By bringing detailed scientific and other types of expertise to bear on policy, the rulemaking process has been the means by which some of the most far-reaching government regulations of the 20th century have been created. For example, science-based regulations are critical to modern programs for environmental protection, food safety, and workplace safety. However, the growth in regulations has fueled criticism that the rulemaking process reduces the transparency and accountability of democratic government.[1]
Introduction
Legislatures rely on rulemaking to add more detailed scientific, economic, or industry expertise to a policy—fleshing out the broader mandates of authorizing legislation. For example, typically a legislature would pass a law mandating the establishment of safe drinking water standards, and then assign an agency to develop the list of contaminants and safe levels through rulemaking.
The rise of the rulemaking process itself is a matter of political controversy. Many find that obscure and complex rulemaking tends to undercut the democratic ideal of a government that is closely watched by and accountable to its citizens.
Purposes
Although executive agencies are usually charged with executing, not promulgating a regulatory scheme, the breadth and depth of regulation today renders it difficult, if not impossible, for legislatures to specify the details of modern regulatory schemes. As a result, the specification of these details are mostly delegated to agencies for rulemaking.
Common purposes of rulemaking include:
Adding scientific expertise. For example, in the U.S., the Federal Food, Drug, and Cosmetic Act outlaws the sale of adulterated or impure drugs. The act requires that the Department of Health and Human Services promulgate regulations establishing which laboratory tests to use to test the purity of each drug.
Adding implementation detail. Legislation on automobile fuel efficiency, for example, often delegates the development of the actual engine tests used to calculate 'city mileage' and 'highway mileage'.
Adding flexibility. More detailed regulations allow for more nuanced approaches to various conditions than a single legislative standard could. Moreover, regulations tend to be more easily changed as new data or technologies emerge.
Finding compromise. In some cases, a divided legislature can reach an agreement on a compromise legislative standard, while each side holds out hope that the implementing regulations will be more favorable to its cause.
The Housekeeping Act, 5 U.S.C. § 301, which gives heads of agencies authority to issue rules for agency employees
The Regulatory Flexibility Act, 5 U.S.C. §§ 601 et seq., which requires agencies to consider the needs of small entities in rule making
The Paperwork Reduction Act, 44 U.S.C. §§ 3501 et seq., which limits the power of an agency to collect information from the public
The Congressional Review Act, 5 U.S.C. §§ 801–808, which gives Congress the authority to review and veto any agency regulation
The Independent Offices Appropriations Act of 1952, 31 U.S.C. §§ 9701, which limits the power of agencies to set user fees
Executive Order 12866, which requires agencies to use cost-benefit balancing in all regulatory actions
For example, a typical U.S. federal rulemaking would contain these steps:
Legislation. The U.S. Congress passes a law, containing an organic statute that creates a new administrative agency, and that outlines general goals the agency is to pursue through its rulemaking. Similarly, Congress may prescribe such goals and rulemaking duties to a pre-existing agency.
When the agency begins to develop a rule, the agency must file with OMB to put the rule on the “regulatory agenda.”[3]
In the process of developing a rule, before publication in a Notice of Proposed Rulemaking, the agency must “consult with members of the public”[4] to evaluate the following:[5]
(i) whether the proposed collection of information is necessary for the proper performance of the functions of the agency; (ii) the accuracy of the agency’s estimate of the burden; (iii) how to enhance the quality, utility, and clarity of the information to be collected; and (iv) minimize the burden of the collection of information on those who are to respond.
Advance Notice of Proposed Rulemaking. This optional step entails publishing the agency's initial analysis of the subject matter, often asking for early public input on key issues. Any data or communications regarding the upcoming rule would be made available to the public for review. Occasionally, a board of potentially affected parties is comprised to do give-and-take bargaining over rulemaking subject-matter which would otherwise result in deadlocked opposition by an interested party.[6] This is commonly called "negotiated rulemaking",[6] and results in more custom-tailored proposed rule. An ANPRM can be a useful opportunity for the agency to collect some of the information and feedback it needs for later steps.
If the rule is “economically significant” under Executive Order 12,866,[7] then the agency must prepare a Regulatory Impact Analysis under OMB Circular A-4 before the agency publishes a Notice of Proposed Rulemaking.[8]
Any rule[9] that imposes or modifies any “information collection” burden on the public must be submitted to the Director of OMB, with “objectively supported” estimates, no later than the time of a Notice of Proposed Rulemaking.[10] As part of this submission, the agency must certify or demonstrate (depending on the setting), and provide a record in support of the certification,[11] that:
(a) the information to be collected “is necessary for the proper performance of the functions of the agency”;[12] (b) the agency is not seeking “unnecessarily duplicative” collection of “information otherwise reasonably accessible to the agency”;[13] (c) the agency “has taken every reasonable step to ensure that the proposed collection of information … is the least burdensome necessary”;[14] and (d) the regulations are “written using plain, coherent, and unambiguous terminology.”[15]
Proposed Rule. In this step, the agency publishes the actual proposed regulatory language in the Federal Register; in which a discussion of the justification and analysis behind the rule is printed, as well as the agency's response to any public comment on the advance notice.
Public comment. Once a proposed rule is published in the Federal Register, a public comment period begins, allowing the public to submit written comments to the agency. Most agencies are required to respond to every issue raised in the comments. Depending on the complexity of the rule, comment periods may last for 30 to even 180 days.
Final Rule. Usually, the proposed rule becomes the final rule with some minor modifications. In this step, the agency publishes a full response to issues raised by public comments and an updated analysis and justification for the rule, including an analysis of any new data submitted by the public. In some cases, the agency may publish a second draft proposed rule, especially if the new draft is so different from the proposed rule that it raises new issues that have not been submitted to public comment. This again appears in the Federal Register, and if no further steps are taken by the public or interested parties, it is codified into the Code of Federal Regulations.
Judicial review. In some cases, members of the public or regulated parties file a lawsuit alleging that the rulemaking is improper. While courts generally offer significant deference to the agency's technical expertise, they do review closely whether the regulation exceeds the rulemaking authority granted by the authorizing legislation and whether the agency properly followed the process for public notice and comment.
Effective date. Except in extraordinary circumstances, the rule does not become effective for some time after its initial publication to allow regulated parties to come into compliance. Some rules provide several years for compliance.
"Hybrid" rulemaking. Not a legal term of art, but describes the kind of rulemaking performed by agencies that is somewhere between formal (with a hearing and record) and informal (with the notice and comment procedures described above). Hybrid rulemaking generally subsumes procedural aspects reserved for adjudication, such as a formal hearing in which interested parties are sworn and subject to cross-examination. The statutory construction of the Administrative Procedure Act, as well as the Supreme Court's ruling in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc.,[16] make hybrid-rulemaking proper only when specifically provided for by the U.S. Congress.
In the United States when an agency publishes a final rule generally the rule is effective no less than thirty days after the date of publication in the Federal Register. If the agency wants to make the rule effective sooner, it must cite "good cause" (persuasive reasons) as to why this is in the public interest.
Significant rules (defined by Executive Order 12866) and major rules (defined by the Small Business Regulatory Enforcement Fairness Act ) are required to have a 60 day delayed effective date.[17]
Rules for rulemaking
Most modern rulemaking authorities have a common law tradition or a specific basic law that essentially regulates the regulators, subjecting the rulemaking process to standards of due process, transparency, and public participation.
The European Commission has recently developed new standards under ideas laid out in a 'Whitepaper on governance.' This effort was undertaken after the Irish ‘No’ vote in 2001, addressing concerns that the public perceived the Commission’s legislative and rulemaking processes as too removed from citizen input.
Use in private industry
Private rulemaking bodies, such as the Internet Engineering Task Force, Java Community Process, and other technical communities, have adopted similar principles and frameworks to ensure fairness, transparency, and thoroughness. While the mechanics vary, these efforts follow the same pattern of an open rulemaking record, public publication of proposals, and an opportunity for public comment on those proposals before they are finalized.
Rulemaking apparatus
Public participation requires some official methods for the agency to communicate with the public. Generally, agencies produce an official gazette, or periodical for publishing all rulemaking notice, such as the Federal Register. Once a rule is final, the language of the rule itself (not the supporting analysis or data) is codified in the official body of regulations, such as the Code of Federal Regulations (CFR).
In essence, the accountability of the rulemaking system assumes that the public does take note of all of the notices in the Federal Register, which can run over a hundred pages per day. In practice, many industry or public advocacy lobbyists and lawyers monitor the Federal Register Table of Contents every day by email on behalf of their constituents or clients.
Public comments are the heart of the public’s ability to participate in the rulemaking process. The agency rulemaking is usually required to consider and publish a written response to all comments. Although high-profile rulemakings may include public hearings, most rulemakings are simply noticed in the Federal Register with a call for written comments by a set deadline.
Holding agencies accountable for objective, fact-based rulemaking requires maintaining a formal record of the facts and analysis behind the rule. Agencies must assemble and make public a rulemaking record that includes all information considered as part of the rulemaking process.
These records can be enormous and can easily fill scores to hundreds of boxes. Interested parties generally must travel to an agency repository to inspect and copy this record. In the United States, the Federal government is moving toward posting rulemaking dockets online at www.regulations.gov. Supporting documentation for 37% of new rulemakings was available on-line as of August 2006. By August 2007 it was available for 80% of new rulemakings. Interested parties frequently comb through the agency’s data to find flaws in the agency’s reasoning. Also, interested parties’ comments on the rule then become part of this record.
Rulemaking and the courts
In the U.S., interested parties can sue to have a judge review the rulemaking process once the rule is finalized. Interested parties frequently sue the rulemaking agency, asking the court to order the agency to reconsider. For example, environmental groups may sue, claiming that the rule is too lax on industry; or industry groups may sue, claiming that the rule is too onerous.
Traditionally, courts are reluctant to step into the shoes of the technical experts and re-open the decisions made in the agency’s detailed analysis. However, courts do review whether a rulemaking meets the standards for the rulemaking process. The basis of this review by the courts may be limited to certain questions of fairness or the procedures that ensure that both sides of a dispute are treated equally before any decision making occurs or that the decision is not patently unreasonable (under Canadian law) or Wednesbury unreasonableness (under British law) or similar doctrines described below.
These powers of review of administrative decisions, while often governed by statute, were originally developed out of the royal prerogative writs of English law such as the writ of mandamus and the writ of certiorari.
Thus, it is not enough to simply claim that the rulemaking agency could have done a better job. Instead, under U.S. administrative law, to ask the court to order changes in a rule, a party must argue that the rule is:
Arbitrary and capricious and/or unsupported by the record. Most frequently, objectors will argue that, even if the judge is not an expert, the judge can tell that there is an obvious gap in the agency’s data or analysis. A court may intervene if it finds that there is no reasonable way that the agency could have drafted the rule, given the evidence in the rulemaking record. A court may send a rule back to the agency for further analysis, generally leaving the agency to decide whether to change the rule to match the existing record or to amend the record to show how they arrived at the original rule. If a court does remand a rule back to the agency, it almost always involves an additional notice and public comment period.
Exceeds statutory authority. Frequently, opponents of a rule argue that it fails to follow the instructions of the authorizing legislation. Rules can be found to exceed statutory authority if they are too strict or too lax. If a law instructs an agency to issue regulations to ban a chemical, but the agency issues a rule that instead sets levels for safe use—or vice versa—a court may order the agency to issue a new rule.
Bolt out of the blue. Occasionally, interested parties argue that the final rule contains provisions that were never vetted during the public comment period. A court may intervene if it finds that there was no way that the commenting public could have anticipated the new provisions and provided comments. If so, the new provisions are said to be, in a colorful legal phrase, a 'bolt out of the blue' rather than a reasonable course correction during the rulemaking process. Frequently, agencies will vet several options during the proposed rule phase to allow for comment on the full spectrum of rules under consideration.
A Notice of Proposed Rulemaking (NPRM) is a public notice that is issued by law when a U.S. federal agency wishes to add, remove, or change a rule or regulation as part of the rulemaking process. The notice is an important part of US administrative law, which facilitates government by typically creating a process of taking of public comment. The term is also used at the state level in the United States.
In the law of the United States, the Code of Federal Regulations (CFR) is the codification of the general and permanent regulations promulgated by the executive departments and agencies of the federal government of the United States. The CFR is divided into 50 titles that represent broad areas subject to federal regulation.
The National Environmental Policy Act (NEPA) is a United States environmental law designed to promote the enhancement of the environment. It created new laws requiring U.S. federal government agencies to evaluate the environmental impacts of their actions and decisions, and it established the President's Council on Environmental Quality (CEQ). The Act was passed by the U.S. Congress in December 1969 and signed into law by President Richard Nixon on January 1, 1970. To date, more than 100 nations around the world have enacted national environmental policies modeled after NEPA.
The Federal Register is the official journal of the federal government of the United States that contains government agency rules, proposed rules, and public notices. It is published every weekday, except on federal holidays. The final rules promulgated by a federal agency and published in the Federal Register are ultimately reorganized by topic or subject matter and codified in the Code of Federal Regulations (CFR), which is updated quarterly.
The Office of Information and Regulatory Affairs is a Division within the Office of Management and Budget (OMB), which in turn, is within the Executive Office of the President. OIRA oversees the implementation of government-wide policies in, and reviews draft regulations under, Executive Order 12866, the Paperwork Reduction Act, and the Information Quality Act.
United States federal administrative law encompasses statutes, regulations, rules, common law rulings, and directives issued by the Office of Information and Regulatory Affairs in the Executive Office of the President, that together define the extent of powers and responsibilities held by administrative agencies of the United States government. The executive, legislative, and judicial branches of the U.S. federal government cannot always directly perform their constitutional responsibilities. Specialized powers are therefore delegated to an agency, board, or commission. These administrative governmental bodies oversee and monitor activities in complex areas, such as commercial aviation, medical device manufacturing, and securities markets.
Electronic rulemaking is the use of digital technologies by government agencies in the rulemaking and decision making processes of the United States. An interdisciplinary electronic rulemaking research community has formed as a result of National Science Foundation funding under the auspices of the Digital Government Program. Groups such as the Cornell E-Rulemaking Initiative (CeRI) have been focused on researching how technologies such as Web 2.0 can help foster greater public participation in the political process, specifically, in Federal Agencies’ rulemaking.
The Safe Drinking Water Act (SDWA) is the principal federal law in the United States intended to ensure safe drinking water for the public. Pursuant to the act, the Environmental Protection Agency (EPA) is required to set standards for drinking water quality and oversee all states, localities, and water suppliers that implement the standards.
The Paperwork Reduction Act of 1980 is a United States federal law enacted in 1980 designed to reduce the total amount of paperwork burden the federal government imposes on private businesses and citizens. The Act imposes procedural requirements on agencies that wish to collect information from the public. It also established the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB), and authorized this new agency to oversee federal agencies' collection of information from the public and to establish information policies. A substantial amendment, the Paperwork Reduction Act of 1995, confirmed that OIRA's authority extended over not only agency orders to provide information to the government, but also agency orders to provide information to the public.
Negotiated rulemaking is a process in American administrative law, used by federal agencies, in which representatives from a government agency and affected interest groups negotiate the terms of a proposed administrative rule. The agency publishes the proposed rule in the Federal Register and then follows the usual rulemaking procedure of soliciting public comments, which are evaluated for inclusion in the final rule.
The USA PATRIOT Act was passed by the United States Congress in 2001 as a response to the September 11 attacks in 2001. It has ten titles, with the third title written to prevent, detect, and prosecute international money laundering and the financing of terrorism.
The Administrative Law, Process and Procedure Project is a bipartisan undertaking of the Committee on the Judiciary of the House of Representatives of the United States Congress. It consists of a comprehensive study of the state of administrative law, process and procedure in the United States. A description of the Project was included in the Judiciary Committee's Oversight Plan for the 109th Congress, as approved by the Committee on January 26, 2005. The Project will culminate with the preparation of a detailed report with recommendations for legislative proposals and suggested areas for further research and analysis to be considered by the Administrative Conference of the United States (ACUS). House Judiciary Committee Chairman F. James Sensenbrenner, Jr. (R-WI) and Ranking Member John Conyers (D-MI) requested the Congressional Research Service (CRS) to assist Representative Chris Cannon (R-UT), the Chairman of the Subcommittee on Commercial and Administrative Law (CAL), in conducting the Project.
The Regulatory Flexibility Act (RFA) is perhaps the most comprehensive effort by the U.S. federal government to balance the social goals of federal regulations with the needs and capabilities of small businesses and other small entities in American society.
The Clean Air Act (CAA) is the United States' primary federal air quality law, intended to reduce and control air pollution nationwide. Initially enacted in 1963 and amended many times since, it is one of the United States' first and most influential modern environmental laws.
Tax protesters in the United States advance a number of administrative arguments asserting that the assessment and collection of the federal income tax violates regulations enacted by responsible agencies –primarily the Internal Revenue Service (IRS)– tasked with carrying out the statutes enacted by the United States Congress and signed into law by the President. Such arguments generally include claims that the administrative agency fails to create a duty to pay taxes, or that its operation conflicts with some other law, or that the agency is not authorized by statute to assess or collect income taxes, to seize assets to satisfy tax claims, or to penalize persons who fail to file a return or pay the tax.
Title 1 of the Code of Federal Regulations, titled General Provisions, is a United States federal government regulation.
The Administrative Procedure Act (APA), Pub. L.Tooltip Public Law 79–404, 60 Stat. 237, enacted June 11, 1946, is the United States federal statute that governs the way in which administrative agencies of the federal government of the United States may propose and establish regulations, and it grants U.S. federal courts oversight over all agency actions. According to Hickman & Pierce, it is one of the most important pieces of United States administrative law, and serves as a sort of "constitution" for U.S. administrative law.
The SEC Regulatory Accountability Act is a bill that was introduced into the United States House of Representatives in the 113th United States Congress. The bill would amend the Securities Exchange Act of 1934 to give new directions to the Securities and Exchange Commission (SEC) governing its regulation creation and amendment process. The SEC would be required to assess the significance of the problem they are considering addressing, determine whether the estimated costs would outweigh the estimated benefits, and identify alternatives to their proposed regulation. The bill is intended to help protect the financial sector from excessive, burdensome regulations created by the SEC. The bill would do this by ordering the SEC to conduct a cost-benefit study before issuing any new rules to ensure that the expected benefits of the new rule would outweigh the expected costs of imposing it.
The Federal Register Modernization Act was a bill that would require the Federal Register to be published, rather than printed, and that documents in the Federal Register be made available for sale or distribution to the public in published form.
Executive Order 12866 in the United States, issued by President Clinton in 1993, requires a benefit-cost analysis for any new regulation that is "economically significant", which is defined as having "an annual effect on the economy of $100 million or more or adversely affect[ing] in a material way the economy, a sector of the economy, productivity, competition, [or] jobs," or creating an inconsistency with other law, or any of several other conditions. The Order established a "regulatory philosophy" and several "principles for regulation", among them requirements to explicitly identify the problem to be addressed, determine whether existing regulations created or contributed to the problem, assess alternatives to direct regulation, and design regulations in the most cost-effective manner possible. Section § 1(a) summarizes this regulatory philosophy as follows:
Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people.
↑ David E. Boundy, The PTAB is Not an Article III Court, Part 1: A Primer on Federal Agency Rulemaking, American Bar Ass’n, Landslide, vol. 10 no. 2 pp. 9–13 (Nov-Dec 2017) here or here
↑ 5 U.S.C. § 602(a); Executive Order 12,866 (as amended), § 4(b). For an example, see Department of Commerce, Spring 2009 Semiannual Agenda of Regulations, 74 Fed. Reg. 21887–914 (May 11, 2009).
↑ The requirement to “consult with members of the public” before a Notice of Proposed Rule Making (NPRM) is not literally in the text of the statute, but arises out of the interdependencies between required steps, and the practical reality that most agencies have no internal sources of objective compliance cost information, and can only obtain objective cost information by conferring with the public. For information collection requests contained in a proposed rule, 44 U.S.C. § 3507(d)(1)(A), 5 C.F.R. § 1320.5(a)(3) and § 1320.11(b) require that an agency submit an ICR to OMB “as soon as practicable, but no later than the date of publication of a notice of proposed rulemaking in the Federal Register.” An agency also is required, by 44 U.S.C. § 3507(a)(1)(D)(ii)(V) and 5 C.F.R. § 1320.5(a)(iv), to publish a notice in the Federal Register “setting forth … an estimate of the burden that shall result from the collection of information.” § 3506(c)(1)(A)(iv) and § 1320.8(a)(4) require that any burden estimate submitted to the OMB Director, including those under § 3507(d)(1)(A), be “objectively supported.” For the types of burden in most agency rule makings—i.e., new requirements for content or form of papers—the only practical source of “objective support” for burden estimates is “conferring” with attorneys who do similar work. This set of critical path events requires consultation with the public sufficiently before the Notice of Proposed Rule Making to permit “objectively supported estimates” to be included with and supported in the NPRM and in submissions to OMB under the Paperwork Reduction Act.
↑ 44 U.S.C. § 3506(c)(2) and 5 C.F.R. § 1320.8(d)(1).
↑ Executive Order 12,866 § 3(f) defines “significant regulatory action” as any rule making that is likely to result in a rule that may: (1)Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in this Executive order.
↑ 44 U.S.C. § 3506(c)(3)(A) and 5 C.F.R. § 1320.5(d)(1)(i) (“ To obtain OMB approval of a collection of information, an agency shall demonstrate that it has taken every reasonable step to ensure that the proposed collection of information: (i) Is the least burdensome necessary for the proper performance of the agency’s functions…”).
↑ 44 U.S.C. § 3506(c)(3)(B) and 5 C.F.R. § 1320.5(d)(1)(ii).
↑ 44 U.S.C. § 3506(c)(2)(A)(iv) and 5 C.F.R. § 1320.5(d)(1)(i).
↑ 44 U.S.C. § 3506(c)(3)(D) and 5 C.F.R. § 1320.9(d).
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