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
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
These are not defined in the
See Vermont Yankee
Nuclear Power Corp. v. Natural Resources Defense Council (435 U.S. 519 (1978)).