In the case of United States v. Florida East Coast Railway (410 U.S. 224 (1973)), the Interstate Commerce Commission (ICC) was having a problem because railroad companies were just borrowing each other’s freight cars instead of building new ones, leading to a shortage. They promulgated a rule imposing a fee for borrowing a freight car in order to encourage railroads to build their own freight cars. The railroad companies sued to overturn this rule.
- The ICC had used an informal rulemaking as defined in APA §553, but the railroads wanted a formal rulemaking as defined in APA §§556-557.
- The ICC’s Enabling Act only said that a ‘hearing’ was required.
- The US Supreme Court found that a formal hearing is only required when the Enabling Act requires that the rule be made “on the record after opportunity for an agency hearing.”
- If the Enabling Act just uses the term ‘a hearing’ (like it did in this case), then an informal rulemaking as defined by APA §553 is perfectly acceptable.
- The Court was very clear that courts cannot impose stricter rulemaking procedures on Agencies beyond what is set out in APA §553 and the Agency’s Enabling Act.
A formal rulemaking is a much more time-intensive process than an informal rulemaking.
- Formal rulemakings require oral hearings and are much more like full trials.
- Informal rulemakings only require a comment period for people to write in with their thoughts about the proposed new rule.
- There are also hybrid rulemakings, which are somewhere in between.
- These are not defined in the APA.
- See Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council (435 U.S. 519 (1978)).