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

Monday Morning Regulatory Review – 3/27/17: Lack of Regulatory Plan as Default

Posted in Judicial Process, Regulatory Flexibility & Small Business, Regulatory Process

dawn over the capitol aocRegulatory practice remains in a curious near-catatonic state two months after the inauguration of a new Administration.  Legislation is amputating prior rules, almost no affirmative regulatory activity is noticeable, and judicial review has slowed markedly while awaiting the Administrative to state of its intentions.  Doctrinal development has all but ceased for the time being.

Congress:  Much has been written about the resurrection of the Congressional Review Act (CRA) – and much has been overwrought or inaccurate.  The CRA provides for a delayed effective date and specific House of Representatives and Senate rules of proceeding for a class of joint resolutions; by its terms it is not judicially reviewable and challenges to any provision remain speculative.  The CRA was successfully invoked only once prior to this year.  A short resume of the current Congress, however, shows that the House has initiated and passed 14 joint resolutions of disapproval; the Senate has, thus far, concurred in 10; five are pending signature by the President of the United States (POTUS); and POTUS has signed three joint resolutions of disapproval into law.  On the other side of the coin, the Senate has initiated and passed only one joint resolution of disapproval and sent it to the House.  Many of these joint resolutions will eventually become law and vitiate targeted rules – and there are more to come.

The regulatory necrology is likely to continue also through the more common and more popular process of inserting riders on appropriations, as noted previously with regard to past omnibus or consolidated appropriations bills.  The Administration’s proposed sweeping budget reductions encourage the insertion of legislation on appropriations despite rules to the contrary.  Some suggest that one target of such riders could be nondiscretionary regulatory actions that have been difficult for the Environmental Protection Agency (EPA) to fulfill and that have become a source for environmental advocacy groups to litigate to compel policy actions, such as two recent decisions of the United States District Court for the District of Columbia largely in favor of California Communities Against Toxics and Blue Ridge Environmental Defense League.

Congress may take significant if narrow actions to direct regulatory results, but legislation – including all the “reform” bills directed at the past Administration that would now hamper the current Administration – is quite limited.  At this point, Congressional action is leading regulatory practice piecemeal and by default.

The Administration:  The Administration has substantially quelled regulations by the agencies – beginning, quite naturally, with a freeze, a withdrawal of pending rules, and delay in effective dates pending review by new political appointees.  Much was made of the Chief of Staff (COS)’s memorandum when it was issued – particularly by those whose memories are short:  almost the same memorandum was issued at the beginning of the Obama Administration, the Bush (II) Administration ….  Complaints were much ado about normalcy, but the current edition has instituted some longer-term effects that are not normal.

While the agencies aggressively delayed regulations initially, they have taken a conservative approach to extending delayed effective dates.  The COS memorandum asked for a 60-day delay from the beginning of the Administration, but the need for more time has lead agencies to propose rules under the Administrative Procedure Act (APA) simply to extend effective dates significantly with short public comment periods.  Some APA advance notice and an opportunity for public comment may be necessary where an effective date or compliance date is incorporated into regulatory text for applicability purposes, but it is wise to take this approach for any substantial delay even if not required.  At least two suits have been filed seeking to hold specific delays in effective dates to be contrary to the APA, vacate the delays, and thereby make the subject rules effective, but the plaintiffs have applied little pressure for rapid adjudication.

The notable lack of affirmative regulations is also telling.  Only five statutorily mandated proposed rules are pending in the Office of Management and Budget (OMB) Office of Information and Regulatory Affairs (OIRA) executive and interagency review fully two months into the Administration.  All five are Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) annual rate-setting rules; three are economically significant.  POTUS’s Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs, requirement that agencies propose the elimination of two rules for each new rule and generate positive economics (whatever these numerics actually mean) may be taking a toll – as intended.

Moreover, POTUS has not nominated an OIRA Administrator – a critical position for the management of the regulatory agenda.  OIRA, through its career Deputy Administrator, as noted previously, has issued the data call for the Spring 2017 Unified Agenda of Regulatory and Deregulatory Actions.  The Regulatory Flexibility Act (RFA), of course, requires agencies to publish semiannual regulatory flexibility agendas in the Federal Register identifying rules that may have a significant economic impact on a substantial number of small entities and that has been combined with the regulatory review process.  The actual substance of the Unified Agenda – whether RFA-driven or not – will require significant political input and that is difficult without clear OIRA political leadership.  (Nominations generally are well behind the pace of previous Administrations).

Rather than moving forward on regulations, agencies have begun proposing formal reconsideration of the accomplished facts.  The EPA and Department of Transportation (DOT) National Highway Traffic Safety Administration (NHTSA), for example, recently published a Notice of Intention To Reconsider the Final Determination of the Mid-Term Evaluation of Greenhouse Gas Emissions Standards for Model Year 2022–2025 Light Duty Vehicles.  The “mid-Term” decision was due April 1, 2018, but the previous Administration’s EPA unilaterally sought to lock in a demanding standard without coordinating with NHTSA’s Corporate Average Fuel Economy (CAFÉ) standards for cars and light trucks for the same model years.  Backing up requires a different gear.

The Judiciary:  The courts have evidenced a wise skepticism of reviewing regulations from the prior Administration given the vociferous anti-regulatory script of the current Administration.  The EPA and Department of Defense, Army Corps of Engineers’ Clean Water Act:  Definition of “Waters of the United States” (WOTUS) provides a good example.  The WOTUS Rule was previously stayed by the United States Court of Appeals for the Sixth Circuit, and briefing on the merits has been stayed pending a United States Supreme Court (SCOTUS) decision on Court of Appeals jurisdiction in National Association of Manufacturers v. Department of Defense, but the Solicitor General seeks to hold briefing in abeyance pending a new rule.  SCOTUS may act on that motion as early as today, but it could even go further given the state of uncertainty and a likely intervening regulation and dismiss its grant of review.  Unlike a rule premised on Justice Kennedy’s functional “significant nexus” test, a much simpler geographic rule less encumbered by individualized determinations could survive judicial review by hewing closely to the statutory definition and text of the Clean Water Act (CWA).  All this may not matter – if SCOTUS were simply to dismiss the writ of certiorari based on the new position of the Government (not as improvidently granted because it was provident at the time) a new rule might interpose before the Sixth Circuit would reach the merits of the current stayed rule – if it directed completion of briefing at all.  The quagmire seems to lead to one conclusion – the moribund WOTUS rule is unlikely to ever become effective.

Some courts seek answers, such as the Tenth Circuit regarding the continued efficacy of the Department of the Interior (DOI) Bureau of Land Management (BLM) Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands final rule.  As noted previously, the court asked for the government’s view of the litigation before it committed to oral argument.  The Department of Justice (DOJ) subsequently moved to hold Wyoming v. Zinke in abeyance pending a proposed rule, and the Court of Appeals partially granted that motion by delaying oral argument, but also requesting further briefing on the state of judicial orders vacating the rule and the Administration’s intentions.

Other courts, notably the United States Court of Appeals for the District of Columbia Circuit, continue to schedule oral argument in cases challenging the former Administration’s regulations.  The effect, naturally, is to force the Administration to file a motion or state openly during oral argument whether it wishes to litigate or sound a retreat.

One case already argued in the D.C. Circuit, the State of West Virginia v. EPA, has been the subject to great speculation.  Various outlets have suggested that the Administration will abandon its defense of the prior Administration’s Clean Power Plan or seek (again) to hold litigation in abeyance while revising the rules, but no executive action or judicial filing has been forthcoming.  The latest version suggests an Executive Order will be issued Tuesday – but why an Executive Order is needed remains unclear.  Recall that the Clean Power Plan (CPP) lies in the unusual posture of being argued initially before the en banc Court of Appeals after SCOTUS stayed the effective date of the rule pending a Court of Appeals decision and any petition for certiorari.  Denial of the many petitions for review on substantive grounds could complicate any Administration plan to alter the result.

Many regulations from the prior Administration are in various stages of judicial review and these barely highlight the complexity of those dockets.  At present, the courts are left to react to some action by the Executive (although they can certainly force that action) on how the current Administration wishes to proceed.  Unfortunately, DOJ has been less than responsive, and while this would not lead to an adverse substantive decision, DOJ should not wish to trifle with the courts displeasure at being left in a lurch.

In short, the Administration is now well behind the curve in its regulatory agenda – other than a default of not having a regulatory agenda and that creates more problems than solves.