According to the Federal Administrative Procedure Act (APA), a new rule formulated by an agency should contain adequate statement of the basis and purpose of the rule. Further, a report of proceedings or statements of action including the actual regulation should be published by the rulemaking agency. If the basis and purpose of a rule are obvious from the reading of a rule, a statement to that effect will not be necessary. A rule may be invalidated under the Federal APA if an agency fails to explain the rule adequately.
All facts, opinions or comments received on proposed rule need not be referred to in the statement, but there should be an explanation of the general basis for the rules chosen. The statement must indicate the major issues of policy raised, and explain the reason why the agency responded in the particular manner. The information that has to be in the statement is based on the subject of the regulation and the nature of the comments received on the proposed rule. A statement of the regulation’s basis and purpose has to be satisfactory for a Court reviewing the rules. The statement should prove that the rules are based on the relevant factors, and not arbitrary. It should enable the courts to be aware of the legal and factual framework underlying the agency’s actions, demonstrate what major issues of policy were resolved, and respond in a reasoned manner to those comments that raise significant problems. The basis and rationale of the agency’s action should also be specified on the statement.
A rule made by an agency can be invalidated by a reviewing court if the statement does not explain the facts adequately. Although, the statement need not be exhaustive of all the facts in detail, it may need to provide a higher degree of factual support if the governing statute requires that the rule be supported by substantial evidence. A statement of the regulation’s basis and purpose should address criticisms of the data which the agency relied upon in formulating its new rules. It should also contain alternatives suggested by commenters.
The statement of the regulation’s basis and purpose should accompany the publication of the rule. Such statement should be pubished around the same time as the rule. It need not be published at the same exact time as the regulation but can’t follow too long behind it either.