Rulemaking - Limits on Judicial Addition of Procedures; Choice Between Rulemaking and Adjudication

Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc.

435 U.S. 519 (1978)

MR. JUSTICE REHNQUIST delivered the opinion of the Court.

[The Natural Resources Defense Council (“NRDC”) challenged a rule promulgated by the (“AEC”). The NRDC claimed that the AEC did not provide a meaningful opportunity to participate in rulemaking because it did not allow participants to undertake discovery or cross-examination processes. The D.C. Circuit Court of Appeals remanded the rule to the agency, finding that “the procedures followed during the hearings were inadequate.” The Supreme Court disagrees with that decision, explaining its reasoning in this case:]

In 1946, Congress enacted the Administrative Procedure Act, which as we have noted elsewhere was not only “a new, basic and comprehensive regulation of procedures in many agencies,” but was also a legislative enactment which settled “long-continued and hard-fought contentions, and enacts a formula upon which opposing social and political forces have come to rest.” 5 U.S.C. § 553, dealing with rulemaking, requires in subsection (b) that “notice of proposed rule making shall be published in the Federal Register . . . ,” describes the contents of that notice, and goes on to require in subsection (c) that after the notice 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.” Interpreting this provision of the Act in United States v. Allegheny-Ludlum Steel Corp., 406 U. S. 742 (1972), and United States v. Florida East Coast R. Co., 410 U. S. 224 (1973), we held that generally speaking this section of the Act established the maximum procedural requirements which Congress was willing to have the courts impose upon agencies in conducting rulemaking procedures. Agencies are free to grant additional procedural rights in the exercise of their discretion, but reviewing courts are generally not free to impose them if the agencies have not chosen to grant them. This is not to say necessarily that there are no circumstances which would ever justify a court in overturning agency action because of a failure to employ procedures beyond those required by the statute. But such circumstances, if they exist, are extremely rare [...]

It is in the light of this background of statutory and decisional law that we granted certiorari to review two judgments of the Court of Appeals for the District of Columbia Circuit because of our concern that they had seriously misread or misapplied this statutory and decisional law cautioning reviewing courts against engrafting their own notions of proper procedures upon agencies entrusted with substantive functions by Congress. We conclude that the Court of Appeals has done just that in these cases, and we therefore remand them to it for further proceedings.

[In December 1967, the Commission granted Vermont Yankee a permit to build a nuclear power plant in Vernon, Vt. Thereafter, Vermont Yankee applied for an operating license. NRDC objected to the granting of a license, however, and therefore a hearing on the application commenced on August 10, 1971. Excluded from consideration at the hearings, over NRDC's objection, was the issue of the environmental effects of operations to reprocess fuel or dispose of wastes resulting from the reprocessing operations. This ruling was affirmed by the Appeal Board in June 1972.

In November 1972, the AEC also instituted rulemaking proceedings “that would specifically deal with the question of consideration of environmental effects associated with the uranium fuel cycle in the individual cost-benefit analyses for light water cooled nuclear power reactors.” This rule was promulgated specifically to supplement the Vermont Yankee Appeal Board ruling. In April 1974, the Commission issued a rule that required no qualitative evaluation of the environmental hazards posed by the uranium fuel cycle. NRDC appealed from the Commission's adoption of the rule.]

Much of the controversy in this case revolves around the procedures used in the rulemaking hearing [...] Vermont Yankee argues that the court invalidated the rule because of the inadequacy of the procedures employed in the proceedings [...]

But this much is absolutely clear. Absent constitutional constraints or extremely compelling circumstances the “administrative agencies ‘should be free to fashion their own rules of procedure and to pursue methods of inquiry capable of permitting them to discharge their multitudinous duties.’” FCC v. Schreiber, 381 U. S., at 290, quoting from FCC v. Pottsville Broadcasting Co., 309 U. S., at 143. Indeed, our cases could hardly be more explicit in this regard. The Court has upheld this principle in a variety of applications [...]

Respondent NRDC argues that 5 U. S. C. § 553 merely establishes lower procedural bounds and that a court may routinely require more than the minimum when an agency's proposed rule addresses complex or technical factual issues or “Issues of Great Public Import.” We have, however, previously shown that our decisions reject this view. We also think the legislative history, even the part which it cites, does not bear out its contention. The Senate Report explains what eventually became [5 U. S. C. § 553] thus:

“This subsection states . . . the minimum requirements of public rule making procedure short of statutory hearing. Under it agencies might in addition confer with industry advisory committees, consult organizations, hold informal ‘hearings,’ and the like. Considerations of practicality, necessity, and public interest . . . will naturally govern the agency's determination of the extent to which public proceedings should go. Matters of great import, or those where the public submission of facts will be either useful to the agency or a protection to the public, should naturally be accorded more elaborate public procedures.” S. Rep. No. 752, 79th Cong., 1st Sess., 14-15 (1945).

The House Report is in complete accord:

“‘[U]niformity has been found possible and desirable for all classes of both equity and law actions in the courts . . . . It would seem to require no argument to demonstrate that the administrative agencies, exercising but a fraction of the judicial power may likewise operate under uniform rules of practice and procedure and that they may be required to remain within the terms of the law as to the exercise of both quasi-legislative and quasi-judicial power.’ . . . . “The bill is an outline of minimum essential rights and procedures. . . . It affords private parties a means of knowing what their rights are and how they may protect them . . . . ” H. R. Rep. No. 1980, 79th Cong., 2d Sess., 9, 16-17 (1946).

And the Attorney General's Manual on the Administrative Procedure Act 31, 35 (1947), a contemporaneous interpretation previously given some deference by this Court because of the role played by the Department of Justice in drafting the legislation, further confirms that view. In short, all of this leaves little doubt that Congress intended that the discretion of the agencies and not that of the courts be exercised in determining when extra procedural devices should be employed.

There are compelling reasons for construing [5 U. S. C. § 553] in this manner. In the first place, if courts continually review agency proceedings to determine whether the agency employed procedures which were, in the court's opinion, perfectly tailored to reach what the court perceives to be the “best” or “correct” result, judicial review would be totally unpredictable. And the agencies, operating under this vague injunction to employ the “best” procedures and facing the threat of reversal if they did not, would undoubtedly adopt full adjudicatory procedures in every instance. Not only would this totally disrupt the statutory scheme, through which Congress enacted “a formula upon which opposing social and political forces have come to rest,” Wong Yang Sung v. McGrath, 339 U. S., at 40, but all the inherent advantages of informal rulemaking would be totally lost.

Secondly, it is obvious that the court in these cases reviewed the agency’s choice of procedures on the basis of the record actually produced at the hearing, and not on the basis of the information available to the agency when it made the decision to structure the proceedings in a certain way. This sort of Monday morning quarterbacking not only encourages but almost compels the agency to conduct all rulemaking proceedings with the full panoply of procedural devices normally associated only with adjudicatory hearings.

Finally, and perhaps most importantly, this sort of review fundamentally misconceives the nature of the standard for judicial review of an agency rule. The court below uncritically assumed that additional procedures will automatically result in a more adequate record because it will give interested parties more of an opportunity to participate in and contribute to the proceedings. But informal rulemaking need not be based solely on the transcript of a hearing held before an agency. Indeed, the agency need not even hold a formal hearing. See 5 U.S.C. § 553(c). Thus, the adequacy of the “record” in this type of proceeding is not correlated directly to the type of procedural devices employed, but rather turns on whether the agency has followed the statutory mandate of the Administrative Procedure Act or other relevant statutes. If the agency is compelled to support the rule which it ultimately adopts with the type of record produced only after a full adjudicatory hearing, it simply will have no choice but to conduct a full adjudicatory hearing prior to promulgating every rule. In sum, this sort of unwarranted judicial examination of perceived procedural shortcomings of a rulemaking proceeding can do nothing but seriously interfere with that process prescribed by Congress [...]

Reversed and remanded.