Negotiated RulemakingPresented at EASFAA May 2013by Janice Dorian, Betsy Hicks and Eileen O’Leary

1

What we hope you will learn today

• What negotiated rulemaking is and how the process works

• What our experiences with negotiated rulemaking have been

• How and why you should participate

2

Definition of negotiated rulemaking

• Known colloquially as “neg reg”

• A process in American administrative law used by federal agencies in which representatives from a government agency work to develop regulations in collaboration with significantly affected parties

• An alternative to traditional rulemaking which only allows for public input after the Notice of Proposed Rulemaking (NPRM) is published

3

Origins of negotiated rulemaking

• Emerged as a concept in the late 1970’s and as a potential solution to traditional rulemaking in the early 1980’s

• First federal agencies to experiment were Environmental Protection Agency (vehicle emissions and pesticide regulations) and Department of Transportation (flight and duty time regulations for airline flight crews)

• Other agencies were reluctant to use it out of concern for its legality until Congress enacted the Negotiated Rulemaking Act of 1990, which was reauthorized in 1996 and then incorporated into the Administrative Procedures Act 4

History of negotiated rulemaking for Title IV programs• The HEA Amendments of 1992 mandated negotiated

rulemaking for Title IV programs as well as public hearings to obtain input on issues to be negotiated

• ED began implementation of negotiated rulemaking within weeks after President Bush signed the bill

• First negotiations were held in January 1993 and the issues centered on the program integrity triad

5

Overview of process

• Publish notice of intent to regulate, including issues

• Obtain feedback on issues through public hearings and solicitation of written feedback

• Select negotiators

• Convene meetings for negotiators

• Publish Notice of Proposed Rulemaking (NPRM)

• Publish Final Regulations6

Selection of negotiators

• Notice in the Federal Register (issues, schedule, solicitation of nominations)

• Typical number of non-federal negotiators on committee consists of 12-15 seats (with primary and alternate for each seat)

• Individuals are nominated, or nominate themselves, and include information on: constituency to be represented, expertise and experience in issues to be negotiated, evidence of support from constituency, and commitment to participate in good faith

• ED selects committee members that reflect diversity in industry7

Negotiations

• Typically three meetings, of three to five days each, held at a monthly interval

• Facilitated by a neutral third-party

• First meeting: adopt protocols, finalize committee members, finalize agenda, orientation to issues

• Second meeting: begin negotiations, reach tentative agreement on each issue separately, including regulatory and preamble language

• Third meeting: continue with negotiations, reach tentative agreement on each issue separately, including regulatory and preamble language, and reach consensus on all issues

8

Rules of engagement

• Consensus means unanimous concurrence among committee members on all issues being negotiated

• Absence or silence equates with no dissent

• All agreements are tentative until all of the issues are considered

• Members may not withdraw their consensus once given

• ED uses consensus-based regulatory language in its NPRM and negotiators and those persons and entities whom they represent may not comment negatively

9

Consequences of not reaching consensus

• ED determines whether to proceed with regulations

• If proceeds, may use regulatory language developed during the negotiations as the basis for its NPRM, or develop new regulatory language for all or a portion of its NPRM

10

Publish regulations

Publish NPRM in the Federal Register Publish Final Regulations in the Federal Register

• Regulatory language • Summary of comments

• Preamble language • ED’s response to comments

• Request for public comments with deadline

• Explanation of any changes made to the regulations that differ from proposed regulations

11

Why each negotiated rulemaking process is unique• Negotiation is intrinsically a process that cannot be specified

entirely in advance

• What works in a particular case depends on a number of factors such as:

• Substantive issues• Perception of agency’s position by affected parties• Authority of party representatives in negotiations• Negotiating style of the representatives• Divergence of view within each constituency represented• Skill of agency personnel• Skill of mediator

12

Characteristics of successful negotiated rulemakings• All interest groups, including the regulatory body, must be

represented at the negotiating table by persons of sufficient authority to make decisions

• Shared vision among committee members that a negotiated rule is preferable to a rule developed under traditional processes

• Balance of power among the parties, including the regulatory agency

• Active mediator involved in the actual negotiation, helping the parties agree by narrowing their substantive differences

13

Characteristics of successful negotiated rulemakings• Appropriate use of caucuses to resolve conflicting interests and/or

agree on a negotiating strategy

• Use of work groups to prepare proposals for the committee as a whole

• Issues must be ripe for resolution and sufficiently multifarious to allow trade-offs

• Opportunity for mutual gain, that is “win-win” bargaining

• Definitive deadline

• Lots of unhealthy snack food14

Eileen’s experiences

• Primary negotiator in 2006-2007 Negotiated Rulemaking on Student Loan Issues

• Primary negotiator in 2008 Negotiated Rulemaking on Student Loan Issues

• Nominated both times by• Senator Edward Kennedy• National Direct Student Loan Coalition

15

2006-2007 Neg Reg Participants

16

Constituency NegotiatorsStudents Jennifer Pae, United States Student Association

Alternate: Luke Swarthout, State Public Interest Research Groups

Legal Assistance Organizations Deanne Loonin, National Consumer Law Center Guaranty Agencies Scott Giles, Vermont Student Assistance Corporation

Alternate: Rachael Lohman, Pennsylvania Higher Education Assistance Agency

Lenders Tom Levandowski, Wachovia Corporation Alternate: Ms. Lee Woods, Chase Education Finance

Secondary Markets Phil Van Horn, Wyoming Student Loan Corporation Alternate: Robert L. Zier, Indiana Secondary Market for Education Loans

Loan Servicers Robert Sommer, Sallie Mae Alternate: Wanda Hall, EdFinancial Services

Guaranty Agency Servicers Richard George, Great Lakes Higher Education Guaranty Corporation Alternate: Gene Hutchins, New Jersey Higher Education Student Assistance Authority

Institutions of Higher EducationPerkins Loans Schools Alisa Abadinsky, University of Illinois at Chicago

Alternate: Karen Fooks, University of Florida

Direct Loans Schools Eileen O'Leary, Stonehill College Alternate: Christine W. McGuire, Boston University

Public Two-Year Darrel Hammon, Laramie Community College Alternate: Kenneth L. Whitehurst, North Carolina Community Colleges

Public Four-Year Pamela W. Fowler, University of Michigan Alternate: Patricia McClug, University of Wyoming

Private Four-Year Elizabeth Hicks, Massachusetts Institute of Technology Alternate: Ellen Frishberg, Johns Hopkins University

Proprietary Jeff Arthur, ECPI College of Technology Alternate: Robert Collins, Apollo Group, Incorporated

HBCUs Shari Crittendon, United Negro College Fund Alternate: Dr. N. Joyce Payne, National Association of State Universities and Land Grant Colleges

Topics for 2006-2007 Neg Reg• Entrance Counseling for Grad/Professional GPLUS Borrowers• Loan Discharge requirements in cases of Identity Theft• Use of Preferred Lenders• Prohibited Inducements• Eligible Lender Trustees (ELT’s)• Frequency of Capitalization of Interest• Maximum Length of Loan Periods • Economic Hardship Repayment Options• Income Contingent Repayment Formula & Family Size• Retention of Disbursement Records (MPN)• Certification of E-Signatures on MPNs assigned to Dept. of ED• Use of “True & Exact Copy” of death certificates for discharge• Retroactive charge for the permanently & totally disabled• NSLDS Reporting Timeframes and Requirements• Assignment of defaulted Perkins Loans• Definition of “Reasonable and Affordable” collection costs

Final consensus was reached!

17

2008 Neg Reg Participants:Community of Interests Primary Negotiator Alternate NegotiatorStudents Luke Swarthout Rebecca Thompson Grad/Prof Students Carrie Steere-Salazar Radhika Miller

Legal Aid Deanne Loonin Lauren Saunders 4-year Public InstitutionsAllison Jones Anna Griswold 4-year Private Institutions Eileen O’Leary Kathleen Koch 2&4 yr Public Institutions George Chin John Curtice

For-Profit Institutions Mark Pelesh Tammy Halligan Lenders, For-ProfitTom Levandowski Walter Balmas

Lenders, Not-For-Profit Scott Giles Phil Van Horn Guaranty AgenciesGene Hutchins Dick George Servicers Wanda Hall Rob Sommers

Collection Agencies Martin Darnian Carl Perry AssociationsAnne Gross Larry Zaglaniczny Department of Education Dan Madzelan

18

Topics for 2008 Neg Reg

• Income Based Repayment rules• Economic Hardship Deferment in IBR• Loan Rehabilitation• Repayment plan• Public Service Loan Forgiveness• Definition of a Not for Profit Holder• HEROES waivers and benefits coordination• Federal Preemption of State Law related to Improper Inducements

and School as Lender Arrangements

• Final consensus was reached on April 14, 2008, 5:50 p.m. EST, on all issues of the proposed regulations for loan issues regarding implementation of the College Cost Reduction and Access Act of 2007.

19

Janice’s experiences

Represented proprietary as the primary negotiator for two negotiated rulemakings sessions.

• William D. Ford Direct Loan Program: January 1994 through July 1994

• Re-Authorization of the Higher Education Act of 1968: January 1999 through July 1999.

Numerous Sessions as assisting the Primary and Alternate Negotiator during and between Sessions. Topics ranged from Loans, Re-authorization , and most recently Program Integrity including the Accreditation, State Authorization and Gainful Employment. 20

Betsy’s experiences

• Four negotiated rulemakings, exclusively on loan issues, over a twenty year period

• Represented four year privates – three times as the primary negotiator and once as the alternate

• Two sessions ended with consensus, two did not

• As Deputy Assistant Secretary for Student Financial Assistance Programs from 1995-1998 responsible for overseeing negotiated rulemaking

21

How to Participate1. Read the Notice of Proposed Rulemaking (NPRM)2. Send comments on any issues of concern or agreement to

address listed in NPRM3. Attend one of the announced hearings on the NPRM that are

held around the country Speak publically at the hearing or Submit written testimony only at the hearing Or simply go to listen and learn

4. Volunteer to be a Negotiator Send letter to ask to be a negotiator to person/address listed in NPRM Seek endorsements in support of your request from others, eg., your

college president, your senator or congressman, from another organization like EASFAA

3. If selected, attend and participate in Neg Reg (at your institution’s expense)

22

Why Participate

• Fascinating experience• Great resume builder• Good networking opportunity

Eileen’s philosophy:

S/he who does not participate in the process, forfeits the right to complain about the results! 23