Litigation over two more major rules was put on hold last week, leaving little actual litigation over past Administration rules proceeding – with small exceptions that may be short lived. At the same time, one court of appeals recognized the reality of appropriations effectively limiting agency discretion – particularly when court orders have consumed limited agency resources. Much of the actual regulatory practice resides within intra-agency reconsideration but the public face of that process is reflecting in a very few complicated executive and interagency reviews.
Clean Power Plan: The United States Court of Appeals for the District of Columbia Circuit last Friday ordered further proceedings in West Virginia v. EPA held in abeyance for 60 days and directed the Environmental Protection Agency (EPA) (i.e. the Department of Justice (DOJ)) to file status reports at 30-day intervals. The court ordered also briefs to be filed not later than May 15 addressing whether the consolidated cases should be remanded to EPA rather than held in abeyance. The court deferred a slew of tactical motions.
West Virginia v. EPA is the lead for 39 consolidated petitions for review of the Obama Administration EPA’s signature Clean Power Plan – Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units final rule published October 23, 2015. The D.C. Circuit declined to stay the final rule, but the United States Supreme Court (SCOTUS) stayed until after disposition of any petition for certiorari, and which the en banc D.C. Circuit held more than seven hours of oral argument last September. The Trump Administration announced its intention to reconsider the rule and EPA has published a notice of intent to do so.
► This latest abeyance of litigation holds perhaps the most complicated of challenges to past-Administration rules that the present-Administration wishes to reconsider – the litigation certainly has progressed the furthest through the juridical mill. It is somewhat surprising that the full court (10 judges acting per curiam in an unsigned order and without a written dissent) would put so much work aside, but it is also unsurprising given the doctrinal requirement that a court decide cases on the basis of the law as it exists at the time of decision – and that law is now being seriously defocused.
Mercury and Air Toxics Rule: The Clean Power Plan hold overshadowed the D.C. Circuit order that litigation over the EPA’s Mercury and Air Toxics Standards (MATS) rules for electric generating plants be held in abeyance. The Obama administration wrote the 2016 Supplemental Finding to address the failure to provide a benefit / cost analysis for the 2012 MATS rule (i.e. consider costs) after SCOTUS remanded Michigan v. EPA and the D.C. Circuit subsequently remanded without vacatur for the EPA to provide the missing analysis and a Supplemental Finding on which the regulation could be based. EPA issued the Supplemental Finding in April 2016 and, once again, litigation ensured, this time as Murray Energy v. EPA. On April 27, a D.C. Circuit panel removed Murray Energy from its May 18 oral argument calendar and ordered the consolidated cases be held in abeyance pending further order of the court, but also directed EPA to file status reports on its further review of the Supplemental Finding at 90-day intervals and ordering all parties to file motions to govern future proceedings within 30 days after EPA files its decision on the Supplemental Finding.
► The point is that nearly all litigation challenging substantial Obama Administration final rules has come to a standstill – one exception being that SCOTUS wants to continue briefing of whether the Court of Appeals (in this case, Sixth Circuit) has jurisdiction over the challenges to the Clean Water Rule: Definition of “Waters of the United States,” but that case would not be scheduled for argument at least until October and further motions in light of Administrative action are likely. The ball is firmly in the Administration’s court, but the judicial reporting and motion deadlines make clear that simple delay will not be acceptable.
Litigation Choice & Appropriation Limitation: In a marginally regulatory case that just can’t be overlooked, the United States Court of Appeals for the Ninth Circuit upheld a decision by the Department of the Interior (DOI) Fish and Wildlife Service (FWS) that a species of tree could not be listed and protected under the Endangered Species Act (ESA) because of past judicial consumption of limited agency budgetary resources. The issue here is regulatory because the ESA provides a highly intricate set of regulatory steps to reach a determination, the details of which can be bypassed for present purposes. In short, the panel summarized in Wildwest Institute v. Kurth, that the Secretary may make a determination that a species is threatened or endangered “solely on the basis of the best scientific and commercial data available to him after conducting a review of the status of the species and after taking into account those efforts, if any, being made” … “to protect such species.” A determination, however, may be “precluded by pending proposals to determine whether any species is an endangered species or a threatened species.” That is, the warranted action “must be precluded by pending proposals and expeditious progress must be being made to list qualified species and delist those for whom ESA’s protections are no longer necessary.”
In the present case of the whitebark pine, FWS concluded that an immediate listing proposal as threatened or endangered was “precluded by court-ordered and court-approved settlement agreements, and listing actions with absolute statutory deadlines, and work on proposed listing determinations for those candidate species with a higher listing priority.” Thus, the panel reached the unfortunate conclusion:
When we are dealing with the potential life or death of an entire species, the legitimacy and efficacy of this system (where we accept that certain listings are “warranted but precluded”) seems to be questionable policy. It means in substance that a species in peril needs some protective standards, but will get none. Yet, it is the system devised by Congress in its explicit statutory language, and so we must accept that so long as expeditious progress is being made to list/delist species and the action is actually precluded by pending proposals, the Secretary is authorized to make a “warranted but precluded” finding. Allowing the Secretary to do so is the natural consequence of the statutory language and of the fact that the Secretary has limited resources. When pending actions outstrip available resources, the Secretary must make its choices and live with its priorities, even though that means leaving factually (if not listed) threatened or endangered species without the protections of the ESA.
The ESA requires FWS to publish after notice and comment “guidance” on how it proceeds in making listing decisions and FWS’s guidance suggests a “worst first” approach, but that does not bind FWS to preclude other factors, as the court found. At bottom, the sum of FWS’s worst-first approach as limited by the current menu of court orders requiring FWS to act within the bounds of the FWS appropriation means that the tree – and the tree’s defenders – lose.
► Bear in mind that even a statute that might theoretically require an agency to request an appropriation of a size to fulfill a specific requirement (rather than the general percentage loss between authorization and appropriation), does not create a judicially reviewable final action. Appropriations requests are nothing more than that – only Congress determines the amount to be appropriated and that may be drawn from the Treasury for a purpose (and those are unreviewable). In a version of the admonition – be careful what you ask for, you may get it – appropriations would say: be careful what you sue for, you will limit other demands.
Complicated Executive and Interagency Reviews: The Office of Management and Budget (OMB) Office of Information and Regulatory Affairs (OIRA) does not yet have a heavy docket, but the substance is becoming more interesting. Three rules under review deserve some attention.
The Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) last Wednesday submitted a proposed Revision of Requirements for Long-Term Care Facilities: Arbitration Agreements for review. CMS was immediately sued when it published a Reform of Requirements for Long-Term Care Facilities final rule last October that prohibited any Medicare-participating skilled nursing facility and Medicaid-participating nursing facility from adopting pre-dispute arbitration agreements with facility residents. CMS was unable to quantify the benefits of that final rule but estimated the total projected cost will be about $831 million in the first year and $736 million per year for subsequent years. In AHCA v. Burwell, the United States District Court for the Northern District of Mississippi preliminarily enjoined enforcement of the HHS final rule, and the Obama Administration appealed the preliminary injunction to the United States Court of Appeals for the Fifth Circuit. The Trump Administration asked to extend the time to file its opening brief until May 5, 2017.
► The original rule was economically significant; the proposed rule is not deemed to be so. With the filing of a proposed rule for OMB review, however, DOJ is likely to file a motion, rather than a brief in AHCA – whether a motion to hold in abeyance, to further defer briefing, or even to dismiss – this week. The efficacy of the CMS bar to pre-dispute arbitration agreements under the Medicare and Medicaid statutes, as contrasted with the Federal Arbitration Act, may never be decided.
The Department of Labor (DOL) Occupational Safety and Health Administration (OSHA) submitted an Occupational Exposure to Beryllium proposed rule to OMB on Thursday, complicating an already complicated history. OSHA published an Occupational Exposure to Beryllium final rule on January 9, 2017. OSHA subsequently delayed the effective date until May 20, 2017, consistent with the change in Administration and the new Administration’s request. In the meantime, however, multiple petitions for review of the rule were filed in multiple Courts of Appeal, setting in motion the order of the Judicial Panel on Multidistrict Litigation (JPMDL), In re: Occupational Safety and Health Administration, Final Rule: Occupational Exposure to Beryllium, 82 Fed. Reg. 2470, Issued on January 9, 2017, MCP No. 143 (Jan. 30, 2017), consolidating and assigning to the United States Court of Appeals for the Eighth Circuit under the moniker of Airborne v. OSHA. The Eighth Circuit has ordered OSHA to file the certified administrative record by next Monday. The parties must submit a joint appendix and petitioners must submit their opening brief by May 22, 2017. OSHA’s brief would be due 30 days hence, and intervenors would file their brief two weeks later.
► The imminent (?) interjection of a proposed rule may cause that schedule to be reconsidered. Once again, the original final rule was economically significant, but the proposed rule is deemed not to be so.
HHS’s Food and Drug Administration (FDA) submitted a draft interim final rule (IFR), Food Labeling; Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments; Extension of Compliance Date; Request for Comments. The FDA labeling rule was published December 1, 2014, and the FDA previously extended the final rule effective date from December 1, 2015, for one year. Under the current state of affairs, compliance with the rule can be enforced on May 5, 2017. The National Association of Convenience Stores and the National Grocers Association petitioned the FDA to stay and reconsider the rule with only a month remaining before compliance. The FDA submitted the IFR for executive and interagency review on April 26, 2017.
► The nominal designation of the IFR suggests that FDA is seeking to further extend the compliance date on an “emergency” basis, but that is just speculation. Whether such an argument would comply with the Administrative Procedure Act (APA) “good cause” exceptions to advance notice and an opportunity for public comment is also speculative – but not for long given the looming compliance date on Friday.