Notice & Comment

D.C. Circuit Review – Reviewed: Was National Petroleum Refiners Association v. FTC Correctly Decided?

I try to keep my opinions to myself about D.C. Circuit’s decisions, at least for purposes of D.C. Circuit Review – Reviewed. “When it comes to these posts, I see my role as a reporter, not a critic.“* I do this for a couple of reasons. First, without doing a lot more work, it often is hard to tell whether the Court’s decision is right or wrong, especially in light of precedent. It is important to read the briefs and the cited cases. Law can be hard (that’s why the parties disagree) and a quick reaction may miss the mark. Second, the world is full of opinions — everyone has one. I like to provide information so that those opinions hopefully can be better informed.

But should this I-try-to-keep-my-views-to-myself policy apply to cases that are almost 50 years old?

I spoke yesterday at the Federal Trade Commission. The FTC hosted a “public workshop to examine whether there is a sufficient legal basis and empirical economic support to promulgate a Commission Rule that would restrict the use of non-compete clauses in employer-employee employment contracts.” My role — strictly procedural — was to discuss the steps the FTC would have to use to promulgate such a rule. And that led me to National Petroleum Refiners Association v. FTC, 482 F.2d 672 (D.C. Cir. 1973).

Here’s why:

It is unclear whether the FTC has power to issue substantive rules about unfair methods of competition. (The FTC has power to do so for consumer protection, via MagnusonMoss rulemaking.) The best case in favor of FTC authority is National Petroleum Refiners. But the FTC apparently hasn’t tried to issue that sort of a rule since at least the 1970s, and a treatise on the FTC observes that such a rule would be “sure to inspire future litigation.”

So what should we think about National Petroleum Refiners? In many respects, it doesn’t read like the sort of opinion that the D.C. Circuit would issue today. For instance, the panel brushed off “the maxim of statutory construction expressio unius est exclusio alterius” as “increasingly considered unreliable.” I suspect today’s judges would spend more time with it. Likewise, the D.C. Circuit did not put all that much weight on the fact that the agency had repeatedly disclaimed such authority and did not try to invoke it for approximately 50 years; cases like FDA v. Brown & Williamson Tobacco Corp. may be relevant. Likewise, the 1973 Court placed more emphasis on the “policies which clearly motivated the framers of the Federal Trade Commission Act of 1914” and “contemporary considerations of practicality and fairness” than, I suspect, many judges would today.

Notably, the district court in National Petroleum Refiners disagreed with the D.C. Circuit, reasoning that “[t]here is only one reference in the FTCA that speaks to the issuance of rules and regulations. …. [and t]his clause is located in Section 6 of the FTCA where the investigative powers are conferred.” But the district court also relied heavily on legislative history. For its part, the D.C. Circuit included a lengthy discussion of legislative history in an appendix to its decision, but did not rely on that discussion because the question “whether the Commission can elaborate the meaning of Section 5’s standard of illegality through rule-making as well as through case-by-case adjudication … was not confronted straightforwardly and decisively” in the history. Needless to say, arguments about legislative history are much less common today than they were in the 1970s — in large part because of the intellectual firepower of Justice Scalia.

On the other hand, as the Court in National Petroleum Refiners repeatedly recognized, the statutory text does give the FTC rulemaking authority and doesn’t expressly limit that authority to procedural rules. The argument in favor of such a limitation would have to be based on the act’s structure — how the provisions fit together — and structural interpretation can be tricky. So might National Petroleum Refiners have reached the correct result, despite some of its reasoning?

Richard Pierce, who knows a thing or two about administrative law, was blunt during yesterday’s panel discussion. In his view, no current Supreme Court justice would approach statutory interpretation the way that the D.C. Circuit did in National Petroleum Refiners; indeed, he stated that he teaches National Petroleum Refiners each semester as a case that would not be decided the same way today. But does that mean the judgment is wrong? Candidly, I’m not yet sure; I need to spend more time with the statute and relevant precedent. So I suppose I don’t share my views on old D.C. Circuit opinions either, at least until I’ve done my homework. But that’s for the best. “Even fools are thought wise if they keep silent, and discerning if they hold their tongues.

Judge Rao had a busy week — she authored three opinions. Two of those cases (United States v. Carr and United States v. Marshall) address criminal law, and the third (In re: Air Crash Over the Southern Indian Ocean on March 8, 2014) addresses forum non conveniens. People sometimes ask me why I cover the D.C. Circuit’s non-admin law opinions. But the answer is obvious: they help me understand the Court. For instance, Carr involves a careful analysis of the sentencing guidelines and the relationship between the residual clause and the elements clause. When you read an opinion with citations to a 1909 Illinois state court decision and Blackstone, you learn something about the author. Rao is not afraid to dive deep into the historical record to try to figure things out. Likewise, for Civil Procedure professors, her discussion of forum non conveniens in In re Air Crash (about “the unexplained disappearance of Malaysia Airlines Flight MH370 somewhere over the Southern Indian Ocean”) could be the starting point for a useful classroom discussion, including about standards of review.

As to admin law, perhaps the most important case this week is American Anti-Vivisection Society v. Department of Agriculture. Judge Tatel addressed agency action that is allegedly “unlawfully withheld [and] unreasonably delayed.” Usually, reviewing courts focus on final agency action. But what happens when the agency hasn’t finalized anything for 18 years? Here, “the Animal Welfare Act, as amended eighteen years ago, requires USDA to issue standards governing the humane treatment … of ‘animal[s]’ as a defined category of creatures including ‘birds’ not ‘bred for use in research.'” The agency hasn’t done it yet: “USDA has yet to fulfill its statutory responsibility to issue standards regarding the humane treatment of birds: the general standards do not apply, and the Department has issued no standards specifically applicable to birds.” (There is more going on in this case but this is a good sample.)

Finally, in Western Oilfields Supply Company v. Secretary of Labor, Chief Judge Garland opened his opinion this way: “Petitioner Western Oilfields Supply Co. … mounts ambitious statutory and constitutional challenges to a $116 fine under the Federal Mine Safety and Health Act of 1977. We deny the petition for review, taking the opportunity to clear up some confusion about the rights the Act grants mine operators.” There is a fair bit of discussion here, but I want to focus on this: “The statute does not expressly state the consequences of violating section 103(f)’s walkaround right, except to say, somewhat cryptically, that ‘[c]ompliance with this subsection shall not be a jurisdictional prerequisite to the enforcement of any provision of this chapter.’ Neither party has offered a persuasive account of what this language means.” The Court’s conclusion? “Whatever the ‘not a jurisdictional prerequisite to enforcement’ language means, it must at least mean that a harmless violation does not preclude enforcement. Otherwise, compliance with section 103(f) would effectively be an absolute prerequisite, whether denominated as ‘jurisdictional’ or something else.” Note also the Fourth Amendment discussion.

* No doubt I fail at this sometimes. C’est la vie.

D.C. Circuit Review – Reviewed is designed to help you keep track of the nation’s “second most important court” in just five minutes a week.