May 15, 2014

Rethinking Formal Rulemaking

  • Aaron L. Nielson

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In the modern world, even those who know a great deal about administrative law often give little thought to the fact that the Administrative Procedure Act (APA)—essentially the Bill of Rights for the administrative state—sets forth two ways for agencies to make rules. Today, many people only focus on the more common kind of rulemaking, called informal or notice-and-comment rulemaking. With informal rulemaking, an agency publishes a notice in the Federal Register, solicits comments from the public, and then finalizes the rule. How the agency goes about finalizing the rule, however, is a largely “black box” process. No one knows for sure how seriously an agency considers the comments it receives.

The APA, however, also sets forth another way to promulgate regulations: formal rulemaking. Formal rulemaking is very different from its informal cousin. Whereas informal rulemaking depends on paper comments, formal rulemaking requires a process somewhat similar to an actual trial, complete with burdens of proof and persuasion, bars on ex parte communications, presentation of evidence, cross-examination, and a written decision at the end. Through such robust procedures, formal rulemaking aspires both to help agencies make better rules and to demonstrate to the public that the agency has taken criticisms of its proposal seriously. After all, if the agency cannot support its final rule based on the evidence presented at the hearing, the rule cannot stand. The black box problem thus can be much less pronounced.

Nonetheless, despite these potential benefits, formal rulemaking is almost never used today. Whereas informal rulemaking is a core feature of modern government, formal rulemaking is remarkably rare. Indeed, it is no overstatement to say that formal rulemaking has now fallen into nearly complete desuetude.

Rather than mourning formal rulemaking’s death, moreover, many regulatory scholars today celebrate it. To these scholars, formal rulemaking is a misfit for today’s government because the procedural protections it provides are too robust. Many fear that formal rulemaking makes it too hard for agencies to act. While it is true that formal rulemaking can make the regulatory process take longer, however, there still may be times when it is a good idea or at least merits experimentation—particularly for the most complex, costly, and controversial rules. For such rules, the benefit of getting it right through more formal procedures could easily be worth the price of delay. Although when, or if, formal rulemaking is appropriate is a difficult question, it is time to reconsider today’s blanket refusal to even consider formal rulemaking in any circumstances whatsoever.

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