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

Monday Morning Regulatory Review – 2/27/17: Transgender Student Bathroom Deguidance; Student Loan Cost Guidance Adherence; Immigration Enforcement Revisited; ORNA Good Cause Intercircuit Conflict & Implementation Executive Order

Posted in Judicial Review & Remedies, Regulatory Process

dawn over the capitol aoc“Guidance” seems to have been the word for last week and that requires many words to explain.  Agencies rescinded prior Administration guidance that is currently being reviewed by the United States Supreme Court (SCOTUS), a district court questioned whether the current Administration would adhere to a prior guidance document, an agency revisited enforcement guidance while avoiding prior judicially enjoined benefits guidance, and a court rejected a guidance document as sufficient notice and an opportunity for public comment under the Administrative Procedure Act (APA) (and an interim rule for insufficient good cause to avoid advance notice and comment).  The substance of all this guidance ranged from sex or gender discrimination to student loans to immigration enforcement to sex offender registration.  Finally, the President of the United States (POTUS) issued another Executive Order to guide agencies in the management of the regulatory process that does not seem to add much substance.

Transgender Student Bathroom Deguidance:  The Department of Education (ED) and the Department of Justice (DOJ) rescinded previous “Dear Colleague Letter” guidance that interpreted the Title IX of the Education Amendments of 1972 prohibition of discrimination “on the basis of sex” to prohibit discrimination on the basis of individual gender identity.  The rationale for the rescission is summarily stated: “These guidance documents do not, however, contain extensive legal analysis or explain how the position is consistent with the express language of Title IX, nor did they undergo any formal public process.”  The rescission points out that the previous guidance had been enjoined nationwide and asserts a “due regard for the primary role of the States and local school districts in establishing educational policy.”

The rescission directly affects the arguments, indeed the viability, of Gloucester Country School Board v. GG, in which SCOTUS is considering (1) whether courts should extend deference to the previous unpublished ED and DOJ guidance letter that does not carry the force of law and was adopted in the context of the litigation in which deference is sought; and (2) whether courts should give effect, with or without deference to the agency’s specific interpretation of the statute and its own regulations that instructs a funding recipient providing sex-separated facilities that it must generally treat transgender students consistent with their gender identity.  The United States Court of Appeals for the Fourth Circuit, in the decision under review, relied on the agency guidance:

We conclude that the Department’s interpretation of its own regulation, …, as it relates to restroom access by transgender individuals, is entitled to Auer deference and is to be accorded controlling weight in this case.


We have carefully followed the Supreme Court’s guidance in Chevron, Auer, and Christopher and have determined that the interpretation contained in the [guidance] letter is to be accorded controlling weight.

The Fourth Circuit observed the fragility of the guidance that has now shattered:

Not only may a subsequent administration choose to implement a different policy, but Congress may also, of course, revise Title IX explicitly to prohibit or authorize the course charted here by the Department regarding the use of restrooms by transgender students.

Moreover, another court enjoined the guidance nationwide and that case is not before SCOTUS.

In the litigation below, DOJ expressed a view, as amicus curiae, that the courts should give deference to the prior guidance letter, but the Solicitor General has been silent thus far before SCOTUS and SCOTUS has not requested the views of the United States, which are now very different.  The Solicitor General’s Office informed SCOTUS of the rescission and lodged the new rescinding Dear Colleague letter, but again stated no position on the case before SCOTUS.  SCOTUS then asked the parties how the case should proceed in light of the new rescission.

►  The rescission leaves SCOTUS in a curious position, not one of applying the “law” as it exists at the time of decision, but one of losing the substance of the subject of its concern in granting review.  The Fourth Circuit deferred to the agencies’ guidance and SCOTUS granted review premised on that guidance.  SCOTUS seems likely to vacate the Fourth Circuit decision and remand for further consideration rather than decide a different issue on the merits, unhinged from evanescent guidance.

Student Loan Cost Guidance Adherence:  While on education, the United States District Court for the District of Columbia permitted the introduction of extra-record evidence in a challenge to whether another ED “Dear Colleague” letter constituted a rule in United Student Aid Funds, Inc. v. DeVos.  This letter told student loan guaranty agencies that ED’s interpretation of statutes and regulations provided that the guarantee agencies could not assess costs against borrowers who agree to a loan rehabilitation plan within 60 days of receiving a notice from the guaranty agency.  The problem before the district court here was that the administrative record appeared incomplete and prevented the court from determining whether the agency complied with its procedural obligations.  The district court, therefore, agreed that it would consider extra-record material.

Substantive issues remain to be decided and the district court ordered the parties to meet and confer, and propose a schedule for motions for summary judgment.  The twist was in the tail:

Additionally, as part of the parties’ Joint Status Report, DOE shall notify the court whether, in light of the change in Administrations, it will continue to adhere to the interpretation of the Higher Education Act and its implementing regulations set forth in the Dear Colleague Letter.

►  The district court’s wariness of the continued viability of the guidance is entirely justified – judicial time and effort should not lightly be wasted if the issue need not be decided, as in Gloucester County School Board.  The court’s request for some commitment to the substance of the litigation reflects another variation on waiting for the new Administration to assert its view.  Should ED stand by its prior guidance, it might also amend the certification of its administrative record.

Immigration Enforcement Revisited:  The Department of Homeland Security (DHS) released two guidance memoranda detailing new priorities in immigration enforcement.  The guidance memoranda implement instructions from POTUS in two recent Executive Orders.  The key point from a regulatory perspective is that the guidance memoranda do not effectively create any programmatic changes.  First, the memorandum does not appear to set out any controlling or binding provision that facially raises a question of whether advance notice and an opportunity for public comment under the APA is required.  Second, the memoranda rescind much of prior conflicting guidance that itself did not impinge on APA requirements.  Third, the guidance does not touch upon the programmatic changes that the previous Administration implemented that arguably do impinge upon APA requirements – Deferred Action for Childhood Arrivals (DACA) and Deferred Action for Parents of Americans (DAPA) – including the creation of classes of individuals who may be granted employment authorization documents that created costs and were enjoined in Texas v. United States as a legislative rule or substantive rule promulgated in violation of the APA.

Rather, one of the memoranda instructs that DHS “no longer will exempt classes or categories of removable aliens from potential enforcement.”  The other memorandum seems to suggest that DHS will revisit extant final rules that create categories of parole under a statutory provision that authorizes case-by-case granting of parole, but suggests that DHS components will issue further guidance “pending the issuance of final regulations clarifying the appropriate use of the parole power.”

Both memoranda, of course, claim only to provide “only internal DHS policy guidance, which may be modified, rescinded, or superseded at any time without notice.”  Moreover, DHS eschews that the documents “create any right or benefit, substantive or procedural, enforceable at law by any party in any administrative, civil, or criminal matter.”   A new boilerplate appears, however, and may reflect the past litigation:  “In implementing this guidance, I direct DHS Components to consult with legal counsel to ensure compliance with all applicable laws, including the Administrative Procedure Act.”

►  DHS’s new guidance does not provide a menu of specific rescissions and that may pose difficulty in implementation, but that is DHS’s difficulty.  Litigation is likely – and might focus on further guidance on the use of parole pending regulatory amendment, but the current memoranda may not possess enough substance to become a target of litigation.  As enforcement prioritization, the memoranda are substantially limited by the current levels of appropriated funds and the authorizations for and limitations on reprogramming in current appropriations – here the memoranda state more goals than significant changes.

SORNA Good Cause Intercircuit Conflict:  The United States Court of Appeals for the District of Columbia Circuit order dismissal of the indictment in United States v. Ross because the Attorney General’s interim rule and guidance applying the Sex Offender Registration and Notification Act (SORNA) to prior convictions violated the APA.  SORNA requires convicted sex offenders to register with local law enforcement authorities and to update registration within days of changing residence, and authorizes the Attorney General to require offenders convicted prior to SORNA’s 2006 effective date to register.  Ross was convicted of a relevant offense in the District of Columbia in 1999 and did not register when he moved to Ohio in 2009.

In 2007, the Attorney General adopted an interim rule declaring SORNA applicable to pre-enactment offenders, invoking the APA’s good cause exception that advance notice and an opportunity for public comment would be contrary to the public interest to “because a substantial class of sex offenders could evade [SORNA]’s registration requirements . . . during the pendency of a proposed rule.”  The D.C. Circuit rejected the argument the Attorney General had good cause, partly because Congress built in some delay in the process, and partly because the Attorney General himself took too long to promulgate the interim rule:

The Attorney General’s own behavior also undercuts the current claim of urgency: as Reynolds observed, he waited over half a year – 217 days – after the effective date of the act to publish the Interim Rule.  …  In this context, the incremental delay entailed by a 30-day comment period and the requisite time for thinking about comments seems a very reasonable trade-off—and its denial unreasonable.

Thus, the D.C. Circuit joined and expanded an intercircuit conflict to five circuits finding no good cause versus four circuits finding good cause or harmless error.

The D.C. Circuit rejected also the notion that 2008 guidelines for States to comply with updating their sex offender registries as simply not on point.  The Attorney General did seek public comments on the guidelines, but disclaimed any authority to decide for himself whether SORNA applied to pre-enactment offenders.  There is disagreement within the panel about the application of precedent that an agency disavowal of discretion cannot be upheld when a statute grants an agency discretion.  That disagreement leads to disagreement over whether the 2008 guidelines adequately specified how and when SORNA would apply to pre-Act offenders.

At bottom, a majority found no legal basis for applying SORNA requirements prior to a 2010 final rule and, therefore, vacated the judgment of conviction for a 2009 failure to register.

►  The regulatory point here is that an agency may not create its own crisis and use that crisis to justify avoiding the demands of the APA.  The courts consistently require that the APA’s good cause exceptions be “narrowly construed and only reluctantly countenanced.”  Whether based on the enforcement evasion theory of “contrary to the public interest,” as here, or the emergency theory of “impracticable,” agency delay is counted against the agency and 217 days is fatal delay.

The intercircuit conflicts over whether that Attorney General complied with the APA prior to the 2010 final rule may never be resolved.  Unlike a direct challenge to a rule under the APA where the remedy is vacatur of the rule, the cases forming these intercircuit conflicts arise out of individual criminal indictments for violations of SORNA and the remedy is dismissal of the indictment.  A facial challenge to the rule is likely barred by the general six-year statute of limitations on actions against the United States.  In the criminal context, even if an indictment can be brought beyond the five-year general criminal statute of limitations (e.g. as a continuing offense), the number of such possible cases is likely declining.  The importance of the issue is clear, but the history is not favorable, and the Solicitor General’s choice of whether to seek certiorari will be complicated.

Implementation Executive Order:  POTUS issued a new Enforcing the Regulatory Reform Agenda Executive Order whose salient provisions direct agency heads to appoint a Regulatory Reform Officer (RRO) and a Regulatory Reform Task Force to implement the regulatory management Executive Orders, including his own Executive Order 13771, section 6 of President Obama’s Executive Order 13563 (Retrospective Analyses of Existing Rules), and President Clinton’s Executive Order 12866.  The new Executive Order establishes management deadlines, reporting deadlines, and waivers, but is to be implemented consistent with statutes, the Office of Management and Budget (OMB) Executive Branch-wide coordinating functions, and does not create any enforceable rights, etc.

►  The Executive Order is typical “management by decree” and seems to assume that the agency heads (appointed by POTUS by and with the advice and consent of the Senate) need guidance on how they should internally manage personnel to implement other Executive Orders.  This Executive Order seems vaguely reminiscent of the creation of President Bush’s “Regulatory Policy Officers” in (rescinded) Executive Order 13422 or statutory “Chief ___ Officers” who report directly to the agency head that seem to assume that an agency’s appointees cannot manage their subordinates.  The Executive Order adds only more bureaucracy.