When must federal administrative agencies use formal rulemaking procedures?

Federal administrative agencies are required to use formal rulemaking procedures when Congress mandates it through specific language in enabling statutes, particularly when it includes phrases like "hearing on the record." This is a clear signal from Congress that a more rigorous process is necessary for a given rulemaking action, ensuring that there is a complete record of the proceedings, which can then be reviewed by the courts.

In instances where Congress outlines the need for formal process, the agency must hold an evidentiary hearing, allow for cross-examination of witnesses, and create a formal record of the proceedings. This contrasts with informal rulemaking, which may allow for simpler notice-and-comment methods without the same level of procedural formality and public engagement.

The other options do not correctly characterize when formal rulemaking must occur. Agencies do not have the freedom to choose to use formal rulemaking at their discretion; rather, this process is dictated by congressional instruction. The statement regarding public hearings is misleading since formal rulemaking is not limited to just public hearings; it encompasses a comprehensive procedural framework dictated by statutory requirements.