which includes the entire discussion of benefit calculation:

The RIA [regulatory impact analysis] should
state the beneficial effects of the proposed
regulatory change and its principal
alternatives. It should include estimates of the
present value of all potential real incremental
benefits to society. Benefits that can be
estimated in monetary terms should be
expressed in constant dollars. Other favorable
effects should be described in detail and
quantified where possible. An annual discount
rate of 10 percent should be used; however,
where it appears desirable, other discount rates
also may be used to test the sensitivity of the
results. Assumptions should be stated, and the
RIA should identify the data or studies on which
the analysis is based.

There should be an explanation of the
mechanism by which the proposed action is
expected to yield the anticipated benefits.

A schedule of benefits should be included that
would show the type of benefit, to whom it
would accrue, and when it would accrue. The
numbers in this table should be expressed in
constant dollar terms.

Thus, the interim guidance memorandum contains no discussion of such thorny issues as (1) problems associated with methodologies for valuing human life, (2) techniques for estimating and incorporating into the analysis, benefits that cannot be quantified or reduced to dollar terms, and (3) the basis for the recommended discount rate for future benefits.

OMB's failure to provide more guidance to agencies may reflect pessimism about the potential for developing a uniform approach to deal with the methodological problems or a desire to

59/ Id. at 3 (emphasis in original).

60/ A U.S. Regulatory Council study found that:

(Continued)

60

Agencies believed a government-wide analytic
methodology or checklist is impractical because
the relevant issues in each regulatory analysis

preserve executive branch flexibility in addressing the difficult 61 methodological issues involved in cost-benefit analysis.

Until OMB issues more specific guidance, agencies will have to develop their own methodologies for conducting regulatory analyses. Some agencies have considerable experience doing such analyses, and have developed standard guidelines or methods. For example, the Department of Transportation has developed a handbook containing detailed guidance to be followed by its staff in 62 conducting regulatory analyses."

3. The statement of basis and purpose. Section 553(c) of the APA provides that, after consideration of relevant material presented in the rulemaking, "the agency shall incorporate in the 1163 rules adopted a concise statement of their basis and purpose. Though the statement of basis and purpose is issued to explain the final agency decision, the rulemaking staff will likely be asked to prepare a draft statement of basis and purpose to accompany its final recommendations. The agency decisionmaker, of course, may

vary so greatly. There are particularly wide variations bet we en economic and social regulatory proposals and between commandcontrol regulation and market-oriented proposals. Aside from the major differences associated with various types of regulatory rationales or techniques, agency staffs foresee some inherent drawbacks in a listing of RA elements. For example, they believe checklist would incline analysts to approach the task in a linear fashion, believing the analysis was complete after each item was checked off. U.S. Regulatory Council, Survey of Ten Agencies' Experience with Regulatory Analysis: A Working Paper 54-55 (May 1981).

a

61/ This was apparently a consideration in issuance of guidance under Exec. Order No. 12,044, see Baram, Cost-Benefit Analysis: An Inadequate Basis for Health, Safety, and Environmental Regulatory Decisionmaking, 8 Ecology L.Q. 473, 514-15 (1980). 62/ Department of Transportation, Guidance for Regulatory Evaluations: A Handbook for DOT Benefit-Cost Analysis, Office of Industry Policy, Office of the Assistant Secretary for Policy and International Affairs (June 1982).

63/ 5 U.S.C. § 553(c) (1976).

reject all or part of the staff's recommended rule, in which case the draft statement of basis and purpose will have to be revised. The decisionmaker also could decide to adopt the staff's recommended rule, but disagree with the rationale advanced by the staff in support of the rule. In any event, the staff typically begins the process by preparing a draft statement of basis and purpose.

A contemporaneous interpretation of the statement of basis and purpose requirement in the APA was that it was "not intended to require an elaborate analysis of rules or of the detailed considerations upon which they are based but [rather] is designed to enable the public to obtain a general idea of the purpose of, and a

statement of the basic justification for, the rules"64 Certainly a

major purpose of the statement of basis and purpose is to inform the public of the supporting reasons and purposes of the final rule. Agencies often use the statement to advise interested persons how the rule will be applied, to answer questions raised by comments received during the rulemaking, and as a "legislative history" that can be referred to in future applications of the rule.

Though the original purpose for including the statement of basis and purpose requirement in the APA may have been to inform the public, it has become the primary document judges turn to in deciding the validity of challenged rules. What reviewing courts have come to expect of statements of basis and purpose is stated in the following language from the D. C. Circuit Court of Appeals' opinion in Automotive Parts & Accessories Ass'n v. Boyd:

It is appropriate for us... to caution against
an overly literal reading of the statutory terms
"concise" and "general." These adjectives must
be accommodated to the realities of judicial
scrutiny, which do not contemplate that the
court itself will, by a laborious examination of
the record, formulate in the first instance the
significant issues faced by the agency and

64/ Legislative History of the APA, S. Doc. No. 248, 79th Cong., 2d Sess. 225 (1947) (appendix to Attorney General's statement on S. 7, as it appeared in committee print issued Oct. 5, 1945). See also Attorney General's Manual on the Administrative Procedure Act 32 (1947).

articulate the rationale of their resolution. We
do not expect the agency to discuss every item
or opinion included in the submissions made to
it in informal rulemaking. We do expect that, if
the judicial review which Congress has thought
it important to provide is to be meaningful, the
"concise general statement of... basis and
purpose" mandated by Section 4 [now 5 U.S.C. S
553] will enable us to see what major issues of
policy were ventilated by the informal
proceedings and why the agency reacted to
them as it did.

67

Some courts have held that the statement of basis and purpose must respond to significant issues raised in comments on the rule. 66 Since the Supreme Court's Vermont Yankee decision, it is doubtful that this will be found to be a discrete procedural requirement. Nevertheless, reviewing courts may find agency rules to be "arbitrary or capricious" (i.e., irrational) if the agency has not responded to apparently significant issues raised in comments submitted by interested persons or other government agencies. However, it should be noted that there is strong support for the proposition that "comments which themselves are purely speculative and do not disclose the factual or policy basis on which they rest require no response."68

65/ 407 F.2d 330, 338 (D.C. Cir. 1968).

66/ See, eg, Alabama Power Co. v. Costle, 636 F.2d 323, 384-85 (D.C. Cir. 1979); United States v. Nova Scotia Food Products Corp., 568 F.2d 240 (2d Cir. 1977); Home Box Office, Inc. v. FCC, 567 F.2d 9, 35-36 (D.C. Cir. 1977), cert. denied, 434 U.S. 829 (1977); Rodway v. Department of Agriculture, 514 F.2d 809, 817 (D.C. Cir. 1975).

67/ Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 435 U.S. 519 (1978).

68/ Home Box Office, Inc. v. FCC, supra note 66 at 35, n. 58. See also Vermont Yankee Nuclear Power Corp. v. NRDC, supra note 67, at 553-54 (citing Portland Cement Ass'n v. Ruckelshaus, 486 F.2d 375 (D.C. Cir. 1973)), for the principle that "[c]omments must be significant enough to step over a threshold requirement of materiality before any lack of agency response or consideration becomes of concern."); Lead Industries Ass'n v. EPA, 647 F.2d 1130, 1167 (D.C. Cir. 1980) ("[the petitioner's] unsupported claim simply did not rise to the level of comment which required a (Continued)

There are additional requirements for an agency response to comments that may apply to some rulemakings. The Regulatory Flexibility Act requires the final regulatory flexibility analysis to evaluate the public comments on the initial analysis and to state 69 any changes made in the rule in response to the comments. Agencies preparing final environmental impact statements must 70 respond to comments received on the initial EIS. The final regulatory flexibility analysis and the EIS probably will be incorporated or referenced in the statement of basis and purpose accompanying the final rule.

The staff may also include in the statement of basis and purpose a response to the Office of Management and Budget's comments on information collection requirements contained in the rule. Under the Paperwork Reduction Act, OMB must comment on an information collection requirement in a proposed rule within 60 days after publication of the NPRM or forfeit its right to disapprove the requirement If OMB does file comments and the agency responds to the comments, OMB can disapprove the 172 requirement only if the agency's response was "unreasonable." The agency's response to OMB's comments is to accompany Federal Register publication of its final rule. 73

71

In responding to comments in the statement of basis and purpose, the agency need not respond to each individually identified comment, but only to the significant issues raised in the comments. Frequently, interested persons will make the same points, and responding to each comment would be unnecessarily repetitive. However, "boilerplate" statements that all comments were carefully considered, without further discussion, are not likely to impress reviewing courts. Once again, a comprehensive

response from the Administrator.").
69/ 5 U.S.C S 604(a)(2) (Supp. V 1981).
70/ 40 C.F.R. S 150 3.4 (1982).

71/ 44 U.S.C. S 3504(h)(2), (4) (Supp. V 1981).
72/ 44 U.S.C. S 3504(hX5) (c) (Supp. V 1981).

73/ 44 US.C. S 3504(h)(3) (Supp. V 1981).

The Paperwork

Reduction Act's provisions are discussed more fully in Chapter Two, text accompanying nn. 184-238.

74/ The Selective Service System's final rules governing (Continued)