Agency Avoidance of Rulemaking Procedures

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.

Comments

Submitted by Jeff Lubbers (not verified) on November 21, 2013 - 5:43 pm EST

Connor’s work is always worth reading. But here I’m concerned that the phrase APA-avoidance is really not a propos. He doesn’t use “APA-non-compliance,” but I think most readers would take it as the same thing. I can understand why agencies do not worry that much about UMRA, since it is a toothless law that basically overlaps with EO 12,866 so (1) agencies are complying with the executive order already and (2) there is not much incentive to base a judicial review petition on it. The Reg Flex Act is a bit more interesting, since a challenger can get a court to set aside a rule based on it—but I think most courts have realized that agencies’ analyses tend to cover many of the required issues and that a good faith effort is all that is required.

Connor bases his study on the GAO’s good cause report. My reaction to this study was that GAO labored mightily, but other than some identifying some weakly stated rationales by agencies, the report didn’t really show that the agencies’ lacked good cause when they invoked that exemption. Nor do the percentages of invoking the standard prove anything about “avoidance.” We should not so lightly call invocation of the APA exemptions “avoidance.” The drafters of the APA included the exemptions for a reason

Finally, Connor says, “[S]potty 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.” I would suggest that perhaps the opposite conclusion could be drawn—that the difficulty of present-day notice-and-comment rulemaking is leading the agencies (with the blessing of the courts) to invoke the APA exemptions more often than they might otherwise want to do.

Submitted by Sean Croston (not verified) on November 25, 2013 - 4:45 pm EST

Jeff,

I agree with your technical point that invoking statutory exemptions is not really "avoiding" the statute. But at the same time, your observation about UMRA -- that "agencies do not worry that much about [it], since it is a toothless law" and "there is not much incentive to base a judicial review petition on it" strongly supports Connor's point. As he put it, "agencies avoid . . . procedural requirements . . . unless such avoidance poses litigation risk to the agency." When it comes to compliance with procedural requirements, litigation risk matters.

For example, Connor's article doesn't discuss the Congressional Review Act (CRA) or the APA's publication/availability requirements in 5 USC 552(a)(1)-(2), but my current (draft) research (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2320133) indicates that over the last 16 years, agencies submitted only 32% of published interpretive rules to Congress as required under the CRA, and only 8% of published policy statements. This isn't surprising because, as discussed in 62 Admin. L. Rev. 907 (2010), the courts have largely interpreted the CRA's provisions to bar effective judicial review, so why not ignore the law? And speaking of policy statements, building off Edward Tomlinson's research underlying ACUS Recommendation 76-2, my data indicates that agencies published between 20-30 policy statements per month forty years ago, and now publish between 20-30 policy statements in the Federal Register each year (a huge decrease), notwithstanding the longstanding APA publication requirements in 5 U.S.C. 552(a)(1)(D). Similarly, even after the enactment of the E-FOIA Amendments of 1996, research from Meredith Fuchs and Kristin Adair (2007) indicated that approximately half of the agencies don't post any of the required materials online, despite the basic posting requirements in 5 U.S.C. 552(a)(2). Unsurprisingly, there's little effective judicial review of noncompliance with 5 U.S.C. 552(a)(1)-(2), so this is what happens.

It's simply Human Behavior 101 -- people more or less rationally respond to incentives and agencies are composed of people. Even dedicated public servants may disregard procedural "requirements" when there are limited resources (especially in the era of the sequester) and the efficient accomplishment of important substantive goals is at stake. Agencies are simply less likely to let procedure get in the way of their mission-related goals if nobody can or will call them to account for it. That's why the courts -- and effective judicial review -- are crucial if we want agencies and federal officials to actually follow the law all the time. I take that to be a key conclusion in Connor's article, and I wholeheartedly agree with it.

Thanks,
-Sean Croston

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