Research note. Agency Avoidance of Rulemaking Procedures (Administrative Law Review, Forthcoming)

Research note by Connor Raso on Agency Avoidance of Rulemaking Procedures

Virtually all scholarship on rulemaking in the United States focuses on rules that were subjected to notice-and-comment under the Administrative Procedure Act (APA). Yet U.S. agencies issue a majority of all rules and over one-third of “major rules” (generally expected to have a $100 million annual impact) without notice-and-comment. My forthcoming paper in the Administrative Law Review, Agency Avoidance of Rulemaking Procedures, analyzes when agencies choose to avoid procedural requirements imposed by the APA, the Regulatory Flexibility Act (RFA), and the Unfunded Mandates Reform Act (UMRA).

The paper hypothesizes that agencies avoid these procedural requirements by citing a statutory exemption unless such avoidance poses litigation risk to the agency; note that this definition of avoidance does not turn on whether the agency provided a valid legal rationale for invoking the exemption. I measure such litigation risk under different procedural statutes by gathering the court opinions discussing challenges to agency avoidance, analyzing how these opinions have interpreted the procedural statutes, computing the rate at which agencies win these cases, and describing the remedies courts granted against agencies. Analyzing avoidance of the APA, RFA, and UMRA within the same set of rules helps hold constant other variables such as potential congressional or White House oversight of the rules. I also analyze differences in levels of APA avoidance between different agencies that face different levels of litigation risk.

The results show that avoidance is widespread. Analysis of Unified Agenda data from 1995 to 2012 shows that agencies avoided APA notice-and-comment on 52 percent of all rules and on 37 percent of major rules. APA avoidance rates were lower at agencies with greater than average litigation risk such as the FCC and the EPA. Agencies avoided other rulemaking procedures with low litigation risk such as the RFA and UMRA for more than 90 percent of rules. Even when the threat of suit is greater, judicial enforcement is inconsistent and the case law interpreting procedural requirements generally provides unclear guidance to agencies.

This spotty judicial enforcement, along with significant agency avoidance, has important implications. It casts doubt on the claim that rulemaking procedures have significantly burdened the rulemaking process. At the same time, agency avoidance suggests that rulemaking procedures do less than commonly thought to promote public deliberation in the rulemaking process, foster agency expertise, guard against agency arbitrariness, and make agencies accountable to Congress and to the public. This suggests that agency avoidance of rulemaking procedures has some benefits, but also many costs.

The Securities and Exchange Commission (SEC) disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This Article expresses the author’s views and does not necessarily reflect those of the Commission or other members of the staff.

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Connor Raso is an attorney at the Securities and Exchange Commission, working on rulemaking, enforcement, statutory interpretation, and administrative law. His academic work has appeared in the Columbia Law Review, Yale Law Journal, Administrative Law Review, Yale Journal on Regulation, and Journal of Politics.

Raso previously worked as an attorney at the Consumer Financial Protection Bureau and clerked for Judge Pierre Leval on the United States Court of Appeals for the Second Circuit. He holds a J.D. from Yale Law School, a Ph.D. from Stanford University’s Department of Political Science, and was a Fulbright Scholar. Raso serves on the Council of the ABA Section on Administrative Law and Regulatory Practice and on the Steering Committee of the DC Bar Administrative Law and Agency Practice Section.