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

Monday Morning Regulatory Review – 12/21/15: Drone Registration; Remand Without Vacatur Time & Commercial Air Efficiency

Posted in Judicial Review & Remedies, Regulatory Process

dawn over the capitol aocA holiday drone gift contains a new requirement today – registration with the Federal Aviation Administration (FAA). On old issues, the United States Court of Appeals for the District of Columbia Circuit remanded a regulatory action and denied mandamus to compel an agency response to a remand. Finally, the Department of Energy (DOE) claimed the largest benefit for energy efficiency ever – commercial heating and air conditioning units – through a consensus process.

Drone Registration: The Department of Transportation (DOT)’s FAA published its Registration and Marking Requirements for Small Unmanned Aircraft interim final rule (IFR) in the Federal Register on December 16, and a notice of approval of its Paperwork Reduction Act (PRA) information collection for the registration system today. The FAA begins its IFR with a familiar premise – that small Unmanned Aerial Systems (sUAS or drones) are aircraft and therefore required to comply with all aircraft statutes and regulations, including registration, marking, and operation. The IFR provides a streamlined internet registration “commensurate to the nature” of drones as an alternative to the paper–based registration process applicable to manned aircraft, and simplified marking requirements instead of the United States-registration tail number (the “N” prefix). The IFR continues to limit the regulatory framework “aircraft” not exclusively “model” aircraft, but finding that line may be complicated.

The information in the registration database will be available within the government and to law enforcement for certain routine, particularly enforcement, uses, and a drone owners name and address will be made available to the public upon request with the drone’s identifier (similar to looking up a manned aircraft owner by N number). The FAA points out that the key is to pair a drone with its owner.

New drone owners must register before operating the drone outdoors, but existing owners must register before February 19, 2016. The rule became effective, and the registry should come online, today.

► Interestingly, the IFR applies the FAA’s $5 aircraft registration fee to drones. Many commenters vociferously opposed any fee, but statute requires the FAA to charge a fee to recover the cost of providing the services. The statute requires also that the FAA adjust the fee when it determines that the cost of the service has changed, but the FAA admits not update the fee since 1966. These specific statutory requirements are not unlike the United States’ general “fee for services” statute. The FAA also waived the fee for the first 30 days of registration, so registrants’ complaints have little merit.

The IFR does not alter any operational issues relating to flying drones in the navigable airspace (NAS). The FAA proposed operational requirements and is drafting a final rule to address small UAS (less than 55 lbs.) requirements. Until the FAA promulgates that rule, anyone operating a drone other than in the hobby/recreational limitation must first obtain FAA approval or an exemption. Although the IFR acknowledges commenters’ concerns about drone owner liability insurance and privacy on private property, the IFR does not respond to those issues. The only privacy issues addressed in the IFR relate to the registration system.

► The FAA argues that it has “good cause” under the Administrative Procedure Act (APA) for promulgating an IFR without an advance notice and public comment and setting the rule’s effective date at less than 30 days after publication. Their good cause is a reduction of the burden from current aircraft registration requirements and a need for action in light of increasing dangerous intrusions, not an initial finalization of a subset of issues of the proposed rule. The FAA might have issued the IFR for purely “interim” purposes based on the broader scope of the previous proposed rule, but they may not think so. The FAA found that the delay for further notice and comment would be impracticable and contrary to the public interest, a semi-emergency argument. The FAA did need the good cause for making the regulation effective less than 30 days after publication, but the effective date delay affects enforceability, and the FAA has retained all of its discretion in that regard. Note also that the FAA requests further public comment.

Remand Without Vacatur Time: First, in an unpublished, summary order, the District of Columbia Circuit, remanded without vacatur the challenge to the Environmental Protection Agency (EPA)’s utility mercury and other hazardous materials final rule in White Stallion Energy Center v. EPA. The United States Supreme Court (SCOTUS) found last summer, in Michigan v. EPA, that EPA erred in not considering cost in its initial statutory determination of whether regulation of electric generating units under the Clean Air Act (CAA) was “appropriate and necessary.” SCOTUS remanded to the D.C. Circuit for further proceedings.

After briefing and oral argument, a panel of the D.C. Circuit simply remanded the issue to the EPA, without vacatur under its Allied-Signal doctrine, noting only that “EPA has represented that it is on track to issue a final finding … by April 15, 2016.” The Allied-Signal doctrine permits remand without vacatur depending on “the seriousness of the order’s deficiencies (and thus the extent of doubt whether the agency chose correctly) and the disruptive consequences of an interim change that may itself be changed.”

Second, in another summary, unpublished order, the D.C. Circuit denied a petition for mandamus to compel the Department of Homeland Security (DHS) and its Transportation Security Administration (TSA) to complete the rulemaking necessitated the court’s decision more than four years ago. In 2011, the D.C. Circuit held, in Electronic Privacy Information Center v. DHS, that

  • TSA failed to justify its declination of a petition to initiate notice and comment rulemaking under the APA before using advanced imaging technology (AIT) for primary screening and
  • the use of AIT “substantively affects the public to a degree sufficient to implicate the policy interests animating notice-and-comment rulemaking,” i.e. APA required a rulemaking.

The D.C. Circuit declined to bar the use of AIT pending a rulemaking “due to the obvious need for the TSA to continue its airport security operations without interruption.” The court remanded the rule to the TSA, but did not vacate it, and instructed DHS and TSA to “promptly” proceed “in a manner consistent with this opinion.” TSA proposed a rule in March 2013, almost two years after remand. TSA has not promulgated a final rule. In response to a petition for mandamus and the government’s response, the court still declined to compel action, noting that the government had represented to the court that the final rule will be published in the Federal Register by March 3, 2016.

► The panel’s decision and brief unpublished order remanding the rule to EPA may not be surprising, but still troubling. Whether the APA admits to remand without vacatur under a provision that directs courts to “hold unlawful and set aside agency action …” remains a problematic issue that requires resolution. In this instance, the EPA informed the court that it believed it would reach the same conclusion after complying with the law, but such a statement, and a court’s acquiescence, undercuts the very purpose of statutory remedy. The line between stated objection and prejudgment is narrow. If an agency may violate a statutory procedural requirement with impunity, there is substantially less reason to expend the enormous effort and substantial cost to seek judicial review of the violation. The question here is one of law, not equity, before a Federal court, not State, and it is time for a hard look at the rationale of the Allied-Signal doctrine.

In the case of TSA, the delay in complying with the court order raises the issue of a reasonable response to a remand without vacatur. TSA presented a compelling case for continuing its practice in violation of the APA’s rulemaking requirements, pending rulemaking, but delayed compliance by four years (and nearly five if TSA meets its schedule) undercuts faith in the agency’s response. Other courts have specifically imposed a deadline for agency response with the distinct enforcement mechanism of vacatur on a date certain if the agency has not complied. If Allied-Signal has any viability, its remands must be enforced with time restrictions – and mandamus probably will not be appropriate without those time restrictions.

Commercial Air Efficiency: The Department of Energy (DOE) released pre-publication versions of several different documents last Thursday –

  1. a direct final rule (DFR) regarding energy conservation standards for small, large, and very large air-cooled commercial package air conditioning, heating equipment, and commercial warm air furnaces;
  2. a mandatory parallel supplemental notice of proposed rulemaking (SNOPR); and
  3. a final rule setting for test procedures for the same equipment.

The DFR in this instance is a statutory device, not the APA practice of using a direct final rule to promulgate non-controversial, technical regulations. Here the underlying statute provides that DOE may use a DFR in response to what might be called a consensus petition, but the rule may not become effective for at least 120 days, while the public is given at least 110 days to submit an objection. The statute also provides DOE with defined discretion to “determine[] that such adverse public comments or alternative joint recommendation may provide a reasonable basis for withdrawing the direct final rule ….”

DOE touts the consensus rule – developed with industry, utilities, and environmental groups – as one that “will save more energy than any other standard issued by the Department to date.” The “negotiated rulemaking” of consensus standards in such a rule supports the DFR process, and can be consistent with the APA’s good cause for “unnecessary” advance notice and public comment.

► The DFR and process here supplement the requirements of the APA, they do not supplant those requirements. The detailed process by which DOE is required to develop energy efficiency standards reduces the need for or likelihood of any judicial review of those standards under the APA.

DOE may propose also the same language of the DFR as a proposed rule, and in this instance, DOE has already published proposed rules related to numerous standards amendments, and therefore will publish a supplemental notice of proposed rulemaking consistent with the direct final rule. The wisdom of that process is clear – as the statute provides, if the DFR fails because of a substantive adverse comment, DOE may proceed on the proposed rule without significant loss of time and effort, an efficient process.

Finally, the degree of savings that DOE claims for these efficiency standards requires scrutiny. While the savings are quite substantial, part of that degree comes from interjection of the “social cost of carbon” theory. Such analyses and “co-benefits” may be legitimate, but an honest evaluation requires that they be tempered by an equivalent degree of analysis of the “social benefits of carbon” and “co-costs.”