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Title I Improving the Regulatory Process (Informal Rulemaking and Open Communications
Honorable Edward M. Kennedy
Chairman, Committee on the Judiciary
United States Senate
Washington, D.C. 20510
Dear Mr. Chairman:
This will reply to your letter of June 22, 1979, seeking comment on S. 1291, "The Administrative Practice and Regulatory Control Act of 1979." I strongly support the purposes of this bill, and I am pleased to offer my comments. The other Commissioners have not been polled, and thus the views expressed here are not necessarily those of the entire Commission.
Due to the number of subjects covered in the bill, title I is divided into two parts for discussion, and titles II, III and IV are discussed individually.
These parts of title I modify the Administrative Procedures Act to require additional procedures in connection with a new class of agency rules, to be known as "significant rules." A rule is defined as "significant" if it will have an annual impact on the economy of $100 million or more or if the agency promulgating it expects it to have an equally significant impact. The additional procedures required for agencies attempting to promulgate such rules include: (1) printing an advance notice of the proposed rulemaking; (2) providing a more detailed notice of proposed rulemaking in the Federal Register which would include, "to the extent feasible," a description of alternatives to the proposal and a description of the anticipated burdens of complying with the proposed rule; (3) printing with the adopted rule an analysis of the substantial arguments made while it was being considered and an explanation of why significant alternatives were rejected; (4) conducting a review of significant rules every five years and issuing a report on
their effectiveness; and (5) maintaining a file for all significant rulemakings which would contain (a) copies of, or identification of, all studies and documentary material relied upon by the agency and (b) a record of each communication initiated by persons outside the agency which relates to the merits of the proposed rule.
These provisions have two apparent purposes: increased public awareness of significant agency actions and fuller agency exploration of relevant issues to improve both, the initial decision making and the review processes. However, I am concerned that the provisions of the bill may not be the best means of encouraging public participation and may even discourage innovation in this area. Also, I suspect that the analyses resulting from these provisions may be merely formalities which nevertheless will require inefficient allocation of agency resources.
Regarding public participation, advance notice and more detailed rulemaking proposals in the Federal Register may be of use to some participants, such as the citizen group lobbyists. However, these persons are those who least need such notice since they are likely to be monitoring the agency's activities anyway. Unfortunately, the information printed in the Federal Register, no matter how useful, will reach only a very small proportion of those persons interested in agency proceedings. To meet this problem, the F.C.C. has recently initiated a number of steps both to broaden the range of persons notified of impending agency actions, and to state in plain language the issues involved and the means for participating. For example, our Office of Consumer Assistance has held a series of public participation workshops in several cities, the Commission publishes a weekly two page summary of pending significant rulemakings designed for a much broader audience than that of the Federal Register; for particularly important rulemakings we publish "F.C.C. Feedback," which both explains the rulemaking and describes how to file comments; and in one recent rulemaking we experimented with publishing a summary of the initial comments to aid the industry and the public in filing reply comments. While I would not urge that any of these procedures be made mandatory for other agencies, I believe these types of actions are more likely to achieve the desired public participation than the requirements of this bill. Further, for Congress to formalize these or other procedural requirements in any manner could only discourage
experimentation with other approaches which might be more effective. Many promising techniques still need to be tried before the best approaches will be known.
A more useful procedural requirement, in my opinion, is the "open communications" provision that a file must be kept on all significant agency rulemakings which includes, among other things, a record of each communication received on the merits of a proposed rule. Recent judicial decisions in this area have been contradictory, and congressional guidance would be useful. The provisions of the proposed bill closely resemble the procedures adopted by the F.C.C., which I enclose (attachment 1). In three areas, our policy differs from the bill's provisions: (1) our policy applies to all informal rulemakings; (2) it requires logging only those communications that are "presentations" on the merits thus, it does not affect contacts which only tangentially relate to an ongoing rulemaking, and (3) it sets a definite time limit when contacts on the merits cease to be ex parte. I would recommend adoption of the Commission's position In each of these areas, and it is particularly important that the logging provisions terminate at some point, preferably after all opportunities for review of the decision have passed.
These procedural sections of the bill point out several general problems which result from dealing with procedures through legislation: (1) it is impossible to legislate for all the various situations which will arise in practice; (2) authoritative interpretation of statutes requires court action; and (3) amending or waiving the procedures would require another act of Congress. For example, litigation could result under these proposals if an agency rule were promulgated under regular procedures, but it subsequently became "significant" (due, perhaps, to inflation over a period of years). Opponents of the rule could urge that it was thus invalidated by the agency's failure to comply with the Act, and the ultimate decision would rest with the courts. Obtaining a judicial decision probably would require an extended period of time during which the regulated industry would be uncertain of the rule's validity and, if the rule were invalidated, the adverse impact of this decision would increase in proportion to the length of the delay.
An alternative to direct legislation would be to authorize the Administrative Conference of the United States (Conference or ACUS) to adopt these procedures as uniform rules under the provisions described in title IV of the instant bill. Congress could direct the Conference to adopt specific rules, and it could grant the Conference discretion to interpret or to amend the rules when circumstances warranted such action. Since the Conference is such a large and diverse body, it might be advisable to establish a permanent Committee on Administrative Procedures with authority both to propose rule amendments to the Conference and to hear petitions for interpretation or waiver of particular rules. Prompter action on disputes should be possible than could be obtained from the courts, and the possibility for prospective remedies would exist.
Finally, regarding specific sections of this title, I would recommend (1) specifying how far in advance the "advance notice of a significant rulemaking must be; (2) clarifying that, although the file required by proposed section 553(d) is public, the required "identification" of all studies or documentary evidence relied upon by the agency does not mean that the agency cannot consider confidential data in informal rulemakings; and (3) eliminating the sections requiring a separate, formal analysis of significant rules at their adoption and every five years thereafter. The analysis requirements seem to me to ignore the fact that agencies already must establish a basis in the record justifying any new rules, and that agencies must continuously review all their policies and rules under the impetus of complaints, petitions for rulemaking, Congressional oversight, and their own familiarity with the operation of their rules gained through ongoing oversight and suggestions from staff. The addition of a formal five year review, limited to specific parts of the administrative process, would artifically narrow the scope of the Commission's focus and would inefficiently reallocate its
This title would create a new section of the Administrative Procedure Act which would authorize the Administrative Conference to disperse money to members of the public participating in agency proceedings. Certain basic qualifications for government aid are listed, and the ACUS is
directed to draw up procedures for participants to seek funds. Under these regulations, agencies would draw up annual reports for the Conference on the nature of the proceedings for which funds are sought, and the Conference would set up procedures for effective disbursement of the funds. The head of each agency and the Chairman of ACUS must prepare annual reports to the Congress and to the Chief of the Office of Management and Budget (OMB) on these proceedings. $20 million is allocated to the program for each fiscal year through October 1, 1981.
I fully support creation of a system whereby some of the costs associated with meaningful public participation in agency proceedings can be defrayed. Further, granting the Administrative Conference authority to disperse the allocated funds should prove more adaptable than if Congress itself were to attempt to establish a mechanism. However, the language of the bill only requires the Conference to consult with the agency before dispensing funds. Thus, the Conference could allocate these moneys in a manner different from or even in direct contravention to the wishes of the agency. I would strongly recommend that the final decision on dispensing money should be that of the independent agency since each agency will be in the best position to determine its needs for
information. It would seem more efficient and more logical for the Conference to set up the dispersal procedures and then to review agencies' allocation decisions in its annual report to the Congress and to OMB. Also, I would like to suggest that while $20 million may be adequate for the first year pilot program, allowance should be made for increased funding in subsequent years if experience warrants.
A Procompetitive Standard For Federal Agencies
This title requires agencies to consider the anti-competitive effects of their actions and to choose the least anticompetitive alternative in achieving their statutory goals. The title applies to four specific areas of agency action: (1) regulating or licensing entry under a scheme in which the level of entry is subject to limitation; (2) regulating the price of goods or services; (3) regulating the production or distribution of goods or services; and (4) regulating agreements among providers or purchasers of goods or services. The F.T.C. and the Attorney General are authorized to intervene as parties of right in any action or the review of