This week the United States Supreme Court (SCOTUS) will take up the latest edition of a significant statutory and regulatory conflict and SCOTUS may soon return to another substantial Administrative Procedure Act (APA) remand without vacatur case. Far up the street, the Office of Management and Budget (OMB) began review of one of the more contentious and least understood regulations that may (or may not) affect pay. One agency projecting risk beyond a generation cost it a rule at least temporarily, while another agency attempts to eliminate the obsolete.
SCOTUS Weighing Regulatory Accommodation: SCOTUS this week will weigh whether the Department of Health and Human Services (HHS) and cohorts sufficiently accommodated religious views in its adoption of mandatory contraceptive coverage during 90 minutes of oral argument in Zubik v. Burwell, and associated cases. HHS’s programmatic authorization for the regulations lies in the Patient Protection and Affordable Care Act (PPACA or Obamacare) to set minimum health insurance standards, which it did to include contraceptive services, i.e. the contraceptive mandate, but with a mechanism for some religious and religious affiliated organizations to except themselves. The general limitation lies in the Religious Freedom Restoration Act (RFRA) requirements that the government “shall not substantially burden a person’s exercise of religion” unless that burden is the least restrictive means to further a compelling governmental interest. The issue presented here is whether HHS’s 2014 regulations (current application – responding to prior SCOTUS decision in Hobby Lobby (for profit) and order in Wheaton College) sufficiently accommodate the non-profit religious institution’s under the RFRA.
► The RFRA tests are unique and place a high burden on the agency, but the case may say something more about how agencies must consider other generally applicable limitations on agency rulemaking under the APA. Put aside the political rhetoric about the importance of contraception and religious freedom, the issue here is one of agency implementation of statutes by regulation. Approach news reports about the argument with caution – “news” and “analysis” often misstating the legal issues are not legal analysis and many will try to mislead the uninformed about the actual content of the argument for their own political purposes. Parse carefully through this thicket.
Another MATS Challenge: Michigan and other states have filed a petition for certiorari (No. 15-1152) asking SCOTUS to review the United States Court of Appeals for the District of Columbia Circuit decision to remand without vacatur the Mercury and Air Toxics Standards (MATS) rule to the Environmental Protection Agency (EPA) in the latest challenge to EPA’s electric generating utility regulations. In last year’s Michigan v. EPA, SCOTUS held that the Clean Air Act (CAA) required that EPA consider costs before proceeding with power plant regulations. On SCOTUS’s remand, the D.C. Circuit declined to vacate the regulations, and remanded to EPA; the court and public expect EPA’s determination of costs by April 15. Dissatisfied with that decision and refusals to stay, Michigan now presents the question: “When an agency promulgates a rule without any statutory authority, may a reviewing court leave the unlawful rule in place?”
The petition takes literally the APA command that “The reviewing court shall . . . hold unlawful and set aside agency action, findings, and conclusions found to be . . . in excess of statutory . . . authority.” The petition seeks to limit the D.C. Circuit’s Allied-Signal doctrine to those situations where the agency has failed to explain its decision, not where the agency lacked authority for the regulation. The petition argues that the D.C. Circuit’s remand not only conflicts with SCOTUS’s decision, but conflicts with the effect of decisions of two other circuits. The Solicitor General’s opposition is due April 15.
► The petition does not present a direct attack on the Allied Signal doctrine, but seeks a lesser, but clearer holding that agency excesses of statutory authority must be “set aside” or vacated. As noted previously in these posts, a post regulation decision of a pre-regulatory requirement remains a post-hoc analysis that does not comply with the statute.
Michigan argues that EPA’s April 15 expected cost decision should not moot this case because the issue is capable of repetition yet evading review, albeit in other circumstances. This is not so much a direct application of the exception to mootness to EPA’s decision as an application of the doctrine to the D.C. Circuit’s doctrine of avoidance. The Solicitor General’s response is not due until well after EPA is expected to issue its cost determination, and SCOTUS would not hear any granted petition until next Term.
The petition raises also an interesting problem of judicial review of a remand order. Generally, a court of appeals lacks jurisdiction at the behest of a private party to review a district court’s remand order to the agency – only the agency can seek appellate review, even though the order aggrieves the private party by not vacating the agency action. Remand effectively “unfinalizes” the agency action. Whether this remand doctrine reaches SCOTUS’s view of certiorari seems less clear.
Overtime Laboring: The Department of Labor (DOL) submitted its final draft rule Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees to OMB for interagency and executive review on Monday, March 14. The proposed rule, published in June 2015, would increase the Fair Labor Standards Act (FLSA) standard salary cap for exemption from overtime pay at the 40th percentile of average full-time earnings (projected as $970 / week, or $50,440 annually, in 2016); increase the total annual compensation requirement needed to exempt highly compensated employees; and establish an automatic updating mechanism. The proposed rule did not alter the tests for the exemption.
► Some very smart people have correctly pointed out that OMB will be under pressure to complete review of this rule, but keep repeating an oversimplified misconception that a final rule will “raise the pay of millions of employees who work more than 40 hours in a week.” The final rule will do no such thing. The rule affects no one’s “pay” but may set in motion an increase if an employer authorizes and individual already above the pay cap to work the same number of hours for the same base wage. Employers may rethink their staffing priorities, may approve less hours, may hire additional personnel, or may take any number of other actions. The rule may cause a great deal of instability but will have no direct impact on any individual’s take home pay. Despite what some pundits would wish, do not count that cash yet.
Speculative Endangerment: A dispute over an Endangered Species Act (ESA) management rule caused a district court to question the temporal limits of speculation in Alaska Oil and Gas Ass’n v. National Marine Fisheries Service. ESA “listing rules” do not often grace these posts, but because the ESA does not supply a separate standard for review, courts review claims that the Department of Commerce (DOC)’s National Marine Fisheries Service (NMFS) violated the ESA under the APA, and a “listing rule” is, after all, a rule. In this instance, the court found that “this dispute ultimately boils down to whether or not it was reasonable for NMFS to list the Arctic ringed seals as a “threatened species,” while the population is strong and healthy, based primarily upon speculation as to what circumstances may or may not exist 80 to 100 years from now.” In this second such rule, the court concluded that the listing was arbitrary and capricious, abuse of discretion, and otherwise not in accordance with law. The court found that NMFS did not articulate a discernable, quantified threat of extinction within the reasonably foreseeable future; and NMFS did admit that the regulations “were not necessary or advisable for the conservation of the Arctic ringed seal at this time” and existing protections made it unlikely that the proposed protective regulations would provide appreciable conservation benefits. The court therefore vacated the rule and remanded to the agency for further proceedings.
► This is not the first such rule to be vacated, and listing a subspecies as “endangered” only requires all federal agencies to consult with NMFS before carrying out any action that might jeopardize the continued existence of subspecies, but that added requirement may detrimentally affect private interests. The real issue revolves on whether and how much an agency can project future risk analysis – in this case about a specific species in a specific environment. Generalizing projected risk analysis poses even greater difficulties.
Removing Obsolescence: Finally, perhaps obsoletely, the Department of Homeland Security (DHS) and its U.S. Customs and Border Protection (CBP) removed regulations relating to international flights specifically between the United States and Cuba in today’s Federal Register. The final rule removes provisions that DHS believes are either obsolete due to intervening regulatory changes or are duplicative of regulations applicable to all other similarly situated international flights. DHS bases its final rule on the APA’s foreign affairs function exemption and a good cause “unnecessary” exception to advance notice and an opportunity for public comment and delayed effective date.
► Neither substance nor process appears to be an issue here – indeed, removing obsolete regulations is a policy worth supporting. DHS even takes the discretionary good policy step of requesting post-promulgation public comment when not required, which is also a policy worth supporting. DHS should address, however, several points.
A preamble heading suggests that the APA requirements are “inapplicable” when, in reality, the APA exempts and excepts some requirements. The language may be merely an evanescent mechanical artifact of CBP’s past that DHS has yet to eliminate.
DHS could also better explain how the final rule involves a foreign affairs function as that function is doctrinally understood. DHS only states the obvious that the rule “concerns international flights between the United States and Cuba, consistent with U.S. foreign policy goals” and is “consistent with the President’s continued effort to normalize relations between the two countries.” DHS leaves open whether the final rule is merely consistent with, rather than actually implements, the United States’ foreign policy and normalization of relations.
DHS may well also be correct that, if the provisions are obsolete, pre-promulgation public comment and delayed effective dates are “unnecessary” under the APA, although that depends entirely upon the stated obsolescence. Perhaps a direct final rule, with automatic conversion to a proposed rule if the public submits an adverse comment showing non-obsolescence, would be a better mechanism. A belt and suspenders – doth DHS protest too much?
The post Monday Morning Regulatory Review – 3/21/16: SCOTUS Weighing Regulatory Accommodation; Another MATS Challenge; Overtime Laboring; Speculative Endangerment; & Removing Obsolescence appeared first on Federal Regulations Advisor.