Doc. p. 358). It is equally clear that the exemption is not limited to strictly diplomatic functions, because the phrase "diplomatic function" was employed in the January 6, 1945 draft of S. 7 (Senate Comparative Print of June 1945, p. 6; Sen. Doc. p. 157) and was discarded in favor of the broader and more generic phrase "foreign affairs function". In the light of this legislative history, it would seem clear that the exception must be construed as applicable to most functions of the State Department and to the foreign affairs functions of any other agency.

"(2) any matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts". The exemption for matters relating to "agency management or personnel" is self-explanatory and has been considered in the discussion of "internal management" under section 3. The exemption of "any matter relating *** to public property, loans, grants, benefits, or contracts" is intended generally to cover the "proprietary" functions of the Federal Government. 92 Cong. Rec. 5650 (Sen. Doc. p. 358). It will be helpful to consider the implication of each of these phrases separately.

Public Property. This embraces rules issued by any agency with respect to real or personal property owned by the United States or by any agency of the United States. Thus, the making of rules relating to the public domain, i.e., the sale or lease of public lands or of mineral, timber or grazing rights in such lands, is exempt from the requirements of section 4. The exemption extends, for example, to rules issued by the Tennessee Valley Authority in relation to the management of its properties, and by the Maritime Commission with respect to ships owned by the United States. The term "public property" includes property held by the United States in trust or as guardian; e.g., Indian property. H.R. Rep. p. 23 (Sen. Doc. p. 257).

Loans. This exempts rules issued with respect to loans by such agencies as the Reconstruction Finance Corporation, the Commodity Credit Corporation, and the Farm Credit Administration. It also exempts rules relating to guarantees of loans, such as are made by the Federal Housing Authority and the Veterans Administration, since they are matters relating to public loans.

Grants. Rule making with respect to subsidy programs is exempted from section 4. "Grants" also include grant-in-aid programs under which the Federal Government makes payments to state and local governments with respect to highways, airports,

unemployment compensation, etc.

Benefits. This refers to such programs as veterans' pensions and old-age insurance payments.

Contracts. All rules relating to public contracts are exempt from section 4. The exemption extends to wage determinations made by the Labor Department under the Davis Bacon Act (40 U.S.C. 276a et seq.) and the Walsh Healey Act (41 U.S.C. 35-45), as conditions to construction and procurement contracts entered into by the Federal Government. See Perkins v. Lukens Steel Co., 310 U. S. 113 (1940).

SECTION 4(a)—NOTICE

Subsections (a) and (b) of section 4 must be read together because the procedural requirements of subsection (b) apply only where notice is required by subsection (a). It is clear that the requirements of "general notice of proposed rule making" apply only to rule making proposed or initiated by an agency; the filing of a petition under section 4 (d) does not require an agency to undertake rule making proceedings in accordance with subsections (a) and (b). H.R. Rep. p. 26 (Sen. Doc. p. 260).

An agency contemplating the issuance of a rule subject to section 4 (a) must publish in the Federal Register a notice of the proposed rule making, "unless all persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law". The reason for the quoted exception is to avoid burdening the Federal Register with notices addressed to particular parties who have been personally served or otherwise have notice. H.R. Rep. p. 51, fn. 8 (Sen. Doc. p. 285). For example, where a proceeding is commenced to establish rates for named carriers or utilities, if a notice complying with section 4 (a) is personally served upon such persons, publication in the Federal Register is not required by the subsection.

Contents of notice. In both formal1 and informal rule making, the required notice, whether published in the Federal Register or personally served, must include the following information:

1. "A statement of the time, place, and nature of public rule making proceedings". While section 4 (a) does not specify how much notice must be given by an agency before it may conduct public rule making proceedings, it is presumed that each agency

1 As used here, "formal" rule making means those public rule making proceedings which must be conducted in accordance with sections 7 and 8.

will give reasonable notice.2 In this connection, each agency should take into account the fact that section 4 (c) provides that thirty days must ordinarily elapse prior to a rule becoming effective. Accordingly, each agency should schedule its rule making in such fashion that there will be sufficient time for affording interested persons an opportunity to participate in the rule making as well as for insuring final publication of the rule at least thirty days prior to the desired effective date.

The nature of public rule making may vary considerably from case to case. Under section 4 (b) each agency, as this memorandum will indicate infra, may conduct its rule making by affording interested persons opportunity to submit written data only, or by receiving a combination of written and oral evidence, or by adopting any other method it finds most appropriate for public participation in the rule making process. However, where an agency is required by statute to conduct a hearing and to reach a decision upon the basis of the record made at such hearing, the formal procedures prescribed by sections 7 and 8 must be pursued. Therefore, the notice, required by section 4(a) should specify the procedure to be employed, that is, formal or informal hearings, submission of written statements with or without opportunity for oral argument, etc.

2. "Reference to the authority under which the rule is proposed". The reference must be sufficiently precise to apprise interested persons of the agency's legal authority to issue the proposed rule.

3. "Either the terms or substance of the proposed rule or a description of the subjects and issues involved". Where able to do so, an agency may state the proposed rule itself or the substance of the rule in the notice required by section 4 (a). On the other hand, the agency, if it desires, may issue a more general "description of the subjects and issues involved". It is suggested that each agency consider the desirability of using the latter method if publication of a proposed rule in full would unduly burden the Federal Register or would in fact be less informative to the public. In such a case, the agency may inform interested persons that copies of the proposed rule may be obtained from the agency upon request-this, of course, in addition to the "description of the subjects and issues involved" in the Federal Register. Where there is a "description of the subjects and issues

2 See section 8 of the Federal Register Act (44 U.S.C. 308) for a general statutory standard of reasonable notice.

involved", the notice should be sufficiently informative to assure interested persons an opportunity to participate intelligently in the rule making process. Final Report, p. 108.

Section 4(a) and (b) applicable only to substantive rules. The last sentence of section 4 (a) exempts from the requirements of section 4(a) and (b), unless otherwise required by statute, "interpretative rules, general statements of policy, rules of agency organization, procedure, or practice". Thus, the rules of organization and procedure which an agency must publish pursuant to section 3(a) (1) and (2) are not ordinarily subject to the requirements of section 4(a) and (b). The further exemption of "interpretative rules" and "general statements of policy" restricts the application of section 4 (a) and (b) to substantive rules issued pursuant to statutory authority. See Senate Comparative Print of June 1945, p. 6 (Sen. Doc. p. 19).

3

Omission of notice and public procedure for good cause. The last sentence of section 4 (a) authorizes any agency to omit the notice required by that subsection (and the procedure specified by section 4(b)) "in any situation in which the agency for good cause finds . . . that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest". It should be noted that the reasons for which an agency may dispense with notice under section 4 (a) are written in the alternative so that if it is "impracticable" or "unnecessary" or "contrary to the public interest" the agency may dispense with notice. Should this be done, the agency must incorporate in the rule issued its finding of "good cause" and "a brief statement of the reasons therefor". In general, it may be said that a situation is "impracticable" when an agency finds that due and timely execution of its functions would be impeded by the notice otherwise required in section 4 (a). For example, the Civil Aeronautics Board may learn, from an accident investigation, that certain rules as to air safety should be issued or amended without delay; with the safety of the traveling public at stake, the Board could find that notice

3 In this connection, the following working definitions are offered: Substantive rules-rules, other than organizational or procedural under section 3 (a) (1) and (2), issued by an agency pursuant to statutory authority and which implement the statute, as, for example, the proxy rules issued by the Securities and Exchange Commisson pursuant to section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78 n). Such rules have the force and effect of law.

Interpretative rules-rules or statements issued by an agency to advise the public of the agency's construction of the statutes and rules which it administers. See Final Report, p. 27; Senate Comparative Print of June 1945, p. 6 (Sen. Doc. p. 18); Senate Hearings (1941) p. 330. General statements of policy-statements issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power.

and public rule making procedures would be "impracticable", and issue its rules immediately. "Unnecessary" refers to the issuance of a minor rule or amendment in which the public is not particularly interested. Senate Hearings (1941) p. 828. "Public interest" connotes a situation in which the interest of the public would be defeated by any requirement of advance notice. For example, an agency may contemplate the issuance of financial controls under such circumstances that advance notice of such rules would tend to defeat their purpose; in such circumstances, the "public interest" might well justify the omission of notice and public rule making proceedings. Senate Hearings (1941) p. 812.

SECTION 4(b)—PROCEDURES

Informal rule making. In every case of proposed informal rule making subject to the notice requirements of section 4 (a), section 4(b) provides that "the agency shall afford interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity to present the same orally in any manner." The quoted language confers discretion upon the agency, except where statutes require "formal" rule making subject to sections 7 and 8, to designate in each case the procedure for public participation in rule making. Such informal rule making procedure may take a variety of forms: informal hearings (with or without a stenographic transcript), conferences, consultation with industry committees, submission of written views, or any combination of these. These informal procedures have already been extensively employed by Federal agencies. Final Report, pp. 103-105. In each case, the selection of the procedure to be followed will depend largely upon the nature of the rules involved. The objective should be to assure informed administrative action and adequate protection to private interests.

Each agency is affirmatively required to consider "all relevant matter presented" in the proceeding; it is recommended that all rules issued after such informal proceedings be accompanied by an express recital that such material has been considered. It is entirely clear, however, that section 4 (b) does not require the formulation of rules upon the exclusive basis of any "record" made in informal rule making proceedings. Senate Hearings (1941) p. 444. Accordingly, except in formal rule making governed by sections 7 and 8, an agency is free to formulate rules upon the basis of