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Henkels, 480, Section 2:

Administrative Procedures Act(1946)

Six Major Sections:

1) Introduction: definitions and key terms

- “administrative agency” should be read broadly

2) Fair Information Practices rules

- Freedom of Information Act

- Privacy Act of 1974

- Government in Sunshine Act

3) Rulemaking

4) Adjudication

- minimal due process: notice, hearing, impartial decision maker

5) Guidelines for Hearings

- procedures

- presiding officers independence

6) Guidelines for judicial review

SECTION II - THE APA AND RULE-MAKING

Federal Register Act of 1935 (since amended):

Federal Register: place where rule-making actions and many other federal announcements are published

Final federal rules are published in the Code of Federal Regulations (CFR)

The regulations are integrated into the large law framed by statutes in the United States Code Annotated (USCA)

Henkels, 480, Section 2:

Rulemaking is “quasi-legislative”: developing details of laws to operationalize them

Examples of Oregon agencies developing rules for fishing on Lake Billy Chinook and the limit of THC in edible marijuana.

Henkels, 480, Section 2:

Rulemaking: Three Guiding Questions

1) What is a rule?

2) How are rules made?

3) Where is rulemaking going?

SECTION II - THE APA AND RULE-MAKING

Henkels, 480, Section 2:

“Rule”: (aka “regulation”)

“the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or proscribe law or policy or describing the organization, procedure, or practice requirements of an agency”

- statement by agency clarifying how a statute will be implemented

SECTION II - THE APA AND RULE-MAKING

Henkels, 480, Section 2:

“Rulemaking”:

agency process for formulating, amending or repealing rules (quasi-legislative)

SECTION II - THE APA AND RULE-MAKING

Henkels, 480, Section 2:

SECTION II - THE APA AND RULE-MAKING

“Order” - final deposition of an agency in a matter other than rulemaking, but including licensing (aka “decisions”)

“Adjudication” - “agency process for the formulation of an order” (quasi-judicial)

Henkels, 480, Section 2:

SECTION II - THE APA AND RULE-MAKING

Separating Rules from Orders:

Kenneth Warren’s two simple tests

guidelines, but definitely not absolute

Test One: Past-Future Test – does the action evaluate a past action or is the focus on future behavior?

Generally, orders are judgments regarding past action, rules are for the future.

Henkels, 480, Section 2:

SECTION II - THE APA AND RULE-MAKING

Warren’s two simple tests

Test Two: Specific-General Test – does the action regard a particular party or is it directed to broad group or general public?

Orders are directed to specific parties, rules are for general public.

Henkels, 480, Section 2:

SECTION II - THE APA AND RULE-MAKING

Ordermaking(adjudication) verse Rulemaking:

Procedural differences: Rulemaking is legislative

- due process concerns in adjudication since specific parties are negatively affected

Uniformity and broad reach of rules, orders are more specific to one circumstance or party

- rules and rulemaking are broadly publicized, more transparent and recognized by the public and courts

Policy planning: trade-off of broad, open, one-shot approach of rulemaking versus the case-by-case adaptive adjudication

NLRB’s reliance on adjudication has weakened its legitimacy in courts and its institutional standing

Henkels, 480, Section 2:

SECTION II - THE APA AND RULE-MAKING

Ordermaking(adjudication) verse Rulemaking:

Regulated parties generally prefer rulemaking: cheaper, more transparent, more stable

General public(actually interest groups since the general public is ignorant of it all): generally favors rulemaking may reduce capture or cozy deals with regulated.

Cheaper to participate in rulemaking, easier to track

Agency officials: mixed view, rulemaking cheaper but general policies may create inequities and limit discretion and adaptability.

Rulemaking may force adoption of policies not ready for broad application

Henkels, 480, Section 2:

General Limitations of rule-making powers:

1) power comes from enabling or organic acts

2) courts will strike down rules that are

a) “arbitrary”, “capricious”, and abuse of discretion or otherwise not in accordance with law

b) “made without proper observance of procedure required by law”

Motor Vehicles Association v. State Farm (1983) : automatic seatbelts verse waiting for airbags

SECTION II - THE APA AND RULE-MAKING

“General statements of Policy” are not rules

- Broad declaration of policy direction or general interpretation not subject to rulemaking requirements or standards

Henkels, 480, Section 2:

Courts allow “general statements of policy” that are not rules

Example: Corps of Engineers can say that they will generally permit wetlands filling if twice the acreage is protected or in other unspecified conditions

– but it would be a legislative rule if protecting twice the acreage was a condition for all permits

FDA could not state as a “general statement of policy” that it would only enforce food contamination if it reached certain “action levels”

– seemed to prevent action in specific situations and therefore was a rule

Henkels, 480, Section 2:

Types of rules:

1) Interpretive(interpretative): non-legislative

2) Procedural – legislative: not always binding

3) Substantive: Legislative – make law

SECTION II - THE APA AND RULE-MAKING

Henkels, 480, Section 2:

Types of rules:

1. Interpretive(interpretative) - operational definitions, guides for action, “advisory”.

Should not have “substantial impact”.

Substantial impact has been largely replaced by:

- “force of law” test, is it “legally binding”?

- Would absence of rule prevent enforcement action?

SECTION II - THE APA AND RULE-MAKING

Henkels, 480, Section 2:

Interpretive rules: Courts review to ensure interpretive rules are not binding in practice and do not alter legal rights

- Will consider if they amend longstanding interpretative rules (supporting that they are legislative rules) and whether agencies explicitly note they are interpretive (supporting that they are interpretive)

Not interpretive if they alter existing legislative rules

Courts respect agency need for flexibility:

Chevron v. NRDC (1984): “stationary source” decision

- Defer to agency interpretation of law if legislative intent is silent or ambiguous

SECTION II - THE APA AND RULE-MAKING

Bubble Concept: One area has ten factories. The costs for reducing pollution are not the same for each factory.

Rather than requiring each factory to reduce pollution by 20%, it could be cheaper to require the overall area to reduce pollution by 20%.

The places that can reduce pollution more cheaply can negotiate with other facilities for compensation for their reductions.

Henkels, 480, Section 2:

Types of rules:

2) Procedural - foster fairness and impartiality, generally agency decides whether and how to make them

- if adopted through rulemaking then legally binding. Should use rulemaking process if there is substantial impact on public

Morton v. Ruiz (1974): Indian benefits: procedures for determining eligibility required by agency’s own rules.

- Invalid procedure for policy that has “substantial impact”

SECTION II - THE APA AND RULE-MAKING

Henkels, 480, Section 2:

Types of rules:

Legislative (substantive) – major focus of concern. Make law.

Creating legislative rules requires specific rulemaking procedures

SECTION II - THE APA AND RULE-MAKING

Henkels, 480, Section 2:

Exemptions from rulemaking procedures

Interpretive Rules

Procedural Rules

Military and foreign relations policymaking

“proprietary matters”: business actions such as personnel, contracting, grant actions

“Good cause”, including Emergency rules: allowed when regular rulemaking is impractical or would be too slow (example: post 9/11 protective actions)

Interim rules: especially by state

Henkels, 480, Section 2:

Methods of Rulemaking: (Required for Legislative Rules)

1. Informal (Notice and Comment) rulemaking

2. Formal rulemaking (Section 554)

2. Hybrid rulemaking (553+)

4. Negotiated Rulemaking

SECTION II - THE APA AND RULE-MAKING

Henkels, 480, Section 2:

Informal (notice and comment) rulemaking - basic requirement

Step 1: Notice in Federal Register (Oregon Bulletin)

- time, place, contact person

- legal authority of action

- description of action

Step 2: Participation

- usually written

- state commonly has hearings

Step 3: Publication of Rule

Methods of Rulemaking: for making legislative(substantive) rules

Henkels, 480, Section 2:

Methods of Rulemaking: for making legislative(substantive) rules

Informal rulemaking: default method:

U.S. v. Florida East Coast Railway (1973) : informal process is default requirement. Any greater requirements must be explicit in legislation

Henkels, 480, Section 2:

Informal Rulemaking

Courts may be concerned about whether additional rulemaking is necessary when final rules differ greatly from proposed rules: They apply the “logical outgrowth” test.

Chocolate milk manufacturers successfully challenged a USDA food stamp rule where a proposed rule reducing sugar in cereals evolved to include flavored milk without any public notice

If there is commentary on a topic during process on an issue, courts will generally not require more hearings after final rule is published.

Henkels, 480, Section 2:

2. Formal rulemaking (Section 554) - adversarial court-like context

- Required when the statute states that a rule be “on the record after an opportunity for an agency hearings”: explicit requirement

Criticized for complexity and delays: over 10 years to determine whether 87.5% or 90% was appropriate peanuts in peanut butter (90%)

Methods of Rulemaking: for making legislative(substantive) rules

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Characteristics of Formal Rulemaking

Agency needs “substantial evidence” to make rule. Less agency discretion and enhances importance of the record

Full opportunity for participation

Thorough record of decision

No “ex parte” communication

Actual outcome is often a recommendation to board or agency head

Methods of Rulemaking

Henkels, 480, Section 2:

Methods of Rulemaking:

3. Hybrid rulemaking (553+): Combines elements of formal and informal: especially enhanced decision record and more opportunity for participation or cross-examination of information

Required by legislatures frequently in 1970s in specific enabling legislation

Agency still in favored legal position

Record of decision makes rule more defensible in court

Hearing may serve political as well as informational purpose

Henkels, 480, Section 2:

Methods of Rulemaking:

Hybrid Rulemaking:

Vermont Yankee v. NRDC (1978) : appellate court required and defended hybrid process.

Supreme court reversed. Only statutory requirements need to be met even if hybrid might be better.

Henkels, 480, Section 2:

Methods of Rulemaking:

4. Negotiated Rulemaking: “Reg-Neg” - seeks to avoid confrontational approach

– promote problem resolution rather than adversarial obstructionism

Demonstrates long term relationship between agencies and outside parties

Henkels, 480, Section 2:

Methods of Rulemaking:

Negotiated Rulemaking Steps:

1. Facilitator assembles stakeholders

2. Second (often different) facilitator manages a negotiation process

3. If rule is agreed upon, it goes to regular notice and comment process

Henkels, 480, Section 2:

Methods of Rulemaking:

Negotiated Rulemaking:

- Limited usefulness

-Encouraged in federal system by 1990 Negotiated Rulemaking Act

- Very common in Oregon state rulemaking

- Insider bias

- Hard for agency to walk away from negotiations

Direct Final Rule: Agency publishes what it intends to be final rule. The rule becomes law unless it receives opposing statement. Even one opposing statement triggers rulemaking process.

Henkels, 480, Section 2: