Two significant actions in regulatory affairs in the week past, other than United States Supreme Court decision, are worth note. The Department of Labor (DOL) published its controversial Fair Labor Standards Act (FLSA) minimum wage ceiling requirement in today’s Federal Register, but the proposed rule raises less substance and greater procedural problems than expected. At the other end of the regulatory process, no sooner did the Environmental Protection Agency (EPA) and the Army Corps of Engineers publish their final rule defining the “waters of the United States” than litigants filed no less than six complaints in the district courts and at least an additional petition for review in a court of appeals.
Empty Overtime Proposal: DOL today published its overdue, controversial, and economically significant Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees proposed rule. President Obama (POTUS) instructed DOL to update the regulations defining the employees protected by the FLSA’s minimum wage and overtime standards on March 13, 2014, but the proposed rule responds to only part of the issue.
The proposed rule would raise the standard salary ceiling for overtime pay to the 40th percentile of earnings for full-time salaried workers ($921 per week, or $47,892 annually for a full-year worker, per 2013 statistics), and then index ceiling increases to some economic measure (e.g. CPI-U) thereafter. DOL expects direct employer costs in year one to be $2.075 billion (including $1.483 billion in transfers to employees, which could be described as benefits).
The proposed rule does not contain preferred changes to the definition and tests for the executive, administrative, professional exemption (EAP), despite substantial uncertainty and agency vacillation about the scope of the EAP exemption tests, such as the guidance underlying Perez v. Mortgage Bankers Association. DOL seems either confused or disingenuous about clarifying the EAP exemption because the proposed rule,
- Does not provide a preferred option for public comment;
- Explains that DOL believes that the salary level increase and automatic updates “will address most of the concerns relating to the application of the EAP exemption;”
- Explains that DOL “is considering whether revisions to the duties tests are necessary in order to ensure that these tests fully reflect the purpose of the exemption;” and
- Affirmatively states that DOL “is seeking additional information on the duties tests for consideration in the Final Rule.”
The last quotation raises the significant problem of whether DOL has proposed with sufficient notice under the Administrative Procedure Act (APA) changes in the EAP definition. The request for information on the duties tests (without the “terms or substance” of a proposed rule) may rest at the very margin of acceptability for notice under the APA’s requirement that an agency provide “a description of the “subjects and issues” involved.” Public comments are due September 4, 2015.
► In early-APA days, subjects and issues proposals were common, but the longstanding, modern, and accepted practice, particularly when amending an already complex regulation, is for the agency to propose its preferred terms or substance on which the public could comment. Notice in a proposed rule must contain some indication of regulatory intent that overcomes plain language because, otherwise, no one would have a meaningful opportunity to comment on a proposed regulation as the APA contemplates. While notice must be sufficient to fairly apprise the public of the issues involved, it need not specify every precise proposal which agency may ultimately adopt in a final rule, and the line between fair notice and lack of notice may be unclear in this case.
Commenters cannot afford to rest upon the likelihood that DOL has provided insufficient legal notice and the potential for APA litigation if DOL includes duties test changes in a final rule. Commenters must file on the duties tests and all of the administrative interpretations (and their failings) considered fair game to protect from being later blindsided by a final rule.
DOL is not being fair to the public by leaving open an issue such as whether DOL has reached the critical mass of notice to amend the duties tests in a final rule. DOL should either eschew the duties tests from this proposed rule or propose its preferred duties tests.
WOTUS Litigation Deluge: Challenges to the EPA and Engineers’ Clean Water Rule: Definition of “Waters of the United States” (WOTUS) final rule were expected, and expected quickly, but filings last week (and this post may not be exhaustive) exceeded all those expectations.
A composite of a majority of States (27) have filed no less than four separate suits to challenge the final rule in tactical venue districts:
- North Dakota v. EPA, D. N.D. No. 3:15-cv-00059 (filed: June 29, 2015);
- Ohio v. Army Corps of Engineers, S.D. Ohio No. 2:15-cv-02467 (filed: June 29, 2015);
- Texas v. EPA, S.D. Tex. No. 3:15-cv-00162 (filed: June 29, 2015), and 5th Cir. No. 15-60460 (Petition for Review filed June 29, 2015); and
- Georgia v. McCarthy, S.D. Ga. No. 2:15-cv-00079 (filed June 30, 2015).
The complaints are largely the same, but do vary, claiming that the agencies violated State sovereign rights, exceeded their statutory authority, were arbitrary and capricious in the final rule, and violated the procedural requirements of the APA.
Private challenges to the final rule have also been filed, at least by Murray Energy Corp. v. EPA, N.D. W.Va. No. 1:15-cv-00110 (filed June 29, 2015), and a broad coalition of national organizations in American Farm Bureau Federation v. EPA, S.D. Tex. No. 3:15-cv-00165 (filed July 2, 2015). These also raise APA arbitrary and capricious and abuse of discretion challenges with variety, as well as constitutional and statutory authority issues.
The characterization of the rule as a “definitional” rule under the Clean Water Act (CWA) compounds the issues presented in these cases because judicial review of some CWA actions lies in petitions for review filed with the appropriate United States Court of Appeals. Accordingly, at least one group of plaintiffs has filed a protective petition for review in the respective court of appeals. This abundance of caution with “dual filing” in both the district court and court of appeals is common and prudent when jurisdiction may be disputed.
► Some coordination between at least the State plaintiffs is obvious and the filing of multiple cases in several different courts provides plaintiffs, cumulatively, with some tactical advantage, at least temporarily. Expect the Department of Justice (DOJ) to try to consolidate this litigation, and that takes some time, while plaintiffs are likely to seek a stay of the final rule or preliminary injunctions against enforcement of the final rule in multiple jurisdictions before any consolidation might occur. If multiple petitions for review are filed with courts of appeal and served on EPA within 10 days of the date of publication or issuance (which also poses a problem), the Judicial Panel on Multidistrict Litigation (JPMDL) will randomly select among the appellate venues.
EPA, of course, must lodge the administrative record or a certified list of its contents in any of these cases and any significant delay in doing so could adversely affect the rule becoming effective. As noted last week in relation to the Department of the Interior (DOI)’s hydraulic fracturing rule, the administrative record may be necessary to adjudicate preliminary relief. If a court cannot determine the likelihood of success on the merits or plaintiffs’ irreparable harm without the administrative record, it may need to grant a stay or preliminary injunction. Accepting only the minimal migration between bodies of water covered by the distal reach of the final rule (i.e. EPA’s core factual argument) between a complaining and any other State would undercut remedy minimization and warrant a nationwide order.
And this from only the first week of judicial review after publication – expect more to come.
The post Monday Morning Regulatory Review – 07/06/15: Empty Overtime Proposal & WOTUS Litigation Deluge appeared first on Federal Regulations Advisor.