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

Monday Morning Regulatory Review – 1/27/14: SCOTUS Enjoins Obamacare Preventive Contraception Rule; NLRB Rescinds Vacated Rule; OMB Economically Significant Reviews; and Social Cost of Carbon & Crystalline Silica Extensions

Posted in Judicial Review & Remedies, Regulatory Process

The United States Supreme Court (SCOTUS) last Friday enjoined enforcement of the Department of Health and Human Services (HHS) regulations on preventive contraception minimum regulations under Obamacare against several non-profit organizations in a procedural order that may be a guidepost for future litigation.  Regulatory activity of interest included the National Labor Relations Board (NLRB) best practice of removing a vacated rule from the Code of Federal Regulations (CFR).  Agencies submitted two critical final energy / emissions rules to the Office of Management and Budget (OMB) for review, while OMB completed one such review.  OMB extended the comment period on its technical Social Cost of Carbon document and the Occupational Safety and Health Administration (OSHA) extended the comment period on its crystalline silica proposed rule.  Agency substantive regulatory action at the public level appears to have chilled somewhat, while notices and other routine management regulations continued apace.

SCOTUS Enjoins Obamacare Preventive Contraception Rule:  SCOTUS continued the injunction issued by Justice Sotomayor in December in Little Sisters of the Poor v. Sebelius that bars the government from enforcing the preventive contraceptive essential coverage rule under the Patient Protection and Affordable Care Act (PPACA) against some religious organizations.  The full Court’s order comes more than three weeks after the Circuit Justice’s order but is both temporary and conditional.  Nonetheless, the procedural order provides a guidepost for further litigation.

The final regulations required the use of “EBSA Form 700” to declare an organization’s religious opposition and required the organization to provide the form to their insurance administrator – who then must provide the coverage.  Little Sisters’ administrator – Christian Brothers – is exempt under the regulations.  Little Sisters argued that even filing the form and passing it on to Christian Brothers imposed upon their religious beliefs.  SCOTUS’s order effectively relieves Little Sisters of the regulatory obligations, temporarily:

If the employer applicants inform the Secretary of Health and Human Services in writing that they are non-profit organizations that hold themselves out as religious and have religious objections to providing coverage for contraceptive services, the respondents are enjoined from enforcing against the applicants the challenged provisions of the Patient Protection and Affordable Care Act and related regulations pending final disposition of the appeal by the United States Court of Appeals for the Tenth Circuit.  To meet the condition for injunction pending appeal, applicants need not use the form prescribed by the Government and need not send copies to third-party administrators.

Although Little Sisters has not been certified as a nationwide class action, the order effectively invites a broader application by any other religious organization – roughly 200 religious nonprofits whose insurance coverage is handled by Christian Brothers.

The order effectively cautions the lower courts that the issue presented by the regulations is problematic; even though SCOTUS warns that the procedural order should not be read as an indication of the Court’s view on the substantive issues.  The standard for an All Writs Act injunction requiring that the injunction is “necessary or appropriate in aid of” of SCOTUS’s jurisdiction and “the legal rights at issue are ‘indisputably clear’” can be seen as higher than the lower courts strong trending toward preliminary and permanent injunctions under Federal Rule of Civil Procedure 65 that requires “irreparable harm” and a “likelihood of success on the merits.”  HHS’s rule is becoming ever more porous and that trend should be expected to continue until SCOTUS resolves the substantive issue or provides sufficient guidance for the lower courts.

The United States may not object if others make such pleas, and the totality of the situation suggests that the rule should effectively be stayed until the substantive issues are resolved.  A lack of objection may be no more than an acceptance of the reality of the trend, but expect the Department of Justice (DOJ)’s Solicitor General to continue to argue the merits.

NLRB Rescinds Vacated Rule:  The NLRB formally interred its Representation – Case Procedures rule last Wednesday with the publication of a rescission in the Federal Register.  The rule had been vacated by the United States District Court for the District of Columbia and that judgment became final with the withdrawal of appeals.

Whatever position one may take on the NLRB’s view of labor relations, the NLRB deserves a tip of the hat for keeping its regulations up to date, a best practice that other agencies should emulate.  Timely removal of vacated rules from the CFR has been recommended by the Administrative Conference of the United States (ACUS) and its recent study has pointed to anecdotal evidence that some rules remain in the CFR long after their demise.  Such a Flying Dutchman (or Mary Celeste, if you wish) can cause confusion at least and substantial harm to the unwary at worst.

OMB Economically Significant Reviews:  Two economically significant rules of note were submitted to the OMB Office of Information and Regulatory Affairs (OIRA) for interagency and executive review under Executive Order 12866 last week:

  • The Environmental Protection Agency (EPA) submitted its economically significant draft final Control of Air Pollution From Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards to OMB on January 24, 2014.  The proposed rule sought to “harmonize” vehicle emission and fuel standards with California standards, or “Californianize” the federal standards.  EPA has moved very quickly to respond to comments on the rule and supporting documents that were released only last May.
  • The Department of Energy (DOE) submitted its final Energy Conservation Standards for Commercial Refrigeration Equipment rule to OMB on January 22, 2014; and

OMB completed review of DOE’s Energy Efficiency Standards for Metal Halide Lamp Fixtures on January 24, 2014, another consumption issue with approximately the same effect.

Social Cost of Carbon Extension:  At the same time, OMB today extended the comment period on its revisions of the Social Cost of Carbon technical document for an additional 30 days, to February 26, 2014, to permit commenters adequate time to review the document and related information in the scientific literature.  The technical document affects the analysis underlying agency and OMB benefit / cost review and, therefore, will affect most economically significant and major rules.

OMB’s caution and willingness to consider public comments when not required is the right approach, but there is no guarantee that OMB will respond to the comments and revise the technical document upon which it reviews agency rulemaking in light of those comments.

Crystalline Silica Extension:  The Department of Labor (DOL)’s OSHA will extend again the comment period for its highly contentious Occupational Exposure to Crystalline Silica proposed rule in a notice to be published on January 29, 2014.

Although OSHA provides no explanation for the extension in the notice itself, OSHA noted that “possible public confusion due to an error on www.regulations.gov” justified the extension.  OSHA has posted 1,700 supporting documents, as late as January 15, 2014, and the public should have sufficient notice and access to those supporting documents for comment.   The Crystalline Silica proposed rule has been and will be one of the most contentious safety standards ever adopted, and the extended comment period is critical to providing OSHA with useful data.  Public comments total more than 1,000 on the rule and, past being prologue, these thousand are merely the scouting party for a full corpse of comments to come.