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

Monday Morning Regulatory Review – 3/18/13

Posted in Constitutional Issues in Regulations, Executive - OMB Review, Judicial Review & Remedies

The regulatory process thawed last week in the Executive and Judicial Branches.  Among the highlights, the simmering Recess Appointments Clause issue facing the National Labor Relations Board (NLRB) will head to the United States Supreme Court (SCOTUS) while many enforcement cases are being held in abeyance and uncertainty surrounds many rules.  The United States Court of Appeals for the District of Columbia resolved an interagency enforcement turf war between the Federal Energy Regulatory Commission (FERC) and the Commodity Futures Trading Commission (CFTC).  On the lighter side, within the Executive Branch, the Office of Management and Budget (OMB) completed or started review on several interesting rules, and the Department of Agriculture (DOA) stepped in a not-so-cool barnyard fight.

Recess Appointments – NLRB and More:  The National Labor Relations Board announced on March 12, 2013:

The National Labor Relations Board has determined not to seek en banc rehearing in Noel Canning v. NLRB, in which the U.S. Court of Appeals for the DC Circuit held that the January 4, 2012 recess appointments of three members to the Board were invalid.  The Board, in consultation with the Department of Justice, intends to file a petition for certiorari with the United States Supreme Court for review of that decision.  The petition for certiorari is due on April 25, 2013.

The Department of Justice (DOJ) Solicitor General apparently has agreed to seek review in the Supreme Court; the NLRB cannot do so on its own.  Nearly 40 cases affected by the D.C. Circuit’s decision in Noel Canning are being held in abeyance in that court alone, and other courts of appeals are seeking briefing on the issue from the parties.  Supreme Court review is not a foregone conclusion, but four votes for certiorari seem more than likely.

The Consumer Finance Protection Bureau (CFPB) – undaunted – continues to propose rules that may not survive the Noel Canning decision:  e.g. Defining Larger Participants of the Student Loan Servicing Market, while further questions are being raised about CFPB’s authority on Capitol Hill and in settlement of cases.

Gas Price Manipulation Jurisdiction:  The U.S. Court of Appeals for the District of Columbia Circuit vacated a $30 million fine levied by the FERC because only the CFTC has jurisdiction in Hunter v. FERC.  In short, FERC fined Hunter $30 million for manipulating natural gas futures contracts under the Energy Policy Act of 2005.  Hunter sought review, claiming that FERC lacked authority to fine him because the CFTC had exclusive jurisdiction over all commodity futures contracts transactions.

The CFTC has intervened in support of Hunter on this issue.  With two agencies taking conflicting positions on their respective jurisdictions, what is a court to do?  It defers to no one:

In refereeing this jurisdictional turf war, we cannot defer to either agency’s attempt to reconcile its statute with the other agency’s statute.  Because the “premise of Chevron deference is that Congress has delegated the administration of a particular statute to an executive branch agency, … we have never deferred where two competing governmental entities assert conflicting jurisdictional claims.”

As the court saw it, Hunter is reduced to two questions.  (1) Does the Commodity Exchange Act (CEA) cover manipulation of natural gas futures contracts?  (2) If it does, did Congress clearly and manifestly intend to impliedly repeal the application of the CEA when it enacted the Energy Policy Act of 2005?   Quick answers:  yes, and no.  Result:

Because manipulation of natural gas futures contracts falls within the CFTC’s exclusive jurisdiction and because nothing in the Energy Policy Act clearly and manifestly repeals the CFTC’s exclusive jurisdiction, we grant the petition for review.

End to the $30 million fine – and whatever it cost two agencies and the petitioner to fight this battle before the court.  This is hardly the first time such turf wars have required judicial settlement and illustrates how independent agency self-interest can be costly and inefficient.

SCOTUS review would be highly unusual if only for practical reasons – the Solicitor General could not represent both warring parties (and neither has the authority or experience to proceed on their own).  This is precisely the kind of issue that a Solicitor General would settle – not litigate, if it landed there – and the D.C. Circuit has provided a clear answer.  Past attempts to circumvent the Solicitor General’s Office has been had ugly results.

Inter-agency conflict can occur in the regulations as well – and even OMB will miss conflict mediations or arbitrations between Executive Branch agencies and no one mediates or arbitrates among the independent agencies.  Broad understanding of administrative law is the only hope of finding and resolving these issues efficiently.

Mandatory Meat Labeling:  The Department of Agriculture (DOA) published its proposed country of original labeling (or COOL) rules immediately drawing the ire of substantial parts of the agriculture industry.  Although DOA asserts that the proposed rule would only bring United States regulations into line with World Trade Organization agreements, the costs – particularly in U.S.–Canadian cross-border marketing – might be quite higher than advertised ($32m) and, if made effective, would be passed through to consumers (not so cool).  Comments are due April 11, 2013 – only a 30-day comment period, not consistent with Executive Order 13,653’s 60-day default.

OMB To and Fro:  Among the interesting transactions between OMB and the agencies:  OMB completed review of the Department of Homeland Security (DHS) Coast Guard (USCG) Transportation Worker Identification Credential (TWIC); Card Reader Requirements proposed rule “consistent with change” and received DHS’s submission of the Transportation Security Administration (TSA) Aircraft Repair Station Security final rule.  The Department of Commerce (DOC) National Oceanographic and Atmospheric Administration (NOAA) submitted a proposed renewal of Reduce the Threat of Ship Collisions with North Atlantic Right Whales regulations.  If gentle readers can find a relationship between all three rules, please advise.