not be central to the final agency decision. Finally, olitical costs in publicly "backing-off" from con osals that were never seriously considered by the ager

GAO Report on Regulatory Analysis, supra note 19 at

113

CHAPTER FIVE: THE PUBLIC STAGE OF THE

RULEMAKING PROCEEDING

The notice of proposed rulemaking required for informal rulemaking triggers an opportunity for public participation in the rulemaking. This notice and opportunity for public participation stage of rulemaking is covered in this chapter. Under the APA, the public's right of participation is limited to the submission of written comments. However, frequently other statutes call for oral hearings to receive public views in rulemaking, and the Administrative Conference has encouraged agencies to exercise their discretion to hold oral hearings in certain circumstances. Therefore, we also discuss in this chapter the advantages and disadvantages of holding oral hearings in rulemaking.

A. The Notice of Proposed Rulemaking.

The notice of proposed rulemaking (NPRM) should not be viewed by the agency rulemaker as simply a legal obstacle that must be overcome in order to get the rulemaking underway.

At a minimum, the NPRM must be detailed and focused enough to enable interested persons to decide intelligently whether or not, as well as how, to participate in the rulemaking. Additionally, the agency rulemaker should bear in mind that the NPRM is one of only two agency documents required by notice and comment procedure. The other is the agency's statement of basis and purpose accompanying the final agency rule. Therefore, the NPRM presents an important opportunity for the agency to explain its views and intentions in proposing the rule. A poorly-crafted NPRM can cause permanent damage to an agency's rulemaking efforts.1

1/ Illustrative of this proposition is the 1978 proposal of the Federal Trade Commission to regulate children's television advertising. The NPRM raised the possibility that the Commission would consider banning such advertising, even though the likelihood of that happening was not great. See FTC, Notice of Proposed (Continued)

2

1. Federal Register vs. "actual" notice. Section 553(b) of the APA requires publication of a notice of proposed rulemaking (NPRM) in the Federal Register. This constitutes what is legally referred to as "constructive notice," and it is deemed sufficient to give affected persons notice of the NPRM's contents." Failure to publish a Federal Register notice of rulemaking, or failure to include mention of a significant subject covered in a final rule, may result in a court setting aside the rule and remanding it to the 3 agency for further procedings.

4

However, the Administrative Procedure Act provides that Federal Register notice is not required if persons subject to the rule "are named and either personally served or otherwise have actual notice" of the rulemaking. The prudent rulemaking staff should view this "actual notice" substitute for Federal Register notice with caution. There certainly are cases where other forms of notice are superior to Federal Register notice. For example, some rules have strictly local application, such as those governing conduct in a particular national park or other, federal facility. In other cases, interested persons will be readily identifiable, and better notice can be given by means other than the Federal Register.5 Despite the superiority of personal service or other

forms of notice in these situations, there simply is too much at stake in most rulemakings not to publish a NPRM in the Federal Register. 6

Rulemaking: Children's Advertising, 43 Fed. Reg. 17,967, 17,969 (Apr. 27, 1978). The political reaction was immediate, with The Washington Post dubbing the FTC a "national nanny." Ultimately, Congress passed legislation that limited the FTC's authority to regulate such advertising.

2/ 44 U.S.C. S 1507 (1976).

3/ See, e.g., PPG Industries, Inc. v. Costle, 659 F.2d 1239, 1249-51 (D.C. Cir. 1981).

4/ 5 U.S.C. S 553(b) (1976).

5/ Proceedings to establish utility rates fall in this category. A combination of personal service, circulation with utility bills, posting, etc., would give notice of the proceeding to all affected persons.

6/ The APA's "actual notice" provision may aid agencies defending rules in court, if the party challenging the rule had actual notice of an issue but, nevertheless, claims the Federal Register notice was (Continued)

2. APA notice content requirements. Section 553 of APA states that the NPRM must state the "time, place, and nature" of 7 the public proceedings." The generality of this requirement may stem from the fact that section 553's notice provision applies to formal rulemaking (where an oral hearing with cross-examination is required) as well as to informal rulemaking. In the context of informal rulemaking, this language requires the agency to specify the type of rule involved; the time during which the agency will receive written comments on the proposal, as well as instructions regarding the manner of filing comments.

8

The APA does not specify a minimum period for comment. A common misconception is that the APA prescribes a 30-day minimum comment period-a belief that probably derives from the APA's requirement that final rules be published 30 days prior to their effective date. A reasonable time should be allowed for comment, with "reasonableness" judged in relation to the particular facts of each rulemaking. The Federal Register Act provides that notice is reasonable when published in the Federal Register:

9

[A]t such a time that the period between the
publication and the date fixed in the notice for
the hearing or for the termination of the
opportunity to be heard is -

inadequate. See, e.g., Water Transport Ass'n v. ICC, 684 F.2d 81, 84-85 (D.C. Cir. 1982). But the provision will be of little help where the agency fails to publish any NPRM in the Register. See, e.g., Rodway v. USDA, 514 F.2d 809, 815 (D.C. Cir. 1975). 7/5 U.S.C. S 553(b)(1) (1976).

In one case, the agency's NPRM title suggested the rulemaking was for the purpose of formulating an interpretive rule, when the agency actually was developing a legislative rule that did more than interpret the statute. Water Transport Ass'n v. ICC, supra note 6, at 84.

9/ See 5 U.S.C. § 553(d). The 30-day period following publication is not intended to provide an opportunity for comment; it is a grace period for coming into compliance with the rule, and, consequently, may be omitted when the rule grants an exemption or relieves a restriction, $ 553(d)(1). Of course, the agency may become aware of unintended consequences of the rule during this period, and it may undertake proceedings to amend the rule to avoid those consequences.

(1) not less than the time specifically
prescribed for the publication of the notice by
the appropriate Act of Congress; or

(2) not less than fifteen days when time for
publication is not specifically prescribed by the
Act, without prejudice, however, to the
effectiveness of a notice of less than fifteen
days where the shorter period is reasonable.

This language should probably be read as guidance on what normally would be the minimum "reasonable" comment period. Certainly, an agency would not (absent an emergency situation) consider giving interested persons only 15 days to comment on a rule that would require industry restructuring or major investment in plant or equipment. Pending in both houses of Congress in 1982 were comprehensive regulatory reform bills that would have established a minimum 60-day comment period.11

The Administrative Conference, in a statement of views on those bills, stated that it has "no objection to enactment. [of the minimum comment period provision]... provided that the "good cause" exception in section 553(b) is retained."12 In other words, even the minimum period could be partially or fully dispensed with when the agency determines that "notice and public procedure... are impracticable, unnecessary, or contrary to the public interest."13

The section 553 notice must also contain a "reference to the legal authority under which the rule is proposed." Though this

14

10/ 44 U.S.C. S 1508 (1976). 11/ See S. 1080, the Regulatory Reform Act, S 3 (passed by the Senate on Mar. 24, 1982); H.R. 746, the Regulatory Procedure Act, S 201 (reported by the House Judiciary Committee on Feb. 25, 1982). President Carter's executive order on improving government regulations also imposed a minimum 60-day comment period for proposed significant regulations. Exec. Order No. 12,044, S 2(c).

12/ Views of the Administrative Conference on Proposals Pending in Congress to Amend the Informal Rulemaking Provisons of the APA (June 18, 1982) (codified at 1 C.F.R. § 310.7 (1983)).

13/ See Chapter Two, text accompanying nn. 108-123 for a discussion of this exemption.

14/ 5 U.S. C. S 553(b)(2) (1976).