Administrative Law Prof Blog

An IRS decision that actually can be reviewed under the APA

"D.C. Circuit Holds IRS Notice Providing Refund Procedures Reviewable Under APA", Bloomberg Law Reports - Administrative Law, Sept. 2009, at 10, reviewing Cohen v. United States, Nos. 08-5088 et al. (D.C. Cir. Aug. 7, 2009).

On August 7, 2009, the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit" or "Court") held in a 2-1 decision that Internal Revenue Service ("IRS") Notice 2006-50 ("Notice") - which provides the procedures by which taxpayers may directly request a credit or refund of specified, erroneously-collected excise taxes - is reviewable under the Administrative Procedure Act ("APA"). Judge Kavanaugh dissented on the grounds that the challenge is barred by the Declaratory Judgment Act, and in any event, not ripe for review. The Court remanded the case to the United States District Court for the District of Columbia to develop the factual record and determine whether the Notice is unlawful under the APA.

Generally, taxation issues are not reviewable under the APA. However, in this case the D.C. Circuit interprets the exceptions for federal taxes in the Anti-Injunction Act, 26 U.S.C. § 7421(a), the Declaratory Judgment Act, 28 U.S.C. § 2201(a), the Internal Revenue Code, 26 U.S.C. § 7422(a), and the APA's general recognition of other statutory limitations on its applicability, 5 U.S.C. § 702, as not applying here, as the plaintiffs are challenging a procedure and not a tax bill.

Characterizing the challenge to Notice 2006-50 as a "fight ... over process, not disputed funds," Judge Brown, writing for the majority, held that suit under the APA was not barred by Section 7422(a). "[O]nly in the anomalous case where the wrongful assessment is not disputed and litigants do not seek a refund is a standalone claim under the APA viable. This is that case." It mattered not to the Court that the taxpayers had brought refund claims in the district court (as a group bringing its appeal only with respect to the APA) and hoped to "parlay a victory" in the APA suit into a subsequent successful suit for refunds; such aspirations were "too remote" to affect the Court’s jurisdiction. ... As to the other statutory exceptions, "Congress only added the tax exception to the DJA to stop taxpayers from using the DJA to circumvent the AIA." Thus, "despite its broad language, the DJA bars only declaratory relief sought for the purpose of restraining the assessment or collection of any tax" (internal quotation marks omitted). In sum, because the appeal sought neither a refund or credit, nor to restrain assessment or collection, review of Notice 2006-50 can proceed under the APA.

EMM

Can a federal agency lose the power to act?

Eben A. Krim and Mark W. Batten (Proskauer Rose LLP),"Can A Federal Agency Lose The Power To Act? – Courts split on whether the NLRB can issue binding decisions with only two of five members", Bloomberg Law Reports - Administrative Law, Sept. 2009, at 8. This article reviews the decision in Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB, 564 F.3d 469 (D.C. Cir. 2009).

The National Labor Relations Board ("NLRB" or "Board"), the ultimate arbiter of disputes between unions and employers, has been functioning with only two members - less than half of the five members its enabling statute calls for - since January 1, 2008. President Obama has nominated three replacements for the open seats, but they have not yet been confirmed. Insisting that the Board's work must continue in the meantime, its remaining members ... have continued to hear and decide unfair labor practice and representation cases at a steady pace. In May 2009, though, the United States Court of Appeals for the D.C. Circuit ("D.C. Circuit") declared that the Board had no authority to issue any decision with only two members. ... Lawyers who practice traditional labor law are used to uncertainty; because the Board members are political appointees, three of whom traditionally are from the President's party, the law in this area tends to shift with the political tides. But the D.C. Circuit's decision raises an entirely new breed of uncertainty, calling into question whether hundreds of decisions can be relied upon as even temporarily authoritative statements of law.

The issue turns on the interpretation of 29 U.S.C. § 153(b). Other Circuits disagree with the D.C. Circuit on this issue, but for jurisdictional reasons the D.C. Circuit wags the dog.

Thus, the authority of the Board’s two current members to decide unfair labor practice and representation cases, and to issue binding opinions and orders on behalf of the Board, has become the subject of a stark split in circuit court authority. ... Until the Board has at least three confirmed members in place, or the split is otherwise definitively resolved, however, we can expect a period of pronounced instability as all of the Board’s decisions continue to be called into question.

EMM

Judicial review of unreasonable agency delay even after delay terminates

Daniel G. Jarcho (McKenna Long & Aldridge LLP), "D.C. Circuit Confrms Right to Judicial Review of Unreasonable Federal Agency Delay Even After Delay Terminates", Bloomberg Law Reports - Administrative Law, Sept. 2009, at 5. Opening paragraph:

Unreasonable federal agency delay can fundamentally harm the vital interests of a business in a regulated industry. Businesses need federal agency approval for a wide variety of essential functions, ranging from the premarket product clearance required in some industries to the licenses needed in other industries as a prerequisite for doing business at all. When federal agencies unreasonably delay action on these important issues, businesses can seek recourse in the courts. This article examines the essential elements of a suit challenging unreasonable agency delay and discusses the recent decision of the United States Court of Appeals for the D.C. Circuit in Del Monte Fresh Produce Company v. United States, which confirmed the right to obtain a court ruling that agency delay is unlawful, even if the agency responds to the lawsuit by terminating the delay.

The article covers when agency delay is reviewable under Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55 (2004); the merits test from Telecomm. Research & Action Ctr. v. FCC, 750 F.2d 70, 80 (D.C. Cir. 1984); and the exception to mootness provided by the “capable of repetition, yet evading review” doctrine. It concludes:

Del Monte Fresh Produce establishes that a court can remedy an unreasonable agency delay that is likely to be repeated in the future, even when the dispute of the moment has been resolved. If a plaintiff sues a federal agency for unreasonably delaying a particular action and the filing of the suit triggers the agency to take the disputed action, the plaintiff need not be content with the knowledge that the incident that gave rise to the suit has been resolved. Under the “capable of repetition” doctrine, a court still has authority to issue a ruling that agency delay was unlawful - a ruling that can protect the plaintiff from future instances of unlawful delay.

EMM

The Irrepressible Myth of Klein

Howard M. Wasserman (Florida International) has posted "The Irrepressible Myth of Klein" on SSRN. Abstract:

This paper examines the Reconstruction-era case of United States v. Klein, which imposed some uncertain limitations on congressional control over judicial jurisdiction and judicial decisionmaking. Klein remains one of the mysteries of the constitutional-law canon, a subject of a sort of “cult” among some lawyers and commentators, although no one seems to know how or why. Two connected myths surround Klein. First, the case is said to be meaninglessly indeterminate because, given the confusing and disjointed language of the opinion, its precise doctrinal contours are not clear; second, the case is believed (and hoped) to function as vigorous precedent, likely to be used by a court to invalidate likely federal legislation. Both of these ideas are false. In fact, close analysis of Klein, its progeny, and past scholarship reveals three core, somewhat-related principles of separation of powers and limits on congressional control over the courts: 1) Congress cannot dictate case outcomes; 2) Congress cannot tell the courts how to understand, interpret, or apply the Constitution; and 3) Congress cannot enact unconstitutional rules.

But close analysis also reveals that Klein lacks doctrinal vigor and that the belief in Klein's power is purely a myth. Those three core principles are neither groundbreaking nor exceptional and all are common ideas, reflected in and associated with other precedents and constitutional doctrines; we do not need Klein to advance these separation-of-power ideals. Consider that no federal law has been judicially invalidated on Klein grounds since the law challenged in Klein itself.

Klein's principles fail to limit in any meaningful way Congress' power to enact two recent, controversial pieces of War-on-Terror legislation: the Military Commissions Act of 2006, which imposed limits on Habeas Corpus on federal judicial decisionmaking in cases brought by WOT detainees, and the FISA Amendments Act of 2008, which granted telecommunications companies retroactive immunity for their assistance to the Bush Administration in conducting warrantless surveillance of people in the United States. Although both laws limit and control the authority, operation, and decisionmaking of federal courts over highly contested legal and constitutional issues - the concerns at the case's heart - the case imposes no meaningful constitutional barriers to either enactment and both survive constitutional scrutiny. The continued belief that Klein imposes significant constitutional limits is a continued belief in a legal myth.

EMM

New Federal Register web site

From Steven D. Schwinn (John Marshal - Chicago) on the Constitutional Law Prof Blog: "White House Sends Mixed Signals on Government Transparency".

The Obama administration today launched a new version of the Federal Register designed to "give[] the public unprecedented access to the federal decision-making process, a major goal set out by President Obama in his Open Government initiative."  The new format for the Fed Reg, available at the GPO web-site, allows easier browsing, organizing, and searching.  Check it out; it's quite an improvement.

EMM

Regulatory taking

The question of when the impact of a law or regulation constitutes a taking for Fifth Amendment due process purposes is a hot one. For many years, taking meant literally taking - regulation alone was not enough to invoke due process protection. Then, in 1978, the Supreme Court allowed that government regulatory actions could under certain circumstances rise to the level of taking without physically seizing the property. Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978). The eye of that needle was exceedingly small at first, but has widened in recent years.

On her Law of the Land blog, Patty Salkin (Albany) describes a recent 9th Circuit case that applies the Penn Central factors to find a taking. The case involved a rent-control ordinance imposed only on trailer parks.

Turning to the merits, the court found the ordinance constituted a regulatory taking under Penn Central. “The proper inquiry in a facial challenge is not whether the property owners can demonstrate that property has been taken without providing evidence beyond the text of the regulation; the inquiry is whether the ‘mere enactment’ of the regulation constitutes a taking.” The owners had submitted evidence of the effect that the mere enactment of the ordinance had on their property: it forced them to rent the entire park at close to an 80 percent discount below the market rate (a “significant” loss) and effected a wealth transfer from them to their tenants. The fact that the owners earned some return on investment was not, as the district court reasoned, the end of their Penn Central claim. ... Although the ordinance had not strongly interfered with the owners’ investment-backed expectations because the owners purchased the park when it was already regulated, the ordinance caused them substantial economic hardship and singled them out by forcing them to bear a burden (of providing affordable housing in the city) that should fairly be borne by the taxpayers as a whole. The ordinance was “quite unlike zoning or other restrictions that appl[ied] broadly to businesses and residences and inevitably restrict[ed] the property’s uses” since the City did not impose comparable costs on any other property owners, and the law effected a transfer of the right to rents for the use of the property from the owners to the tenants. “This looks much more like a classic taking than a mere regulatory burden.”

Note that this opinion has a dissent. It will be interesting to see if it holds up en banc. EMM

A useful example

Lawrence Friedman, on his Customs Law blog, has a nice multi-part review of a recent customs case that covers all sorts of administrative law arguments as well as evidence issues:

• Deem It All!
• Kahrs II: Revenge of the Import Specialist
• Kahrs III: What Have I Done Wrong?
• Epilogue: The Wrath of Kahrs

Did the government follow its rules? Including its rules about changing rules? Read and find out. EMM

New administrative law articles

From the University of Washington's Current Index to Legal Periodicals:

• Cafaggi, Fabrizio. The great transformation. Administrative and judicial enforcement in consumer protection: a remedial perspective. 21 Loy. Consumer L. Rev. 496-539 (2009). [H]|[L]|[W]
• Clark, Sara A. Note. Taking a hard look at agency science: can the courts ever succeed? 36 Ecology L.Q. 317-354 (2009). [H]|[L]|[W]
• Gersen, Sara. Note. Who can enforce the Endangered Species Act's command for federal agencies to carry out conservation programs? 36 Ecology L.Q. 407-438 (2009). [H]|[L]|[W]
• Jackson, Alex. Note. EPA's fuzzy bright line approach to residual risk. 36 Ecology L.Q. 439-466 (2009). [H]|[L]|[W]
• Moren, Harry. Note. The difficulty of fencing in interstate emissions: EPA's Clean Air Interstate Rule fails to make good neighbors. 36 Ecology L.Q. 525-552 (2009). [H]|[L]|[W]
• Pursley, Garrick B. Avoiding deference questions. 44 Tulsa L. Rev. 557- 586 (2009). [H]|[L]|[W]
• Shapiro, Sidney A. "Political" science: regulatory science after the Bush Administration. 4 Duke J. Const. L. & Pu. Pol'y 31-43 (2009). [H]|[L]|[W]
• Swanson, Kelsey M. Comment. The right to know: an approach to gun licenses and public access to government records. 56 UCLA L. Rev. 1579- 1628 (2009). [H]|[L]|[W]
• Wilson, Andrea. Comment. Missing the mark: the public health exception to the HIPPA Privacy Rule and its impact on surveillance activity. 9 Hous. J. Health L. & Pol'y 131-156 (2008). [H] |[L ]|[W]

EMM

Research resources

From Jason Sowards at Wake Forest:

Today in my specialized legal research class, we will talk about locating administrative decisions. This gives me a chance to spotlight one of my favorite web sites.

The University of Virginia's government documents department has developed a web site that provides access to agency documents (including decisions) available on the Internet. This includes agency guidance documents, interpretation letters, as well as links to agencies' e-FOIA reading rooms.

Organized both by agency and subject this site provides a wealth of information in a cost-effective manner. The subject search is particularly helpful when you are not aware of which agency might possibly regulate in the area you're researching. Although you may run across a broken link or 2, the site still gives you enough context to locate that same information on your own (through backtracking the URL).

A disclaimer from the site:

This page is not an attempt to link to Federal Register or the Code of Federal Regulations information for each federal agency. It links to other administrative actions which are outside the scope of the CFR or the FR. What is available via the Internet varies from agency to agency.

Last year when I asked my students to locate administrative decisions on an assignment, I thought I was clever by picking decisions that I thought could only be found on Westlaw and/or LexisNexis. To my delight, every single student chose the Virginia site to answer the questions and found every decision I was looking for. Very nice indeed (and cost-effective)!

--
Posted By Jason Sowards to RIPS Law Librarian at 9/30/2009 08:50:00 AM

EMM

What happens when the government makes a mistake?

But that never happens. Yeah. Right. Sometimes, however, the mistake is in your favor. Can you take advantage of it?

The New York Public Personnel Law blog describes a case where somebody tried and failed, in "Clerical error in recording an educator’s tenure area does not vest educator with tenure in the tenure area recorded". The claimant was a special education supervisor, but when she completed her probationary period her records showed her tenure as administration rather than special education supervision. Her position was abolished, and when a vacant elementary school principal position - an administration position - was filled by someone else she objected that she had superior rights to the position under New York law.

Reality won. The Commissioner deciding the case found that

• according to a revised job description signed by the claimant some years earlier, her tenure area was changed then from a related special education area to special education supervisor;
• there was no indication in the Board’s minutes that it was consciously changing the claimant's tenure area to administration or that she was consenting to a change;
• the Board could not retroactively change the scope of the tenure area in which the claimant was serving.

The Commissioner found that the the listing of the claimant's tenure area as administration "was due to clerical error" and that her actual tenure area was special education supervisor, meaning she had no priority right to the principal's job.

Generally, government agencies have rules for dealing with "ministerial" errors in their establishing statutes or their regulations. In most instances, as in the case above, reality wins. The sword usually cuts both ways. The challenge for the practitioner, whether representing the agency or the aggrieved party, is finding the facts - usually old records - that evidence reality. I've dug in the National Archives and even used affidavits of retired officials. Sometimes you have to be creative. EMM

New administrative law articles

From the University of Washington's Current Index to Legal Periodicals:

• Bernard, Chris. Note. Shifting and shrinking common ground: recalibrating the Federal Trade Commission's and Department of Justice's enforcement powers of single-firm monopoly conduct. 34 Del. J. Corp. L. 581-609 (2009). [H]|[L]|[W]
• Buccino, Sharon, et al. Expedited NEPA review for alternative energy projects. 39 Envtl. L. Rep. News & Analysis 10581-10593 (2009). [H ]|[L]|[W]
• Goldhammer, Joseph M. and Naomi Y. Perera. We never talk anymore: evaluating confidentiality rules and no-fraternization policies--Cintas Corp. v. NLRB and Guardsmark LLC v. NLRB. 24 Lab. Law. 379-398 (2009). [H]|[L]|[W]
• Herz, Michael. Law lags behind: FOIA and affirmative disclosure of information. 7 Cardozo Pub. L. Pol'y & Ethics J. 577-598 (2009). [H]|[L]|[W]
• Jones, Renee M. Legitimacy and corporate law: the case for regulatory redundancy. 86 Wash. U. L. Rev. 1273-1333 (2009). [H]|[L]|[W]
• Levitin, Adam J. Hydraulic regulation: regulating credit markets upstream. 26 Yale J. on Reg. 143-227 (2009). [H]|[L]|[W]
• Pall, Zachary. Student article. The high costs of costs: fees as barriers to access within the United States and Canadian freedom of information regimes. 7 Cardozo Pub. L. Pol'y & Ethics J. 599-632 (2009). [H]|[L]|[W]
• Pasternak, Daniel B. and Justin F. Keith. One of these things is not like the other: the continuing battle over the meaning of discrimination-- Salmon Run Shopping Center LLC v. NLRB and Guard Publishing Company v. NLRB. 24 Lab. Law. 325-338 (2009). [H]|[L]|[W]
• Rohlf, Daniel J. Avoiding the 'bare record': safeguarding meaningful judicial review of federal agency actions. 35 Ohio N.U. L. Rev. 575-617 (2009). [H]|[L]|[W]
• Romano, Roberta. Does the Sarbanes-Oxley Act have a future? 26 Yale J. on Reg. 229-341 (2009). [H]|[L]|[W]
• Rozen, Yona, Christa Boyd-Nafstad and Tiffany C. Alvoid. One of these things is not like the other: the continuing battle over the meaning of discrimination--Salmon Run Shopping Center LLC v. NLRB and Guard Publishing Company v. NLRB. 24 Lab. Law. 339-377 (2009). [H]|[L]|[W]
• Wu, Alexander. Note. Motivating disclosure by a debtor in bankruptcy: the Bankruptcy Code, intellectual property, and fiduciary duties. 26 Yale J. on Reg. 481-510 (2009). [H]|[L]|[W]
• Essays from the Weil, Gotshal & Manges Roundtable on the Future of Financial Regulation. 26 Yale J. on Reg. 343-480 (2009). [H]|[L]|[W]
  • Bebchuck, Lucian A. Buying troubled assets. 26 Yale J. on Reg. 343-358 (2009). [H]|[L]|[W]
  • Bhagat, Sanjai and Roberta Romano. Reforming executive compensation: focusing and committing to the long-term. 26 Yale J. on Reg. 359-372 (2009). [H]|[L]|[W]
  • Coates, John and David Scharfstein. Lowering the cost of bank recapitalization. 26 Yale J. on Reg. 373-389 (2009). [H]|[L]|[W]
  • Herring, Richard J. The known, the unknown, and the unknowable in financial policy: an application to the subprime crisis. 26 Yale J. on Reg. 391-404 (2009). [H]|[L]|[W]
  • Kane, Edward J. Incentive roots of the securitization crisis and its early management. 26 Yale J. on Reg. 405-416 (2009). [H]|[L]|[W]
  • Mayer, Christopher, Edward Morrison and Tomasz Piskorski. A new proposal for loan modifications. 26 Yale J. on Reg. 417-429 (2009). [H]|[L]|[W]
  • Partnoy, Frank. Historical perspectives on the financial crisis: Ivan Kreuger, the credit-rating agencies, and two theories about the function, and dysfunction, of markets. 26 Yale J. on Reg. 431-443 (2009). [H]|[L]|[W]
  • Pavlov, Andrey D. and Susan M. Wachter. Systemic risk and market institutions. 26 Yale J. on Reg. 445-455 (2009). [H]|[L]|[W]
  • Schwarcz, Steven L. Conflicts and financial collapse: the problem of secondary-management agency costs. 26 Yale J. on Reg. 457-470 (2009). [H]|[L]|[W]
  • Solender, Michael S. How the Obama Administration should regulate the financial sector. 26 Yale J. on Reg. 471-480 (2009). [H]|[L]|[W]

EMM

Newly posted on SSRN

"Strategic Statutory Interpretation by Administrative Agencies" by Yehonatan Givati, Terence M. Considine Fellow in Law and Economics at  Harvard Law School. Abstract:     

Many statutes are administered by administrative agencies. This paper shows that, when interpreting an ambiguous statute, administrative agencies choose between two strategies of statutory interpretation: the risky strategy - a relatively aggressive interpretation that provokes an appeal by the firm - and the safe strategy - a relatively non-aggressive interpretation that the firm complies with. The paper also shows that a change in the level of judicial deference may result in a shift from the risky strategy to the safe one, or vice versa. Therefore, contrary to the commonly held view, an increase in the level of judicial deference may result in agencies choosing a less aggressive statutory interpretation, and in more court decisions reversing agencies' statutory interpretation.

EMM

The Governance Journal Provides Free Access to Article in Recognition of International Right To Know Day

Monday September 28th is International Right to Know Day.  To mark the day,
Governance (International Journal of Policy, Administration, and institutions) is providing free access to Professor Cary Coglianese¹s articlefrom its new issue (22.4, October 2009).  In "The Transparency President? The Obama Administration and Open Government," Coglianese assesses the administration¹s early record on transparency and warns that high public expectations about openness may not be realized.  He also raises larger questions about ³an excessive emphasis on fishbowl governance,² aimed mainly at the disclosure of details about how officials behave.  The neglected
alternative, says Coglianese, might be a strategy of ³reasoned transparency, that demands that government officials offer explicit explanations for their actions.² 

You can download the article here.   You can also subscribe to the newsletter and learn more about International Right to Know Day.

KP

A useful if narrow precedent

In her Law of the Land blog, Patty Salkin (Albany) presents a Vermont case that was presented to the ALI-ABA Land Use Institute in August 2009, "Applicant Entitled to Project Review Under Conditional Use Permit and Site Plan Regulations in Effect at Time of Application":

Emphasizing that its holding was a “narrow one,” the court iterated: “When a town erroneously informs a landowner that a proposed use is not permitted, the landowner then submits a conditional-use application rather than a site-plan application in reliance on that representation, and the town then amends its regulations to explicitly bar the use it maintained was not permitted, the applicant has a right to apply for site-plan approval with the benefit of the original use determination.  ... .”

It passes the common-sense test that the government can't change the rules in the middle of the game. EMM

Seamless web time

Or, why even criminal law specialists need to know administrative law. An interesting administrative law problem appears on prattvilleprogress.com, the web site of the Prattville (Alabama) Progress newspaper), "Appeal filed in voter application rejection":

An 18-year-old local woman whose voter registration application was reject­ed by county registrars because she inad­vertently listed her former address on the document, has appealed the decision to the Autauga County Judge of Probate.
...
Dent, who filed an amended applica­tion minutes after Wise pointed out the inaccuracies, expressed on paper her be­lief that the registrar could have resolved the issue by allowing her to file a cor­rected form.
...
The office of District Attorney Randall Houston conducted an investiga­tion into the legal questions posed by the appeal, and the rejection of the original application.

The DA's response to the notice of ap­peal includes determinations that the board failed to specify to Dent the basis for its decision. But the legal filing also states that Dent "cannot, without specu­lating, attack the basis of the decision of the Board," and "cannot overcome the presumption of correctness or demon­strate that the Board exceeded its statu­tory authority."
...
Houston declared in the legal response that his office, which is responsible for defending the lo­cal board's action, "is unable to effectively defend against the pe­tition if it does not know the ba­sis of the decision of the Board."
...
Houston said Thursday that his office rarely deals with such legal issues.

"You learn something every day," he said. "I had no idea we had anything to do with that. We've had one or two before, but they were different situations, where the applicant had past criminal convictions. We don't generally do much in probate court. Basically, what happened here is that the form was not filled out right. My basic motion is that they dismiss the whole thing and start over."

Thanks to Votelaw for the pointer. EMM

Dealing with poorly written regulations

On their Drug and Device Law blog, Jim Beck (Dechert LLP, Philadelphia) and Mark Herrmann (Jones Day, Chicago) have posted "New Article On Free Speech and FDA 'Intended Use' Regulations", in which they review favorably an article on FDA requirements for labeling for off-label uses of drugs and medical devices.

Such "adequate" labeling, of course, can't be added for a new use without going through the FDA's entire drug/device approval process. Given how widespread off-label use is, many manufacturers would have to be wilfully blind not to know of such use. For one thing, they have to collect and submit adverse event reports, whether or not the use involved was a labeled one.

The thesis of the article is that this is a "Catch-22 regulation" that can't possibly be (and hasn't been) enforced as written without both violating the First Amendment rights of free speech and and the statutory rights of doctors to engage in off-label use. For one thing, "objective intent" is an oxymoron, describing something unknown to the law.

Interesting. EMM

Regulation through tort litigation

On the Conglomerate Blog, David Zaring (Wharton) has posted "Greenhouse Gas Regulation Through The Nuisance Suit", a review of Connecticut, et al. v. American Electric Power Company Inc., et al., 05-5104-cv, 05-5119-cv (2d Cir., Sep. 21, 2009).

In what could be a big, big case, the 2d Circuit just permitted a federal common law nuisance suit to go forward against power companies that contribute to greenhouse gas emissions.  As you might imagine, the interplay between this and Massachusetts v. EPA, the Supreme Court's greenhouse gas case, is quite complicated. ... I can't imagine the Supreme Court won't be looking at this very closely - the implications are vast.

From the opinion summary:

In 2004, two groups of Plaintiffs, one consisting of eight States and New York City, and the other consisting of three land trusts (collectively “Plaintiffs”), separately sued the same six electric power corporations that own and operate fossil-fuel-fired power plants in twenty states (collectively “Defendants”), seeking abatement of Defendants’ ongoing contributions to the public nuisance of global warming. ...

Plaintiffs brought these actions under the federal common law of nuisance or, in the alternative, state  nuisance law, to force Defendants to cap and then reduce their carbon dioxide emissions. Defendants moved to dismiss on a number of grounds. The district court held that Plaintiffs’ claims presented a non-justiciable political question and dismissed the complaints. ...

On appeal, Plaintiffs argue that the political question doctrine does not bar adjudication of their claims; that they have standing to assert their claims; that they have properly stated claims under the federal common law of nuisance; and that their claims are not displaced by federal statutes. Defendants respond that the district court’s judgment should be upheld, either because the complaints present non-justiciable political questions or on a number of alternate grounds: lack of standing; failure to state a claim; and displacement of federal common law. In addition, Defendant Tennessee Valley Authority (“TVA”) asserts that the complaints should be dismissed against it on the basis of the discretionary function exception.

We hold that the district court erred in dismissing the complaints on political question grounds; that all of Plaintiffs have standing; that the federal common law of nuisance governs their claims; that Plaintiffs have stated claims under the federal common law of nuisance; that their claims are not displaced; and that TVA’s alternate grounds for dismissal are without merit.

EMM

Circuit split on interpreting a regulation

I suspect there is a law review article here. In the firm's Payment Matters newsletter, Thomas W. Coons and Kristin Cilento Carter of the DC area law firm Ober, Kaler, Grimes & Shriver describe a split over the interpretation of the Health and Human Services regulation governing how to count medical residents in determining the number of full-time equivalents in a hospital, in "The Divide Continues: Illinois Court Rejects Secretary's Interpretation of IME Regulation to Exclude Research Time, 9/17/09".

Less than a year after the United States Court of Appeals for the First Circuit issued the opinion in Rhode Island Hospital v. Leavitt, No. 07-2673 (1st Cir. Nov. 17, 2008), upholding the Secretary of the Department of Health and Human Services' ("Secretary") interpretation of the indirect medical education (IME) regulation to exclude time spent by residents engaged in research activities, the United States District Court for the Northern District of Illinois has reached the opposite conclusion. In University of Chicago Medical Center v. Sebelius, No. 1:07-cv-07016 (Aug. 3, 2009), the University of Chicago Medical Center ("Hospital") challenged the Centers for Medicare and Medicaid Services' (CMS) reduction of the Hospital's Medicare payments for fiscal year (FY) 1996 by excluding time spent be residents engaged in educational research from the IME full-time equivalent (FTE) resident count. Finding that the reduction was improper, the Court issued summary judgment in favor of the hospital finding that the IME resident count for FY 1996 should include resident time engaged in research when the requirements of the IME regulation are met.

... The debate in the University of Chicago Medical Center case was over the proper meaning of the term "portion." The Hospital argued that "portion" unambiguously refers to a geographic location within a hospital, while the Secretary contended that "portion" refers to the function that a resident is performing within a hospital, regardless of the resident's location. ...

I'm sorry, but it's difficult to assert that a word is unambiguous if people are arguing about it in federal court and other courts have already split over it. Thanks to Lexology for the pointer. EMM

Review requirement ends when the city rejects the project

The winning defenders in a suit by a developer against the City of Los Angeles describe this interesting case in "Court of Appeal Holds Developer Cannot Sue City for Violations of CEQA and Constitutional Law Where City Rejects Project Before Completing EIR".

The City had spent several years preparing an EIR [environmental impact review] under CEQA [California Environmental Quality Act] before the City made a policy decision to reject the project. The developer sued the City, alleging that the City was prohibited from making this policy determination and rejecting the project until it completed the EIR. ... [T]he Court relied on Public Resources Code section 21080, subdivision (b)(5), in holding that CEQA applies only to projects that a public agency proposes to carry out or approve, and does not apply to projects that the agency rejects or disapproves. The Court made clear that "if an agency at any time decides not to proceed with a project, CEQA is inapplicable from that time forward." The Court explained that requiring a public agency to prepare an EIR before rejecting a project "would impose a substantial burden on the agency, other agencies, organizations, and individuals commenting on the proposal, and the project applicant. Such a requirement would not produce any discernible environmental benefit and would not further the goal of environmental protection." ... The Court held that the developer could not state a claim for denial of procedural due process because it had no claim of entitlement to an EIR or the underlying development entitlements. The Court also held that the developer did not adequately allege a substantive due process claim, because it did not allege any outrageous or egregious abuse of power.

Finally, the Court held that the developer did not adequately allege an equal protection claim. The Court cited the recent U.S. Supreme Court decision Engquist v. Oregon Dept. of Agriculture (2008) __ U.S. __ [128 S.Ct. 2146] (Engquist), which held that the class of one theory of equal protection has no application in the context of public employment decisions, which involve complex, discretionary decisionmaking. The Court of Appeal applied this rule in the land use context, holding that the proposed project presented complex urban planning and land use issues. The Court observed that the decision whether to approve such a project "ordinarily would involve numerous public policy considerations and the exercise of discretion based on a subjective, individualized determination." Such a decision is the antithesis of the simple issue presented in other equal protection cases concerning the consistent imposition of a standard requirement.

EMM

Authority to apply rules is not the authority to make rules

On her Law of the Land blog, Patty Salkin (Albany) describes a recent case in "Wisconsin Appeals Court Finds Municipalities Preempted from Regulating Solar and Wind Energy Systems Where Such Actions Set Policy".

The court explained that “administrative powers involve the interpretation or application of law, and require the authority to carry a law into execution or implementation.” It further observed that the “[p]owers of an administrative character do not allow political subdivisions to make policy.”

In addition, the court noted that [the state statute] permits local regulation of a wind energy system not any wind energy system or even wind energy systems. The court explained that  “[w]hen a political subdivision creates restrictions without sufficiently developed facts about a particular wind energy system, it is impossible for it to determine if its ordinance is in conflict with the statute.” Accordingly, the court concluded that “Wis. Stat. sec. 66.0401(1) requires a case-by-case approach, such as a conditional use permit procedure, and does not allow political subdivisions to find legislative facts or make policy.”

The court found support for its conclusion in the legislative history of 66.0401. The court said the history showed that the “legislature determined it appropriate to give political subdivisions the power to assist in the creation of renewable energy systems and thus become an integral and effective factor in the State’s renewable energy goal.” However, the history did not “indicate that the State intended to delegate the power of policymaking.” Rather, the court observed “the evidence is that the State delegated the authority to execute and administer its established policy of favoring wind energy systems, and the statutory scheme was intended to create avenues for political subdivisions to assist the State.” The Court said that, “(L)ocalities may restrict a wind energy system only where necessary to preserve or protect the public health or safety, or where the restriction does not significantly increase the cost of the system or significally decrease its efficiency, or where the locality allows for an alternative system of comparable cost and efficiency.”

EMM