An agency cannot issue, amend, or rescind a legislative rule without first conducting a notice and comment proceeding (N&C) unless it can find an applicable exemption from the N&C procedure. The N&C process has become so lengthy and resource-intensive that agencies are increasingly desperate to find an applicable exception. Moreover, Congress sometimes shares agencies’ frustration with the lengthy N&C process, at least in the context of attempts to repeal rules. It enacted a statute in 1996—the Congressional Review Act—that was used only once until Congress used it to repeal 15 rules in 2017 without using N&C.
Two student-written essays that have been posted on SSRN and will be published in the forthcoming administrative law issue of George Washington Law Review address some of the important issues that are raised by use of these shortcuts to the process of issuing rules. As a formal matter, the essays were written under my supervision. In reality, the authors required little supervision, and I learned a lot from working with the students and reading the product of their work.
In “Good Cause” is Cause for Concern, James Yates begins by discussing the N&C requirement, the statutory exemptions to the process, and the increasing desire of agencies to avoid N&C by finding an applicable exemption. He then focuses on the good cause exemption, which allows an agency to issue a rule without using N &C “for good cause found and published with the rule.” He shows how agency attempts to rely on the good cause exemption and judicial decisions that acquiesce in agency invocations of the good cause exemption have increased significantly over the past twenty-five years.
Yates contrasts the traditional reluctance of courts to accept agency claims of good cause and the narrow circumstances in which they were willing to accept such claims twenty-five years ago with the much more permissive judicial approach to claims of good cause and the long list of circumstances in which courts have accepted such claims in recent years. Agencies have responded to this apparent change in judicial attitude toward the good cause exception by increasing significantly the number of cases in which they invoke the exception to avoid the N&C process.
Thus, for instance, in 2010 alone, the Department of Health and Human Services promulgated 11 major rules without N&C to implement the Affordable Care Act. Yates places particular emphasis on the remarkably high—35%—proportion of major rules that were expected to have economic effects of at least $100,000,000 that the Obama Administration issued without first engaging in N&C by invoking the good cause exemption. He then discusses potential remedies for the absence of the assurances of analytical rigor that N&C provides, including post-promulgation N&C and retrospective review of previously issued rules. He concludes that neither provides an adequate substitute for pre-promulgation N&C.
Yates then proposes an amendment to the APA that would severely limit the availability of the good cause exemption in the case of major rules and would create a presumption that failure to provide pre-promulgation N&C for a major rule constitutes prejudicial error.
In Use of the Congressional Review Act at the Start of the Trump Administration: A Study of Two Vetoes, Stephen Santulli evaluates another mechanism that has been used to avoid N & C. He describes the Congressional Review Act (CRA) and the way in which it renders it easy for Congress to repeal a recently enacted rule by exempting from normal congressional procedures a joint resolution of disapproval of a recently issued rule. He contrasts its use to repeal only one rule during the first twenty years it was in effect with its use to repeal 15 rules during the first few months of the Trump Administration.
Santulli focuses on the provision of the CRA that forbids an agency from issuing a rule in “substantially the same form” as the rule Congress repealed. That ambiguous provision is important for many reasons. Thus, for instance, the Pacific Legal Foundation has urged agencies to refer rules that are exempt from N&C to the Senate for repeal through the use of the CRA rather than to repeal those rules because the CRA route to repeal will permanently bar an agency from issuing a similar rule. Conversely, the Senate refused to concur in a House Resolution that would have repealed a rule because some Senators that wanted to repeal the rule feared that use of the CRA to repeal it would have the effect of precluding the agency from issuing a much needed and better rule on the subject in the future.
Santulli discusses at length the critical question of the meaning of the term “substantially the same form.” He uses specific applications of the CRA to inform his discussion of the meaning of the term. He notes that the question of whether a subsequent rule is within the scope of the prohibition may never arise in most cases because a risk averse agency may just never issue another rule on the same subject matter. That has been the situation with respect to the OSHA ergonomics rule that was the subject of the only use of CRA until 2017. In most cases, an agency is unlikely to issue a rule on the same subject that arguably violates the CRA prohibition unless and until a Progressive Democrat is elected President.
Santulli identifies two rules that were repealed through use of the CRA that are likely to raise the interpretative question in the near future, however. In the first case, the SEC issued a rule that required natural resource extraction companies to disclose to prospective investors payments the companies made to foreign governments related to their projects in those countries. The rule was required by statute and a court had already issued an order that required the agency to issue the rule within a year. Congressional proponents of the successful resolution to repeal the rule emphasized repeatedly that they objected only to the high cost of the particular rule that the agency had issued and that they expected the agency to issue a lower cost replacement rule in the near future in compliance with the statute and the court order.
In the second case, Congress repealed a rule because it was narrower than most members wanted. A statute forbids states from requiring drug testing as a prerequisite for a job unless DOL authorizes its use for that type of job. DOL issued a rule that authorized states to require drug-testing for only eight types of jobs. Congressional proponents of the resolution of disapproval criticized the rule for conferring insufficient discretion on states to require drug-testing as a prerequisite for a job. They made it clear that they expect DOL to issue a new rule soon that will authorize states to require drug testing for more types of jobs.
Santulli uses his analysis of the recent uses of CRA to inform his proposed interpretation of “substantially the same form.” Given the widely varying reasons that Congress uses the CRA, the only interpretation that makes sense is one that courts can adapt to the circumstances of each repeal and the reasons for each repeal—a replacement rule is prohibited as in “substantially the same form” as the repealed rule only if the new rule “evinces an intent by the agency to frustrate the will of Congress” by circumventing the action taken by Congress under the CRA.
Both the Yates Note and the Santulli Note make significant contributions to our understanding of current debates about administrative law and regulatory reform. Both focus attention on the good and bad effects of the extremely demanding and resource-intensive requirement that agencies use the N & C process to issue, amend or rescind a rule. Each accomplishes this task by evaluating in detail two of the ways in which agencies and Congress have increasingly circumvented the N & C process in important contexts. Both then propose specific ways in which courts or Congress could improve the rulemaking process and its results by limiting the uses of the two means of avoiding N & C that the Notes address. The Notes also demonstrate that smart and engaged law students can make valuable contributions to scholarly debates.
Richard J. Pierce, Jr. is the Lyle T. Alverson Professor of Law at George Washington University Law School.
This post is part of the Administrative Law Bridge Series, which highlights terrific scholarship in administrative law and regulation to help bridge the gap between theory and practice in the regulatory state. The Series is further explained here, and all posts in the Series can be found here.