's subtext reveals something about what the most fruitful future work in the field might look like.

1. SOME CONTEXT: RULEMAKING

   Rulemaking by federal administrative agencies is one of the most important lawmaking functions of the U.S. government. Kerwin thus rightly dispenses with tentativeness:

   Between Congress and the people it represents and the goals we seek to achieve when a law is written stands a crucial intermediate process. We have come to rely on rulemaking to an increasing degree to define the substance of public programs. It determines, to a very large extent, the specific legal obligations we bear as a society.(3)

   As Kerwin explains, rulemaking is the most important device federal agencies use to specify, clarify, and refine Congress's work-product -- in short, to finish the task of legislating. This is true not only for especially broad, open-ended pieces of legislation. Even when Congress speaks at considerable length and with considerable specificity, agencies must engage in substantial statutory gap-filling. For example, as Kerwin notes, the Clean Air Act Amendments of 1990(4) required at least several hundred new regulations (by the Environmental Protection Agency's (EPA) count) before it could become operational (p. 2). Measured qualitatively as well, agency rules constitute a genus of public law of the highest importance.(5) Accordingly, Kerwin seeks, above all else, to generate increased attention to this dimension of American governance(6) -- to an institution Kenneth Culp Davis famously described as "one of the greatest inventions of modern government."(7) But first, just what is that invention?

   Rulemaking takes several forms. According to section 553 of the Administrative Procedure Act of 1946 ("APA" or "Act")(8) -- an act that serves as the "constitution" of the administrative state(9) -- agencies authorized by statute to issue "legislative"(10) rules without first providing a hearing on a record can do so simply by following three basic steps. First, the agency must apprise potentially interested parties that it is contemplating adopting some proposed rule. Second, the agency must allow those parties an opportunity to respond to the agency's proposed rule. Third, after receiving any such responses and generating whatever additional information the agency thinks necessary to consider, the agency must promulgate, at least thirty days before the rule is to take effect, a "concise general statement" explaining why the rule took the final form it did.(11) Thus do agencies engage in "ordinary" or "informal" or "notice-and-comment" rulemaking.

   Ordinary rulemaking is distinguished first from "formal" rulemaking. The words "hearing" and "record" (more precisely, the legal equivalents of these terms(12)) in an agency's statute triggers formal rulemaking.(13) In the formal rulemaking mode -- employed only for limited categories of agency decisions, such as ratemaking and decisions dealing with food additives -- an agency must conduct a hearing during which parties may provide testimony, present evidence taken on a record, and cross-examine adverse witnesses.(14) If the agency deems that prejudice will not result from the written submission of evidence, it can conduct formal rulemaking, in effect, through the mail,(15) in which case formal rulemaking partially resembles informal rulemaking. Even here, however, evidence is recorded, and all other requirements of formal rulemaking still apply.

   As Kerwin explains, agencies' rulemaking obligations -- whether in the formal or informal mode -- do not always appear on the face of the virtually unamended APA.(16) First, some of those obligations have been identified by federal courts in the course of interpreting the Act's provisions. For example, courts have held that section 553's "notice" must explain the general factual or other bases on which a proposed rule rests, in order to give potentially interested parties a fair opportunity to respond with comments, and furthermore that 553's "concise general statement" cannot be so concise or general that courts cannot effectively review an agency's final rule.(17)

   More important, the other two branches have supplemented agencies' rulemaking obligations by subsequent legislation and executive order. Sometimes these supplemental requirements are directed to particular agencies, as in the case of the Toxic Substances Control Act,(18) which requires the EPA to develop rules governing the testing of substances based on considerations of costs and a range of specified health risks (p. 58). Other statutes supplementing the APA's rulemaking requirements apply to all agencies, such as the National Environmental Policy Act,(19) the Paperwork Reduction Act,(20) and the Regulatory Flexibility Act.(21) These acts require rulemakers to assess the environmental impact of certain rules, develop information on the paperwork burden that will accompany rules, and reduce the burden of rules on small entities, respectively. In addition to such legislation, executive orders requiring specific consideration of the costs and benefits of proposed major rules significantly add to rulemakers' obligations.(22)

   The Negotiated Rulemaking Act of 1990(23) also applies to agencies across the board, authorizing but not requiring agencies to organize and conduct negotiations among parties interested in a particular rule. The Negotiated Rulemaking Act essentially codified and routinized a practice agencies sometimes employed to generate a consensus among interested parties prior to promulgating a proposed rule. In a negotiated rulemaking, the agency convenes a committee composed of representatives of parties whose interests are implicated by the rule an agency seeks to develop.(24) Along with the agency, and with the help of an outside facilitator, the committee members negotiate in an attempt to formulate a proposed rule that all find acceptable. Ordinary notice-and-comment processes commence once participants in the negotiated rulemaking have come to a consensus about the form of a proposed rule. But, at least according to negotiated rulemaking's proponents, ordinary notice-and-comment proceeds more quickly and with less conflict than it would have in the absence of prior negotiations.(25)

   "Hybrid rulemaking" constitutes yet a fourth species of rulemaking -- "hybrid" because this mode is more formal than ordinary rulemaking but less so than formal rulemaking.(26) Like negotiated rulemaking, hybrid rulemaking involves legislative supplementation to section 553's requirements. Unlike negotiated rulemaking, however, hybrid rulemaking statutes selectively apply to particular agencies. Typically, hybrid rulemaking requires those agencies to conduct public hearings in the course of developing a rule. This effort to expand opportunities for outside participation in rulemaking peaked in the early 1970s, after which time hybrid rulemaking lost its popularity. Because formal rulemaking and hybrid rulemaking are not widely used today,(27) and because negotiated rulemaking's use so far has been limited, most of Rulemaking focuses, implicity, on section 553, notice-and-comment rulemaking.(28)

   This is not to imply that the dominant species of rulemaking started with the APA. To the contrary, the APA's rulemaking provisions constituted more of an endorsement than a creation of rulemaking. As Kerwin explains, rulemaking extends back to the first Congress (p. 45), though of course large-scale bureaucracies with substantial organizational resources did not emerge until the end of the nineteenth century. In fact, one of the virtues of Rulemaking, even for the initiated, is the supply of little-known facts and anecdotes Kerwin provides in explaining how rulemaking was an important government function before the passage of the APA.(29) He mentions, for example, that the Interstate Commerce Commission (ICC) promulgated numerous important rules in the years immediately following the passage of the Motor Carrier Act of 1935.(30) And while Kerwin carefully outlines the history of rulemaking -- explaining the American Bar Association's strong resistance to increased...