Litigation dominated regulatory practice last week. New filings in the Waters of the United States litigation clarified, as expected, some issues and process in nearly a dozen different district courts, and two court of appeals standing decisions will require the Administration to respond to a recess appointment challenge and an individual exception to the Obamacare contraceptives mandate challenge. One agency proposed implementation of immigration executive action by regulation raises some concern about litigating its non-regulatory executive actions.
WOTUS Litigation Joined: Litigants joined expected issues in the wide-ranging litigation over the Environmental Protection Agency (EPA) and Army Corps of Engineers’ Waters of the United States (WOTUS) final rule scheduled to become effective August 28, 2015.
First, plaintiffs moved for a preliminary injunction against enforcement of the rule, in Georgia v. EPA. In the first motion filed, expected to be a harbinger of others to come, plaintiffs argue that specific changes denominating specific distances encompassed within definitional coverage in the final rule are not a logical outgrowth of the proposed rule, and, therefore, the agencies gave insufficient advance notice and an opportunity for public comment under the Administrative Procedure Act (APA). The district court ordered expedited briefing from the United States and scheduled a hearing on the motion for August 12.
Second, the Department of Justice (DOJ), on behalf of the agencies, requested a stay of proceedings in several districts (and they aver all cases) pending its filing of a motion to consolidate before the Judicial Panel on Multidistrict Litigation (JPMDL). DOJ argues that a stay of litigation pending JPMDL consolidation:
- would promote efficient litigation of cases filed in multiple district courts with common law and fact issues;
- is consistent with past practice of staying proceedings while JPMDL consolidation is pending; and
- avoids risk of potential inconsistent rulings arising from multiple facial challenges to a final rule if proceeding simultaneously in multiple different district courts.
DOJ notes also the multiple petitions for review already filed in several courts of appeals, and the JPMDL random selection process for which of those courts will hear all of the petitions for review. DOJ advised that EPA and the Engineers expect to certify the timely served filings to JPMDL early this week.
► DOJ’s judicial economy argument is tactical and tactically logical: a judicial stay or nationwide preliminary injunction in any one of the numerous courts would bar implementation of the rule pending resolution on the merits. DOJ logically would not wish to fight these many battles and lose all because it loses one. DOJ shows appropriate restraint as well in seeking only a stay pending the consolidation, so that the transferee court can consider further preliminary actions.
What DOJ does not address is the effect of staying proceedings on requests for a stay of the rule effective date or preliminary injunction, and more such motions are expected. While courts may not countenance a shift in the balance of equities between the parties because a rule has become effective (i.e. status quo ante as not effective v. as effective) in light of such a stay of proceedings, DOJ should address the issue.
The APA basis for the motion for a preliminary injunction (or a motion for a stay of the effective date of the rule) raises additional questions for consolidation. Some variance, particularly in the level of detail, exists among the circuits on the logical outgrowth doctrine and the outer boundaries of notice sufficient for public comment, perhaps partly the result of the frequency with which it arises in each circuit. A transferee district court may consider the totality of nationwide standards rather than focus narrowly on the law of its circuit.
The confluence of these issues could result also in a compromise to stay both the effective date of the rule and the district court proceedings pending JPMDL assignment of a transferee court, and that court’s resolution of preliminary relief. The order of decision could be significant.
CFPB Recess Appointment Challenge Revived: Reinvigorating some challenges to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) and the life of the Consumer Financial Protection Bureau (CFPB), the United States Court of Appeals for the District of Columbia Circuit reversed and remanded a district court decision in State National Bank of Big Spring v. Lew. The district court held the plaintiffs did not have standing and their claims were not ripe to challenge CFPB’s constitutionality and the recess appointment of the CFPB Director.
The D.C. Circuit analysis hinges on the fact that the CFPB ostensibly regulates the Bank and therefore the bank has standing to challenge the CFPB’s constitutionality and the authority of its Director to promulgate regulations. The Bank’s recess appointment challenge rests on the same factual and legal premises as NLRB v. Noel Canning, the United States Supreme Court (SCOTUS) decision striking down the recess appointments of some members of the National Labor Relations Board (NLRB). Given the district court’s dismissal on standing grounds, the court of appeals panel remanded and left to the district court consideration of the significance of the Director’s subsequent nomination, Senate confirmation, and appointment, and the Director’s subsequent ratification of previously taken actions under the recess appointment.
► The standing insulation stripped away, the potential for the demise of the CFPB is unlikely, but the demise of many final rules is more likely, and at least a limitation of those final rules to application to the Director’s post-Senate confirmed appointment and ratification is much more likely. The district court will consider, probably on cross-motions for summary judgment, whether (and to what extent) the Director’s notice of ratification effectively reaches back to legitimize his actions (a highly technical doctrine in and of itself) to save final rules promulgated between the January 4, 2012, recess appointment and the August 30, 2013, notice.
Contraceptive Insurance Exception: In another court of appeals, the Eighth Circuit illustrated the depths of dispute over the religious exemption from the Patient Protection and Affordable Care Act (PPACA or Obamacare) in Wieland v. HHS. Wieland’s health insurer previously permitted Wieland to opt out of contraceptive coverage for religious reasons, but discontinued that opt-out when another district court in another case found the opt-out provision preempted by Obamacare. The Wielands challenged that the Obamacare requirement that they obtain insurance and Department of Health and Human Services (HHS)’s enforcement of the contraceptives mandate. They argue that enforced purchase of contraceptive coverage violated their rights under the Religious Freedom Restoration Act (RFRA), the Free Exercise clause of the First Amendment to the United States Constitution, and other limitations, by forcing them to provide their daughters with coverage for contraceptives contrary to their sincerely held religious beliefs.
The district court dismissed for lack of standing because their injury was not redressable. The Eighth Circuit reversed, concluding that it was more than merely speculative that injunctive relief could redress Wielands’ injury, particularly if the district court ultimately concluded that Hobby Lobby effectively requires exception from the requirement that they purchase a health plan that includes contraceptive coverage, an ultimate issue not yet ready for resolution.
► Wieland presents a not unexpected or particularly new battleground for Obamacare, yet one that could erode the concept of universal coverage by many thousand cuts. Much of the debate has focused on employers and exempt plans, but Wieland focuses on the individual participation requirement when an employer’s plan is non-exempt. Wieland thus affects a far larger potential individual population and a more complicated set of potential exceptions to the mandate. Wieland remands to the district court and resolves only the standing / redressability issues. Further developments in the district court bear watching.
Immigration Executive Action Regulation: The Department of Homeland Security (DHS) proposed an Expansion of Provisional Unlawful Presence Waivers of Inadmissibility last Wednesday. DHS proposes to expand the population of aliens eligible for a provisional waiver of certain grounds of inadmissibility based on the accrual of unlawful presence to all aliens who are statutorily eligible for a waiver of inadmissibility. The proposed rule generally (1) eliminates restrictions on eligibility to certain immediate relatives of United States citizens, and (2) eliminates restrictions on showing extreme hardship to United States citizen spouses or parents. In effect, the proposed rule would expand an inadmissibility waiver program to permit more aliens to depart from the United States to another country for a consular officer visa interview and then return to the United States assured that they would not be barred from admission. DHS estimates that it could receive approximately 10,006 provisional waiver applications from newly eligible non-immediate relatives, and estimates a much larger population of unlawful presence aliens would be eligible over ten years. Public comments are due September 21, 2015.
The Secretary of Homeland Security directed his subordinates to propose regulations to expand eligibility for the provisional waiver process beyond certain immediate relatives of United States citizens to all statutorily eligible relatives of United States citizens and lawful permanent residents (LPR), in November 2014, as part of the immigration executive actions. The Secretary sought to reduce the financial and emotional burdens to families when an alien was required to leave the United States to be interviewed at United States consulates abroad to obtain an immigrant visas. The proposed rule is consistent with that directive.
► The proposed expansion of the provisional waiver authority is consistent with the process for altering the regulations to grant relief, but DHS does not address how this proposed rule’s grant of a benefit differs from the non-regulatory grant of temporary status and employment authorization. The requirement for APA advance notice and opportunity for public comment rulemaking of latter lies at the heart of the preliminary injunction in Texas v. United States, a preliminary injunction that the Fifth Circuit has thus far declined to stay pending appeal.
The post Monday Morning Regulatory Review – 7/27/15: WOTUS Litigation Joined; CFPB Recess Appointment Challenge Revived; Contraceptive Insurance Exception & Immigration Executive Action Regulation appeared first on Federal Regulations Advisor.