Administrative Procedure Act

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

Seyfarth Synopsis: On April 11, 2018, Arizona Governor Doug Ducey signed into law HB 2238, which amended the state’s administrative procedure laws to remove “Chevron Deference,” so that for disputes involving state administrative law, courts will not be required to defer to an agency’s interpretation of an ambiguous statutory provision.

The legal doctrine—named for the 1984 Supreme Court decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-844 (1984)—has been criticized by various judges, including U.S. Supreme Court Justice Neil Gorsuch (then sitting on the Tenth Circuit).  The U.S. Senate has also unsuccessfully attempted to repeal the doctrine.

Under Chevron, if a statutory term is ambiguous, the agency has authority to construe that term and interpret its meaning within the statutory scheme by promulgating regulations following Administrative Procedure Act (APA) notice and comment procedures.  In such instances, the court must defer to that interpretation.  This is arguably permissible because Congress explicitly granted agencies the ability to interpret their governing statutes, if APA rulemaking procedures are followed in establishing the agency’s interpretation of regulations.

State courts have largely followed or deferred to Chevron when evaluating an interpretation of a state statute by the state agency charged with implementing that statute’s mandates.

HB 2239 amended Arizona Revised Statutes §12-910, regarding the scope of judicial review of administrative decisions. The new law added language to subsection E, and created subsections F and G. The new statute reads as follows:

  1. . . . In a proceeding brought by or against the regulated party, the court shall decide all questions of law, including the interpretation of a constitutional or statutory provision or a rule adopted by an agency, without deference to any previous determination that may have been made on the question by the agency. Notwithstanding any other law, this subsection applies in any action for judicial review of any agency action that is authorized by law.
  2. Notwithstanding subsection E of this section, if the action arises out of Title 20, Chapter 15, Article 2, the court shall affirm the agency action unless after reviewing the administrative record and supplementing evidence presented at the evidentiary hearing the court concludes that the action is not supported by substantial evidence, is contrary to law, is arbitrary and capricious or is an abuse of discretion.
  3. This section does not apply to any agency action by an agency that is created pursuant to Article XV, Constitution of Arizona.

The Arizona law is believed to be the first state law of its kind. Interestingly, it appears to mandate that no deference at all be provided to a state agency’s interpretation, perhaps meaning that the court cannot even evaluate or weigh the reasonableness of the agency interpretation.  The law, however, continues the trend toward scaling back agency autonomy and power.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of Seyfarth’s Workplace Safety and Health (OSHA/MSHA) or Environmental Compliance, Enforcement & Permitting Teams.

By Andrew H. Perellis, Kay R. Bonza, and Patrick D. Joyce

Seyfarth Synopsis: With a dramatic change from a progressive democratic to a conservative republican administration, we anticipate that EPA is not only likely to pivot away from an enforcement heavy to a more business friendly agenda, it is also likely to abandon many of the previous administration’s landmark climate regulations and take a more measured approach to climate change.

The U.S. presidential election outcome has left many with questions about what to expect with the new administration and a Republican-controlled Congress. However one thing is certain: we will experience a 180 degree shift in current environmental policy when Donald Trump takes office in January 2017.  Below is a synopsis of the key environmental changes we expect to see under the Trump administration, although, of course, nothing is certain given the overall lack of information regarding Mr. Trump’s policy proposals and no background as to how he will act as an elected official.

Regulatory Reform

Mr. Trump has stated that he will likely issue a temporary moratorium on all new environmental regulation, and plans to strike regulations which his administration deems “unnecessary” and that “kill jobs and bloat government.”  Specific rules Mr. Trump has singled out to “eliminate” include: the Interior Department’s proposed Stream Protection Rule to safeguard communities from coal mining operations; the EPA and Army Corps of Engineers’ Clean Water Rule redefining water bodies subject to federal jurisdiction and protection; and EPA’s Clean Power Plan which requires states to develop strategies to reduce carbon dioxide emissions from power plants.

In addition, currently proposed EPA rules will likely not be made final, and environmental regulations facing challenges in the courts could be weakly defended by the Justice Department at the direction of the new administration. It is also possible any regulations that make it to the U.S. Supreme Court will be struck down by a conservative Court. Rescinding regulations that do not fall in line with the new administration is a possibility, but one that requires another EPA rulemaking process that may face challenges by environmental groups and states in support of the regulations.

Energy

Mr. Trump has indicated he has plans to revamp U.S. energy policies to make the U.S. a net energy exporter by opening onshore and offshore leasing on federal lands and waters to encourage production of energy resources. He also has hinted at plans to review all “anti-coal regulations,” rescind the coal mining lease moratorium on new federal coal leases announced in January 2016, and open up more public land for fossil fuel extraction. Eliminating the proposed Stream Protection Rule will remove regulatory requirements for the coal mining industry to consider the effects of their operations on groundwater, surface water, and endangered species, making it cheaper and easier to mine coal.  At the same time, the new administration is likely to focus on promoting policies and regulations to develop the infrastructure necessary for the export of fossil fuels.

While the fossil fuel industries may receive less scrutiny under environmental regulations under the Trump administration, the new administration may not change the renewable energy sector significantly because individual states have made significant progress in this area. For example, many states now require utilities to draw a percentage of their generation capacity from renewable energy sources and have implemented policies and set future goals to increase the use of renewable sources.  Corporations are increasingly procuring their own power, from rooftop solar energy to utility-scale wind farms, all of which are contributing energy to the electric grid.  Federal regulation that may interfere with states’ progress in the renewable energy sector is unlikely given Mr. Trump’s disfavor for regulations and the Republican position against limiting states’ rights.

Climate Change

Under the new administration, and with climate change skeptic Myron Ebell on the shortlist to become EPA Administrator, regulations for controlling greenhouse-gas emissions face a high likelihood of being scrapped, including the Clean Power Plan, mentioned above, and the Obama administration’s Climate Action Plan.  It is also highly like the U.S. will back out of the Paris Agreement, where more than 190 countries agreed to reduce their carbon dioxide emissions and limit global warming to below two degrees Celsius.  The agreement calls for “appropriate financial flows, a new technology framework and an enhanced capacity building framework” to support action by developing and vulnerable countries.  While formally withdrawing from the agreement may prove difficult due to a time-specific exit clause barring exit for three years from the date of ratification, followed by a one-year waiting period upon a request to withdraw, the new administration could opt to ignore the agreement and refuse to provide financial aid.  Without the participation of the U.S., the world’s second-largest greenhouse gas polluter, the goal to limit global warming may be unattainable.

Supreme Court and Agency Decision-making

With a Republican president and Republican-controlled Congress, a conservative Justice will almost certainly be appointed to the U.S. Supreme Court and as a result, we expect the Court to be less deferential to agency decision-making. We had previously blogged about the U.S. Supreme Court’s decision in Perez v. Mortgage Bankers Association and indicated that conservative leaning Supreme Court justices have called into question whether agency interpretations of their own regulations should be given any judicial deference.  The appointment of a conservative Justice could tip the scale in favor of curbing the level of deference given to agency interpretations, thereby prompting agencies like the EPA to undertake the formal rulemaking process more frequently to amend their interpretations of existing rules.

EPA’s National Enforcement Initiatives

The EPA selects National Enforcement Initiatives (NEIs) every three years, to prioritize its resources on the most significant environmental risks that can be mitigated by government action, and those issues where noncompliance is a significant contributing factor.  The NEIs for fiscal years 2017 – 2019 went into effect on October 1, 2016, and include: a focus on reducing air pollution from the largest sources and reducing hazardous air pollutants; ensuring energy extraction activities comply with environmental laws; reducing pollution from mineral processing operations and reducing risks of accidental releases at industrial and chemical facilities; and protection the nation’s waters from industrial pollutants, raw sewage, contaminated stormwater, and animal waste.

These enforcement priorities will very likely shift under the new administration which has the ability to redirect resources from one priority to another. Given Mr. Trump’s focus on revamping the U.S. coal industry, he is likely to de-emphasize the enforcement of environmental laws in the energy extraction sector and instead opt for a business-friendly approach.  The EPA as a whole may begin to approach enforcement more reactively when incidents prompt intervention, rather than proactively to prevent environmental disasters.  Enforcement may be replaced by increased agency initiatives to promote compliance assistance and more heavily consider the costs of environmental compliance on the regulated community.  Decreased enforcement activity could in turn lead to citizen suits to force the EPA to enforce its regulations.

Conclusion

Navigating environmental policy under the new administration will likely involve paying closer attention to state regulatory regimes that will move to the forefront in instances of reduced federal regulation. EPA could shift a large portion of environmental regulation and enforcement to the states, subjecting multi-state companies to different state-specific regulatory requirements.  We will continue to monitor the changes sure to take place for environmental compliance and enforcement under the Trump administration and will provide more clarity as the situation unfolds.  However, keep in mind that the EPA is like a cargo ship out on the ocean; it takes time to change course.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Seyfarth Environmental Compliance, Enforcement & Permitting Team.

By Benjamin D. Briggs, Adam R. Young, and Craig B. Simonsen

shutterstock_150166427Seyfarth Synopsis: The Tenth Circuit held that a trucking company unlawfully retaliated against a truck driver after he abandoned a trailer on a public highway, finding that his actions constituted a protected refusal to operate a vehicle in unsafe conditions.

The Tenth Circuit Court of Appeals denied a petition for review of a retaliation finding by the Administrative Review Board (ARB), finding that the employee had been retaliated against in violation of the Surface Transportation Assistance Act (STAA). TransAm Trucking, Inc. v. Department of Labor, No. 15-9504 (Tenth Circuit August 8, 2016),

The Court explained that the driver parked a tractor-trailer on the shoulder of an interstate highway. After sitting in sub-freezing temperatures, the brake lines on the trailer froze and rendered the trailer immobile. When a service vehicle failed to arrive and the driver’s heating unit stopped functioning, the driver detached the trailer and drove away in the tractor.

After his termination, the employee filed a whistleblower complaint with the Occupational Safety and Health Administration (OSHA), an agency within the Department of Labor (DOL) that administers STAA claims, asserting that the employer violated the whistleblower provisions of the STAA when it discharged him. After OSHA dismissed the driver’s complaint, the employee requested a hearing before a DOL administrative law judge (ALJ).

The employer argued that the driver’s actions were not protected under the STAA, which only creates a whistleblower claim for an employee who “refuses to operate a vehicle because … the employee has a reasonable apprehension of serious injury to the employee or the public because of the vehicle’s hazardous safety or security condition,” 49 U.S.C. § 31105(a)(1)(B)(ii). Because the trailer was inoperable and the driver drove off without it, the employer argued that the driver could not have refused to “operate” in unsafe conditions; but, rather, he abandoned company property.

The ALJ concluded that the driver had engaged in protected activity when he reported the frozen brake issue to the employer, and again when he refused to obey the instruction to drive the truck while pulling the trailer. The ALJ further concluded that the protected activity was a contributing factor in the employer’s decision to terminate his employment because his refusal to operate the truck while pulling the trailer was “inextricably intertwined” with the employer’s decision to terminate him for abandoning the trailer at the side of the highway. The employer appealed to the DOL Administrative Review Board (ARB) (which affirmed the ALJ’s decision) and then to the Tenth Circuit Court of Appeals.

In denying the employer’s appeal, the Tenth Circuit noted that the Administrative Procedure Act (APA) “standard of review is narrow and highly deferential to the agency.” Compass Envtl., Inc., v. Occupational Safety & Health Review Comm’n, 663 F.3d 1164, 1167 (10th Cir. 2011).  The Court concluded that the driver had refused to operate the vehicle when he left the trailer behind.  Consequently, the Court upheld the ARB decision and ordered the driver to be reinstated with backpay.

This case should remind employers that the DOL takes an expansive view of the whistleblower statutes enforced by OSHA, and the kind of actions that constitute protected activity under those statutes. In this case, the employer advanced a seemingly non-retaliatory reason for the termination — abandonment of company property — as the reason for the challenged decision.  However, the close connection between the trailer abandonment and the report that the brakes had frozen/refusal to pull the trailer was enough to tip the scales in the employee’s favor.  Employers should exercise extreme caution when making employment decisions under circumstances in which a legitimate reason for discipline bears a close relationship to conduct that may constitute protected activity under a whistleblower statute.

OSHA enforces the whistleblower provisions of twenty-two statutes protecting employees who report violations of various workplace, commercial motor vehicle, airline, nuclear, pipeline, environmental, railroad, public transportation, maritime, consumer product, motor vehicle safety, health care reform, corporate securities, food safety, and consumer financial reform regulations. For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Whistleblower Team or the OSHA Compliance, Enforcement & Litigation Team.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

US Supreme Court Capitol Hill Daytime Washington DCSeyfarth Synopsis: The Supreme Court decided that Army Corps’ jurisdictional determinations are judicially reviewable. This decision leaves open the question of whether other types of administrative decisions are immediately judicially reviewable.

In a significant victory for owners of private property, the Supreme Court of the United States (SCOTUS) decided this week that an Army Corps of Engineers (Corps) jurisdictional determination (JD) is a final agency action judicially reviewable under the Administrative Procedure Act (APA).  U.S. Army Corps of Engineers v. Hawkes Co., Inc., et al., No. 15-290, 578 U.S. ____ (May 31, 2016).

The issue presented was whether a so-called “approved” jurisdictional determination — the government’s determination that a wetland is regulated under the Clean Water Act (CWA) thereby requiring a permit to dredge or fill — is immediately reviewable. The Hawkes decision builds on the holding of Sackett v. EPA, 132 S. Ct. 1367 (2012) (see our earlier blog on the Sackett decision) where SCOTUS concluded that an EPA compliance order issued under the CWA requiring that a developer cease its filling activity of an allegedly regulated wetland was judicially reviewable. SCOTUS rejected the Government’s contention that the landowner has to await EPA’s judicial enforcement of that order.

Following Sackett, the Circuit Courts of Appeal have split as to whether a landowner receiving a JD finding the wetland to be CWA-regulated is final and reviewable — with the Eighth Circuit holding yes, and the Fifth Circuit holding no.

In Hawkes, the plaintiffs sought to mine peat from wetland property. The Corps upset that plan when it issued an approved JD that the property constituted “waters of the United States” (WOTUS), requiring the plaintiffs to obtain a permit to discharge dredged or fill materials into these “navigable waters.” Approved JDs present a definitive statement that waters of the United States are, or are not, present. The Corps also issues “preliminary” JDs that only tell a landowner that waters of the United States “may” be present. Preliminary JDs were not at issue in this case. An approved JD is binding upon the Corps and EPA. For example, where the JD concludes that a CWA-regulated wetland is not involved, it provides the landowner with a “safe-harbor” for five years, under which it is free to develop its property without need to obtain a permit. For this reason, SCOTUS concluded that the JD affects the plaintiffs’ rights and obligations and has legal consequences, making it reviewable.

This SCOTUS determination could have heightened importance in the context of the EPA’s and the Corps’ recent release of the Final Clean Water Rule: Definition of “Waters of the United States.” We blogged about this new rule when it was published. The new WOTUS rule will substantially increase the number of potential wetlands, making a challenge to the Corps’ Jurisdictional Determinations more likely now that SCOTUS has decided that they are judicially reviewable.

The Hawkes decision also leaves open questions of whether other types of administrative decisions are immediately judicially reviewable. In a related Law360 Expert Analysis (Water Case Shows Justices Warm To Review Of Fed. Agencies), Andy Perellis notes that “there is potentially a universe of agency actions such as guidance documents or opinion letters that in the past have evaded judicial review that may be reviewable because those agency determinations have immediate consequences.”