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

Monday Morning Regulatory Review – 4/7/14: COOL First Amendment; Rearview Cameras; Electric Utility Safety Standards; & OMB Reviews

Posted in Constitutional Issues in Regulations, Executive - OMB Review, Judicial Review & Remedies

The United States Court of Appeals for the District of Columbia Circuit took a significant step toward giving agencies more definitive guidance on the whether and how information disclosure can be used as a regulatory mechanism by ordering, on its own initiative, en banc review of a panel decision issued only a week ago.  On the agency side, two substantial and economically significant final rules were released by the Department of Labor (DOL)’s Occupational Safety and Health Administration (OSHA) and the Department of Transportation (DOT)’s National Highway Traffic Safety Administration (NHTSA).  Additionally, the Environmental Protection Agency (EPA), Department of Health and Human Services (HHS), and Department of Energy (DOE) added notable economically significant proposed or final rules to the interagency and executive review docket.

COOL First Amendment:  The D.C. Circuit, sua sponte, vacated the opinion issued last week in American Meat Institute v. Department of Agriculture and ordered the case be reheard by the en banc court.  In addition, the court ordered the parties to separately brief the specific question:

Whether, under the First Amendment, judicial review of mandatory disclosure of “purely factual and uncontroversial” commercial information, compelled for reasons other than preventing deception, can properly proceed under Zauderer …, or whether such compelled disclosure is subject to review under Central Hudson Gas & Electric ….

The briefs, by all parties, are due April 21, 2014, and the court set oral argument for May 19, 2014.

The United States Supreme Court (SCOTUS) recognizes very limited exceptions to the general rule that content-based speech regulations — including compelled speech — are subject to strict scrutiny, the most demanding scrutiny, under the First Amendment to the United States Constitution’s guarantee of free speech.  Two primary exceptions in the commercial speech context may apply: (1) Zauderer’s “purely factual and uncontroversial” disclosures are permissible if they are “reasonably related to the State’s interest in preventing deception of consumers,” provided the requirements are not “unjustified or unduly burdensome,” or (2) Central Hudson’s purely commercial speech may be subject to less stringent review if  (a) its asserted interest is substantial, (b) the restriction directly and materially advances that interest, and (c) the restriction is narrowly tailored.  Central Hudson is not quite as demanding as strict scrutiny, it is significantly more stringent than Zauderer, that some find akin to rational-basis review.

A footnote to last week’s opinion set the stage for this order by formally suggesting en banc consideration, and the panel recognized that “reasonable judges” may differ on the test to be applied when reviewing disclosure requirements forcing speech.  The en banc court’s decision could thus determine the extent to which regulations can require disclosure of information, short only of SCOTUS review, and a precedent applicable to all regulatory agencies venued in the District of Columbia (nearly all agencies).  Mandatory disclosure has become a significant regulatory mechanism in recent years, and the en banc court could provide agencies with more defining limits on regulation by disclosure.

Rearview Cameras:  The NHTSA published its final Federal Motor Vehicle Safety Standards; Rear Visibility rule in today’s Federal Register, requiring all new vehicles under 10,000 pounds to come equipped with rearview cameras and screens that display a 10-foot by 20-foot zone behind the vehicle, but not sensors with audible warnings, with a phase-in period beginning on May 1, 2016, and full compliance on May 1, 2018.  The incremental unit costs may not be significant, but the fleet-wide projected costs total $546 to $620 million and a net lifetime cost of $202 to $281 million, depending on discount assumptions.  NHTSA’s evaluation substantially reduced the projected costs from the proposed rule, in part because of wider voluntary adoption of rearview cameras as an option.  NHTSA asserts that the rule requires the least costly alternative that complies with the statutory requirements.

The NHTSA did not require additional sensor / auditory alarm systems or demarcation gridlines for the vehicles rearward path, although these are common to many optional rearview camera systems.  Reading the rule, the NHTSA did not effectively address the negative-distraction impact of dashboard screens on 360º awareness, or the degree to which drivers will actually utilize their enabling rearview camera as a supplemental guide for backing; this is only an equipment performance rule, not a driver rule.  NHTSA’s choices were limited in requiring rearview cameras given the Congress’ underlying statute, and the rule leaves significant ambivalence about whether it will be effective against costs.

Electric Utility Safety Standards:  In a final rule that suggests $129 million in net benefits, OSHA released revised construction standards for Electric Power Generation, Transmission, and Distribution; Electrical Protective Equipment, to be published in the March 11, 2014, Federal Register, to update the standards to be more consistent with the general industry standard and is making some revisions to both the construction and general industry requirements.

The highly technical final rules more closely correspond to other national consensus standards than the proposed rule, as suggested by both industry and labor concerns, such as the National Fire Protection Association voluntary standards.  At some point, the final rule may affect the electric rate base, but that notion is far beyond the analysis that OSHA conducts.

The 1600-typescript-page rule will become effective 90 days after publication, although some compliance deadlines are more appropriately elongated.

OMB Reviews:  Agencies added a few economically (as well as legal and policy) significant submissions to the Office of Management and Budget (OMB) Office of Information and Regulatory Affairs (OIRA) interagency and executive review docket:

  • EPA submitted a proposed Carbon Pollution Guidelines for Existing Power Plants: Emission Guidelines for Greenhouse Gas Emissions From Existing Stationary Sources: Electric Utility Generating Units rule, a companion to the previously issued proposed rule for new power plants;
  • HHS’s Food and Drug Administration (FDA) submitted the Food Labeling: Calorie Labeling of Articles of Food Sold in Vending Machines final rule and the Food Labeling: Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments final rule (see COOL First Amendment, above); and
  • DOE submitted the Energy Conservation Standards for Residential Furnace Fans final rule with no material change from the proposed rule, a signal that industry should be note.