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Rulemaking Assignment

Rulemaking Assignment. IRS-2013-0038 – proposed rule defining “candidate related activity” in which 504(c)(4) social welfare organizations are not allowed to engage and still maintain tax-exempt status under the Internal Revenue Code Comment themes: Infringement on 1 st Amendment rights

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Rulemaking Assignment

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  1. Rulemaking Assignment • IRS-2013-0038 – proposed rule defining “candidate related activity” in which 504(c)(4) social welfare organizations are not allowed to engage and still maintain tax-exempt status under the Internal Revenue Code • Comment themes: • Infringement on 1st Amendment rights • Targets conservative groups • Necessary to regulate anonymous political money manipulating political process by using “social welfare” groups as pretext • USCG–2012-0779 – advanced notice of proposed rulemaking proposing to enact rules that require all vessels engaged in certain outer-continental shelf activities to have a SEMS in place that incorporates certain management principles • Comment themes: • New requirements are unnecessary and duplicative • New requirements would be burdensome & confusing

  2. Rulemaking Assignment – what will the agencies do with all these comments? • Agency must respond to comments on “major policy issues” with sufficient detail/explanation so judge reviewing a challenge to the rules can adequately make a decision • Does an agency have to address every comment no matter how small or irrelevant?NO • Does the relative importance of the issue matter?YES • Does it matter if the comments/claims were specific or vague? YES • What if an agency gets several similar comments on a particular issue – how should that weigh? DEPENDS • Does it matter if the comment actually addresses the rule and its reasoning? YES

  3. What constitutes the agency record on challenges to rulemakings? • In Choc Mfrs & NSFP procedural defects resulted in challenges to agency action - what does a reviewing court look to in order to resolve those challenges? • A court can only review agency action based on the contemporaneous record that was before the agency at the time it made its decision. A court cannot accept post hocrationalizations for the agency’s decision (such as trial affidavits prepared after the fact). • This is called the Chenery I principle • With formal rulemakings/adjudications – identifying the record for review is easy: • Sec. 556(e) – “The transcript of testimony and exhibits, together with all papers and requests filed in the proceeding, constitutes the exclusive record for decision in accordance with section 557 of this title . . .” • There is no similar definition of record for Sec. 553 rulemakings.

  4. Sec. 553 rulemakings – the agency record on review • NPR • Final rule & SBP • Written comments during comment period • Oral comments during comment period (if oral hearing held/transcript) • Should othermaterials that the agency might have consulted be included? • Scholarly articles, Agency manuals, Staff reports, Consultant studies • How should agency refer to them so they are part of the record? • Can it just say “we relied on other things” or incorporate them as part of its “expertise” without specifically mentioning these items? • Must the agency specifically refer to these even if they aren’t scientific and technical data (as required to be divulged in the NPR)? • If the agency was heavily influenced by the material it should probably mention it specifically in NPR &/or SBP and then make available to court in record on review

  5. Sec. 553, the record & ex parte contacts • Consider the role that ex parte communications play in trials vs. legislation: • Why are they considered improper in trials but not in the legislative process? • Switch gears to agencies: • In FORMAL adjudications/rulemakings, certain ex parte contacts are explicitly prohibited. See Sec. 557(d) – more on this later • Does Sec. 553 prohibit ex parte contacts between agency officials and others during the rulemaking process? • Are suchcontacts likely to occur during that process? • Why does the HBO court seem concerned about them?

  6. HBO’s rule/remedy • Even after HBOex parte contacts are not completely prohibited– which contacts are prohibited? • How does the court define prohibited contact and what is its remedy if a prohibited contact occurs? • How useful is this remedy?

  7. The aftermath of HBO • The ACT decision (p. 446 n. 5) retreats rapidly from HBO and refused to require a summary of ex parte contacts in a Sec. 553 rulemaking proceedings. • Why – are the two cases distinguishable or is this just a turn in a different direction? • ACT court claims that HBO case involved “competing claims to a valuable privilege” – what does that mean? • Generally in cases governed by Sec. 553 requirements, courts won’t follow the HBOroute and prevent ex parte contacts unless the situation is REALLY egregious as in that case. • But many agencies adopt rules prohibiting ex parte contacts or organic statutes may prohibit them.

  8. Hybrid rulemaking by Congress • Hybrid rulemaking: When an entity (Congress, agency or courts) requires agency to use procedures beyond the minimal procedures of ' 553 • E.g., – oral hearing requirement w/ opportunity for cross exam of persons making statements or req’mt that all contacts be identified in the docket • Example – Magnus Moss Act & Clean Air Act (pp. 474 -75) • Why might Congress (or an agency) want to add procedural requirements onto agency rulemakings in particular circumstances? • Some agency rulemakings may be subject to greater industry bias/capture • Some rules may require more significant vetting due to technical data • Some rules may be subject to more challenges • What happens whencourtstry to impose these additional procedures?

  9. Vermont Yankee v. NRDC – the adjudications • AEC granted VY a construction license after a formal adjudicatory hearing in 1967. • Congress enacted NEPA in 1969, which required that all agencies file an EIS regarding possible effect on the environment of any agency action. • At the 1971 adjudication for VY’s operating license, NRDC argued that NEPA required consideration of the environmental effects associated with the nuclear fuel cycle – including spent nuclear fuel. • AEC found that NEPA required it to account for transportation of spent nuclear fuel but not disposal, storage or reprocessing – thus, it gave ZERO value to the impact of spent nuclear fuel in the cost benefit analyses required for licensing • VY got its operating license and AEC appeal board eventually affirmed in 1972.

  10. Vermont Yankee v. NRDC – the rulemaking • 11/72 - AEC began informal rulemaking proceedingsto explore the “environmental effects associated with the uranium fuel cycle in the individual cost-benefit analyses for light water cooled nuclear power reactors” in licensing proceedings. • 2 options proposed– (1) No consideration of the impact because the effect of spent fuel was slight OR (2) provide specified numeric values of the cost of waste disposal to consider in the cost benefit analysis in licensing decisions • At the end of the rulemaking, AEC concluded that environmental effects of the fuel cycle, including waste disposal, were “relatively insignificant” but it should still account for them in licensing decisions. • Adopted a rule tracking option 2 above – used numerical values representing the impact of spent nuclear fuel on the environment BUT AEC refused to apply the new rule retroactively to the Vermont Yankee operating license • Why would AEC want a rule here rather than figuring out the impact in each individual licensing decision?

  11. Procedures during the Vermont Yankee rulemaking • Does anyone contend that the agency didn’t meet the textual requirements of Sec. 553? Did the agency actually go beyond those requirements? • Why does the NRDC argue that the procedures used were still insufficient? What about this situation makes the NRDC want additional procedures? • What is the statutory source of the NRDC’s complaint that the AEC/NRC had an obligation to provide additional more procedural protections? • NEPA? APA Sec. 553? APA Sec. 706’s “whole record” requirement?

  12. Vermont Yankee – the courts • D.C. Circuit’s ruling: • Is its ruling about the substantive defects of the agency’s rule or the procedural defects in the proceeding? • How does the Supreme Court characterize the D.C. Circuit’s ruling – as one involving substantive problems with the rule or procedural inadequacies of the rulemaking? • How does the SCT respond to such judicially-imposed “hybrid rulemaking”? • What is it concerned about?

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