Chapter 5 - Continued - PowerPoint Presentation

Chapter 5 - Continued Do You Have to Have Notice and Comment? 1

2 Why Avoid Notice and Comment? Remember rulemaking ossification? What is the benefit to the regulated parties of interpretive rules and guidance? What if the agency is prevented from providing guidance documents? What is the risk to the agency if it issues guidance without notice and comment, and the court finds the guidance to be a rule requiring notice and comment?

Exemptions to Notice and Comment Requirements (does 553 apply at all?) § 553. Rule making(a) This section applies, according to the provisions thereof, except to the extent that there is involved -(1) a military or foreign affairs function of the United States; or(2) a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts. 3

4 Military and Foreign Affairs Limiting the term of residence for Iranian nationals after the hostage incident Extending asylum to persons subject to reproductive restrictions in China Deporting young Muslin men with visa problems. Changing international trade rules Why exempt these?

Public Property (2) a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts. This would exempt Social Security benefits, everything to do with public lands, and many other areas of regulation.As the regulatory state developed, there was pressure to repeal this provision.To defuse this, agencies adopted rules requiring notice and comment rulemaking in several of these areas.Congress has suspended this section in many enabling laws.You have to look at the agency’s own rules and enabling act to see if 553 has been waived. 5

553(b) – [General] Exceptions to Notice Requirements 1) Interpretative rules, general statements of policy, and rules of agency organization, procedure, and practice; and2) Rules when the agency finds for good cause that notice and public procedure are impracticable, unnecessary, or contrary to the public interest.No notice means no comment under 553(c) 6

7 Exception 1 - Interpretative Rules It is only explaining the law or providing guidance for action Prosecution guidelines IRS audit guidelines Since they do not change the law, they have no legal effect Like commentary in the civil law? Does that mean you can ignore them?

Legislative and Nonlegislative Rules Agencies can only make legislative rules if the legislature delegates this power to the agency through statute.Nonlegislative rules (guidelines, etc.) do not have legal effect. They only explain the agency’s view of the law.Does an agency need statutory authorization to issue non-legislative rules? Some states limit non-legislative rules to limit agency power. 8

9 Can Nonlegislative Rules be Retroactive? Why does the ban on retroactive rules not apply to interpretive rules? How do judges change the law retroactively? If interpretive rules cannot change legal rights, does retroactive really mean anything for nonlegislative rules?

10 EPA Example – Is This Definition a Rule? EPA says that the term “waters of the United States” (which defines the jurisdiction of EPA under the Clean Water Act) includes wetlands that potentially provide habitat to migratory birds. This might include a pothole in a field, not otherwise connected to a waterway. If the EPA has jurisdiction over the wetland, it will become expensive or impossible to drain or develop the area.

Is this an Interpretative Rule or a Legislative Rule? Can we tell by just looking at the rule?How might this definition affect the value of the wetlands?Is this a “substantial impact” (old test)? Assuming that it is a substantial impact, how can the agency defend not using notice and comment? The substantial impact test has now been mostly abandoned in favor of the “legally binding” test.11

12 The “Legally Binding” or “Force of Law” Test Can the agency enforce the law without the rule? Continuing with the previous wetlands example Is the agency required to define wetlands before enforcing the statute? Was the agency doing enforcement before this rule? If so, does this change the enforcement? What does tell us about whether it is legally binding? Assume a statute allows the agency to define toxic substances that cannot be dumped into lakes. Would a list of these substances need notice and comment? Could the law be enforced without the list?

13 How High do I Build the Fence? Hoctor v. USDA , 82 F.3d 165 (7th Cir. 1996) Statute requires the agency to adopt rules for the safe housing of dangerous animals Agency uses notice and comment to promulgate a rule requiring that reasonable precautions be taken to prevent the escape of the animals Agency then issues guidance saying that a reasonable precaution would be an 8 foot fence. Interpretation or legislation? How does it change the proof of facts in the enforcement adjudication?

14 Junk in the Park: United States v. Picciotto , 875 F.2d 345 (D.C. Cir. 1989) Can the agency use notice and comment to promulgate a legislative rule that says that the agency can add other requirements in specific situations without notice and comment? Why or why not? What if the rule just says that nothing can be brought to the park that would be disruptive or impede public access? Would it need a specific list? How does not having a rule affect enforcement?

Inconsistent with a Rule: Phillips Petroleum Co. v. Johnson, 22 F.3d 616 (5th Cir. 1994). An agency cannot issue a rule that is inconsistent with a statute, and thus it certainly cannot issue guidance that is inconsistent with the statute.What about guidance that is consistent with the statute, but not with a rule based on the statute? This would change the rule without notice and comment. 15

Non-Procedural IndicatorsSaying it is guidance/interpretative rule. Publication in the Code of Federal Regulations (CFR). Does the person signing the document have the authority to make a rule? 16

General Policy Statements and Procedural Rules 17

18 Agency Procedures Like the code of civil procedure Does not change the substantive rights of the parties Does not change the regulated behavior, only the internal agency procedures Thus no need for public participation.

19 General Policy or Specific Requirements? Remember, 553(b) does not require notice and comment for general policy statements or procedural rules. Assume the statute says that in licensing actions, a physician must reply to agency request for information in a reasonable time. How would you argue that a 7 day answer period is a substantive change, not just a procedural requirement? Why does the inclusion of specific factual information (deadline periods, fence heights) undermine the claim that it is a general policy statement?

20 Federal Mine Safety and Health Act Example Secretary has the statutory right to sue both the mine owner and the mine operator for violations of the Act. Secretary publishes a policy statement explaining that the agency can and will sue both of them for infractions, depending on the nature of the infraction. Does this require notice and comment? Why?

Enforcement Manual The Coast Guard is authorized to investigate and enforce against certain types of oil pollution in the waters of the United States under the Clean Water Act. To aid its officers engaged in these functions it has created a Marine Safety Manual. That Manual gives guidance as to what appropriate penalties might be for various types of pollution incidents. The range of penalties is specified in statutes. Legislative rule or prosecution policy?What is the key?21

22 Corps of Engineers Example Corps issues a guidance document providing examples of ways to mitigate wetlands damage. One way is to promise to restore 2X as much wet land as you fill. Does this need notice and comment? Why or why not? What if the Corps will only issue permits to people who agree to this? How would you prove this?

Recap – Key Takeaways from Rulemaking 23

Notice and Comment Rulemaking is a Core Agency Function Environmental Law Pretty much everything Securities and financial regulationAlmost everythingFCC, FAA, and other alphabet agenciesMost thingsEEO and Civil RightsNot as critical – enforcement under the statute24

Pre-Rulemaking Regulatory Review There are a number of statutes that agencies must address before they make a rule. There is also review through the Office of Information and Regulatory Affairs (OIRA) Discussed next classOIRA grew out of OMB and was formalized in 1980.Know as the place rules go to die.This is where the new EO sends guidance documents, etc., as well as rules25

Requirements for the Public Notice The legal basis for the rule The supporting evidence for the rule. Scientific testsDataAnalysisAny articles that were relied onAnything else that is necessary to justify the ruleThe proposed rule.26

The Standard of Review (future chapter preview) Chevron In theory, deferential to the agency, but subject to mind-bending judicial manipulation. Hard-look reviewMaking sure every detail that the agency is required to consider is perfect before deferring to the agency.Hard-look is what makes the process so lengthy, both in time and the length of the register posting.27

Avoiding Notice and Comment Agencies want to avoid notice and comment because it takes so long and costs so much to do. The core of our discussion of interpretive rules and agency policy statements is simple: What is your argument for why they need to be enjoined until the agency issues them through notice and comment?This stops their use and the agency is unlikely to reissued them as N&C rules.28

What Triggers the N&C Requirement? You have to convince the court that the guideline, policy statement, etc., changes your client’s legal situation – if they have legal effect, they need to be N&C. There are several statements of this legal test: Substantial impactLegally bindingForce of lawNo practical difference in your proof29

The Standing Tests (Preview of Future Chapters) We will circle back to this question of legal impact as we look at judicial review. Standing – Lujan from Conlaw IIs your client injured?RipenessIs this a final agency action?If it has no legal effect, it is not a final agency action and thus there is nothing to review.30

Reviewing the Class Material Don’t get bogged down in the minutia of the cases in the E&E. The cases are all examples of how attorneys argued that a non-notice and comment document should have gone through N&C. They make a good shorthand – the junk in the park case, the fence case, etc. – for different ways of showing that the document affected their client’s rights.31

The Regulators: Our Invisible Government This is the only look inside the rulemaking process. Including a proto-OIRA review with Jim Tozzi While it is old, the only real change is that the process is much more complicated and time-consuming today.Even the legal question – the protection of vistas in the national parks – has not been resolved to this point and the grandfathering in of existing industries has had unintended consequences.32

Watch the Regulators 33