More surprises after Spokeo and Zubik leavened last week’s regulatory practice, including an order by the United States Court of Appeals for the District of Columbia Circuit to hold en banc oral argument on the many challenges to the Administration’s environmental signature Clean Power Plan. Major economically significant final rules to hit the street last week include Department of Labor (DOL)’s revision of the minimum salary for overtime exemption and th
e Department of Health and Human Services (HHS) Food and Drug Administration (FDA)’s nutrition labeling rules. The Department of Transportation (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) final rule on baggage for e-cigarettes joins other related rules. The Office of Management and Budget (OMB) released the penultimate Unified Agenda of Regulatory and Deregulatory Actions for this Administration, setting expectations for this Administration’s final deluge of regulations.
Clean Power En Banc: In a surprise, the United States Court of Appeals for the District of Columbia Circuit sua sponte ordered en banc oral argument in West Virginia v. EPA and 38 consolidated cases on September 27, 2016, rather than before the panel as scheduled on June 2. West Virginia challenges the Environmental Protection Agency (EPA) Clean Power Plan (CPP) imposition of emission guidelines for States to follow in developing Clean Air Act (CAA) plans to reduce greenhouse gas (GHG) emissions from existing fossil fuel-fired electric generating units (EGUs). The United States Supreme Court (SCOTUS) stayed the final rule pending judicial review after the D.C. Circuit had previously denied a stay. The panel argument could have spanned two days according to the requests by the parties. A full court of nine – Chief Judge Garland and Judge Pillard have withdrawn from the case – must set an argument schedule, one that could impose substantial commitments of time.
► The brief order signals, again, the importance of the case and the complex issues raised by EPA’s Clean Power Plan. Initial en banc review eliminates the need to later petition the court for en banc rehearing, which, theoretically, saves time, but the correlation of nine views into respective opinions likely requires more time than just three views, but even an initial resolution of the host of issues presented in the 38 cases will occur in the next Administration.
Logistics are the immediate concern. Petitioners previously requested five hours of oral argument; respondents proposed three hours and ten minutes; interveners asked for time of their own; and the panel did not issue issued an oral argument division order. An en banc panel of nine will now face that daunting task and might be less inclined to hear so much. In any event, when the D.C. Circuit decides this case, expect multiple opinions (even a dispersed majority opinion) and multiple petitions for certiorari filed with SCOTUS. This litigation still has very long legs.
FLSA Overtime & Exemptions: The Department of Labor (DOL) Wage and Hour Division (WHD) published its Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees final rule in today’s Federal Register. The rule changes the dollar values by which individuals either qualify for overtime pay or exempt under substantive definitions for executive, administrative, professional, outside sales, and computer employees that the rule does not change. DOL’s final rule increases the threshold from $23,660 to $47,476 per year, or from $455 to $913 per week. The final rule sets an automatic adjustment, beginning January 1, 2020, to “equal the 40th percentile of weekly earnings of full-time nonhourly workers in the lowest-wage Census Region in the second quarter of the year preceding the update as published by the Bureau of Labor Statistics [(BLS)].”
Finally, the rule permits employers to satisfy up to 10% of the standard salary requirement with at least quarterly payments of nondiscretionary bonuses, incentive payments, and commissions.
The final rule is effective December 1, 2016. DOL additionally published in the Federal Register a highly restrictive Time-Limited Non-Enforcement Policy for Providers of Medicaid-Funded Services for Individuals With Intellectual or Developmental Disabilities in Residential Homes and Facilities With 15 or Fewer Beds through March 17, 2019. The delayed effective date responded to employers’ needs to make systems adjustments while the latter appears to respond to concerns raised through executive and interagency review by the Department of Health and Human Services (HHS) relating to its own policies and priorities that fund those services. DOL released several different guidance documents and fact sheets.
In reviewing the final rule, OMB recorded at least 63 meetings and telephone calls through May 12, but the Office of Information and Regulatory Affairs (OIRA) appears to be logging Office of Legislative Affairs (OLA) contracts from Capitol Hill and calls with specific White House policy officials, such as the Domestic Policy Council (DPC) director. Such contacts have always occurred, but OMB now appears to be recording those contacts.
► Several issues and non-issues are apparent in the final rule. The automatic update provision appears facially to comport with other automatic adjustments (e.g. civil penalties adjusted for inflation) – a non-discretionary formula application. The BLS determination of the “40th percentile” is not, however, entirely independent of the rulemaking and is not as automatic as other indicators commonly used for updates, such as inflation. As past debates have shown, these separate and dependent criteria are subject to manipulation (including economics as rhetoric), and a future adjustment may be subject to judicial review. At some point in the next three years, DOL may rethink establishing a mechanism for noticing the adjustment; the rule is currently silent and that could become problematic.
DOL’s $1.2 Billion / year rule may not effectively evaluate the details of the business economic decisionmaking. While DOL expends effort in defining and measuring deadweight loss (DWL) as a function of the difference between the wage employers are willing to pay for the hours lost, and the wage workers are willing to take for those hours (i.e. decrease in total economic surplus in the market), other factors cannot be measured. How individual employers will react to the final rule depends on far more than just the rule’s changes in dollar values – action depends on the employers perception of their entire economic situation and their choices for adjusting their business plan. Some employees will see in increase in wages as they collect overtime, but others may see their hours and wages decrease as employers seek other means of competing or limit each employee to 40 hours per week.
Comments and meetings raised significant questions about whether the final rule delayed effective date would permit employers time to reclassify employees or make other adjustments, some suggesting the need for at least six months lead-time. DOL appears to be been responsive to that issue, and probably avoided any need for high-speed judicial review of the final rule. The delayed effective date until December 1, just more than six months, permits a reasonable, negotiated timetable for the filing and resolution of complaints in a district court through summary judgment, or, more appropriately, judgment on the administrative record.
Nonprofits, on the other hand, appear to have begun reviewing service levels against limited, and often fixed, income. One concern noted that increased costs to non-profit relief agencies might adversely affect their ability to assist the Department of Homeland Security (DHS)’s Federal Emergency Management Agency (FEMA) respond to disasters. Some institutions of higher education had argued that application to graduate and post-doctoral researchers (on 10- or 12-month contracts into next summer) would upset a delicate research funding balance, and while DOL published a “fact sheet” on the subject suggesting disinclination to pursue enforcement, DOL did not provide any relief. DOL’s forbearance policies – whether formally published or hinted at – are only DOL’s position: DOL’s enforcement policies do not affect private causes of action that have been blooming in recent years with DOL’s support.
Food Labeling: HHS’s Food and Drug Administration (FDA) released its expected Revision of the Nutrition and Supplement Facts Labels and Serving Sizes of Foods that Can Reasonably Be Consumed at One Eating Occasion … final rules on May 20, to be published in the Federal Register of May 27. The final rule discontinues several elements of current labeling, but adds new elements, particularly for “added sugar,” posing significant costs. FDA’s fundamental argument is quite simple: “The new label will make it easier for consumers to make better informed food choices.” The final rules become effective July 26, 2016, but manufacturers with $10 million or more in annual food sales have two years to comply and manufacturers with less than $10 million in annual food sales have three years to comply.
► The labeling rules raise old and often repeated, yet still unclear issues, relating to “disclosure rules.” First, as to these specific rules, charges have been leveled that FDA’s analysis lacks scientific rigor based on careful consideration or evidence-based reviews and a thorough appraisal of unintended consequences that are likely to arise. Sometimes this issue is little more than scientific disagreement, but it is an issue that is difficult to raise in the context of judicial review under the Administrative Procedure Act (APA)’s arbitrary and capricious or abuse of discretion standard.
Second, as with all disclosure rules, and this rule in particular after 20 years of implementation of the previous labeling rule, the premise is that information will change behavior, and the issue that always arises is whether anyone will actually pay attention, in this case, to the nutrition labels. In this instance, one commentator has suggested that the individuals most likely to read and understand the nutrition labels are individuals who already make the choices that the labeling rule hopes to suggest. Therefore, the labels are least likely to affect change.
All of the past “disclosure” issues arising in other regulations – e.g. Country of Origin Labeling to Conflict Minerals – are likely to arise again, and likely to require expeditious resolution by the courts.
E-Cigarettes Baggage: The Pipeline and Hazardous Materials Safety Administration (PHMSA) last Thursday finalized its 2015 interim final rule prohibiting passengers and crewmembers from carrying battery-powered portable electronic smoking devices (e.g., e-cigarettes, e-cigs, e-cigars, e-pipes, e-hookahs, personal vaporizers, electronic nicotine delivery systems) in checked baggage and from charging these devices and their batteries on board the aircraft. However, these devices may continue to be transported in carry-on baggage. The final rule is consistent with a similar amendment in the 2015-2016 Edition of the International Civil Aviation Organization (ICAO) Technical Instructions for the Safe Transport of Dangerous Goods by Air.
► The final rule must be considered in conjunction with a number of other rules that affect this fast-growing industry – the FDA’s deeming rule and the Federal Aviation Administration (FAA)’s ban on in-flight use. The “e-cigarette” issues are a poor fit for “tobacco” regulation (containing none), but, at the same time, raise many of the same hazards and new ones.
Unified Agenda: OMB released the current edition of the semi-annual Unified Agenda of Regulatory and Deregulatory Actions on May 18, 2016. The current snapshot of agency agendas deserves a close read this time insofar as it proposes actions in the final eight months of the Administration. By law, one more Unified Agenda should be published in the fall.
► A healthy dose of skepticism is needed in reading the Unified Agenda for several reasons oft repeated here: it is no more than a snapshot of intentions taken at some point in the recent past and may already be overtaken by events and the shifting sands of policy priorities. Nonetheless, as the Administration proposes to make substantial changes in its final days, this Unified Agenda remains but a set of guideposts on the regulatory plain. The “regulatory plan” in the Fall 2016 Unified Agenda will not be so useful.
The post Monday Morning Regulatory Review – 5/23/16: Clean Power En Banc; FLSA Overtime & Exemptions; Food Labeling; E-Cigarettes Baggage & Unified Agenda appeared first on Federal Regulations Advisor.