Rulemaking

Part I

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Jargon Alert

Legislative rule (regulation) Has the effect of law Generally just called a rule or regulation

Non-Legislative rule Has no legal effect, but shows what the agency thinks

the law is Many names - interpretive rule, guidelines, guidance

document, anything but rule or regulation

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Administrative Rules

The Legislature can delegate the power to make rules to the agency Some agencies do not have rulemaking authority Rules cannot exceed the authority in the

agency's enabling legislation or the Constitution Properly promulgated rules have the same effect as

statutes

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The Agency as Legislature

The shift from adjudications to rulemaking started in the 1950s

The courts try to allow an agency to make rules

Parallels the growth of state and federal agencies

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The Impact of Rules

Congress often delegates details to agencies because the issue is a political hot potato Wetland policy is mostly driven by regulations

based on vague statutory authority and permissive court decisions

The EIS process is based on regulations Thus agencies may develop and implement the

most intrusive or controversial policies Is this good policy?

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How do you make a Rule?

Publish the proposed rule and what it is based on for public comment The Federal Register and LA Register are where

rules are published first Review and address public comments and publish

these along with any modifications in the rule Codify the rule after it is effective

Rules are Codified in Code of Federal Regulation and the LA Administrative Code

Why Make Rules?

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Participation and Generality

Allow Public Participation Adjudications are limited to the parties

Allow Political input Rulemaking is a public process which allows

politicians input Appropriate Procedure

Adjudications are tied to specific facts and parties Rules are generally applicable, although they may be

very specific

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Uniformity

Adjudications, like trials, are driven by specific facts and can treat similar situations differently

Rules set up a general framework that treats all parties uniformly

Rules are the fairest way to make big regulatory changes

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Adoption of National Standards

National standards can be adopted through agency rules, harmonizing practice across jurisdictions National building codes CDC guidelines on food sanitation Recommendations of the Advisory Committee

on Immunization Practices LA and building codes

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Agency Efficiency

While a rulemaking can be expensive and time consuming, it can settle issues across a large number of adjudications

Rulemaking can also eliminate many hearings by resolving factual questions In disability cases, rules can be used to

establish what constitutes a disability, rather than making it as case by case determination.

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Better Guidance for the Public

Rules are published and codified State rules were hard to find, but the Internet is

making this better Agency adjudications, especially at the state

level, are often not published There may be no transcript of the full

adjudication Rules are binding on everyone, not just the

parties

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Agency Oversight

You can control the outcome of rulemaking much easier than that of adjudication Not Dependant on ALJs Why is this especially important in LA?

More input from across the agency Directly controlled by agency policy makers

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Downside of Rulemaking

Adjudications can be more flexible in the individual cases

Rules can be so abstract or overbroad that they are expensive or difficult to follow Like statutes

Adjudications are useful when you are not sure what the rule should be and need more info and a chance to experiment

Does not do away with the need for adjudications

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Rulemaking Ossification

Rulemaking has gotten so complex and time consuming it has lost some of its value

Rulemaking can go on for years What is the legal value of a proposed rule that has

not been finalized? This was the problem for the anti-kickback

regulations Complicated by regulatory conflict and incompetent

agency practice The courts and legislature have increased the burden

on rulemaking

What is a Rule?

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Definition of a Rule

APA 551(4) (4) 'rule' means the whole or a part of an agency statement of

general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefor or of valuations, costs, or accounting, or practices bearing on any of the foregoing;

Not a clear definition Things that are not adjudications or licensing

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LA Definition

6) "Rule" means each agency statement, guide, or requirement for conduct or action, exclusive of those regulating only the internal management of the agency and those purporting to adopt, increase, or decrease any fees imposed on the affairs, actions, or persons regulated by the agency, which has general applicability and the effect of implementing or interpreting substantive law or policy, or which prescribes the procedure or practice requirements of the agency.

"Rule" includes, but is not limited to, any provision for fines, prices or penalties, the attainment or loss of preferential status, and the criteria or qualifications for licensure or certification by an agency. A rule may be of general applicability even though it may not apply to the entire state, provided its form is general and it is capable of being applied to every member of an identifiable class. The term includes the amendment or repeal of an existing rule but does not include declaratory rulings or orders or any fees.

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Functional Definitions

Critical term is general applicability Remember the standards for a hearing? If you do not get a hearing, and there is no special

exception such as an emergency or national security, it is probably a rule

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If it is Retrospective, it Should be an Adjudication

Retroactivity Adjudications are based on things that have

already happened Adjudications can be treated as treated as

precedent, but this is not binding Adjudications are driven by the available cases

Rules are prospective Not bound by existing facts

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Which are Retrospective?

National Highway Traffic Safety Administration finds that cars do not protect against side impacts Proposes rule require engineering changes or side air

bags OSHA finds auto paint shops are inadequately ventilated

Proposes ventilation rule and requires paying for health screening of employees who have been working in the badly ventilated shops

What is the rule says testing is to monitor future harm?

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Legislative v. Nonlegislative Rules(Rules v. Guidance)

A notice and comment rule is only necessary if the rule changes the legal environment In many cases, agencies issue explanations of what

they believe their enabling legislation means These guidelines do not need notice and comment

because they do not change the legal environment, Can be challenged if they create new legal duties

More later on this.

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Rules v. OrdersNarrowing the Scope of Adjudications

FCC must determine if granting a TV station license is in the public interest This is a matter of fact that must be determined

in a hearing Agency promulgates a rule that it is not in the

public interest to own more than 5 TV stations How does this change the facts to be decided

at the license hearing?

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Food Handling Standards

If there were no rules on food handling in restaurants, what would to be established during an adjudication before a restaurant could be cited for not keeping the soup at 140 degrees or hotter?

How does the adoption of comprehensive national code allow the adjudication to take the form of an inspection?

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Beginning Rulemaking

What drove rulemaking in the Regulators? If the agency has the power to make rules, but no

legislative direction as to when to make them, can you force the agency to make a rule?

5 U.S.C. §553(e) (e) Each agency shall give an interested person

the right to petition for the issuance, amendment, or repeal of a rule.

We will explore this more in Mass. v. EPA

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Formal Rulemaking

Widely used when the APA was passed, usually in rate making proceedings Not typical, in that they were more like

adjudications Trial type

Very time consuming Seldom used Must be required by statute

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Informal Rulemaking - Notice and Comment

Most rulemaking Governed by the APA

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Publication Rules

Rules that do not require comment to become effective

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Extra-APA Requirements

Notice and comment rulemaking is not constitutionally mandated

Congress can establish additional or alternative procedures

Congress could allow agencies to make rules without comment or public input

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Non-APA Requirements

APA is only the default if there is no other statutory guidance

National Environmental Policy Act imposes requirements if the rule affects the environment

Regulatory Flexibility Act - small business Executive Order 12866 - more $100M impact The book calls these hybrid rulemaking, do not

confuse this with court imposed hybrid rulemaking as in Vermont Yankee

Exemptions to Notice and Comment Requirements

Is notice and comment a constitutional requirement?

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Military and foreign affairs

Why exempt these? Limiting the term of residence for Iranian

nationals after the hostage incident National security issues?

Extending asylum to persons subject to reproductive restrictions in China Was this just an individual benefit or part of a

foreign policy?

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Agency Procedures

Like the code of civil procedure Does not change the substantive rights of the

parties Does not change the regulated behavior, only the

process in agency procedures

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Actions where Secrecy is Important

Wage and price controls Bidding on contracts Negotiations on land purchases and sales

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Emergency Proceedings

Emergency Rules http://www.state.la.us/osr/osr.htm

Interim Final Rules Published and in effect, but will be modified after

comments are in. Calculations and other non-discretionary rules Technical corrections

Can require notice and comment if the correction causes a different result

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553(b) - Exceptions to Notice Requirements

1) Interpretative rules, general statements of policy, and rules of agency organization, procedure, and practice; and

2) Rules when the agency finds for good cause that notice and public procedure are impracticable, unnecessary, or contrary to the public interest.

No notice means no comment under 553(c)

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Exception 1 - Interpretative Rules

It is only explaining the law or providing guidance for action Prosecution guidelines IRS audit guidelines

Since they do not change the law, they have no legal effect Does that mean you can ignore them?

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How do you know if it an Interpretive Rule or a Legislative Rule?

Why would an agency want to use an interpretive rule rather than a legislative rule? What is the risk to the agency if they do and the

court disagrees? What is the benefit to the regulated parties of

interpretive rules? What if the agency is prevented from providing

guidance documents?

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The Nature of the Enabling Act

Very general laws Little effective guidance in the statute Makes any interpretative rule more likely to

been seen as a legislative rule Very specific laws - like the ADA

No room for legislative rules Everything is guidance

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EPA Example - Wetlands

EPA makes a rule that states that the term “waters of the United States” (which defines the jurisdiction of EPA under the Clean Water Act) includes wetlands that potentially provide habitat to migratory birds.

Is this an interpretative rule or a legislative rule? Can we tell just looking at the rule? Will the agency say that the rule is binding?

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The Substantial Impact Test

How might this rule affect the buyers of wetlands? Is this a substantial impact? What is the agency's defense? Is the substantial impact test circular?

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The “Legally Binding” or “Force of Law” Test

What is the enforcement test? What do we need to know to tell whether the agency can

enforce the law without this rule? Is the agency required to define wetlands? Was the agency doing enforcement before this rule?

Under this test, is this an interpretative rule? What if statute allows the agency to define toxic

substances that cannot be dumped into lakes? Would a list of these substances be legislative?