Two interesting cases were handed down last week. One is a complicated dissent from denial of a petition for rehearing en banc that raises questions of agency regulation of a subject that falls either in a gap in the sta
tute or outside the subject of the statute. The second case focuses on standing to challenge internal guidance that structured discretion. From an agency, the latest response to a judicial remand in the saga of cross-state air pollution.
Silence, Gaps, Limits & Tips: The United States Court of Appeals for the Ninth Circuit last week denied a petition for rehearing en banc in Oregon Restaurant and Lodging Association v. Perez but the scope and nature of the dissent from denial presents a substantial regulatory problem of when an agency may alter regulations after a court determines statutory meaning. In the prior case of Cumbie v. Woody Woo, Inc., a panel of the Ninth Circuit unpacked the dense language of the Fair Labor Standards Act (FLSA) requiring only a lower than normal minimum wage while permitting an employer a “tip credit” for tips actually earned by wait staff. Cumbie held that a tip pool including employees who were not normally tipped by customers was valid when the employer paid at least a full minimum wage and did not take a “tip credit.” Cumbie expressly rejected the Department of Labor (DOL) interpretation as plainly erroneous and unworthy of any deference.
DOL promulgated new regulations in 2011 to clarify that tips are the property of the employee whether or not the employer has taken a tip credit. A panel of the Ninth Circuit held in Oregon Restaurant and Lodging Association v. Perez that, under essentially the same operative facts as Cumbie, the DOL regulations now required that the tips not be pooled at all, no matter what wage was paid.
On petition for rehearing en banc, the dissent takes the view that Cumbie precluded a regulatory revision as an interpretation of the statute’s plain meaning under the United States Supreme Court’s decision in Brand X that “a court’s interpretation of a statute trumps an agency’s … if the prior court holding ‘determined a statute’s clear meaning.’” In short, the dissent argues that Cumbie established plain meaning under Chevron Step 1 and that no ambiguity allowed DOL regulation after the plain meaning was established. The dissent argues that the panel decision errs in multiple ways, but even 10 judges could not persuade the last few to make up a majority to order a rehearing en banc. In the broad sense, the issue is whether Congress has been silent in leaving a gap within the statute for DOL to fill, or left the subject beyond the scope of the statute and its delegation to DOL.
► The conflict over whether DOL may promulgate a regulation depends on whether the statutory meaning is plain – admitted or not, the court is so deeply divided that the issue is likely to become one of the next in the ongoing series of SCOTUS FLSA cases. The dissent is phenomenal because of the number of participants – 10 – one judge short of the entirety of the limited en banc court and more than one-third of the total authorized judgeships for the Ninth Circuit. The decision may provide an opportunity to SCOTUS to grant review on the basis of the importance of the FLSA question but it presents an even more important conflict over whether a court can presume the existence of delegated agency regulatory authority.
Flashing Lights, Highway Guidance & Standing: The Highway Beautification Act requires the Department of Transportation (DOT)’s Federal Highway Administration (FHWA) and each State to negotiate standards for the “size, lighting and spacing” of billboards that come within 660 feet of interstate highways. FHWA issued a 2007 guidance memorandum that interpreted the prohibition of “flashing, intermittent or moving” lights to permit state approval of those digital billboards that met certain timing and brightness requirements. Advocacy group Scenic America Inc. challenged the guidance memorandum as a substantive rule without advance notice and an opportunity for public comment under the Administrative Procedure Act (APA) and violated the strictures of the Highway Beautification Act. The United States Court of Appeals for the District of Columbia Circuit, in Scenic America, Inc. v. DOT, held that Scenic America lacked constitutional standing to raise the notice and comment challenge and dismissed their complaint on the merits of the statutory challenge.
Prior to the 2007 guidance, FHWA’s Division Offices differed on whether digital billboards complied with the agreed lighting standards, as FHWA found out in a survey. The 2007 guidance brought more consistency, but that consistency allowed more electronic billboards. The court’s decision turns on redressability prong of Article III standing – that it is forced to expend greater resources fighting digital billboards because the 2007 Guidance makes it easier for states to erect such billboards and vacatur of the guidance will save those resources. But the court found that Scenic America had shown no evidence that vacatur would actually result in denial of new digital billboards by Division Offices rather than a return to inconsistency, or that specific Division Offices would revert to a denial mode. “In sum, we cannot assume, without more, that vacating the Guidance would eliminate or lessen the construction of digital billboards.”
► Leaving aside the substantive statutory claim, the court’s view of the internal instructions of the FHWA instructs that plaintiffs must be specific in their trail to redress – it is not enough to speculate that removing an impediment will result in a reversal of fortune. Additionally, a lesson oft overlooked is reinforced here: a plaintiff must maintain jurisdictional requirements throughout the litigation with increasing specificity. The plaintiffs burden of proof rises from a complaint’s presumed factual basis to the proof that must be established as uncontested facts before summary judgment, and both are scrutinized on appeal.
Remanded Emissions Budgets Return: The Environmental Protection Agency (EPA) released an economically significant Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS (i.e. National Ambient Air Quality Standards) final rule in response to judicial remands and changes made in Office of Management and Budget (OMB)’s executive and interagency review. One key in this final rule lies in EPA’s response to a remand without vacatur from the D.C. Circuit in EME Homer City Generation L.P. v. EPA (II), for reconsideration of the EPA’s emission budgets for 11 states (Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia), and a separate remand relating to emissions budgets in four states (Alabama, Georgia, South Carolina, and Texas). Along with a number of other changes, the rule will become effective 60 days after publication in the Federal Register, subject, as always to further reconsideration and litigation.
► In an odd turn, the D.C. Circuit instructed EPA to act promptly, yet EPA required more than a year, and OMB’s docket suggests that no judicial deadline for action existed. For a variety of reasons including continuing dissatisfaction, the remand, and interrelatedness with other rules still in litigation, the rule is likely to return to the D.C. Circuit. Moreover, EPA is likely to reduce the budgeted emissions again before litigation is concluded. The Clean Air Act (CAA) process may now be never-ending.
The post Monday Morning Regulatory Review – 9/12/16: Silence, Gaps, Limits & Tips; Flashing Lights, Highway Guidance & Standing; and Remanded Emissions Budgets Return appeared first on Federal Regulations Advisor.