The end of 2015 warranted a review of Congressional regulatory interventions and limitations, and the beginning of 2016 warrants a review of expectations for the coming (Presidential election) year – the final year of an Administration, a final chance to establish its regulatory legacy. Do not confuse this review with the Unified Agenda, a mere snapshot of agency hopes at a moment in time before publication — review here focuses on likely events, not necessarily what the agencies may wish or attempt to accomplish or what anyone believes to be politic. The final year of this or any Administration presents a long list of issues and prospects, some of which deserve attention.
Final Regulations: The end of any Administration naturally results in a tide of regulations, its size depending on how much that Administration believes that it has accomplished and how much it believes it needs to accomplish. For this Administration, some regulations are more important than others, and some are more controversial than others.
Labor Overtime: One signature regulation is likely to be the Department of Labor (DOL), Wage and Hour Division (WHD), Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees final rule. DOL acted under instructions from the President of the United States (POTUS) to update the ceiling and the regulations defining which white collar workers are protected by the Fair Labor Standards Act (FLSA) minimum wage and overtime standards. The proposed rule did the first, not the second. Nearly 300,000 public comments illustrated a sharp division exists between those who believe that the rule will actually increase individual salaries and those who warned that an upward adjustment to the ceiling will result in job reductions. However the economics shake out, DOL will be limited by the logical outgrowth doctrine to the proposed subjects.
Retirement Fiduciaries: DOL’s Employee Benefits Security Administration (EBSA) will try to finalize the redefinition of the responsibilities of retirement investment advisors by the end of the year in its Definition of the Term “Fiduciary”; Conflict of Interest Rule – Retirement Investment Advice. DOL proposed another version in 2010, and withdrew that proposal when it issued the new proposed rule, but DOL also needed to extend the comment period on the new proposal. The public filed nearly 400,000 comments, but that count might be deceiving due to a significant number of non-substantive “mass mailings.” Litigation is all but assured if DOL acts because this controversial proposal would increase retirement advisor’s responsibilities to the “fiduciary” level, but may increase also the costs of retirement plans because it eliminates other, offsetting sources of income in an attempt to insulate the retirement advice from outside influences.
Labor @ OMB: DOL has not submitted either rule to the Office of Management and Budget (OMB) for interagency and executive review at the beginning of 2016. DOL has submitted the Occupational Safety and Health Administration (OSHA) economically significant Occupational Exposure to Crystalline Silica final rule to OMB on December 21, and Office of Labor-Management Standards (OLMS) Persuader Agreements: Employer and Labor Relations Consultant Reporting Under the [Labor-Management Reporting and Disclosure Act (LMRDA)] final rule to OMB on December 7. Both rules should reach final promulgation this year, although both have long and contentious histories.
Air Passenger Screening: The Department of Homeland Security (DHS), and its Transportation Security Administration (TSA), submitted an economically significant final Passenger Screening Using Advanced Imaging Technology to OMB on November 19. The United States Court of Appeals for the District of Columbia Circuit held in EPIC v. DHS that TSA failed to justify not conducting notice and comment rulemaking to establish advanced imaging technology (AIT) as the primary method for air passenger screening. The D.C. Circuit remanded the issue to TSA to promulgate a substantive rule (or legislative rule) without a prohibition of continued use because of the security disruption prohibition would cause. DHS proposed a rule in March 2013. In response to a petition for mandamus and the government’s response, the court still declined to compel action, noting that the Department of Justice (DOJ) had represented that DHS will publish the final rule in the Federal Register by March 3, 2016.
As DHS had not promulgated a rule, no rule existed for the court to vacate, and, therefore, the only compulsion would be a bar to further use of AIT. Oddly, in submitting a final rule to OMB, DHS suggested that no legal deadline required completing the rulemaking.
Optional Practical Training: DHS is also in the process of responding to the United States District Court for the District of Columbia vacatur and stay of vacatur of its 2008 science, technology, engineering and mathematics (STEM) optional practical training (OPT) interim final rule (IFR). The court found that DHS failed to comply with the Administrative Procedure Act (APA) – it had insufficient good cause to bypass the requirements of advance notice and an opportunity for public comment. The district court vacated the rule, but stayed its vacatur until February 16, 2016, to permit DHS to promulgate a new rule and avoid the disruptive effect of vacatur. DHS proposed a revision on October 19, 2015, with only a 30-day public comment period, about the minimum possible. The Regulations.gov docket contains more than 50,700 comments. On December 22, DOJ asked the court to “extend the stay of vacatur for approximately ninety (90) days, through May 10, 2016, providing for approximately 30 days to complete the rulemaking and 60 days for a delayed-effective-date period, under which DHS would train agency personnel and coordinate with the regulated community.”
DOJ advised the court that plaintiffs would oppose the motion. Opposition is hardly surprising because the stated need for time to respond to the public comments (30 days) is overshadowed by the notion that the agency needs to retrain its staff (60 days). The motion argues that the volume of comments was “unprecedented” for the “agency” – it may be that “DHS” has not received such a volume, but its predecessor agencies most certainly did, and the argument suggests that the real problem is a knowledge vacuum.
DHS will resolve both procedural issues by promulgating final rules. Litigation will then likely refocus on substantive issues of authority, whether the agency has acted in an arbitrary and capricious way, or with an abuse of discretion.
Highly Skilled Immigration: On the last day of 2015, DHS published a proposed Retention of EB-1, EB-2, and EB-3 Immigrant Workers and Program Improvements Affecting High-Skilled Nonimmigrant Workers rule. The proposed rule (short version) would alter procedures for employers seeking to sponsor and retain immigrant and nonimmigrant workers, job flexibility for such workers, and capture numerous policies in regulations. The proposed rule appears to be an implementation of the immigration executive actions announced in November 2014, although DHS does not so state. DHS will accept comments through February 29, 2016, and should publish a final rule by December 19, 2016, to lock in the result before the end of the Administration.
Executive Immigration Deferral or Benefits: The United States Supreme Court (SCOTUS) will decide whether to grant certiorari in United States v. Texas, and possibly step into one of the Administration’s most sensitive priorities. The parties, however, cannot even agree on what issue is presented. Both the Solicitor General on behalf of the United States and the State of Texas attempt to load the question presented with political freighting – a tactic that ill-serves them both. The Fifth Circuit decided only limited issues that
(1) at least one plaintiff had standing, and
(2) the district court did not abuse its discretion in issuing a preliminary injunction on finding that DHS likely violated the APA by attempting to provide “lawful presence” in the United States (and likely employment authorization) to a class of undocumented aliens without advance notice and opportunity for public comment on a substantive or legislative rule.
If SCOTUS grants certiorari, it likely will fashion its own, better focused, less politically motivated issue for argument, likely closer to the Fifth Circuit’s decision. A grant in January could lead to a decision by July, and delay beyond that point might portend a denial or a rare expedition order; a denial sends the matter back to the district court for summary judgment. After that, the decision tree becomes quite complex, with any number of sequential demises for either party. One way or another, some closure will occur this year.
H-2B: In the crosshairs of statutory authority to promulgate regulations between DHS and DOL, the Eleventh Circuit and several district courts are likely to decide at multiple levels whether DOL has statutory authority to issue regulations in its role of “consulting” with DHS on the H-2B visa program that businesses use to fill temporary non-agricultural jobs. A direct challenge lies in the Eleventh Circuit in Bayou Lawn & Landscaping v. Perez. Variant challenges to DOL rules have percolated through the courts for several years, but Bayou presents a head-on challenge to DOL’s authority to regulate at all.
Drones: The Department of Transportation (DOT)’s Federal Aviation Administration (FAA) will try to publish a final Operation and Certification of Small Unmanned Aircraft Systems (aka “drones” or sUAS) rule. The proposed rule, published last April, presents the FAA’s position that the use of drones in the National Airspace System (NAS) is prohibited without full registration and licensing; the FAA is “integrating” sUAS use into the NAS. The FAA also set a drone registration regime in an IFR with comments due January 15, 2016. The FAA clearly states its “good cause” justification for bypassing advanced notice and an opportunity for public comment in the registration IFR: the market development and expansive use of drones has increased safety problems for manned aircraft. The FAA faces the difficult task of narrowing the manned aircraft regime to the subset of unmanned aircraft in the “small” range, including, as noted previously, fundamental issues such as privacy and liability insurance. Whether the FAA succeeds in resolving the multitude of issues presented by a rapidly developing industry outpacing regulatory capacity, expect the FAA to do something.
WOTUS & Jurisdictional Determinations: In a raft of issues presented in many different posts in this blog, “water” will be a critical focus in 2016. SCOTUS has ordered briefing and argument in Army Corps of Engineers v. Hawkes Co., on whether the Engineers’ “approved jurisdictional determination” – i.e. that specific lands lie within its jurisdiction under the “waters of the United States” (WOTUS) and, therefore, a water pollution permit is required – is a final agency action for the purposes of APA judicial review. This narrow issue could complicate the broader issues litigated over the Environmental Protection Agency (EPA) and Engineers’ Clean Water Act: Definition of “Waters of the United States.” A separate narrow issue revolves on whether jurisdiction lies in a Court of Appeals or a District Court. A host of broader procedural and substantive issues must be resolved under the rubric of whether the final rule passes legal muster. The Sixth Circuit must decide both questions in a Judicial Panel on Multidistrict Litigation (JPMDL) consolidation of multiple petitions for review, and has stayed the rule nationwide. At the same time, however, at least one district court must make the same decisions for a more limited number of plaintiffs for whom it has preliminarily enjoined the rule.
These issues should all be resolved this year, but that does not mean an end to any part of the disputations process. As noted last week, Congress has nibbled at the edge of these issues. Congress will likely return to the issues again to change the law after the courts have decided the meaning of the current law.
Clean Air, Water, Power: EPA also faces numerous other petitions for review of regulations promulgated last year, all of which should be decided this year:
Clean Power Plan: EPA published its Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units in October and litigants filed multiple petitions for review under the Clean Air Act (CAA) in D.C. Circuit within days. In short, the CPP sets emission guidelines for States to follow in developing plans to reduce carbon dioxide (CO2) emissions from existing fossil fuel-fired electric generating units (EGUs) by 32% over the next 15 years. Whether EPA has statutory authority for the rule dominates the front end of the litigation, but numerous procedural and rationality issues follow. The D.C. Circuit has briefed motions to stay the rule, but not yet reached briefing on the merits.
Power Plant Water: EPA also faces challenges to its Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category final rules. EPA published the rule on November 3, and the JPMDL consolidated petitions for review in the Fifth Circuit on December 8. Briefing and argument should lead to a decision this year, but that may be too quick.
Ozone: EPA also finalized regulations to cut the amount of acceptable surface-level ozone from 75 to 70 parts per billion (ppb) in the National Ambient Air Quality Standards (NAAQS), and, again, multiple PFRs were filed in the D.C. Circuit – some arguing that the level was too low, some arguing that it was not low enough. Indeed, nearly all the States and interests are participating and divided along their lines of interest.
Open Net Neutrality: And last but not least, the D.C. Circuit heard more than three hours of argument on multiple issues raised by a dozen petitions for review challenging the efficacy of the Federal Communications Commission (FCC)’s Protecting and Promoting the Open Internet in U.S. Telecom Association v. FCC in December. The court did not stay the rule, and a vacatur could set off even more ripples in the rapidly changing regulation of the internet.
These are mere samples of expected highlights of the coming year, …
POTUS will announce this week executive action to regulate sales of firearms ….
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