Half a dozen highlights from regulatory practice last week – from environmental to communications, to labor to immigration. The Environmental Protection Agency (EPA) and Army Corps of Engineers (Engineers) submitted a controversial Waters of the United States (WOTUS) final rule for executive and interagency review, and EPA also proposed resolution of the long delayed Renewable Fuels Standard (RFS) regulations and litigation. The Federal Communications Commission (FCC) today publishes in the Federal Register the open internet neutrality utility final rule. The Department of Labor (DOL) responded to the prospective vacatur of its shepherd’s wages guidance. Further small and unsurprising steps were taken in immigration executive action litigation, but the Department of Homeland Security (DHS) lost an appeal from vacatur of a portion of its religious worker regulations.
Waters of the United States: EPA and the Engineers sent a contentious final Definition of Waters of the United States Under the Clean Water Act rule to the Office of Management and Budget (OMB) for review on April 6, 2015. OMB lists this Clean Water Act (CWA) final rule as not economically significant, as contrasted with the proposed rule as economically significant, but this change may not portend the substance of changes in the rule. EPA has admitted that the economically significant proposed rule was flawed and said that it would be responsive to the concerns raised in the public comments, but EPA has only posted 20,000 of the more than one million public comments submitted (admittedly, many, if not most, of the comments will provide little substance for EPA to consider).
A significant issue that needs resolution lies in the proposal that “other waters” (those not fitting in any of the specific defined categories) could be determined to be included in the definition through a case-specific showing that, either alone or in combination with similarly situated “other waters” in the region, they have a “significant nexus” to a traditional navigable water, interstate water, or the territorial seas. This “catch-all” is not a definition but an agency determination.
The definition is “agency jurisdictional” and its determination by an agency will be subject to extensive litigation. Last week, the United States Court of Appeals for the Eighth Circuit, in Hawkes Co., Inc., v. United States Army Corps of Engineers, creating an intercircuit conflict over whether the Engineers’ jurisdictional determination that a particular place came under the WOTUS definition is a final agency action. The Eighth Circuit, disagreeing with a Fifth Circuit contrary decision, determined that the Engineers’ formal determination that a property constitutes WOTUS within the meaning of the CWA is a “final agency action” within the meaning of the Administrative Procedure Act (APA) and thus subject to judicial review.
In our view, a properly pragmatic analysis of ripeness and final agency action principles compels the conclusion that [the Engineers’ jurisdictional assertion] is subject to immediate judicial review. The [Engineers’] assertion that the [decision] is merely advisory and has no more effect than an environmental consultant’s opinion ignores reality. “[I]n reality it has a powerful coercive effect.” …. Absent immediate judicial review, the impracticality of otherwise obtaining review, combined with “the uncertain reach of the Clean Water Act and the draconian penalties imposed for the sort of violations alleged in this case … leaves most property owners with little practical alternative but to dance to the EPA’s [or to the [Engineers’]] tune.”
At some point this jurisdictional issue will need to be resolved by the United States Supreme Court (SCOTUS) – and pressure for a resolution could be substantially increased by an agency determination definition.
► Although many have noted that OMB’s 90-day “clock” has begun, do not expect OMB and the agencies to complete review of this complex and controversial final rule within this management goal; the proposed rule required six months to review. If the final rule contains an amorphous definition of WOTUS – subject to the agencies’ determination – a veritable flood of administrative and judicial process will be created.
Renewable Fuels Consent Decree: EPA and the Department of Justice (DOJ) filed a proposed consent decree to resolve the long-standing delays in EPA’s issuance of annual RFS ethanol mandates under the Clean Air Act (CAA); the litigation commenced less than a month ago, but negotiations likely preceded that filing. The proposed consent decree sets forth the timing of signature of proposed and final rules and presumably includes OMB’s executive and interagency review. A notice of the proposed consent decree will be published in the Federal Register (which is not yet scheduled), and a reasonable public comment and agency consideration of those public comments will follow, before the decree can be approved by the court. Off-decree, EPA has stated that it expects to re-propose volume requirements for 2014 that reflect the volumes of renewable fuel that were actually used in 2014.
► The proposed settlement may bring the RFS process back on track, but the application of reality to establish the past RFS level is critical because actual availability of ethanol has always been a limiting issue. At some point, the equally problematic issue of whether EPA should or even can impose an “E-15” requirement rather than the current “E-10” requirements – and the impact on existing engines – will need to be addressed.
Open Internet Utility Rule: The FCC’s publication of its Protecting and Promoting the Open Internet final rule (or “open internet” or “internet neutrality” or “internet utility,” take your pick) sets of the second round of petitions for judicial review. In a previous episode, protective petitions for review were filed in United States Court of Appeals for the District of Columbia Circuit and the Fifth Circuit; since then the Judicial Panel on Multidistrict Litigation (JPMDL) randomly picked the D.C. Circuit, which has historically understood the publication date, not the release date, to be the date of final agency action for jurisdictional purposes.
► Expect the parties to start the judicial process again, and paperwork to festoon the clerks’ offices. Perhaps everyone will petition for review in D.C. Circuit, but that seems unlikely. The only certainty is that they will seek judicial review and protracted litigation will begin anew.
Shepherd’s Wages: OMB completed review on April 7, 2015, of a DOL proposed H-2A Wages for Open Range Herding and Livestock Occupations rule to establish special procedures for setting the minimum wages of non-immigrant alien shepherds. The D.C. Circuit previously held that DOL violated the APA by promulgating administrative interpretations that had substantive and binding effect without providing advance notice and an opportunity for public comment, and, on remand, the district court set deadlines for DOL to propose and promulgate a rule, with a date-dependent order vacating DOL’s prior interpretation.
► The proposed rule appears to be slightly behind schedule, but the critical point is that DOL’s prior sub-regulatory interpretations will be vacated upon the earlier of a specified date or upon the effective date of the final rule. A “management order” is often negotiated, but still keeps the agency on a schedule.
Immigration Executive Action Litigation VII: The United States District Court for the Southern District of Texas declined to stay its February 16, 2015, preliminary injunction pending appeal in Texas v. United States, which held that plaintiffs were likely to prevail that the DHS program required substantive rulemaking following the procedures specified in the APA, which everyone conceded DHS had not completed. Although the most recent decision characterized much of DOJ’s argument as a request to reconsider its decision to issue a preliminary injunction, the key element of the court’s analysis was that “[t]he Government has not shown any credible reason for why this Directive necessitates immediate implementation,” i.e. it has not shown irreparable harm from the preliminary injunction. DOJ showed no change in the balancing of harms to warrant a stay of the preliminary injunction: “When balancing the potential harms to each side (as required under the preliminary injunction analysis), the scales of justice greatly favor the States.”
The same issues will be argued before a panel of the Fifth Circuit on April 17, 2015, as DOJ seeks the same stay that the district court has now denied. The district court’s denial and DOJ’s request for a stay in the Fifth Circuit should not be confused with DOJ’s appeal from the preliminary injunction itself, which is subject to more elongated briefing and argument in the next few months, or the merits.
The denial of a stay in the district court and the pending argument over a stay in the court of appeals should not be confused with the underlying question of Article III standing that DOJ will raise as a premise for the issue of likelihood of success on the merits, or the question of standing decided by the Fifth Circuit in Crane v. Johnson – where individuals and the State of Mississippi presented different facts. All these are preliminaries to the issue of whether DHS can legally and should have promulgated a rule. Although some issues overlap, each discrete argument must be considered on its own merits.
► The district court’s denial of the stay of the preliminary injunction was hardly a surprise – once the hardships are balanced by the district court, the proponent of a stay bears a heavy burden in showing that the preliminary injunction imposes an irreparable harm. The district court correctly considered, over plaintiffs’ objection, new affidavits from the DHS, but those affidavits failed to present facts showing that the preliminary injunction imposed irreparable harm on the United States Government.
Religious Workers & Legal Status: In a case of first impression at the circuit level, the United States Court of Appeals for the Third Circuit, in Shalom Pentecostal Church v. Secretary United States Department of Homeland Security, considered whether a DHS regulation requiring that qualifying religious work have been carried on “in lawful immigration status” was a permissible statutory interpretation or crossed the line to ultra vires regulation contrary to the clear intent of Congress. The Immigration and Nationality Act (INA) enables an alien to obtain visa as a “special immigrant religious worker” if the alien, among other things, has been “carrying on” religious work for at least the two years preceding the filing of the visa petition; DHS regulations require that “carrying on” of religious work have been in a legal status if in the United States. After an extensive statutory analysis, the Third Circuit reached no further than the plain meaning and context of the statutory terms and concluded:
In sum, by its plain terms and consistent with … and applicable canons of statutory construction, the INA authorizes an alien who engaged in religious work continuously for the two years preceding the visa application and who meets the other statutory criteria to qualify for [a] … visa as a special immigrant religious worker. As the statute is clear and unambiguous and the Regulation is inconsistent with the statute, the Regulation is ultra vires and we do not reach the second step of the Chevron analysis.
► One particular aspect of the decision deserves attention: The Third Circuit was “unswayed” by D.C. Circuit precedent in the administrative agency context that “a congressional mandate in one section and silence in another” may simply reflect a decision “to leave the question to agency discretion.” This stricter review of Congressional linguistics under Chevron Step 1 canons of statutory interpretation analysis (not atypical between the Third and D.C. Circuits) requires Congress to be more disciplined in its structuring of statutes and the specific language that Congress utilizes. In the instant case, the plaintiffs might have chosen the D.C. Circuit as the venue based on the loci of the agency, but their choice of their personal loci made a substantive difference, which is why these issues must be carefully considered in advance of filing suit.