An Introduction to the Federal Regulatory Process

Presentation to
the National Press Foundation
June 18, 2021

Robert L. Glicksman
J.B. & Maurice C. Shapiro Professor of Environmental Law
The George Washington University Law School
 Road Map of Today’s Presentation

I. Introduction
II. The Source of Regulatory Authority
III. Forms of Administrative Regulation
IV. Regulatory Process
V. Forms of Oversight of Regulatory Actions
VI. Questions and Answers
 What is the Source of Agency Regulatory Authority?
• Federal administrative agencies have no inherent authority to do anything.
• Agencies derive all of their authority from legislation adopted by Congress.
• Congress can only legislate to implement powers enumerated in Article I of the Constitution,
including the power to adopt statutes:
o regulating interstate or foreign commerce;
o governing immigration;
o establishing a patent system;
o imposing taxes;
o directing the expenditure of
o money by the federal government;
o managing federal lands and resources; and
o implementing treaties.
 The Non-Delegation Doctrine
• Congress may delegate to agencies the power to “fill up the details” created by non-specific
statutes.
o But Congress may not delegate away its core legislative function.
o It must make key policy determinations, rather than abdicating that responsibility by
allowing the agency to do so.
o It must provide an “intelligible principle” to guide the agency in the exercise of that
delegated authority
• The Supreme Court has not invalidated any statute as a violation of the non-delegation
doctrine since 1935.
o But several Justices have made it clear they think the doctrine requires greater specificity
in legislative delegations.
o Reinvigoration of the non-delegation doctrine would make it harder for Congress to
authorize regulation by agencies.
o The net result would almost surely be less federal regulation of conduct in private
markets.
 Forms of Administrative Action
• Rulemaking
o Rulemaking is the process used to issue a rule.
o A “rule” is “an agency statement of general Rulemaking Adjudication
or particular applicability and future effect
designed to implement, interpret, or prescribe law
or policy or describing the organization, procedure,
or practice requirements of an agency.”
• Adjudication
o The APA defines adjudication as the process for
issuing an order.
o An “order” is a disposition in a matter other than
Rulemaking.
o Adjudication is a process for making an
individualized decision in which an agency makes
determinations of the legal consequences of past events.
Agency Action
 Rulemaking vs. Adjudication
Case Londoner (Adjudication) Bi-Metallic (Rulemaking)

Action Special Assessment Broad Valuation Increase

Few People Many People
Characteristics Especially Affected Affected the Same
Individualized Grounds Policy Grounds
Fundamental Fairness Too Costly
Rationales Not Politically Accountable Political Accountability
Judicial Facts Legislative Facts

Rulemaking is a process for making a decision to adopt a general, across-the-board

policy that (usually) regulates conduct prospectively.
Adjudication is a process for making an individualized decision in which an agency
makes determinations of the legal consequences of past events.
 Regulatory Process:
Sources of Administrative Procedural Requirements
• The Administrative Procedure Act (APA), 5 U.S.C. §§ 551-559, 701-706
o The “bible” of federal administrative procedure
o Establishes “default rules” for agency procedure
• Agency organic statutes
o e.g., the Clean Air Act, the Federal Communications Act, the Internal Revenue Code,
the Securities and Exchange Act
o Can supplement or displace the APA
• Cross-cutting procedural statutes
o Can require things like recordkeeping and reporting by agencies
o e.g., Unfunded Mandates Act, Paperwork Reduction Act
• The Due Process Clause of the 5th Amendment
o Notice
o Opportunity to be heard
o Neutral, unbiased decisionmaker
 Rulemaking vs. Adjudication
Case Londoner (Adjudication) Bi-Metallic (Rulemaking)

Action Special Assessment Broad Valuation Increase

Few People Many People
Characteristics Especially Affected Affected the Same
Individualized Grounds Policy Grounds
Fundamental Fairness Too Costly
Rationales Not Politically Accountable Political Accountability
Judicial Facts Legislative Facts

Rulemaking is a process for making a decision to adopt a general, across-the-board

policy that (usually) regulates conduct prospectively.
Adjudication is a process for making an individualized decision in which an agency
makes determinations of the legal consequences of past events.
 Regulatory Process:
Sources of Administrative Procedural Requirements
• The Administrative Procedure Act (APA), 5 U.S.C. §§ 551-559, 701-706
o The “bible” of federal administrative procedure
o Establishes default rules for agency procedure
• Agency organic statutes
o e.g., the Clean Air Act, the Federal Communications Act, the Internal Revenue Code,
the Securities and Exchange Act
o Can supplement or displace the APA
• Cross-cutting procedural statutes
o Can require things like recordkeeping and reporting by agencies
o e.g., Unfunded Mandates Act, Paperwork Reduction Act
• The Due Process Clause of the 5th Amendment
o Notice
o Opportunity to be heard
o Neutral, unbiased decisionmaker
 APA Procedural Requirements
• Rulemaking
o Formal (trial-type procedures)
o Informal (notice-and-comment rulemaking)
 Notice
 Opportunity to comment
 Statement of basis and purpose
o Exemptions
 Nonlegislative rules
 “Good cause”
• Adjudication
o Formal (trial-type procedures)
o Informal (left largely up to the agency)
The Comment Phase of Informal Rulemaking

https://www.regulations.gov/
 APA Procedural Requirements
• Rulemaking
o Formal (trial-type procedures)
o Informal (notice-and-comment rulemaking)
 Notice
 Opportunity to comment
 Statement of basis and purpose
o Exemptions
 Nonlegislative rules
 “Good cause”
• Adjudication
o Formal (trial-type procedures)
o Informal (left largely up to the agency)
 APA Procedural Requirements
• Rulemaking
o Formal (trial-type procedures)
o Informal (notice-and-comment rulemaking)
 Notice
 Opportunity to comment
 Statement of basis and purpose
o Exemptions
 Nonlegislative rules
 “Good cause”
• Adjudication
o Formal (trial-type procedures)
o Informal (left largely up to the agency)
 Legislative and Nonlegislative Rules

• Legislative rules
o Establish binding rules of conduct for affected persons (like statutes).
o Fully subject to notice and comment procedures.
• Nonlegislative rules
o Not binding
o Exempt from notice and comment procedures
o Three kinds
 Rules of agency organization, practice, and procedure
 Interpretive rules
 Policy statements
 More on Nonlegislative Rules
(aka Guidance Documents)

• Interpretive rules
o Advise the public of the agency’s interpretation of a statute it administers or a legislative rule it
has issued in the past.
o Not itself binding, but if it reflects a valid interpretation of a statute or a legislative rule, the
underlying statute or regulation is binding.
o Does the rule impose a “new duty” on existing parties or creates “new rights,” such that it adds
to the substantive law that already exists?
o If so, it’s legislative.
• Policy statements
o Advises the public of the manner in which the agency proposes to exercise a discretionary
power in the future.
o Announces the agency’s intention to adopt a new duty or enforce an existing duty in some
future adjudication or rulemaking.
o Its function is to allow agencies to announce their tentative intentions for the future without yet
committing themselves.
 APA Procedural Requirements
• Rulemaking
o Formal (trial-type procedures)
o Informal (notice-and-comment rulemaking)
 Notice
 Opportunity to comment
 Statement of basis and purpose
o Exemptions
 Nonlegislative rules
 “Good cause” (unnecessary, impractical, or contrary to the public
interest)
• Adjudication
o Formal (trial-type procedures)
o Informal (left largely up to the agency)
 Forms of Adjudication
• The “trigger”
o APA § 554(a)
o Formal procedures apply if the agency’s organic statute requires that adjudication be conducted “on the
record after opportunity for an agency hearing”
• Formal
o “On the record” hearing
 Adversary proceeding (usually)
 Parties can call witnesses
 Cross-examination available
o Presided over by a relatively independent administrative law judge (ALJ)
o Decision must be based exclusively on evidence developed during the proceeding
• Informal
o Tends to be governed by agency organic statute and agency’s own regulations
o In rare cases, due process may require more
o Presided over by hearing officers
o Fewer procedural safeguards mandated
 Oversight of Agency Decisionmaking

• Administrative law’s essential conflict: autonomy vs. accountability

• Congressional oversight
• Executive oversight
• Judicial oversight
 Oversight of Agency Decisionmaking

• Administrative law’s essential conflict: autonomy vs. accountability

• Congressional oversight
o Oversight hearings
o Statutory amendments
o Appropriations bills
 Cut funding
 Substantive riders
o The Congressional Review Act
• Executive oversight
• Judicial oversight
 Oversight of Agency Decisionmaking
• Administrative law’s essential conflict: autonomy vs.
accountability
• Congressional oversight
• Executive oversight
o Presidential oversight
 Appointment power
 Removal power (executive vs. independent agencies)
 Direct oversight (Executive Orders)
o Regulatory review
 The Office of Information and Regulatory Affairs
 Regulatory impact analysis
• Judicial oversight
 Judicial Oversight of Agency Decisionmaking
o Availability
o Venue
o Review of questions of fact
 Substantial evidence review
Arbitrary and capricious review
o Review of questions of law
 Chevron USA Inc. v. NRDC, 467 U.S. 837 (1984)
 Step one: The court decides what a statute means if the statute is clear on the precise question
 Step two: Courts must defer to reasonable agency interpretations of ambiguous statutory
provisions
 Kisor v. Wilkie, 139 S. Ct. 2400 (2019) (narrowing deference under Auer v. Robbins)
o Review of policy determinations
 Arbitrary and capricious review (deferential)
 Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971)
 Motor Vehicle Mfrs. Ass’n v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983)
 Department of Commerce v. New York, 139 S. Ct. 2551 (2019)
 Judicial Oversight of Agency Decisionmaking
Motor Vehicle Mfrs. Ass’n v. State Farm Mutual Automobile Insurance Co.,
463 U.S. 29 (1983)
Indicia of arbitrary and capricious decisionmaking:
 the agency relied on improper factors;
 the agency failed to consider an important aspect of the problem;
 the agency’s explanation is counter to the evidence in the record; or
 the agency’s explanation is so implausible that it cannot be ascribed to a
difference in view or the product of agency expertise.
 Judicial Oversight of Agency Decisionmaking
o Availability
o Venue
o Review of questions of fact
 Substantial evidence review
Arbitrary and capricious review
o Review of questions of law
 Chevron USA Inc. v. NRDC, 467 U.S. 837 (1984)
 Step one: The court decides what a statute means if the statute is clear on the precise
question
 Step two: Courts must defer to agency interpretations of ambiguous statutory provisions
 Kisor v. Wilkie, 139 S. Ct. 2400 (2019)
o Review of policy determinations
 Arbitrary and capricious review (deferential)
 Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971)
 Motor Vehicle Mfrs. Ass’n v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29
(1983)
 Department of Commerce v. New York, 139 S. Ct. 2551 (2019)
Questions