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

Pre-Enforcement Judicial Review of Regulations: Dates, Eggs, Bells, and Other Things to Consider

Posted in Judicial Process, Judicial Review & Remedies

An agency final rule normally takes effect 30 days after publication in the Federal Register.  If that rule has serious substantive or procedural flaws, and substantial detriment to a client, counsel may have only those 30 days to respond.  Once the rule becomes effective, unscrambling the eggs and unringing the bell will be far more difficult, perhaps impossible.  Several factors counsel should consider in initiating judicial review include seeking a stay from the agency and from the court, and an injunction against specific enforcement pending resolution of litigation.*

Effective Date:  The Administrative Procedure Act (APA) provides a default effective date for informal final rules of not less than 30 days after the publication of a final rule in the Federal Register.  The agency may make an exception to shorten the effective date period “for good cause found and published with the rule.”  At the same time, the agency may, at any time during that pre-effective date period, extend the effective date.

Effective Date Effects:  Once a rule becomes effective, significant change occurs in the procedural posture of litigation.  Not only does the rule become law, but the burdens of litigating against that rule increase.  Whether seeking a stay or an injunction, the plaintiff must proceed and persuade on essentially the same four factors that the United States Supreme Court (SCOTUS) has reiterated many times:

  • plaintiff is likely to succeed on the merits,
  • plaintiff is likely to suffer irreparable harm in the absence of preliminary relief,
  • the balance of equities tips in plaintiff’s favor, and
  • a [stay or injunction] is in the public interest.

Each factor entails specific values in rulemaking that differ substantially from general litigation.  The key, however, is that the plaintiff’s burden to establish each factor effectively rises when the rule becomes law:  “irreparable harm,” for example, changes from being prospective to retrospective – the law becoming effective means that the harm from the law becoming effective is now past – judges have pointed out that the bell cannot be unrung and the eggs cannot be unscrambled – even post hoc vacature sometimes will not undue that which has occurred and damages are not available against the United States or its agencies as a remedy.  Similarly, the balance of equities tips further in the government’s favor (not matter where it started) once the rule becomes law – rung bell, scrambled eggs.  United States Court of Appeals precedent varies on the application of these factors and the sum of the factors, through each factor must be established.

Stays and Injunctions:  Litigators are more accustomed to seeking an injunction to thwart a specific action against the client and herein lies a useful distinction:  A stay applies to maintain the status quo by delaying the effect of an entire rule; a preliminary injunction maintains the status quo by barring the agency from proceeding under the rule against the specific client.  Not all courts follow this distinction, but litigants will find it useful in managing expectations, posture, and requested remedies.

Stay by the Agency:  The first step (in any litigation) is notification to and negotiation with the agency itself, and with the Department of Justice (DOJ) if the agency is an executive agency.  The APA specifically provides that an agency may postpone the effective date of a rule pending judicial review when the agency finds that “justice so requires.”  The first formal argument to the agency also paves the way to a later request for the same relief from the court – a plaintiff shows good faith by making the request to the agency first.  As a practical matter, the agency may alter the effective date of a rule prior to that effective date by a simple notice in the Federal Register – until the rule becomes effective, this remains an issue of agency discretion.

Petition in the Court of Appeals:  When a petitioner may file for review directly in the United States Court of Appeals, the Federal Rules of Appellate Procedure specifically require the petitioner to request a stay of the rule from the agency and certify that request to the court.  The court has specific authority under the APA to “issue all necessary and appropriate process to postpone the effective date of an agency action or to preserve status or rights pending conclusion of the review proceedings.”

Complaint in the District Court:  Civil litigation in the United States District Courts is different.  Stays are not as constrained as in the courts of appeals, but the district courts have many more such cases and are more adept at interim relief pending final decision because they more regularly consider preliminary injunctions under the Federal Rules of Civil Procedure.  Generally, the district courts act as appellate reviewers in litigation attacking an agency rulemaking and few of the normal civil litigation tools are available.  The whole record before the agency must be timely produced as the factual record before the court in many cases (previously analyzed), discovery rarely is allowed, and adjudication is most often on “summary judgment” (or more technically, “judgment on the record” although that verbiage is also not consistently used).  Requesting a stay from the agency as a predicate to a request to the district court remains highly functional part of the negotiation.  These delicate technicalities are worth careful consideration.

Preliminary Injunctions:  As noted above, stays can generally have larger effects than injunctions and an injunction that is narrowly tailored to the specific litigant, specific case, and specific remedy are both more easily structured and more likely to succeed because they require less consideration of the “public interest” factor.  At the same time, irreparable harm to a specific litigant is more easily shown than irreparable harm to an industry as a whole because economic damage and competitive harm, for example, are more discrete.

Planning for Litigation:  Counsel must plan for the eventuality of high speed pre-enforcement litigation when formulating a position before the administrative agency.  Once the agency has made a decision, counsel has little time and much to negotiate in seeking to overturn or at least delay an agency final rule.

* This post responds to requests for a short summary of key points of a continuing legal education session on high-speed judicial review of rulemaking.