Agenda items for June 2008 telephone conference call
Listed in order of priority:
Article 7
A.
SECTION 702. [RULES REVIEW COMMITTEE] DUTIES.
[Ron Levin] [A] At the plenary session, a commissioner who had participated in his legislature=s review process suggested that the number of rules forwarded to the review committees should be limited: A[W]e were just swamped with all these rules. We had no idea how many rules were being issued. Many of them were so perfunctory that they really didn=t need to be reviewed but under our statute initially they all had to be given.@ (Transcript 149 (Hillyard).) My impression is that this is exactly right, and Congress=s experience under the Congressional Review Act tends to confirm it. One way to limit the deluge would be to provide that an agency should forward only those rules for which a regulatory analysis has been prepared, and that the legislative committee may also review, at its request, any other newly adopted rule that may come to its attention. (I suspect, however, that some legislatures probably will want to continue to see everything, so this limitation might be presented as a bracketed alternative only.)
B.
SECTION 703. [RULES REVIEW COMMITTEE]
PROCEDURE AND POWERS.
1. Section 703 [Ray Pepe] In the upcoming conference call regarding the MSAPA, I recommend that we discuss whether Section 703 should be amended to require presentment of legislative resolutions to the Governor for approval or veto, rather than merely the enactment of a joint resolution to sustain a Legislative Rules Committee disapproval of a regulation.
While I have not followed the precedent interpreting the Supreme Court's 1983 INS v. Chadha decision, 473 U.S. 919, 951-9, the basis for the decision was that because Congressional action reversing an administrative agency action was legislative in nature, to be valid the process must comport with the requirements of Art. I, Sec. 7 of the U.S. Constitution, which requires legislation to be passed by both the House and the Senate and presented to the President for his approval or veto, subject to the ability of Congress to override a veto by a two-thirds majority. Because the requirements of Art. 1, Sec. 7 are equivalent to procedures provided by most state constitutions, it seems appropriate both from a strictly constitutional as well as public policy basis to require a Rules Committee disapproval to both be sustained by the enactment of a joint resolution and presented to the Governor for approval or disapproval.
2. Section 703 [Ron Levin] [A] According to ¶ (c), “If the [rules review committee] proposes an amendment to the adopted or amended rule under subsection (a)(2), the agency may make the amendment, and resubmit the rule, as amended, to the [rules review committee].” The text should make clear that the amended rule must be one that the agency could have adopted on the basis of the record in the rulemaking proceeding, and the agency must provide an explanation for the amended rule as provided in § 312. (This means, among other things, that the amended rule must be a logical outgrowth of the proposed rule, and the explanation must support the amended rule in accordance with the applicable legal criteria.)
[B] Paragraph (d) implies that, following a committee objection, the effective date of the rule is suspended, but it does not say so directly. This should be clarified. I would also insert language like the following, which is closely modeled on the Congressional Review Act, 5 U.S.C. § 801(a)(5): “The effective date of a rule shall not be delayed by operation of this article beyond the date on which either House of the legislature votes to reject a joint resolution of disapproval under paragraph (d).”
[C] Unless terminated, however, a suspension lasts until the adjournment of the next regular session of the legislature. The power to delay the effectiveness of the rule for that considerable length of time puts a lot of power in the hands of the committee, and the checks on that power are quite limited. On the other hand, I appreciate that many state legislatures do not meet year round, and the suspension is intended in part to give the legislature sufficient time to override the rule if it is so disposed. A solution may be to provide that the suspension expires either at the adjournment of the session or after the legislature has been in session for a total of (say) ninety days following the committee’s vote to disapprove the rule, whichever comes first. [B] According to & (c), AIf the [rules review committee] proposes an amendment to the adopted or amended rule under subsection (a)(2), the agency may make the amendment, and resubmit the rule, as amended, to the [rules review committee].@ The text should make clear that the amended rule must be one that the agency could have adopted on the basis of the record in the rulemaking proceeding, and the agency must provide an explanation for the amended rule as provided in ' 312. (This means, among other things, that the amended rule must be a logical outgrowth of the proposed rule, and the explanation must support the amended rule in accordance with the applicable legal criteria.)
3. Section 703 [John/Ken]. Subsection (a) (page 91, line 20): REPLACE "Rules Review Committee" with "rules review committee".
2. Entire section: I have a fundamental philosophical problem with Section 703. Permitting a
legislative committee to amend an agency's rule does not square with our understanding of separation of powers, or the Chadha holding.
3.The legislative committee should be able to "object". That puts the agency on notice that it needs to change something. It also permits a member of the committee to prepare legislation t o more specifically tailor the agency's authorizing statute to prevent the abuse perceived.
C. Section 310 Guidance
documents (Ron Levin redraft of Section
310 (g), and (h)
(g) A person may petition under section 317 to request an agency to adopt a rule in place of an existing guidance document.
Subsection (g) is based on Wash. Rev. Code Ann. § 34.05.230(2), which provides
for petitions “requesting the conversion of interpretive and policy statements
into rules.” However, it is phrased more generally than the
(h) A person may petition an agency to revise or repeal an existing guidance document. Not later than [60] days after submission of such a petition, the agency shall: (1) revise or repeal the guidance document; (2) initiate a proceeding for the purpose of considering such a revision or repeal; or (3) deny the petition in a record and state its reasons for the denial.
Subsection (h) extends the principles of section 317 by allowing interested persons to petition an agency to revise or repeal an existing guidance document. Thus, while this Act does not require an agency to obtain the views of the public before issuing a guidance document, this subsection provides a procedure by which members of the public may bring their views regarding an existing guidance document to the agency’s attention and request that the agency take account of those views. This process may be of particular importance to persons who are indirectly affected by a guidance document (such as persons who stand to benefit from the underlying regulatory program) but are unlikely to be the targets of an enforcement action in which they could challenge the legality or wisdom of the document under subsection (b). See Nina A. Mendelson, “Regulatory Beneficiaries and Informal Agency Policymaking,” 92 Cornell L. Rev. 397, 438-44 (2007); see also ACUS Recommendation No. 76-5, 41 Fed. Reg. 56,769 (1976) (noting that section 553(e) of the federal APA “allow[s] any person to petition at any time for the amendment or repeal of . . . an interpretive rule or statement of general policy”).
The subsection requires an agency to respond to the petition in [sixty] or fewer days. An agency that is not prepared to revise or repeal the guidance document within that time period may initiate a proceeding for the purpose of giving the matter further consideration. This proceeding can be informal; the notice and comment requirements of Sections 304 through 308 are inapplicable to it, because those sections deal with rules rather than guidance documents. The agency may, however, voluntarily solicit public comments on issues raised by the petition. Cf. ACUS Recommendation 76-5, supra, ¶ 2. This section does not prescribe a time period within which the agency must complete the proceeding, but judicial intervention to compel agency action “unlawfully withheld or unreasonably delayed” may be sought in an appropriate case. § 501(a). If the agency declines to revise or repeal the guidance document, within the [sixty] day period or otherwise, it must explain its decision. Denials of petitions under this subsection, like denials of petitions for rulemaking under section 317, are reviewable for abuse of discretion, and the agency’s explanation will provide a basis for any judicial review of the denial.
C. Other Section 310 issues:.
1. Subsection (e): DELETE "and may file the guidance document with the [publisher]" The word "may" means that the publisher will have an incomplete record that duplicates in part the record the agency is already required to publish. [John/Ken]
D. Section 305. Regulatory
Analysis
1. [John/Ken]
Subsection (f) (pages 27 and 28, lines 20 through 23, and 1 through 4): The timing in this
subsection does not work. An agency may be required to prepare a regulatory analysis 20 days after publication of the notice of proposed action. In that action, the public comment period may have been set to 30 days. However, subsection (f) requires the agency to publish separately this concise summary at least 20 days before the earliest of (1) the end of the public comment period, (2) the end of the hearing request period (which doesn't exist elsewhere in the statute), or (3) the date of any required hearing. We are requiring an agency to abide by a timeframe that they may not fully know until 20 days after publication.
2. . Page 28, lines 1 and 2 (subsection (f)(2): Where are the provisions for requesting a hearing?
They don't appear in Section 306. [John/Ken]
[Ron Levin] [A] Under & (a), an agency must prepare a regulatory analysis if the estimated economic impact exceeds a stated dollar figure, and under & (b) it is to prepare a Astatement of no estimated economic impact@ if none is expected. This phrasing leaves a gap, because it says nothing about the situation in which the agency anticipates an impact that is below the threshold but greater than zero. A suggested rewrite of & (b): AAn agency that concludes that it is not required to prepare a regulatory analysis shall publish that conclusion as part of its notice of proposed rulemaking.@
[B] Under ' (f) the agency must publish its regulatory analysis at least twenty days before the end of the comment period (or any hearing on the rule). Yet, under ' 311(f) the Afinal regulatory analysis statement required by Section 305" must be published with the final rule. Thus, the text contains another gap, because ' 305 says nothing about completing a Afinal@ regulatory analysis. This gap might be filled by requiring the agency (perhaps in a new & (g)) to invite comments on the regulatory analysis required by & (a), and (new & (h)) to update the analysis in light of those comments. This process would lead to the preparation of the statement envisioned by ' 311(f). This approach is modeled (though with much less detail) on the structure of the federal Regulatory Flexibility Act, which requires an Ainitial regulatory flexibility analysis@ and a Afinal regulatory flexibility analysis.@ 5 U.S.C. '' 602, 603.
[C] Section 305 is silent as to whether an agency=s compliance with the requirements of the section is judicially reviewable. By its silence, the Act presumably answers that question affirmatively, but that answer is questionable. In present federal law, the adequacy of an agency=s compliance with cost benefit analysis requirements is generally unreviewable, although the analysis itself is added to the administrative record and thus is considered in the court=s determination of whether the rule is arbitrary and capricious. The 1981 MSAPA provided that A[i]f the agency has made a good faith effort to comply with the requirements of [this section], the rule may not be invalidated on the ground that the contents of the regulatory analysis are insufficient or inaccurate.@ ' 3‑105(f). The official comment to that section added: ATo ascertain >good faith= for this purpose, . . . a court should only determine if the analysis was actually issued, and if on its face it actually addresses in some manner all of the points specified in [the section]. If so, the sufficiency or accuracy of its contents are not subject to judicial review.@
I favor a relatively restrictive approach to judicial
review. The agency=s determinations under & (c) would invite a host of
challenges, because they would often have to be based on unprovable
assumptions, rough factual estimates, and predictions. This vulnerability would be particularly
problematic at the state level, where the available resources and expertise for
conducting sophisticated cost-benefit analysis are much scarcer than at the
federal level. Moreover, the need to
evaluate the agency=s effort
against specialized professional norms of policy analysis would strain at the
outer limits of judicial competence. In
several states in which there is no explicit bar to judicial review of
regulatory analyses, I have seen courts apply regulatory analysis requirements
quite undemandingly, perhaps reflecting a tacit acknowledgment that they cannot
effectively play a major role in this area.
Northeast Ohio Regional Sewer Dist. v. Shank, 567 N.E.2d 993 (
Thus, at a minimum the Committee should consider incorporating the language of 1981 MSAPA ' 3-105(f) into ' 305. In addition, because Agood faith@ can be in the eye of the beholder, I would also add the above-quoted comment language to the statutory text. Or, the Committee could go even further and completely preclude judicial review of compliance with the section, with the understanding that the analysis would become part of the record and could be considered in the court=s consideration of the merits.
E. SECTION 306.
PUBLIC PARTICIPATION.
1. Subsection (d) (page 29, line 1): REPLACE "30" to "20" to permit the hearing to be held within
the public comment period. [john/ken]
F. SECTION 307.
FINAL ADOPTION.
1. [Ron Levin] The Committee hopes to shorten the Model Act, and a good way to make progress toward that goal would be to delete this section entirely.
[A] The main thrust of ' 307 is to put deadlines on an agency to complete a rulemaking proceeding (&& (b), (c)] and to declare any rule Avoid@ if these deadlines are not met [& (d)]. I see no persuasive justification for such a lapse provision. A rulemaking proceeding is not like a court case or agency adjudication, in which due process values suggest that Ajustice delayed is justice denied.@ Bureaucratic organizations of all kinds frequently have multiple policy initiatives pending at once, and it is natural for them to put some of them on the back burner for months or years if other matters are more pressing. Corporations, agencies, legislatures, law faculties, and law revision commissions all do this, and I see nothing particularly sinful about it. Basically, the issue goes to managerial judgment. The incumbent administration should be politically accountable to the legislature and the public for any foot-dragging, along with other aspects of its management of its workload, but I do not see why an administrative procedure act needs to address it. Moreover, some issues by their nature take a long time to resolve, due to their multiple ramifications, technical complexity, or the lack of political consensus. A government-wide statutory deadline is not likely to be adequately sensitive to these realities.
The deadlines could prove mischievous as well. Suppose that an agency is on track to finish Rulemaking A on schedule, but at the last minute a bona fide public crisis arises and it has to turn intensive attention to Rulemaking B. This means that it will either have to finish Rulemaking A in a rushed, perhaps halfbaked way, or it will have to start over from scratch. I don=t see a reason to create that dilemma through an APA.
I also wouldn=t retain this section as a safeguard against individual harm that may result from delay in a rulemaking proceeding. The Act does provide a remedy for such problems in ' 501(a), which allows a reviewing court to Acompel agency action that is unlawfully withheld or unreasonably delayed.@ Judicial relief under the corresponding federal APA provision, 5 U.S.C. ' 706(1), depends on a balance between individual hardship and the agency=s good faith effort, its overall workload, etc. Frankly, courts are hesitant to intervene in this kind of case, because of their sensitivity to the agency=s resource constraints. There is room to debate whether the MSAPA should encourage a more forceful judicial role. But at least ' 501(a) allows sensitivity to context. In contrast, ' 307(d) would invalidate the proceeding regardless of the public benefits that would ensue from the rule that is thereby rendered Avoid,@ and even if nobody has been particularly hurt by the delay. This seems very unwise.
Incidentally, a secondary function of & (b) is to induce the agency to publish the rule shortly after it is adopted. However, that function is also served by ' 315, so it is not needed here.
[B] Paragraph (a) is not so troublesome, but I question the need for it. It provides: AAn agency may not adopt, amend, or repeal a rule until the period for submitting information or comments has expired and notice has been given under [Article] 7.@ The part about Article 7 appears obsolete, because that article no longer requires an agency to send a notice to the rules review committee until after the rule has been adopted. The prohibition against issuing a rule until the comment period ends is obviously a sound idea, but it is implicit in the Act, particularly ' 306(b), and is well understood. I cannot recall ever seeing a case in which an agency misunderstood this, despite the absence of an explicit prohibition in the APAs. (In some cases an agency has been reversed for implementing a rule de facto before formally adopting it, Radaszewski v. Garner, 805 N.E.2d 620 (Ill.App.2003); Mahoney v. Shinpoch, 732 P.2d 510 (Wash. 1987), but even in those cases the agency didn=t officially adopt the rule until after the comment period.) Therefore, I think & (a) addresses a nonproblem. If the Committee does decide to keep it, however, it can be added to ' 306(b), allowing ' 307 as such to be deleted.
[C] If the Committee does eliminate ' 307 but wants to preserve most of the current section numbering, it could move ' 308 (variance) to ' 307 and split ' 309 (emergency and expedited rulemaking) into two sections, one of which would become ' 308.
2.
Subsection (a) (page 29, line 15): reference to Article 7 is too vague. I couldn't find the notice requirement to which this refers. [John/Ken]
G. SECTION 308. VARIANCE BETWEEN PROPOSED RULE AND ADOPTED RULE.
[A] The specific criteria in && (1) through (3), although admittedly based directly on 1981 MSAPA ' 3‑107, are somewhat unconvincing. Clause (1) does not seem particularly relevant to the logical outgrowth issue. The question is not whether people could foresee being affected by the proposed rule, but rather whether they could reasonably foresee the changes. Clause (2), which invites consideration of the differences between the proposed and adopted rules, is somewhat at odds with the prefatory clause of the section, which says that a substantial difference is permissible if the adopted rule is a logical outgrowth (although, actually, the word Asubstantial@ in the prefatory clause could probably be eliminated). Clause (3) asks the agency to consider the respective Aeffects@ of the proposed and adopted rules C a quite speculative inquiry. I think the section would come closer to the case law if the Committee were to drop the three clauses altogether and simply say that the logical outgrowth issue should be determined by considering whether, on the basis of the proposed rule, affected persons could reasonably have anticipated the adopted rule.
H. SECTION 309.
EMERGENCY RULEMAKING; EXPEDITED RULEMAKING.
1. Subsection (a) (page 31, line 16): What does "states in a record" mean?
2.
Subsection (a) (page 31, lines 22 and 23): In many states, an emergency rule does not go into effect until it is filed with the publisher. Why are we permitting retroactive notice of emergency
rules? [John/Ken]
[Ron Levin] [A] Paragraph (a) provides that, in order to issue an emergency rule, the agency must make a finding of imminent peril, but it does not say that the agency must have good cause for making its finding, as does 1981 MSAPA ' 3-108(a), as well as the federal APA, 5 U.S.C. ' 553(b)(B). Presumably the Committee intends for the finding to be reviewable, so the good cause language should be added. Numerous federal and state cases hold that Agood cause@ should be narrowly construed, and these cases could be referenced in a comment. In addition, Aloss of federal funding@ should be changed to Aimminent loss of federal funding.@
[B] I am gratified that the Committee is proposing an Aexpedited rulemaking@ provision based on the ACUS recommendation on direct final rulemaking and my underlying consultant=s report, but I have a couple of ideas for revision. First, why isn=t Adirect final rulemaking@ a better term than Aexpedited rulemaking@? Aside from the fact that it is in common use, it is more descriptive of the actual process C that is, a process in which an agency skips the proposed-rule step and adopts a Afinal@ rule (contingent on the absence of an objection) at the outset. Whether the adoption will be expedited (faster) isn=t really the point, because by definition the rule is minor and there is no particular rush about it. (In fact, if one had to choose, the term Aexpedited@ would work better as a description of what the Act calls Aemergency@ rulemaking, because speed is exactly the purpose of that kind of rulemaking.)
[C] I believe that when the expedited rulemaking process fails and the agency has to proceed through the regular rulemaking process, it should be required to provide an additional comment period, not simply rely on comments it received during the objection period. This requirement would protect people who failed to comment because they relied on the agency=s prediction that the rule would be uncontroversial. It would also give the agency an incentive not to use this process except for rules that it has good reason to believe will uncontroversial.
I.
SECTION 312. CONCISE EXPLANATORY
STATEMENT.
[Ron Levin] This section could be shortened considerably, making it more Aconcise@ and the ensuing explanatory statements also more Aconcise.@
[A] Under & (a)(1), the statement must contain Athe agency=s reasons for the action, which must include [i] an explanation of the principal reasons for and against the adoption, amendment, or repeal of the rule, [ii] the agency=s reasons for overruling substantial arguments and considerations made in testimony and comments, and [iii] its reasons for failing to consider any issues fairly raised in testimony and comments.@ (The bracketed numbers are my insertions, not part of the text.) I believe that clauses [i] and [iii] are superfluous. Clause [ii] says everything that needs to be said here.
[B] The word Aonly@ has been dropped from & (b), which changes the entire meaning of the sentence and renders it trivial. Presumably this was inadvertent. However, even assuming that Aonly@ could be restored, there are larger issues to consider.
At the 2007 plenary session, Commissioners Thurbon, McKay, and Winkelman (and perhaps Commissioner Walsh) urged that & (b) be deleted. (Transcript 107-18.) Although I completely support the general principle of the Chenery doctrine and the ban on post hoc rationalizations, I agree that this provision should be deleted from ' 312. It doesn=t belong in Article Three. It states a judicial review principle, not a rulemaking principle. That is, it doesn=t directly instruct agencies as to what they should do or not do. Indeed, because it addresses only agencies and not courts, it suggests by negative implication that judges may violate Chenery sua sponte, although government counsel can=t ask them to do it. That hardly makes sense.
In addition, the provision is overbroad. Under the case law, Chenery applies only to matters that are within the discretionary authority of the agency. Thus, it doesn=t apply to interpretations of the APA, or of the Constitution, or to pure issues of law (which in modern federal parlance would be called Chevron step one issues). On any of these matters, judges are free to rely on rationales not suggested by the agency=s written decision, and counsel for the government (or private parties who support the agency=s result) are free to urge the court to adopt those rationales. This separation of Alaw@ from Adiscretion@ is a distinction that could perhaps be expressed in a judicial review context, but not in the context of a mandate addressed to agencies. In short, there is an open question whether the Act can effectively codify the Chenery doctrine in Article Five, but I don=t think it can do so in Article Three.
[D] Perhaps the word Aconcise@ should be dropped as a description of the required explanatory statement. I certainly believe that the statement should be Aconcise@ in the sense of non-verbose, but the word may suggest to some minds that the agency doesn=t need to analyze issues in depth, even when they are susceptible of such analysis by the agency (though not all issues are).
J. SECTION 313. INCORPORATION BY REFERENCE
1. Subsection (1) (page 37, line 11): REPLACE "incorporation of" with "repeating verbatim". Otherwise, we are using "incorporation" in two senses within the same section.
2. Subsection (2) (page 37, lines 14 and 15): BRACKET "and states whether the rule includes any later amendments or editions of the incorporated code, standard, or rule".
K. SECTION 314. COMPLIANCE.
Now that the former second sentence of this section has been moved to ' 504(a), possibly the remainder of the section should just be eliminated in the interest of overall brevity. The surviving sentence basically tells rulemaking agencies that substantial compliance with Article Three is good enough. I=m not sure this is an important message to convey. The real purpose of the sentence, I think, is to admonish the courts not to set aside a rule for insubstantial procedural reasons. However, ' 509(b) already instructs a reviewing court to Atake due account of the rule of harmless error,@ which would seem adequate to cover the point.
L. SECTION 315. FILING OF RULES
1. What is the publisher's role? Is it our intent that the adopted rule (final rule) be published in the
bulletin? [John/Ken]
M.
SECTION 316. EFFECTIVE DATE OF RULES.
1.Subsection (d) (page 39, line 24): INSERT before the period, "or a later date specified by the
agency" to make it consistent with subsection (e). [John/Ken]
[Ron Levin] [A] In & (a), the normal effective date is A[60] days.@ Although the brackets do afford individual states flexibility, I think sixty days is a long time to wait for a rule to go into effect. As a general matter, thirty days (the federal standard) seems ample. However, I recognize that the longer period may be intended to accommodate the rules review process of Article Seven, which is itself bracketed. The solution may be to put A[30]@ in the text, but also to say in the comment that the needs of a rules review committee would be a valid reason for substituting a longer period.
N. SECTION 317. PETITION FOR ADOPTION OF RULE.
1. Subsection (a)? (page 40, line 17): It seems odd that a statute about standardization of
procedures would prescribe that "Each agency shall prescribe by rule the form of the petition and the procedures" for rulemaking petitions. Why isn't this one of the model rules adopted by the AG?
2.
Subsection (1) (page 40, line 20): What does "in a record" mean? [John/Ken]