In two very different cases, one district court found that an agency has a nondiscretionary duty to conduct detailed analysis under a statute in taking many different actions, while another district court found that an agency erred in dismissing an appeal because it misinterpreted its own regulations as mandatory when they were clearly discretionary. An additional case was filed challenging another agency rule eschewing mandatory arbitration, but with several added twists. And a new final rule raises the question again of how much discretion an agency possesses in setting fees for service recImage may be NSFW.
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Nondiscretionary Employment Analysis: In a case seeking declaratory and injunctive relief, the United States district court for the Northern District of West Virginia determined, in Murray Energy Corp. v. McCarthy, that the Clean Air Act (CAA) requires the Environmental Protection Agency (EPA) to conduct continuing evaluations of potential employment loss that may result from CAA administration or enforcement. The CAA provides that EPA “shall conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the provision of [the CAA] and applicable implementation plans, including where appropriate, investigating threatened plant closures or reductions in employment allegedly resulting from such administration or enforcement.” The instant case clarifies that the CAA imposes a nondiscretionary duty or mandatory duty on the EPA, not a discretionary one, focusing on the directive rather than hortatory shall. The grant of summary judgment, however, does not include a remedy – the court has ordered EPA to respond with a schedule.
► The decision is not the first excursion into the question of law – the district court previously held that the CAA mandated the evaluation, but here the court does so on summary judgment, setting the stage for a critical appeal. At the same time, this is only a declaratory and injunctive action – no specific rule or enforcement action is the loci of complaint – and Article III standing remains a significant potential issue.
Historically, suits to compel EPA to comply with a mandatory duty under the CAA have, historically, been the province of pro-environmental advocates, but this case represents a broad mandate that EPA consider a different evaluation in the environmental context. Unfortunately, even mandatory actions on which agency action is statutorily predicated may be remanded to the agency resulting in little if any deterrence from further violation of the law – e.g. the appropriate and necessary finding to regulate electric generating units in Michigan v. EPA, remanded so the agency could reach the same result. A final decision that EPA has a mandatory duty to evaluate employment effects may impose a significant time-consuming and costly duty, but agency compliance (without penalty) remains the problem.
Discretionary Dismissal Remand: In an obvious failure by an administrative agency, the United States District Court for the District of Columbia granted summary judgment to plaintiffs in St. Vincent’s Hospital v. Burwell and remanded a funding decision to the Department of Health and Human Services (HHS) because the agency failed to follow its own regulations. HHS regulations and Provider Reimbursement Review Board (PRRB or Board) rules provide detailed means for filing an appeal and a “final position paper.” St. Vincent’s timely submitted its final position paper through a carrier that delivered one day late through the carrier’s own issues. The PRRB notified plaintiff that it had dismissed its appeal “for failure to timely file the final position paper.” under HHS regulations and PRRB rules, explaining that “[t]he applicable regulation and rule provide that the Board is to dismiss an appeal if the Provider does not timely file its position paper.”
As plaintiff claimed, both the HHS regulations and the PRRB rules use the word “may.” Therefore, according to the district court:
The language of these two provisions is plainly permissive, not mandatory – each directs that the Board may dismiss an untimely appeal, not that it is required to do so. In other words, the Board’s conclusion that it was required to dismiss plaintiff’s appeal as untimely filed is not in accordance with law and must be set aside.
May – not must – was enough to warrant granting summary judgment to the plaintiff, setting aside the PRRB’s decision, and remanding to the agency for further proceedings. The district court additionally rejected HHS’s attempt to argue that the rules were ambiguous and the PRRB’s interpretation was owed deference – may is plainly (and unambiguously) not must.
► This result should be obvious. Unfortunately, the waste of plaintiff’s and the court’s resources may be compounded on remand by the PRRB’s discretionary (may) decision to, again, dismiss the appeal. One would hope that HHS and the PRRB are sufficiently chastised to not embarrass themselves further with an arbitrary and capricious dismissal – they will need to explain themselves thoroughly in light of the record if they do so. The better course would be to decide the merits.
Long-Term Care Arbitration: In a new filing, American Health Care Association v. Burwell, N.D. MS No 3:16-cv-233 (filed Oct. 17, 2016), plaintiffs attack the HHS’s Centers for Medicare & Medicaid Services (CMS) Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities final rule prohibiting any Medicare-participating skilled nursing facility and Medicaid-participating nursing facility from adopting pre-dispute arbitration agreements with facility residents. At bottom, plaintiffs complain that HHS has no authority to prohibit arbitration agreements under the Federal Arbitration Act (FAA), a now-normative statutory construction issue of whether an agency has delegated regulatory authority to prohibit that which the FAA permits. The underlying statutes, cited by HHS, are non-specific, but HHS argued that “pre-dispute arbitration clauses are, by their very nature, unconscionable.” The particular bar to pre-dispute arbitration and standards for post-dispute agreed arbitration become effective November 28, 2016.
In four counts, the complaint challenges HHS authority under its programmatic statutes as against the FAA, thereby alleging under the Administrative Procedure Act (APA) that HHS’s final rule is in excess of statutory jurisdiction, authority, or limitations, or short of statutory right. In two counts, plaintiffs allege that HHS violates the APA by failing to consider relevant data and failing to provide a reasoned analysis for changing a long-established position (that arbitration was acceptable). Therefor the complaint argues that the rule is arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law under the APA.
The final count alleges that HHS failed to comply with the Regulatory Flexibility Act (RFA). While the proposed rule included an initial regulatory flexibility analysis (IRFA) on a host of changes not including the arbitration bar, HHS states in the final rule:
[W]e have determined and the Secretary certifies, that this final rule will not have a significant economic impact on a substantial number of small entities. We note that the proposed rule, …, incorrectly identified that the proposed rule would have a significant economic impact on a substantial number of small entities. The inclusion of this statement was an oversight.
The complaint argues that HHS failed to comply with the RFA by not analyzing increased costs of judicial resolution of claims against arbitration costs, as well as increased insurance costs.
► The suit is of little surprise, although the details of the claims will require substantially more work than presented in the complaint. While the statutory confluence or conflict is purely a question of law, the administrative record review issues will focus on how plaintiffs presented the data in their public comments on the proposed rule and whether HHS adequately responded to those comments. Although the complaint was filed a week ago, no motion for a stay of the rule effective date or a preliminary injunction has been filed.
Immigration Fees, Budgets, and Policy: The Department of Homeland Security (DHS) is publishing its most recent U.S. Citizenship and Immigration Services [(USCIS)] Fee Schedule in today’s Federal Register. The rule updates the immigration examinations fee schedule under the Immigration and Nationality Act (INA) for the first time in six years – requiring increased by a weighted average of 21% to generate an annual USCIS operating budget of just over $3 billion per year. The final rule spreads fee waivers and statutory no-fee applications across all paying fees, but also makes specific decisions that some fees will not be raised according to the activity based costing system or distinguishes on policy choices among fee payers. The final rule is effective December 23, 2016, and any applications or petitions filed on or after that date must include the new fee.
► The USCIS fee schedule may be the largest fee for service funding structure within the Federal Government and these fees directly fund USCIS operations – not merely the budget and accounting trick of an appropriation that is offset (usually imperfectly) by a miscellaneous receipt. Not only does DHS make adjustments for individual accounting contingencies such as fee waivers to ensure a full cost recovery, but it appears that DHS is also making substantive policy choices benefiting specific groups by holding specific fees to a reduced increase and spreading the unrecouped costs among all other applicants. This is not a “new” concept but this rule adopts much more obviously policy-based choices that are not related to the fee for service principles, or any other requirement, such as the Independent Agencies Appropriation Act, 1952 (IOAA), or guidance, such as Office of Management and Budget (OMB) Circular A-25 (User Fees). Although litigated in the past, the new rule may raise new questions of this policy choice efficacy.
The post Monday Morning Regulatory Review – 10/24/16: Nondiscretionary Employment Analysis; Discretionary Dismissal Remand; Long-Term Care Arbitration & Immigration Fees, Budgets, and Policy appeared first on Federal Regulations Advisor.