What The Heck Is Negotiated Rulemaking, Anyway?

On June 30, the U.S. Supreme Court upended the Biden Administration’s campaign promise to forgive student debt. As soon as the Court released its decision, President Biden announced the Administration’s plan to “provide student debt relief to as many borrowers as possible, as quickly as possible.”

In his remarks, the President offered three ways in which the Administration would seek to provide loan relief to borrowers. One of the three approaches the President suggested would “allow [Education] Secretary Cardona…to compromise, waive, or release loans under certain circumstances…” by leveraging a public policy process called “negotiated rulemaking.”

Almost overnight, an obscure federal rulemaking process leapt from the world of wonkery, and into the mainstream.

So, what is negotiated rulemaking?

Negotiated rulemaking – or “neg reg” – is a process that many federal agencies use to develop proposed rules that will govern a federal program or the implementation of a federal law.

Neg reg is actually not new to the Department of Education. In fact, the Higher Education Act (HEA), the law which governs the federal government’s involvement in higher education, requires the Department to engage in negotiated rulemaking whenever making changes to student financial aid programs.

But, the process is not always simple or efficient, as many who have been close to the federal negotiated rulemaking processes in higher education will tell you.

If we take a walk down memory lane, back to when the negotiated rulemaking process was developed in the 1980’s, legal reform advocates suggested that if parties were to work together face to face, there might be a greater chance of an outcome favorable to all, over negotiating without in-person meetings.

If only policymaking were actually so amicable.

While the intention of the negotiated rulemaking process is to include as many voices, perspectives, and advocacy positions as possible, the way in which the process is constructed and implemented often leaves little room for consensus building and agreement among stakeholders around the proverbial table.

Critics of “neg reg” argue that the negotiating committees are “stacked” with individuals who are aligned with an administration’s position. And nearly everyone agrees that the time it takes to engage in negotiated rulemaking is arduous, and does not necessarily guarantee an outcome that is any different than what a majority-party Congress may have enacted (if or when they act).

How does negotiated rulemaking work?

Now that the Biden Administration has announced that it plans to engage in negotiated rulemaking on the student loan program, the process to identify the specific topics of negotiation, as well as the negotiators themselves, now begins.

The recent Federal Register notice informs the public that the Department of Education will hold one public hearing on July 18, 2023. At this hearing, parties who are interested in commenting on the topic of rulemaking on the student loan programs can share their perspectives, and also suggest additional topics that the Department may want to consider. From the comments, the agency will synthesize the themes and publish a document in the Federal Register that announces the specific topics that the negotiated rulemaking committee (or committees) will address.

The Department of Education will also provide guidance to the public about how a person may apply or nominate another person to serve on the negotiated rulemaking committee. Once the negotiators are selected and named to the committee (or committees), the work begins.

The Department indicated in the June 30 Federal Register notice that it anticipates holding three sessions of no less than two days each at roughly four-week intervals, to address the issues related to debt forgiveness.

The role of a negotiator

Negotiated rulemaking committees are often composed of 20-25 individuals, nominated by self or others, but ultimately selected by the agency. The final committee can select a facilitator; but frequently, the facilitator is an agency staff member or an individual selected by the agency. This facilitator serves as the chair of the meetings and is charged with ensuring that all viewpoints and perspectives are heard by the committee.

The goal of the negotiated rulemaking committee is to reach consensus on all of the issues in front of the body. This means that every negotiator agrees – unanimously – to the proposed rule under consideration, or that they unanimously agree on any changes that would be made to the proposed rule.

If the committee reaches consensus, they transmit a report to the Department of Education, with all of the proposed rules and actions taken and agreed to by the committee. If the committee does not reach consensus, they transmit a report back to the Department of Education which specifies where they could not agree, or where they may have found partial consensus. Oftentimes, negotiators share supplemental materials and recommendations with the agency, as a means of expressing their particular points of view on the issues at hand. There is nothing that would prohibit a single negotiator from corresponding with the agency regarding their personal position, particularly if the committee fails to reach consensus.

Even if the negotiated rulemaking committee reaches consensus, there is nothing that requires the agency to be bound to that consensus. And, after all the work of the negotiated rulemaking committee, the agency still retains discretion over what is published in the final rule. While it is unlikely that the agency will go in its own direction after consensus is reached, it has happened that federal agencies have published a different version of a rule than the consensus outcome. A prominent example in higher education is the “borrower defense” rule, which has essentially “ping-ponged” across administrations since 2016 and has not always aligned with the will of the negotiated rulemaking committees.

What lies ahead for student debt forgiveness?

While all eyes have been on the Supreme Court and its decision, now the attention turns to the Department of Education and its negotiated rulemaking process. While nothing about the Court’s actions were particularly expedient, if the past is a predictor of the future, there will be nothing particularly expedient about the negotiated rulemaking process, either. It will take time for the Department to review comments after the July 18 hearing and come to an agreement across the Administration on which topics should be included for the committee. It will take time to nominate and name members of the negotiated rulemaking committee. And it will take time for the committee (or committees) to gather, review the issues, come to consensus (or not), and submit a report back to the Department of Education.

And then, even if the committee (remember, through reaching consensus) and the agency align, the Department of Education has to post the final rule(s), seek public comment on those final rules, and then issue the rules before they can be implemented. Federal guidelines require the Department to announce by November of one year the rule(s) that will go into effect in July of the following year.

The likelihood that the Department will be ready to announce new rules authorizing changes to the loan program, including its original loan forgiveness proposal, before November 2023, is extremely low, and in turn significantly lowers the odds that new rules will be in place before June 2024.

Spoiler alert: we are about 15 months away from a presidential election, when a new administration could altogether halt – or start – this process all over again.