December 02, 2013

Professor Bill Funk: public participation thwarted by USDA’s policy revocation

Professor Bill Funk, our resident Administrative Law guru, weighs in regarding USDA’s recent revocation of their long-standing policy requiring “notice and comment” for rulemaking proceedings that involve “public  property, loans, grants, benefits, or contracts….”. Will other agencies soon follow?

            On October 28, 2013, the Department of Agriculture revoked its 40-plus year-old policy of engaging in notice-and-comment rulemaking notwithstanding the exemption in the Administrative Procedure Act for rules relating to public property, loans, grants, benefits, or contracts.  See 78 Fed. Reg. 64194 (2013).  In proposing the revocation in July, the Department explained that it had adopted this policy at the suggestion of the Administrative Conference of the United States (ACUS) in anticipation of legislation that would have statutorily eliminated the exemption and with the expectation that the advantages of public participation would outweigh the disadvantages in terms of increased costs and delayed implementation.  The Department said that it “ascribe[d] significant weight” to Congress’s failure to enact the expected legislation.  Moreover, the Department said that it had now reassessed the costs and benefits of providing public participation in these rulemakings, concluding that in many cases using the APA’s notice-and-comment procedures necessarily delays the implementation of a program without providing a corresponding benefit.  This conclusion was supported by a recital of delays incurred as a result of E.O. 12866 and reviews by the Office of Management and Budget (OMB).  Finally, the Department noted that since 1971 there are numerous additional ways in which interested persons may communicate their views to the Department without having to resort to notice-and-comment rulemaking.

            As if to prove its point, there were only two commenters on the Department’s proposal.  There is no excuse for the failure to notice this proposal by entities like the American Bar Association (ABA) and the Administrative Conference of the United States (ACUS), as well as numerous public interest groups, which would have strongly opposed it. After all, ACUS has always urged agencies to waive this exemption, and the ABA likewise since 1981 has expressly called for notice-and-comment rulemaking in rules relating to public property, loans, grants, benefits, and contracts.  The Humane Society of the United States did comment critically on the proposal, but it failed to communicate with other groups who might have assisted. 

            It is ironic at best for the Department of Agriculture to revoke its policy in favor of public participation in these rulemakings when Executive Order 12866 requires that “[e]ach agency shall provide the public with meaningful participation in the regulatory process.”  And President Obama’s Executive Order 13563 likewise requires that “regulations shall be adopted through a process that involves public participation,” specifically ordering “each agency [to] endeavor to provide the public with an opportunity to participate in the regulatory process.”

            The Department’s justifications for revoking its longstanding policy are disingenuous.  First, when it adopted the policy in 1971, its explanation contained no suggestion that it was issued in anticipation of legislative action.  To the contrary, it specifically noted that the Administrative Conference of the United States recommended “that Government agencies provide for public participation when formulating rules relating to public property, loans, grants, benefits, or contracts as a matter of policy.” Nothing in the adoption of the policy was contingent on subsequent legislation. Moreover, perhaps the most important explanation for why Congress did not amend the APA is the fact that agencies widely had voluntarily agreed to use notice-and-comment rulemaking despite the exemption, making statutory change unnecessary. 

            Second, the delays associated with procedural requirements imposed by E.O. 12866 and reviews by OMB are not imposed by the notice-and-comment procedures of the APA but apply to agency regulatory actions regardless of whether they go through notice and comment. Moreover, not one of the three rules the Department gave as examples of cases where it believed there was little benefit to the agency from allowing for public comment demonstrated any delay or cost resulting from compliance with the APA s notice-and-comment procedures.  Indeed, two of the example rules were issued as interim final rules, enabling swift implementation. In addition, the Department of Agriculture has also effectively used direct final rulemaking further to reduce the costs and time associated with rules in which there is little public interest or controversy.  In short, there is sufficient flexibility under the APA to adopt routine and uncontroversial regulations without full notice and comment so that a requirement for public participation in rulemaking need not entail any particular delay or cost for such regulations, making unnecessary a wholesale revocation of the policy in favor of public participation.

            Third, it certainly is true that much has changed since 1971 in the ways agencies communicate with the public and the public with agencies, but none of the facilities available to the public and the Department, as valuable as they may be for various purposes, enables persons the assurance that their comments on a proposed Department of Agriculture rule will be read and considered.

            The actual effect of the revocation is yet to be determined.  The Department maintained that it was merely eliminating a requirement for notice-and-comment rulemaking and restoring the discretion it previously had to allow for public participation in appropriate circumstances.  Unfortunately, prior to 1971 the Department had apparently never found appropriate circumstances for providing notice and comment for rulemakings relating to public property, loan, grants, benefits, and contracts.  Perhaps its attitude has changed since then regarding public participation, but the revocation notice is not reassuring.  Whatever its attitude, the Department did not in its notice of revocation of the policy actually repeal any of the regulations requiring notice-and-comment rulemaking that it adopted in 1971 pursuant to the policy. See, e.g., 36 C.F.R. § 261.70 (c).  Of course, the Department could repeal them immediately without notice and comment because those would be procedural regulations.  We will have to wait and see.

            Another open question is whether this is the first shoe dropping.  That is, there are a number of other agencies, like the Departments of Interior and Transportation, that adopted similar policies in 1971.  Will they follow Agriculture’s lead?