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Federal Regulations Advisor Insight and Commentary on U.S. Government Regulatory Affairs

Monday Morning Regulatory Review – 12/10/12

Posted in Executive - OMB Review, Judicial Review & Remedies

Regulatory activity continued to pick up speed last week, with the Environmental Protection Agency (EPA) submitting three rules for Office of Management and Budget (OMB) review, while OMB completed one time-sensitive review.  The Department of Health and Human Services (HHS) published an economically significant Patient Protection and Affordable Care Act (ACA) proposed rule on benefit and payment parameters for 2014, the first truly effective year of the ACA.  Some less significant actions are noted below, as well as a clearing of the path to the United States Supreme Court for review of the Food and Drug Administration (FDA) tobacco packaging rules struck down by the D.C. Circuit last August.

EPA Litigation and Negotiation:  Some of EPA’s activity at OMB is generated by judicial decisions remanding rules to the EPA for further review; others are simply “emergencies.”

Reconsideration of Final National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines [RICE] final rule submitted to OMB:  The petitions sought reconsideration of EPA’s allowing emergency stationary engines to operate for up to 15 hours per year in emergency demand response if needed to maintain stability in the power grid or cover outages.  The RICE final rule concludes reconsideration and a proposed rule that was published before the Derecho hit Washington in June and Sandy hit New York / New Jersey in November – and the effects of prolonged grid outages.  The rule may have changed or may change during review to account for these events.

Portland Cement Manufacturing National Emission Standard for Hazardous Air Pollutants (NESHAP) and New Source Performance Standard (NSPS) – Proposed Amendments as a Result of Reconsideration final rule submitted to OMB.  This latest iteration will attempt, hopefully, to deal with the partial remand (and partial vacature) in Portland Cement Association v. EPA.

Review of the National Ambient Air Quality Standards [NAAQS] for Particulate Matter final rule submitted to OMB.  EPA must review the NAAQS for coarse and fine particulate matter every five years and this review follows the partial remand without vacature of EPA’s determinations for secondary NAAQS for fine particulate matter identified in American Farm Bureau Federation v. EPA.

OMB completed review on December 4, 2012, of the Protection of Stratospheric Ozone: The 2013 Critical Use Exemption From the Phaseout of Methyl Bromide proposed rule, consistent with change.  EPA has not yet released this annual rule allowing limited agricultural use of methyl bromide (CH3Br) when there are no effective alternatives as it attempts to eliminate methyl bromide to protect stratospheric ozone under the requirements of a Montreal Protocol.  The exception represents one of those difficult situations where EPA must attempt to eliminate a problematic but essential chemical without having any effective substitute for some uses.

HHS ACA Benefits / Payments Parameters:  HHS proposed details of the ACA’s risk adjustment, reinsurance, and risk corridors programs; cost-sharing reductions; user fees for a Federally facilitated Exchange; advance payments of the premium tax credit; a Federally facilitated Small Business Health Option Program; and the medical loss ratio programs, and other matters.  Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2014.  HHS solicits comments on

additional strategies consistent with the Affordable Care Act that HHS or States might deploy to help make rates affordable in the current market and encourage timely enrollment in coverage in 2014.”

After all the effort put into the ACA, HHS admits,

We are unable to quantify benefits of the proposed rule — such as improved health and longevity due to increased insurance enrollment — and some costs — such as the cost to society of providing additional medical services to newly-enrolled individuals.

The quantified costs, however, exceed $6 billion, less nearly equivalent “miscellaneous” receipts (for those steeped in appropriations law).  Whether these figures play out in reality is questionable and they are, at best, “estimates.”

FTC Red Flags:  The Federal Trade Commission (FTC) published its Identity Theft Red Flags and Address Discrepancies under Fair and Accurate Credit Transactions Act of 2003 on December 6, 2012, to narrow the regulatory definition of “creditor” in the original Red Flags Rule to make it consistent with the revised definition in the Clarification Act of 2010.  The FTC asserts that advance notice and an opportunity for public comment is unnecessary because the rule merely makes technical amendments to conform to intervening legislation.

The FTC has also made an interpretive statement about the substance of the rule and may have restricted its future ability to change that interpretation until it adopts another final rule.  Also of interest is the FTC’s notion that advance notice and an opportunity for public comment thus becomes discretionary, but if this were true, the FTC could adopt a final rule, not an interim final rule.  The characterization is consistent with the FTC’s view of its discretion, not necessarily the technical meaning under the Administrative Procedure Act (APA), but it is wise policy to ensure that it can adopt a final rule if its interpretation of the APA is not correct.

SBA Size Standards: The Small Business Administration (SBA) published the Small Business Size Standards: Administrative and Support, Waste Management and Remediation Services, and Information final rules on December 6, 2012.  SBA also published its Small Business Size Standards: Support Activities for Mining proposed rule.

DHS Detainee Rape Rules:  In a follow-up to a Presidential direction, OMB also cleared the Department of Homeland Security (DHS) economically non-significant, but legally very significant, immigration detainee facility sexual abuse reduction proposed rule:  Standards to Prevent, Detect and Respond to Sexual Abuse and Assault in Confinement Facilities.  The Department of Justice (DOJ) previously implemented a rule for Bureau of Prisons and contractor facilities under the Prison Rape Elimination Act; President Obama ordered DHS to do the same.

FDA Tobacco Rules:  The United States Court of Appeals for the District of Columbia Circuit on December 5, 2012, denied the Food and Drug Administration (FDA) petition for rehearing en banc in R.J. Reynolds v. FDA, which struck down the FDA’s tobacco packaging regulations on First Amendment forced speech grounds.  The United States must now decide whether the seek certiorari in the United States Supreme Court or start over.  The Sixth Circuit previously upheld the same regulations and the tobacco companies have already sought certiorari – with the suggestion that the Supreme Court hold that petition pending the outcome of the D.C. Circuit en banc petition.

The Solicitor General has a clear intercircuit conflict and an important First Amendment corporate speech issue on which to base a petition, which is more likely that further regulatory action.