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)).