Streamline Agency Rulemaking Procedures

Streamline Agency Rulemaking Procedures

Background

In an effort to coordinate policies within each agency and within the
executive branch, numerous layers of review and analyses have been added
on top of the relatively simple notice-and-comment requirements of the
Administrative Procedure Act (APA). Clearance is required by numerous
offices within the agency (and again within the department if the agency
is part of a department) and by the Office of Management and Budget
(OMB). As has been previously noted, the entire process is repeated
twice--first at the proposal stage, then again when the rule is
finalized. After a several-month-long study by a contractor, one agency
found that it took an 18-foot flow chart with 373 boxes to describe its
then-current rulemaking process.[Endnote 1]

Another reason for the extensive internal review is the fear of
litigation challenging the rule. Agencies compile extensive records to
defend themselves if rules are challenged in court--even for issues no
one has raised during the public comment period. An agency can spend
considerable resources developing a rule only to have it nullified in
court because the rule was based on an impermissible statutory
interpretation. If a successful challenge is brought after the rule is
issued, an entire program may be thrown into a state of
disarray.[Endnote 2]

Some agencies have statutory provisions that help reduce the amount of
litigation preparation needed during the rulemaking process. For
example, some statutes prohibit litigants from challenging a rule on any
basis other than ones raised during the public comment period and
require challenges to be brought within 60 days of the day the rule is
issued.[Endnote 3]

The straightforward APA notice-and-comment rulemaking process has now
become so formalized that its name--informal rulemaking--seems a
misnomer. Some agencies, however, have additional statutory requirements
that make their rulemaking process even more cumbersome. For example,
the Federal Trade Commission is required to conduct trial-type hearings
that allow cross-examination of witnesses.[Endnote 4]

NEED FOR CHANGE

Although different agencies have different internal rulemaking
processes, within an agency too often the same review process is used
and the same number of clearances are required regardless of the
significance or complexity of a rule.[Endnote 5] A process with numerous
checks makes sense for significant rules (e.g., ones that announce a
major policy, initiate a new regulatory program, have a significant
effect on the economy, or are particularly controversial).  However, a
large number of the thousands of rules issued each year are not
significant and do not warrant extensive review by numerous offices.
Anecdotal evidence indicates that insignificant rules (which may be a
clarification of an existing rule or a small change needed to undo an
unintended consequence of an existing rule) often languish on reviewers'
desks because the rules are not high priority and the reviewers are busy
with other demands.[Endnote 6] Even relatively minor changes to an
existing program can easily take nine months or more.

The failure to establish a process that differentiates between
significant and insignificant rules is costly. The current lengthy
process precludes quick, minor adjustments to existing programs, wastes
the time of numerous reviewers, and frustrates staff responsible for
getting the rules out and keeping programs functioning. Evidence that
the rulemaking process has become too cumbersome is provided by the
frequency with which agency staff turn to other methods of establishing
agency policy.  Instead of issuing rules, agencies issue policy
statements, guidance documents, and memos to agency personnel that are
often not required to go through public comment, extensive internal
agency clearance or OMB review.[Endnote 7]

SOME EFFORTS AT STREAMLINING. The Clinton administration's regulatory
review executive order is a major step in streamling the regulatory
process. It will streamline the review process by requiring the Office
of Information and Regulatory Affairs (OIRA) to review only significant
rules.

The Environmental Protection Agency (EPA) also has made efforts to
streamline its process and avoid the "double" review process (i.e., all
clearances required both at proposal and final rule stage) by issuing
"direct final" rules for certain rules on which it believes the public
will not comment.  Although EPA issues many rules that are controversial
and that benefit from public comment, a significant number of rules
receive no comments. These rules include:

--minor modifications of existing rules (such as directions about where
to submit information or technical changes to testing standards that
have been adopted by a professional association);

--federal approval of changes to a state plan implementing federal law
affecting only one or a small group of companies (especially where the
federal agency has very little discretion); and

--"significant new use" rules limited to specific chemicals.

In this direct final rulemaking approach, EPA publishes a notice in the
Federal Register saying that a rule will become effective in 60 days
unless, within 30 days, someone submits written notice of an intent to
file an adverse or negative comment. If no such notice of intent is
filed, the rule becomes final without going through a second round of
intra- and inter-agency review. If even one person files such a notice,
EPA withdraws the rule, republishes it as a proposed rule, and proceeds
with normal notice- and-comment rulemaking and the second round of
review. (Republishing the rule as a proposal serves two functions.
First, it gives an opportunity to comment to people who may have kept
silent because they wanted the rule to go into effect immediately.
Second, it self-imposes a penalty--additional steps and further
delay--which serves to prevent the agency from overreaching in the use
of this technique.)

This approach avoids the second round of clearances and review, which
otherwise delays rules, wastes time, and should be superfluous
(especially if all reviewers are warned the first time that the rule
might go final without further review). Theoretically, the second review
ought to be very quick, but clearing any document through numerous
government offices takes time. The paper shuffling also wastes the
reviewers' time by requiring them to look at something twice when once
would have sufficed.

EPA uses this process routinely in two areas--approval of changes to
state implementation plans and "significant new use" rules for
chemicals.

--In a pilot project testing this procedure for EPA approval of changes
to state implementation plans under the Clean Air Act, 90 rules were
processed in an average of 181 days, which was considerably better than
the 419 days it took to process 81 comparable rules prior to the use of
the direct final process.[Endnote 8] For the last 10 years, EPA has used
the process nationwide to approve changes to state plans.

--In 1989, as a result of an informal reg neg process with industry and
environmental groups, EPA adopted the direct final rulemaking process
for chemical-specific significant new use rules (SNURs) issued under the
Toxic Substances Control Act.[Endnote 9] SNURs for at least a hundred
chemicals have been issued as direct final rules.[Endnote 10]

EPA also uses direct final rules occasionally for other types of rules.
The agency has rarely had to withdraw a rule because public comments
were filed, and no one has ever challenged these rules for failure to
comply with the APA.[Endnote 11]

Some agencies have streamlined the process by issuing broad, generic
rules to resolve common issues or to establish standards applicable to
multiple industries instead of conducting separate rulemakings for each
issue or industry. For example, the Social Security Administration and
the Nuclear Regulatory Commission each have successfully issued rules
concerning common problems arising in disability claims and applications
for power plants, respectively. On the other hand, the Occupational
Safety and Health Administration was not allowed by a court to use a
generic, instead of a hazard-by-hazard, approach for permissible
exposure levels for air contaminants.[Endnote 12]

The National Marine Fisheries Service has established categories of
rulemaking notices that appear in final form in the Federal Register
after reduced review.  For example, when a quota of fish previously
specified by regulation has been taken in a particular fishery, a notice
closing that fishery is published in the final rule section of the
Federal Register. Violators of these closure notices may be subject to a
variety of civil enforcement proceedings. These notices are not reviewed
by either the Department of Commerce or OIRA.[Endnote 13]

Agencies also conserve agency resources by adopting voluntary national
consensus standards rather than developing criteria in-house.[Endnote
14]


Cross-References To Other Npr Accompanying Reports

Department of Labor, DOL03: Expand Negotiated Rulemaking and Improve
Up-front Teamwork on Regulations.

Department of Education, ED05: Streamline and Improve the Department of
Education's Grants Process.  Department of Health and Human Services,
HHS02:  Reengineer the HHS Process for Issuing Regulations.

Streamlining Management Control, SMC08: Expand the Use of Waivers to
Encourage Innovation.

Endnotes

1. Although that agency has since modified its process, the process
depicted on the chart is not atypical of rulemaking procedures
throughout the government.

2. See Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th cir. 1991)
(EPA's asbestos rule, 10 years in the making, remanded to agency for
lack of substantial evidence).

3. See the Clean Air Act, 42 U.S.C.    7607(b)(1) and (d)(7)(B) (1991
Supp.).

4. 15 U.S.C.   57a (1988). The Securities and Exchange Commission has
similar requirements in the Securities Act Amendments, 15 U.S.C.
78f(e) (1988), as does the Environmental Protection Agency (EPA) in the
Toxic Substances Control Act, 15 U.S.C.   2605(c) (1988).

5. Some very minor or repetitive rules have an expedited process, but
most agency processes fail to adequately match the thoroughness of the
process with the complexity of the rule. The American Waterways
Operators reports that a staff member from the Office of Information and
Regulatory Affairs noted that "the Coast Guard's rigorous internal
review process applies equally to rules of sweeping consequence and
minor technical guidelines." The American Waterways Operators, "The
Federal Regulatory Process:  Opportunities for and Obstacles to
Government/Industry Cooperation," May 1992, p. 17.

6. Interview with Richard Wilson, Director, Office of Mobile Sources,
Environmental Protection Agency, May 14, 1993.

7. To a certain extent, the use of such other methods allows agencies to
differentiate between significant and insignificant rules and is a
useful development.  However, there are drawbacks to these methods--
although technically these policies cannot bind people outside the
agency, as a practical matter, they may have that effect. Unlike rules
(which are published in the Federal Register and codified in the Code of
Federal Regulations), less formal statements of agency policy are not
necessarily compiled in one place and may not be accessible to the
public. There is a general sense that agencies are turning to policy
statements and guidance too frequently. See Emery, Fred, Rulemaking as
an Organizational Process (1982), p. 46 (unpublished report to ACUS);
Anthony, Robert, "Agency Efforts to Make Nonlegislative Documents Bind
the Public," Admin. Law Review, Vol.  44 (1992), p. 31. an expanded
version of the latter article will shortly appear as Interpretive Rules,
Policy Statements, Guidance, Manuals and the Like--Should Agencies Use
Them to Bind the Public?, 1992 Administrative Conference of the U.S.
Recommendations and Reports.

8. Environmental Protection Agency, Requirements for Preparation,
Adoption, and Submittal of State Implementation Plans; New SIP
Processing Procedures to Save Time and Resources, 47 FR 27073, 27074
(June 23, 1982) (in this notice EPA uses the term "immediately final"
rather than "direct final").

9. Interview with James Nelson, Associate General Counsel, Environmental
Protection Agency (May 11, 1993). See 40 C.F.R.   721.170(d)(4)(1).

10. See note 9 above.

11. Interviews with Alan Eckert, Associate General Counsel,
Environmental Protection Agency, May 6, 1993; James Nelson, Associate
General Counsel, EPA, May 11, 1993; and Howard Hoffman, Senior Attorney,
EPA, May 10, 1993. In response to an informal request to all attorneys
in Environmental Protection Agency's Office of the General Counsel, no
direct final rule was identified as having been challenged in court for
failure to comply with the Administrative Procedure Act (APA).

12. AFL-CIO v. OSHA, 965 F.2d 962 (11th Cir. 1992).

13. Memorandum to Jeffrey Lubbers, Team Leader, NPR Improving Regulatory
Systems Team, from Gloria Gutierrez, Acting Chief Financial Officer and
Assistant Secretary for Administration, Department of Commerce, Aug. 5,
1993.

14. Administrative Conference of the United States, Recommendation 78-4,
"Federal Agency Interaction with Private Standard-Setting Organizations
in Health and Safety Regulations," 1 C.F.R.   305.78-4.

15. These principles should apply to all agencies even though agency
processes vary significantly from agency to agency, depending, in part,
on the agency's mission and culture.