Negotiated Rulemaking Act
5 U.S.C. §§ 561–570 (2012); enacted Nov. 29, 1990, by Pub. L. No. 101-648, 104 Stat. 4969, renumbered Aug. 26, 1992, by Pub. L. No. 102354, 106 Stat. 944; amended by Pub. L. No. 104-320, § 11, Oct. 19, 1996, 110 Stat. 3870.
The Act originally named the Administrative Conference of the United States (ACUS) as the lead agency for coordinating negotiated rulemaking, but the Conference was defunded by Congress in 1995, so in 1996 Section 569 of the Act was amended to require the President to designate an agency or interagency committee to facilitate and encourage agency use of negotiated rulemaking. The President then named the Regulatory Working Group, which had been established under Section 4(d) of Executive Order 12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993), as the lead agency. See Memorandum on the Designation of Interagency Committees to Facilitate and Encourage Agency Use of Alternate Means of Dispute Resolution and Negotiated Rulemaking, May 1, 1998, 1 Pub. Papers of the Presidents 749, 1998 WL 214697. However, it is not clear that the Regulatory Working Group has taken on any responsibilities in this area, despite its retention on paper and specific amendment in Executive Order 13,258, 67 Fed. Reg. 9385 (2002). The reestablishment of ACUS in 2010 has thus far not resulted in its redesignation as the agency responsible for facilitating and encouraging the use of negotiated rulemaking. Thus, there does not appear to be any real lead agency for this Act. For more information on ACUS, see www.acus.gov.
The Negotiated Rulemaking Act of 1990 establishes a statutory framework for agencies to formulate proposed regulations by using negotiated rulemaking. The Act supplements the rulemaking provisions of the Administrative Procedure Act by clarifying the authority of federal agencies to conduct negotiated rulemaking. It largely codifies the practice of those agencies that had previously used the procedure. While not requiring use of the technique, the Act provides each agency discretion with regard to using negotiated rulemaking.
Negotiated rulemaking (sometimes known as “regulatory negotiation” or “reg-neg”) emerged in the 1980s as an alternative to traditional procedures for drafting proposed regulations. The essence of the idea was that in certain situations it is possible to bring together representatives of an agency and the various affected interest groups to negotiate the text of a proposed rule. The negotiators would try to reach consensus through a process of evaluating their own priorities and making tradeoffs to achieve an acceptable outcome on the issues of greatest importance to them. If they do achieve consensus, then the resulting rule is likely to be easier to implement, and the likelihood of subsequent litigation is diminished. Even absent consensus on a draft rule, the process may be valuable as a means of better informing the regulatory agency of the issues and the concerns of the affected interests.
Negotiated rulemaking should be viewed as a supplement to the rulemaking provisions of the Administrative Procedure Act. This means that the negotiation sessions generally take place prior to issuance of the notice and the opportunity for the public to comment on a proposed rule that are required by the APA (5 U.S.C. § 553). In some instances, negotiations may be appropriate at a later stage of the proceeding and have sometimes been used effectively in drafting the text of a final rule based on comments received.
In 1982 ACUS set forth criteria for identifying rulemaking situations for which reg-neg is likely to be successful (Recommendation 82-4, 47 Fed. Reg. 30,708 (July 15, 1982)). These criteria were intended to guide agencies in determining whether negotiated rulemaking would be appropriate for addressing particular regulatory problems. ACUS also suggested specific procedures for agencies to follow in applying this approach. Additional refinements, based on a study of initial agency experiences with reg-neg, were recommended in 1985 (Recommendation 85-5, 50 Fed. Reg. 52,895 (Dec. 27, 1985)).
Much of the Negotiated Rulemaking Act is permissive, incorporating many of the criteria and procedures suggested in the Conference recommendations. The drafters intended that the Act not impair any rights otherwise retained by agencies or parties, and section 561 expressly provides that the Act is not intended to limit innovation or experimentation with the negotiated rulemaking process. Although the Act plainly permits an agency to publish as its own the consensus proposal adopted by the negotiating committee, nothing in the Act requires the agency to publish either a proposed or final rule merely because a negotiating committee proposed it.
Following the recommendations of the Conference, section 563 of the Act lists several criteria for agencies to consider in determining whether to use negotiated rulemaking in any particular instance. It permits, but does not require, the use of outside impartial persons (referred to as “conveners”) to assist the agency in identifying potential participants in the negotiation process. Section 564 requires public notice of planned negotiated rulemaking proceedings both in the Federal Register and in appropriate trade and specialized publications. Persons or interests believing that they are not adequately represented on the negotiating committee must be given an opportunity to apply for membership, though the agency retains discretion as to whether to grant such requests.
Section 565 outlines the process for establishing negotiating committees and makes clear that they are also to comply with the Federal Advisory Committee Act. At least one member of the committee must be a representative of the agency. If, after considering the public responses to the published notice of intent to establish a negotiating committee under the Act, the agency determines not to do so, then the agency must publish a notice of that fact and the reasons for its decision.
Section 566 addresses the procedures of the negotiating committee and provides for selection of a neutral “facilitator” or mediator to assist the committee in its deliberations.
Section 567 permits an agency to keep a negotiating committee in existence until promulgation of the final rule, but also allows earlier termination if the agency or the committee so chooses.
Section 568 addresses options for acquiring the services of conveners and facilitators. Agencies are authorized to pay expenses of certain committee members in accordance with the Federal Advisory Committee Act. Section 569 refers agencies considering negotiated rulemaking to the agency or committee identified by the President to facilitate and encourage negotiated rulemaking. It also permits an agency to accept and utilize gifts in support of negotiated rulemaking, if the gift would not “create a conflict of interest.” To avoid creating new sources of potential litigation, section 570 provides that agency actions relating to the establishment, assistance, or termination of a negotiated rulemaking committee are not subject to judicial review. However, the Act does not affect the otherwise available judicial review of the rules promulgated through the negotiation process. Under section 5 of the Negotiated Rulemaking Act of 1990, as originally enacted by Public Law 101-648, the provisions of the Act were to be repealed six years after the date of enactment (Nov. 26, 1996). Section 11(a) of the Administrative Dispute Resolution Act of 1996 (Pub. L. No. 104-320) repealed section 5 and permanently reauthorized the Act.
The Senate’s Select Committee on Small Business and Committee on Governmental Affairs held joint hearings on “regulatory negotiation” in July 1980. Legislation was introduced in September 1980 “to create a pilot program to encourage . . . the formation of regulatory negotiation commissions, comprised of representatives of business, public interest organizations, labor, State and local officials, and other interested persons, for the purpose of making recommendations to Federal agencies on regulatory policy.” (H.R. 8240, 96th Congress) Other bills to establish a statutory framework for negotiated rulemaking were introduced in each subsequent Congress throughout the 1980s.
100th Congress. The first negotiated rulemaking bill to be acted upon was S.1504, introduced by Senator Carl Levin in the 100th Congress. The Senate Committee on Governmental Affairs held hearings on May 13, 1988, and the Senate passed the bill on September 30, 1988 (134 Cong. Rec. S 13,760, Sept. 30, 1988; see also the report of the Senate Committee on Governmental Affairs, 100th Congress, 2d Session, S. Rep. No. 100-547). In the House, the Judiciary Subcommittee on Administrative Law and Governmental Relations held a hearing on August 10, 1988, on a companion bill, H.R.3052, introduced by Representative Donald Pease. No further action was taken.
101st Congress. In the 101st Congress, identical bills, S. 303 and H.R. 743, were introduced on January 31, 1989 (135 Cong. Rec. S. 862 and H. 144, Jan. 31, 1989). The Senate Committee on Governmental Affairs reported out S. 303 on July 13, 1989, and the Senate passed it on August 3, 1989 (see 135 Cong. Rec. S 10,060, Aug. 3, 1989; see also the report of the Senate Committee on Governmental Affairs, 101st Congress, 1st Session, S. Rep. No. 101-97). The House Subcommittee held a hearing on H.R. 743 on May 3, 1989, and on February 7, 1990, reported out the bill with amendments. The Committee on the Judiciary passed the bill on March 28, and the House passed it on May 1 (136 Cong. Rec. H. 1852, May 1, 1990; see also the report of the House Committee on the Judiciary, 101st Congress, 2d Session, H. Rep. No. 101-461). The Senate amended the bill further and passed S. 303 again on October 4 (136 Cong. Rec. S. 14,580, Oct. 4, 1990). The House accepted the Senate amendments, voting final passage on October 22 (136 Cong. Rec. H 10,966, Oct. 22, 1990). President Bush signed the bill on November 29, 1990. During the period of congressional consideration of the Negotiated Rulemaking Act, Congress passed three other pieces of legislation that mandated use of negotiated rulemaking: the Carl D. Perkins Vocational and Applied Technology Education Act Amendments (Pub. L. No. 101-392), the Hawkins-Stafford Elementary and Secondary School Improvements Amendments (Pub. L. No. 100-297), and the Price-Anderson Amendments Act of 1988 (Pub. L. No. 100-408). Each of these laws provided specific and widely differing procedures for negotiating rules. 102d Congress. The Administrative Procedure Technical Amendments Act of 1991, Pub. L. No. 102-354, 106 Stat. 944, was passed by the 102d Congress and signed into law on August 26, 1992. It recodified the existing Negotiated Rulemaking Act to a different subchapter to eliminate the duplication in section numbering with the Administrative Dispute Resolution Act. 104th Congress. On February 27, 1996, Representative Gekas introduced H.R. 2977, a predecessor for the measure that would eventually become Pub. L. 104-320. H.R. 2977 was referred to the House Committee on the Judiciary and the Subcommittee on Commercial and Administrative Law for consideration. The Committee on the Judiciary reported up the measure (H. Rep. 104-597), and the House passed an amended resolution on June 4. In the Senate, S.1224 was incorporated into H.R. 2977 as an amendment. A Conference report was filed in the House, H. Rep. 104-841, to consider the House’s objections to the amendments. On September 27, the House considered and passed H.R. 4194, substantially identical to H.R. 2977. The Senate considered and passed H.R. 4194 as amended three days later, and the House passed the amended resolution without objection. On October 19, 1996, President Clinton signed the bill into law. Congress has used the Negotiated Rulemaking Act as a common reference for application of reg-neg procedures to other legislation. For example, see Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act of 1997, Pub. L. No. 104-180, August 6, 1996, 110 Stat. 1,569, Section 734(d); or Health Insurance Portability and Accountability Act, Pub. L. No. 104-191, August 21, 1996, 110 Stat. 1,936, Section 216(b).
Significant Case Law: EPA’s final rule on asbestos-containing materials in schools was the first reg-neg rule to be challenged in court. The suit was brought by the Safe Buildings Alliance, a group representing former manufacturers of asbestos building products that are now illegal. Plaintiffs in the lawsuit claimed that the rule would encourage unnecessary removal of materials from buildings and would result in a chaotic situation. They sought a more objective standard—based on air monitoring, for example—rather than the professional judgment called for under EPA’s rule. The Safe Buildings Alliance had been represented on the negotiating committee. Several other parties who were represented on the negotiating committee intervened in support of the final rule as published. These included the National Education Association, the American Association of School Administrators, and a group of state attorneys general. In May 1988, the rule was upheld by the U.S. Court of Appeals for the D.C. Circuit, Safe Buildings Alliance v. EPA, 846 F.2d 79 (D.C. Cir. 1988). The court determined that EPA’s regulation embodied a reasonable interpretation of the requirements of the Asbestos Hazard Emergency Response Act of 1986, Pub. L. No. 99-519, 15 U.S.C. §§ 2641-2654. Neither the appeal nor the court’s decision referred to the negotiation procedure that was followed. EPA’s underground injection rule, based in part on negotiated rulemaking, was also challenged and essentially upheld by the D.C. Circuit, Natural Resources Defense Council v. EPA, 907 F.2d 1146 (D.C. Cir. 1990). The Department of Education’s regulations pertaining to the liability of student loan servicers were the first reg-neg rules in which the court actually discussed the negotiated rulemaking process. USA Loan Services, Inc. v. Riley, 82 F.3d 708 (7th Cir. 1996). The court determined that any promises made by the agency during negotiations regarding the outcome of the final rule were unenforceable under the Negotiated Rulemaking Act. Id. at 714. Furthermore, the reg-neg procedures were viewed as merely a consultative process, since an agency is not bound by the consensus of the negotiations in determining the final rule. Id. at 715. This case is notable, however, because it referred to negotiated rulemaking as “a novelty in the administrative process,” and because the court’s discussion seemed critical of this new process, even as it upheld the legality of what was done. This decision has been criticized as narrow and erroneous. See Philip J. Harter, First Judicial Review of Reg-Neg a Disappointment, Admin. & Reg. L. News, Fall 1996, 1. While Section 570 of the Act states that agency actions establishing negotiated rulemaking committees are not subject to judicial review, it also says that nothing in the section bars review of a rule otherwise subject to review. In Center for Law and Education v. U.S. Department. of Education, 315 F. Supp. 2d 15 (D.D.C. 2004), aff’d on other grounds, 396 F.3d 1152 (D.C. Cir. 2005), the court held that this section precluded a challenge to a rule in which the plaintiff claimed that the composition of the rulemaking committee violated the requirements of the Federal Advisory Committee Act. The court of appeals affirmed the judgment of dismissal on the grounds that the plaintiffs lacked standing and did not reach the Section 570 question. Judge Edwards, however, wrote separately to state that, while he agreed that the plaintiffs lacked standing, he believed that Section 570 did not bar their challenge. He believed that the savings portion of the section allowed, pursuant to the APA, judicial review of a claim that the agency violated FACA in its establishment of the rulemaking committee. The courts have uniformly refused to review rules adopted through negotiated rulemaking in any different way from rules adopted with traditional notice and comment. See, e.g., Fort Peck Housing Authority v. U.S. Department of Housing and Urban Development, 367 Fed. App’x 884, 892 n.14 (10th Cir. 2010) (no special deference to be afforded rule adopted through negotiated rulemaking); Portland, Oregon v. EPA, 507 F.3d 706, 715 (D.C. Cir. 2007) (adequacy of the notice of proposed rulemaking to be judged according to normal standards notwithstanding that it was the product of a regulatory negotiation). Source Note: In 1995, the Administrative Conference of the United States published a second edition of its Negotiated Rulemaking Sourcebook, a step-by-step guide to the conduct of negotiated rulemaking proceedings. The volume contains a discussion of when and how to use the procedure, along with sample notices and other documents that may be needed by an agency using the process. Numerous articles, both analytical and practical, are reprinted in the Sourcebook, including the Harter and Perritt reports to the Conference that furnished the research background for Conference Recommendations 82-4 and 85-5. An extensive bibliography is also included. While this book is out of print, it is still available in a number of libraries. Bibliography: