5

As Chapter Two discusses, however, even the procedural "floor" set in section 553 does not apply to all rulemaking. Entire classes of rules are totally exempted from its requirements, and certain types of rules are exempted from some of section 553's requirements. These exemptions reflect the APA drafters' cautious approach to imposing procedural requirements on a myriad of agency functions and their general willingness to leave agencies discretion to fashion procedures appropriate to rulemaking.

This willingness to leave rulemaking procedures to agency discretion, above the bare minimum required by section 553, has gradually eroded in the three decades following enactment of the APA. Federal courts, the Congress, and the White House have all required that agencies follow more rigorous procedures. These developments are discussed below.

B. The Federal Courts and Rulemaking Procedure: Before and After "Vermont Yankee".

The term "hybrid rulemaking" was initially used to describe judicially-imposed use of procedures in agency rulemaking that went beyond the minimum requirements of section 553.6 Most of the early "hybrid rulemaking" judicial decisions involved rulemaking under statutes that called for either a decision after a hearing (but not on the record) or "substantial evidence" review. The courts refused to apply formal rulemaking procedures to these proceedings, but they did remand final rules to the agencies for additional development of issues through cross-examination or other unspecified procedural devices.7

The rationales given in support of these judicial decisions were often quite broad, and for a decade beginning in the late

Procedure Act, S. Rep. No. 752, 79th Cong., 1st Sess. 201 (1945). 5/ See Chapter Two at pp. 24-44.

6/ See Williams, "Hybrid Rulemaking" Under the Administrative Procedure Act: A Legal and Empirical Analysis, 42 U. Chi. L. Rev. 401 (1975). The term "hybrid rulemaking" apparently was in use prior to publication of the Williams article. See Clagett, Informal Action-Adjudication-Rulemaking: Some Recent Developments in Federal Administrative Law, 1971 Duke L.J. 51, 70 (urging agencies to fashion "hybrid or conglomera te procedural devices"). 7/ See generally Williams, supra note 6.

1960's, there evolved a kind of "common law" of rulemaking procedure and review. These judge-made additions to informal rulemaking procedure were principally the product of the U.S. Court of Appeals for the District of Columbia Circuit, but some of the concepts originating in that that court gained widespread acceptance in other federal courts. Thus, courts have held that agencies commit procedural error by failing to disclose critical data or methodologies for comment during rulemaking; by relying on information received from interested persons on an ex parte basis; by failing to respond to cogent comments in the statement of basis and purpose accompanying the final rule, or by failing in the statement of basis and purpose to explain the rationale for the rule in sufficient detail to permit judicial review of the final agency decision.8 These judicial decisions will be discussed in the stageby-stage discussion of rulemaking in later guide chapters.

By its controversial Vermont Yankee decision, the U.S. Supreme Court has slowed, if not stopped, the development of judge-made "common law" of rulemaking procedure. In criticizing the D.C. Circuit's experimentation with "hybrid" procedure, the Court stated that "generally speaking [S 553 of the APA] 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."9

Though Vermont Yankee prevents the invalidation of rules for failure of the agency to use specific procedures not required by section 553, it is unlikely the decision portends the demise of all the law of informal rulemaking developed by the lower courts in the last decade. Read narrowly, Vermont Yankee is only a rejection of the type of strict procedural review espoused by Judge Bazelon, author of the majority opinion in the circuit court.

8/

See cases cited in DeLong, Informal Rulemaking and the Integration of Law and Policy, 65 Va. L. Rev. 257, 267-272 (1979). 9/ Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 435 U.S. 519, 524 (1978) (footnote omitted). (Continued)

The Vermont Yankee holding (as opposed to its sweeping generalizations about judicial review) does not necessarily undermine judicial interpretations of the notice and comment or statement of basis and purpose requirements in section 553. Yet clearly some of these interpretations go beyond what was contemplated by the drafters of the APA.11 It is noteworthy that the court cited with approval one such interpretation in Vermont 12 Yankee.

The reason some of the judicial interpretations of section 553's requirements may survive Vermont Yankee is that they were made in response to major changes that occurred in administrative law and federal regulation after 1946. One change was the tremendous increase in the volume and scope of federal regulation. In the late 1960's and throughout the 1970's, Congress established a number of major regulatory schemes designed to address health and safety or environmental problems. Not only did this new legislation produce more agency rulemaking, it led to rulemaking in which the issues were often very complex and the stakes very high.13

10/ If construed this narrowly, the decision will have little longterm effect on administrative law. See 1 K. Davis, Administrative Law Treatise SS 6:36-37 (2d ed. 1978); Rodgers, A Hard Look at Vermont Yankee: Environmental Law Under Close Scrutiny, 67 Geo. L.J. 699, 713–14 (1979).

11/ For example, the drafters of the APA did not contemplate that agencies would submit their factual material and reasoning for public probing and challenge during rulemaking. Nor was the statement of basis and purpose intended to be a detailed "road map" of the agency's reasoning and underlying factual support. See Auerbach, Informal Rule Making: A Proposed Relationship Between Administrative Procedures and Judicial Review, 72 Nw. U.L. Rev. 15, 23 (1977); Nathanson, Probing the Mind of the Administrator: Hearing Variations and Standards of Judicial Review Under the Administrative Procedure Act and Other Federal Statutes, 75 Colum. L. Rev. 721, 754-55 (1975).

12/ The Court referred to Judge Leventhal's opinion in Portland Cement Ass'n v. Ruckelshaus, 486 F.2d 375, for the propositon that "comments must be significant enough to step over a threshold requirement of materiality before any lack of agency response or consideration becomes of concern." 435 U.S. at 553.

13/ See generally DeLong, Informal Rulemaking and the (Continued)

Another change was in the context and timing of judicial review of agency rules. When the APA was written, it was expected that judicial review of the validity of rules would take place in a proceeding to enforce or enjoin enforcement of rules. Therefore, a record for review would be developed either by the agency or de novo in the reviewing court when the rule was challenged. However, accompanying the increased use of informal rulemaking was a trend toward preenforcement review of agency rules; typically (as required by statute) in the federal courts of 14 appeal. The law relating to standing to sue also changed, so that it became easier for a wider range of interested persons to challenge rules prior to their enforcement in specific cases.

These changes combined to make it easier for interested persons to get into court to challenge rules with the potential for major impact on persons or society as a whole, but the procedures required for rulemaking did not ensure development of a record that would be adequate for courts to perform their review function. The Court's analysis in Vermont Yankee does not discuss these changes, and there remains much uncertainty about the limits of procedural and substantive review of agency rulemaking.

15

C. Congress and Rulemaking Procedure.

Since 1946 the Congress has acted in several ways to influence agency rulemaking and rulemaking procedure. Most major legislation enacted in the last decade or more has included delegation of rulemaking authority that specifies procedures to be followed in addition to, or in lieu of, the minimum requirements in 5 U.S.C. § 553.16

The variety of procedural requirements imposed on agencies by these statutes makes generalization about their impact

Integration of Law and Policy, supra note 8 at 276-284.

14/ See Scalia, Vermont Yankee: The APA, the D.C. Circuit, and the Supreme Court, Sup. Ct. Rev. 345, 377-78 (1978).

15/ See, e.g., Verkuil, Judicial Review of Informal Rulemaking: Waiting for Vermont Yankee II, 55 Tul. L. Rev. 418 (1981).

16/ See Chapter Two at pp. 65-70 for a listing of the major "hybrid" rulemaking statutes.

difficult. At the very least, the presence of specific and varied rulemaking requirements has undermined the original unifying purpose of the APA. Moreover, the almost routine addition of procedural requirements shows that Congress no longer believes section 553 contains the minimum procedures that will generally assure fairness and accuracy in agency rulemaking.

It is uncertain whether Congress will continue in "balkanizing"17 administrative procedure, as it has in the last decade, or reach a consensus on a new set of minimum procedures to be required for agency rulemaking. Regulatory reform bills that would have amended section 553 received serious consideration in the 97th Congress, but though a bill passed the Senate, a similar bill died in the House of Representatives amidst controversy over several of its provisions.18

Beyond imposing additional procedural requirements on the agency rulemaking process, Congress occasionally has sought to control rulemaking by after-the-fact legislative review of final agency rules. For years there was widely divergent opinion on the constitutionality and desirability of various forms of the legislative veto at both the state and federal levels. The Administrative Conference had studied the operation of legislative vetoes and concluded that the legislative veto procedure generally is undesirable for rulemaking. The debate over use of the

20

19

17/ This term was used by former ACUS Chairman Antonin Scalia to describe and deplore Congress' piecemeal imposition of additional procedures when establishing new programs. See Scalia, Vermont Yankee: the APA, the D.C. Circuit, and the Supreme Court, supra note 14 at 404 (quoting his Foreword to the 1973-74 Annual Report of the Administrative Conference).

18/ For the Administrative Conference's views on the major bills, see Views of the Administrative Conference on Proposals Pending in Congress to Amend the Informal Rulemaking Provisions of the APA, 47 Fed. Reg. 30,715 (July 15, 1982) (codified at 1 C.F.R. S 310.7). Major regulatory reform proposals in the 96th and 97th Congresses are described in Note, Regulatory Analyses and Judicial Review of Informal Rulemaking, 91 Yale L.J. 739 (1982).

19/ See generally Levinson, Legislative and Executive Veto of Rules of Administrative Agencies: Models and Alternatives, 24 Wm. & Mary L. Rev. 79 (1982) (report to the Administrative Conference). 20/ ACUS Recommendation 77-1, Legislative Veto of Administra(Continued)