EHS Administration, Enforcement and Inspection, Regulatory Developments

DC Circuit Court Clarifies When a Final Rule is Final

In Humane Society of the U.S. v. USDA, a divided D.C. Circuit Court ruled that an agency must provide notice and an opportunity for comment when withdrawing a rule that has been filed for public inspection but not yet published in the Federal Register.

What is public inspection? The National Archives Office of the Federal Register (OFR) maintains a public inspection website that provides a preview of the content scheduled to appear in the next day’s Federal Register, as well as content scheduled for future issues if requested by the issuing agency.

The ruling, decided on July 22, 2022, “will mostly change the rules of the rush-rules-out-the-door-before-a-presidential-transition game,” reports the Yale Journal on Regulation. “Or, if the dissent is right, it will possibly upend settled expectations about the timeline for judicial review.”

Case background

The underlying issue in the case was the Humane Society’s 50-year quest to end the practice of “soring” show horses. This practice cuts, burns, or otherwise inflicts pain on the legs of a horse to alter its natural gait. This abuse is a shortcut to create the distinctive gait of the Tennessee Walking Horse instead of committing time to properly train the horse.

The Horse Protection Act was enacted by Congress in 1970 to bar the showing or sale of any horse subjected to a “cruel or inhumane method or device … for the purpose of affecting its gait.” It directed the Secretary of Agriculture to perform horse inspections to enforce the prohibition.

Due to limited resources, the U.S. Department of Agriculture (USDA) was able to do little to curb the abusive practice, so the Horse Protection Act was modified in 1976 to allow the appointment of private inspectors. Permitting the industry to essentially police itself also did not curb the abusive practice.

In 2010, the USDA’s Office of Inspector General (OIG) published a report finding that the “current program for inspecting show horses for abuse is not adequate to ensure that these animals are not being sored.”

The USDA OIG report recommended doing away with designating private inspectors and establishing inspections by “independent, USDA-accredited veterinarians.”

A proposed rule was issued, followed by public hearings and an extended comment period in 2016.

On January 11, 2017, the USDA issued a press release announcing the final rule and scheduled it for publication in the Federal Register.

The next day, newly elected President Donald Trump’s chief of staff issued a memo directing all federal agencies to immediately withdraw any regulations sent to the OFR that had not yet been published.

Legal arguments and decision

“The Humane Society filed suit along with four of its members challenging the rule’s withdrawal. It principally [claimed] that the Department unlawfully repealed the rule without notice and comment or the reasoned decisionmaking that the Administrative Procedure Act [APA] requires,” states the D.C. Circuit Court ruling. “The district court dismissed, agreeing with the government that a rule becomes final only upon Federal Register publication.”

The D.C. Circuit Court panel justices were Judge David Tatel and Judge Patricia Millett in the majority, with Judge Neomi Rao dissenting.

The majority opinion notes that presidential administrations dating back to the Clinton era have made it a practice to withdraw rules awaiting Federal Register publication upon taking office. This practice ignores procedural rules required by the APA, states the decision.

“To foster public participation and facilitate reasoned decisionmaking, ‘the APA requires agencies to afford notice of a proposed rulemaking and an opportunity for public comment prior to a rule’s promulgation, amendment, modification, or repeal,’” states the decision, based upon American Hospital Association v. Bowen. “Providing for notice and comment before repeal of a final rule ‘ensures that an agency will not undo all that it accomplished through its rulemaking without giving all parties an opportunity to comment on the wisdom of repeal,’” based upon Consumer Energy Council of America v. FERC.

The majority looked to the Federal Register Act (FRA) in deciding the case, which sets forth the legal consequences of each step in the process of publication of a final rule.

“The statute repeatedly distinguishes between the publication of a document and its issuance, prescription, or promulgation,” the majority opinion states, and in doing so “the statute contemplates that a rule may be prescribed before publication in the Federal Register.” “Confronted with this language at oral argument, government counsel conceded that ‘a rule can be issued, prescribed, or promulgated without publication in the Federal Register or prior to publication in the Federal Register.’ … Given this concession and the statute’s plain language, it is difficult to see what of the government’s statutory argument remains. The APA requires notice and comment before ‘repealing a rule.’”

The decision says rules become final once they are made available for public inspection.

In her dissenting opinion, Judge Rao contends that “the APA’s rulemaking provisions ‘strongly suggest’ that publication marks the point at which an agency must undertake notice and comment to repeal a rule.”

Future implications

The majority opinion notes that agency practices may change, such as ensuring typographical errors are corrected during internal OFR processing, rather than in the brief period between public inspection and publication. “But that is as far as it goes,” Judge Tatel wrote.

As a result of the decision, Judge Rao’s dissent envisions a world where a host of previously withdrawn regulations will “rise from the regulatory graveyard as soon as an aggrieved party brings suit,” leading to vast regulatory uncertainty.

The Yale Journal of Regulation’s analysis of the case has determined, “The majority opinion seeks to alleviate the latter concern by noting that the meaning of ‘promulgation’ in statutes setting judicial review timelines is unrelated to the question of when notice-and-comment requirements attach, and—depending on the statute—publication is not the universal answer. Given the majority’s decision to ‘emphasize the limits of [its] decision’ … its more limited prediction of the decision’s effects will probably be borne out in the end.”