Summer’s end (not Childhood’s End) brings the opening of schools across the country without the looming Administration guidance on gender identity. More complex is the new overhang of Medicare hospital reimbursements that may not be recouped because of an agency failure to adopt criteria through notice and comment rulemaking. On the other hand, in reality meets litigation, compliance with a series of regulations commanded by Congress and a court will be delayed by practicality – and may be amended. Thrice rejected broadcast ownership rules returned from the agency and appear to be headed back to court. And speed limiters for heavy trucks may be on a nearer horizon with the release of a draft proposed rule.
School Gender Identity Guidance Enjoined: In the latest skirmish over when an agency guidance is a de facto rule, the United States District Court for the Northern District of Texas preliminarily enjoined the Department of Justice (DOJ) and the Department of Education (ED) from enforcing the “Dear Colleague” guidance letter that interprets sex to include gender self-identification under title IX of the Civil Rights Act. The district court’s decision in Texas v. United States concluded that ED and DOJ (1) failed to comply with the Administrative Procedure Act (APA) by adopting a substantive rule without advance notice and an opportunity for public comment and (2) by issuing a directive that conflicts with existing statutory and regulatory provisions. Both are familiar principles under the APA and each present an independent basis for the district court decision. Additionally, the court rejected the government’s notion that the “guidance” warranted Auer deference as an interpretation of ambiguous regulations – finding the “ambiguity” to be “invented.” The court additionally concluded that its preliminary injunction must be nationwide in scope.
The district court’s preliminary injunction follows the previous decision of the United States Court of Appeals for the Fifth Circuit barring the application of Equal Employment Opportunity Commission (EEOC) guidance on use of criminal convictions in employment screening in Texas v. EEOC, and a host of District of Columbia Circuit decisions. The administrative law substance, of course, is deeply enmeshed in broader litigation over whether gender self-identification is a basis for constitutional or statutory discrimination claims and conflicting State law, such as Carcano v. McCrory.
► The “Dear Colleague” letter, in context, establishes at least de facto obligations for schools in, and because of, a fragile dependency of local schools on federal funds and creates out of whole cloth the ambiguity of “sex” qua individual subjective “gender” identification. The litigation is both familiar and troubling, raising increasing unsettled questions of when the costs of the Federal government’s administrative process and the Federal Government’s overarching funding create final agency actions, and agencies’ desire to evade the time-consuming requirements of the APA by adopting guidance with imminent effects. In this instance, federal funds are so intrinsic to the operation of school systems that their loss threatens insolvency. The United States will certainly appeal but otherwise faces a complicated obstacle course to acquire reversal.
Medicare Reconciliation Criteria: Returning again to the hall of mirrors of Medicare payments, the United States District Court for the District of Columbia, in Clarian Health West, LLC v. Burwell, found that Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) improperly adopted 2010 reconciliation guidelines under which CMS sought a recoupment of $2 million in payments. Clarian Health sued claiming that the agency failed to employ required notice-and-comment procedures required by the Medicare statute prior to adopting the guidelines that establish the criteria for identifying which hospitals should be subjected to the reconciliation process, and, therefore, CMS lacked statutory and regulatory authority to require repayment.
The court provides a detailed review (and required supplemental briefing) on the intricate interrelationship between the APA and the Medicare statute’s separate notice and comment requirements. At bottom, while the Medicare statute incorporates the APA’s “good cause” exceptions when notice and comment are impracticable, unnecessary, or contrary to the public interest; the Medicare statute does not incorporate exceptions for procedural rules or policy statements from its notice and comment requirements. The district court notes that courts have interpreted the Medicare statute to except APA interpretative rules from the Medicare notice and comment requirements and assumed a procedural exception.
In the instant case, the district court found the reconciliation criteria were not sufficiently related to the regulations to be interpretive of those regulations. Additionally, the court found that the Medicare statute provided no exception for procedural rules and that the criteria applied to determine whether the reconciliation process would be used were not procedural in any event.
► Clarian Health West is important, first, because of the clear and detailed analysis provided by the district court and, second, because that details sets a clear path for the United States Court of Appeals for the D.C. Circuit to resolve the issue with greater finality. In short, CMS must appeal because of the long-range implications of the decision and its potential application across hundreds of millions of dollars in hospital reimbursement recoupments, not because of the $2 million at stake here. The qualifying criteria appear substantive even if they only set in motion a reconciliation process.
Food Rules Compliance Reality: The HHS’s Food and Drug Administration (FDA) extended the compliance deadlines for four foundational Food Safety Modernization Act (FSMA) final rules from four months to two years (longer for small entities) in:
- Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human Food;
- Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Food for Animals;
- Foreign Supplier Verification Programs for Importers of Food for Humans and Animals; and
- Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption.
FDA states that it is “extending the compliance dates to address concerns about the practicality of compliance with certain provisions, consider changes to the regulatory text, and better align compliance dates across the rules.”
These FSMA rules were at the heart of litigation over FDA Congressional deadlines and delays in promulgating rules implementing FSMA (search: FSMA). In effect, reality has caught up with demands for final agency action – FDA may have promulgated the rules commanded by the FSMA and the court, but actual implementation is governed by far more complex realities.
► The negotiated settlement and consent decree in the FSMA litigation contained specific deadlines for the FDA to publish final rules – and that may be the ultimate limit on judicial authority. The court could not dictate the substance of the rules, nor could the court dictate the enforcement discretion embodied in the compliance deadlines. The FSMA litigation did not raise the specter of statutory private causes of action to enforce the regulations, and agency action within that set of issues must await another day entirely. Doth haste make waste?
The curious reader might wonder why the extension contained no regulatory text, even though denominated as a “final rule.” The original rules contained no express compliance dates as regulatory thresholds – the compliance dates appear only to be preamble statements of intent to enforce after a certain date. Hence, the “final rule” is merely descriptive; the compliance dates merely preambularly predictive.
Broadcast Ownership Again — Still: The Federal Communications Commission (FCC) last week released its quadrennial revised and long-contested media-ownership rules. The FCC’s order completes the 2010 and 2014 reviews, but the revisions were not significant – and broadcasters and others have again threatened litigation. The FCC Order (i.e. rule) concludes that retaining the existing rules is the best way to promote the FCC’s policy goals in local markets and, following the Third Circuit decision in Prometheus III, the FCC readopted the Television Joint Sales Agreement (JSA) Attribution Rule, and responded to the Third Circuit’s remand of the 2008 diversity rule in Prometheus II.
► Stand by for Prometheus IV.
Heavy Speed Limiters: And finally, the Department of Transportation (DOT)’s National Highway Traffic Safety Administration (NHTSA) and Federal Motor Carrier Safety Administration (FMCSA) released a draft proposal to require new heavy-duty trucks and buses (> 26,000 pounds (11,793.4 kg)) to be equipped with vehicle speed limiters in response to a pair of petitions for rulemaking filed a decade ago. The proposal discusses – but does not specify a preference other than as a maximum benefit – setting the maximum speed at 60, 65, and 68 miles per hour, and the agencies leave open consideration of other speeds based on public comments.
Much of the preamble and the publicity focused on the benefits of basic physics: a lesser mass can do lesser damage, effecting less loss of life, i.e. an avoidance benefit. The agencies argue also that speed limiters could also save an estimated $1.1 billion in fuel costs and millions of gallons of fuel annually. The agencies admit that the costs include greater time to accomplish the same travel at higher speeds, estimating the cost of added time at $1.534 billion annually at a speed limited 60 mph, $514 million @ 65 mph; and $206 million @ 68 mph.
► DOT’s agencies summarized its benefit / cost analysis in the preamble, but the more interesting and detailed analysis must await release on the docket of the Preliminary Regulatory Impact Analysis (RIA), Initial Regulatory Flexibility Analysis (IRFA), and Draft Environmental Assessment (EA) that accompany the proposed rule. Until then, how far DOT will drive the cost analysis for truckers and consumers is not known, but a division appears to have already developed between fleet owners who favor speed limiters and independent operators whose profit depends on delivery turnaround. Consumers ultimately bear the brunt of the costs and presumably eventually acquire the benefits. A proposed rule has not been filed for public inspection at the Federal Register and the dockets (two) have not been opened, so publication and release of the RIA, IRFA, and EA remain sometime in the future, all preliminary to a 60-day notice and comment period. The potential effects will reach everyone – road user or consumer.
The post Monday Morning Regulatory Review – 8/29/16: School Gender Identity Guidance Enjoined; Medicare Reconciliation Criteria; Food Rules Compliance Reality; Broadcast Ownership Again – Still & Heavy Speed Limiters appeared first on Federal Regulations Advisor.