Introduction to Rulemaking: An Overview

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.