Highlights in regulatory practice last week included an arcane railroad timetable management train wreck may have complicated the authority of a number of different government-related organizations. The Department of the Interior (DOI) finally published its major response to the Deepwater Horizon, but with risks. Less risky, though not with élan or elegance, the Consumer Financial Protection Bureau (CFPB) adopted without change 14 interim final rules from its regulatory inception. The Department of Justice (DOJ) sought to avoid or reduce risk by downsizing a potentially problematic proposed rule to a pre-rule notice. And that may be the last we will see of Office of Management and Budget (OMB) executive and interagency review until OMB corrects its own docket problems.
Amtrak’s Regulatory Derailment: The United States Court of Appeals for the District of Columbia Circuit last Friday constitutionally derailed a Passenger Rail Investment and Improvement Act of 2008 (PRIIA) provision that authorized Amtrak and the Department of Transportation (DOT)’s Federal Railroad Administration (FRA) to jointly regulate and enforce Amtrak’s priority over other trains on private freight rail tracks. The D.C. Circuit previously invalidated the statute as an unconstitutional delegation of regulatory power to a private entity (Amtrak), but the United States Supreme Court (SCOTUS) reversed, holding that Amtrak’s designation and operation as a for-profit corporation did not mean that Amtrak could not also be considered a governmental entity. On remand from SCOTUS, and after further argument, the D.C. Circuit concluded that the underlying statute violated:
- the United States Constitution’s Fifth Amendment Due Process Clause, by authorizing Amtrak, which the court found to be an economically self-interested actor, to regulate its competitors, which the court found that it did – i.e. Carter v. Carter Coal Co., and
- the Constitution’s Appointments Clause, by delegating regulatory power to an improperly appointed arbitrator – an officer appointed by DOT’s Surface Transportation Board (STB) to resolve any impasse between Amtrak and FRA over the content of the performance standards through “binding arbitration” that would impact the freight railroads obligations to Amtrak.
The court left for yet another day the issue of whether a government corporation whose board is only partially comprised of members appointed by the President is constitutionally eligible to exercise Congressionally delegated regulatory power.
► Any loss by the Government on the grounds that a statute or its actions violate the United States Constitution is significant. This court of appeals decision has broader implications than its first decision or the SCOTUS decision – particularly the first basis applying Carter. The court of appeals analysis could affect other entities – such as traditional government-sponsored enterprises (GSEs), privately held corporations with public purposes created by Congress to manage credit markets – who could be perceived to regulate and participate in competitive lines of business. Other dynamic business institutions could face similar scrutiny. The modern (and even very old) mixing of regulation and business operations is far more complex than just Amtrak’s peculiar statute. The Solicitor General may make more evident the extent of this potential problem in a petition for certiorari, a second request for review of a narrow statutory provision needs more importance.
The appointments clause issue remains a “one off” – unique to this statute – but an equally lethal one. The court of appeals, in deciding essentially alternative grounds, insulated both from review. The Solicitor General would need to address both issues in seeking SCOTUS review to acquire relief from either.
Congress overcomplicated the regulatory process. Had Congress simply delegated the promulgation of metrics and standards to the FRA, or mandated something akin to negotiated rulemaking including Amtrak and the freight railroads before the FRA ultimately promulgated the metrics and standards, these questions would never have arisen. A simpler solution now may be to seek revision even from this divided Congress.
Blowout Prevention: DOI’s Bureau of Safety and Environmental Enforcement (BSEE) published the long-awaited Oil and Gas and Sulfur Operations in the Outer Continental Shelf—Blowout Preventer Systems and Well Control on Friday, over six years after the initiating Deepwater Horizon explosion and environmental catastrophe. The final rule substantively focuses on blowout preventer and well-control requirements, including incorporation by reference of all or designated portions of American Petroleum Institute (API) and American National Standards Institute (ANSI) consensus standards, and adopts well design, well control, casing, cementing, real-time well monitoring, and subsea containment changes. The final rule consolidates the equipment and operational requirements for offshore oil and gas drilling and its various processes and contains both prescriptive and performance-based measures. In a number of instances, the final rule regularizes several Notices to Lessees and Operators (NTLs) issued in response to the Deepwater Horizon events. The rule becomes effective on July 28, 2016, but defers compliance with certain provisions to later dates.
► DOI’s final rule (released several weeks ago) completes a long, risky, and complicated process. DOI performed a full economic analysis and concluded that the benefits (including risk reduction assumptions) outweighed the costs and the final rule preamble discusses in some detail the inputs and public comments on those inputs. No regulatory process is perfect and particularly one borne of a disaster, created in the wake of a major governmental reorganization, and fraught with technical practicability issues presents a higher risk value than usual. Here, of particular note, BSEE included in its baseline post-event interim standards changes to exclude those costs from the economic analysis (and a somewhat dismissively responded to challenges to the baseline). Industry does not appear convinced, and has stated that it believes the costs of the proposed rule were substantially higher, and although the response to the final rule has been somewhat muted, one should expect slow, technical litigation.
Dodd-Frank Long Cleanup: Last Thursday, the CFPB finalized 14 interim final rules from its organic process. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) transferred regulatory authority under a number of statutes from seven different Federal agencies to the CFPB in 2011. Late that year, the CFPB republished the existing regulations from those predecessor agencies as IFRs with technical and conforming changes to reflect the transfer of authority and certain other changes made by the Dodd-Frank Act. Those IFRs did not purport to impose any new substantive obligations. Thursday’s final rule summarily adopts all 14 IFRs as final, subject to any intervening CFPB final rules.
► The CFPB rejects with a minimum of effort approximately 100 public comments on the IFRs, summarily grouped into four categories. The CFPB may be quite correct in disposing of insignificant notions that the re-adoption resulted in link-rot in the electronic Code of Federal Regulations (eCFR) and out-scope substantive changes or adoption of predecessor agency guidance. The CFPB also dispatched out of hand suggestions that it clean up possible typographical, grammatical, or similar scrivening errors in the adopted regulations, bordering on disdain. An agency that adopts IFRs blithely after more than four years of inaction, particularly one standing on contested footing, ought to be more humble.
State and Local Internet Nondiscrimination: DOJ, for its Civil Rights Division (CRT), last week withdrew a long-standing economically significant draft Nondiscrimination on the Basis of Disability: Accessibility of Web Information and Services of State and Local Governments proposed rule from OMB executive and interagency review. At the same time, DOJ submitted to OMB a non-economically significant pre-rule version. The draft proposed rule had been in review since July 2014 and ranked as one of the longest pending reviews, though not close to the longest recorded.
► DOJ may not release its reason for the change, but the form suggests two possibilities (1) the costs proposed for State and local governments were intractably high and / or (2) the regulatory interface between disability and the internet was intractably too difficult. Perhaps the policy discussions just became too long. For whatever reason, DOJ has stepped back in the process to an information-gathering mode without suggesting that, for now, it will not propose textual regulations or a description of the subjects and issues involved. To say this is a difficult choice would understate the reality.
Reginfo Missing Again: Reginfo.gov, the website that provides the OMB docket, run by the General Services Administration (GSA), is sadly projecting the following message for all elements of its dashboard:
We are temporarily experiencing technical difficulties
Please try again later. We apologize for any inconvenience.
No information on recent executive and interagency review submissions or completions, Paperwork Reduction Act (PRA) information collection submissions and approvals (or lapses), or the Unified Agenda of Regulatory and Deregulatory Actions (Unified Agenda) is available. The Unified Agenda (Spring 2015) is (over) due.
► Lapses in the availability of this tool have been noted before and, more unfortunately, appear to be increasing. A commercial endeavor that lapses its website loses money; a government endeavor that lapses its website loses trust.
The post Monday Morning Regulatory Review – 5/2/16: Amtrak’s Regulatory Derailment; Blowout Prevention; Dodd-Frank Long Cleanup; State and Local Internet Nondiscrimination & Reginfo Missing Again appeared first on Federal Regulations Advisor.