D.C. Circuit Review – Reviewed: When Exactly Is a Final Rule Final?
To cut to the answer (for those who have been on the edge of their seats): A final rule is final, such that withdrawing it requires a new round of notice and comment, when the Office of the Federal Register (OFR) makes it available for public inspection. Or possibly earlier, when a signed rule is posted on the agency’s website; the D.C. Circuit did not address that argument, because it was unnecessary to resolve the case before it: Humane Society of the U.S. v. U.S.D.A., No. 20-5291 (D.C. Cir. July 22, 2022), which will mostly change the rules of the rush-rules-out-the-door-before-a-presidential-transition game. Or, if the dissent is right, it will possibly upend settled expectations about the timeline for judicial review. Time will tell, but because timing is often integral to administrative litigation, the case is worth a read, and the rest of this post is a bit of a deep dive into the minutiae of how rules become final. The D.C. Circuit decided three other cases this week—re FERC, FOIA, and foreign export controls/ultra vires review. Those are covered in brief at the end of this post.
As readers of this blog will know, a final rule has a few stops along the way before its publication in tri-column Federal Register form: the agency transmits it to the Office of the Federal Register (OFR), the OFR does confidential processing, the OFR makes a copy “available for public inspection,”44 U.S.C. § 1503, and then it is published in the Federal Register. Typically, there a few days between public inspection and publication. The Humane Society case involved a rule with the following chronology:
- January 11, 2017 – posted on USDA website, and at some point thereafter transmitted to OFR
- January 19, 2017 – made available for public inspection by OFR
- January 20, 2017 – presidential inauguration, complete with the now-typical Regulatory Freeze Memo directing agencies to “Immediately withdraw” “regulations that have been sent to the OFR but not published in the Federal Register”
- January 23, 2017 – USDA withdrew the rule from publication without notice and comment
- January 24, 2017 – date the rule had been scheduled to be published
The Humane Society sued, arguing the withdrawal was a procedurally invalid repeal because the rule became final when it was posted on the USDA website. The agency claimed the rule could be withdrawn without notice and comment because it was not yet final; it would have become final only when published in the Federal Register. Judge Tatel, joined by Judge Millett, pegged finality to an in-between event: public inspection (making the rule’s withdrawal invalid). Judge Rao dissented, and would have pegged finality to Federal Register publication.
As the majority recognized, presidential administrations going back at least to the Clinton years routinely withdrew all prior-administration rules that had not yet been published. The court nonetheless held that a rule “passes th[e] regulatory point of no return,” slip op. 8, at public inspection. The court relied on three main points. First, under the Federal Register Act, making a document available for public inspection is “sufficient to give notice of the contents” and makes the document valid against a person even without actual knowledge. 44 U.S.C. § 1507. The Act distinguishes between the publication of a document and its promulgation, suggesting issuance can come before publication. And it is the “day and hour” of public inspection that must be recorded by OFR. Id. § 1503. Second, Attorney General opinions close in time to the Act’s 1930s enactment and 1960s codification support that a regulation is valid as soon as it has been made available for public inspection. Third, the government has enforced unpublished rules against individuals who had actual notice, supporting that a rule (if immediately effective) can have legal effect before publication.
Judge Rao, in dissent, focused on APA provisions requiring substantive rules to be published in the Federal Register, and specifying that a “person may not in any manner be required to resort to, or adversely affected by, a matter required to be published in the Federal Register and not so published.” 5 U.S.C. § 552(a)(1). The APA also requires publication at least 30 days before a substantive rule’s effective date (subject to certain exceptions). Id. § 553(d). Collectively, in Judge Rao’s view, these provisions make publication the marker for the promulgation of a substantive rule. She noted that publication is understood to be the date that a rule is “final agency action” and the judicial review clock starts running. These considerations outweighed the Federal Register Act’s provisions about the “nuts and bolts of publication.” Slip op. 10 (Rao, J., dissenting). Judge Rao distinguished the pre-publication enforcement cases as not involving substantive rules, and would have deferred to an OFR regulation providing that an agency may withdraw rules before publication. (For its part, the majority noted the OFR regulation covered any document, many of which aren’t rules, and reasoned it simply didn’t speak to what the APA might require before an agency withdraws a rule).
The majority and dissent also sparred over whether the D.C. Circuit had in fact already approved of pre-publication withdrawal of rules, in Kennecott Utah Copper Corp. v. Department of the Interior, 88 F.3d 1191, 1200-01 (D.C. Cir. 1996). In that case, the court rejected a challenge to the no-notice withdrawal of a rule after transmission to the OFR, but before both public inspection and publication. For the majority, the fact that the Kennecott withdrawal came before public inspection sufficiently distinguished the case.
The final contested issue between the majority and dissent is how much this decision matters. The majority said agencies might need “to ensure typographical errors … are corrected during internal OFR processing, rather than in the brief period between public inspection and publication,” but that is “as far as it goes.” Slip op. 20. The dissent envisions a world where a host of rules from prior presidential transitions will “rise from the regulatory graveyard,” slip op. 19 (Rao, J., dissenting), leading to all sorts of complications, and timing for judicial review will become uncertain. The majority opinion seeks to alleviate the latter concern by noting that the meaning of “promulgation” in statutes setting judicial review timelines is unrelated to the question of when notice-and-comment requirements attach, and—depending on the statute—publication is not the universal answer. Given the majority’s decision to “emphasize the limits of [its] decision,” slip op. 20, its more limited prediction of the decision’s effects will probably be borne out in the end.
Three more cases from this week, in brief:
In Changji Esquel Textile Co. Ltd. v. Raimondo, No. 21-5219 (D.C. Cir. July 19, 2022), the court affirmed the district court’s denial of a preliminary injunction in a non-statutory (aka ultra vires) review case. The Export Control Reform Act of 2018 authorizes the Secretary of Commerce to maintain a list of entities that are restricted from receiving U.S. exports based on national security and foreign policy concerns. 50 U.S.C. § 4813(a)(2). The statute largely exempts the Secretary’s determinations from APA review. A Chinese company added to the list based on its alleged implication in human rights abuses against Uyghurs sued. The Act directs the Secretary to list entities “pursuant to the policy set forth in section 4811(2)(A).” Id. The Chinese company argued this provision restricts the Secretary’s listing authority to concerns addressed in § 4811(2)(A), which include national security issues like terrorism and weapons of mass destruction, and bars the Secretary from listing entities based on “protection of human rights,” which is covered in § 4811(2)(D). In an opinion by Judge Katsas, the court rejected the argument because while § 4813(a)(2) did not specifically authorize the listing, it did not prohibit it, either. The listing therefore fell within a broad grant of authority to undertake any necessary action that is not prohibited by law. Drawing on the non-statutory review case from early July (FedEx), the court emphasized the “delta between ultra vires review and less-exacting review under Chevron,” the minimal force of various statutory canons in this context, and deference to the executive branch in foreign affairs. The court also expressed substantial skepticism of the idea that ultra vires review might extend to agency violations of their own regulations, but did not decide the question.
In Xcel Energy Servs., Inc. v. FERC, No. 20-1295 (D.C. Cir. July 19, 2022), the court held that FERC reasonably exercised its authority to ensure that rates and rules under its jurisdiction are “just and reasonable,” 16 U.S.C. § 824d(a), to “reject a [grid operator] rule the agency found would risk favoring a vertically integrated operator’s own power plants over those of its rivals,” slip op. 1. A vertically integrated operator both generates power and distributes it. An independent grid operator does not generate power; it only operates a distribution grid. There is much more nuance in the opinion for those who work in this area, but in broad-brush terms, the D.C. Circuit held that FERC reasonably evaluated the risk of a vertically integrated operator discriminating against power generator competitors, even though the grid operator’s “criticism is not unfair,” and the Commission “certainly could have explained itself more clearly.” Slip op. 15. Moreover, FERC “reasonably applied a different rule to a vertically integrated grid operator than it did to independent grid operators because vertically integrated operators have distinct competitive incentives.” Slip op. 3.
In Montgomery v. Internal Rev. Serv., No. 21-5168 (D.C. Cir. July 19, 2022), the court affirmed the district court’s grant of summary judgment to the IRS in several FOIA suits brought by taxpayers seeking records that would illuminate how their “tax schemes came to the attention of the IRS.” Slip op. 3. The case addresses two issues. The first is the propriety of the IRS’s Glomar response to requests for documents pertaining to whistleblowers; the court upheld the response (and the district court’s associated procedure in reviewing in camera declarations). (As the court helpfully recaps, slip op. 4-5, an agency makes a Glomar response when it refuses to confirm or deny the existence of records on the theory that acknowledging records would reveal the information the agency seeks to protect under a FOIA exemption.) The second issue was the adequacy of the IRS’s search for a different set of records; the court affirmed the district court’s fact-intensive judgment that the search was adequate, which the district court reached only after making the IRS re-do the search several times.