Negotiated Rulemaking

August 28, 2006 (RL32452)

Contents

Summary

Negotiated rulemaking, which is a supplement to traditional rulemaking, is a process in which representatives of federal agencies and affected parties work together in a committee to reach consensus on what can ultimately become a proposed rule. Although negotiated rulemaking is not appropriate for all regulations, advocates believe that the approach can speed rule development, reduce litigation, and generate more creative and effective regulatory solutions.

The Negotiated Rulemaking Act of 1990 established the basic statutory authority for the approach while giving agencies wide latitude in its implementation, and the Clinton Administration advocated a broader application of the approach. Agencies are permitted to use "conveners" to determine whether negotiated rulemaking is appropriate and to select participants, and to use "facilitators" to chair the negotiated rulemaking committee meetings. At the end of the process, agencies must still publish proposed and final regulations for public comment, but any proposal agreed to by the negotiating committee is not binding on the agency or other parties.

Although the Negotiated Rulemaking Act gives agencies substantial discretion as to whether the approach should be employed in rulemaking, Congress has sometimes mandated its use by rulemaking agencies and established specific procedures and time frames to follow. Studies examining the implementation of negotiated rulemaking have reached different conclusions regarding the approach's effect on rulemaking timeliness, litigation, as well as other issues. Researchers also disagree regarding how the effectiveness of negotiated rulemaking should be measured.

This report will be updated if significant developments occur (e.g., congressional action or research findings) that could affect the use of negotiated rulemaking. For information on the traditional rulemaking process, see CRS Report RL32240, The Federal Rulemaking Process: An Overview, by [author name scrubbed].


Negotiated Rulemaking

The Administrative Procedure Act (APA) of 1946 (5 U.S.C. §551 et seq.) generally requires federal agencies to publish their proposed rules (also called regulations) in the Federal Register, to provide the public with an opportunity to comment on those proposed rules, and to publish a final rule at least 30 days before its effective date. The APA does not, however, specify how agencies are to develop their proposed rules or who should participate in that process. Consequently, agencies sometimes develop rules without discussing relevant issues with all affected interests, and there may be little or no opportunity for an informal exchange of views among affected parties or between those parties and the rulemaking agency either before or after the proposed rule is published.

Negotiated rulemaking (sometimes referred to as regulatory negotiation or "reg-neg") is a supplement to the traditional APA rulemaking process in which agency representatives and representatives of affected parties work together to develop what can ultimately become the text of a proposed rule.1 In this approach, negotiators try to reach consensus by evaluating their priorities and making tradeoffs, with the end result being a draft rule that is mutually acceptable. Negotiated rulemaking has been encouraged (although not usually required) by both congressional and executive branch actions, and has received bipartisan support as a way to involve affected parties in rulemaking before agencies have developed their proposals. Some questions have been raised, however, regarding whether the approach actually speeds rulemaking or reduces litigation.

Development of Negotiated Rulemaking

The development of negotiated rulemaking is traceable to dissatisfaction with what some viewed as the formal, complex, and adversarial nature of traditional rulemaking procedures. For example, in 1982, administrative law expert Philip J. Harter—an early advocate of negotiated rulemaking—said a "malaise" had settled over the federal rulemaking process because of the defensive and arms-length manner in which agencies and affected parties interacted.2 He suggested a different approach in which differences were acknowledged and resolved through face-to-face negotiations, and laid out a series of principles that could make those negotiations successful.

Also in 1982, the Administrative Conference of the United States (ACUS) recommended that agencies consider using negotiated rulemaking as a way to develop proposed rules, published criteria for determining when negotiated rulemaking was likely to be successful, and suggested specific procedures to be followed when implementing the approach.3 For example, ACUS said agencies should use "conveners" to determine whether negotiated rulemaking is appropriate and to identify affected interests. ACUS also recommended that Congress pass legislation explicitly authorizing agencies to use negotiated rulemaking, but giving them substantial flexibility to adapt negotiation methods.

In 1983, the Federal Aviation Administration became the first federal agency to try negotiated rulemaking (regarding flight and rest time requirements for domestic airline pilots), followed by the Environmental Protection Agency (EPA) and the Occupational Health and Safety Administration. In 1985, ACUS recommended refinements to the procedures based on these agencies' experience with the approach.4 For example, ACUS said that agencies sponsoring the effort should take part in the negotiations, and pointed out that negotiated rulemaking could be used at several stages of the rulemaking process.

Congressional Action

The Negotiated Rulemaking Act of 1990 (5 U.S.C. §§561-570), as amended and permanently authorized in 1996 by the Administrative Dispute Resolution Act of 1996 (110 Stat. 2870, 3873), essentially enacted the ACUS recommendations, establishing basic statutory authority and requirements for the use of the approach while giving agencies wide latitude in its implementation. The act supplements (but does not supplant) APA rulemaking procedures, and establishes a framework by which agencies are encouraged (but not required) to use negotiated rulemaking to develop proposed rules. The act established public notice requirements and procedures by which affected parties can petition for inclusion in the process, and clarified that agencies must generally comply with the Federal Advisory Committee Act in establishing and administering the negotiating committee.5 The negotiated rulemaking committee, composed of representatives of the agency and from the various non-federal interests that would be affected by the proposed regulation, addresses areas of concern in the hope that it can reach agreement on the contents of a proposed regulation. The agency can, if it agrees, then issue the agreement as a proposed rule, and eventually as a final rule, under existing APA procedures. The expectation is that any rule drafted through negotiated rulemaking would be easier to implement and less likely to be the subject of subsequent litigation.6

Executive Branch Actions

In September 1993, the Clinton Administration's National Performance Review (NPR) recommended (among other things) that federal agencies increase their use of negotiated rulemaking.7 That same month, President Clinton issued Executive Order 12866, which, in part, directed federal agencies to "explore and, where appropriate, use consensual mechanisms for developing regulations, including negotiated rulemaking."8 President Clinton also issued a separate memorandum in September 1993 directing each agency to identify at least one rulemaking for which the agency would use negotiated rulemaking during 1994, or to explain why the use of the approach was not feasible.9

In May 1998, President Clinton issued another memorandum to the heads of executive branch departments and agencies intended to promote greater use of negotiated rulemaking.10 Specifically, he designated the Regulatory Working Group (which had been established by Executive Order 12866 and was composed of the heads of agencies with significant domestic regulatory responsibilities) as an interagency committee to "facilitate and encourage agency use of negotiated rulemaking."

The Negotiated Rulemaking Process

The Negotiated Rulemaking Act permits agencies to establish a negotiated rulemaking committee if the head of the agency determines that doing so is "in the public interest." In making that determination, the act says the head of the agency must consider whether (1) a rule is needed, (2) there are a limited number of identifiable interests that will be significantly affected by the rule, (3) there is a "reasonable likelihood" that a balanced committee can be convened that will adequately represent those identifiable interests and is willing to negotiate in good faith to reach consensus on a proposed rule, (4) there is a "reasonable likelihood" that the committee will reach a consensus on the proposed rule within a fixed period of time, (5) the negotiated rulemaking process will not delay the issuance of the proposed or final rule, (6) the agency has adequate resources that it is willing to commit to the committee, and (7) the agency will use the committee's consensus as the basis of the proposed rule "to the maximum extent possible consistent with the legal obligations of the agency." The act also specifically permits the use of conveners to help the agency identify affected parties and to determine whether a committee should be established.

If the agency decides to establish a negotiated rulemaking committee, the act requires the agency to publish a notice in the Federal Register (and, as appropriate, relevant trade or other specialized publications) containing (among other things) a description of the subject and scope of the rule, a list of affected interests, a list of those proposed to represent those interests and the agency, and a solicitation for comments.11 The comment period must be for at least 30 calendar days. Membership on the committee is limited to 25 members (including at least one from the sponsoring agency), unless the agency head determines that more members are needed. The agency can select (subject to the approval of the committee by consensus) an impartial "facilitator" to chair meetings and oversee the administration of the committee. The facilitator does not have to be a federal employee, but agencies are required to determine whether a person under consideration to be a convener or a facilitator has any financial or other conflict of interest.

Any agreement on a negotiated rule must be unanimous, unless the negotiated rulemaking committee agrees to other conditions. If the committee reaches consensus, it must submit a report to the sponsoring agency containing the proposed rule and any other information it deems appropriate. However, any proposal agreed to by the committee is not binding on the agency or other parties; the agency may decide not to issue a proposed rule at all or not as designed by the committee, and interest groups represented on the committee may oppose the rule that they helped craft.12

The committee terminates no later than promulgation of the final rule. An agency may pay reasonable travel and per diem expenses, and reasonable compensation to negotiating committee members under certain conditions. Agency procedural actions related to establishing, assisting, or terminating the committee are not subject to judicial review, but any judicial review available regarding the rule resulting from negotiated rulemaking is unaffected.

Congressional Mandates to Negotiate

Although the Negotiated Rulemaking Act gives agencies substantial discretion as to whether the approach should be employed in rulemaking, Congress has sometimes mandated its use by rulemaking agencies and established specific procedures and time frames to follow. For example:

Several bills that have been introduced in the 110th Congress would, if enacted, also require the use of negotiated rulemaking. For example, the Indian Health Care Improvement Act Amendments of 2007 and 2008 (H.R. 1328 and S. 1200) would (among other things) revise the Indian Catastrophic Health Emergency Fund (CHEF) requirements and require the Secretary of HHS to use negotiated rulemaking for the promulgation of CHEF regulations.

Evaluations of Negotiated Rulemaking

According to ACUS and other advocates of the approach, negotiated rulemaking can have a number of beneficial effects, including the following:

ACUS and others have also identified a number of disadvantages of negotiated rulemaking.

Nevertheless, a number of observers continue to view negotiated rulemaking favorably, with one regulatory expert describing it as offering the public "the most direct and influential role in rulemaking of any reform of the process ever devised."17

Empirical Studies

Studies of how negotiated rulemaking works in practice have reached substantially different conclusions about its effects and prospects.

Substantial disagreements exist regarding how the effectiveness of negotiated rulemaking should be measured (e.g., timeliness and the amount of litigation).23 Most researchers agree, however, that the approach is not appropriate for all rules, and that more research is needed to determine its effects on rules, the rulemaking process, and participants in that process.

Footnotes

1.

For a more complete discussion of negotiated rulemaking and relevant agency documents, see David M. Pritzker and Deborah S. Dalton, eds., Negotiated Rulemaking Sourcebook (Washington: Administrative Conference of the United States, 1995).

2.

Philip J. Harter, "Negotiating Regulations: A Cure for Malaise," Georgetown Law Journal 71 (1982), pp. 1-118.

3.

Administrative Conference of the United States, Recommendation 82-4, 1 CFR 305.82.4. The Administrative Conference was established in 1968 to provide advice regarding procedural improvements in federal programs, and was eliminated by Congress in 1995.

4.

Administrative Conference of the United States, Recommendation 85-5, 1 CFR 305.85-5.

5.

The Federal Advisory Committee Act (codified at 5 U.S.C. App. 2) regulates the formation and operation of advisory committees used by federal agencies that are not entirely composed of full-time federal employees.

6.

Another process for early stakeholder involvement in rulemaking was established by the Small Business Regulatory Enforcement Fairness Act of 1996 (P.L. 104-121, codified at 5 U.S.C. §609). The act required the Environmental Protection Agency and the Occupational Safety and Health Administration to convene a small business advocacy review panel before publishing any proposed rule that they determine may have a significant economic impact on a substantial number of small entities. Although the panels are required to be composed of federal employees, the panel must collect the advice and recommendations of representatives of affected small entities.

7.

Vice President Al Gore, From Red Tape to Results: Creating a Government That Works Better and Costs Less (Sept. 1993), recommendation REG03.

8.

Executive Order 12866, "Regulatory Planning and Review," 58 Federal Register 51735, Oct. 4, 1993. The order was issued on Sept. 30, 1993.

9.

U.S. President (Clinton), "Negotiated Rulemaking," Sept. 30, 1993.

10.

U.S. President (Clinton), "Designation of Interagency Committees to Facilitate and Encourage Agency Use of Alternate Means of Dispute Resolution and Negotiated Rulemaking," May 1, 1998.

11.

If the agency subsequently decides not to establish a negotiated rulemaking committee, the agency is required to publish another notice in the Federal Register explaining why it decided not to go forward. A copy of the notice must be sent to each person who applied for or nominated another person for membership on the committee.

12.

See USA Group Loan Services, Inc. v. Riley, 82 F.3d 708 (7th Cir. 1996).

13.

Cary Coglianese, "Is Consensus an Appropriate Basis for Regulatory Policy?," in Eric Orts and Kurt Deketelaere, eds., Environmental Contracts: Comparative Approaches to Regulatory Innovation in the United States and Europe (Kluwer Law International, 2001), pp. 93-113.

14.

William F. West, "Formal Procedures, Informal Processes, Accountability, and Responsiveness in Bureaucratic Policy Making: An Institutional Policy Analysis," Public Administration Review 64 (Jan/Feb 2004), pp. 66-80.

15.

Juliet A. Williams, "The Delegation Dilemma: Negotiated Rulemaking in Perspective," Policy Studies Review 17 (spring 2000), pp. 125-146.

16.

William Funk, "Bargaining Toward the New Millennium: Regulatory Negotiation and the Subversion of the Public Interest," Duke Law Journal 46 (1997), pp. 1351-1388.

17.

Cornelius M. Kerwin, Rulemaking: How Government Agencies Write Law and Make Policy, 2nd ed. (Washington: CQ Press, 1999), p. 179.

18.

David Pritzer and Deborah Dalton, eds., "Agency Experience with Negotiated Rulemaking," in Negotiated Rulemaking Sourcebook (Washington: Administrative Conference of the United States, 1990), pp. 327-344.

19.

Cornelius Kerwin and Scott Furlong, "Time and Rulemaking: An Empirical Test of Theory," Journal of Public Administration Research and Theory 2 (1992), pp.113-138.

20.

Cary Coglianese, "Assessing Consensus: The Promise and Performance of Negotiated Rulemaking," Duke Law Journal 46 (1997), pp. 1255-1349.

21.

Steven J. Balla and John R. Wright, "Consensual Rulemaking and the Time it Takes to Develop Rules," presented at the Fifth National Public Management Research Conference, College Station, TX, Dec. 3-4, 1999.

22.

Laura I. Langbein and Cornelius M. Kerwin, "Regulatory Negotiation versus Conventional Rulemaking: Claims, Counterclaims, and Empirical Evidence," Journal of Public Administration Research and Theory 10 (2000), pp. 599-632. See also Jody Freeman and Laura I. Langbein, "Regulatory Negotiation and the Legitimacy Benefit," New York University Environmental Law Journal 9 (2000), pp. 60-151.

23.

Philip J. Harter, "Assessing the Assessors: The Actual Performance of Negotiated Rulemaking," New York University Environmental Law Journal 9 (2000), pp. 32-59; and Cary Coglianese, "Assessing the Advocacy of Negotiated Rulemaking: A Response to Philip Harter," New York University Environmental Law Journal 9 (2001), pp. 386-447.