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 DOMINIQUE CUSTOS*

The Rulemaking Power of Independent

Regulatory Agencies

The legal regime of the rulemaking power of the American Inde-

pendent Regulatory Agencies (IRAs) is mostly similar to that of their
executive counterparts. Its peculiarity is essentially confined to its
relative insulation from the President. Therefore, its study' provides
a substantial appraisal of the rulemaking power in the United States,
in general.

I. DEFINITION AND CHARACTERISTICS OF INDEPENDENT

REGULATORY AGENCIES (IRAs)
Similar to some European constitutions, the U.S. constitutional
text has no provision dealing with independent regulatory agencies.
Its 'necessary and proper clause' merely confers the authority to cre-
ate the government on Congress. 2 Apart from a constitutional refer-
ence to the cabinet departments,3 the design of the U.S. federal
government is Congress's responsibility. Therefore, the establish-
ment of the category of independent regulatory agencies, at the
American federal level, as in European countries, results from
legislation.
The definition and characteristics of American independent
agencies must be articulated against the backdrop of the structure of
the U.S. government. Beside the presidency, the study of the struc-
ture of the U.S. government stresses a main distinction between exec-
utive regulatory agencies and independent regulatory agencies. The
distinction is based primarily on their respective location in the ad-
ministrative architecture and secondarily on their distinct type of
leadership.
The executive agencies are cabinet agencies directly located
within one department in the Executive Branch whereas the inde-

* Professor of law at Loyola University New Orleans; Ph.D, Panthdon-Sorbonne

Law School, 1989, Agr6gation, Droit public, Paris, 1994; Fulbright Visiting Scholar,
Columbia, 1997-1998. My thanks to Professor John Reitz for his comments on an
earlier version of this report.
1. This paper follows the outline drawn by the general reporter although it has
been abbreviated to comply with the publisher's space requirement.
2. Art. I, Sec. 8, cl. 18 of the U. S. Constitution.
3. Art. II, Sec. 2, cl. 1. of the U.S. Constitution.

615
616 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

pendent agencies are placed outside such presidential realm.4 As

multi-member agencies, the independent agencies are headed by a
college of commissioners and are otherwise referred to as 'commis-
sions'. Comparatively, the executive agencies are under the leader-
ship of a single administrator.
The rules governing the appointment and the removal of the
commissioners guarantee their independence. Commissioners are
nominated by the President and confirmed by Congress. Bipartisan-
ship, staggered dates and fixed term of appointment, are designed to
prevent a perfect political consonance between the President and a
given independent agency. Removal of commissioners 5 is confined to
a non political cause,6 thus making it, at least in principle, impossible
for the President to censor or sanction political disagreement.
In light of the two aforementioned criteria, the independent
agency is defined as a form of administrative government that is
placed outside any cabinet department and under the leadership of a
college of commissioners independent of the President. Such a defini-
tion in structural and relational terms must be completed by an in-
quiry into the functions of the independent agency. Thus amended,
the definition becomes: a form of administrative government that is
responsible to regulate human activities 7 and is placed outside any

4. There is some uncertainty as to the nature of two agencies that are generally
characterized as independent agencies even though it is located in a department: Fed-
eral Energy Regulatory Commission (Department of Energy) and Occupational Safety
and Health Review Commission (Department of Labor). In the case of the FERC,
Professor Schwartz questioned the independent nature; Professors Davis, Pierce and
Strauss do not : Bernard Schwartz, A decade of Administrative Law: 1986-1997, 32
Tulsa Law Review, 493, 579 (1997); Kenneth Davis and Richard Pierce, Administra-
tive Law Treatise, Vol. 1, 47, 1994; Peter Strauss, An introduction to Administrative
Justice in the United States, 133, 2002. The OSHA is listed under the category of
independent regulatory commissions by Professor Straus who indicates that the
agency is 'associated with the department of Labor' which may be read as different
from placed in the given department: Peter Strauss, idem.
5. There is one exception: removal of the president of the independent commis-
sion or agency falls under the ad nutum category, typical of the head of the executive
agency.
6. Removal for cause may be justified by: inefficiency, neglect of duty, or malfea-
sance in office. See Humphrey's Executor v. United States 295 U.S. 602, 629-632
(1935), Wiener v. United States 357 U.S. 349, 356 (1958).
7. The diversity of areas of regulatory activities may be assessed by the following
list:
Economic regulation: Interstate Commerce Commission (established in 1887 but
repealed by a 1994 statute), Federal Reserve Board, Federal Trade Commission
(1914), Federal Communications Commission (1934), Securities and Exchange Com-
mission (1934), National Labor Relations Board (1935), Civil Aeronautics Board (es-
tablished in 1938 abolished in 1978), Federal Energy Regulatory Commission
(replaced, in 1978, the Federal Power Commission which was established in 1920)
Commodity Futures Trading Commission (1974), Nuclear Regulatory Commission
(1974).
Social Regulation: Equal Employment Opportunity Commission (1963-1964), Oc-
cupational Safety and Heath Review Commission (1970), Consumer Products Safety
Commission (1972).
2006] RULEMAKING POWER 617

cabinet department and under the leadership of a college of commis-

sioners independent of the President. The significance of the func-
tional dimension of the independent agency must be properly
assessed. Historically, it was both an element of definition and, along
with location and its oversight implications, a fundamental feature of
distinction from the executive agency. Nowadays, it still has a defini-
tional value but it is no more a source of differentiation from the exec-
utive agency. Originally,8 the independent agency symbolized the
vesting in idealized 9 experts of regulatory powers over the economy,
that challenged the common law notions of property and contractual
freedom, in the name of the public interest. It contrasted with the
executive agency which theoretically was confined to managerial
tasks1 0 and could not venture into decision making as far-reaching
and encompassing as congressional action. Accordingly, it was
termed the independent regulatory agency. The regulatory mission
was translated into "the model of combined-function agency"" which
makes the rules, investigates, prosecutes, and adjudicates. Neverthe-
less, de facto, this functional distinction proved not to be fully opera-
tional. First, executive agencies carry out regulatory functions also.12
Second, some independent agencies simultaneously devote a substan-
tial part of their action to non regulatory functions.13 In other words,
it has now become clear that the two institutional categories both
carry out regulatory and executive missions and enjoy intermingled
powers. Therefore, if as a matter of definition, the independent
agency is regulatory, as a matter of differentiation it is not exclu-
sively such.
The original value of the functional criterion as a way to differen-
tiate the then new independent agency from its existing executive
counterpart mirrored one of the current criteria of distinction among
executive and regulatory agencies in Europe either at the national

Political Regulation: Federal Election Commission (1975).

8. Frank Goodnow, The Principles of the Administrative Law of the United
States, 1905, James Landis, The Administrative Process, 1938.
9. They were idealized in that they were presumed to resort to science and be
insulated from the failings of politics.
10. "When Congress enacts a statute that is complete in policy aspects and ready
to be executed as law, Congress has recognized that enforcement is only an executive
function and has yielded that duty to wholly executive agencies" See Justice Jackson's
dissent in Federal Trade Commission v. Ruberoid Co. 343 U.S. 470, 489(1952).
11. Michel Asimow, The Administrative Judiciary: ALJs in Historical Perspec-
tive, 20 J. Nat'l A. Admin. L. Judges 157, 158 (2000).
12. For example, adjudication has always been a great bulk of the work of the
Social Security Administration, which until 1994 was viewed as an executive agency.
13. In addition to the performance of its regulatory duties, "[tihe Nuclear Regula-
tory Commission, for example, awards and oversees the performance of contracts for
research into issues of safety in the operation of nuclear power plants", Peter Strauss,
An introduction to Administrative Justice in the United States, 133, 2002.
618 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

level' 4 or at the European Union level.' 5 The difference of historical

stratification of the development of independent administrative
structures in the U.S. and Europe certainly explains the discrepancy
between the American and the European conceptions. The question
raised by this comparative historical perspective is whether Europe
will experience another age in the study of regulation whereby the
diffusion of the regulatory function across the administrative govern-
ment will be fully recognized.
Although it reflects the main feature of the American adminis-
trative architecture the dual account of the American governmental
structure is not quite faithful to the diversity of its forms. Mid-way
between the main two categories, exist the independent executive
agencies which was pioneered in the 1970s with respect to environ-
mental protection.' 6 In other words, beside the independent regula-
tory agency, there is a second type of independent agency. In both
cases, the independent characteristic is based on the lack of location
in a cabinet department. But in this second type, the independence is
reduced for two reasons. First, the independent executive agency is
still part of the Executive branch despite its non incorporation into a
department. Second, the independent executive agency is headed by
an administrator who can be discharged at will by the President.

II. DEFINITION OF RULEMAKING POWER IN NATIONAL LAW

A legislative definition of rulemaking power may be derived from

the 1946 Administrative Procedure Act (or APA) which provides for
the two forms of agency action. Under the APA dichotomous division
of government action, IRAs as well as executive agencies may engage
either in rulemaking or adjudication. Agencies resort to rulemaking
as they carry out general policy. They employ adjudication when
their administrative action affects individual rights. Additional
sources of administrative procedure may be found in legislation ad-
dressing a specific aspect of rulemaking or enabling a particular
agency as well as in agency regulations. Among the additional
sources, some statutes are exclusively applicable to IRAs, thus consti-
tute a specific source of administrative procedure for IRA's
rulemaking.

14. For instance, regulatory function, besides structural independence, of French

Autoritis Administratives Ind~pendantes is employed as a criterion of differentiation.
15. European Commission, The Operating Framework for the European Regula-
tory Agencies, COM (2002) 718 final, 4, 12/11/2002; White paper on European Gov-
ernance COM (2001) 428 final, 7/25/2001.
16. Environmental Protection Agency (1970), National Credit Union Administra-
tion (1982), Farm Credit Administration (1982), National Science Foundation (1982),
Social Security Administration (since 1994), Surface Transportation Board (substi-
tuted for the ICC in 1995).
20061 RULEMAKING POWER 619

The rulemaking power may be defined as the authority to issue

rules or regulations. 1 7 According to the APA, a rule is "the whole or a
part of and agency statement of general or particular applicability
and future effect designed to implement, interpret, or prescribe law
or policy."18 From a comparative standpoint, besides the confusing
mention of'particular applicability,'1 9 this definition sounds familiar
due to its reference to the impersonal and prospective character of
rulemaking.
Less familiar to the comparative mind is the encompassing na-
ture of the American definition of rulemaking. As a matter of fact,
rulemaking describes not only the binding law-making power of
agencies but also a non binding component of their normative power
which in other legal systems, such as French administrative law, are
clearly excluded from the rulemaking sphere. 20 To this effect, the
APA distinguishes between, on the one hand, legislative rules which
modify the legal landscape and are binding, on the other hand, non
legislative rules which do not have the force and effect of the law.

III. SOURCE OF IRAs' RULEMAKING POWER

The source of the IRAs' rulemaking power is legislative. Each en-
abling statute assigns a specific set of powers to a given agency. A
grant of rulemaking power does not exist in every governing statute
and even though it elects to confer rulemaking power, Congress may
choose to vest only a power to make rules with no force of law.
However, the delegation may cover the entire range of the IRAs
mission or may consist in specific grants of authority. 2 1 Moreover, the
wide spread of rulemaking does not necessary derive from a clear
delegatory congressional intent. In fact, Congress has very often em-
ployed ambiguous language, vaguely referring to the authority to pro-
mulgate rules and regulations, which potentially may or may not be
binding. 2 2 Faced with the determination of the extent of the delega-

17. 5 U.S.C.A. 551 (5): ""rule making" means agency process for formulating,
amending, or repealing a rule"
18. 5 U.S.C.A. 551 (4). 5 U.S.C.A. 551 (6): "Any other agency action is an 'order'."
19. For Continental European scholars and the Administrative Conference of the
U.S., the mention of 'particular applicability' sounds erroneous because of the general
characteristic normally associated with rulemaking.
20. For instance, the definition of the French rulemaking power includes only
what in the U.S. is referred to as legislative rulemaking.
21. Some statutes such as the Clean Water Act contain both general and specific
provisions of delegations to the EPA. Thomas W. Merill, Kathryn T. Watts, Agency
Rules with the Force of Law: The Original Convention, Harvard Law Review, 116
Harv. L. Rev. 467, 584 (2002).
22. Two formulas account for this ambiguity. The first one: power "to make such
rules and regulations. . .as are necessary to carry out the provisions of this chapter" is
illustrated by the governing acts of the ex-ICC, and the FTC. The second one: power
"to make, amend, and rescind such rules and regulations as may be necessary to carry
620 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

tion,23 since the 1970s, courts have been inclined to presume 24 that
such a language conveys the intent to confer a legislative rulemaking
power. With such a presumption, the post-APA case-law favors a gen-
eralization of the delegation of legislative power.
Typically, such assignment differs from the allocation of govern-
mental functions among the three named branches in the Constitu-
tion. Congress ascribes power to agencies in a manner that allows
them to partake in legislative, executive and judicial powers. As part
of this conjoining of responsibilities in a single entity, rulemaking
power symbolizes the delegation of legislative power by the Legisla-
tive branch without explicit constitutional authorization.
Although the text of the Constitution does not explicitly support
the conferral of rulemaking power to IRAs, it contains principles
which can accommodate the latter. In fact, the U.S. constitution does
not precisely allocate rulemaking power per se. Even though it explic-
itly vests the executive power in the President, it leaves this execu-
tive power wholly undefined. It merely indicates that "[the President]
shall take care that the laws be faithfully executed"; 25 which may call
for direct responsibility or control over those who actually execute the
laws through rulemaking. In fact, there is "a continuing tension be-
tween a view of the President as politically responsible for all acts of
governments, and a view of the other officers of government, who op-
erate pursuant to statutory authority, as legally responsible for all
decisions respecting their particular programs." 2 6 The recognition of
rulemaking power to the President results from an inference based
on the conferral of executive power but not from a clear constitutional
allocation. Moreover, this inference only addresses the question of the
existence of a presidential rulemaking power it does not solve that of
the monopoly over, or sharing of, such a power to make regulations.
The uncertainty of the textual framework of the allocation of
rulemaking power in the U.S. contrasts with the precision of the con-
stitution in other presidential 27 or in semi-presidential 28 regimes.
The question that arises from this observation is whether such an

out the provisions of this title", is exemplified by the enabling acts of the SEC, the
FCC, the ex-FPC, and the Federal Reserve Board.
23. The issue of interpretation was raised in particular regarding the FTC and
the NLRB. Thomas Merill and Kathryn Watts, at 504-520.
24. Thomas Merill, Kathryn Watts, at 467. The authoro "argue that throughout
most of the Progressive and New Deal eras, Congress followed a convention for signal-
ing when an otherwise ambiguous rulemaking grant was intended to confer delegated
authority to make rules with the force of law. Under this convention, rulemaking
grants coupled with a statutory provision imposing sanctions on those who violate the
rules were understood to authorize rules with the force of law."
25. Art. II of the U.S. Constitution.
26. Peter Strauss, Administrative Justice in the U.S., Op. Cit. 87.
27. Such as the presidential regime of Argentine.
28. In France, the Prime Minister is the explicit recipient of the rulemaking
power.
2006] RULEMAKING POWER 621

uncertainty lends a propitious context to the empowerment of IRAs

with rulemaking capacity. Two other characteristics of the U.S. gov-
ernment may have a similar favorable effect. First, the federal nature
of the state determines a decentralization of the rulemaking power
among different levels of government. Second, the principle of checks
and balances embedded in the Constitution supports a diffuse distri-
bution of a given power.
In fact, as in Europe, the constitutionality of the design of inde-
pendent agencies has been a matter of controversy. The reasons for
the controversy have been similar. The organizational separation and
the correlative degree of independence, on the one hand, seem not to
square with the constitutional vision of the presidential leadership of
administration, 2 9 the delegation of legislative, executive and adjudi-
catory powers,30 on the other hand, seems to flout the separation of
powers enshrined in the Constitution. Since the New Deal, and de-
spite a threat of destabilization in the 1990's, 3 1 the legal acclimation
of the IRAs has been ensured by case law. The finding of a statutory
intelligible principle providing sufficient guidance to the agency
serves as evidence of the preservation of the substance of the consti-
tutional assignment of legislative capability to the Congress. 32 The
determination that the conjoining of powers does not amount to a fa-
tal encroachment adduces proof that the balance of powers devised by
the Framers is not disturbed.3 3 The Supreme Court also validated
the limitation of the President's power to remove their commission-
ers, 34 although independence from the President seems to establish
independent agencies as competitors with the chief of the Executive
branch. Nevertheless, the existence of the IRAs still stirs up a legal
controversy 35 despite these judicial pronouncements.

IV. ORIGINS OF IRAs AND THEIR RULEMAKING POWER

The American IRAs are deeply-entrenched in the national gov-

ernmental landscape, in contradistinction to the recent independent
agencies that have been proliferating elsewhere - in Europe in partic-
ular - owing to the privatization of network industries. Practically,

29. Art. II, Sec.1 cl. 1 of the U.S. Constitution. Peter Strauss, Administrative Jus-
tice in the U.S., at 87.
30. Art. I, Sec. 1 cl. 1 of the U.S. Constitution. Art. III, Sec.1, cl. of the U.S.
Constitution.
It is worth noticing that the questions raised by the non-delegation doctrine con-
cerns equally the executive agencies.
31. American Trucking Associations, Inc. v. Environmental Protection Agency,
175 F. 3d 1027 (DC Cir. 1999)
32. J.W. Hampton, Jr & Co. v. United States, 276 US 394 (1928). Whitman v.
American Trucking Associations, Inc., 531 US 457 (2001).
33. Mistretta v. United States 488 US 361 (1989).
34. Humphrey's Executor v. United States 295 U.S. 602, 629-632 (1935), Wiener
v. United States 357 U.S. 349, 356 (1958).
35. Infra VI. 1.
622 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

congressional delegations of rulemaking power started as early as

1789.36 Throughout the nineteenth century the President mostly, the
Secretaries, occasionally, were the beneficiaries of this empower-
ment, in areas such as the military, foreign affairs, tax and internal
government.3 7 In the late nineteenth century, in connection with the
expansion of the administrative hold over the economy, agencies, sin-
gularly independent agencies, became the favorite recipients of the
law-making authority. They emerged at the end of the XIXth century
as essential instruments of discipline of free enterprise, in the name
of public interest.3 8 Sometimes, in this tempering of wild capitalism
endeavor, they came into existence with the blessing of the regulatees
themselves.3 9 They represent, in other words, the American model of
public economic intervention. It is one that reluctantly engages into
direct management 40 and preferably exercises oversight. This model
of indirect intervention was later used in other areas where it has
now morphed into a model of protection of fundamental rightS41 or
elections regulation. 42 Such a migration from the economic and social
regulatory spheres to the constitutional and political regulatory
realms is sufficiently indicative of the adaptability of the American
IRAs. It is also explicative of the large borrowing they gave rise to.

V. EXTENT OF THE AUToNomous RULEMAKING POWER OF IRAs

In the U.S., the independent rulemaking power was meant to ad-
equately empower those structures designed to regulate, according to
the public interest, the functioning of a horizontal aspect of the na-
tional economy or of a specific industry. In the pro-agency parlance of
the 1930s, 43 it was a means designed to allow the expert-regulator to
issue the rules of proper conduct for the regulated parties. Thus de-
signed, the rulemaking power encompasses a broad discretion which
is to be exercised under the guidance of an intelligible principle laid

36. Thomas W. Merill, Kathryn T. Watts, at 495. Cornelius M. Kerwin, Rulemak-

ing: How Government Agencies Write Law and Make Policy, 1994. Pp. xii, 321, 11-15.
37. Thomas W. Merill, Kathryn T. Watts, at 795.
38. The first independent commission, the Interstate Commerce Commission
(ICC), was originally placed in the Department of the Interior on Feb. 4, 1887. The
Interstate Commerce Act of 1887, ch. 104, S 11, 24 Stat. 379, 383 (1887) (codified as
amended at 49 U.S.C. S 10301 (2005)). Id. S 21, 24 Stat. 387. Congress, however,
amended these provisions on Mar. 2, 1889, relocating the ICC outside that depart-
ment and making it independent. Act of Mar. 2, 1889, ch. 382, 25 Stat. 855 (1889)
(codified as amended at 49 U.S.C. S 10761 (2005)).
39. As in the case of the Federal Communications Commission's precursor, the
Radio Regulatory Commission. Dominique Custos, La Commission F~ddrale Am6ri-
caine des Communications A l'Heure des Autoroutes de l'Information, 34-35,
L'Harmattan, 1999
40. At the federal level, there are just a few public corporations such AMTRAK,
Tennessee Valley Authority.
41. EEOC.
42. FEC.
43. James Landis, The Administrative Process, 1938.
2006] RULEMAKING POWER 623

down by the Congress. As a result of the vagueness of this intelligible

principle combined with the logic of the delegation of legislative
power itself, the corpus of substantive laws governing the regulated
matter is mostly of administrative origin as opposed to legislative ori-
gin. This observation would indeed apply to the European expression
of the phenomenon. On the other hand, the comparative evaluation of
the distribution of the rulemaking power offers more contrasting re-
sults. Unlike the French IRAs who may be confined to a secondary
rulemaking power, the American IRA enjoys a primary rulemaking
power. Indeed, the French IRAs involvement in rulemaking may be
limited (to a secondary role) by a substantial rulemaking power re-
served to the Government, or subject to approval by a Minister. 4 4
Comparatively, even though an executive agency may partake in the
regulatory task, the effectiveness of the authority to issue rules of
American IRAs cannot be subject to presidential assent. To this ex-
tent, the reference to a real autonomous rulemaking power seems
particularly justified in the case of American IRAs.
Yet, the use of the legislative veto4 5 against American IRAs deci-
sions, i.e., a resolution by which Congress nullifies a regulation
before it takes effect, offers some degree of similarity to the approval
power vested in ministers elsewhere. In both cases, the effectiveness
of agencies' rules depends on the good will of an overseer/ co-decision-
maker, either a legislator or a minister. To this extent, the autonomy
of the IRAS' rulemaking authority is curtailed. However, the func-
tional resemblance does not have the same significance. The legisla-
tive veto appears to be exercised by the author of the delegation of
rulemaking power, as a form of legitimate congressional oversight,
whereas the approval power wielded by a minister is indicative of an
oversight by an executive branch opposed to the diffusion of rulemak-
ing power outside the realm of the original administrative govern-
ment. At least, in principle, American IRAs are spared by this kind of
presidential control.

V.1. Adoption of the regulation

Until 1946, no general text prescribed a particular method of ad-
ministrative decision-making. Rulemaking procedure was shaped
mostly through litigation. In 1946, the APA purported to set out pro-
cedural limits in order to ensure protection of liberty against the
threats associated with the development of the administrative state.
It is worth noticing that the statute deals with agencies in general.
Therefore, it does not contain a specific set of provisions for rulemak-

44. Dominique Custos, Autorit6s Ind6pendantes de R~gulation Am6ricaines et

Autorit6s Administratives Frangaises, 20 Politique et Management, 66 (2002).
45. Infra VI. 1.
624 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

ing conducted by IRAs. Under the APA, 4 6 the procedure of adoption of

a regulation pursuant to a grant of legislative rulemaking authority
varies depending on the type of rulemaking, not on the independent
or executive nature of the agency involved. Informal rulemaking4 7
and formal 4 8 are the two sub-procedural forms which apply when
proceedings are not exempted from the APA's procedural
requirements.
Informal rulemaking is the basic model which is applicable by
default. In the informal rulemaking, the proceedings go through
three phases: notice, comment and publication. It is considered 'one of
the greatest inventions of modern government.' 4 9 The first phase has
an informational purpose: the agency apprises the public that it in-
tends to promulgate a rule. To this end, it publishes a 'notice of
rulemaking'5 0 in which it indicates the legal basis of the proceedings
and presents the proposed rule or the issues involved. With this re-
quirement, American rulemaking process is initiated with trans-
parency, although the APA does not deal with what occurs prior to
the publication of the notice of intended administrative action. 5 1
Since the 1990s, new information technology serves as a tool for en-
hanced transparency in the form of e-rulemaking. 52 The second step
of the informal rulemaking process is a comment phase during which
the public submits 'written comments'5 3 to the agency's contemplated
rule. It symbolizes the participatory characteristic of American infor-
mal rulemaking which is indicative of a relaxed command-and-con-
trol approach to rulemaking and calls to mind a kind of congressional
debate without verbal sparring. The effective participants are the
regulated industries and other interest groups. The third phase is a
decisional and explanatory phase whereby the IRA issues the final
rule along with "a concise general statement of basis and purpose."54
However, due to the transfiguration of informal rulemaking by the
hard look review,5 5 this last phase has become a time-consuming and

46. The APA is the general source of procedural rules applicable to the IRAs. The
enabling statute of each IRA may supplement this general set of rules.
47. It is also referred to as or notice-and-comment rulemaking. 5 U.S.C.A. 553.
48. 5 U.S.C.A. 553 (c).
49. See Kenneth Culp Davis, Administrative Law Treatise § 6.15, at 283 (Supp.
1970).
50. 5 U.S.C.A. 553 (b). The notice of proposed rulemaking or NRPM is published
in the Federal Register.
51. "Much, if not most, of the work takes place prior to the publication of the
NPRM." Cary Coglianese, E-rulemaking Information Technology and the Regulatory
Process, 56 Admin. L. Rev. 353, 358 (2004).
52. See Cary Coglianese, supra note 51 at 54; Cary Coglianese, Stuart Shapiro,
Steven J. Balla, Unifying Rulemaking Information: Recommendations for the New
Federal Docket Management System, 57 Adm. L. R. 621 (2005). Beth Simone Noveck,
The Electronic Revolution in Rulemaking, 53 Emory L.J. 433, 470-471.
53. 5 U.S.C.A. 553 (c).
54. Id.
55. Infra VI. 3.
2006] RULEMAKING POWER 625

meticulous exercise of rational justification of the given decision. The

so called "concise statement" can now stretch several tens of pages
because the agency must not confine itself to the articulation of its
reasoning but must also address the major objections raised in the
comments. The exigencies judicially imposed on the writing of the
statement of a rule by an American IRA seem to be unparalleled. In
particular, they clearly contrast with the exceptional nature of the
'motivation'5 6 requirement in French administrative law. They also
remain distinct from the duty to provide reasons for their interven-
tion imposed on European Union institutions:5 7 even though the
Commission engages into a relatively thorough explanation, it is not
required to discuss alternate options that might have been submitted
by interested parties.
Because the advent of the new information technology facilitates
the resort to public electronic consultations by other IRAs over the
world and the European Commission, the participation afforded in
the American rulemaking runs now the risk of being overlooked.
However, when it was introduced in 1946 in the executive as well as
in the executive agencies it clearly stood out as its openness to the
public at large and its sophistication contrasted so manifestly with
the mandatory or optional consultations of specific institutions that
were required from administrative decision-makers elsewhere at a
time when the U.S were the only country that could showcase IRAs.
Even now, the participation voluntarily allowed by other IRAs and
the European Commission since the 1990s does not quite compare
with a requirement imposed by a statute such as the APA since 1946.
First, foreign IRAs may decide to discontinue their practice. Second,
participants have no cause of action in law against the discontinu-
ance or the shortcomings of such a practice. Lastly, the appreciation
of the rulemaking power of American must heed the fact that the
APA applies to both executive and independent agencies. Conse-
quently, the detected elements of transparency and participation do
not distinguish American IRAs from their executive counterparts.
Comparatively, the participatory practice promoted by French IRAs
appeared to originally differentiate their rulemaking proceedings
from that of the rest of the administrative world until ministries em-
braced the practice.
Even though the APA sketches out the three steps of informal
rulemaking, its language, if taken literally, affords the agency a cer-
tain degree of procedural flexibility for the exact design of each

56. The 'motivation' is the procedural requirement consisting in the statement of

the factual and legal reasons for issuing the regulation or the order. In rulemaking
proceedings, it is exceptionally required as for example in the case of rules by profes-
sional bodies. Under the French Act of July 11, 1979, it is mandatory in case of an
adverse individual decision, which in the U.S. would be considered an adjudication.
57. Art. 253 of the Treaty of the European Community.
626 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

phase. Thus, it appears to be informal. In contrast, formal rulemak-

ing is tightly defined. It is called formal because it borrows several
features of the formal adjudicatory process. Instead of the comments
and the concise general statement, a hearing over which administra-
tive law judges 53 or the commissioners preside is held by the agency.
To ensure decisional independence5 9 and impartiality, administra-
tive law judges, as agency employees, are structurally separated from
61
the rest of the personnel 6 0 and enjoy special career guarantees.
In addition to documentary evidence, parties resort to testimony
and cross-examination to adduce proof of their arguments. The record
produced at the hearing is the exclusive record for the issuance of the
final rule. Off-the record communications with outside parties are
prohibited to officers presiding over or participating in the decision
making. Thus, formal rulemaking is, like adjudication, an oral proce-
dure although it may exceptionally and partially take a written
form. 6 2 In fact, the possibility of restriction to documentary evidence
constitutes a departure from the typical trial-like administrative pro-
cedure. Other dissimilarities include a relaxed requirement of sepa-
ration of adjudicatory functions from investigative and prosecuting
functions. The administrative law judges, who must observe the ex
parte communication prohibition within the agency when engaging in
the most stringent model of formal adjudication,6 3 are exempt from
this aspect of the requirement in a formal rulemaking. They are al-
lowed to enter into such consultations with the very staff members
defending the agency's position in the proceedings over which they

58. Administrative law judges (ALJs) are to be differentiated from Article III
judges, the only federal judiciary which reviews agency action including rules derived
from formal rulemaking. ALJs are appointed pursuant to 5 U.S.C. 3105. They make
the recommended or initial decision which is reviewed by the agency. They must be
licensed lawyers with a seven-year experience, including two in an agency. See C.
Koch Administrative Law and Practice § 6.4 (1985). Unlike Article III judges, ALJs
may not constitutionally impose imprisonment as a penalty for violation of a statute
or regulation or consider felony cases.
59. In Ramspeck v. Federal Trial Examiners Conference, the Supreme Court
found that Congress intended ALJ's to be "a special class of semi-independent
subordinate hearing officers". Ramspeck v. Federal Trial Examiners Conference, 345
U.S. 128 (1953).
60. Administrative law judges serve in a separate office and are under no supervi-
sion within the agency except the administrative supervision exercised by the Chief
Administrative Law Judge.
61. A professional merit selection of applicants is made through a competitive ex-
amination administered by the Office of Personnel Management (independent agency
within the executive branch). Appointment is made on the basis of a list drawn by the
OPM and not subject to a probationary period. Salary-related disputes or disciplinary
measures are the responsibility of a distinct agency, the Merit Systems Protection
Board, which must hold a hearing. Discharge is possible only upon a showing of good
cause.
62. 5 U.S.C.A. 556 (d): when it is not prejudicial to parties' interest, written sub-
missions may be substituted for oral testimony but cross-examination remains
available.
63. Infra V. 2.
2006] RULEMAKING POWER 627

preside. 64 As a whole, formal rulemaking is a hybrid procedural

model: 'highly individualist from one perspective (thus strong proce-
dural and participatory claims), yet polycentric and non-adversary
from another.'6 5
Formal rulemaking applies only if there is a clear indication of
congressional intent in this regard.6 6 Ratemaking falls within the
limited scope of application of the formal rulemaking procedure. In-
deed, because of the cumbersome nature of the procedure agencies
tend to avoid using it if the language of their enabling statute sup-
ports such strategy. However, with respect to the availability of for-
mal rulemaking, the general normative power of American IRAs
differs from that of their foreign counterparts. IRAs elsewhere em-
ploy rulemaking tools that are limited to procedures more or less
reminiscent of legislative proceedings. When they engage in rulemak-
ing proceedings American IRAs utilize procedural means that either
espouse the initiative-discussion-decision steps typical of a delibera-
tive institution or an attenuated trial-type process. It follows that for-
mal rulemaking, in its very principle, seems to be specific to the
American IRAs. If one pursues the comparative inquiry, one finds
that foreign IRAs like American IRAs can avail themselves of a regu-
latory polycentrism which makes them independent rule-makers.
But, as a result of this re-distribution of rulemaking power outside
the sphere of the Executive branch, American IRAs appear to be
more broadly empowered than their foreign counterparts. This is true
not only because of the substantive breadth of the authority vested in
them but also because of the procedural diversity made available to
them. On the other hand, among the American agencies, the signifi-
cance of the delegated power and the dualism of procedural forms of
rulemaking are not specific to the IRAs. This rulemaking procedural
versatility is equally available to American executive agencies. In
fact, the availability or the lack of a plurality of rulemaking tools for
agencies denotes different conceptions of rulemaking, depending on
whether a domestic theory of administrative law acknowledges both
a pure and a hybrid type of rulemaking or accounts only for a pure
type. 6 7

64. "Unlike adjudications, rulemaking proceedings are generally not accusatory;

consequently, there is less need to isolate the decision makers from a potentially ad-
versary staff in order to assure fairness to the accused": Ernest Gellhorn, Ronald
Levin, Administrative Law and Process, 1997, 317.
65. Peter Strauss, at 225. Thus, the formal rulemaking model appears to be simi-
lar to that of initial licensing. See infra V. 2.
66. United States v. Florida East Coast Railway Co., 410 U.S. 224 (1973).
Under 5 U.S.C.A. 553 (c) formal rulemaking must be used "when rules are required by
statute to be made on the record after opportunity for an agency hearing".
67. For instance, ratemaking, under French administrative law falls under the
same rulemaking category than the provisions regulating other aspects of industry
conduct.
628 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

Beginning in 1966, APA requirements relating to rulemaking

have been supplemented by a legislation which like the APA, gener-
ally applies to all agencies. This supplementary legislation either pro-
motes transparency, or cost-benefit analysis of administrative action.
Towards the first end, IRAs are required to make their records avail-
able to satisfy the right of information enjoyed by the public, 68 to fol-
low specific procedures when soliciting advice.6 9 In pursuance of the
second goal, they are mandated to develop information on the
paperwork burden generated by their rules,7 0 to reduce the regula-
tory burden on small businesses,' to assess the environmental im-
pact of certain regulations. 72 However, one post-APA statute, by
targeting multi-member agencies exclusively affects the independent
agencies rulemaking processes. The Government in the Sunshine Act
of 197673 demands that multi-headed agencies hold open meetings.
Thus, this statute introduces an additional layer of openness and op-
portunity for public participation to rulemaking undertaken by IRAs.
Nevertheless, the subsequent avoidance behavior adopted by com-
missioners doing their utmost to reduce the number of meetings cov-
ered by the act, is sufficient indication of the inhibitions caused by its
enactment. Moreover, despite their contribution to the democratiza-
tion and rationalization of administrative action, these statutes have
had a cumulative side-effect. The additional obligations thus imposed
on rule-makers by Congress contribute to the ossification, 74 which
plagues the independent and executive agencies rulemaking process
indiscriminately. The independence attribute is powerless to spare
the IRAs such a burdensomeness or rigidity.

V.2. Comparisonwith adjudicatorypowers of IRAs

Under the APA, adjudication constitutes the other procedural
mode of administrative action. In practice, although rulemaking
grants can be traced to 1789, until the 1970s agencies substantially

68. Freedom of Information Act of 1966, Pub. L. No. 89-554, 80 Stat. 383 (1966);
Electronic Freedom of Information Act Amendments of 1996, Pub. L. No. 104-231, 110
Stat. 3048 (codified at 5 U.S.C. § 552 (Supp. II 2005)).
69. Federal Advisory Committee Act of 1972, Pub. L. No. 92-463, 86 Stat. 770
(1972) (codified as amended at 5 U.S.C. App. 2 §§ 1-16 (2005)). The Act purports to
combat agency capture due to the over-representation of certain interests in advisory
committees.
70. Paperwork Reduction Act of 1980, Pub. L. No. 96-511, 94 Stat. 2812 (1980)
(codified at 44 U.S.C. §§ 3501-521 (2005)).
71. Regulatory Flexibility Act of 1980, Pub. L. No. 96-354, 94 Stat. 1154 (as
amended by SBREFA (1996) at 5 U.S.C. §611 (2005).
72. National Environmental Policy Act of 1969, Pub. L. No. 91-190, § 102, 83 Stat.
852 (1970) (codified at 42 U.S.C. § 4332 (2005).
73. Government in the Sunshine Act of 1976, Pub. L. No. 94-409, 90 Stat. 1241
(1976), (codified at 5 U.S.C. § 552b (2000).
74. E. Donald Elliot, Remarks at the Symposium on "Assessing the Environmen-
tal Protection Agency After Twenty Years: Law, Politics, and Economics," at Duke
University School of Law (Nov. 15, 1990).
2006] RULEMAKING POWER 629

resorted to adjudicatory procedure to conduct their policies. To be

sure, the organizational scheme of the independent agencies was de-
signed with the adjudicatory function in mind." 75 The domination of
rulemaking as a favorite regulatory tool occurred in response to a
heavy advocacy by scholars, judges7 6 and other commentators7 7
stressing its superiority and urging agencies to systematically utilize
it. The shift, which affected both categories of agencies, stemmed
from considerations of fairness and efficacy of rulemaking attached to
its general and prospective characters. However, the increasing role
of IRAs as rulemakers poses the question of coordination of the over-
all federal rulemaking activity by the President.7 8 Moreover, the sub-
sequent ossification7 9 of the informal rulemaking process has
compromised the expectations attached to such a selection of regula-
tory vehicle.
Two IRAs in particular resisted that trend for several decades
devising policy through adjudication: the FTC and the NLRB. It is
only in the 1960s that the FTC, first cautiously in 1962, then aggres-
sively from 1964, resorted to legislative rulemaking.8 0 The NLRB
eventually turned to rulemaking in the 1970s and similarly employ-
ing caution at first (in 1970) and firmness since 1987.81
To be fully assessed, the substitution of rulemaking for adjudica-
tion as a preferred method of regulation must be examined against
the backdrop of a comparison of the respective procedural modes. Sec-
tion 551 (7) of the APA defines adjudication as agency process for the
formulation of an order. The meaning of an order itself is articulated
in a residual manner under 551 (6): 'the whole or a part of a final
disposition . . . of an agency in a matter other than rule making'.
Concretely an order may take a positive form such as that of the
award or a license, or a negative form such as the infliction of a sanc-
tion or a denial of request. The APA implicitly distinguishes a formal
and an informal adjudicatory procedure. From a technical stand-
point, informal rulemaking proves to differ from formal adjudication

75. P. Verkuil, The Purposes and Limits of Independent Agencies,1988 Duke L.J.
257, 263 (1988).
76. United States v. Florida East Coast Railway 410 US 224 (1973).
77. The main advocates were James Landis and Judge Henry Friendly. James
Landis, Report on Regulatory Agencies to the President-Elect, 22 (1960); Henry J.
Friendly, The Federal Administrative Agencies, 5-6 (1962). For additional references,
see Thomas W. Merill, Kathryn T. Watts, at 546-547 and accompanying notes.
78. P. Verkuil, supra at 265.
79. Infra VI. 3.
80. In 1973 the FTC's claim of legislative rulemaking authority was vindicated by
the courts. Nat'l Petroleum Refiners Ass'n v. FTC, 482 F. 2d 672, 674 (D.C. Cir. 1973).
Thomas W. Merill, Kathryn T. Watts, at 549-557.
81. Its efforts to assert its legislative power were implicitly and explicitly upheld
by judicial opinions. Implicitly: Wyman-Gordon, 394 U.S. 759 (1969); Explicitly: Am.
Hosp. Ass'n v. NLRB, 499 U.S. 606, (1991). Thomas W. Merill, Kathryn T. Watts, at
465-570.
630 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

but formal rulemaking resembles formal adjudication. Consequently,

the evolution of policymaking methodology consisted in the replace-
ment of formal rulemaking by informal rulemaking.
The APA scarcely provideS8 2 for informal adjudication although
it covers a significant part of the adjudicatory proceedings. 3 When
denying a request, the agency must meet only two requirements: it
must give prompt notice of the denial to the interested person and a
brief statement of the decision's grounds. Parties rely on the Due Pro-
cess Clause to supplement the paucity of these legislative procedural
exigencies. Comparatively, the APA's provisions governing the formal
adjudication are detailed. 8 4 Modeled after a court trial, they greatly
contrast with those devoted to informal rulemaking but exhibits simi-
larities with those dealing with formal rulemaking. IRAs must resort
to formal adjudication 'in every case of adjudication required by stat-
ute to be determined on the record after opportunity for an agency
hearing.'8 5
As in the case of formal rulemaking, the key procedural feature
in both cases, is a hearing conducted by an Administrative Law
Judge or the commissioners. With the IRA being assimilated to a
court, parties can avail themselves of means of argumentation typical
of a judicial proceeding. In particular, impartiality is sought through
a separation of functions and a preservation of the on-the-record
character of the proceeding.
In order to guarantee the adjudicatory decision-maker's indepen-
dence within the agency, section 554 (d) (2) sets out two provisions.
First, the officer presiding at the reception of evidence 'may not be
responsible to or subject to the supervision or direction of an em-
ployee or agent engaged in the performance of investigative or prose-
cuting functions for an agency.' Second, 'an employee or agent
engaged in the performance of investigative or prosecuting functions
for an agency in a case may not, in that or a factually related case,
participate or advise in the decision, recommended decision, or
agency review . . . , except as witness or counsel in public proceed-
ings.' Impartiality is further served by two other provisions8 6 prohib-
iting off-the-record conversations 'relevant to the merits of the
proceeding' between presiding officers and 'interested persons outside
the agency.'
This sophisticated procedure is not universally applicable to all
formal adjudications. In fact, beside the general model of on-the-re-
cord adjudication, two other models may be detected in the APA.

82. 5 U.S.C. 551 (e).

83. Most benefactory programs are administered through informal adjudication.
84. 5 U.S.C. 554, 556-557.
85. 5 USC 554 (a).
86. 557 (d) (1) (A) and (B).
2006]1 RULEMAKING POWER 631

Thus, procedural requirements are alleviated when the agency en-

gages into an initial license process 8 7 or determines the validity of
claims for money or benefits. 8 Conversely, the APA is more demand-
ing when the agency issues license sanctions. 8 9 The highly adver-
sarial character of such a proceeding justifies two additional
guarantees for the prosecuted parties. Not only are they entitled to
written notice of the impugned facts or conduct 9 0 but also they have
an'opportunity to demonstrate or achieve compliance with all lawful
requirements.' 9 1

V.3. Hierarchyof norms

Three series of observations can be made. First, regarding their

relationship with statutes enacted by Congress, rules issued by IRAs
present a lesser legal value than the congressional rules. They must
in fact conform not only to the relevant statutes but also to the Con-
stitution and the case-law.
Second, as to reciprocal relationship among the regulations pro-
duced by IRAs, because IRAs are not structured as a hierarchical
branch of government, there is no hierarchy between the regulations
produced by them. All the products of IRAs' legislative rulemaking
share the same legal status. Compatibility among those rules results
from voluntarily coordination among agencies.
Third, the place of the binding norms formulated by IRAs rela-
tive to the executive orders promulgated by the President is contro-
versial. 9 2 At first sight, it can be easily stated: due to their
independence, IRAs, unlike executive agencies, are not subject to
presidential pronouncements. Nevertheless, the claim for a unitary
Presidency that would incorporate executive as well as independent
agencies, a certain realism in view of the implications of the Presi-
dent's responsibilities in wartime and other exceptional circum-
stances, challenge in whole or in part this apparently easy
determination.

87. Under 5 U.S.C. 554 (d) (A), the issuance of initial licenses is exempt from the
two prohibitions relating to separation of adjudicatory functions from investigative
and prosecuting functions. Moreover, section 556 (d) allows for an exception to the
right to oral evidence. Lastly, thanks to section 557 (b) (1), responsible members of
staff instead of administrative law judges may recommend a decision.
88. Section 556 (d) allows the agency to limit the submission of evidence, in part
or in all, to written submissions as long as the affected party is not prejudiced.
89. Such as the withdrawal, the suspension of a license.
90. 5 U.S.C. 558 (c) (1).
91. 5 U.S.C. 558 (c) (2).
92. Infra VI. 1.
632 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

VI. CONTROL OF THE RULEMAKING POWER OF IRAs

The independence of IRAs is limited by the influence of the politi-

cal branches of government and the regulated industries as well as by
judicial review.

VI.1. Presidentialand congressional oversight

Congress as well as the President exerts political control over

IRAs. The techniques employed for congressional oversight of inde-
pendent agencies are similar to those used over executive agencies.
But Congress's attempts to influence IRA action are made with a par-
ticular sense of entitlement arising from the view that these agencies
constitute its arms in confrontations with the President. Participa-
tion in the appointment of commissioners, either through the Presi-
dent's consultations with senators prior to nomination, or through
confirmation after nomination, gives Congress a determining role in
the designation of IRAs. Once the IRA's membership has been deter-
mined, congressional oversight may be as drastic as a reduction of
the scope of the delegation to the agencies or a termination.9 3 But
ordinarily, authorization, appropriation, regulatory review and inves-
tigation furnish the means of formal congressional oversight.
Periodical authorization of a maximum level of expenditures as
opposed to permanent authorization and annual appropriation weigh
significantly on agencies' activities. 9 4 These congressional rituals
which mobilize substantial agencies' resources, as they may result in
a sanction or recompense for past action, force agencies to carefully
justify their request for funding. Congress may include prohibitions
and instructions with respect to future action in the appropriations
bills.
Regulatory oversight may target a particular administrative ac-
tion and during the 1970s legislative veto became a favorite tool in
this regard. Legislative veto allows Congress to review and nullify by
resolution a rule before it becomes effective. However, a formalistic
approach to the bicameralism and presentment requirements led the
Supreme Court to constrain the use of such tool, in 1983.95 From then
on, to constitutionally resort to legislative veto Congress must ensure
involvement of both houses and of the President. If the Chadha opin-
ion forced Congress to follow the key-principles of enactment of a
statute when wielding regulatory oversight it did not deter or even
diminish its overseeing zeal. Indeed, the 1996 Congressional Review

93. The Aeronautics Board was abolished in 1978. The ICC was terminated in
1995 and replaced by the STB.
94. The Congressional Budget Office plays a key-role in this process.
95. INS v. Chadha, 462 U.S. 919 (1983)
2006] RULEMAKING POWER 633

Act of 1996 provides that, before their rules can take effect,96 agen-
cies must submit them to each House along with a cost-benefit analy-
sis. In creating this quasi-systematic legislative filter, the Act adds
another procedural step to that articulated by the APA and contrib-
utes to a cumbersome decision making. Apart from cost-benefit con-
cerns, Congress may also pass or attempt to pass a statute designed
to substitute its own judgment to that of an agency on a specific regu-
latory policy question.9 7
Lastly, investigations conducted by congressional committees
constitute another powerful device of formal political supervision to
which the submission of an annual report demanded from the foreign
counterparts of the American IRAs pales into insignificance. The
public legislative hearings, in which administrative action is care-
fully scrutinized and a commissioner or staff member is plied with
questions, symbolizes the unparalleled sophistication of American
congressional control over administrative action, in general and by
IRAs, in particular. Individual oversight by representatives or sena-
tors also takes place. Through correspondence or meetings, the latter
convey the concerns of their constituents.
The President resorts to a myriad of political pressures to keep a
check on IRAs. An abundant literature describes the diverse methods
of political influence9 8 over IRA's decision making.99 It seldom occurs
in adjudication but frequently in rulemaking.
The examination of presidential oversight from a legal stand-
point is more complex. Despite their location outside the Executive
Branch, IRAs are subject to presidential oversight. However, the ex-
tent of such a control is a matter of contention and therefore,
uncertain.
The availability of certain legal presidential powers furnishes a
sufficient basis to determine the existence of such a control. The
power of nomination 0 0 is an effective statutory tool of control which

96. Contract with America Advancement Act of 1996 or Congressional Review

Act, codified at 5 USCA && 801-08. 'Major rules', i.e. rules whose implementation
entail substantial costs, cannot take effect during the sixty days afforded Congress to
perform its review. See 5 U.S.C.A. 801 (a)(3). Under 5 U.S.C.A. 801 (a)(4),' Except for
a major rule, a rule shall take effect as otherwise provided by law after submission to
Congress.'
97. The fairness doctrine and equal opportunity offer good examples of this con-
gressional posture in the case of the FCC.
98. This may occur "either through the public submission of views or via some
type of off-the-record contact", Marshall J. Breger, Gary J. Edles 52 Admin. L. Rev.
1111 (2000).
99. Illustrative of this literature are: Angel Manuel Moreno, Presidential Coordi-
nation of the Independent Regulatory Process, 8 Admin.L.J.Am.U. 461 (1994)); Paul
R. Verkuil, Jawboning Administrative Agencies: Ex Parte Contacts by the White
House, 80 Colum.L.Rev. 943 (1980)
100. In particular, the President appoints the chairperson of the independent
agencies.
634 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

allows the president to choose commissioners who share his regula-

tory philosophy while abiding by the bipartisanship rule.
Litigation furnishes another legal arm for oversight to the Chief
of the Executive branch. IRAs do not have an exclusive litigating au-
thority. In quite a determining fashion, this responsibility also rests
with the Solicitor General within the Department of Justice, which is
an executive agency. Although this official does not control all IRA's
litigation, the authority to petition the Supreme Court is centralized
in him.' 0 Thus, through legal arguments, he has the ability to im-
pose the unitariness of the executive branch. The litigation model at
the appellate level being diffuse, independent agencies may submit
their own brief before a court of appeals.1 0 2
Moreover, in 1939, statutory amendments made it clear that
IRAs were required to obtain clearance from the President for their
budget and legislative proposals before submitting them to the Con-
gress.10 3 As a result, although some exceptions were introduced in
the 1970s,1 0 4 the presidential Office of Management and Budget is
allowed to sift through the IRAs' proposals and endorse, correct or
reject them in consideration of the President's directives of the
moment.
Notwithstanding these legal powers, the controversial question
of the applicability of executive orders to independent agencies blurs
the limits of IRAs' independence. Although the principle of indepen-

101. There are some exceptions. Neal Devins, Unitariness and Independence: So-
licitor General Control over Independent Agency Litigation, 82 Cal. L. Rev. 255, 275
(1994): "Two independent agencies, the Interstate Commerce Commission (ICC) and
the FTC, may represent themselves before the Supreme Court whenever the Solicitor
General refuses to defend their position. This authority may also extend to the Na-
tional Labor Relations Board (NLRB) and the Tennessee Valley Authority (TVA). Fi-
nally, through the Hobbs Act, specified agencies may seek certiorari regardless of
Solicitor General approval, but only to defend an administrative order. Hobbs Act
cases are rare, for the agency can break free from the Solicitor General only when
there is an irreconcilable divergence of views. In those cases, the agency and the Solic-
itor General each appear before the Court as named parties."
Hobbs Act: ch. 1189, 64 Stat. 1129 (1950) (at 18 U.S.C. §§ 2341-2351 (1988) or 28
U.S.C. 28 U.S.C. § 2348 (1994). The FCC, the NRC and FMC are among the IRCs
benefiting from this latter exception: Marshall J. Breger, Gary J. Edles, Established
by Practice: the Theory and Operation of Independent Federal Agencies, 52 Admin. L.
Rev. 1111, 1154.
102. "The SEC, Equal Employment Opportunity Commission (EEOC), and FERC
have authority to litigate in the courts of appeals, and the CPSC has authority to
litigate in the district court": Marshall J. Breger, Gary J. Edles, Supra at 1154.
103. This requirement was originally imposed by the Budget and Accounting Act of
1921. See Act of June 10, 1921, ch. 18, §§ 207, 213, 42 Stat. 20, 22-23 (codified as
amended at 31 U.S.C. § 1108 (1994)); See Reorganization Act of 1939, Pub. L. No. 76-
19, § 201, 53 Stat. 565. Marshall J. Breger, Gary J. Edles, Supra at 1151-1152.
104. A diversity of exceptions concerns the SEC, FERC, CFTC. Moreover, the Fed-
eral Maritime Commission (FMC), FTC, Nuclear Regulatory Commission (NRC),
STB, and U.S. International Trade Commission have developed the practice to ex-
empt themselves from this requirement without any statutory basis. Marshall J. Bre-
ger, Gary J. Edles, Supra at 1152-1153.
2006]1 RULEMAKING POWER 635

dence seems to naturally shield the IRAs from the supervisory con-
trol of the President in the issuance of rules,1 0 5 the claim has been
repeatedly made that the President could legally subject them to his
methodological instructions in this regard. Recently, an extensive
historical study concluded that the constant rejection by successive
presidents of the attempts to full independence had prevented the
formation of a customary rule upholding the so-called indepen-
dence. 0 6 Other scholars 0 7 as well as the DOJ and the ABA 1 08 have
contended that the limitation of the presidential removal power did
not entail an immunity from presidential oversight of the substance
of the IRAs' rulemaking as long as it remained short of a blunt substi-
tution of decision. Such a conception would deprive the President of a
power to remove IRAs' commissioners and to override their decisions
but would entitle him to supervise rulemaking proceedings by IRAs.
As it suggests more a difference of degree than that of nature be-
tween executive and independent agencies, the successive and recent
reiterations of its formulation leave the IRAs in an unstable position
in the American administrative government, despite the judicial vali-
dation of the delegation of power and the limited removal power.

VI.2. Control by regulated industry

A complete assessment of independence must include the influ-
ence of the economic forces targeted by their regulation. According to
the regulatory capture thesis, independent agencies are said to come
under the influence of the regulated industries. This phenomenon is
analyzed either as an inherent feature of regulation 0 9 or an inevita-
ble phase of the typical development. 1 0 It reflects a broader reality of
any administrative government, that of identification of a given unit
- whether executive or independent - with the interests of the partic-
ular industry that it regulates. In the U.S. as elsewhere, professional

105. Bernard Schwartz, Administrative Law 19 (3d ed. 1991). In support of this
thesis, two examples may be referred to. President Reagan's requested only voluntary
implementation of Exec. Order No. 12, 291, 3 C.F.R. 127 (1982) (requiring federal
agencies to conduct a Regulatory Impact Analysis) from IRAs. All declined to comply
with it. President Clinton's Executive Order No. 12,866, 58 Fed. Reg. 51,735 (1993)
requiring federal agencies to conduct cost-benefit analysis exempted independent
agencies from conducting this analysis.
106. Christopher Yoo, Steven Calabresi, Anthony Colangelo, The Unitary Execu-
tive in the Modern Era, 1945-2004, 90 Iowa L.Rev. 601 (2005).
107. Robert W. Hahn, Cass R. Sunstein, A New Executive Order for Improving
Federal Regulation: Deeper and Wider Cost-Benefit Analysis, 150 U. Pa. L. Rev. 1489,
1496, 1530-1537 (2002); Robert W. Hahn and Mary Beth Muething, The Grand Exper-
iment in Regulatory Reporting, 55 Admin. L. Rev. 607, 630 (2003).
108. Peter L. Strauss & Cass R. Sunstein, The Role of the President and OMB in
Informal Rulemaking, 38 Admin. L. Rev. 181 app. at 206 (1986)
109. George Stigler, The Theory of Economic Regulation, 2 Bell J. Econ. 3 (1971);
Sam Peltzman, Toward a General Theory of Regulation, 19 J.L. & Econ. 211 (1976).
110. Marvel Bernstein, Regulating Business by Independent Commissions, 35-39
(1955).
636 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54

organizations, interest groups serve as the formal and informal (ex

parte contact) media of such control. But one characteristic of the
U.S. administrative law makes American independent or executive
agencies especially vulnerable to regulatory capture. To the extent
that the regulated companies possess the means to avail themselves
of the participatory guarantees of informal rulemaking, administra-
tive procedure itself may be viewed as fostering a disproportionate
power of the industry over the agencies. The transparency legislation
was precisely designed to curb this trend. The rise of citizen groups,
the complexity of each of the regulated industries, result in compet-
ing strategies of instrumentalization of the agencies, that make the
capture phenomenon a dynamic process.

VI.3. Judicial review

Judicial review of independent agencies' action proves also to es-

pouse the features of that of executive agencies' decisions. First, the
independence characteristic does not bear any implication in terms of
standards of judicial review. What really matters for the determina-
tion of the applicable standard of review is the type of question at
stake: factual findings, legal determinations or policy questions. The
arbitrary and capricious standard"'1 is of general applicability
whereas the substantial evidence 1l 2 and de novo review1 13 standards
have a limited applicability. Traditionally the scale of judicial defer-
ence ascribes a lesser intensity of judicial scrutiny to the arbitrary
and capricious test than the substantial evidence test. However, a
convergence has been developing between the two tests. In fact, in
either case, courts engage in an inquiry of the reasonableness of the
administrative decision.
In itself, this textual failure to formulate distinct sets of rules
may be viewed as indicative of the limited significance of the differ-
ence among independence and executive agencies. The unitary vision
retained by the APA for the conduct of rulemaking or adjudication is
carried over to the provisions relating to the control of administrative
conduct by courts. Although the validation of the limitation of the
President removal power attests to the judicial endorsement of the
concept of independence, the caselaw provides a single regime of

111. U.S.C.A 706 (2)(A). The arbitrary and capricious standard is applicable to fac-
tual and policy questions in informal rulemaking and to questions of law. Because of
the shift to informal rulemaking, it concerns the bulk of the independent agencies'
intervention.
112. U.S.C.A.706 (2) (E). The substantial evidence standard applies to formal pro-
ceedings. It thus concerns the IRAs formal rulemaking power.
113. U.S.C.A. 706 (2) (F). The de novo standard covers factual questions in rare
cases of non-adjudicatory action. It thus marginally concerns the IRAs' rulemaking
power.
2006] RULEMAKING POWER 637

scope and availability of judicial intervention, regardless of the cate-

gory of agency involved.
Thus, the rejection in principle of a public action1 4 which would
allow an abstract review of regulations applies without distinction to
executive and independent agencies. Quite significantly, when the
Supreme Court refers to the President's responsibility for the execu-
tion of the laws to justify its insistence on the case and controversy
requirement," 5 it does not draw any exception for agencies located
outside the executive branch. In the same vein, the relaxing of the
principle through the introduction of an hybrid test, "the injury in
fact arguably within the interests protected by the statute,"1 1 6 en-
sures access to administrative justice to public interest groups con-
testing independent or executive agency regulatory intervention.
The presumption of reviewability of agency action" 7 enunciated
by courts as well as their elaboration on the two exceptions men-
tioned in the APAn 8 do not make any distinction among the different
forms of the administrative government. Similarly, an ALJ's factual
determinations in a formal rulemaking that involves eyewitness tes-
timony or demeanor evidence will be afforded an equally significant
weight whether she/he is employed by an agency which is within or
outside the executive branch." 9 Likewise, when examining the out-
come of an informal rulemaking, courts observe the same strong def-
erence if the interpretation of an ambiguous statutory language is
found to be a permissible construction of the law by an independent
or an executive agency.12 0 The same penetrating probe, so-called
hard look,121 was applied to policy choices made by either category of
agencies by reviewing courts, which nevertheless stressed the illegal-
ity of the substitution of judicial judgment for administrative discre-
tion. This demanding judicial posture, which so expansively
redefined the three steps of informal rulemaking as to transform the
latter into a cumbersome hybrid form of administrative action,
equally affects executive and independent agencies. This court-man-

114. An exception to the principle is found in qui tam or whistleblower provisions

that allow private parties to bring suits on behalf of the government as "relators", i.e.,
private attorneys general, and grant these parties a share of any monetary recovery.
115. Lujan v. Defenders of Wildlife, 594 US 555 (1992).
116. Association of Data Processing Service Organizations v. Camp, 397 US 150
(1970).
117. Abbott Laboratories v. Gardner, 387 US 136 (1967. The presumption is based
on 5 U.S.C.A. 701, 702, 704.
118. 5 U.S.C.A. 701.
119. Universal Camera Corp. v. NLRB, 340 US 474 (1951).
120. Chevron, Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984).
121. Citizens to Preserve Overton Park Inc. v. Volpe, 401 US 402 (1971); U.S. v.
Nova Scotia Food Products Corp. 568 F. 2d 240 (2d Cir. 1977), Motor Vehicle Manu-
facturers' Association v. State Farm Mutual Automobile Insurance Co., 463 US 29
(1983).
638 THE AMERICAN JOURNAL OF COMPARATIVE LAw [Vol. 54

dated paper hearing indiscriminately ossified executive as well as in-

dependent administrative action.
Of course, that the IRAs are subject to a judicial check is in full
keeping with the rule of law. However, the failure to account for any
difference, via some adjustments of the intensity of the court inter-
vention, 12 2 confines the independence of the so-called independent
agency to their relationship to the President. In other words, agen-
cies, regardless of their official placement in the overall administra-
tive structure, appear to be on an equal footing in their relationship
with the judiciary. Administrative independence does not warrant
any specific restraint on the part of the reviewing courts. In light of
the functional similarities among the two types of agencies, this indif-
ference to independence is plausible.

VI.4. Soft-Law Practice

To bypass the stifling effects of the documentary hearing, inde-
pendent as well as executive agencies tend to resort to informality. In
a way, this trend is consistent with an entrenched characteristic of
the American administrative process, which survived the formality
introduced by the APA and is now reactivated in light of the entan-
glement caused by the accretion of procedural requirements. 123 Nego-
tiated rulemaking and the use of non legislative rules exemplify the
trend.
Among the statutes supplementing the APA, the Negotiated
Rulemaking Act of 1990124 deserves special mention. In fact, it codi-
fied a practice that first emerged in labor and environmental regula-
tion. Regulatory negotiation, as it is otherwise called, is a process
through which the agency, the regulated industry and other stake-
holders seek a consensus on a proposed rule. Rejecting a command-
and-control approach to regulation, it purports to shorten the
rulemaking proceeding, to increase compliance, to reduce litigation,
and to produce better rules. However, it simultaneously deprives the
agency of the superiority attached to its nature of public entity,
brings the public interest down to the level of private interests. Thus,
it creates a context of confusion of status of the respective partici-
pants and represented interests at stake, which offers a breeding
ground to regulatory capture. Nevertheless, the resulting disruption
in the conventional principles remains partial because the negotiated

122. As suggested in Justice Jackson's dissent in Federal Trade Commission v.

Ruberoid Co. 343 U.S. 470, 491 (1952): "a determination by an independent agency,
with 'quasi-legislative' discretion in its armory, has a much larger immunity from
judicial review than does a determination by a purely executive agency".
123. Todd Rakoff, The Choice Between Formal and Informal Modes of Administra-
tive Regulation, 52 Admin. L. Rev. 159, 162-170, (2000).
124. Negotiated Rulemaking Act of 1990, Pub. L. No. 101-648, 104 Stat. 4970, 6697
(codified at 5 U.S.C. §§ 561-570 (1994 & Supp. IV 1998)).
20061 RULEMAKING POWER 639

consensus does not possess any legal force. To acquire binding effect,
the rule formulated by consensus must be subject to the notice-and-
comment procedure, although it is assumed that it will be the eventu-
ally promulgated rule. In law, it may, at the maximum, become the
proposed rule published in the Federal Register. Moreover, it is not a
new requirement but an option that agencies may ignore. Therefore,
negotiated rulemaking may be categorized as soft law and it appears
to introduce an extra step into informal rulemaking. To this extent, it
does not quite suffer from the same level of ambiguity that the macro-
agreements experimented between the Institutions and the indus-
tries in environment regulation in the E.U.12 5
The concern for the preservation of the rule-making power of
agencies that can be detected with the American legislator when de-
vising new regulatory mechanisms, is also perceptible in other coun-
tries. The search for regulatory consensus in lieu of the top-down
conventional method echoes that underlying the establishment of the
Internet Forum created in France in the early 2000s. However, a sig-
nificant nuance exists, in the latter case, the informal process, sym-
bolically called, co-regulation, is created outside the agency
possessing rulemaking power,126 whereas, the American negotiation
is decided by the agency vested with the normative power although it
is presided by an independent conveneer.
Beside the 1990 codified compromise between soft and hard law,
agencies make use of some regulatory tools that are listed in the
APA, as a way to regain regulatory flexibility and efficiency. Interpre-
tive rules and policy statements are employed towards this end be-
cause they are not subject to the notice-and-comment requirement.
As they interpret the applicable law or articulate how the agency will
wield its discretion, they provide guidelines to which voluntary com-
pliance is expected. To be successful in the resort to such a strategy,
agencies must formulate and apply these non-legislative rules in a
non-binding fashion. Otherwise, these rules run the risk of being
struck down for subversion of the APA scheme.1 27 Lastly, apart from
the opportunities of soft-rulemaking offered by legislation, agencies
can employ non codified informal techniques of their own such as let-
ters, speeches, news media interviews, threats of enforcement,
presentations at professional meetings to communicate the proper
conduct to be exhibited by regulated parties.

125. Richard Stewart, A New Generation of Environmental Regulation? 29 Cap. U.

L. Rev. 21, 83 (2001).
126. The Telecommunications Regulatory Authority.
127. Community Nutrition Institute v. Young, 828 F. 2d 943 (DC Cir. 1987).
640 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 54