FCC, Local Jurisdictions & Cell Towers:  Congress tried to balance competing federal (nationwide communications) and local (zoning regulation) concerns about siting cell towers in the Telecommunications Act of 1996 by setting parameters for local primacy, with antidiscrimination provisions, and a timing limitation.  The State or local government “shall act on any request for [build a cell tower] within a reasonable period of time after the request is duly filed….”  The Federal Communications Commission (FCC) adopted a rule setting a presumptive “reasonable period.”  The United States Court of Appeals for the Fifth Circuit held that the Chevron framework applied to the threshold question whether the FCC possessed statutory authority to adopt specific 90- and 150-day timeframes.  The Court granted certiorari to consider whether an agency’s interpretation of a statutory ambiguity that concerns the scope of its regulatory authority (that is, its jurisdiction) is entitled to deference under Chevron U.S.A. Inc. v. NRDC, Inc.

Chevron Deference:  Chevron holds that courts owe deference to an agency interpretation of their programmatic statutes in a familiar two-step process:

1. The court must determine, applying the ordinary tools of statutory construction, “whether Congress has directly spoken to the precise question at issue.  If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”
2. But “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”  If so, the court must defer to the agency’s interpretation and the court not decide the issue itself.

In this case, the relevant Act of Congress imposed five substantive limitations, only one of which was at issue:  the Act requires state or local governments to act on wireless or cell tower siting applications “within a reasonable period of time after the request is duly filed” and the issue is whether the FCC has “jurisdiction” to interpret that phrase, and is due deference.

SCOTUS Decision:  The Court, by Justice Scalia, noted that Chevron is based on a presumption of congressional intent (establishing intent is a separate issue):  prior cases have held that Congress’s ambiguity in a statute delegating rulemaking authority, “understood that the ambiguity would be resolved, first and foremost, by the agency, and desired the agency (rather than the courts) to possess whatever degree of discretion the ambiguity allows.

The Court rejected for agencies the “jurisdictional” distinctions that are applicable to statutes affecting judicial review and the courts.  Justice Scalia makes clear that under Chevron:

the distinction be­tween “jurisdictional” and “nonjurisdictional” interpreta­tions is a mirage.  No matter how it is framed, the question a court faces when confronted with an agency’s interpretation of a statute it administers is always, simply, whether the agency has stayed within the bounds of its statutory authority.

Judicial “jurisdictional” distinctions do not apply to agency administration of Congressional Acts:

Both [the agency’s] power to act and how they are to act is authoritatively prescribed by Congress, so that when they act improperly, no less than when they act beyond their jurisdiction, what they do is ultra vires. Because the question — whether framed as an incorrect application of agency authority or an assertion of author­ity not conferred — is always whether the agency has gone beyond what Congress has permitted it to do, there is no principled basis for carving out some arbitrary subset of such claims as “jurisdictional.”

Granting an agency deference over the interpretation of its jurisdiction simplifies, in Justice Scalia’s view, the decision on the first and only critical element:

In sum, judges should not waste their time in the mental acrobatics needed to decide whether an agency’s interpretation of a statutory provision is “jurisdictional” or “nonjurisdictional.”  Once those labels are sheared away, it becomes clear that the question in every case is, simply, whether the statutory text forecloses the agency’s assertion of authority, or not.

Concur:  Justice Breyer joined the majority’s judgment and “such portions of its opinion as are consistent with” his concurring opinion.  Although not necessary to a Court majority and decision, Justice Breyer’s view (particularly in administrative law) may persuade judges in future cases.

I say that the existence of statutory ambiguity is sometimes not enough to warrant the conclusion that Congress has left a deference-warranting gap for the agency to fill because our cases make clear that other, sometimes context specific, factors will on occasion prove relevant.

And he provides those very relevant factors, citing prior authority, including:

the interstitial nature of the legal question, the related expertise of the Agency, the importance of the question to administration of the statute, the complexity of that administration, and the careful consideration the Agency has given the question over a long period of time.

Justice Breyer illuminates further two key points:

The subject matter of the relevant provision — for instance, its distance from the agency’s ordinary statutory duties or its falling within the scope of another agency’s authority — has also proved relevant.

Moreover, the statute’s text, its context, the structure of the statutory scheme, and canons of textual construction are relevant in determining whether the statute is ambiguous and can be equally helpful in determining whether such ambiguity comes accompanied with agency authority to fill a gap with an interpretation that carries the force of law.

Dissent:  Chief Justice Roberts (joined by Justices Kennedy and Alito) disagreed and succinctly expressed the disagreement:

A court should not defer to an agency until the court decides, on its own, that the agency is entitled to deference.  Courts defer to an agency’s interpretation of law when and because Congress has conferred on the agency interpretive authority over the question at issue.  An agency cannot exercise interpretive authority until it has it; the question whether an agency enjoys that authority must be decided by a court, without deference to the agency.

The dissent looks to the separation of powers problem inherent to deferring to an agency’s view of the contours of its own power:

The Court touches on a legitimate concern:  Chevron importantly guards against the Judiciary arrogating to itself policymaking properly left, under the separation of powers, to the Executive.  But there is another concern at play, no less firmly rooted in our constitutional structure.  That is the obligation of the Judiciary not only to confine itself to its proper role, but to ensure that the other branches do so as well.

The dissent holds to the structure of the question, agreeing that the Fifth Circuit correctly recognized that it could not apply Chevron deference to the FCC’s interpretation unless the agency possessed statutory authority to administer the reasonable time provision of the Act, but argues that the Fifth Circuit erred by granting Chevron deference to the FCC’s view on that antecedent question.

Rejecting Jurisdiction – Not Solving Issues:  The Court’s decision might be seen as expanding deference to an agency’s interpretation of its underlying statute, but only slightly or perhaps not at all.  Courts must still determine, often under the Administrative Procedure Act (APA), whether the agency has acted in accordance with the statute – but without the aid of a jurisdictional exception.  Agencies may, if they are capable, clarify ambiguity, apparently even ambiguity over common words, but their statements too must be clear and supported.  City of Arlington v. FCC eliminates a short-hand distinction but does not resolve issues generated by Chevron; rather it may complicate those issues.

The dissent points out, and the majority finds understandable, concern for the growth of agency power.  An agency naturally tends to expansively interpret its authority as a byproduct of political pressures to accomplish goals and bureaucratic pressures to respond, thereby expanding the regulatory portfolio.  City of Arlington does not help temper agency aggrandizement tendencies or require Congressional clarity.

Recess Appointments:  The United States Court of Appeals for the Third Circuit decision in NLRB v. New Vista Nursing and Rehabilitation (2-1) stuck down POTUS’ recess appointments to the NLRB on different reasoning and on a different timeframe than the D.C. Circuit’s opinion in Noel Canning v. NLRB.

The Third Circuit concluded that the NLRB panel lacked the requisite quorum of members to exercise the NLRB’s authority because one panel member was invalidly appointed during an intrasession break, agreeing with the result of the D.C. Circuit.  Alone this warranted vacating the NLRB’s orders:

In sum, the parties argue that “the Recess of the Senate” has one of three meanings: (1) intersession breaks; (2) intersession and intrasession breaks that last a non-negligible period, which has historically been ten days (“long intrasession breaks” hereinafter); or (3) any time in which the Senate is not open for business and is unavailable to provide its advice and consent.  We hold that “the Recess of the Senate” means only intersession breaks, and so we conclude that Member Becker’s appointment was invalid.

► The Third Circuit’s reasoning may differ from the D.C. Circuit reasoning, but the decision adds more pressure for the United States Supreme Court (SCOTUS) to grant the Solicitor General’s petition in NLRB v. Noel Canning.  Respondents are likely to cite New Vista as further support for their position that the D.C. Circuit decision was correct, whether the oppose certiorari or not.

► As noted previously, these cases raise a constitutional issue that could fully undercut the efficacy of a number of regulatory actions taken by the NLRB and other agencies.  Some will argue that these cases create a “constitutional crisis,” but they represent no more than the inherent breadth of reach in separation of powers cases.

Tummino Stay to the Second.  As expected, the Department of Justice (DOJ) has appealed the District Court’s decision in Tummino v. Hamburg, requiring the Department of Health and Human Services (HHS) Food and Drug Administration (FDA) to make emergency contraceptive Plan B available to teenagers without age limits, to the Second Circuit.  After the district court granted a temporary stay to permit the Second Circuit to act on a stay pending appeal, the Second Circuit ordered the motion referred, with any response, to a panel on May 28.

► Rapid action on the stay request may be followed by lengthier appellate timing.  Whether the Secretary of HHS had authority to make the final decision in light of non-regulatory delegations as contrasted with whether the District Court had authority to decide the case at all in light of complex statutory delegations and procedures commends extensive briefing.

Food Safety:  In a least surprising development in Center for Food Safety v. Hamburg, the parties have asked for more time to work out a timetable for the FDA to develop rules required by the Food Safety and Modernization Act.  The court’s order required the parties to confer and propose a schedule today, and the parties have requested an extension to June 10.  Also as expected, the plaintiffs believe that the schedule proposed by defendants does not comply with the court’s order; defendants believe their proposed schedule is reasonable; and neither is discussing the details.  They at least agree “in the interest of judicial economy” to request “more time to continue discussions in the hope of narrowing their differences.”

► The extension of the comment period on the first batch of FSMA proposed rules to September 16, 2013, cannot be retracted without affecting other interests not before the court, and complicates the negotiating process.

• Environmental Protection Agency (EPA)’s response to a possibly record-setting docket;
• Office of Management and Budget (OMB)’s completion of review of a major Department of Energy (DOE) efficiency rule;
• Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) adoption of “red flag” rules;
• SEC’s foray into public disclosure by social media;
• A little more National Labor Relations Board (NLRB) recess appointments discord; and
• The “beginning of the end” of Term watch at the United States Supreme Court (SCOTUS).

Carbon Delay:  The EPA reportedly conceded that it would delay finalization of its proposed Greenhouse Gas New Source Performance Standard for Electric Generating Units until 2014.  EPA received thousands of substantive comments and reportedly more than 2,000,000 total comments (many mass mailings) on the proposed rule.

►‘Mass mailings’ do not add substance to EPA’s consideration of the final rule, but managing those mass mailings may simply slow the process of consideration and the process of formulating a final rule.  In this case, the depth and complexity of the issues probably drive the delay.

Electric Distribution Transformers:  The highlight from OMB last week was the completed review, consistent with change, of the Department of Energy (DOE) Energy Efficiency Standards for Distribution Transformers final rule.  The subject of the rule (hidden beneath the lingua franca of public utilities engineering) are power grid transformers, so the costs and benefits should spread across the grid.  This economically significant final rule would implement a combination of a judicial settlement, some negotiated rulemaking, and a recurring reevaluation.

Red Flags:  On April 10, 2013, the SEC and CFTC jointly adopted Identity Theft Red Flag Rules that require broker-dealers, mutual funds, investment advisers and certain other regulated entities to adopt programs designed to detect “red flags” and prevent identity theft.  The rules require financial institutions and creditors to develop and implement a written identity theft prevention program designed to detect, prevent, and mitigate identity theft in connection with certain existing accounts or the opening of new accounts, and include guidelines to assist in the formulation and maintenance of programs that would satisfy the requirements of the rules.

Catching up on Digital Discourse:  The SEC, two weeks ago, released the results of an investigation that permits public companies to make at least some corporate disclosures via social media channels in an April 10, 2013, Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: Netflix, Inc., and Reed Hastings: Regulation FD.  The report suggests that use of social media for public company disclosure is that investors must generally be aware – i.e. the company needs to disclose to them – that the company is using the social media channel to disclose information.

►While the report comes to the issue from the perspective of investigating a company’s actions (Netflix President’s Facebook page), a real question remains:  has the SEC established a standard that stratifies investors by their adherence to a commercial third-party’s business model (i.e. advertising), and, therefore, should the SEC being adopting a rule?  Business interests may do so in their interest, but agencies must be cautious about their love affairs with social media and the implications for “public” notice.

At Odds:  President Obama (POTUS) proposed an increase in his FY2014 budget for the NLRB and announced three NLRB nominations; the House passed legislation that would bar all NLRB action until its post-Noel Canning authority is resolved.  It would appear that they are not talking.

City of Arlington Watch:  While many watch eagerly for politically freighted decisions (which might be decided on constitutional grounds large or small) from the United States Supreme Court (SCOTUS), this blog takes a more precise approach:  The Court heard argument in City of Arlington v. FCC on January 16, 2013, so a decision may now be ripe on whether a court should apply Chevron v. NRDC deference in reviewing an agency’s determination of its own jurisdiction.  An opinion may come as early as tomorrow, or Wednesday, … or late June.

Happy April 15th – do you know where your taxes are?  (which explains the picture at the top of this post).

The Department of Education (ED) took one step last week in its attempt to better regulate the “for profit” colleges, universities, and other schools:  ED published a revision of a preamble to rules that the United States Court of Appeals for the District of Columbia Circuit remanded because the prior explanation was inadequate.  Amending a preamble, however, may just be confusing, and may spawn more litigation.

Also last week, ED’s latest attempt in litigation fell flat:  to salvage some of the rules previously struck down by the United States District Court for the District of Columbia.  The court was not impressed that ED had presented a ground for amending its judgment.

Background:  The United States Court of Appeals for the District of Columbia Circuit in a lengthy opinion discussed last June vacated or remanded significant parts of the ED’s signature Higher Education Act (HEA) regulations of for profit schools in Association of Private Sector Colleges and Universities v. Duncan (II).  The court of appeals:

• affirmed the judgment of the District Court holding that the Compensation Regulations do not exceed statutory limits, but remand two aspects of the Compensation Regulations because ED failed to provide an adequate or reasoned explanation of (1) elimination of the safe harbor based on graduation rates provision, and (2) potential adverse effect on minority enrollment.
• held that the Misrepresentation Regulations exceed statutory limits in three respects: by (1) allowing enforcement actions against schools without procedural protections; (2) proscribing misrepresentations on subjects that are not covered by the statute; and (3) proscribing statements that are merely confusing.
• held that the distance education regulation was not a logical outgrowth of the proposed rules.

Thus, in Duncan II, the court of appeals affirmed in part and reversed in part Career College Association v. Duncan (I).

In separate litigation also reviewed here, United States District Court for the District of Columbia, less than a month later, vacated and remanded more of the rules in Association of Private Sector Colleges and Universities v. Duncan (III):  ED failed to provide a reasoned basis for the debt repayment standard of the debt regulation, and the district court vacated that provision.  The opinion illustrates DOE’s quintessentially arbitrary choice and caprice:

The debt repayment standard, by contrast, was not based upon any facts at all.  No expert study or industry standard suggested that the rate selected by the Department would appropriately measure whether a particular program adequately prepared its students.  Instead, the Department simply explained that the chosen rate would identify the worst-performing quarter of programs.  Why the bottom quarter?  Because failing fewer programs would suggest that the test was not “meaningful” while failing more would make for too large a “subset of programs that could potentially lose eligibility.”

Additionally, the court found that the repayment rate test cannot be severed from the other debt measures and, thus, the majority of the related rules could not stand and were vacated as well.

ED Responds to the Court of Appeals:  In a unique approach to the remand, ED revised the preamble discussion to its 2010 final regulations on private for profit college program integrity, but ED did not revise or re-promulgate the rules.  ED addresses in this Program Integrity Issues “final rule” published March 22, 2013, the elimination of a safe harbor provision that the court found ED had inadequately explained.  The “revisions to preamble” are precisely that: amendments not to regulatory text, but amendment to the preamble discussion as if it were a correction.  This poses several interesting issues aside from the substance of the discussion and the rule.

►The amendment to the preamble does not contain any promulgatory “words of issuance” – a bridge between the preamble and the regulatory changes that it proposes or makes or re-promulgates.  Without more, this “final rule” is not a final rule, but a notice, and may not be a “final agency action” upon which a party could bring suit under the Administrative Procedure Act (APA).  ED provides no justification for this process under the APA.  This may be a unique occurrence – and other examples and comments are always invited.

►If ED believes that this new explanation resolves the court’s finding of inadequacy, it may need to file a motion to amend the court’s judgment to that effect, but that is not entirely clear, nor is it clear that this action satisfies the requirements of the Administrative Procedure Act (APA).

►ED’s proffered substantive explanation may be inadequate and has not been tested in the crucible of public comment.  Whether this new rationale is arbitrary and capricious may be challenged anew – whether ED has complied with the remand does not require that ED take some new final agency action.  The process itself, however, belies one of the inadequacies of a remand without vacating a rule under Allied Signal – the agency may act in a far less definitive manner than promulgating a new rule.  This instance may be a cause for rearguing Allied Signal and returning to the APA’s original notion that a court must “set aside” a procedurally or substantively defective rule, a point raised in opinions by Senior Judges Sentelle and Randolph.

►ED does not address the court’s remand of provisions of ED’s misrepresentation regulations states that it will publish a separate “notice” addressing those issues.  The notice, however, seems to mix some of the misrepresentation issues into the safe harbor issue.  ED seems intent on creating new issues.

Seeking Relief in the District Court:  Also last week, the District Court in, Duncan (IV), denied the Department of Justice (DOJ)’s latest motion to alter or amend the judgment (Rule 59(e)) in Duncan III, which vacated specific provisions of the rule.  ED had argued that the disclosures provisions that the court upheld could not be fully effective without both the vacated reporting requirements and portions of the vacated debt measures.  As the court found, the reporting requirement violated Congress’s bar of a database.

►What the court did not mention is that ED seems to have its cart before its horse:  the agency is responsible for complying with statutory requirements; it is not the court’s responsibility to permit violation of one statutory requirement to permit the agency to more effectively implement another regulation.  ED really needs to start over.

ACUS:  Created by Congress, ACUS frequently makes significant recommendations that would improve the administration of government.  ACUS develops recommendations through committees that consider consultants’ reports on distinct topics.  As announced in a Federal Register Notice, four committees are scheduled to meet this Spring.

Committee on Adjudication: The committee plans to consider Dean Harold Krent (IIT- Chicago – law) and Associate Dean Scott Morris (IIT-Chicago – Psychology)’s draft report and recommendations on social security disability adjudication.  The draft report  presents findings and recommendations based on legal and empirical analysis of the Social Security Administration’s adjudication of Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) claims.  If memory serves, the SSA asked ACUS to undertake this study to analyze perceived problems.  The committee plans to meet:

• March 6, 2013 at 2:00 p.m.
• April 8, 2013 at 2:00 p.m.
• April 30, 2013 at 2:00 p.m.

Committee on Judicial Review: The committee plans to consider a draft report prepared by your author (note disclaimer) on the composition and compilation of administrative records prepared by federal agencies for use in informal agency regulatory proceedings and, if agency decisionmaking is challenged, for the purpose of review by federal courts.  The issue is of recurring interest within the Conference and the electronic revolution has changed much of the thinking that goes into administrative records.  The committee plans to meet:

• March 19, 2013 at 2:00 p.m.
• April 3, 2013 at 2:00 p.m.
• April 22, 2013 at 2:00 p.m.

Committee on Regulation:  The committee plans to discuss two projects:

1. A revised report examining the use of science by administrative agencies by Professor Wendy Wagner (Texas), as well as a set of proposed recommendations to enhance the transparency and integrity of agency scientific factfinding.  This study follows on an ACUS – National Academy of Sciences workshop, a George Washington University Regulatory Studies Center workshop, and a Small Business Administration (SBA) roundtable.
2. A draft report on independent agency assessment of the benefits and costs related to their rulemakings by Curtis Copeland and recommendations.  The independent agencies implement numerous statutory analytical requirements (not Office of Management and Budget (OMB) regulatory impact analyses) that deserve this review.

The committee plans to meet:

• March 4, 2013, at 1:00 p.m.
• April 2, 2013 at 1:00 p.m.
• April 29, 2013 at 1:00 p.m.

Committee on Rulemaking: will meet to consider a draft report by Professor Michael Herz (Cardozo) on the policy and legal issues implicated by agency use of social media to support rulemaking, and recommendations.

• March 25, 2013 at 2:00 p.m.
• April 23, 2013 at 9:30 a.m.

RSVP:  The committee meetings will be held at 1120 20th Street NW., Suite 702 South, Washington, DC 20036.  RSVP is required and can be done directly on the ACUS calendar.  Committee meetings are also streamed on the web.  Reports, as they are available, can be access by clicking through the calendar.

Disclaimer:  The author is a consultant to ACUS on the Committee on Judicial Review administrative records projected noted above.

Case Background:  Wheaton College and its co-appellant Belmont Abbey College sought relief from the Department of Health and Human Services (HHS) interim final rules requiring that they, as employers, provide preventative (contraceptive) care to employees at no cost because the colleges believe that such a requirement violates their religious tenets and, therefore, the First Amendment guarantee of freedom of religion.  The United States District Court for the District of Columbia dismissed both cases on the ground that the colleges lacked standing and that HHS’s pending rules changes – announced only through an advance notice of proposed rulemaking – rendered their claims unripe for review.

The court of appeals heard extended argument only last Friday on this issue, and summarily disposed of the standing issue, noting that standing is determined at the time of filing of the complaint – plaintiffs had standing at that time.

The ripeness issue, the court noted, “is more difficult.”  The court noted that counsel for the “Government” went further than HHS during oral argument:

First, it represented to the court that it would never enforce [the regulation] in its current form against the appellants or those similarly situated as regards contraceptive services.  ….  There will, the government said, be a different rule for entities like the appellants,  and we take that as a binding commitment.  The government further represented that it would publish a Notice of Proposed Rulemaking for the new rule in the first quarter of 2013 and would issue a new Final Rule before August 2013.  ….

We take the government at its word and will hold it to it.  ….  Based expressly upon the understanding that the government will not deviate from its considered representations to this court, we conclude that the cases are not fit for review at this time because “[i]f we do not decide [the merits of appellants’ challenge to the current rule] now, we may never need to.”

(brackets in original).  The court, therefore, held the cases in abeyance and requires the Government to provide status reports every 60 days.

Larger Issue Background:  The Government has taken the position on a number of occasions – whether dealing with the contraceptives or other rules – that its expressed intent to change a rule makes legal challenges to the rule unripe for review.  Similarly, the Government takes the position that once it has changed a rule, it is the new rule that applies – and has done so at the late stages of litigation.

Recent Supreme Court argument illuminated concern that the Government has been less than candid in advising the court of its intentions.  Certainly, the Government may change the rules, but the questions raised must be carefully parsed:

1. Has the Government committed to a rule change?  The issue here is presented only by an “advance notice of proposed rulemaking” (ANPRM), which is little more than a tool for acquiring information and most often contains no rule text or a basis for later objection that the submitting agency has adopted a rule that is not a logical outgrowth of its proposed rule.  An ANPRM can be so vague that the degree of “commitment” is nebulous.
2. Has the Government committed to a rule change?  The court of appeals order must be taken at face value:  it is relying upon not only the HHS commitment, but also the Government’s commitment in the form of the statements of a Department of Justice (DOJ) attorney representing the United States, not just one agency.  Whether intentional or not, the Office of Management and Budget (OMB) must be on notice that the court is relying on a commitment that it will be required to meet.  In addition, note the converse:  that an independent agency’s counsel appearing in court cannot, and mostly need not, obligate the “United States,” whereas a DOJ attorney – and particularly the Solicitor General – may obligate independent agency and the United States.  The complexities of representation and independence are a separate subject.
3. Does commitment to a rule change make a case unripe or just “ripening”?  The traditional result of a lack of ripeness is dismissal, but the court held the cases in abeyance – another signal that the Government’s word will be enforced until that day when the court may evaluate the application of the plaintiffs / appellants claims against that new rule.

Orders and Reports:  This is not the first, nor will it be the last, order that the Government report to the court on the status of pending contraceptive regulations – it is a common device.  An abeyance and report order says that the court will manage its docket to protect the pending interests in litigation – as well it should.  The Government’s obligation is to fair and efficient adjudication, not just winning.

The Decision Below:  The United States Court of Appeals for the Ninth Circuit succinctly stated the case before it in beginning its decision:

Northwest Environmental Defense Center (“NEDC”) brings suit against the Oregon State Forester and members of the Oregon Board of Forestry … and against various timber companies ….  NEDC contends that Defendants have violated the Clean Water Act (“CWA”) and its implementing regulations by not obtaining permits from the [EPA] for stormwater — largely rainwater — runoff that flows from logging roads into systems of ditches, culverts, and channels and is then discharged into forest streams and rivers.  NEDC contends that these discharges are from “point sources” within the meaning of the CWA and that they therefore require permits under the National Pollutant Discharge Elimination System (“NPDES”).

EPA, through DOJ, argued as amici that its position had long been settled that logging ditches and culverts were not point sources subject to the CWA and that the Ninth Circuit owed EPA’s interpretation judicial deference under Auer.

The Ninth Circuit disagreed, holding conclude that stormwater runoff from logging roads that is collected by and then discharged from a system of ditches, culverts, and channels is a point source discharge for which an NPDES permit is required.

Congressional Intervention:  So dissatisfied was Congress about the Ninth Circuit’s decision that it enacted, through rare bipartisanship, an appropriations rider to the Consolidated Appropriations Act, 2012 (a hint: it starts on page 1046).  Some colleagues appear to believe that the rider lapsed just prior to the beginning of the Supreme Court Term at the end of the fiscal year, but there is considerable debate on this point and whether it continues in the current Continuing Resolution until March 27, 2013 – and may continue on and on as is the life of appropriations riders once enacted.

Certiorari & Regulations:  In a belt and suspenders approach, the Administration continued to support the State of Oregon and the loggers while proposing new regulations to make even clearer the regulatory resolution of any ambiguity in the CWA.  The final rule was released to the public last Friday and the Solicitor General’s divided amicus argument is this morning – if past is prologue (and it always is), the Solicitor General’s office had a hand in clearing this regulation in a “timely” fashion.  This has happened many times before and reflects an approach to avoiding unnecessary decisions when possible (of course, it doesn’t always work).

Issues:  The core issue is whether the Ninth Circuit should have deferred to EPA’s longstanding interpretation that NPDES permits are not required for channeling runoff from logging roads, and erred in mandating that EPA regulate such runoff as NPDES industrial stormwater.  EPA has taken a practical position for decades that forest or logging roads are not industrial, and that channeling natural runoff was not a discharge of pollution.

A number of other issues, however, could prove the demise of Ninth Circuit’s decision including simple statutory construction – an exercise that is inherently the province of judicial disagreement.  The Supreme Court is not shy about disagreeing with a lower court’s interpretation of statute and legislative history.  The statute itself is highly expansive and selective legislative history is equally so.

Argument:  Neither the core issue nor the underlying issue caught the Court’s attention:  the Court was interested in whether it actually had a case.  The full oral argument transcript is available to the public.

Petitioners noted the EPA final rule in a letter to the Court last Friday and counsel could not get out his first sentence before the Chief Justice interrupted him:

CHIEF JUSTICE ROBERTS:  Well, before – before we get into that, congratulations to your clients … getting almost all the relief they’re looking for under the new rule issued on Friday.

The Chief Justice thus began a dialogue on whether the new rule rendered the case moot – of no legal significance,

CHIEF JUSTICE ROBERTS: Well, but it’s – it’s an unusual situation for us to rule in a case where the issue has ongoing significance and that’s taken away.  And what we would be doing is, when there is a new rule, we would be considering quite a lot of difficult issues to determine what the old rule was, so that you can unravel what the Ninth Circuit has upheld.

JUSTICE SOTOMAYOR:  I thought the case law was fairly clear that when the EPA changes its rules in your favor, that they can’t – the court can’t impose penalties for a past violation.

The point of mootness is that no risk remains – and that is not entirely clear in a citizen suit under the Clean Water Act.  While the EPA may assess penalties (and seems to eschew that notion), the question becomes whether NEDC could recover attorneys feels or the plaintiffs could be held liable for remediation.

The Chief Justice then steered the argument toward whether the new rule was itself a separate legal challenge:

CHIEF JUSTICE ROBERTS: Now, I suppose that … the Respondents, can challenge the new rule, right?

MR. BISHOP: Yes.

CHIEF JUSTICE ROBERTS: So you would have simultaneously pending a case involving the interpretation of the old rule and a challenge to the new rule.

MR. BISHOP: Right.

CHIEF JUSTICE ROBERTS: Each of which would have the same issue.

MR. BISHOP: And this Court can cut through all of that by deciding this case, which the simplest way to decide this case is under the stormwater rule.  ….

But can the Court actually do that on a rule that is not before them?  Justice Kagan – a former Solicitor General – asked the question most problematic in any case before the Court in which an intervening rule is promulgated:

JUSTICE KAGAN:  But, Mr. Bishop, as — as Justice Ginsburg said, that question was not decided below, and in the context of this case, which, of course, was very different when it was briefed, Mr. Fisher spent a grand total of 2 pages, and rightly so.  It wasn’t — it was — it was not the main issue in the case then.

So would we really be doing something, you know, a good practice to decide this issue without really any briefing on it and without a decision below?

Deputy Solicitor General Stewart put the issue right before the Court immediately after his formal greeting, but satisfied very few.  Indeed, Mr. Stewart confirmed – directly and by avoidance – the very point made by this blog:  The new rule was designed and scheduled (as best it could) to settle this case:

MR. STEWART:   …  On Friday, the EPA administrator signed a new rule that amends EPA’s existing regulatory definition of the term “stormwater discharge associated with industrial activity.”

The new rulemaking specifically disapproves the Ninth Circuit’s decision in this case and states explicitly that the only facilities under SIC Code 2411 that are industrial are rock crushing, gravel washing, log sorting and log storing.

CHIEF JUSTICE ROBERTS: Were you as surprised as we were to learn about that final rule?

MR. STEWART:  No, we were not.

CHIEF JUSTICE ROBERTS:  When did you learn that the final rule would be issued on Friday?

MR. STEWART:  I learned on Friday morning that the final rule would be issued. I learned on Friday afternoon that the final rule had been issued. Within five minutes of that time, I alerted counsel for both the Petitioners and –

CHIEF JUSTICE ROBERTS:  You had no idea before Friday that this was coming out?

MR. STEWART:  I knew that it was a strong possibility – I knew that it was a strong possibility that it would come out.  The EPA had issued a notice in September of proposed rulemaking.  There was a notation on OMB’s website in early November to the effect that the rule had been transmitted for final approval by OMB.

CHIEF JUSTICE ROBERTS:  In early November?

MR. STEWART:  In early November.

CHIEF JUSTICE ROBERTS:  Maybe in the future you could let us know when something as definite as that comes.

There were 875 pages on the merits briefing in this case, and if we knew that the final rule was imminent, we could have rescheduled the case for April or something along those lines.

MR. STEWART:  I’m sorry, Your Honor.  We you know, we did explain in the opening brief that the rule had been –

CHIEF JUSTICE ROBERTS:  Oh, I know, that there was a proposed rule.  Is it your experience that proposed EPA rules become final within a couple of months particularly?

MR. STEWART:  No, I think that – well, I think this happened more quickly than it usually does, but I think we intended respect for the Court’s processes rather than disrespect.

Obviously, it’s suboptimal for the new rule to be issued the Friday before oral argument; but, it would have been even worse, I think, from the standpoint of the parties’ and the Court’s decision-making processes if the rule had been issued a week or two after the Court heard oral argument.

CHIEF JUSTICE ROBERTS:  Well, maybe.  And it would have been best if we had known about this in early November.

MR. STEWART:  With respect to the impact of the rule on this case, the new rule was not intended to change the meaning of the preexisting definition, and in our view it renders the case moot.

‘And, really, the point of issuing the new –

♦Oh, to have had that sentence finished.  With all due respect to the Office of the Solicitor General, the point of the rule is to end this litigation the way the United States wishes it to end – and the Solicitor General’s Office is well aware of the timing of the rule.  Playing ostrich is not becoming.  But Mr. Stewart got his chance to finish the sentence:

JUSTICE KENNEDY:  Is it your submission that we should issue an order vacating this moot or issue an order for the Court of Appeals to consider whether it’s moot?

….

MR. STEWART:  Our preference would be that the Court issue an order vacating as moot; but, it would also be an appropriate decision to leave that to the Court of Appeals in the first instance.

And, again, EPA’s objective in this was to obviate the need to decide vex[ing] questions concerning the meaning of the old rule.  That is, EPA has said for nearly 40 years that it doesn’t believe that NPDES permits are the appropriate way of addressing the dangers to water quality that are posed by these sorts of discharges and –

Respondents, of course, wanted nothing to do with vacature for mootness or vacature and remand, but could not disagree that the case was likely not to be decided:

It seems to me, in light of the recent events, that the most appropriate course for this Court is to just simply dismiss this case as improvidently granted.  …

which would leave the Ninth Circuit’s ruling in place.

♦These issues are not new – but rather commonplace with the United States seeks to affect a court’s judgment by promulgating new regulations while the judicial decision is on appeal.  The United States has the right to do so, and in many instances may be right in doing so, but it should also be honest about it.

The EPA published the 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards (aka CAFÉ) in today’s Federal Register.  Previous discussion of this rule questioned the ability to project costs and benefits as far downstream as EPA projects, and now the clock has started on judicial review.

The American Petroleum Institute and others sued the SEC in the United States District Court for the District of Columbia to invalidate the Disclosure of Payments by Resource Extraction Issuers final rule, previously approved and published.  The rule requires publicly traded energy and mining companies to file commercially sensitive and detailed payment information about foreign energy investments with the SEC in a public database.  The Complaint alleges the rule violates the First Amendment to the United States Constitution by forcing U.S. companies to engage in content-based speech that discloses sensitive, confidential information that the SEC concedes will cause them substantial economic harm.  Under the Administrative Procedure Act (APA), the complaint alleges, among other things that the SEC acted, or the rule is, arbitrary and capricious because it:

• Misread the statute to require public disclosure of a company’s reports;
• Failed to provide a reasoned explanation for why particular exemptions proposed by commenters were or were not in the public interest, such as the proposed exemption for payments whose disclosure would violate the law of a foreign state;
• Failed to adequately consider whether its discretionary decisions in the rulemaking – including the decisions to refuse to allow confidential reporting, to define “project,” and to grant an exemption for conflicts with foreign law – resulted in burdens on competition that were “necessary or appropriate” as required under the Exchange Act;
• Failed to set forth substantial evidence evaluating the costs and benefits of the rule as required under the Exchange Act; and
• Failed to provide public notice and an opportunity for comment on a new methodology and cost assessment used for the first time in the final rule.

The complaint and the parallel petition for review (because jurisdiction is not free of doubt) are courtesy of the United States Chamber of Commerce National Chamber Litigation Center.

Ricardo Carvajal, of Hyman, Phelps & McNamara, points out that the Department of Justice, for the FDA, requested rehearing and rehearing en banc in R.J. Reynolds v. FDA by the United States Court of Appeals for the District of Columbia Circuit.

Katherine McCoy, of Liskow & Lewis, reports that DOJ, for the EPA, has sought a rehearing en banc, not a panel rehearing with a suggestion of rehearing en banc, of the decision of the United States Court of Appeals for the District of Columbia Circuit invalidating the Cross-State Air Pollution Rule in EME Homer City Generating v. EPA.

♦There is a distinction between the FDA and EPA petitions for review, but it may not make a difference:  the FDA petition admits that panel rehearing may be appropriate, while the EPA petition appears to request only review by the full court of appeals.  Both panel decisions were 2-1, but rehearing is not very likely and “disfavored.”

♦This blog happily extends the courtesy to those who make court documents publicly available without the payment of PACER fees (preferably with filing headers).

Ben Protess, at Dealb%k, reports that the CFTC is considering appealing the district court decision in International Swaps and Derivatives Association v. CFTC invalidating the Position Limits for Futures and Swaps final rule and interim final rule.

♦Given the previous votes, dissents, and discussion in the CFTC, as explicated by the District Court, a majority of commissioners may not agree to a staff-recommended appeal – the District Court may have responded directly to the concerns raised within the CFTC that it did was still required to make a finding of necessity.  Stand by.

OMB:  The election cycle may have caught up with OMB, or, to give it a more nefarious spin, OMB is avoiding clearing any regulation or other action that could cause political upheaval for their political masters.  For the sake of clarity, OMB completed review (ubiquitously “consistent with change”) in the past month of:

1. Department of Agriculture (DOA):  Agricultural Bioterrorism Protection Act of 2002; Biennial Review and Republication of the Select Agent and Toxin List; Amendments to the Select Agent and Toxin Regulations final rule;
2. Department of Education (DOEd):  Race to the Top–Early Learning Challenge Phase 2 final rule (yes, economically significant);
3. Department of Health and Human Services (HHS):  Possession, Use, and Transfer of Select Agents and Toxins; Biennial Review final rule;
4. Department of Homeland Security (DHS):  Guidance for Protecting Responders’ Health During the First Week Following a Wide-Area Anthrax Attack notice;
5. DHS: Extension of the Designation of Haiti for Temporary Protected Status and Employment Authorization for Haitian F-1 Nonimmigrant Students notices;
6. DHS:  CNMI-Only Transitional Worker Numerical Limitation for Fiscal Year 2013 notice;
7. Department of Labor (DOL):  Wage Methodology for the Temporary Nonagricultural Employment H-2B Program final rule extension of effective date, discussed last week;
8. Environmental Protection Agency (EPA):  Regulation to Modify Definition of Heating Oil in Renewable Fuel Standard Program final rule;
9. EPA:  Regulation of Fuels and Fuel Additives: 2013 Biomass-Based Diesel Renewable Fuel Volume final rule (yes, that’s economically significant and deserved a mention last week); and
10. Corporation for National and Community Service:  Criminal History Checks: AmeriCorps State/National, Senior Companions, Foster Grandparents, and Retired Senior Volunteer Program final rule.

And that is all.  The Department of Agriculture withdrew the National Organic Program: Sunset Review for Nutrient Vitamins and Minerals final rule (admittedly economically significant), but no reason has been given.  Agencies appear to have sent OMB about the same number of rules and notices for review.  The unannounced slowdown may portend an increase in regulations that the Administration will launch during the last three months of this term – whether the current occupants are leaving or otherwise.

♦Once again, we must note the absence of a Spring 2012 Unified Agenda, and now the absence of a Fall Unified Agenda and Regulatory Plan.

OMB needs to explain this obvious slowdown – it has not lived up to its claims of “transparency.”  Some, like the Sunlight Foundation, argue for greater transparency and lobbying disclosure because they believe OIRA is little known or understood, but it is well known though unmistakably (perhaps intentionally) opaque.

FEC Contributor Disclosures:  Chris Rissetto and Carlos Valdvia, and Julius Chen, separately report that the FEC, by a party-line vote, declined to pursue a new rulemaking to amend the electioneering contributor limitations, or campaign donor advertising, regulations struck down in Van Hollen v. FEC.  Separately, the Center for Individual Freedom indicated that it had petitioned the FEC for a narrow rulemaking to address the specific issues noted by the United States Court of Appeals for the District of Columbia Circuit in its judgment reversing the district court and finding the statute anything but clear.  Expect to hear more about this case.

At times, presenting issues sequentially actually makes sense – and the technicalities of judicial review of final agency action may present one of those times.

Preliminary Injunctions & Stays:  Lawyers often inadvertently mislead a court at the very beginning of a case by demanding an injunction as remedy in their complaint and following up immediately with a motion for a preliminary injunction.  Lawyers and judges are accustomed to this oft-repeated maneuver and the complex recipe for a preliminary injunction in trial practice as recently canonized in Winter v. Natural Resources Defense Council:

A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.

Not quite so in judicial review of final agency action.  Here, they really mean an order “staying” the agency action pending review under the APA, 5 U.S.C. § 705, as was the case in Sierra Club v. Jackson, which also dealt with a stay under a specific statute.  A stay involves other complicated procedures not required for a preliminary injunction (e.g. often a stay request to the agency), but temporarily holds the parties in place until the court resolves the case.  While the standards for a stay of a final rule are the same as for a preliminary injunction, the process confusion at the very beginning of litigation sets in motion potential further missteps.

Summary Judgment & Judgment on the Record:  A second delicate technicality lies in the manner in which judicial review is resolved in the district courts.  Lawyers routinely seek summary judgment under Federal Rule of Civil Procedure 56 when facts are not disputed.  Summary judgment is appropriate, under the familiar formulation, when the pleadings, the disclosure and discovery material, and any affidavits show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.

In judicial review of final administrative action, the facts lie in the administrative record certified by the agency (most of the time, unless a ground for dispute or supplementation is well plead).  While the mechanism for resolving a case is familiar under the summary judgment rule, the motion is correctly denominated as a “Motion for Judgment on the Record.”  This subtle difference does have meaning:  the motion effectively accepts the agency’s certified record as undisputed and raises only questions of law and application of law to that record.  The United States District Court for the District of Columbia, the district court most commonly faced with such cases, and some other courts even have local rules for this situation.

Setting Aside & Permanent Injunction:  The criticism that prompted the initial comment and this post comes from R.J. Reynolds Tobacco Company v. Food and Drug Administration, the case in which the United States Court of Appeals for the District of Columbia Circuit struck down the Food and Drug Administration (FDA)’s graphic cigarette warning label regulations.

The court of appeals pointed out that the district court’s permanent injunction did not square with the APA requirement, 5 U.S.C. § 706(2), that the court:

hold unlawful and set aside agency action, findings, and conclusions found to bed –

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;

(D) without observance of procedure required by law[.]

Citing a previous decision, the court of appeals reminded that a district court reviews an agency regulation as an appellate tribunal rather than a trial court, and a district court should vacate and remand unlawful actions.

Sidebar:  In R.J. Reynolds, the court (without comment) did not slow to apply any “balancing” of relative harm and program disruption when vacating procedural failures under Allied Signal v. NRC.  Balancing harm simply doesn’t apply to a remedy in substantive First Amendment cases – the regulations must be vacated.  Whether the APA permits the discretion embodied in the Allied Signal test is unresolved and debated.

A permanent injunction, however, provides relief in a more refined “as applied” analysis rather than the “setting aside” more facial approach.  Permanent injunctions do not bar the rule itself, but the enforcement of the rule against a particular person for a particular violation of the constitution or statute, as was the case in Newland v. Sebelius.  A rule itself is “set aside” not enjoined.

Cumulative Error:  One small error can cumulate in other errors.  Judicial review of final administrative action is as complex as any litigation – but very different from the pre-trial and trial process that make up the normal course for lawyers and judges.  Care should be taken, lest a small error become a major failure.

*  Opening voiceover from The Lone Ranger.