Formal Rulemaking
Rule
APA §§ 556–557 trial-type procedures apply to rulemaking only when the agency’s organic act requires the rule to be “made on the record after opportunity for an agency hearing” — the “magic words” formulation. United States v. Florida East Coast Railway (1973). In the absence of such language, informal § 553 notice-and-comment procedures govern.
Elements / Test
- Examine the organic act: does it require a rule to be made “on the record after opportunity for an agency hearing” (or equivalent language)?
- If yes, §§ 556–557 apply: witnesses, sworn testimony, transcript, cross-examination (except for benefits adjudications), and decision based solely on the record.
- If the organic act merely says “after hearing,” this does not trigger §§ 556–557 (Florida East Coast Railway distinguishing Allegheny-Ludlum).
- § 556(d) escape clause: formal rulemaking may dispense with oral presentations and cross-examination “when a party will not be prejudiced thereby.”
Exceptions
- Very few organic statutes invoke full “on the record” language (notable exception: FDA statute).
- Formal rulemaking is the default for formal adjudication, not for rulemaking (different trigger provisions: § 553(c) vs. § 554(a)).
Policy
- Trial-type procedures are ill-suited to “legislative” fact-finding in rulemaking, which involves broad policy judgments better made on paper.
- FECR eliminated formal rulemaking from most contexts, channeling agencies to informal § 553 procedures.
- Hybrid rulemaking (cross-examination on critical issues) was rejected as unauthorized by courts after Vermont Yankee.
Key Cases
- United States v. Florida East Coast Railway — “magic words” required to trigger formal rulemaking
- Vermont Yankee Nuclear Power Corp. v. NRDC — courts may not impose hybrid rulemaking procedures