Regulatory practice last week presented a number of different Congressional interventions – from the complexity of a Consolidated Appropriation for the remainder of the fiscal year, to disapproval of a regulation under the Congressional Review Act (CRA), to a direct legislative vitiation of a final rule. The Administration took two different steps toward reconsideration of politically and judicially contested issues through executive and interagency review of a new Waters of the United States (WOTUS) rule and an Executive Order mandating reconsideration of exemptions under the contraceptive mandate. Finally, the Food and Drug Administration (FDA) published a compliance date extension as an interim final rule, with dubious exceptions from Administrative Procedure Act (APA) requirements.
Appropriations Impact on Regulations: The House of Representatives and Senate enacted, and the President of the United States (POTUS) signed on May 5, H.R. 244, the Consolidated Appropriations Act, 2017, completing the appropriations process for the current fiscal year with significant impacts on extant regulations and the authority to promulgate or implement regulations. The conformed text of the enrolled H.R. 244 (700+ pages of fine print) contains some interesting requirements beyond the routine ‘no funds shall be expended’ to enforce a specific rule language – both significant and not, many repeats from prior appropriations, but some new.
Among the General Provisions – Government-Wide actions that affect all agencies, Congress has reinforced its will in disapproving regulations under the CRA:
None of the funds made available pursuant to the provisions of this or any other Act shall be used to implement, administer, or enforce any regulation which has been disapproved pursuant to a joint resolution duly adopted in accordance with the applicable law of the United States.
The provision actually has substance in that it invokes the appropriations enforcement process to ensure that agencies and agency personnel clearly understand the demise of a particular regulation under the CRA.
Among the significant prohibitions, Congress barred the Department of Housing and Urban Development (HUD) from requiring any grantee (i.e. local political subdivision) “to undertake specific changes to existing zoning laws” to comply with HUD’s Affirmatively Furthering Fair Housing final rule and guidance. The scope of the rule has always been debated, but HUD cannot force zoning changes.
Also significant, the Department of the Treasury (DOTr), including the Internal Revenue Service (IRS), from issuing, revising, or finalizing any regulation, revenue ruling, or other guidance not limited to a particular taxpayer (i.e. a ruling letter) “relating to the standard which is used to determine whether an organization is operated exclusively for the promotion of social welfare for purposes of section 501(c)(4) of the Internal Revenue Code of 1986” (IRC). The effect here is to limit the IRS’s ability to reinterpret the standard for one particular tax exempt status.
On the other hand, Congress continued its bar application of the FDA’s hazard analysis and risk-based preventive control requirements in its food for animals rules from being applied to the production, distribution, sale, or receipt of dried spent grain byproducts of the alcoholic beverage production process. In short, spent grains from beer can be fed to farm animals provision.
► Unquestionably, the appropriation contains and limits substantive authorizations, but that is Congress’ prerogative because an appropriations law is still a superseding law.
Pending Disapproval: The House and Senate presented also to POTUS for signature one more joint resolution of disapproval under the CRA. H. J. Res. 66 disapproves the Department of Labor (DOL) Savings Arrangements Established by States for Non-Governmental Employees final rule.
► At least one more joint resolution of disapproval of a final rule is expected before the legislative days calendar under the CRA (theoretically) runs out. The point here is merely to note the event – now 14 joint resolutions of disapproval under the CRA – and put that event in context with the appropriations process and the legislative process.
Legislation Repealing Regulation: Fully outside either the CRA or appropriations mechanisms, Congress can – and has – enacted legislation to vitiate a regulation. S. 496, presented for POTUS’s signature on May 2, 2017, specifies that the Department of Transportation (DOT)’s Federal Highway Administration (FHA) and the Federal Transit Administration (FTA) Metropolitan Planning Organization Coordination and Planning Area Reform final rule promulgated December 20, 2016, “shall have no force or effect, and any regulation revised by that rule shall be applied as if that rule had not been issued.”
The Senate passed the bill without amendment by unanimous consent. In the House, one side of the aisle suggested that all “understood the unintended ramifications that this last-minute rule created” while the other side of the aisle argued that “the rule was haphazardly put together on an expedited timeline,” and all universally condemned the result in a 417 – 3 approval of the repeal.
► While the CRA short-circuits a number of rules, S. 496 exemplifies efficiency in the Senate and House rules. Any regulation may be vitiated by Congress if Congress has the will – the appropriations process and CRA are convenient mechanisms for effecting that will (though some would say undermining the protection of minority interests). Perhaps recognizing (anticipating?) reality, DOT submitted a proposed rule to Office of Management and Budget (OMB)’s Office of Information and Regulatory Affairs (OIRA) for executive and interagency review on April 6, 2017, to revise again the rule. Both now reside at 1600 Pennsylvania Ave.
WOTUS Reconsideration: The Environmental Protection Agency (EPA) submitted a Definition of “Waters of the United States” Recodification of Preexisting Rules proposed rule to OMB last Tuesday. With the prior EPA and Army Corps of Engineers previous final rule stayed and litigation in abeyance with the exception of (and depending on) the issue of judicial review jurisdiction pending before the United States Supreme Court (SCOTUS), the proposed rule was entirely expected.
► The proposed rule is deemed to be not economically significant – assuming the accuracy of the title, the baseline for analytical purposes has never changed because the rule subject to judicial review has never become effective. Recodification of prior regulations would have no economic impact – the technical term “recodification” signals no substantive change in the regulations.
Contraceptive Mandate Reconsideration: POTUS issued an Executive Order supporting religious freedom and, in doing so, set in motion reconsideration by the Department of Health and Human Services (HHS) and its cohorts in Patient Protection and Affordable Care Act (PPACA or Obamacare) insurance regulations relating to conscience-based objections (exemptions) from the contraceptive / preventive care mandate. The reconsideration is not a surprise, but the Executive Order reflects a consciousness of litigation consequences with a new provision:
Severability. If any provision of this order, or the application of any provision to any individual or circumstance, is held to be invalid, the remainder of this order and the application of its other provisions to any other individuals or circumstances shall not be affected thereby.
► The severability of provisions that represent no final agency action may be unnecessary, but also is cautious of judicial interpretation that might disagree. Initial reactions seem to reflect the public relations rather than substantive value of the Executive Order.
Compliance Extension Good Cause: Finally, but by no means the least important, the FDA published its Food Labeling; Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments; Extension of Compliance Date; Request for Comments interim final rule (IFR) last Thursday. The IFR extends the compliance dates for publishing nutritional values for standard menu items until May 7, 2018. The FDA argues a series of reasons why it need not provide advance notice and an opportunity for public comment under the APA before making the rule final; although seemingly lengthy, FDA’s “concise statement” of reasoning is quite conclusory:
To the extent that 5 U.S.C. 553 applies to this extension of the compliance date, the action is exempt from notice and comment because it constitutes a rule of procedure under 5 U.S.C. 553(b)(A). Alternatively, to the extent that the notice-and-comment and delayed effective date requirements set forth in 5 U.S.C. 553 applies to this action, the implementation of this action without opportunity for public comment, effective immediately upon publication today in the Federal Register, is based on the good cause exceptions in 5 U.S.C. 553(b)(B) and (d)(3). Given the imminence of the compliance date (May 5, 2017), and the fact that, as discussed above, a number of regulated establishments continue to raise numerous, complex questions about applicability of the menu labeling requirements and about how to implement them, we have decided that providing an opportunity for public comment would be impracticable and contrary to the public interest. This is because providing immediate notice to covered establishments of the additional time to come into compliance allows for more efficient planning and accounting for implementation of requirements, thus reducing regulatory burden and costs on affected entities. In addition, providing immediate notice that there will be additional time to comply is necessary so that affected entities can avoid incurring immediate costs and efficiently plan and account for implementation of the requirements by the imminent compliance date. Good cause exists to delay the compliance date without comment and effective immediately.
► FDA’s arguments are legally dubious at best. FDA asserts that the extension is a procedural rule in a single sentence, without any justification of how it is “procedural,” let alone fits within any judicial interpretation of the APA term. FDA’s “good cause” arguments are more detailed, but also pose problems. For example, FDA’s ‘imminence and complexity’ argument making advance notice and comment impracticable sounds like it means “emergency” but the APA exception does not support an “emergency created by the agency’s created deadlines.” FDA’s efficiency argument sounds only that an immediate rule is a good idea, not that compliance with the law requiring advance notice and an opportunity for public comment is contrary to the public interest. What FDA does not assert is that any private interest is adversely affected by changing the compliance dates that appeared in the preamble of its final rule or that a change even requires a further rulemaking, leaving the cynical to wonder if the FDA is bypassing advance notice and an opportunity for public comment merely because it believes that it can do so with impunity.
Programming Note: Due to planned travel, a Monday Morning Regulatory Review next week is unlikely, unless, of course, some truly significant event occurs in regulatory practice.