This is a guest post by Connor Raso, an Attorney Advisor at the Consumer Financial Protection Bureau. This post is the result of the author’s independent research and does not necessarily represent the views of the Consumer Financial Protection Bureau, the Administrative Conference or its Members, or the United States.
The Administrative Conference's Recommendation 95-4, Procedures for Noncontroversial and Expedited Rulemaking, examines direct final rulemaking -- which is one tool that agencies use in lieu of notice-and-comment rulemaking. This recommendation was discussed in a recent Government Accountability Office report, entitled Federal Rulemaking: Agencies Could Take Additional Steps to Respond to Public Comments (2012). ACUS Recommendation 83-2, The "Good Cause" Exemption from APA Rulemaking Requirements, examines another basis for exempting rulemaking actions from notice-and-comment, and encourages agencies to provide for post-promulgation comment in some circumstances. Recommendation 76-5, Interpretive Rules of General Applicability and Statements of General Policy, encourages agencies to consider offering notice and comment opportunities for non-adjudicatory interpretive rules and policy declarations of general applicability.
Virtually all scholarship on rulemaking focuses on rules that were subjected to notice-and-comment under the Administrative Procedure Act (APA). Yet agencies issue a majority of all rules and over one-third of “major rules” (generally expected to have a $100 million annual impact) without notice-and-comment. My working paper, Agency Avoidance of Rulemaking Procedures, analyzes when agencies choose to avoid procedural requirements imposed by the APA, the Regulatory Flexibility Act (RFA), and the Unfunded Mandates Reform Act (UMRA).
The paper hypothesizes that agencies avoid these procedural requirements by citing a statutory exemption unless such avoidance poses litigation risk to the agency; note that this definition of avoidance does not turn on whether the agency provided a valid legal rationale for invoking the exemption. I measure such litigation risk under different procedural statutes by gathering the court opinions discussing challenges to agency avoidance, analyzing how these opinions have interpreted the procedural statutes, computing the rate at which agencies win these cases, and describing the remedies courts granted against agencies. Analyzing avoidance of the APA, RFA, and UMRA within the same set of rules helps hold constant other variables such as potential congressional or White House oversight of the rules. I also analyze differences in levels of APA avoidance between different agencies that face different levels of litigation risk.
The results show that avoidance is widespread. Analysis of Unified Agenda data from 1995 to 2012 shows that agencies avoided APA notice-and-comment on 52 percent of all rules and on 37 percent of major rules. APA avoidance rates were lower at agencies with greater than average litigation risk such as the FCC (15 percent) and the EPA (45 percent). Agencies avoided other rulemaking procedures with low litigation risk such as the RFA and UMRA for more than 90 percent of rules. Even when the threat of suit is greater, judicial enforcement is inconsistent and the case law interpreting procedural requirements generally provides unclear guidance to agencies.
This spotty judicial enforcement, along with significant agency avoidance, has important implications. It casts doubt on the claim that rulemaking procedures have significantly burdened the rulemaking process. At the same time, agency avoidance suggests that rulemaking procedures do less than commonly thought to promote public deliberation in the rulemaking process, foster agency expertise, guard against agency arbitrariness, and make agencies accountable to Congress and to the public. This suggests that agency avoidance of rulemaking procedures has some benefits, but also many costs.