What is negotiated rulemaking and why is it important to financial aid administrators?
Negotiated rulemaking is the process federal agencies use to formulate rules and regulations. Some rules and regulations focus on new legislation or legislative directives from Congress while others improve current regulations that need some tweaking because they are too administratively burdensome to comply with or because they aren't fulfilling their legislative intent.
Negotiated rulemaking began in the 1980s, but wasn't used extensively until the Negotiated Rulemaking Act of 1990 encouraged all federal agencies to use it to enhance the rulemaking process.
Negotiated rulemaking begins when a federal agency (in the case of federal student aid the Department of Education) convenes an advisory committee to discuss proposed regulatory changes. The committee consists of 12 to 25 individuals who represent parties that would be affected by the rules. The advisory committee attempts to draft proposed rules by consensus, usually meaning unanimous agreement (not majority) by all participants. While this is the usual definition of consensus, the Administrative Procedure Act allows each committee to define consensus differently.
Pros and Cons of Negotiated Rulemaking
In most cases negotiated rulemaking for the federal student aid programs leads to better rules and regulations that are easier to implement and better benefit intended financial aid recipients. It allows those affected by the rules to give direct input into their feasibility. Rules drafted under this process also tend to be more technically accurate, clear, and have been found to be less likely to be legally challenged in the future.
However in some cases, negotiated rulemaking can become highly contentious when participants fail to reach any consensus. Such was the case last year in the negotiated rulemaking sessions that focused on federal student loans and the ACG and National SMART Grants.
When negotiators fail to reach consensus, the federal agency is permitted to continue its rulemaking process without considering any of the input from negotiators. When negotiators failed to reach consensus last year, the Department drafted its own rules. In such cases, the Department says it tries to draft rules in accordance with agreements reached during the rulemaking sessions. But in some instances, the Department drafts regulations that some or all negotiators disagree with.
Ultimately, it should be remembered that negotiated rulemaking is a voluntary process. Even in instances where there is consensus, there are no laws constraining any agency to abide to the rules drafted during negreg. Federal agencies are directed to always act in the best interest of the public and are not bound to agreements forged during negreg. However, changing rules where consensus has already been reached would certainly undermine the credibility of the agency and the negreg process.
How To Get Involved
Public comment - while sometimes allowed - is not really part of negreg. Instead, interested parties are encouraged to work through the negotiators who represent them. After the negotiated rulemaking process the Department will still issue a Notice of Proposed Rulemaking (NPRM) where the public is allowed to submit comment before issuing final rules, which are usually implemented during the following year.
Interested parties should not wait until the public comment period to get involved. It is critical that the student aid community work through their associations and/or the committee members directly during the negreg process, when their opinions are likely to have the most impact. Certainly changes to rules can result from public comment after the NPRM, but concerns are better handled when raised before the regulations are even drafted into an NPRM. Let your voice be heard in the negotiated rulemaking process by contacting NASFAA directly at negreg@nasfaa.org.
By Justin Draeger
NASFAA Assistant Director for Communications
Posted 01/08/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
