Communications Between the Council of Economic Advisers and the Department of Interior Regarding Proposed Regulations ( 1979 )

January 17, 1979
79-5 MEMORANDUM OPINION FOR THE
SECRETARY OF THE INTERIOR
Administrative Procedure—Rulemaking—
Department of the Interior—Ex Parte
Communications—Consultation with the Council of
Economic Advisers—Surface Mining Control and
Reclamation Act (30 U.S.C. § 1201 et seq.)
On September 18, 1978, the Office of Surface Mining Reclamation and
Enforcement (OSM), acting pursuant to a delegation of authority from
you as Secretary of the Interior under the Surface Mining Control and
Reclamation Act of 1977, 91 Stat. 445, 30 U.S.C. § 1201 et seq. (the 1977
Act), published a notice of a proposed rulemaking in the Federal Register.
The notice (1) stated that the rulemaking was intended to establish “ a
nationwide permanent program for the regulation of surface and under­
ground mining operations by the States and the Federal Government as
required by” the 1977 Act; (2) set forth the text of proposed rules; (3) an­
nounced that public hearings on the rules would be held at certain desig­
nated places during October 1978; and (4) invited written or oral com­
ments from the public for a 60-day period ending November 17, 1978.
During the comment period the Regulatory Analysis Review Group
(RARG), at the direction of the President, reviewed the proposed rules
and submitted a report containing a number of comments. The Council of
Economic Advisers (CEA) is an active member of RARG, and it partici­
pated in the preparation of this report. After the close of the comment
period, the Chairman of CEA and the Assistant to the President for
Domestic Affairs and Policy were asked to consider several questions
related to the proposed rules. This Office has been asked to consider
whether—and pursuant to what limitations—CEA members and staffers
may meet with you and members of your OSM staff to discuss in greater
detail their concerns about several portions of the rules.
The questions we have been asked are, first, whether there is any
statutory or constitutional prohibition against consultations between the
Department of the Interior (Interior) and CEA; second, provided that
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consultations are appropriate, what are the necessary procedures to insure
compliance with the requirements imposed by recent decisions of the U.S.
Court of Appeals for the District of Columbia Circuit.
For the following reasons, we conclude that no prohibition against com­
munications within the executive branch after the close of the comment
period exists; that nothing in the relevant statutes or in the decisions of the
D.C. Circuit Court suggests that full and detailed consultations between
parties charged with promulgating the rules and the President’s advisers
are barred. The rulings of the D.C. Circuit Court, however, suggest that it
may be inappropriate for interested persons outside the executive branch
to conduct ex parte communications with the Secretary and his staff. If
that is so, we believe that the D.C. Circuit Court would disapprove of
CEA or other advisers to the President serving as a conduit for such ex
parte communications. In order to prevent CEA from serving as a con­
duit, we recommended the procedure outlined in detail in the attached let­
ter from this Office to CEA of December 28, 1978. We have concluded
that by adhering to these procedural steps, as we understand Interior and
CEA have done, there has been proper compliance with the law as it has
developed in the D.C. Circuit Court.
I. Procedure
We understand that each of the following procedural steps has now
been implemented:
(1) The CEA staff has compiled a record of all the oral and
written communications with private persons interested in the
proposed rules. This catalog outlines the content of all the com­
munications as accurately and fully as possible. For the sake of
completeness, it also includes recollections of CEA conversations
with other executive branch agencies.
(2) Following receipt and review of this material, OSM made it
available to the public in the document room at the Department
of the Interior. At the same time OSM published a statement in
the Federal Register of January 4, 1979, acknowledging and ex­
plaining the reason for this addition to the administrative record.
The statement also announced the reopening of the record to
allow comments on factual material contained in the submission.
A period of 18 days will be permitted in which appropriate com­
ments may be submitted by the public. At the close of that period
OSM will review and analyze these comments. To assure the wid­
est public availability of the CEA documents, copies of the com­
plete packet have been delivered to every Regional Office of your
Department. An effort was also made to contact directly State
governments likely to have an interest in reviewing this material.
(3) Once the compilation was made publicly available and
the notice was forwarded to the Federal Register for publication,
the CEA Chairman and/or his staff conferred with OSM on
particular portions of the proposed rules. First meeting was
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in January 1979, and there have been a few brief subsequent
communications.
(4) Although no changes were made in the proposed rules as a
result of these consultations, if any communications made dur­
ing this consultation process did become in part the basis for the
Secretary’s final decision concerning the rulemaking, their rela­
tionship to that decision would be fully spelled out with the
promulgation of the final rule. The record may not be further re­
opened prior to the final decision unless you propose to rely on
information not included in the record and subjected to reason­
able public comment in advance of your final decision.
(5) During the period of consultation, the participants were
asked to refrain from communicating with other persons inter­
ested in the rulemaking, including other executive branch officials,
if those officials have either directly or indirectly had contacts with
non-Govemment persons having an interest in the rulemaking.
II. Participation by CEA in the Decisionmaking Process
The first question is whether either the Constitution or relevant statutes
prevent the President’s economic advisers from conferring with you. The
basic constitutional presumption favors communication and consultation
within the executive branch in the process of formulating rules and pro­
cedures. While some matters may be of quasi-adjudicatory nature, to
which communication with the decisionmaker would seem improper, in
the much larger category of executive actions barriers to free communica­
tion between and among the President’s advisers should not be lightly
assumed. The President is charged under Article II, section 3, of the Con­
stitution to insure that the laws are faithfully executed. In Myers v. United
States, 272 U.S. 52, 135 (1926), the Supreme Court stated:
The ordinary duties of officers prescribed by statute come under
the general administrative control of the President by virtue of the
general grant to him of the executive power, and he may properly
supervise and guide their construction of the statutes under which
they act in order to secure that unitary and uniform execution of
the laws which Article II of the constitution evidently con­
templated in vesting general executive power in the President
alone. Laws are often passed with specific provision for the adop­
tion of regulations by a department or bureau head to make the
law workable and effective. The ability and judgment manifested
by the official thus empowered, as well as his energy and stimula­
tion of his subordinates, are subjects which the President must
consider and supervise in his administrative control.1
1 We note that other language in Myers makes unclear whether the mode of supervision
contemplated by the Court in the language quoted in the text above was limited to the power
of removal or whether that supervision could take less drastic forms, such as consultation.
See 272 U.S. at 135.
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We believe that, albeit dictum, this language is a correct statement of the
principle that Congress, in delegating rulemaking authority to department
heads, who are subject to the President’s removal power under Article II,
section 2, class 2, of the Constitution, must be assumed to have recognized
the inherent power of the President to supervise the exercise of that
authority. We also believe that this supervisory power of the President,
and the duty of the department heads to report to the President concerning
the discharge of their offices,2 carry with it the constitutional right of the
President to receive and give advice to his subordinates relating to the dis­
charge of their duties. See, e.g., United States v. Nixon, 418 U.S. 683(1974).
The only substantial issue is, in our view, whether Congress has at­
tempted, by statute, to limit or otherwise regulate participation (in the de­
cisionmaking process) by the Chairman or any other Federal official not
within Interior. We think the answer to this question is an unqualified
negative.
Before discussing those statutes that could arguably place some limits
on the Chairman’s participation, we would observe that Congress has
demonstrated a full awareness of the means by which it may attempt to
regulate interagency review of proposed rules. For example, in § 305(a) of
the Clean Air Act Amendments of 1977, 42 U.S.C. § 2607(d)(4)(B)(ii),
Congress specifically required that written comments by agencies partici­
pating in interagency review of rules be placed on the record of the rule-
making conducted by the Administrator of the Environmental Protection
Agency. That provision also recognizes that such written comments may
be made at any point in the process, both prior to the publication of the
notice of rulemaking and after the close of the public comment period.
It is particularly significant that neither the language of 305(a) nor its
legislative history suggests in any way that Congress was enlarging, or
needed to enlarge, an affirmative power of the President to conduct such
interagency review.3 Furthermore, we believe that Congress’ refusal to ex­
tend the requirement of § 305(a) to oral communications was a recognition
of the right of the President and his subordinates to communicate in con­
fidence their views on issues raised by rulemaking governed by that
provision.
The question whether the relevant statutes, here § 4 of the Ad­
ministrative Procedure Act, 5 U.S.C. § 553, and § 501 of the 1977 Act, 30
U.S.C. § 1251, in any way limit the authority to conduct interagency
review of the rule at issue may be disposed of readily. Nothing in the lan­
guage of the statutes or their legislative history suggests an intent to limit
or otherwise to regulate the interagency review that has been accorded this
rule. Furthermore, we believe that the Supreme Court’s recent decision in
Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense
2 Constitution of the United States, Art. II, § 2, cl. 1.
1 See H. Rept. 294, 95th Cong., 1st sess., 319-20 (1977); H. Rept. 564, 95th Cong., 1st
sess., 177-78 (1977).
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Council, Inc., 435 U.S. 519, 547 (1978), indicates that § 553 is an affirma­
tive grant of power to agencies to devise procedures most congenial to the
rulemaking conducted by them. Thus, we think it clear that a procedure
adopted by an agency to secure the views of other interested agencies on
specific rules is within the ambit of the power conferred by § 553. We
therefore turn to the question whether the procedures set forth in part I
above are a reasonable exercise of that power.4
III. The D.C. Circuit Court Cases
In two cases, Home Box Office, Inc. v. FCC, 567 F. (2d) 9 (D.C. Cir.
1977), cert, denied, 434 U.S. 829 (1977), and U.S. Lines, Inc. v. Federal
Maritime Commission, 584 F. (2d) 519 (D.C. Cir. 1978), panels of the D.C.
Circuit Court of Appeals have indicated that so-called ex parte communica­
tions between persons interested in an “ informal” rulemaking and the rule-
making agency must be generally disclosed on the record. Those cases also
indicate that, at least where such contracts may have substantially influ­
enced or provided a basis for the rule finally adopted, their substance must
have been subjected to adversary comment by other interested persons.
Although the Supreme Court’s decision in Vermont Yankee, as well as
decisions by other panels of the D.C. Circuit Court,5 cast considerable
doubt on the correctness and applicability of these court-fashioned ex
parte rules in the present context, we believe that the procedures in Part I
satisfy Home Box Office and U.S. Lines. The procedures were drafted
with these two cases in mind and they reflect our best efforts to satisfy the
several requirements of the cases. First, they place in the administrative
record the substance of all so-called ex parte communications between
private persons and the Chairman and his staff since the notice of pro­
posed rulemaking was published. Every document that CEA received and
reviewed has been transmitted to OSM and the substantive details of every
telephone conversation have been disclosed. Thus, in our view, there is no
longer any. reasonable likelihood that in meeting and discussing the pro­
posed rules CEA will be transmitting any off-the-record ex parte informa­
tion. Secondly, the procedures devised here give to any interested person
the right to comment on those communications for a reasonable period
4 We are advised that no departmental regulations in effect from September 18, 1978 to the
present would in any way conflict with the procedures set forth in Part I. On August 10,
1978, a document entitled “ Public Participation in Decisionmaking—Interim Guidelines and
Invitation for Comment,” was published in the Federal Register, 43 F.R. 35754-57, outlin­
ing your proposed policy regarding public participation in rulemaking. Nothing in those
guidelines appears to be inconsistent with the procedures set forth in Part I. Nor would this
procedure appear to conflict with the notice of procedures for public participation issued by
your Department on June 12, 1978, establishing the policy for public participation at the pre­
notice state of this rule, 43 F.R. 25881-82 (June 15, 1978), or the proposal of the rule itself,
43 F.R. 41661 et seq. (Sept. 18, 1978).
* See, Action fo r Children’s Television v. FCC, 564 F. (2d) 458 (D.C. Cir. 1977); Hercules,
Inc. v. EPA, 598 F. (2d) 91 (1978).
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of time. The reopening of the record for this limited purpose has been
undertaken to insure that any information communicated by CEA that
was made a part of the record has been subjected to the fullest and fairest
scrutiny.6 In fact, we have been advised both by CEA and by OSM staff
that the predominance of material released was already in the record
developed during the comment period. Indeed, most of the information,
insofar as CEA found it to be relevant, was included in the RARG Report
which, as you know, was incorporated into the record during the comment
period and was itself subjected to considerable public scrutiny.
The only question that remains under Home Box Office and U.S Lines
is whether those cases require that the meetings and communications be­
tween your staff and CEA must themselves be placed in the public record.
Neither case dealt with intra-executive branch communications; in both
the ex parte contacts were made by interested persons outside the decision­
making process. Moreover, we think the purposes underlying the holdings
in these cases are fully served by a requirement that all contacts with per­
sons outside the Government be disclosed. It was not the purpose of the
court to alter the ordinary way in which decisions are made by those
charged with promulgating rules. Just as there is no bar in those opinions
against confidential consultation between the Secretary and his assistants,
we find no bar to communications from others within the executive branch
so long, of course, as the communications are not the vehicle for the in­
direct transmission of off-the-record, ex parte information from interested
persons outside the Government. For the reasons outlined in our discus­
sion of the role of the Chief Executive in overseeing the rulemaking proc­
ess, we would be most reluctant to infer a prohibition or other restraint
against a full exchange of views among the President’s advisers. To the
contrary, Congress has frequently demonstrated sensitivity to the need to
preserve open lines of communication for the exchange of views and to im­
prove the deliberative process within the executive branch. Exemption
(b)(5) in the Freedom of Information Act, 5 U.S.C. § 552 (b)(5), stands as
the clearest evidence of Congress’ continuing acknowledgment of the
practice of confidential communications.
Finally, we should reiterate that to permit confidential communications
6 Reopening the record for the restricted purpose of allowing comment on the CEA
disclosure document is somehow unfair to other interested persons who might wish to make
additional comments after the 60-day formal comment period closed. Indeed, we understand
that a number of comments have been received by OSM after the close of the comment
period but that it has declined to review and consider them. We believe that a limited reopen­
ing is appropriate in this case. The purpose of the reopening is quite simply to assure closest
compliance with these D.C. Circuit Court decisions while allowing executive branch officials
to fulfill their responsibilities. As the disclosure documents prepared by CEA demonstrate,
this procedure was not intended to provide, nor will it have the effect of providing, a means
o f funnelling tardy industry or other interested persons’ comments to the agency decision­
maker. Virtually all the comments received by CEA were made during the public comment
period and are already in the record. Given these facts, we think it reasonable to reopen
without launching anew the rulemaking process.
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between Interior and the President’s economic advisers will not frustrate the
basic requirements of the Administrative Procedure Act and of the 1977
Surface Mining Act that the foundation and rationale for ultimate rule-
making determinations be spelled out and be subject to close public and
judicial scrutiny. To whatever extent your views are premised upon
economic or other considerations arising in the course of your discussions
with CEA, those considerations must (1) have their origin somewhere in the
record you have developed over the last few months, and (2) be articulated
in your final rule. These requirements having been met, and the other pro­
cedures satisfied, we see no substantial basis for a claim that the rules
themselves are arbitrary or capricious, or that the rulemaking process has
been otherwise flawed.
Larry A. H am m ond
Acting Assistant Attorney General
Office o f Legal Counsel
Attachment
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December 28, 1978
Mr. Peter G. Gould
Special Assistant to the Chairman
Council of Economic Advisers
Executive Office Building
Washington, D.C. 20506
Dear Peter:
This letter is to confirm the conversations we have had over the last
several days with respect to the Council of Economic Advisers’ (CEA’s)
participation in the Office of Surface Mining’s (OSM’s) regulations. The
following items have been discussed fully with Leo Krulitz and, more
recently, with Bill Eichbaum, at the Department of Interior. We have also
reviewed this matter carefully with Jim Moorman and his staff in our
Land and Natural Resources Division. It is our view that the following
procedures are fully compatible with the relevant statutes and case law
with respect to the informal rulemaking process:
(1) CEA staff members are in the process of preparing a
catalogue of all oral and written communications they may have
had with parties interested in OSM’s proposed strip mining regu­
lations. It is understood that the compilation of these contacts
will reflect, as completely as reasonably possible, the content of
all such communications. This Office will assist you in assuring
that this material is set forth in as complete and accurate a form
as reasonably possible. Hopefully, we will be able to transmit
this material to OSM on Tuesday morning, January 2, 1979.
(2) Knowledgeable people at OSM will review this compilation
as soon as it is received and will ascertain what portions, if any,
of the material constitute new matter not already set forth on the
record of this rulemaking proceeding. Of course, staff people at
CEA should be able materially to assist in this process, since you
also have a comprehensive knowledge of the record.
(3) As soon as reasonably possible following the receipt and
review o f this material, OSM will make it available to the public
in the document room at the Department of the Interior. At the
same time OSM will have published in the Federal Register a
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statement acknowledging and explaining the reason for the sup­
plementation of the record in this respect. The statement will also
announce the reopening of the record to allow comments on
whatever new factual material may be contained in this submis­
sion. A period of ten days will be permitted in which appropriate
comments may be submitted by interested parties. At the close of
that comment period OSM will review and analyze these com­
ments in the same manner in which it has in the past analyzed
comments accumulated during the public notice and comment
period.
(4) It is the judgment of this Office that once this compilation
of third-party communications has been made publicly available
and the notice has been transmitted to the Federal Register for
publication it will then be appropriate for the Chairman and
staff personnel at CEA to participate in the decisionmaking
process in whatever fashion is most productive. We understand
that you envision one or more meetings to discuss particular por­
tions of the proposed rules. Those meetings need not be con­
ducted on the record. I have advised, however, that you maintain
a.record of the agenda items discussed with OSM so that, if
necessary, we can identify at a later time those portions of the
regulations that were the subject of your communications.
(5) To the extent that your meetings and communications
become in part the basis for the Secretary of Interior’s final deci­
sion, of course, the substantive basis for that decision will be
spelled out on the record. It will not be necessary for the Secre­
tary to allow any additional reopening of the record at this later
stage unless, through some failing in the procedure we have
developed, the Secretary’s ultimate judgment is based indirectly
on third-party communications that were not included in the
record and subjected to reasonable comment.
(6) During this period of consultation between CEA and OSM
the Chairman and CEA staff members will refrain from having
any further communications with parties interested in these pro­
posed regulations. In order most carefully to assure the propriety
of this process we have also advised you to refrain from having
communications with other executive branch officials if those of­
ficials have, themselves, had contacts with outside parties with
respect to these regulations.
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As I have stated above, it is our view that these several steps carefully
pursued will assure the legality of the informal rulemaking proceeding. We
have begun the drafting of and will complete early next week a legal opin­
ion discussing the several bases for this conclusion.
Sincerely,
Larry A. H am m ond
Acting Assistant Attorney General
Office o f Legal Counsel
cc: Mr. William Eichbaum
Office of the Solicitor
Department of the Interior
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