Introduction to Rulemaking

The APA divides regulatory procedures into two categories: “rulemaking” and “adjudication.” According to the APA, everything that isn’t rulemaking is considered to be adjudication. Further, both rulemaking and adjudication are separated into “formal” and “informal.” There is formal rulemaking, informal rulemaking, formal adjudication, and informal adjudication. 

APA section 553 says that formal procedures are triggered when enabling statutes require rules to be made “on the record after opportunity for an agency hearing.” As we will see in our Class 8 reading, courts have interpreted this part of the APA very narrowly, so formal processes are rarely required.

Each of these four types of procedures have different procedural requirements according to the APA. Here is a quick overview of the four types of procedures:

1) Formal Rulemaking: Formal rulemaking procedures are rarely used. Formal rulemaking imposes trial-like adjudicatory processes (hearings, testimony, etc.) on the rulemaking process. Formal rulemaking takes a lot of time and resources. The hearings in the PB wars podcast took almost four months and produced a transcript of 7,736 pages. Agencies would prefer to avoid these long, resource-intensive processes.

2) Informal Rulemaking: This is the commonly used procedure for rulemaking. It follows the “notice and comment” procedures described in APA section 553. In informal rulemaking, agencies publish advanced notice of proposed rulemaking in the Federal Register so that the public has an opportunity to participate in the rulemaking process. 

3) Formal Adjudication: Like formal rulemaking, formal adjudication is rare. It requires trial-like procedures. Administrative Law Judges (ALJ) hear these adjudications. 

4) Informal adjudication is “everything else.” Often, the processes for informal adjudication are specified in enabling statutes or described in agencies’ regulations.

Several factors beyond the APA add complexity to the rulemaking and adjudication procedures. For one, the rulemaking process does not begin, magically, with a notice of proposed rulemaking published in the Federal Register per APA section 553(b). Before formulating a proposed rule, agencies do years of studies, prioritizing, planning, studying, and consulting with experts and stakeholders (people and groups who will be affected by the regulation). Similarly,  the rulemaking process rarely ends with the publication of the final rule in the Federal Register. Final rules are often countered by judicial review as adversely affected stakeholders exercise their right to review per APA section 702. In the PB Wars, the peanut butter companies’ sued the FDA after the agency issued its final order. The industries regulated by the Clean Air Act rule in The Regulators were waiting for the final rule to file complaints in the federal courts.  Judicial review plays a prominent role in agency rulemaking.

Beyond pre- and post- procedure activities, there are also several factors that add complexity to the notice and comment part of the rulemaking process in APA section 553:

-Judicial interpretations of APA section 553 add layers of complexity to the agency’s procedural requirements. 

-Statutes beyond the APA add additional procedural requirements for agencies to follow. The APA rulemaking requirements are boilerplate, default rulemaking requirements that are often supplemented by other statutory requirements. The National Environmental Policy Act (“NEPA”) requires agencies to consider the environmental impacts of certain agency actions. Other statutes like the Paperwork Reduction Act and the Regulatory Flexibility Act are meant to reduce “red tape” on regulated entities by ensuring limiting the amount of paperwork agencies can impose on regulated entities and forcing agencies to consider regulatory burdens new regulations may put on small businesses. 

-Enabling statutes can also supplement, or even override, the APA’s rulemaking requirements. For instance, many environmental laws require agencies to conduct environmental studies and cost benefit analyses before finalizing new environmental rules. Agency mandates require all sorts of additional processes like oral hearings or additional testimony.

-Agencies sometimes voluntarily engage in extra procedures to reduce the chances of judicial review and other rulemaking slowdowns. Agencies build consensus among stakeholders by engaging in a process called “regulatory negotiation,” asking for pre-notice feedback on rulemaking priorities, or seeking advice from Federal Advisory Committees before issuing notice of a proposed rule.

-Executive agencies must comply with Executive Orders including E.O. 12,866 which requires agencies draft and submit “regulatory impact statements” to the White House Office of Information and Regulatory Affairs (“OIRA”). OIRA reviews regulations to consider their costs and benefits.

Our study of the rulemaking process will focus on APA section 553 informal rulemaking, which is often referred to as “notice and comment” rulemaking. As we learn about APA section 553 informal rulemaking, keep in mind that there are many things that determine how rules will be promulgated beyond the “boilerplate” 553 procedures.

How and Why Do Agencies Start the Rulemaking Process?

Before we start learning about the steps of the informal rulemaking procedure (APA section 553), we will learn about how agencies decide to promulgate a rule. The word “promulgate” means to formally proclaim or declare that a new law is in effect after its final approval. In the administrative law context, “promulgate” refers to the process of enacting administrative final rules (making regulations). A regulation is “promulgated” when the final rule is published in the Federal Register at the conclusion of the rulemaking process. 

While APA section 553 describes how agencies must make a rule from notice, comment, and the publication of the final rule, the rulemaking process really begins long before notice of a proposed rule is published in the Federal Register, when the agency begins to consider whether to propose the rule in the first place. Agencies do not simply decide, internally, what to regulate and how to regulate it. The decisionmaking processes that agencies undertake to decide what rules to make involves a lot of outside influence. As public interest advocates, you will be pushing for progressive regulatory reform amidst other stakeholders also advancing their initiatives. For instance, if you are pushing for safe food regulations, your concerns will be weighed against food corporations’ lobbying, and if you are an environmental advocate asking for clean air regulations, you will be fighting to have your voice heard against energy companies and other industrial groups interested in less air regulation. Here are some tips for participating in agency rulemaking from an ex-agency official:

Initiating Agency Action Colloquium

5 Admin. L. J. of Am. U. 24 (1991)

Comments of Patricia Bailey (Commissioner of the Federal Trade Commission from 1979-1988)

[…] The first thing to do is to think about what you're trying to do. Agency actions are taken pursuant to statutes and regulations on congressional oversight indictments. And in that respect, they are making legal decisions. But that is the only respect in which you can call a lotof these decisions legal, while regulations and statutes are at the foundation of agency action, decisions that are being made are what government should do, not really so much what the government is compelled to do by the statute. And so you have to remember, I think, when you go forward to do battle with the government agency, that an agency is not a courtroom. [… People who work in agencies are] making policy decisions.

Getting the agency to act in a certain way requires certain policy advocacy skills. And in no particular order, I would say that those skills are an ability to understand the agency's problem, to have a fairly firm grip on the legislative process, the ability to deal with the political environment that the agency finds itself in, and an understanding of basic policy analysis tools that most all agencies use. The final skill would be, of course, to know when none of these other skills would work, and to know what to do then.

Let me elaborate a little bit. Let's say that you are dealing with an agency where a decision is going to be made and a proposal has already been made about it. I think that there is no need to come whining to the agency that some policy or decision that they make is going to harm your client or harm consumers or do harm to someone. Because almost any decision that an agency makes is going to harm someone. Allegation without more does not surprise them and does not cause them to change course.

You have to know what the agency's mission is, what its purpose is, what its causes are. And that may enable you to argue that whatever action it is that they are proposing to take will damage their own interests. This is often a good tactic to take, because, hopefully, you can get them to see that whatever it is you want them to do is in their own best interests, based on your understanding of what they have been told to do and what they are trying to do. And at the same time, don't ever try to conceal your own self-interest, because your reasons from the outside are inherently suspect.

If you understand an agency's position, you may discover that what is primary for the agency is really secondary or even unimportant to you. But what may be crucial to you is only secondary for the agency. If you can look at it that way, you may be able to get something that is very important to you eliminated or added, whatever your interest is, in a way that will enable the agency to deal with the problem without compromising its own cause. A 100% win is not attainable. It is probably a waste of money to pursue, and unwise in the end.

Now, understanding the bearcutter process is important because it is very easy to stumble in at the wrong place and to make the wrong arguments to the wrong people, and to get sort of hopelessly bogged down. The government decisionmaking process sometimes seems vulnerable, whereas it's only fragmented. So, if you get an organization chart, that is the beginning of wisdom. It doesn't help a lot, but it gives you at least some idea. Wherever you go there are going to be technical experts and economists and lawyers and planners and program generalists and a whole category of other people. As the input of people in these divisions begins to rise up the decision ladder, the proposed action will receive less and less in-depth review.

Now, regardless of how serious and significant the issue may be, the decision reached will be based largely on the material generated at the staff level by the staff. To be most effective, input of data and arguments from outsiders must be made at that level. It will make less and less of an impact as a matter for decision moves up the chain. I cannot tell you the number of people I know who want to come in and talk to the Secretary of Commerce about a matter that somebody has said in the regulatory agenda he's going to make a decision on this week. The problem, however, is that it is too late, it is just too late to do that, unless you have certain kinds of issues which I will mention in a minute. You need to sort out who you're talking to. I watch with amazement as lawyers make insistent legal arguments to economists… “… our keen legal arguments do not interest them.”

[…] You have to educate yourselves about the agency's normal procedures. And all government agencies have the same kind of modus operandi. They have these lengthy in-depth analyses by the stack, but somewhere—and you should find out where—somebody is responsible for making an overall synthesis of these arguments so that it tells a story that makes sense to somebody. And then there's going to be a summary at the top for the people at the highest levels of the decision chain. So you should prepare your papers in the same format.

Understand that once the papers leave the staff unit, the decisions made in that unit will not be reversed. The lawyers are not going to reverse anything that the economists have written. And that's true all across this spectrum. In the end, the arguments of the unit may be rejected, but they're not going to be reversed by anyone. So you have to get in on the ground floor. You cannot risk missing out at that level. […]

[Do] not gratuitously insult the staff of an agency. What will happen is that most likely the agency will close ranks against you, freeze you out. That is going to be true even if you have a pretty good case or an argument. I have seen it happen a lot. I call it the "New York lawyers' syndrome." It is sort of, you know, "These people are really not very bright. They're not very something." They have an animosity toward my client, born surely of their ignorance. And it could as well be called "the Chicago's economist syndrome" or "the cumulus single-minded public advocate approach." There is a way not to deal with these things. In court you can go in and make light of somebody else's argument. But to try that in an agency; you're on your way out.

Now I would say, try to understand the political environment that the agency is involved in. Don't talk about unelected bureaucrats with arbitrary unchecked power; that is not how it seems to them. With OMB (the Office of Management and Budget) on one shoulder and the White House on another and congressional oversight investigative appropriations committees, agency constituents-whomever they may be—labor, agriculture, business, and the media. The […] media is always there, disclosing things, commenting on things, criticizing them and subjecting them to ridicule. It doesn't seem to [the agencies] like they have unchecked power. So you should keep in mind when you're urging an agency to take a certain kind of action how it is going to appear to the significant others that surround that agency. Because that is the way that agency will be looking at it.

I would also say that if your views are an anathema to some of those people that you are trying to persuade, if you represent Exxon and you're trying to deal with the EPA on oil spill regulation or something, what you might try to do is to form a coalition and get someone else to make your argument. I think that would be the best thing. Agencies like to reach consensus decisions so that everyone gets something and nobody with a really legitimate concern is left somewhere out in the streets screaming as loud as they can on the way to Capitol Hill or to the Washington Post. So they probably will give you a little bit. You know, something to get you on board-to be able to do your job to find out how much you can give them to reach their policy goals and how little you will have to give to reach these objectives. […]

It is helpful if you know the rudiments of policy analysis-cost/benefit analysis, risk assessment, knowledge of market forces and all that stuff. All agencies talk a lot about that now. And actually these are useful tools. But, don't try to play games. Don't come in and say, “Well, you know, this is cost/benefit and we're going to pay all of the costs so we want all of the benefits to go here.” If you do that without any sort of analysis, you're not going to help yourselves, because agencies increasingly have more sophisticated means of doing these things. And that is what you are up against. […]

I only offer one caution about the Congress that became very obvious in the last few years. One thing the Congress can do is to get an agency not to do something, because they can always threaten to shut off the money. For a particular project, we had to stop working on a few over at the FTC three times because the money was cut off. […] So the limits of congressional pressure really come from that side. In sum, it is much easier to stop something than to start it.

Petitions for Rulemaking

Like industries and interest groups that lobby members of Congress, agency lobbyists have become experts at getting involved in agency rulemaking, integrating themselves into agencies’ decisionmaking processes. It has been said that rulemaking is now a “blood sport” where regulated industries spend millions of dollars to influence agency actors and exert political pressure on agencies. One way that public interest advocates can counter industry lobbyists is to petition agencies to begin the rulemaking processes. Enabling statutes often require agencies to protect public health, safety, and interests. APA section 553(e) says that “[e]ach agency shall give an interested person the right to petition for issuance, amendment, or repeal of a rule.”

While the APA doesn’t give us any procedural requirements for petitioning for rulemaking, agencies are not allowed to ignore petitions for rulemaking. APA section 555(e), requires agencies to provide “prompt notice” of a denial of a “written application, petition, or other request of an interested person made in connection with any proceeding.” This notice of denial must be “accompanied by a brief statement of the grounds for denial.” 

Filing a petition for rulemaking is a way to force agencies to take action when they have not done so on their own. If an agency starts the rulemaking you petition for, you have successfully pushed the agency to act. If the agency does not start the rulemaking process or does not deny the petition and accompany the denial with its rationale for denying the request within a reasonable amount of time, the petitioner can seek judicial review under the APA section 702. APA section 702 says that a person suffering a legal wrong because of “agency action” has the right to seek judicial review, and APA section 551(13) defines “agency action” to include an agency’s “failure to act.” Finally, APA section 706(1) says that courts can “compel agency action unlawfully withheld and unreasonably delayed.” So, according to the APA, an agency’s failure to act is considered an “agency action” within the permissible scope of judicial review.

It is hard for courts to review agency inaction because, when an agency hasn’t done anything, there is no substantive agency record for a court to review. Without an agency decision, courts have little to work with, substance-wise, to determine whether the agency has done anything wrong. An agency will usually claim that it hasn’t responded to a petition for rulemaking because it hasn’t had the time or resources to begin the rulemaking process. Agencies get a lot of leeway in deciding how to prioritize their various initiatives and responsibilities, and courts tend to give agencies a lot of deference, or “the benefit of the doubt” when agencies make those choices. 

So, when there isn’t an agency record for the court to review, how can a court decide whether the agency’s decisionmaking process is acceptable? The court is not in the position to know about all of the agency’s priorities or make informed determination about how much time and resources the various priorities require. Federal courts have adopted a list of factors (the TRAC factors) to consider as they decide whether an agency’s delay is permissible.

Telecommunications Research & Action Center v. Federal Communications Commission

750 F.2d 70 (D.C. Cir. 1984)

HARRY T. EDWARDS, Circuit Judge:

The Telecommunications Research & Action Center (“TRAC”) and several other not-for-profit corporations and public interest groups petition this court for a writ of mandamus to compel the Federal Communications Commission (“FCC” or “the Commission”) to decide certain unresolved matters now pending before the agency. The essence of TRAC's claim is that the FCC has unreasonably delayed determining whether American Telephone and Telegraph Company (“AT&T”) must reimburse ratepayers for [...] allegedly unlawful overcharges. [...]

Representative Timothy Wirth, Chairman of the Subcommittee on Telecommunications, Consumer Protection and Finance of the House Committee on Energy and Commerce, has twice written to the FCC to inquire about the unexplained delay in agency action. In 1981, FCC officials responded that they expected a staff recommendation that fall. However, no such recommendation was produced. In the spring of 1984, agency officials modified their response and estimated that a staff recommendation would be issued that summer. The agency failed on this commitment, too. Now, in the face of this court action, the Commission has recently indicated that it plans to resolve the matter on or before November 30, 1984. [...]

III. Merits of the Unreasonable Delay Claim

[G]iven the clear legislative preference for review of final action, we must be circumspect in exercising jurisdiction over interlocutory petitions. Postponing review until relevant agency proceedings have been concluded “permits an administrative agency to develop a factual record, to apply its expertise to that record, and to avoid piecemeal appeals.” [...] 

Claims of unreasonable agency delay clearly fall into that narrow class of interlocutory appeals from agency action over which we appropriately should exercise our jurisdiction. It is obvious that the benefits of agency expertise and creation of a record will not be realized if the agency never takes action. Agency delay claims also meet Judge Leventhal's suggested criteria for our interlocutory intervention — not only is there an outright violation of 5 U.S.C. § 555(b)'s mandate that agencies decide matters in a reasonable time, there also is no need for the court to consider the merits of the issue before the agency. Finally and most significantly, Congress has instructed statutory review courts to compel agency action that has been unreasonably delayed. 5 U.S.C. § 706(1).

In the context of a claim of unreasonable delay, the first stage of judicial inquiry is to consider whether the agency's delay is so egregious as to warrant mandamus. Although this court has decided several cases involving claims of unreasonable delay, [...] we have not articulated a single test for when the writ should issue. On reading these cases together, however, one can discern the hexagonal contours of a standard. Although the standard is hardly ironclad, and sometimes suffers from vagueness, it nevertheless provides useful guidance in assessing claims of agency delay: (1) the time agencies take to make decisions must be governed by a “rule of reason”; (2) where Congress has provided a timetable or other indication of the speed with which it expects the agency to proceed in the enabling statute, that statutory scheme may supply content for this rule of reason; (3) delays that might be reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake; (4) the court should consider the effect of expediting delayed action on agency activities of a higher or competing priority; (5) the court should also take into account the nature and extent of the interests prejudiced by delay; and (6) the court need not “find any impropriety lurking behind agency lassitude in order to hold that agency action is ‘unreasonably delayed.’” 

Because, in the instant case, the FCC has assured us that it is moving expeditiously on both overcharge claims, we need not test the delay here against the above standard to determine if it is egregious enough to warrant mandamus. But in light of the Commission's failure to meet its self-declared prior deadlines for these proceedings, we believe these delays are serious enough for us to retain jurisdiction over this case until final agency disposition.

In [an earlier case] we announced that:

the entire ratemaking procedure in the 1934 Communications Act revolves around a “rule of reason” .... It assumes that rates will be finally decided within a reasonable time encompassing months, occasionally a year or two, but not several years or a decade .... Complex regulation must still be credible regulation; the delay at issue here threatens the FCC's credibility .... Many of the same considerations that impel judicial protection of the right to a “speedy trial” in criminal cases or implementation of civil decrees with all deliberate speed are not inapposite in agency deliberations. Those situations generally involve protection of constitutional rights, but delay in the resolution of administrative proceedings can also deprive regulated entities, their competitors or the public of rights and economic opportunities without the due process the Constitution requires.

In that case we found a four year delay to be unreasonable. [...] In the instant case, the FCC has delayed almost five years on the rate of return inquiry [...] These delays have permitted AT&T's allegedly excessive returns to “become for all practical purposes, the accepted” ones. Even the agency recognizes, at least with regard to the rate of return delay, that “an unfortunately long time has elapsed since [this] matter first appeared.” Whether or not these delays would justify mandamus, we believe they clearly warrant retaining jurisdiction. [...]

TRAC Factors Applied in the Present Tense

In the Pesticide Action Network North America (“PANNA”) case, below, the Ninth Circuit Court of Appeals applies the TRAC factors in a case where environmental safety advocates seek judicial review of the EPA’s delayed response to the advocates’ petition calling on the agency to regulate the use of chlorpyrifos on crops.

The PANNA court starts by proclaiming that the agency’s “delay is egregious and warrants mandamus relief.” A writ of mandamus is an order from a court ordering an inferior government official (like an agency head) to properly fulfill their official duties or to correct an abuse of discretion. Congress gave courts the authority to issue writs of mandamus in the All Writs Act,  28 U.S.C. § 1651, which allows courts to “issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” Writs of mandamus are considered “extraordinary remedies” that courts justify granting only in “exceptional circumstances.” In the context of agency delay, mandamus is only warranted when an agency’s delay is egregious. 

Here is an overview video about the pesticide issue in the case below. It’s a short, and informative, clip that provides great context for the issue in the case: If You Can Hear My Voice: The Fight to Ban Chlorpyrifos -  https://youtu.be/CnD1I3T2vr8

Pesticide Action Network North America (PANNA) v. U.S. Environmental Protection Agency

798 F.3d 809 (9th Cir. 2015)

McKEOWN, Circuit Judge:

Although filibustering may be a venerable tradition in the United States Senate, it is frowned upon in administrative agencies tasked with protecting human health. Pesticide Action Network North America and the Natural Resources Defense Council have been waiting for years for the United States Environmental Protection Agency to respond to their administrative petition requesting a ban on the pesticide chlorpyrifos. Instead, they've received a litany of partial status reports, missed deadlines, and vague promises of future action. We recognize the scientific complexity inherent in evaluating the safety of pesticides and the competing interests that the agency must juggle. However, EPA's ambiguous plan to possibly issue a proposed rule nearly nine years after receiving the administrative petition is too little, too late. This delay is egregious and warrants mandamus relief. We order EPA to issue a full and final response to the petition no later than October 31, 2015.

BACKGROUND

EPA is tasked with registering all pesticides. A pesticide may be registered only if EPA finds that it is “safe,” meaning that "there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information." 21 U.S.C. § 346a(b)(2)(A)(ii). EPA may “revoke” a pesticide's registration whenever it determines that its use does not meet safety standards. Id. § 346a(b)(2)(A)(i).

The Food Quality Protection Act of 1996, Pub.L. No. 104-170, directed EPA to take a fresh look at the safety of existing pesticides. The statute required EPA to examine every pesticide then in use to ensure compliance with relevant safety standards. The Act gave EPA ten years to complete an initial review of registered pesticides, 21 U.S.C. 346a(q)(1), and ordered the agency to repeat the process using updated scientific data every fifteen years, 7 U.S.C. § 136a(g)(1)(A)(iii).

During this initial review, EPA determined that the pesticide at issue here, chlorpyrifos, was not being used in an altogether safe manner. In 2000, EPA announced an agreement with pesticide manufacturers to ban the application of chlorpyrifos in residential areas. Carol M. Browner, Dursban Announcement (June 8, 2000). Soon after, the agency issued both interim and final decisions permitting the continued use of chlorpyrifos in agricultural areas.

Pesticide Action Network North America and the Natural Resources Defense Council vehemently disagree with EPA's assessment that chlorpyrifos is safe. [...] Pesticide Action Network [...] filed an administrative petition with EPA in September 2007. EPA published a notice of that petition in the Federal Register, 72 Fed. Reg. 58,845 (Oct. 17, 2007), but otherwise did not issue any formal response to it. In July 2010 Pesticide Action Network filed suit in federal district court in New York demanding a final response to the administrative petition. Five months later, EPA and Pesticide Action Network filed a stipulation staying the suit based on EPA's promise that it would issue a human health risk assessment by June 2011 and a final response by November 2011. EPA was a month late in issuing the human health risk assessment and failed to publish a final response to the administrative petition.

In April 2012, Pesticide Action Network filed a petition for a writ of mandamus in the Ninth Circuit. EPA responded by publishing a partial denial of the administrative petition and stating that it would finalize its response to the remaining issues raised in the petition between [by February, 2014]. 

After mediation efforts failed to yield a resolution, we denied the 2012 mandamus petition. In concluding that mandamus relief was inappropriate at that time, we noted that EPA had a “concrete timeline” for issuing a final response by February 2014, and made clear that “our denial of the petition is without prejudice to seeking the same relief at a future date in the event EPA fails to act.” Id. at 651-52.

As an astute reader might have guessed, EPA's timeline proved not to be “concrete.” When EPA failed to issue a final response to the administrative petition in February 2014 as promised, Pesticide Action Network filed a renewed petition for a writ of mandamus in September 2014, which is the subject of this opinion. [...]

We heard oral argument on June 4, 2015. In response to questioning regarding when EPA intended to issue a final response to the administrative petition, counsel for EPA was unable to offer a firm date. However, counsel stated that EPA would know by June 30 whether the public comments received in response to its preliminary final denial of the administrative petition necessitated further proceedings. We thus ordered EPA to inform the court of the date by which it intended to either "finalize the preliminary denial of [the] administrative petition" or issue any other "final ruling" in this matter. In re Pesticide Action, Network N. Am., 790 F.3d 875 (9th Cir. 2015).

In response to that order, EPA asserted that its concerns about contamination of drinking water had convinced it to take more aggressive action to restrict chlorpyrifos. EPA stated that its current plan is to publish, before April 15, 2016, a proposed rule to "revoke all chlorpyrifos tolerances"—in essence, to impose an outright ban on the pesticide. In that update, however, EPA also noted that certain labeling changes could render such action “unnecessary.” Dissatisfied with the uncertainty of EPA's response, Pesticide Action Network reiterated its request that we issue a writ of mandamus compelling EPA to issue a “final” ruling on the administrative petition.

ANALYSIS

The only question before us is whether EPA’s delay in responding to the administrative petition warrants the extraordinary remedy of mandamus. We conclude that it does. EPA has spent nearly a decade reviewing Pesticide Action Network’s data and arguments. Even in response to our unambiguous order directing EPA to specify a date for issuing a “final ruling” on the administrative petition, the agency has still not stated with certainty when it intends to take formal action to grant or deny it. Issuing a writ of mandamus is necessary to end this cycle of incomplete responses, missed deadlines, and unreasonable delay.

The legal standard governing our analysis is neither complex nor contested by the parties. The Administrative Procedure Act instructs agencies to complete their work “within a reasonable time,” and grants courts of appeal the authority to “compel agency action unlawfully withheld or unreasonably delayed.” 5 U.S.C. §§ 555(b), 706(1). Our authority to issue a writ of mandamus is contained in the All Writs Act, 28 U.S.C. § 1651. Issuing a writ of mandamus directing a federal agency to act, however, is "an extraordinary remedy justified only in `exceptional circumstances.'" In re Cal. Power Exch. Corp., 245 F.3d 1110, 1120 (9th Cir.2001) (quoting Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 289, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988)). Mandamus is warranted in those rare instances when the agency's delay is “egregious.” Id. at 1124 (internal quotation marks omitted).

Our inquiry is governed by the six-factor test articulated in Telecommunications Research and Action Center v. F.C.C., 750 F.2d 70 (D.C.Cir.1984), known as the “TRAC factors.” These factors are:

(1) the time agencies take to make decisions must be governed by a rule of reason;

(2) where Congress has provided a timetable or other indication of the speed with which it expects the agency to proceed in the enabling statute, that statutory scheme may supply content for this rule of reason;

(3) delays that might be reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake;

(4) the court should consider the effect of expediting delayed action on agency activities of a higher or competing priority;

(5) the court should also take into account the nature and extent of the interests prejudiced by delay; and

(6) the court need not find any impropriety lurking behind agency lassitude in order to hold that agency action is unreasonably delayed.

Two years ago, in July 2013, we applied the TRAC factors to Pesticide Action Network's 2012 mandamus petition and found that they did not yet weigh in favor of judicial action. We explained that the “complexity of the issue” justified EPA's delay in answering the petition, and noted that the agency had many competing priorities consuming its resources. In re Pesticide Action Network, 532 Fed.Appx. at 651. Although Pesticide Action Network alleged that chlorpyrifos harmed human health and safety, the urgency of action was mitigated somewhat because EPA “regulates almost entirely in the realm of human health” and had certified the safety of chlorpyrifos in 2006. Critically, we recognized that issuing a writ was unnecessary in light of EPA's "concrete timeline" for finally resolving the petition in “February 2014.” 

EPA would have us adhere to the reasoning and holding of our prior disposition. But time changes things, including our weighing of the TRAC factors.

First and foremost, the “rule of reason” has tipped sharply in favor of Pesticide Action Network. Two years ago, EPA had been considering the administrative petition for six years and had a “concrete timeline” for issuing a final ruling in a matter of months. Now, the delay has stretched to eight years, and when we asked EPA to specify the precise date by which it would issue a “final ruling” on Pesticide Action Network's petition, it demurred. Instead, EPA told us it intends to initiate a proposed rulemaking next year, in April 2016. Not only is a proposed rulemaking not a final ruling, EPA also indicated that it might not issue such a rule at all if settlement discussions with industry are fruitful. These prospective conversations introduce yet another uncertainty in the process. What's more, EPA's latest status report says that it has “concerns about the risks to farmworkers” who are exposed to chlorpyrifos and states that “complex regulatory proceedings” may be necessary. Yet EPA does not offer a timetable for concluding or even initiating those proceedings. EPA's response isn't a “concrete timeline” for resolving the petition—it's a roadmap for further delay. EPA has stretched the “rule of reason” beyond its limits.

Another factor that has moved the needle is the threat posed by chlorpyrifos to human health. Although EPA determined that chlorpyrifos was “safe” in 2006, it has backtracked significantly from that pronouncement over the last several years. EPA recently imposed new labeling requirements on the chemical, and in its latest status report, EPA reported that chlorpyrifos poses such a significant threat to water supplies that a nationwide ban on the pesticide may be justified. We do not take this representation lightly. Yet EPA offers no acceptable justification for the considerable human health interests prejudiced by the delay. In view of EPA's own assessment of the dangers to human health posed by this pesticide, we have little difficulty concluding it should be compelled to act quickly to resolve the administrative petition.

Finally, although there is no allegation of impropriety underlying EPA's delay, we note that the agency has a significant history of missing the deadlines it has set in these proceedings. The D.C. Circuit's comment in Public Citizen Health Research Group v. Brock seems particularly apt here: “In light of the fact that [the agency's] timetable representations have suffered over the years from a persistent excess of optimism, we share petitioners' concerns as to the probable completion date.” 823 F.2d 626, 629 (D.C.Cir.1987) (per curiam). EPA's unreasonable delay in responding to the administrative petition has already been the subject of three non-frivolous lawsuits. There should not be a fourth.

CONCLUSION AND ORDER

The petition for a writ of mandamus is granted. EPA is directed to issue either a proposed or final revocation rule or a full and final response to the administrative petition by October 31, 2015. If EPA chooses to issue a proposed revocation rule, it shall inform the court by October 31, 2015, of the timeline for finalizing the proposed rule. The court will consider modification of this deadline only if EPA documents that extraordinary circumstances not already presented to the court will prevent its compliance.

The petition for a writ of mandamus is GRANTED.

We learned about how and why agencies start the rulemaking process. When agencies promulgate regulations, they usually use the informal rulemaking process, which is far less burdensome than the formal rulemaking procedure. Today, we will look at best practices and reasons for commenting on agencies’ proposed rules.

The Danger of A Single Story in Public Institution Decisionmaking

Hopefully, you watched Chimamanda Ngozi Adichie’s “The Danger of a Single Story” TED Talk. This video is important because, especially when we interact with agencies and provide comments in reaction to agencies’ proposals, we are adding our perspectives to the conversation, and describing our stakes in the agency’s decisionmaking. Agency decisions are determined by stakeholders including agency experts and political appointees, regulated industries, and public interests impacted by the regulated industries and regulations.

Often, our perspectives compete against the storytelling of industry lobbyists and agencies’ initiatives. It is easy to feel overwhelmed by these other perspectives. It is also sometimes tempting to adopt the perspectives of these competing interests that seem much more powerful than our own, especially when you feel disempowered or if imposter syndrome seeps in. Chimamanda Ngozi Adichie’s lesson reminds us to believe in our perspective and advocate on behalf of our communities and our understandings and experiences, especially when confronted with power. It is useful to keep the danger of a single story in mind, and to value your story and the stories of those you represent, when participating in agency decisionmaking and commenting on proposed rules.

Why Public Comments Matter 

Here is a PDF from Harvard Law School’s Center for Health Law and Policy Innovation illustrating some of these points in a health law context.

Commenting on proposed rules is an important tool for advocates because agencies are required to consider the comments and incorporate the comments into a statement of basis and purpose in the final rule according to APA section 553(c). Comments can shape the regulation by pointing out legal errors, critiquing the likely impacts of a rule and pointing out possible unintended consequences of the proposed rule. Comments can also applaud good decisionmaking or provide alternatives to that may improve the proposal. Comments also allow experts to chime in and provide for people who experience the impact of the regulated industry to share how the regulated activities affect their lives.

Sometimes, agencies propose rules to test whether the rule will be accepted by regulated industries and the public. If the agency receives an outpouring of critical comments on a proposed rule, a final rule may not materialize and the rulemaking may stop and be reevaluated by the agency.

Comments can also set the foundations for future lawsuits. Even if your comments feel futile and don’t change the rulemaking, they become part of the administrative record considered by courts that review the agency’s actions. Also, if agencies fail to adequately consider the comments per APA section 553(c), a judge may invalidate the rule on procedural grounds.

Good Rulemaking Practices - Tips and Resources

Elizabeth D. Mullin, author of The Art of Commenting: How to Influence Environmental Decisionmaking With Effective Comments, has created guides for written and verbal commenting.

There are no APA or other requirements for commenting. Comments can be from anyone, and they can be any length and contain any comments from personal feelings to scientific research. The commenting process is broad and undefined to democtratize participation in agency decisionmaking. It is meant to be open to all. 

Even though there are no requirements, there are some best practices for lawyers participating in commenting. Because lawyers have legal expertise, their comments can speak to legal issues and requirements that laypeople may be less prepared to discuss. You can harness the power of legal writing to create clear, concise, and persuasive arguments. Here are a few tips:

Before writing a comment: Do the research and make an outline 

Research the purpose and goals of the enabling statute, executive order, or other political or factual forces that prompted the rulemaking. Also look into the history of the rulemaking. Is this an amendment to an existing regulation? Are there any other relevant regulations at play? Is the agency acting on the recommendation of a Federal Advisory Committee or internal study?

Draft an outline for your comment. Define your objectives and write them out. Separate your comment into subheadings and use your IRAC skills to organize your arguments/points.

Organize with others. Reach out to other organizations doing similar work to partner with them in a single comment or coordinate your comments to strengthen your message.

During writing: Be clear, concise, and organized

Use subheadings and topic sentences to draw attention and delineate your main points.

Make your strongest arguments. Consider and incorporate agency goals, explaining how your arguments will help the agency satisfy its policy objectives and legal requirements. You can do this by:

-Identifying legal violations 

-Suggesting specific language

-Illustrating problems with examples

-Offering solutions to help agencies reach goals

-Back up your claims by citing solid primary and secondary authorities. Base your ideas in scientific studies, clear legal arguments that cite the proper legal authorities, and citations that support your arguments.

Before submitting: Proofread, and have someone read and provide feedback on the comment to ensure your arguments come across.

Regulations.gov and The Realities of Online Rulemaking Participation

Commenting on federal agencies’ proposed regulations, like most of our communications, has become an online activity. Congress passed the E-Government Act of 2002, Pub. L. No. 107-347 § 2(a)(1) codified at 44 U.S.C. §3601 to bring federal government processes online. Under this law, agencies were required to provide electronic rulemaking dockets online and to accept online public comments on proposed rules electronically. In 2011, President Obama issued Executive Order 13,563, which required executive agencies to provide the public with opportunities to comment on proposed regulation online and to provide rulemaking dockets on Regulations.gov. Executive Order 13,579 extended the same requirements to independent agencies. 

Since then, Regulations.gov has become a go-to online hub for finding rulemaking dockets and commenting on proposed regulations. The website makes commenting on regulations easier than ever before, providing the commenter has internet access. Regulations.gov is where to go if you want to comment on a regulation or check on an agency’s rulemaking docket. There is a separate FederalRegister.gov website to look at and search through the Federal Register. These two websites, together, make agency rulemaking more accessible than ever.

In some cases, this online accessibility may hamper the democratic goals of commenting and participating in rulemaking. Online systems can be gamed. In one famous rulemaking that determined the fate of net neutrality, a single proposed rule got 24 million comments. But most of the comments were filed by bots and fake email accounts. 

The rule was the Federal Communications Commission (“FCC”) “net neutrality” rule that stripped away equal access to the internet. The proposed “Restoring Internet Freedom Order”, would reclassify broadband internet services as “information services” instead of common carrier telecommunications services. Common carriers provide services to the general public for a set price. In contrast, private carriers provide services to limited numbers of customers at varying prices. Common telecommunications carriers serve the general public and are regulated by the FCC under the Telecommunications Act of 1934 to ensure that they provide equal access and protect users’ privacy. The proposed rule would let private internet companies charge whatever fees they want to whoever they want and bypass privacy requirements. 

The millions of bot comments, both from those in favor of the rule, and from advocacy groups with “click a button to make a comment” options in their campaigns to protect net neutrality, flooded the system, drowning out the debate with thousands of AI-generated comments and duplicative comments.

Here is a Senate Report discussing the online commenting problems titled “Abuses of the Federal Notice-And-Comment Rulemaking Process,”

Administrative law scholars had long feared that automated commenting may dilute the commenting process by introducing bots responses and other digitally-drafted comments into the commenting process. Lowering the bar to engagement would let not just people, but also computers, participate in the system. It would also make the commenting process susceptible to getting “swamped” with thousands of comments.

So, the comment process is both more transparent and accessible than ever, and simultaneously more easily manipulated. This conundrum is one that governments will have to deal with as we move to more online systems. (We see similar issues in FOIA portals and other junctures where the public can interact with government decisionmaking and transparency.)

APA section 553(b) requires that agencies publish “general notice of proposed rulemaking” in the Federal Register. A “Notice of Proposed Rulemaking” in the Federal Register (often abbreviated as “NPRM” or “NOPR”) serves as constructive notice of a new rule, and is legally sufficient notice even if an affected party is not aware of the notice. Lawyers and advocates doing regulatory work should read regulatory updates and news, or look at Regulations.gov or the Federal Register regularly to see whether there are any new proposed rules that may impact their clients or work.

According to APA section 553(b), NPRMs must include the “time, place, and nature” of the public proceedings so that people can participate in the commenting process. NPRMs must also state the legal authority under which the proposed rule is proposed (the enabling statute). Agencies also have to provide “either the terms or substance of the proposed rule or a description of the subjects and issues involved.” 

Agencies usually publish much more than the bare minimum notice required by APA section 553(b). An NPRM usually contain the full text of the proposed rule and an extensive “preamble” that gives background and describes what the rule is intended to do. Thorough NPRMs have evolved because statutes have added requirements to rulemaking on top of the “boilerplate” APA requirements, and also because agencies want to avoid getting sued for lack of notice by providing plenty of notice.

But, even with long, in-depth NPRMs, agencies still sometimes fail to provide sufficient notice. The APA’s notice requirement was supposed to ensure that agencies sufficiently apprised “interested persons” of the issues involved so that they could “present responsive data or argument.” S. Doc. No. 248, 79th Cong., 2d Sess. 200 (1946). When agencies fail to provide adequate notice to apprise stakeholders of the issues involved in the rulemaking, courts will remand the final rules back to the agencies, and the agencies will have to go through new notice and comment periods. 

It is not unusual for agencies to be challenged about the sufficiency of the notice they give when they propose rules. Whenever agencies adopt final rules that are different from what the NPRM describes, stakeholders may claim that the agencies failed to provide adequate notice. The stakeholder has to wait for the final rule to come out though… The courts must then weigh whether the notice was sufficient, and whether the change to the proposal was minor or more consequential. Sometimes, agencies note unresolved issues that may change in the NPRM preamble, but other times, agencies change their rulemaking decisions mid-course because of information that commenters provide or other things they learn in the course of the rulemaking process. 

The courts have to balance the interest of the public in being notified about what agencies are proposing in the rulemaking process with the interest of administrative flexibility - allowing the agency to improve rules without continually having to re-start the notice and comment process with a new notice for every amendment. Agencies claim that the latter would prevent them from ever changing a proposed rule, but, if agencies can change rules without giving new notice, people are denied the opportunity to participate and influence rulemaking outcomes. 

The test courts apply to make this difficult balancing choice is the “logical outgrowth test.” Courts have decided that the public has notice when the final rule is a “logical outgrowth” of the rulemaking process. Specifically, the court sees whether the final rule materially alters the issues in the rulemaking or, if the final rule substantially departs from the terms or substance of the proposed rule. In those cases, notice is inadequate for the purposes of the Administrative Procedure Act. 

These two cases are examples of how the court applies the logical outgrowth test. The first case is a fun topic Chocolate Manufacturers and the second case is a horribly confusing topic with fun logical outgrowth language. 

Chocolate Manufacturers Association of the United States v. Block

755 F.2d 1098 (4th Cir. 1985)

JAMES SPROUSE, Circuit Judge:

Chocolate Manufacturers Association (CMA) appeals from the decision of the district court denying it relief from a rule promulgated by the Food and Nutrition Service (FNS) of the United States Department of Agriculture (USDA or Department). CMA protests that part of the rule that prohibits the use of chocolate flavored milk in the federally funded Special Supplemental Food Program for Women, Infants and Children (WIC Program). Holding that the Department's proposed rulemaking did not provide adequate notice that the elimination of flavored milk would be considered in the rulemaking procedure, we reverse.

I

Since 1946 USDA has administered a variety of child nutrition programs under the National School Lunch Act and the Child Nutrition Act of 1966. [...] The WIC Program was established by Congress in 1972 to assist pregnant, postpartum, and breastfeeding women, infants and young children from families with inadequate income whose physical and mental health is in danger because of inadequate nutrition or health care. Under the program, the Department designs food packages reflecting the different nutritional needs of women, infants, and children and provides cash grants to state or local agencies, which distribute cash or vouchers to qualifying individuals in accordance with Departmental regulations as to the type and quantity of food.

In 1975 Congress revised and extended the WIC Program through fiscal year 1978 and, for the first time, defined the "supplemental foods" which the program was established to provide. The term shall mean those foods containing nutrients known to be lacking in the diets of populations at nutritional risk and, in particular, those foods and food products containing high-quality protein, iron, calcium, vitamin A, and vitamin C.... The contents of the food package shall be made available in such a manner as to provide flexibility, taking into account medical and nutritional objectives and cultural eating patterns.

Pursuant to this statutory definition, the Department promulgated new regulations specifying the contents of WIC Program food packages. These regulations specified that flavored milk was an acceptable substitute for fluid whole milk in the food packages for women and children, but not infants. This regulation formalized the Department's practice of permitting the substitution of flavored milk, a practice observed in the WIC Program since its inception in 1973 as well as in several of the other food programs administered by the Department.

In 1978 Congress, in extending the WIC Program through fiscal year 1982, redefined the term "supplemental foods" to mean those foods containing nutrients determined by nutritional research to be lacking in the diets of pregnant, breastfeeding, and postpartum women, infants, and children, as prescribed by the Secretary. State agencies may, with the approval of the Secretary, substitute different foods providing the nutritional equivalent of foods prescribed by the Secretary, to allow for different cultural eating patterns.

Congress stated further: The Secretary shall prescribe by regulation supplemental foods to be made available in the program under this section. To the degree possible, the Secretary shall assure that the fat, sugar, and salt content of the prescribed foods is appropriate.

To comply with this statutory redefinition, the Department moved to redraft its regulations specifying the WIC Program food packages. In doing so it relied upon information collected during an extensive investigative effort which had begun in 1977. In June 1977 the Department held public hearings in seven cities and elicited testimony on the structure and administration of the WIC Program. The Department invited many interested and informed parties to attend these hearings — the governor and chief health officer of every state, the House Education and Labor Committee, the Senate Select Committee on Nutrition Evaluation, state WIC coordinators, industry representatives, and professional and advocacy groups. In addition to information gathered at the public hearings, the Department received periodic reports from the National Advisory Council on Maternal, Infant, and Fetal Nutrition, as well as recommendations from a Food Package Advisory Panel convened in October 1978.

Using this information as well as its own research as a basis, the Department in November 1979 published for comment the proposed rule at issue in this case. 44 Fed.Reg. 69254 (1979). Along with the proposed rule, the Department published a preamble discussing the general purpose of the rule and acknowledging the congressional directive that the Department design food packages containing the requisite nutritional value and appropriate levels of fat, sugar, and salt. Discussing the issue of sugar at length, it noted, for example, that continued inclusion of high sugar cereals may be “contrary to nutrition education principles and may lead to unsound eating practices.” It also noted that high sugar foods are more expensive than foods with lower sugar content, and that allowing them would be “inconsistent with the goal of teaching participants economical food buying patterns.”

The rule proposed a maximum sugar content specifically for authorized cereals. The preamble also contained a discussion of the sugar content in juice, but the Department did not propose to reduce the allowable amount of sugar in juice because of technical problems involved in any reduction. Neither the rule nor the preamble discussed sugar in relation to flavoring in milk. Under the proposed rule, the food packages for women and children without special dietary needs included milk that could be “flavored or unflavored.” 

The notice allowed sixty days for comment and specifically invited comment on the entire scope of the proposed rules: “The public is invited to submit written comments in favor of or in objection to the proposed regulations or to make recommendations for alternatives not considered in the proposed regulations.” Over 1,000 comments were received from state and local agencies, congressional offices, interest groups, and WIC Program participants and others. Seventy-eight commenters, mostly local WIC administrators, recommended that the agency delete flavored milk from the list of approved supplemental foods.

In promulgating the final rule, the Department, responding to these public comments, deleted flavored milk from the list, explaining:

In the previous regulations, women and children were allowed to receive flavored or unflavored milk. No change in this provision was proposed by the Department. However, 78 commenters requested the deletion of flavored milk from the food packages since flavored milk has a higher sugar content than unflavored milk. They indicated that providing flavored milk contradicts nutrition education and the Department's proposal to limit sugar in the food packages. Furthermore, flavored milk is more expensive than unflavored milk. The Department agrees with these concerns. There are significant differences in the sugar content of fluid whole milk and low fat chocolate milk. Fluid whole milk supplies 12.0 grams of carbohydrate per cup compared to 27.3 grams of carbohydrate per cup provided by low fat chocolate milk. If we assume that the major portion of carbohydrate in milk is in the form of simple sugar, fluid whole milk contains 4.9% sugar contrasted with 10.9% sugar in low fat chocolate milk. Therefore, to reinforce nutrition education, for consistency with the Department's philosophy about sugar in the food packages, and to maintain food package costs at economic levels, the Department is deleting flavored milk from the food packages for women and children. Although the deletion of flavored milk was not proposed, the comments and the Department's policy on sugar validate this change. 

After the final rule was issued, CMA petitioned the Department to reopen the rulemaking to allow it to comment, maintaining that it had been misled into believing that the deletion of flavored milk would not be considered. In a letter to CMA dated November 18, 1981, the Department indicated that it would reopen the issue of flavored milk for "further public comments" and would request “rationale both supporting and opposing the disallowance of flavored milk in the WIC Program.” It subsequently reversed this position, however, and declined to reopen the rulemaking procedure.

On this appeal, CMA contends first that the Department did not provide notice that the disallowance of flavored milk would be considered, and second that the Department gave no reasoned justification for changing its position about the nutritional value of chocolate in the food distributed under its authority. The Department responds to the first contention by arguing that its notice advised the public of its general concern about high sugar content in the proposed food packages and that this should have alerted potentially interested commenters that it would consider eliminating any food with high sugar content. It also argues in effect that the inclusion of flavored milk in the proposed rule carried with it the implication that both inclusion and exclusion would be considered in the rulemaking process. Because we agree with CMA that the Department provided inadequate notice and, therefore, that it must reopen the comment period on the rule, we do not reach the issue of the reasonable justification for its change of position.

II

The requirement of notice and a fair opportunity to be heard is basic to administrative law. Our single chore is to determine if the Department's notice provided interested persons, including CMA, with that opportunity. We must decide whether inclusion of flavored milk in the allowable food packages under the proposed rule should have alerted interested persons that the Department might reverse its position and exclude flavored milk if adverse comments recommended its deletion from the program.

Section 4 of the Administrative Procedure Act (APA) requires that the notice in the Federal Register of a proposed rulemaking contain “either the terms or substance of the proposed rule or a description of the subjects and issues involved.” 5 U.S.C. § 553(b)(3). The purpose of the notice-and-comment procedure is both “to allow the agency to benefit from the experience and input of the parties who file comments ... and to see to it that the agency maintains a flexible and open-minded attitude towards its own rules.” National Tour Brokers Ass'n v. United States, 591 F.2d 896, 902 (D.C.Cir.1978). The notice-and-comment procedure encourages public participation in the administrative process and educates the agency, thereby helping to ensure informed agency decisionmaking. 

The Department’s published notice here consisted of the proposed rule and a preamble discussing the negative effect of high sugar content in general and specifically in relation to some foods such as cereals and juices, but it did not mention high sugar content in flavored milk. The proposed rule eliminated certain foods with high sugar content but specifically authorized flavored milk as part of the permissible diet. In a discussion characterized by pointed identification of foods with high sugar content, flavored milk was conspicious by its exclusion. If after comments the agency had adopted without change the proposed rule as its final rule, there could have been no possible objection to the adequacy of notice. The public was fully notified as to what the Department considered to be a healthy and adequate diet for its target group. The final rule, however, dramatically altered the proposed rule, changing for the first time the milk content of the diet by deleting flavored milk. The agency concedes that the elimination of flavored milk by the final rule is a complete reversal from its treatment in the proposed rule, but it explains that the reversal was caused by the comments received from 78 interested parties — primarily professional administrators of the WIC Program.

This presents then not the simple question of whether the notice of a proposed rule adequately informs the public of its intent, but rather the question of how to judge the adequacy of the notice when the proposal it describes is replaced by a final rule which reaches a conclusion exactly opposite to that proposed, on the basis of comments received from parties representing only a single view of a controversy. In reviewing the propriety of such agency action, we are not constrained by the same degree of deference we afford most agency determinations. “Though our review of an agency's final decision is relatively narrow, we must be strict in reviewing an agency's compliance with procedural rules.” BASF Wyandotte Corp. v. Costle, 598 F.2d at 641; see also Weyerhauser Co. v. Costle, 590 F.2d 1011, 1025-28 (D.C.Cir.1978) (whereas a court defers to an agency's technical judgments, it is less hesitant to reject the agency's interpretation of statutes, and in reviewing an agency's procedural integrity, the court relies on its own independent judgment). “The question of adequacy of notice where a proposed rule is changed after comment ... requires careful consideration on a case-by-case basis.” 

There is no question that an agency may promulgate a final rule that differs in some particulars from its proposal. Otherwise the agency “can learn from the comments on its proposals only at the peril of starting a new procedural round of commentary.” International Harvester Co. v. Ruckelshaus, 478 F.2d 615, 632 n. 51 (D.C.Cir.1973). An agency, however, does not have carte blanche to establish a rule contrary to its original proposal simply because it receives suggestions to alter it during the comment period. An interested party must have been alerted by the notice to the possibility of the changes eventually adopted from the comments. Although an agency, in its notice of proposed rulemaking, need not identify precisely every potential regulatory change the notice must be sufficiently descriptive to provide interested parties with a fair opportunity to comment and to participate in the rulemaking. 

As we have indicated, appellate review of changes in a proposed rule after comments is more specifically controlled by the circumstances of each case than most administrative appeals. Nevertheless, a review of decisions of our sister circuits performing similar tasks is helpful. In BASF Wyandotte Corp. v. Costle, 598 F.2d 637 (1st Cir.1979), the court considered an EPA regulation controlling the discharge of pollutants into navigable waters by the pesticide industry. The EPA originally proposed dividing the organic pesticide industry into three subcategories, setting different pollutant standards for each one. The industry, arguing for expansion of the number of subcategories and, therefore, pollutant standards, submitted comments demonstrating that the proposed three subcategories were indistinguishable. The EPA, while agreeing with the comments, chose a different solution: it altered its initial rule by eliminating the subcategories and applying uniform standards throughout the entire organic pesticide industry. The industry complained that the EPA's decision to contract rather than expand the number of subcategories took them entirely by surprise. “The essential inquiry,” the court said, “is whether the commentators have had a fair opportunity to present their views on the contents of the final plan.” The First Circuit reasoned that even if the initial rule had proposed uniform standards, the content of petitioner's comments would not have been different for they still would have argued, albeit more voluminously and vociferously, for more subcategories. The petitioners, therefore, “had a fair opportunity to present their views.” [...]

The test devised by the First Circuit for determining adequacy of notice of a change in a proposed rule occurring after comments appears to us to be sound: notice is adequate if the changes in the original plan “are in character with the original scheme,” and the final rule is a “logical outgrowth” of the notice and comments already given. Other circuits also have adopted some form of the "logical outgrowth" test. Stated differently, if the final rule materially alters the issues involved in the rulemaking or, if the final rule “substantially departs from the terms or substance of the proposed rule,” the notice is inadequate.

There can be no doubt that the final rule in the instant case was the “outgrowth” of the original rule proposed by the agency, but the question of whether the change in it was in character with the original scheme and whether it was a “logical outgrowth” is not easy to answer. In resolving this difficult issue, we recognize that, although helpful, verbal formulations are not omnipotent talismans, and we agree that in the final analysis each case “must turn on how well the notice that the agency gave serves the policies underlying the notice requirement.” Under either view, we do not feel that CMA was fairly treated or that the administrative rulemaking process was well served by the drastic alteration of the rule without an opportunity for CMA to be heard.

It is apparent that for many years the Department of Agriculture has permitted the use of chocolate in some form in the food distribution programs that it administers. The only time the Department has proposed to remove chocolate in any form from its programs was in April 1978 when it sought to characterize chocolate as a candy and remove it from the School Lunch Program. That proposal was withdrawn after CMA commented, supporting chocolate as a part of the diet. Chocolate flavored milk has been a permissible part of the WIC Program diet since its inception and there have been no proposals for its removal until the present controversy.

The Department sponsored commendable information-gathering proceedings prior to publishing its proposed rule. Together with its own research, the information gathered in the pre-publication information solicitations formed the basis for the proposed rule. Most of the same information was presented to Congress prior to enactment of the 1978 statute that precipitated the 1979 rulemaking here in controversy. The National Advisory Council on Maternal, Infant, and Fetal Nutrition provided information and advice. Regional council meetings were open to the public and held in diverse areas of the country. Department of Agriculture personnel attended a number of regional, state, and local meetings and gathered opinions concerning possible changes in the food packages. The agency also gathered a food package advisory panel of experts seeking their recommendations. Food packages were designed based on the information and advice gleaned from these sources. In all of these activities setting out and discussing food packages, including the proposed rule and its preamble, the Department never suggested that flavored milk be removed from the WIC Program.

The published preamble to the proposed rule consisted of twelve pages in the Federal Register discussing in detail factors that would be considered in making the final rule. Two pages were devoted to a general discussion of nutrients, including protein, iron, calcium, vitamin A, vitamin C, folic acid, zinc, and fiber, and the dangers of overconsumption of sugar, fat, and salt. The preamble discussed some foods containing these ingredients and foods posing specific problems. It did not discuss flavored milk.

In the next eight pages of the preamble, the nutrition content of food packages was discussed — under the general headings of “cereal” and “juice” for infants; and “eggs,” “milk,” “cheese,” “peanut butter and mature dried beans and peas,” “juice,” “additional foods,” “cereals,” “iron,” “sugar,” “whole grain cereals,” “highly fortified cereals,” and “artificial flavors and colors” for women and children. The only reference to milk concerned the correct quantity to be provided to children, i.e., 24 quarts per month instead of 28 quarts. Although there was considerable discussion of the sugar content of juice and cereal, there was none concerning flavored milk. Likewise, there was considerable discussion of artificial flavor and color in cereal but none concerning flavored milk. The only reference to flavored milk was in the two-page discussion of the individual food packages, which noted that the proposed rule would permit the milk to be flavored or unflavored. The proposed rule which followed the preamble expressly noted that flavored or unflavored milk was permitted in the individual food packages for women and children without special dietary needs.

At the time the proposed rulemaking was published, neither CMA nor the public in general could have had any indication from the history of either the WIC Program or any other food distribution programs that flavored milk was not part of the acceptable diet for women and children without special dietary needs. The discussion in the preamble to the proposed rule was very detailed and identified specific foods which the agency was examining for excess sugar. This specificity, together with total silence concerning any suggestion of eliminating flavored milk, strongly indicated that flavored milk was not at issue. The proposed rule positively and unqualifiedly approved the continued use of flavored milk. Under the specific circumstances of this case, it cannot be said that the ultimate changes in the proposed rule were in character with the original scheme or a logical outgrowth of the notice. We can well accept that, in general, an approval of a practice in a proposed rule may properly alert interested parties that the practice may be disapproved in the final rule in the event of adverse comments. The total effect of the history of the use of flavored milk, the preamble discussion, and the proposed rule, however, could have led interested persons only to conclude that a change in flavored milk would not be considered. Although ultimately their comments may well have been futile, CMA and other interested persons at least should have had the opportunity to make them. We believe that there was insufficient notice that the deletion of flavored milk from the WIC Program would be considered if adverse comments were received and, therefore, that affected parties did not receive a fair opportunity to contribute to the administrative rulemaking process. That process was ill-served by the misleading or inadequate notice concerning the permissibility of chocolate flavored milk in the WIC Program and “does not serve the policy underlying the notice requirement.”

The judgment of the district court is therefore reversed, and the case is remanded to the administrative agency with instructions to reopen the comment period and thereby afford interested parties a fair opportunity to comment on the proposed changes in the rule.

REVERSED AND REMANDED WITH INSTRUCTIONS.

Environmental Integrity Project v. EPA

425 F.3d 992 (D.C. Cir. 2005)

DAVID B. SENTELLE, Circuit Judge.

The Environmental Integrity Project and other petitioners petition for review of the Environmental Protection Agency’s Part 70 regulations, as well as the Agency’s revised interpretation of its “periodic” and “umbrella” monitoring rules. Petitioners contend EPA’s Part 70 regulations are arbitrary, capricious, and otherwise unlawful. In addition, petitioners claim EPA’s actions in this case violate the notice-and-comment requirements of the Administrative Procedure Act (APA). Because we agree EPA's final rule was not a "logical outgrowth" of the Agency's proposed interim rule, we grant the petition for review, vacate the final rule, and remand the matter to the Secretary. [...]

I. Background

[...] The Clean Air Act (CAA) requires that [every major stationary source of air pollution has to get an operating permit (called a Title V permit) to ensure that it will comply with pollution limitations. (Stationary sources are not mobile like cars or trucks. Stationary sources are air pollution sources like factories and power plants that do not move.) All stationary sources that have Title V permits must monitor their air emissions (pollution discharges) to assure that they are complying with the CAA. The EPA has promulgated numerous monitoring regulations. Two monitoring regulations are relevant here: the “periodic monitoring” rule and the “umbrella monitoring” rule. These monitoring regulations overlap and conflict with each other, confusing permit-holders.]

The “periodic monitoring” rule, 40 C.F.R. § 70.6(a)(3)(i)(B), requires that

[w]here the applicable requirement does not require periodic testing or instrumental or noninstrumental monitoring (which may consist of recordkeeping designed to serve as monitoring), [each permit must contain] periodic monitoring sufficient to yield reliable data from the relevant time period that are representative of the source's compliance with the permit. Such monitoring requirements shall assure use of terms, test methods, units, averaging periods, and other statistical conventions consistent with the applicable requirement. Recordkeeping provisions may be sufficient to meet the requirements of [the periodic monitoring rule].

The “umbrella” rule, 40 C.F.R. § 70.6(c)(1), requires that each permit contain, “[c]onsistent with [the “periodic monitoring” rule], compliance certification, testing, monitoring, reporting, and recordkeeping requirements sufficient to assure compliance with the terms and conditions of the permit.” EPA must review and approve all Title V permits, and if a specific permit requires insufficient monitoring, EPA must reject it. 

In November and December 2000, EPA rejected two Title V permits. In both decisions, EPA held the “umbrella” rule empowers state permitting authorities to review, on a case-by-case basis, the sufficiency of each permittee's monitoring requirements, independent of any other monitoring that might be imposed under the “periodic monitoring” rule. Thus, EPA concluded that where a permit requires no “periodic” monitoring at all, the “umbrella” rule is satisfied by meeting the more substantive requirements of the “periodic monitoring” rule. On the other hand, where there is some periodic monitoring but it is not sufficient to assure compliance, the umbrella rule's “separate regulatory standard” governs instead and requires case-by-case enhancement of existing monitoring “as necessary to be sufficient to assure compliance.” 

[Note from Lamdan: YES, reader, this is very confusing! It helps to think of the “umbrella” and “periodic” monitoring requirements, simply, as two different monitoring requirements. If the EPA requires both umbrella and periodic monitoring requirements then state environmental agencies administering the permit program can tell the polluters to do more monitoring if they are not doing enough “periodic” monitoring. Conversely, if the EPA requires only one of the requirements (umbrella or periodic monitoring) then Title V permit holders can do less monitoring. Title V permitting agencies could not make a permit-holding polluter with periodic monitoring plans add additional, more stringent umbrella monitoring plans on top of the periodic monitoring.]

On September 17, 2002, EPA published a proposed rule to clarify the monitoring required in Title V permits by “codifying” the interpretation of Part 70 that the Agency embraced in the permit rejection cases. Specifically, EPA proposed to remove the italicized prefatory language to § 70.6(c)(1) providing that all Title V permits contain, “[c]onsistent with paragraph (a)(3) of this section,” monitoring “sufficient to assure compliance with the terms and conditions of the permit.” [This proposed rule would make the “umbrella” and “periodic” monitoring requirements independent of each other. The two monitoring regulations would, in some cases, require stationary source air polluters to adopt both periodic and umbrella monitoring plans.]

In its final rule, however, EPA decided not to amend Part 70. [...] Instead of codifying the two permit decisions, EPA's final rule switched course and adopted the opposite position, holding that [the periodic monitoring requirement and the umbrella monitoring requirement] are not “separate regulatory standard[s],” and permits that satisfy [periodic monitoring requirements] cannot be supplemented with additional monitoring requirements under the [umbrella monitoring rule]. The upshot of EPA's final interpretation of its Part 70 rules is that state permitting authorities are now prohibited from adding new monitoring requirements under the “umbrella” rule if the Title V permit already contains some (albeit insufficient) monitoring under the “periodic monitoring” rule.

EPA explains its abandonment of the proposed rule (and its adoption of the inverse interpretation of its Part 70 regulations) on the basis of public comments, which insisted that source-specific, case-by-case reviews by permitting authorities would have been unduly time-consuming and wasteful of valuable regulatory resources. [...]

II. Analysis

A.

This Court will uphold EPA's final agency action unless it was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. See 5 U.S.C. § 706(2)(A). However, an interpretation of a legislative rule “cannot be modified without the notice and comment procedure that would be required to change the underlying regulation—otherwise, an agency could easily evade notice and comment requirements by amending a rule under the guise of reinterpreting it.” Molycorp, Inc. v. EPA, 197 F.3d 543, 546 (D.C.Cir. 1999).

B.

The Environmental Integrity Project and other petitioners raise four principal arguments in their petition for review. First, petitioners argue EPA’s Part 70 regulations unlawfully, arbitrarily, and capriciously compel state permitting authorities to accept “inadequate but ‘periodic’ monitoring ... without enhancement.” [...] Finally, petitioners argue that EPA's final rule violates APA §§ 551(5), 553(c), because it was not a “logical outgrowth” of the Agency's proposed interim rule and therefore did not comport with the requirements of notice-and-comment rulemaking. Because we conclude the fourth and final argument is dispositive in this case, we need not and do not reach petitioners' other claims. 

C.

Last term, in International Union, United Mine Workers of America v. Mine Safety & Health Administration, 407 F.3d 1250 (D.C.Cir. 2005), we noted:

[The APA's n]otice requirements are designed (1) to ensure that agency regulations are tested via exposure to diverse public comment, (2) to ensure fairness to affected parties, and (3) to give affected parties an opportunity to develop evidence in the record to support their objections to the rule and thereby enhance the quality of judicial review.

Given the strictures of notice-and-comment rulemaking, an agency’s proposed rule and its final rule may differ only insofar as the latter is a “logical outgrowth” of the former. See Northeast Maryland Waste Disposal Auth., 358 F.3d at 952 (stating a final rule is a “logical outgrowth” of a proposed rule only if interested parties “‘should have anticipated’ that the change was possible, and thus reasonably should have filed their comments on the subject during the notice-and-comment period”) The “logical outgrowth” doctrine does not extend to a final rule that finds no roots in the agency’s proposal because “[s]omething is not a logical outgrowth of nothing,” Kooritzky, 17 F.3d at 1513, nor does it apply where interested parties would have had to “divine [the agency’s] unspoken thoughts,” Arizona Pub. Serv. Co. v. EPA, 211 F.3d 1280, 1299 (D.C.Cir.2000) , because the final rule was “surprisingly distant” from the Agency's proposal. International Union, 407 F.3d at 1260.

Thus, we have refused to allow agencies to use the rulemaking process to pull a surprise switcheroo on regulated entities. In International Union, for example, the Agency's proposed rule provided that “[a] minimum air velocity of 300 feet per minute must be maintained” to ventilate underground coal mines. The final rule, however, provided that “[t]he maximum air velocity in the belt entry must be no greater than 500 feet per minute, unless otherwise approved in the mine ventilation plan.” Although “[t]here were some comments during the hearings urging the Secretary to set a maximum velocity cap,” we vacated the final rule because the Agency “did not afford a ... public notice of its intent to adopt, much less an opportunity to comment on, such a cap.” International Union, 407 F.3d at 1261; see also Fertilizer Inst. v. EPA, 935 F.2d 1303, 1312 (D.C.Cir. 1991) (stating EPA “cannot bootstrap notice from a comment”) [...]

EPA argues that it met its notice-and-comment obligations because its final interpretation was also mentioned (albeit negatively) in the Agency's proposal. However, this argument proves too much. If the APA's notice requirements mean anything, they require that a reasonable commenter must be able to trust an agency's representations about which particular aspects of its proposal are open for consideration. A contrary rule would allow an agency to reject innumerable alternatives in its Notice of Proposed Rulemaking only to justify any final rule it might be able to devise by whimsically picking and choosing within the four corners of a lengthy “notice.” Such an exercise in “looking over a crowd and picking out your friends,” does not advise interested parties how to direct their comments and does not comprise adequate notice under APA § 553(c).

In this case, EPA proposed to codify its interpretation of the Part 70 rules through an amendment of the regulatory text. Whatever a “logical outgrowth” of this proposal may include, it certainly does not include the Agency's decision to repudiate its proposed interpretation and adopt its inverse. We therefore hold EPA's final rule violated the APA's notice-and-comment requirements.

III. Conclusion

For the reasons set forth above, we [...] vacate the final rule, and remand the matter to the Secretary [...]

Case Law Limits on Rulemaking Procedures

In the 1970’s the Supreme Court decided three cases that set limits on how the courts can interfere in the rulemaking process:

United States v. Allegheny-Ludlum Steel Corp.: APA section 553 rarely triggers the requirement of formal rulemaking, even when stakeholders want more procedures and opportunities to participate in the rulemaking process.

United States v. Florida East Coast Railway Co.: Limits hearing requirements agencies have to undertake in rulemaking (reiterating Allegheny-Ludlum)

Vermont Yankee Nuclear Power Corp. v. NRDC: Courts cannot impose additional procedures on agencies beyond those imposed by Congress (even more broad than railroad cases)

The first two cases, Allegheny-Ludlum Steel Corp. and Florida East Coast Railway Co., deal with disputes between regulated train companies and train shippers and the Interstate Commerce Commission (“ICC”) a now-defunct federal agency that was created to regulate U.S. railroad companies. Both of the ICC cases limit the use of formal rulemaking procedures. Each case explains that APA section 553(c) only applies when Congress specifies that rules will be made “on the record” after the “opportunity for a hearing.” Courts read the language in APA section 553(c) saying “When rules are required by statute to be made on the record after opportunity for an agency hearing, sections 556 and 557 of this title apply instead of this subsection.” to only trigger section 556 and 557 rulemaking requirements when enabling statutes say “on the record after opportunity for a hearing.” This language rarely appears in enabling statutes, so formal rulemaking is rarely required.

The third case, Vermont Yankee, limits court intervention in agency procedures more broadly. In Vermont Yankee, the Supreme Court says that courts cannot impose additional rulemaking procedures on agencies beyond those required by Congress through the APA and enabling statutes.

UNITED STATES v. ALLEGHENY-LUDLUM STEEL CORP.

406 U.S. 742 (1972)

MR. JUSTICE REHNQUIST delivered the opinion of the Court.

[The “ICC” was an agency that regulated railroads. It was abolished after Congress passed the ICC Termination Act of 1995. After World War I, Congress passed the Esch Act to empowered the ICC to regulate railroad cars to ensure that railroad companies were using their services efficiently. In 1969, the ICC promulgated two rules that required freight cars to be returned to the lines that owned them after they were unloaded. These rules were meant to supply more freight cars to the Nation’s shippers because shippers were suffering from freight car shortages at peak loading periods. The ICC found that a major cause for the inadequate supply of freight cars was the operation of a national “car-pool” system where freight cars were shared across railroad lines and not returned immediately to their own lines. This left some lines without their empty, ready-to-use freight cars for extended periods of time.

Several railroads and shippers sued to enjoin the ICC rules, contending that the car service rules would seriously disrupt established railroad industry practices and cancel out the rules’ intended benefits, so the rules are not “reasonable” as that term is used in the Esch Act. The railroads and shippers also claimed that the ICC failed to comply with the APA by not using formal rulemaking procedures.] 

[...] Appellees claim that the Commission's procedure here departed from the provisions of 5 U. S. C. §§ 556 and 557 of the Act. Those sections, however, govern a rulemaking proceeding only when 5 U. S. C. § 553 so requires. The latter section, dealing generally with rulemaking, makes applicable the provisions of §§ 556 and 557 only “[w]hen rules are required by statute to be made on the record after opportunity for an agency hearing . . . .” The Esch Act, authorizing the Commission “after hearing, on a complaint or upon its own initiative without complaint, [to] establish reasonable rules, regulations, and practices with respect to car service . . . ,” does not require that such rules “be made on the record.” That distinction is determinative for this case. “A good deal of significance lies in the fact that some statutes do expressly require determinations on the record.” 2 K. Davis, Administrative Law Treatise § 13.08, p. 225 (1958). Sections 556 and 557 need be applied “only where the agency statute, in addition to providing a hearing, prescribes explicitly that it be ‘on the record.’” Siegel v. Atomic Energy Comm'n, 130 U. S. App. D. C. 307, 314 (1968). We do not suggest that only the precise words “on the record” in the applicable statute will suffice to make §§ 556 and 557 applicable to rulemaking proceedings, but we do hold that the language of the Esch Car Service Act is insufficient to invoke these sections [...]

This proceeding, therefore, was governed by the provisions of 5 U. S. C. § 553 of the Administrative Procedure Act, requiring basically that notice of proposed rulemaking shall be published in the Federal Register, that after notice the agency give interested persons an opportunity to participate in the rulemaking through appropriate submissions, and that after consideration of the record so made the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose. The “Findings” and “Conclusions” embodied in the Commission's report fully comply with these requirements, and nothing more was required by the Administrative Procedure Act.

We conclude that the Commission's action in promulgating these rules was substantively authorized by the Esch Act and procedurally acceptable under the Administrative Procedure Act. The judgment of the District Court must therefore be 

Reversed.

United States v. Florida East Coast Railway Co.

410 U.S. 224 (1973)

MR. JUSTICE REHNQUIST delivered the opinion of the Court.

Appellees, two railroad companies [...] challenged the order of the Commission on both substantive and procedural grounds. The District Court sustained appellees' position that the Commission had failed to comply with the applicable provisions of the Administrative Procedure Act, 5 U.S.C. § 551 et seq., and therefore set aside the order without dealing with the railroads' other contentions. The District Court held that the language of § 1(14)(a) of the Interstate Commerce Act, required the Commission in a proceeding such as this to act in accordance with the Administrative Procedure Act, 5 U.S.C. § 556(d), and that the Commission's determination to receive submissions from the appellees only in written form was a violation of that section because the appellees were “prejudiced” by that determination within the meaning of that section. [The Interstate Commerce Act § 1(14)(a), says:

"The Commission may, after hearing, on a complaint or upon its own initiative without complaint, establish reasonable rules, regulations, and practices with respect to car service by common carriers by railroad subject to this chapter…”]

Following our decision last Term in United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742 (1972), we noted probable jurisdiction and requested the parties to brief the question of whether the Commission's proceeding was governed by 5 U.S.C. § 553,or by §§ 556 and 557, of the Administrative Procedure Act. We here decide that the Commission's proceeding was governed only by § 553 of that Act, and that appellees received the “hearing” required by § 1(14)(a) of the Interstate Commerce Act. We, therefore, reverse the judgment of the District Court and remand the case to that court for further consideration of appellees’ other contentions that were raised there, but which we do not decide. [...]

II. APPLICABILITY OF ADMINISTRATIVE PROCEDURE ACT

In United States v. Allegheny-Ludlum Steel Corp., supra, we held that the language of § 1(14)(a) of the Interstate Commerce Act authorizing the Commission to act “after hearing” was not the equivalent of a requirement that a rule be made “on the record after opportunity for an agency hearing” as the latter term is used in § 553(c) of the Administrative Procedure Act. [...]

[The District Court for the Middle District of Florida concluded that the ICC proceedings were governed by the stricter requirements of §§ 556 and 557 of the Administrative Procedure Act, rather than by the provisions of § 553 alone.] The conclusion of the District Court for the Middle District of Florida, which we here review, was based on the assumption that the language in § 1(14)(a) of the Interstate Commerce Act requiring rulemaking under that section to be done “after hearing” was the equivalent of a statutory requirement that the rule “be made on the record after opportunity for an agency hearing.” Such an assumption is inconsistent with our decision in Allegheny-Ludlum [...]

III. “HEARING” REQUIREMENT OF § 1(14)(a) OF THE INTERSTATE COMMERCE ACT

Inextricably intertwined with the hearing requirement of the Administrative Procedure Act in this case is the meaning to be given to the language "after hearing" in § 1(14)(a) of the Interstate Commerce Act. Appellees, both here and in the court below, contend that the Commission procedure here fell short of that mandated by the "hearing" requirement of § 1(14)(a), even though it may have satisfied § 553 of the Administrative Procedure Act. The Administrative Procedure Act states that none of its provisions “limit or repeal additional requirements imposed by statute or otherwise recognized by law.” 5 U.S.C. § 559. Thus, even though the Commission was not required to comply with §§ 556 and 557 of that Act, it was required to accord the “hearing” specified in § 1(14)(a) of the Interstate Commerce Act [...] 

The term “hearing” in its legal context undoubtedly has a host of meanings. Its meaning undoubtedly will vary, depending on whether it is used in the context of a rulemaking-type proceeding or in the context of a proceeding devoted to the adjudication of particular disputed facts. It is by no means apparent what the drafters of the Esch Car Service Act of 1917, which became the first part of § 1(14)(a) of the Interstate Commerce Act, meant by the term [...] What is apparent, though, is that the term was used in granting authority to the Commission to make rules and regulations of a prospective nature [...]

Under these circumstances, confronted with a grant of substantive authority made after the Administrative Procedure Act was enacted, we think that reference to that Act, in which Congress devoted itself exclusively to questions such as the nature and scope of hearings, is a satisfactory basis for determining what is meant by the term “hearing” used in another statute. Turning to that Act, we are convinced that the term “hearing” as used therein does not necessarily embrace either the right to present evidence orally and to cross-examine opposing witnesses, or the right to present oral argument to the agency's decisionmaker.

Section 553 excepts from its requirements rulemaking devoted to “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice,” and rulemaking “when the agency for good cause finds . . . that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” This exception does not apply, however, “when notice or hearing is required by statute”; in those cases, even though interpretative rulemaking be involved, the requirements of § 553 apply. But since these requirements themselves do not mandate any oral presentation, it cannot be doubted that a statute that requires a “hearing” prior to rulemaking may in some circumstances be satisfied by procedures that meet only the standards of § 553. The Court's opinion in FPC v. Texaco Inc., 377 U. S. 33 (1964), supports such a broad definition of the term “hearing.”

Similarly, even where the statute requires that the rulemaking procedure take place “on the record after opportunity for an agency hearing,” thus triggering the applicability of § 556, subsection (d) provides that the agency may proceed by the submission of all or part of the evidence in written form if a party will not be “prejudiced thereby.” Again, the Act makes it plain that a specific statutory mandate that the proceedings take place on the record after hearing may be satisfied in some circumstances by evidentiary submission in written form only.

We think this treatment of the term “hearing” in the Administrative Procedure Act affords a sufficient basis for concluding that the requirement of a “hearing” contained in § 1(14)(a), in a situation where the Commission was acting under the 1966 statutory rulemaking authority that Congress had conferred upon it, did not by its own force require the Commission either to hear oral testimony, to permit cross-examination of Commission witnesses, or to hear oral argument. Here, the Commission promulgated a tentative draft of an order, and accorded all interested parties 60 days in which to file statements of position, submissions of evidence, and other relevant observations. The parties had fair notice of exactly what the Commission proposed to do, and were given an opportunity to comment, to object, or to make some other form of written submission. The final order of the Commission indicates that it gave consideration to the statements of the two appellees here. Given the “open-ended” nature of the proceedings, and the Commission's announced willingness to consider proposals for modification after operating experience had been acquired, we think the hearing requirement of § 1(14)(a) of the Act was met.

Appellee railroads cite a number of our previous decisions dealing in some manner with the right to a hearing in an administrative proceeding. Although appellees have asserted no claim of constitutional deprivation in this proceeding, some of the cases they rely upon expressly speak in constitutional terms, while others are less than clear as to whether they depend upon the Due Process Clause of the Fifth and Fourteenth Amendments to the Constitution, or upon generalized principles of administrative law formulated prior to the adoption of the Administrative Procedure Act. [Lamdan note: We will learn why the Due Process Clause of the Fifth and Fourteenth Amendments does not apply to quasi-legislative rulemaking when we read the Londoner and Bi-Metallic cases in a few weeks.]

[...] Here, the incentive payments proposed by the Commission in its tentative order, and later adopted in its final order, were applicable across the board to all of the common carriers by railroad subject to the Interstate Commerce Act. No effort was made to single out any particular railroad for special consideration based on its own peculiar circumstances. Indeed, one of the objections of appellee Florida East Coast was that it and other terminating carriers should have been treated differently from the generality of the railroads. But the fact that the order may in its effects have been thought more disadvantageous by some railroads than by others does not change its generalized nature. Though the Commission obviously relied on factual inferences as a basis for its order, the source of these factual inferences was apparent to anyone who read the order of December 1969. The factual inferences were used in the formulation of a basically legislative-type judgment, for prospective application only, rather than in adjudicating a particular set of disputed facts.

The Commission's procedure satisfied both the provisions of § 1(14)(a) of the Interstate Commerce Act and of the Administrative Procedure Act, and were not inconsistent with prior decisions of this Court. We, therefore, reverse the judgment of the District Court, and remand the case so that it may consider those contentions of the parties that are not disposed of by this opinion.

It is so ordered.

Paper Hearings 

Both Allegheny-Ludlum and Florida East Coast Railway conclude that APA section 553 notice and comment requirements can be satisfied through “paper hearings,” where all of the notice and comment requirements happen in writing, not through live testimony (like a hearing). Notice printed in the Federal Register, and comments submitted in paper or electronically (by email or through Regulations.gov) satisfy the public participation requirements in the APA. 

Especially in informal rulemaking, which is a quasi-legislative process, written communications satisfy the APA’s participation and notice requirements. While we will learn more about how “paper hearings” fulfill procedural Due Process obligations required by the Fifth and Fourteenth Amendments of the U.S. Constitution in Class 11 (when we read the Londonder and Bi-Metallic cases), we can start to think about how quasi-legislative and quasi-adjudicative processes differ. Do we get to have individual hearings when Congress passes laws that affect our lives? During the coronavirus pandemic, Congressional committees switched from live hearings to paper hearings. Here is an article describing that change: Lawfare, Three Cheers for Paper Hearings, https://www.lawfareblog.com/three-cheers-paper-hearings. 

Vermont Yankee: Limiting Judicial Review of Agency Rulemaking Procedures

Five years after the Florida East Coast Railway decision, the Supreme Court said, in Vermont Yankee, that courts reviewing agencies’ rulemaking procedures must find the minimal procedural requirements in APA section 553 adequate absent “extremely compelling circumstances.” Before Vermont Yankee, the D.C. Circuit sometimes required agencies to augment notice and comment rulemaking procedures with more processes like discovery and live testimony. The Vermont Yankee decision prohibits courts from adding those extra, hybrid procedural requirements. Only Congress and the President (through mechanisms like Executive Orders) can impose procedural requirements on agencies. 

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 AEC 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.

Exemptions to Notice and Comment Rulemaking Requirements

In some situations, agencies can make rules without going through the procedural process described in APA section 553: 

When APA section 553 Does Not Apply to Rulemaking Processes

First, according to APA section 553(a), 553 doesn’t apply when (1) a military or foreign affairs function of the United States is involved or (2) the rule is a matter of agency management or personnel or to public property, loans, grants, benefits, or contracts. Congress decided that these types of decisions should not be left to the public. 

The “Good Cause” Exception

Second, APA section 553(b) provides exceptions to notice and comment rulemaking when (A) an agency is making interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice or (B) when the agency for good cause finds that notice and public procedure are:

1) Impracticable

2) Unnecessary or

3) Contrary to the public interest

APA section 553(b)(B) requires that the agency include its rationale for bypassing APA section 553 requirements in its rule when an agency bypasses notice and comment with one of these exceptions. 

Each of the three exceptions has its own body of case law interpreting it, but generally, the exceptions are “narrowly construed and only reluctantly countenanced” according to American Federation Government Employees v. Block, 655 F.2d1153 (D.C. Cir. 1981). 

In some cases, agencies will invoke the “good cause” exception when acting quickly is in the public interest. For instance, when there are oil spills or public health emergencies, agencies have promulgated rules without waiting for public input. Additionally, when rules do not impact the public interest, or public input would be “unnecessary” in situations where the rules are making minor, technical amendments to regulations, they may not require notice and comment according to the APA. Finally, when rulemaking reflects changes that have already come to pass, like regulations that amended country names after the Soviet Union collapsed, agencies may invoke the good cause exception to forgo notice and comment procedures. 

Courts have considered the good cause exception in the context of 1) emergencies, 2) situations where prior notice would subvert Congressional intent or deadlines, and 3) situations where Congress meant to waive APA section 553 requirements. In Hawaii Helicopter Operators Association v. FAA the Ninth Circuit Court of Appeals considers the good cause exception in cases of emergency and in New Jersey v. EPA, the D.C. Circuit considers the good cause exception in light of statutory deadlines.

Hawaii Helicopter Operators Association v. Federal Aviation Administration

51 F.3d 212 (9th Cir. 1995)

SCHROEDER, Circuit Judge:

The Hawaii Helicopter Operators Association (“HHOA”) petitions, pursuant to 49 U.S.C. § 46110(a), for review of the Federal Aviation Administration's issuance of Special Federal Aviation Regulation (“SFAR”) No. 71 establishing special operating rules, procedures and limitations for airplane and helicopter air tour operators in Hawaii. The regulation was promulgated on an emergency basis pursuant to the exception contained in 5 U.S.C. §553, which exempts an agency from complying with the notice and comment requirements of the Administrative Procedure Act (“APA”) where good cause exists. HHOA’s principal grievance is with SFAR No. 71’s prohibition against air tour aircraft flying below a minimum altitude of 1,500 feet. HHOA also objects to the requirements that helicopters be amphibious and equipped with emergency flotation gear, or that each person on board wear approved flotation gear.

The FAA promulgated SFAR No. 71 after a series of seven helicopter accidents involving four fatalities, which occurred in the first nine months of 1994. The regulation was promulgated September 26, 1994. It became effective on October 26, 1994.

HHOA initially contends that the FAA improperly invoked 5 U.S.C. § 553(b)(B), the good cause exception to the notice and comment requirements of the APA’s rule-making provision. The APA provides that notice and comment may be waived by an agency when it “for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. § 553(b)(B).

This court has said that our “inquiry into whether the Secretary properly invoked ‘good cause’ proceeds case-by-case, sensitive to the totality of the factors at play.” Alcaraz v. Block, 746 F.2d 593, 612 (9th Cir.1984). We have observed that notice and comment procedures should be waived only when “delay would do real harm.” Buschmann v. Schweiker, 676 F.2d 352, 357 (9th Cir.1982).

In this case the FAA based its invocation of the “good cause” exception on Hawaii's “recent escalation of fatal air tour accidents.” The FAA further explained that the problem was urgent:

Despite voluntary measures, the cooperation of the Hawaii air tour operators, and the FAA’s inspections, the accident data show that voluntary measures and existing regulations are insufficient to ensure safe air tour operations in Hawaii. The recent accidents ... indicate an urgent safety problem that cannot be adequately addressed solely by enforcement of existing regulations. Air Tour Operators in the State of Hawaii, 59 Fed.Reg. 49138, 49145 (Sept. 26, 1994) (to be codified at 14 C.F.R. §§91 and 135). 

The FAA listed specific facts supporting its reasons for issuing SFAR No. 71. These facts included: (1) there had been 20 air tour accidents between 1991 and 1994, including 24 fatalities; (2) among the 20 accidents, seven had occurred in 1994; (3) the most recent fatal accident had occurred on July 14, 1994; (4) the most recent non-fatal accident had occurred on September 4, 1994, only three weeks before SFAR No. 71 was promulgated.

We perceive no indication in this record that the FAA waived notice and comment for any reasons other than its concern about the threat to public safety reflected in an increasing number of helicopter accidents. The FAA adequately explained the basis for taking emergency action without waiting for public participation. Compare San Diego Air Sports Center, Inc. v. FAA, 887 F.2d 966, 970 (9th Cir.1989) (FAA did not comply with provisions of §553 when it issued letter disallowing parachuting without any explanation of why it felt emergency action was needed and where only known accident had occurred two years earlier.).

HHOA also contends that SFAR No. 71 is arbitrary and capricious. See 5 U.S.C. §706(2)(A). A decision is arbitrary and capricious within the meaning of the APA when the agency

has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

Beno v. Shalala, 30 F.3d 1057, 1073 (9th Cir.1994) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 44, 103 S.Ct. 2856, 2867, 77 L.Ed.2d 443 (1983)). The reviewing court “may not substitute its judgment for the agency’s; rather, it is limited to an inquiry whether the agency's decision was based on a consideration of relevant factors and whether there was a clear error of judgment.” Marshall, 625 F.2d at 302. An agency's factual findings must be upheld “if those findings are supported by substantial evidence on the record as a whole.” Arkansas v. Oklahoma, 503 U.S. 91, 113, 112 S.Ct. 1046, 1060, 117 L.Ed.2d 239 (1992).

HHOA's principal objection is to the 1,500 foot minimum flying altitude requirement. The FAA summarized its rationale as follows:

Hawaii’s unique topography often complicates access to suitable emergency landing areas. The air tour accidents in Hawaii have been characterized by insufficient time for pilots to locate suitable landing areas after engine power loss or other problems leading to accidents. The requirement to maintain an altitude of 1,500 feet above the surface is necessary for safety because it allows the pilot sufficient time to react in an emergency, to notify and instruct passengers, and to prepare for a forced landing. An aircraft operating at least 1,500 feet above the surface allows the pilot a greater opportunity to select a suitable landing site than would be the case at lower altitudes.

On the basis of the record before this court, the regulation bears a rational relationship to legitimate FAA safety concerns and is neither arbitrary nor capricious.

HHOA also objects to the SFAR 71’s flotation requirements, contending that no rational basis supports singling out helicopters flown in Hawaii for such regulation. The regulation itself adequately explains that flotation requirements were imposed after a study of recent helicopter accidents in Hawaii showed that crash victims of accidents where flotation equipment was available were much less likely to drown than victims of helicopter accidents where no such equipment was available. We conclude that a reasonable basis supported the flotation requirement.

HHOA also contends that due process requires the FAA to provide some notice and comment before promulgating the regulation. Where the requirements of §553 have been satisfied, however, the Constitution imposes no higher procedural requirements. Cf. Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 524, 98 S.Ct. 1197, 1202, 55 L.Ed.2d 460 (1978) (“[Section 553 establishes] the maximum procedural requirements which Congress was willing to have the courts impose upon agencies in conducting rulemaking procedures.”).

Moreover, the FAA has not barred all input from interested parties such as HHOA. Under SFAR No. 71,

interested persons are invited to submit such comments as they desire regarding this SFAR.... All communications received on or before the close of the comment period will be considered by the Administrator, and this SFAR may be changed in light of the comments received. All comments will be available, both before and after the closing dates for comments, in the Rules Docket for examination by interested parties.

In this manner, the FAA left the record open for a comment period that has recently expired. The FAA has indicated that it may modify SFAR No. 71 in response to comments. The record reflects that a number of comments, including comments from the National Transportation Safety Board, have directed criticism at SFAR No. 71. These comments may well merit response by the FAA.

When the FAA does respond to the comments, its action, including any modifications of the regulation, will constitute final agency action reviewable by this court. See, e.g., 14 C.F.R. §§ 11.61-11.69.

This panel will retain jurisdiction of any further petitions for review of SFAR No. 71 or any successor regulation emerging from the comment period. 

REVIEW DENIED.

State of New Jersey Dep’t of Environmental Protection v. U.S. Environmental Protection Agency 

626 F.2d 1038 (1980)

McGOWAN, Circuit Judge:

We review here a rule promulgated by the Administrator of the Environmental Protection Agency [“EPA”] under section 7407(d) of the Clean Air Act. Because the Administrator felt that a tight statutory schedule gave him “good cause” to do so, he promulgated that rule without the prior notice and without the prior solicitation of public comments which section 553 of the Administrative Procedure Act ordinarily requires. Because we find that the Clean Air Act’s schedule for promulgation of the rule did not place such time constraints on the Administrator that notice and comment rulemaking would have been impracticable, we hold he erred in invoking the good cause exception. We therefore reverse the Administrator and remand the record for further proceedings.

I

[Congress amended the Clean Air Act in 1970. Those amendments empowered the EPA to promulgate “National Ambient Air Quality Standards” for several pollutants, including a pollutant variously referred to as photochemical oxidants or ozone.] In 1970, Congress had expected that these standards would be met by the middle of the decade. However, by 1975 Congress apprehended that that expectation would go unrealized in many areas. Congress viewed this failure with the utmost seriousness, for it understood that the “non-attainment of air quality standards in a wide and densely populated region could result in a phenomenal health impact, measured in terms of millions of days of aggravated disease, asthma attacks and lower respiratory disease episodes.” H.Rep. No. 95-294, 95th Cong., 1st Sess. 209 (1977).

Fearing for the health of “tens of millions,” Congress imposed a new, and tight, schedule for achieving the air quality standards[...] The [schedule] required states to submit to the Administrator a list of (1) those air-quality-control regions (to be designated “attainment”) which, on August 7, 1977, met the national air quality standards, (2) those regions (to be designated “nonattainment”) which did not meet the standards[...] This list was to be submitted on December 5, 1977. Within sixty days thereafter—by February 3, 1978—the Administrator was directed to “promulgate each such list with such modifications as he deems necessary.”

Although the statute required the Administrator to promulgate a list of nonattainment areas on February 3, 1978, he in fact promulgated it on March 3, 1978. And although section 553 of the Administrative Procedure Act (APA) requires that, when an agency proposes to issue a rule, it must first publish a general notice in the Federal Register, 5 U.S.C. §553(b), and “give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments,” 5 U.S.C. § 553(c), the Administrator provided neither notice nor opportunity for comment. Instead, his “final rule” was effective “immediately.” 43 Fed.Reg. 8962 (March 3, 1978). In justification, he invoked the exception to the usual requirement of notice and comment rulemaking which section 553(b)(B) creates for those occasions “when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. § 553(b)(B). The Administrator explained that the tight schedule Congress had set prevented notice and comment rulemaking:

The States are now preparing revisions to their State implementation plans (SIPs) as required by sections 110(a)(2)(I) and 172 of the Act. This enterprise, which must be completed by January 1, 1979, requires that the States have immediate guidance as to the attainment status of the areas designated under section 107(d). Congress has acknowledged this by imposing a tight schedule on the designation process and requiring EPA to promulgate the list within 180 days of the enactment of the amendments. Under these circumstances it would be impracticable and contrary to the public interest to ignore the statutory schedule and postpone publishing these regulations until notice and comment can be effectuated. For this good cause, the Administrator has made these designations immediately effective.

However, the Administrator did offer to receive post hoc public comment:

The Agency recognizes . . . the importance of public involvement in the designation process. It is[,] therefore, soliciting public comment on this rule by May 2, 1978.

In his list (i. e., in the rule we now review), the Administrator designated “over 600” of the 3,044 counties in the country as “nonattainment” for photochemical oxidant pollution. Most counties in the industrial Northeast and in western California were designated nonattainment for oxidant pollution; little of the rest of the country was [...]

On April 28, 1978—and thus within the 60 days allotted by the Administrator for comments—the State of New Jersey wrote the Administrator to protest his analysis of the way oxidants are formed, the time they persist in the atmosphere, the distances they travel, the ways they should be measured, and the degree of their ubiquity:

Ozone air pollution is widespread; certain meteorological conditions carry it over wide areas of the country at levels above the Federal health standard. As these ozone-laden air masses move across the United States, every area, rural or urban, is likely to violate the ozone standard. Moreover, sources everywhere contribute ozone generating ingredients to the air mass exacerbating the problem.

New Jersey thus asked the Administrator to “change your designations and policies in such a way as to require all states to establish control regulations for the ingredients to ozone formulation.” 

On May 2, 1978, New Jersey petitioned this court for review of the Administrator’s rule. Since that time, the States of Maine, Connecticut, Massachusetts, New York, Rhode Island, and Vermont, the District of Columbia, and the City of New York have intervened in favor of petitioner New Jersey, and the States of Georgia, Arkansas, Missouri, and New Mexico have intervened in favor of the respondents (the EPA and its Administrator)[...]

II

In its brief, New Jersey argues that the Administrator’s oxidant designations of “nonattainment” and “unclassifiable” are invalid because (1) they were issued without notice-and-comment rule-making and (2) they are arbitrary, capricious, and without adequate basis in the record. At oral argument, however, counsel for New Jersey bowed to the deference which, as a legal and practical matter, this court must pay the EPA’s technical expertise and conceded that, in the present circumstances of this case, we could not properly invalidate the rule on the state's second ground. In any event, we find New Jersey’s first argument persuasive and consequently need not reach the second [...]

We hold that the Administrator erred in declining to adhere to the notice-and-comment requirements of section 553 of the APA [...]

First, we emphasize that judicial review of a rule promulgated under an exception to the APA’s notice-and-comment requirement must be guided by Congress's expectation that such exceptions will be narrowly construed. In American Bus Association v. U. S., 627 F.2d 525 (D.C.Cir. 1980), where we investigated at length another exception to the notice-and-comment requirement of section 553, we said that that section “was one of Congress’s most effective and enduring solutions to the central dilemma it encountered in writing the APA—reconciling the agencies’ need to perform effectively with the necessity that ‘the law must provide that the governors shall be governed and the regulators shall be regulated, if our present form of government is to endure.’” It is now a commonplace that notice-and-comment rule-making is a primary method of assuring that an agency’s decisions will be informed and responsive. And we have previously explained that, “if the Agency, in carrying out its ‘essentially legislative task,’ has infused the administrative process with the degree of openness, explanation, and participatory democracy required by the APA, it will thereby have ‘negate[d] the dangers of arbitrariness and irrationality in the formulation of rules . . . ,” Weyerhaeuser Co. v. Costle, 590 F.2d 1011, 1027-28 (D.C.Cir.1978).

From this, it should be clear beyond contradiction or cavil that Congress expected, and the courts have held, that the various exceptions to the notice-and-comment provisions of section 553 will be narrowly construed and only reluctantly countenanced. Nowhere did Congress make its intention in this respect plainer than in its deliberations over the very exception respondent cites. The Senate Committee responsible for the APA warned:

The exemption of situations of emergency or necessity is not an “escape clause” in the sense that any agency has discretion to disregard its terms or the facts. A true and supported or supportable finding of necessity or emergency must be made and published. “Impracticable” means a situation in which the due and required execution of the agency functions would be unavoidably prevented by its undertaking public rule-making proceedings.

The Committee concluded its report by reminding courts of their particular obligation to enforce the APA through a meticulous and demanding interpretation of its terms:

It will thus be the duty of reviewing courts to prevent avoidance of the requirements of the bill by any manner or form of indirection, and to determine the meaning of the words and phrases used. For example, in several provisions the expression “good cause” is used. The cause so specified must be interpreted by the context of the provision in which it is found and the purpose of the entire section and bill. Cause found must be real and demonstrable.

As the Fifth Circuit commented in U. S. Steel,

This exception should be read narrowly. It is an important safety valve to be used where delay would do real harm. It should not be used, however, to circumvent the notice and comment requirements whenever an agency finds it inconvenient to follow them. 595 F.2d 207, 214 (5th Cir. 1979) [...]

[W]hatever one's conclusions about the general compatibility of the APA and the Clean Air Act, the Third and Fifth Circuits have demonstrated that, under the facts of this case, the Administrator could have reconciled the commands of the two acts by publishing the designations submitted to him by the states as proposed rules [...] If the admonition to construe the good-cause exception of section 553(b)(B) narrowly means anything, it means that we cannot condone its invocation where, as here, such a reconciliation is possible[...] While we do not contend that a statutory schedule can never preclude notice-and-comment rule-making, we doubt these two cases will bear the precedential weight placed on them. 

Our fourth consideration is that we cannot accept in any absolute form the Sixth and Seventh Circuits' argument that the Administrator cannot be reversed here because to do so would delay implementation of the Clean Air Act. An agency’s functions will be impaired any time it is reversed on procedural grounds, and such occasional impairments are the price we pay to preserve the integrity of the APA. Of course, cases under the “tight schedule” version of good cause are sure to be particularly troublesome in this respect, since if an agency’s allegations as to the need for expedition are remotely true, the elapse of time necessary to secure judicial review will assure that a court cannot easily reverse the agency. But a court serves neither the law nor, ultimately, the parties before it by succumbing, without a cautious examination of a case's facts, to whatever fait accompli an agency may choose to present. Fortunately, such an examination of this case indicates that our reversal of the Administrator should not noticeably interfere with, and may actually promote, the ends of the Clean Air Act [...]

IV

It will be recalled that, after promulgating a “final rule” which was to be effective “immediately,” the Administrator stated the Agency would accept public comments received within sixty days of the promulgation of the rule. The Administrator now argues that his provision for post hoc comment “cures” his failure to follow section 553’s procedures. We cannot agree.

Once again, we accept the reasoning of the Fifth Circuit in its U.S. Steel:

Section 553 is designed to ensure that affected parties have an opportunity to participate in and influence agency decision making at an early stage, when the agency is more likely to give real consideration to alternative ideas. Other courts have recognized this difference and rejected arguments similar to that asserted here:

Permitting the submission of views after the effective date is no substitute for the right of interested persons to make their views known to the agency in time to influence the rule making process in a meaningful way. . . . “We doubt that persons would bother to submit their views or that the Secretary would seriously consider their suggestions after the regulations are a fait accompli.”

. . . Were we to allow the EPA to prevail on this point we would make the provisions of §553 virtually unenforceable. An agency that wished to dispense with pre-promulgation notice and comment could simply do so, invite post-promulgation comment, and republish the regulation before a reviewing court could act. 595 F.2d at 214-15.

We are convinced that the Fifth Circuit accurately assessed the psychological and bureaucratic realities of post hoc comments in rule-making. It was in recognition of those realities that Congress specified that notice and an opportunity for comment are to precede rule-making [...]

Introduction: What is “Guidance”?

Sometimes, agencies publish materials that are not rules (from the rulemaking process) or orders (from the adjudication process). These publications are called “guidance.” Guidance often tells regulated entities how to comply with agency rules or orders. Guidance takes many forms: manuals, pamphlets, letters, blog posts— anything an agency publishes that isn’t a rule or order is probably guidance.

The APA does not directly discuss guidance, but APA Section 553(b)(A) and 553(d)(2) exempt “interpretative rules” and “general statements of policy” from rulemaking procedural requirements. Some legal scholars call interpretative rules and general statements of policy “nonlegislative rules,” but Professor Lamdan prefers to call them, simply, guidance. These agency publications bypass rulemaking procedures, so they are not legally binding, and thus not “rules.” 

Guidance can be written for a variety of purposes. Some guidance advises regulated entities about how to comply with agency rules. Some guidance announces or justifies the agency’s plans to make a rule or decisions about enforcing a regulation. Guidance is an efficient and helpful way to implement regulatory policies. Guidance informs the public and helps regulated entities comply with regulatory requirements. 

Agencies can also use guidance to warn regulated parties about potential enforcement actions. For instance, the Securities and Exchange Commission (“SEC”) staff writes “no-action letters” at the request of entities subject to SEC regulations. No-action letters recommend that the agency will not take legal should the entity engage in specific situations not clarified in SEC regulations. Other agencies, like the Department of Education, write “Dear Colleague” letters to convey policy statements about how they will interpret statutes. Agencies with complex procedural regulations like the Internal Revenue Service (“IRS”) and the Federal Emergency Management Agency (“FEMA”) write in-depth manuals about how to do things like file taxes and apply for emergency federal aid.

How Can You Tell Whether An Agency Has Issued a Legislative Rule or Non-Binding Guidance?

Because agency guidance is advice that bypasses the rulemaking process, there are often legal controversies over whether an agency’s guidance is truly non-binding, or whether it is rulemaking that binds regulated entities illegally bypassing the APA Section 553 rulemaking process. Although agencies may claim that guidance is not binding, agencies often follow guidance inflexibly, as though it is binding. When agencies treat guidance like it is binding, agencies undermine the APA’s procedural requirements and forego public participation in the rulemaking process.

Federal courts sometimes find that guidance violates the APA’s procedural requirements— the guidance is actually more of a binding, legislative rule that should have undergone APA Section 553 notice and comment rulemaking. (Remember, the APA Section 702 gives you the right to sue an agency for failing to follow APA requirements, including rulemaking procedures.) 

While various Circuit courts apply a variety of tests to assess whether an agency has issued guidance or a binding rule that requires notice and comment, the crux of the various tests includes these two considerations:

1) Does the rule have a present, binding effect?

2) Does the statement leave the agency and its decisionmakers free to exercise discretion?

Case Law Examples Applying Guidance/Rulemaking Tests

Here are two cases where courts analyze agency publications to determine whether they are non-binding guidance documents, or rules that have improperly bypassed APA Section 553 rulemaking procedures. The first case, Hoctor v. U.S. Dep’t of Agriculture, is dedicated to anyone who watched Tiger King during our semester apart. In the second case, Texas v. United States, a district court decides whether Deferred Action for Parents of Americans and Lawful Permanent Residents (“DAPA”) is guidance or rulemaking that violates the APA. I included this case because it allows us to explore immigration law, which is very administrative-law intensive area of the law, and also because it gives us a peek at how important judicial nominations are to progressive lawyering. 

[Lamdan removed racist, biased terminology from the Texas decision - Google the Judge’s name if you’d like more background on his approach to immigration law and why the case went before his court. Lamdan did not remove evidence of the Judge’s misunderstanding of basic administrative law principles and blatant errors, like calling the APA the “Administration Procedure Act.” Also note the Judge’s legal writing: is your legal writing more clear, concise, free of passive voice, pull-quotes from other cases, and adverbs? Chances are, the answer is “yes.” Whenever you feel any hesitation that you are capable of legal greatness (aka imposter syndrome), remember this opinion.]

Hoctor v. U.S. Dep’t of Agriculture

82 F.3d 165 (7th Cir. 1996)

POSNER, Chief Judge:

A rule promulgated by an agency that is subject to the Administrative Procedure Act is invalid unless the agency first issues a public notice of proposed rulemaking, describing the substance of the proposed rule, and gives the public an opportunity to submit written comments; and if after receiving the comments it decides to promulgate the rule it must set forth the basis and purpose of the rule in a public statement. 5 U.S.C. §§ 553(b), (c). These procedural requirements do not apply, however, to “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.” 5 U.S.C. § 553(b)(A). Distinguishing between a “legislative” rule, to which the notice and comment provisions of the Act apply, and an interpretive rule, to which these provisions do not apply, is often very difficult—and often very important to regulated firms, the public, and the agency. Notice and comment rulemaking is time-consuming, facilitates the marshaling of opposition to a proposed rule, and may result in the creation of a very long record that may in turn provide a basis for a judicial challenge to the rule if the agency decides to promulgate it. There are no formalities attendant upon the promulgation of an interpretive rule, but this is tolerable because such a rule is “only” an interpretation. Every governmental agency that enforces a less than crystalline statute must interpret the statute, and it does the public a favor if it announces the interpretation in advance of enforcement, whether the announcement takes the form of a rule or of a policy statement, which the Administrative Procedure Act assimilates to an interpretive rule. It would be no favor to the public to discourage the announcement of agencies’ interpretations by burdening the interpretive process with cumbersome formalities.

The question presented by this appeal from an order of the Department of Agriculture is whether a rule for the secure containment of animals, a rule promulgated by the Department under the Animal Welfare Act, 7 U.S.C. §§ 2131 et seq., without compliance with the notice and comment requirements of the Administrative Procedure Act, is nevertheless valid because it is merely an interpretive rule. Enacted in 1966, the Animal Welfare Act, as its title implies, is primarily designed to assure the humane treatment of animals. The Act requires the licensing of dealers (with obvious exceptions, for example retail pet stores) and exhibitors, and authorizes the Department to impose sanctions on licensees who violate either the statute itself or the rules promulgated by the Department under the authority of 7 U.S.C. § 2151, which authorizes the Secretary of Agriculture “to promulgate such rules, regulations, and orders as he may deem necessary in order to effectuate the purposes of [the Act].” The Act provides guidance to the exercise of this rulemaking authority by requiring the Department to formulate standards “to govern the humane handling, care, treatment, and transportation of animals by dealers,” and these standards must include minimum requirements “for handling, housing, feeding, watering, sanitation,” etc. 7 U.S.C. § 2143(a).

The Department has employed the notice and comment procedure to promulgate a regulation, the validity of which is not questioned, that is entitled “structural strength” and that provides that “the facility [housing the animals] must be constructed of such material and of such strength as appropriate for the animals involved. The indoor and outdoor housing facilities shall be structurally sound and shall be maintained in good repair to protect the animals from injury and to contain the animals.” 9 C.F.R. § 3.125(a).

Enter the petitioner, Patrick Hoctor, who in 1982 began dealing in exotic animals on his farm outside of Terre Haute. In a 25–acre compound he raised a variety of animals including “Big Cats”—a typical inventory included three lions, two tigers, seven ligers (a liger is a cross between a male lion and a female tiger, and is thus to be distinguished from a tigon), six cougars, and two snow leopards. The animals were in pens (“primary enclosures” in the jargon of the administration of the Animal Welfare Act). The area in which the pens were located was surrounded by a fence (“containment fence”). In addition, Hoctor erected a fence around the entire compound (“perimeter fence”). At the suggestion of a veterinarian employed by the Agriculture Department who was assigned to inspect the facility when Hoctor started his animal dealership in 1982, Hoctor made the perimeter fence six feet high.

The following year the Department issued an internal memorandum addressed to its force of inspectors in which it said that all “dangerous animals,” defined as including, among members of the cat family, lions, tigers, and leopards, must be inside a perimeter fence at least eight feet high. This provision is the so-called interpretive rule, interpreting the housing regulation quoted above. An agency has, of course, the power, indeed the inescapable duty, to interpret its own legislative rules, such as the housing standard, just as it has the power and duty to interpret a statute that it enforces. Stinson v. United States, 508 U.S. 36, 42–46, 113 S.Ct. 1913, 1918–19, 123 L.Ed.2d 598 (1993).

On several occasions beginning in 1990, Hoctor was cited by a Department of Agriculture inspector for violating 9 C.F.R. § 3.125(a), the housing standard, by failing to have an eight-foot perimeter fence. Eventually the Department sanctioned Hoctor for this and other alleged violations, and he has sought judicial review limited, however, to the perimeter fence. He is a small dealer and it would cost him many thousands of dollars to replace his six-foot-high fence with an eight-foot-high fence. Indeed, we were told at argument that pending the resolution of his dispute over the fence he has discontinued dealing in Big Cats. The parties agree that unless the rule requiring a perimeter fence at least eight feet high is a valid interpretive rule, the sanction for violating it was improper.

We may assume, though we need not decide, that the Department of Agriculture has the statutory authority to require dealers in dangerous animals to enclose their compounds with eight-foot-high fences. The fence is a backup fail-safe device, since the animals are kept in pens, cages, or other enclosures within the compound, in an area that is itself fenced, rather than being free to roam throughout the compound. Since animals sometimes break out or are carelessly let out of their pens, a fail-safe device seems highly appropriate, to say the least. Two lions once got out of their pen on Hoctor’s property, and he had to shoot them. Yet, when he did so, they were still within the containment fence. The Department’s regulations do not require a containment fence, and it is unclear to us why, if that fence was adequate—and we are given no reason to suppose it was not—Hoctor should have had to put up an additional fence, let alone one eight-feet high. But we lay any doubts on this score to one side. And we may also assume that the containment of dangerous animals is a proper concern of the Department in the enforcement of the Animal Welfare Act, even though the purpose of the Act is to protect animals from people rather than people from animals. Even Big Cats are not safe outside their compounds, and with a lawyer’s ingenuity the Department’s able counsel reminded us at argument that if one of those Cats mauled or threatened a human being, the Cat might get into serious trouble and thus it is necessary to protect human beings from Big Cats in order to protect the Cats from human beings, which is the important thing under the Act. In fact Hoctor had shot the two lions because they were dangerously close to one of his employees. Since tort liability for injury caused by a wild animal is strict, Burns v. Gleason, 819 F.2d 555 (5th Cir.1987); Behrens v. Bertram Mills Circus Ltd., [1957] 2 Q.B. 1; W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 76, p. 542 (5th ed. 1984), the common law, at least, is solicitous for the protection of the citizens of Terre Haute against escapees from Hoctor’s menagerie even if the Animal Welfare Act is not. The internal memorandum also justifies the eight-foot requirement as a means of protecting the animals from animal predators, though one might have supposed the Big Cats able to protect themselves against the native Indiana fauna.

[…]

The only ground on which the Department defends sanctioning Hoctor for not having a high enough fence is that requiring an eight-foot-high perimeter fence for dangerous animals is an interpretation of the Department’s own structural-strength regulation, and “provided an agency’s interpretation of its own regulations does not violate the Constitution or a federal statute, it must be given ‘controlling weight unless it is plainly erroneous or inconsistent with the regulation.’ ” Stinson v. United States, supra, 508 U.S. at 44–46, 113 S.Ct. at 1919. The “provided” clause does not announce a demanding standard of judicial review, although the absence of any reference in the housing regulation to fences or height must give us pause. The regulation appears only to require that pens and other animal housing be sturdy enough in design and construction, and sufficiently well maintained, to prevent the animals from breaking through the enclosure—not that any enclosure, whether a pen or a perimeter fence, be high enough to prevent the animals from escaping by jumping over the enclosure. The Department’s counsel made the wonderful lawyer’s argument that the eight-foot rule is consistent with the regulation because a fence lower than eight feet has zero structural strength between its height (here six feet) and the eight-foot required minimum. The two feet by which Hoctor’s fence fell short could not have contained a groundhog, let alone a liger, since it was empty space.

Our doubts about the scope of the regulation that the eight-foot rule is said to be “interpreting” might seem irrelevant, since even if a rule requiring an eight-foot perimeter fence could not be based on the regulation, it could be based on the statute itself, which in requiring the Department to establish minimum standards for the housing of animals presumably authorizes it to promulgate standards for secure containment. But if the eight-foot rule were deemed one of those minimum standards that the Department is required by statute to create, it could not possibly be thought an interpretive rule. For what would it be interpreting? When Congress authorizes an agency to create standards, it is delegating legislative authority, rather than itself setting forth a standard which the agency might then particularize through interpretation. Put differently, when a statute does not impose a duty on the persons subject to it but instead authorizes (or requires—it makes no difference) an agency to impose a duty, the formulation of that duty becomes a legislative task entrusted to the agency. Provided that a rule promulgated pursuant to such a delegation is intended to bind, and not merely to be a tentative statement of the agency’s view, which would make it just a policy statement, and not a rule at all, the rule would be the clearest possible example of a legislative rule, as to which the notice and comment procedure not followed here is mandatory, as distinct from an interpretive rule; for there would be nothing to interpret. American Mining Congress v. Mine Safety & Health Administration, 995 F.2d 1106, 1109 (D.C.Cir.1993); Robert A. Anthony, “ ‘Interpretive’ Rules, ‘Legislative’ Rules and ‘Spurious’ Rules: Lifting the Smog,” 8 Admin. L.J. of Am. Univ. 1 (1994). That is why the Department must argue that its eight-foot rule is an interpretation of the structural-strength regulation-itself a standard, and therefore interpretable, in order to avoid reversal.

Even if, despite the doubts that we expressed earlier, the eight-foot rule is consistent with, even in some sense authorized by, the structural-strength regulation, it would not necessarily follow that it is an interpretive rule. It is that only if it can be derived from the regulation by a process reasonably described as interpretation. Metropolitan School District v. Davila, 969 F.2d 485, 490 (7th Cir.1992). Supposing that the regulation imposes a general duty of secure containment, the question is, then, Can a requirement that the duty be implemented by erecting an eight-foot-high perimeter fence be thought an interpretation of that general duty?

“Interpretation” in the narrow sense is the ascertainment of meaning. It is obvious that eight feet is not part of the meaning of secure containment. But “interpretation” is often used in a much broader sense. A process of “interpretation” has transformed the Constitution into a body of law undreamt of by the framers. To skeptics the Miranda rule is as remote from the text of the Fifth Amendment as the eight-foot rule is from the text of 9 C.F.R. § 3.125(a). But our task in this case is not to plumb the mysteries of legal theory; it is merely to give effect to a distinction that the Administrative Procedure Act makes, and we can do this by referring to the purpose of the distinction. The purpose is to separate the cases in which notice and comment rulemaking is required from the cases in which it is not required. As we noted at the outset, unless a statute or regulation is of crystalline transparency, the agency enforcing it cannot avoid interpreting it, and the agency would be stymied in its enforcement duties if every time it brought a case on a new theory it had to pause for a bout, possibly lasting several years, of notice and comment rulemaking. Besides being unavoidably continuous, statutory interpretation normally proceeds without the aid of elaborate factual inquiries. When it is an executive or administrative agency that is doing the interpreting it brings to the task a greater knowledge of the regulated activity than the judicial or legislative branches have, and this knowledge is to some extent a substitute for formal fact-gathering.

At the other extreme from what might be called normal or routine interpretation is the making of reasonable but arbitrary (not in the “arbitrary or capricious” sense) rules that are consistent with the statute or regulation under which the rules are promulgated but not derived from it, because they represent an arbitrary choice among methods of implementation. A rule that turns on a number is likely to be arbitrary in this sense. There is no way to reason to an eight-foot perimeter-fence rule as opposed to a seven-and-a-half foot fence or a nine-foot fence or a ten-foot fence. None of these candidates for a rule is uniquely appropriate to, and in that sense derivable from, the duty of secure containment. This point becomes even clearer if we note that the eight-foot rule actually has another component—the fence must be at least three feet from any animal’s pen. Why three feet? Why not four? Or two?

The reason courts refuse to create statutes of limitations is precisely the difficulty of reasoning to a number by the methods of reasoning used by courts. Hemmings v. Barian, 822 F.2d 688, 689 (7th Cir.1987). One cannot extract from the concept of a tort that a tort suit should be barred unless brought within one, or two, or three, or five years. The choice is arbitrary and courts are uncomfortable with making arbitrary choices. They see this as a legislative function. Legislators have the democratic legitimacy to make choices among value judgments, choices based on hunch or guesswork or even the toss of a coin, and other arbitrary choices. When agencies base rules on arbitrary choices they are legislating, and so these rules are legislative or substantive and require notice and comment rulemaking, a procedure that is analogous to the procedure employed by legislatures in making statutes. The notice of proposed rulemaking corresponds to the bill and the reception of written comments to the hearing on the bill.

The common sense of requiring notice and comment rulemaking for legislative rules is well illustrated by the facts of this case. There is no process of cloistered, appellate-court type reasoning by which the Department of Agriculture could have excogitated the eight-foot rule from the structural-strength regulation. The rule is arbitrary in the sense that it could well be different without significant impairment of any regulatory purpose. But this does not make the rule a matter of indifference to the people subject to it. There are thousands of animal dealers, and some unknown fraction of these face the prospect of having to tear down their existing fences and build new, higher ones at great cost. The concerns of these dealers are legitimate and since, as we are stressing, the rule could well be otherwise, the agency was obliged to listen to them before settling on a final rule and to provide some justification for that rule, though not so tight or logical a justification as a court would be expected to offer for a new judge-made rule. Notice and comment is the procedure by which the persons affected by legislative rules are enabled to communicate their concerns in a comprehensive and systematic fashion to the legislating agency. The Department’s lawyer speculated that if the notice and comment route had been followed in this case the Department would have received thousands of comments. The greater the public interest in a rule, the greater reason to allow the public to participate in its formation.

 We are not saying that an interpretive rule can never have a numerical component. See, e.g., American Mining Congress v. Mine Safety & Health Administration, supra, 995 F.2d at 1108, 1113; St. Mary’s Hospital v. Blue Cross & Blue Shield Ass’n., 788 F.2d 888, 889–91 (2d Cir.1986). There is merely an empirical relation between interpretation and generality on the one hand, and legislation and specificity on the other. Especially in scientific and other technical areas, where quantitative criteria are common, a rule that translates a general norm into a number may be justifiable as interpretation. The mine safety agency in the American Mining case could refer to established medical criteria, expressed in terms of numerical evaluations of x-rays, for diagnosing black-lung disease. 995 F.2d at 1112–13. Even in a nontechnical area the use of a number as a rule of thumb to guide the application of a general norm will often be legitimately interpretive. Had the Department of Agriculture said in the internal memorandum that it could not imagine a case in which a perimeter fence for dangerous animals that was lower than eight feet would provide secure containment, and would therefore presume, subject to rebuttal, that a lower fence was insecure, it would have been on stronger ground. For it would have been tying the rule to the animating standard, that of secure containment, rather than making it stand free of the standard, self-contained, unbending, arbitrary. To switch metaphors, the “flatter” a rule is, the harder it is to conceive of it as merely spelling out what is in some sense latent in a statute or regulation, and the eight-foot rule in its present form is as flat as they come. At argument the Department’s lawyer tried to loosen up the rule, implying that the Department might have bent it if Hoctor proposed to dig a moat or to electrify his six-foot fence. But an agency’s lawyer is not authorized to amend its rules in order to make them more palatable to the reviewing court.

The Department’s position might seem further undermined by the fact that it has used the notice and comment procedure to promulgate rules prescribing perimeter fences for dogs and monkeys. 9 C.F.R. §§ 3.6(c)(2)(ii), 3.77(f). Why it proceeded differently for dangerous animals is unexplained. But we attach no weight to the Department’s inconsistency, not only because it would be unwise to penalize the Department for having at least partially complied with the requirements of the Administrative Procedure Act, but also because there is nothing in the Act to forbid an agency to use the notice and comment procedure in cases in which it is not required to do so. We are mindful that the court in United States v. Picciotto, 875 F.2d 345, 348 (D.C.Cir.1989), thought that the fact that an agency had used notice and comment rulemaking in a setting similar to the case before the court was evidence that the agency “intended” to promulgate a legislative rule in that case, only without bothering with notice and comment. The inference is strained, and in any event we think the agency’s “intent,” though a frequently cited factor, is rather a makeweight. What the agency intends is to promulgate a rule. It is for the courts to say whether it is the kind of rule that is valid only if promulgated after notice and comment. It is that kind of rule if, as in the present case, it cannot be derived by interpretation. The order under review, based as it was on a rule that is invalid because not promulgated in accordance with the required procedure, is therefore

VACATED.

Texas v. United States

86 F.Supp.3d 591 (S.D.Texas 2015)

ANDREW S. HANEN, District Judge.

This is a case in which twenty-six states or their representatives are seeking injunctive relief against the United States and several officials of the Department of Homeland Security to prevent them from implementing a program entitled “Deferred Action for Parents of Americans and Lawful Permanent Residents”  [...]

On November 20, 2014, Jeh Johnson, in his position as Secretary of the [U.S. Department of Homeland Security] DHS, issued multiple memoranda to Leon Rodriguez, Director of the United States Citizenship and Immigration Services (“USCIS”), Thomas S. Winkowski, Acting Director of the United States Immigration and Customs Enforcement (“ICE”), and R. Gil Kerlikowske, Commissioner of the United States Customs and Border Protection (“CBP”). One of these memoranda contained an order establishing a new program utilizing deferred action to stay deportation proceedings and award certain benefits to approximately four to five million [immigrants...] in the United States. The present case, filed in an attempt to enjoin the rollout and implementation of this program, was initiated by the State of Texas and twenty-five other states or their representatives. Specifically, the States allege that the Secretary’s actions violate the Administrative Procedure Act (“APA”). The States filed this suit against DHS Secretary Johnson [...] 

III. BACKGROUND

On June 15, 2012, DHS Secretary Janet Napolitano issued a memorandum creating the DACA program, which stands for “Deferred Action for Childhood Arrivals.” Specifically, Secretary Napolitano’s memorandum instructed her Department heads to give deferred action status to all [...] immigrants who:

1. Came to the United States before age sixteen;

2. Continuously resided in the United States for at least five years prior to June 15, 2012 and were in the United States on June 15, 2012;

3. Were then attending school, or had graduated from high school, obtained a GED, or were honorably discharged from the military;

4. Had not been convicted of a felony, significant misdemeanor, multiple misdemeanors, or otherwise pose a threat to national security; and

5. Were not above the age of thirty. Doc. No. 38, Def. Ex. 19 (June 15, 2012 DACA Memorandum issued by Secretary Napolitano) [...] 

On November 20, 2014, following in his predecessor’s footsteps, Secretary Johnson issued a memorandum to DHS officials instructing them to implement the DAPA program and expand the DACA program in three areas. That memorandum [expands DACA by removing the age cap, extending and expanding renewal and work authorization, and extending deferred action to parents. Doc. No. 1, Pl. Ex. A (November 20, 2014 DAPA Memorandum issued by Secretary Johnson).] 

Deferred action is not a status created or authorized by law or by Congress, nor has its properties been described in any relevant legislative act. Secretary Johnson’s DAPA Memorandum states that deferred action has existed since at least the 1960s, a statement with which no one has taken issue. Throughout the years, deferred action has been both utilized and rescinded by the Executive Branch [...] 

D. Factual Contentions

Secretary Johnson supported the implementation of DAPA with two main justifications. First, he wrote that the DHS has limited resources and it cannot perform all of the duties assigned to it, including locating and removing [immigrants]. Secretary Johnson claimed that the adoption of DAPA will enable the DHS to prioritize its enforcement of the immigration laws and focus its limited resources in areas where they are needed most. Second, the Secretary reasoned that humanitarian concerns also justify the program’s implementation.

Plaintiffs maintain that the Secretary's justifications are conditions caused by the DHS, are pretexts, or are simply inaccurate. Regarding resources, Plaintiffs argue that the DHS has continued to be funded at record levels and is currently spending millions to create the enormous bureaucracy necessary to implement this program. The States additionally maintain that the DAPA program was: politically motivated and implemented illegally. The first proposition is not the concern of the Court; the second is. To support the latter proposition, the States quote President Obama at length. First, they quote the President’s statements made prior to the implementation of DAPA stating that he, as President, did not have the power under the Constitution or the laws of this country to change the immigration laws. On these occasions, he asserted that only Congress could implement these changes in this area of the law. From these statements, the States reason that if the President does not have the necessary power to make these changes, then the DHS Secretary certainly does not [...]

E. Legal Contentions

[The States maintain that Secretary Johnson's DAPA Directive violates the Administrative Procedure Act (“APA”)] The Government claims that the DAPA program is merely general guidance issued to DHS employees, and that the delineated elements of eligibility are not requirements that DHS officials are bound to honor. The Government argues that this flexibility, among other factors, exempts DAPA from the requirements of the APA [...]

The States complain that the implementation of DAPA violates the APA. 5 U.S.C. §§ 501 et seq. Specifically, the States assert that DAPA constitutes a “substantive” or “legislative” rule that was promulgated without the requisite notice and comment process required under Section 553 of the APA. Defendants concede that DAPA was not subjected to the APA’s formal notice-and-comment procedure. Instead, they argue that DAPA is not subject to judicial review and, even if reviewable, is exempt from the APA’s procedural requirements.

i. Judicial Review Under the Administrative Procedure Act

[...] The APA provides an avenue for judicial review of challenges to “agency action.” See 5 U.S.C. §§ 701-706. Under Section 702, “[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.” 5 U.S.C. § 702 [...] 

i. Rulemaking Under the APA [...]

Section 553 of Title 5, United States Code, dictates the formal rulemaking procedures by which an agency must abide when promulgating a rule. Under Section 553(b), “[g]eneral notice of proposed rule making shall be published in the Federal Register.” 5 U.S.C. § 553(b). The required notice must include “(1) a statement of the time, place, and nature of public rule making proceedings; (2) reference to the legal authority under which the rule is proposed; and (3) either the terms or substance of the proposed rule or a description of the subjects and issues involved.” Id. Upon providing the requisite notice, the agency must give interested parties the opportunity to participate and comment and the right to petition for or against the rule. See id. § 553(c)-(e).

There are two express exceptions to this notice-and-comment requirement, one of which Defendants argue applies in this case. Pursuant to Section 553(b)(3)(A), the APA’s formal rulemaking procedures do not apply to “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.” On the other hand, if a rule is “substantive,” this exception does not apply, and all notice-and-comment requirements “must be adhered to scrupulously.” Shalala, 56 F.3d at 595. The Fifth Circuit has stressed that the “‘APA’s notice and comment exemptions must be narrowly construed.’”

The APA does not define “general statements of policy” or “substantive rules”; however, the Case law in this area is fairly well-developed and provides helpful guidelines in characterizing a rule. With that said, the analysis substantially relies on the specific facts of a given case and, thus, the results are not always consistent. Here, Plaintiffs’ procedural APA claim turns on whether the DAPA Directive is a substantive rule or a general statement of policy. If it is substantive, it is “unlawful, for it was promulgated without the requisite notice-and-comment.” Id.

This Circuit, following guidelines laid out in various cases by the D.C. Circuit, utilizes two criteria to distinguish substantive rules from nonsubstantive rules:

First, courts have said that, unless a pronouncement acts prospectively, it is a binding norm. Thus ... a statement of policy may not have a present effect: “a ‘general statement of policy’ is one that does not impose any rights and obligations”.... The second criterion is whether a purported policy statement genuinely leaves the agency and its decisionmakers free to exercise discretion.

The court [in Community Nutrition Institute v. Young, 818 F.2d 943 (D.C.Cir. 1987)] further explained that “binding effect, not the timing, ... is the essence of criterion one” In analyzing these criteria, we are to give some deference, “albeit ‘not overwhelming,’” to the agency's characterization of its own rule.

The rule’s effect on agency discretion is the primary determinant in characterizing a rule as substantive or nonsubstantive. For instance, rules that award rights, impose obligations, or have other significant effects on private interests have been found to have a binding effect on agency discretion and are thus considered substantive. A rule, while not binding per se, is still considered substantive if it “severely restricts” agency discretion. Put another way, any rule that “narrowly constrict[s] the discretion of agency officials by largely determining the issue addressed” is substantive. Lastly, a substantive rule is generally characterized as one that “establishes a standard of conduct which has the force of law.”

In sharp contrast to a substantive rule, a general statement of policy does not establish a binding norm, nor is it “finally determinative of the issues or rights to which it is addressed.” Shalala, 56 F.3d at 596. A general statement of policy is best characterized as announcing the agency’s “tentative intentions for the future.” Thus, it cannot be applied or relied upon as law because a statement of policy merely proclaims what an agency seeks to establish as policy [...]

Defendants insist that the Directive is “a policy that ‘supplements and amends ... guidance’ for the use of deferred action.” In their briefings before the Court, Defendants label DAPA “Deferred Action Guidance.” The Court finds Defendants’ labeling disingenuous and, as discussed below, contrary to the substance of DAPA. Although Defendants refer to DAPA as a “guidance” in their briefings and in the DAPA Memorandum, elsewhere, it is given contradictory labels. For instance, on the official website of the DHS, DAPA is referred to as “a new Deferred Action for Parents of Americans and Lawful Permanent Residents program.”

The DHS website does use the term “guidelines” in describing DAPA’s criteria; however, this is only in the context of a “list” of guidelines that candidates must satisfy in order to qualify for DAPA (or the newly expanded DACA). Thus, not only does this usage of the term “guidelines” not refer to the DAPA program itself, but it is also a misnomer because these “guidelines” are in fact requirements to be accepted under these programs [...]

What is perhaps most perplexing about the Defendants’ claim that DAPA is merely “guidance” is the President’s own labeling of the program. In formally announcing DAPA to the nation for the first time, President Obama stated, “I just took an action to change the law.” He then made a “deal” with potential candidates of DAPA: “if you have children who are American citizens ... if you’ve taken responsibility, you’ve registered, undergone a background check, you’re paying taxes, you’ve been here for five years, you’ve got roots in the community—you’re not going to be deported.... If you meet the criteria, you can come out of the shadows....”

While the DHS’ characterization of DAPA is taken into consideration by this Court in its analysis, the “label that the ... agency puts upon its given exercise of administrative power is not ... conclusive; rather, it is what the agency does in fact.” Shalala, 56 F.3d at 596. Thus, the Court turns its attention to the primary focus of its analysis: the substance of DAPA. Nevertheless, the President's description of the DHS Directive is that it changes the law.

(2) Binding Effect

The Fifth Circuit in Shalala propounded as a “touchstone of a substantive rule” the rule’s binding effect. Quoting the Eleventh Circuit, the Shalala Court emphasized:

The key inquiry ... is the extent to which the challenged policy leaves the agency free to exercise its discretion to follow or not to follow that general policy in an individual case, or on the other hand, whether the policy so fills out the statutory scheme that upon application one need only determine whether a given case is within the rule’s criteria. As long as the agency remains free to consider the individual facts in the various cases that arise, then the agency action in question has not established a binding norm.

Despite the DAPA memorandum’s use of phrases such as “case-by-case basis” and “discretion,” it is clear from the record that the only discretion that has been or will be exercised is that already exercised by Secretary Johnson in enacting the DAPA program and establishing the criteria therein. That criteria is binding. At a minimum, the memorandum “severely restricts” any discretion that Defendants argue exists. It ensures that “officers will be provided with specific eligibility criteria for deferred action.” Indeed, the “Operating Procedures” for implementation of DACA contains nearly 150 pages  of specific instructions for granting or denying deferred action to applicants. Denials are recorded in a “check the box” standardized form, for which USCIS personnel are provided templates. Certain denials of DAPA must be sent to a supervisor for approval before issuing the denial. Further, there is no option for granting DAPA to an individual who does not meet each criterion. With that criteria set, from the President down to the individual USCIS employees actually processing the applications, discretion is virtually extinguished.

In stark contrast to a policy statement that "does not impose any rights and obligations" and that "genuinely leaves the agency and its decisionmakers free to exercise discretion," the DAPA Memorandum confers the right to be legally present in the United States and enables its beneficiaries to receive other benefits as laid out above. The Court finds that DAPA’s disclaimer that the “memorandum confers no substantive right, immigration status, or pathway to citizenship” may make these rights revocable, but not less valuable. While DAPA does not provide legal permanent residency, it certainly provides a legal benefit in the form of legal presence (plus all that it entails)—a benefit not otherwise available in immigration laws. The DAPA Memorandum additionally imposes specific, detailed and immediate obligations upon DHS personnel—both in its substantive instructions and in the manner in which those instructions are carried out. Nothing about DAPA “genuinely leaves the agency and its [employees] free to exercise discretion.” In this case, actions speak louder than words [...]

VI. CONCLUSION

This Court, for the reasons discussed above, hereby grants the Plaintiff States' request for a preliminary injunction. It hereby finds that [...] the Defendants have clearly legislated a substantive rule without complying with the procedural requirements under the Administration Procedure Act. The Injunction is contained in a separate order. Nonetheless, for the sake of clarity, this temporary injunction enjoins the implementation of the DAPA program that awards legal presence and additional benefits to the four million or more individuals potentially covered by the DAPA Memorandum and to the three expansions/additions to the DACA program also contained in the same DAPA Memorandum [...]

Epilogue for Texas v. United States

This case set off a chain of events: In November, 2015, the 5th Circuit upheld the District Court’s preliminary injunction blocking the implementation of DAPA. In 2016, the Supreme Court affirmed the Circuit Court decision. In 2017, Secretary of Homeland Security issued a memo formally rescinding DAPA. The decision that we just read (that started this chain of events) is considered erroneous by many administrative law scholars. 

Here is an article by a law professor named Eric Posner explaining why the Hanen Court erred. Posner writes, “If the DHS had said that everyone who satisfied the DAPA criteria must be given deferred-action status, then DAPA would be a rule, and so notice and comment would be required. But DHS told its employees that they should use their discretion when applying the DAPA criteria. The agents were given permission to refrain from granting deferred action to applicants who, for whatever reason, don’t seem to deserve it. DAPA was a policy statement, not a rule. For that reason, as Cass Sunstein explains, Judge Hanen erred… [Judge Hanen] cannot issue a preliminary injunction based on a prediction about how the government will act. He can only wait and allow the DHS to leap into action. If plaintiffs subsequently gather evidence that DHS agents actually do not use discretion but instead apply the DAPA criteria formulaically, only then can they seek an injunction. Hanen, in seeking to restrain the supposedly out-of-control executive branch, exceeded his own authority.”