The end of 2013 was hardly quiet, with five notable events worth highlighting. While this blog has foresworn further coverage of the crenelated litigation in the United States District Courts over the Obamacare contraceptive coverage requirements, one case has moved to an unusual posture before the United States Supreme Court (SCOTUS) though it may not move further. In a final rule, the Consumer Financial Protection Bureau (CFPB) may have reduced a long-standing and confusing multiple mortgage loan notices, although implementing its final rule will take a substantial amount of time. Three proposed rules have been released that have quite different potential impacts: an Environmental Protection Agency (EPA) proposal to update regulation of new wood-burning stoves, and two coordinated proposed, and potentially litigious, rules to expand the application of a bar to those with mental illness from possessing firearms and to expand the information mental health providers can provide to the national database that must be queried for criminal conviction bars to firearms possession.
Obamacare @ SCOTUS: Justice Sotomayor granted a temporary injunction in Little Sisters of the Poor Home for the Aged, Denver, Colorado v. Sebelius, U.S. No. 13A691 (Dec. 31, 2013), prohibiting the government “from enforcing against applicants the contraceptive coverage requirements imposed by the Patient Protection and Affordable Care Act [or PPACA], …, and related regulations pending the receipt of a response and further order of the undersigned or of the Court.” The application sought both a temporary injunction and certiorari before judgment in the court of appeals to bring the issue directly to SCOTUS. The Solicitor General’s post-injunction response opposed a further temporary injunction. Justice Sotomayor may revisit the temporary injunction in light of the response and reply, but must refer the petition for certiorari before judgment to the full Supreme Court, where the temporary injunction may again be scrutinized. A new order may be expected as early as this morning.
► The temporary injunction (in this case slightly different from a preliminary injunction) may be extended, joining a number of lower court orders, precisely because of the visceral nature of the constitutional right to freedom of religion and the existence of numerous other exceptions to Obamacare. Certiorari before judgment is unlikely, however, because in this particular case the government has conceded that (1) the applicant may opt out from the contraceptive coverage mandate by completing the self-certification form and providing that form to their third-party administrator, (2) the third party administrator is a “church plan” exempt from the mandate, and (3) no fines or penalties would be applicable and no coverage provided. The Solicitor General has argued that there is no enforceable obligation. This case does not require that the religious organization find a commercial third-party administrator who would accept the certification and shift the obligation to provide the contraceptive coverage to itself through other resources (an accounting sleight of hand) and suffer penalties if the coverage was not provided. Here petitioners seek too much and this case is likely to percolate through the briefing before the court of appeals. This does not appear to be the hard case that requires immediate resolution.
Mortgage Disclosure Relief: The CFPB published its 635-Federal Register-page Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z) in two separate books of the Federal Register on December 31, 2013. The integration of loan estimates and closing disclosure forms results from requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and should help reduce confusion that has existed for more than 30 years because of different disclosure form requirements. The regulated industry has plenty of time to catch up on its reading as the final rule’s effective date is 19 months away – August 1, 2015.
► Several critical points about this complex and lengthy final rule should be considered:
- CFPB spent considerable time testing its forms and real world testing is the surest way to illuminate difficulties in the forms.
- The rule is so long because the CFPB exemplified the forms in the Federal Register and the Code of Federal Regulations – adding over 400 pages to the Federal Register Publication (at a cost of about an average mortgage).
- CFPB provided a detailed final regulatory flexibility analysis as required by the Regulatory Flexibility Act (RFA) and analysis of the Paperwork Reduction Act (PRA) burdens imposed, but the CFPB does not appear to have summarized the hundreds of millions of dollars in costs of this rule in any single composite table of costs and benefits.
- At bottom, several years from now, a new mortgage might be easier to understand, perhaps the greatest benefit that would be difficult at best to monetize.
Wood Burning Stoves: The Office of Management and Budget (OMB) Office of Information and Regulatory Affairs (OIRA) completed review and the EPA released an advance copy of the economically significant Standards of Performance for New Residential Wood Heaters, New Residential Hydronic Heaters and Forced-Air Furnaces, and New Residential Masonry Heaters proposed rule for public comments, which will be due 90 days after publication in the Federal Register. EPA expects the proposed rule, when finalized, will require manufacturers to redesign wood burning heaters to emit lower pollution and perform better.
► The burdens of the proposed rule may fall more heavily on rural than urban residents because of a higher tendency to use indigenous organic material (trees) as heating fuel, but these are not burdens that EPA is required to evaluate.
Firearms & Mental Health: The Administration, following up on its gun control priorities, proposed two new coordinated rules for the control of firearms by those deemed to be barred from owning a firearm for mental health reasons:
- Department of Justice (DOJ), Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATFE, aka ATF), Amended Definition of “Adjudicated as a Mental Defective” and “Committed to a Mental Institution” would clarify that the arcane statutory term “adjudicated as a mental defective” includes persons who are found incompetent to stand trial or not guilty by reason of mental disease or defect, lack of mental responsibility, or insanity, and that the term includes persons found guilty but mentally ill, and clarify that the statutory term “committed to a mental institution” applies to involuntary inpatient or outpatient treatment. Comments will be due April 7, 2014.
- Department of Health and Human Services (HHS), Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule and the National Instant Criminal Background Check System (NICS) would modify the HIPAA Privacy Rule to expressly permit certain HIPAA-covered entities to disclose to DOJ’s National Instant Criminal Background Check System (NICS) the identities of individuals who are subject to a Federal “mental health prohibitor” that disqualifies them from shipping, transporting, possessing, or receiving a firearm. The proposed rule would apply only to covered entities with lawful authority to adjudicate or commit individuals subject to the Federal mental health prohibitor, or that serve as repositories of information for NICS reporting purposes. Comments will be due March 10, 2014.
► The coordination of these two very different agencies in addressing mental illness and the prohibition against possessing firearms is a worthy goal, but the proposed rules raise many underlying issues, including whether an adjudication that a person is subject to the “mental health prohibitor” provides sufficient due process to impose a limitation on a Constitutional right to bear arms. Additionally issues focusing on the judgments necessary – and disagreements among professionals regarding categorization and severity – under the American Psychiatric Association’s new Diagnostic and Statistical Manual of Mental Disorders (DSM-5) (2013) will also arise and the expansion will create significant additional litigation if retained.