According to the Administrative Procedure Act, "rulemaking" is the agency process for formulating, amending, or repealing a rule. A rule "means the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefore or of valuations, costs, or accounting, or practices bearing on any of the foregoing."
There are three major types of rulemaking:
1. Informal Rulemaking (also called "Notice and Comment' or "Section 553" rulemaking)
Under § 553, the agency is required to provide the public with adequate notice of the proposed rule. Typically this is achieved by publishing notice of the proposal in the Federal Register. Once published, the agency must provide the public a meaningful opportunity to comment on the proposal. After the comment period ends, the agency issues a statement of the purpose and justification of the rule and a response to the public comments submitted.
2. Formal (found in § 556 and 557)
Occasionally, a rule may be subjected to a more formal rulemaking process. This is a trial-like process where the agency must present their case and be subjected to cross-examination. These proceedings are usually presided over by a administrative law judge or official who has the power to issues subpoenas and administer oaths. Agencies are only required to submit to this formalized process when Congress explicitly requires that the rulemaking process proceed "on the record".
As the term suggests, this is a "hybrid" between formal and informal. Hybrid rulemaking statutes require additional procedural by the agency (compared with the informal process) but fall short of formal rulemaking. This process, much like formal rulemaking, is only conducted when explicitly directed by Congress.