Laying Down the Law on Rule Delays

by Lisa Heinzerling

June 14, 2018

Originally published on The Regulatory Review. Reprinted with permission.

Since the Reagan administration, it has become commonplace for new presidential administrations, in one of their first official acts after inauguration, to freeze at least some pending regulatory actions of the prior administration. These freezes have been of varying breadth and have taken varying forms.

The Trump administration’s regulatory freeze was notable for its sweeping scope and blunderbuss execution. In the early months of President Donald J. Trump’s presidency, agencies delayed many dozens of final rules issued in the Obama administration, often with little explanation other than that a new President had been elected and he wanted the agencies to revisit existing regulations.

Before the Trump administration, there was surprisingly little law on agencies’ power to delay the effectiveness of final rules. A small cohort of judicial decisions came out of the Reagan years, and a handful of cases emerged from subsequent administrations. These decisions, together, made clear that agencies’ decisions to delay final rules were reviewable by the courts and that a delay of a rule’s effective date was itself an act of substantive rulemaking subject to the notice-and-comment requirements of the Administrative Procedure Act (APA).

The courts expressed serious concern that agencies could effectively repeal rules—without going through the process required for repeal—if they were allowed to delay rules indefinitely. Courts looked with great skepticism on rule delays that were tantamount to rule repeals. Even so, many legal questions about rule delays remained unanswered.

Today, due to the widespread litigation provoked by the Trump administration’s across-the-board rule delays, there is a large and growing body of law on agencies’ legal authority to delay rules. This body of law exposes the pervasive legal flaws in this early round of the Trump administration’s deregulatory push, and it should make future administrations hesitant to follow this administration’s lead.

Note that the legal principles applied to the delay of final agency rules differ from the principles applied to agencies’ delays in issuing rules in the first place. The Trump administration has also gotten into legal trouble for the latter kinds of delays by dragging its feet in issuing standards for lead paint, designating whether areas meet national air quality standards for ozone, and issuing efficiency standards for air conditioners and air compressors. These are not the kinds of delays I discuss here.

At least ten important legal principles can be gleaned from the judicial decisions already handed down on the Trump administration’s delays of previously signed final rules. I set out these principles below.

First, delay is indeed a final, reviewable agency action. Early in 2017, the U.S. Environmental Protection Agency (EPA) attempted to delay a rule regulating methane emissions from oil and gas facilities. In the first major case on President Trump’s rule delays, the U.S. Court of Appeals for the District of Columbia Circuit rejected the argument that the delay of a rule was not reviewable because it did not have consequences for regulated parties.

To the D.C. Circuit, the removal of a legal obligation has legal consequences just as surely as the imposition of a legal obligation does. As the Trump administration wades ever deeper into its war on regulation, this decision is important precedent for the idea that when the government deregulates, it is not not acting—it is acting to remove legal protections.

Second, delay of a rule is reviewable according to the same standard of review—the “arbitrary and capricious” standard—that would apply to the rule itself. In rejecting the suspension of a Bureau of Land Management (BLM) rule to control the waste of natural gas from venting, flaring, and leaks on federal public lands, a district court in California rejected the argument that a suspension of a rule “should be reviewed with less rigor than any future revision,” saying that such a notion “has no merit.”

Third, a delay of a rule’s effective date is indeed an act of substantive rulemaking subject to the notice-and-comment requirements of the APA. A district court in Washington, D.C., recently reaffirmed this longstanding principle in rejecting the Department of Housing and Urban Development’s (HUD) two-year delay of an Obama-era rule requiring public housing authorities to calculate housing vouchers’ values based on local, not metro-area-wide, market rates. Likewise, a federal district court in California embraced this principle in rejecting EPA’s repeated delays of a rule strengthening standards for certification and use of pesticides.

Fourth, an agency may not, in delaying a rule of the prior administration, invoke the “good cause” exception to the notice-and-comment requirements of the APA based simply on the observation that it plans to reconsider the rule in light of the change in administration. As the California district court held in the challenge to EPA’s delay of its rule on pesticide certification and use, an agency may not escape the requirement to conduct notice-and-comment rulemaking by citing a “simple desire” to reconsider a rule.

Fifth, an agency may not, in delaying the compliance date of a rule, invoke its authority under section 705 of the APA to stay the effective date of a rule pending judicial review. Compliance dates set the time when regulated parties must bring their behavior into line with the underlying rule, while effective dates set the time when the underlying rule takes legal effect. 

Judicial decisions reviewing actions of previous administrations had made this much plain, but, before the Trump administration, they had not faced the argument that an agency could invoke section 705—allowing stays of effective dates pending judicial review—in staying compliance dates. The two courts that have faced this type of argument in response to Trump administration actions have rejected it; both cases involved the BLM’s efforts to suspend a rule on waste of natural gas on federal public lands.

Sixth, even when an agency proposes to delay a rule, rather than revoke it entirely, it must provide the public with a comment period long enough to make the public process meaningful. Four days, for example, is not enough, said the federal district court rejecting EPA’s delay of the rule on pesticide certification and use.

Seventh, in delaying a rule, an agency must explain itself in reasoned terms. An agency may not explain its desire to delay a rule by referring to the purported inadequacies of the rule and then refuse to take public comment on the substantive merits of the rule, as the BLM had done in delaying its rule on waste of natural gas on public lands. Similarly, in rejecting HUD’s delay of a rule on the calculation of the value of housing vouchers, the district court held that an agency may not rely on statutorily irrelevant factors in explaining its decision to delay a rule while simultaneously failing to consider statutorily relevant factors.

These two decisions applied straight-up, black-letter administrative law on the obligations of agencies to give reasons—reasons that make sense—for what they do.

Eighth, statutes may limit agencies’ authority to suspend, or stay, rules pending reconsideration. In its decision rejecting EPA’s attempt to delay a rule controlling methane emissions from oil and gas facilities, the D.C. Circuit held that EPA may not invoke a provision of the Clean Air Act allowing stays pending reconsideration without complying with the analytical requirements set out in that provision. The court stated that EPA had no “inherent authority” to issue even a “brief stay.”

Now pending in the same court is a case raising a broader question about agencies’ authority to stay rules pending reconsideration. In that case, environmental groups are challenging EPA’s delay of a rule requiring risk management plans at chemical facilities. One question posed is whether an agency has inherent authority to stay a rule pending reconsideration. After oral argument in the case, the court asked for supplemental information on agencies’ historical practice of changing effective or compliance dates for final rules based on their desire to reconsider the rules.

Ninth, clear statutory deadlines override agencies’ desire to delay rules. For example, a federal district court in California held that EPA violated a statute requiring standards for formaldehyde in composite wood products by extending a compliance deadline well beyond the deadline set out in the statute.

Tenth, an agency might escape the full effect of these legal restrictions on delays imposed without notice or comment by subsequently using notice-and-comment rulemaking to effectuate a delay. This possibility is the unsatisfying lesson of two federal district court decisions reviewing rule delays, issued without notice-and-comment, which were later superseded by delays of the same rules issued using notice-and-comment procedures.

A district judge in California declined to vacate the U.S. Department of the Interior’s delay of a rule on valuing oil and gas produced from federal and Native American lands. The judge found that the equities favored leaving the delay in place—even though she had found the delay unlawful—because the delay would soon be overtaken by a rule issued after notice-and-comment.

To similar effect, a district court in D.C. recently found moot a challenge to a delay of EPA’s rule regulating toxic water pollution from power plants because the initial delay, announced without notice-and-comment, had been superseded by a notice-and-comment rule delaying the underlying rule on water pollution.

Several lessons surface from these ten principles contained in the body of law that has emerged just in the first year and a half of the Trump administration.

First, administrations of both political parties have in the past probably broken the law to the extent that they have delayed the effective or compliance dates of final rules without going through notice-and-comment rulemaking. Particularly suspect are broad orders to freeze regulatory actions of the prior administration simply because they are the regulatory actions of the prior administration.

It is possible that wholesale freezes will escape courts’ scrutiny altogether if they do not last very long, and it is also possible that even if courts do review short-term freezes, they will decline to vacate them or will find a legal dispute about them moot. Nevertheless, it is hardly propitious when brand-new Presidents come into office and, as one of their administrations’ first acts, violate laws intended to control the power of the executive branch.

Second, although questions remain about agencies’ inherent authority to delay existing rules based on a desire to reconsider them and about the appropriate legal remedy for unlawful delays, the law is now clear on many points. The public should have little patience for frivolous legal arguments, such as the notion that rule delays need not go through notice-and-comment or that a mere presidential change-of-hands justifies broad freezes on the prior administration’s rules, even when they come from an administration freshly installed in office.

Moreover, incoming administrations should not find themselves wondering what the law is on regulatory freezes on the day after inauguration. Consideration of the legal constraints on regulatory freezes should play a central role in presidential transition teams’ planning for the early days of the new administration.

Third, and finally, the law on rule delays following presidential transitions reminds us that even freshly elected, newly inaugurated presidents may not change the law as reflected in regulations without following appropriate processes and giving good reasons. It is not enough to point to an election as justifying an abrupt change of course; political reasons are often not the good reasons required by administrative law. Administrative agencies are not the toy soldiers of the presidency.

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Lisa Heinzerling is a Professor of Law at Georgetown University. 

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