In preceding sections, I argued that, to improve accountability and public participation in comitology, European lawmakers should look to the experience of another separation of powers system -- the United States. I argued, that in the United States, the administrative procedure of notice and comment rulemaking is one of the main devices used to foster accountability to the legislative branch and public participation. Even though significant improvements in Community rulemaking were made in the 1990s, the European Parliament still cannot adequately monitor comitology proceedings and the public is denied direct access. Consequently I suggested that the European Community adopt certain aspects of American notice and comment. In this section, I describe in greater detail how American rulemaking operates so as to give a better idea of what such a reform would entail.
The standards governing agency procedure and judicial review in an American rulemaking proceeding are to be found in the Administrative Procedure Act of 1946 (APA), the specific statute being implemented, and administrative case law. The two most important APA provisions for these purposes are:
(b) General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law. The notice shall include --
(1) a statement of the time, place, and nature of public rule making proceedings;
(2) reference to the legal authority under which the rule is proposed; and
(3) either the terms or substance of the proposed rule or a description of the subjects and issues involved.
. . . .
(c) After notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose.60
And the second provision:
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall --
. . . . .
(2) hold unlawful and set aside agency action, findings, and conclusions found to be --
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations or short of statutory right;
(D) without observance of procedure required by law; . . . .61
These provisions contain a number of critical features. First, the public must be informed of the rule through publication in the official government journal, the Federal Register (notice). Second, interested individuals may submit comments in which they marshal data, opinions, and legal arguments in favor or against the proposed rule (comment). Third, the agency must briefly justify the rule, setting out the regulatory problem it is intended to address and the considerations that led to its adoption (statement of basis and purpose). Finally, courts are to catch administrators who transgress the outer limits of their statutory mandates and regulate when not authorized to do so and are to strike unconstitutional or "arbitrary and capricious" rules. Although the APA is the essential backdrop in any rulemaking proceeding, the starting point is the statute conferring regulatory authority upon an agency in that instance. Understanding the relationship between the APA and enabling legislation is easy if the statute is silent as to agency procedure or standard of review because the APA operates as a default rule. The intersection of the two is also straightforward where, as is more often the case, the legislation independently sets down agency procedure and the judicial review standard but the APA is repeated word for word or incorporated by reference. Only when the statute departs from the APA scheme does a difficulty arise. Many laws passed in the 1970s, at a time when the public had come to distrust administrative agencies, require agencies to go through additional procedural hoops such as oral, trial-type hearings and impose higher burdens of proof such as judicial review for "substantial evidence on the record as a whole" or review for "clear and convincing evidence."62 To come full circle, however, even when APA procedure is altered by statute, the APA conceptual framework (developed, as we shall see, in the case law) is so powerful that agencies and courts are reluctant to drop it and rulemaking generally follows the standard course.63
The APA rulemaking provisions, as originally drafted, favored New Deal government activism.64 They trod lightly upon agency decisionmaking power. Notice of the proposed rule, an opportunity for comment, and the statement of basis and purpose accompanying the final rule were designed to guarantee openness in the policymaking process. The judiciary was to ensure that agency rules were constitutional (as with all government action) and that they did not fly in the face of reason. Courts were not to delve too deeply into a plausible agency explanation to check the facts and logic.
In the 1960s, agency rulemaking was transformed. The standard modus operandi of the prototype New Deal agencies, adjudication, fell out of favor for a number of reasons.65 Most important for the purposes of this paper was a change in public perception of administration and experts. Expertise at the service of public ends came to be perceived as more complicated than a statutory instruction to an agency to solve a given problem.66 In a number of cases, the experts seemed to act not in the public good but in the interests of the industry they were supposed to be regulating. It thus appeared that decades of agency interaction with industries, an unavoidable part of the regulatory task, had transformed a once adversarial relationship into a cozy partnership ("agency capture"). Furthermore, the legitimacy of the administrative state had fallen prey to a general decline in confidence in science, technology, and, more broadly speaking, the possibility of objective, impartial knowledge. It was no longer possible to believe that advances in technology were inevitably tied to progress when they had led to pollution, atomic weapons, and other problems. Thus, went the view, experts routinely made judgment calls with significant normative ramifications and the public, not the experts, had to somehow control those decisions.
Public law reformers thought that rulemaking could go a long way in remedying these defects. Agency action would be more public-spirited because rulemaking, unlike adjudication, was a process open to all, rendering administrators accountable to the entire community and not simply firms with a high financial stake in the outcome.67 Reformers promoted rulemaking, over-optimistically as I shall discuss later, as the primary institutional means by which administrators were to solve contemporary social problems. This new mission for rulemaking led to dramatic changes in how it operated. Agencies had to solicit and incorporate the views of a variety of groups that previously had been excluded from the administrative process. Courts had to police rulemaking proceedings to protect against regulatory capture and ensure that proceedings were accessible and responsive to the public.
As courts took on their new role, the character of judicial review changed considerably and it is this framework, formally based on the APA text from 1946, but developed in the case law of the 1970s, that still stands today.68 As before, courts reviewed rules for constitutional violations, agency action that went beyond what was authorized in the statute, and misinterpretation of statutory text guiding agency action. Unlike the past, however, when courts were called upon to decide whether rules were arbitrary and capricious, they showed themselves far more willing to get into the technical merits of agency policy choices and carefully scrutinize the rationale offered for such decisions. Courts had to be satisfied that agencies had considered and adequately answered the challenges put forward by rulemaking participants. Patricia Wald, a judge on the federal court of appeals that handles the overwhelming majority of rulemaking cases, describes the variety of complaints that masquerade behind the deceptively simple claim that a rule is "arbitrary and capricious":
"Arbitrary and capricious" has turned out to be the catch-all label for attacks on the agency's rationale, its completeness or logic, in cases where no misinterpretation of the statute, constitutional issue or lack of evidence in the record to support key findings is alleged. Frequently the arbitrary and capricious charge is grounded on the complaint that the agency has departed from its prior rationale in other cases without admitting it or explaining why. Sometimes the agency is rebuffed because it did not give adequate consideration to an alternative solution. But most often the court simply finds the agency's explanation for what it is doing "inadequate." . . . In a surprising number of cases, the court is most frustrated about the agency's failure to communicate any reason for taking certain actions.69
Part of this willingness to roll up sleeves and get mired in policy debates was the need for an extensive agency record. Without a written record (and in the absence of independent fact-finding) courts could not evaluate whether attacks on agencies' scientific evidence and policy analysis had any merit. Agencies, therefore, were required to compile a contemporaneous record that included the scientific evidence and reasoning that served as the foundation for the agency rule and justified rejecting the other options advocated by notice and comment participants.
At the same time, standing was liberalized, expanding the class of litigants entitled to challenge agency rules in court.70 Previously, litigants had to show that they had a legal right specifically protected by the regulatory statute at issue to challenge agency action. Under a Supreme Court case decided in 1970, anyone who fell "arguably within the zone of interests to be protected or regulated by the statute" was allowed into court, and allowed into court not to protect individual legal rights but as a "reliable private attorney general to litigate the issues of the public interest in the present case."71 Congress also had a hand in liberalizing standing. Many of the regulatory statutes enacted in the late 1960s and early 1970s permitted anyone to litigate agency action on the theory that they would serve as private attorneys general, protecting the public interest in the correct application of the law ("citizen-suit provisions").
Quite obviously, the more active role that courts took on in policing the rulemaking process fed back into and altered the very nature of that process. Constructing an agency record that would hold up in court did not simply entail more paper and ink but required more extensive and accessible (to the non-expert judge) fact-finding and reasoning from the very beginning. Before an agency could even publish notice of a proposed rule it had to document the need for regulatory change and the nature of the different policy options through surveys, scientific studies, and consultation with the regulatory community. Agencies could not rely as extensively on the quick and convenient, but occasionally inaccurate, rules of thumb and informal information-gathering techniques that they had used in the past.
60 5 U.S.C. § 553 ("Rulemaking").
61 5 U.S.C. § 706 ("Scope of Review").
62 Rulemaking that must, by statute, satisfy these more demanding procedural and substantive standards is known as hybrid rulemaking.
63 See, e.g., Martin Shapiro, The Frontiers of Scientific Doctrine: American Experiences with the Judicial Control of Science-Based Decision-Making, EUI Working Paper RSC No. 96/11, at 10-12 (1996).
64 See generally Martin Shapiro, Who Guards the Guardians 36-77 (1988) (describing vicissitudes of APA since its enactment).
65 See generally Richard J. Pierce, Jr., The Fiftieth Anniversary of the Administrative Procedure Act: Past and Prologue Rulemaking and the Administrative Procedure Act, 32 Tulsa L.J. 185 (1996) (describing adjudication's defects and rise of rulemaking).
66 See, e.g., Martin Shapiro, Who Guards the Guardians? 62-73 (1988) (explaining reasons for demise of public faith in technocracy); Bruce A. Ackerman & William T. Hassler, Clean Coal, Dirty Air 1-7 (1981) (describing replacement of expertise model of agency action by capture one).
67 See Richard B. Stewart, "The Reformation of American Administrative Law," 88 Harv. L. Rev. 1667 (1975); Jerry L. Mashaw, Greed, Chaos, and Governance: Using Public Choice to Improve Public Law 22-23 (1997).
68 The following cases are commonly thought to have laid down the new "hard look" approach: Automotive Parts & Accessories Ass'n v. Boyd (D.C. Cir. 1968); Portland Cement Ass'n v. Ruckelshaus (D.C. Cir. 1973); National Tire Dealers & Retreaders Ass'n (D.C. Cir. 1974); United States v. Nova Scotia Food Prods. Corp. (2d Cir. 1977); and Motor Vehicle Mfrs Ass'n v. State Farm Mut. Ins. Co. (1983). See generally Jerry L. Mashaw & David L. Harfst, The Struggle for Auto Safety 95-100; 161-63 (1990) (describing the more activist approach of courts in reviewing rules promulgated by the National Highway Transportation Safety Authority).
69 Patricia M. Wald, "The Fiftieth Anniversary of the Administrative Procedure Act: Past and Prologue Judicial Review in Midpassage," 32 Tulsa L.J. 221, 233-34 (1996).
70 See Martin Shapiro, Who Guards the Guardians 45-46 (1988).
71 Data Processing Service v. Camp, 397 U.S. 150, 153-54 (1970).