Chapter 9

Chapter 9

The Legal Requirements for Changing Notice and Comments Regulations What do State Farm and Fox tell us about the required notice for changing a rule? From Regan to Trump The State Farm case arises when the Regan Administration

DOT proposes a rule rolling back automobile safety standards promulgated by the Carter Administration. The background on the push for automotive safety standards is a good example of how major public policies may arise from individual or small groups advocacy. Each shift of political control of the White House has resulted in rule changes. What has been unique with the Trump administration is the attempts to roll back rules with a minimal notice and comment record. We will look at the current United States Supreme Court precedent, with the expectation of further Supreme Court gloss in the next few years. 2 In the Beginning The Peoples Car

3 The Peoples Car comes to America 4 Ralph Nader and Public Interest Unsafe at any Speed - 1965 5 The Statute Passed in 1966

[12] 15 U. S. C. 1381, directs the Secretary of Transportation or his delegate to issue motor vehicle safety standards that "shall be practicable, shall meet the need for motor vehicle safety, and shall be stated in objective terms." 15 U. S. C. 1392(a) (1976 ed., Supp. V). In issuing these standards, the Secretary is directed to consider "relevant available motor vehicle safety data," whether the proposed standard "is reasonable, practicable and appropriate" for the particular type of motor vehicle, and the "extent to which such standards will contribute to carrying out the purposes" of the Act. 6 The Seat Belt Saga I

Eventually there are more than 60 rulemaking notices related to these standards. 1967 - regulation requiring seat belts 1972 - realized that people were not wearing the seat belts Regulation requiring automatic seat belts or airbags by 1975 7

The Seat Belt Saga II Required cars between 1973 and 1975 to have automatic seat belts or ignition interlocks Chrysler v. DOT affirmed the regs Industry choose interlocks - why? 1974 - Congress passed a law banning regs requiring interlocks and said that all future regs on passive restraints had to be submitted to Congress for legislative veto Chadha does not fix that until 1983. 8

The Seat Belt Saga III DOT under Ford withdrew the regs DOT under Carter (a few months later) promulgated new passive restraint regs for 1982 and Congress did not veto them. These required air bags or automatic seatbelts, and assumed that most cars would get air bags. 1979 - Regs were affirmed in Pacific Legal Foundation v. DOT. 9

The Seat Belt Saga IV 1981 - DOT under Reagan withdrew the regs because the car companies were going to use automatic seat belts that could be disconnected. Motor Vehicles Manufacturers Assoc. v State Farm challenged the DOT rule rescission for not adequately explaining why the rule was no longer necessary. 10 Motor Vehicle Manufacturers v State Farm Mutual Auto, 463 U.S. 29 (1983)

DOT is the real defendant at interest. Motor Vehicle Manufacturers was an intervener. DOT had previously published the factual case justifying the need for a rule that required automatic (passive) seat belts. The new rule asserted that the facts had changed and that the rule would be unnecessary. Given the high expense and limited benefits of detachable belts, NHTSA feared that many consumers would regard the Standard as an instance of ineffective regulation, adversely affecting the public's

view of safety regulation and, in particular, "poisoning . . . popular sentiment toward efforts to improve occupant restraint systems in the future." 11 The Rational For Withdrawing the Rule In a statement explaining the rescission, NHTSA maintained that it was no longer able to find, as it had in 1977, that the automatic restraint requirement would produce significant safety benefits. This judgment reflected not a change of opinion on the effectiveness of the technology, but a change in plans by the automobile industry. In 1977, the agency had assumed that airbags would be installed in 60% of all new cars

and automatic seatbelts in 40%. By 1981 it became apparent that automobile manufacturers planned to install the automatic seatbelts in approximately 99% of the new cars. For this reason, the lifesaving potential of airbags would not be realized. Moreover, it now appeared that the overwhelming majority of passive belts planned to be installed by manufacturers could be detached easily and left that way permanently. Passive belts, once detached, then required "the same type of affirmative action that is the stumbling block to obtaining high usage levels of manual belts." For this reason, the agency concluded that there was no longer a basis for reliably predicting that the Standard would lead to any significant increased usage of restraints at all. 12 The 553 Standard for Review Both the Act and the 1974 Amendments

concerning occupant crash protection standards indicate that motor vehicle safety standards are to be promulgated under the informal rulemaking procedures of the Administrative Procedure Act. 5 U. S. C. 553. The agency's action in promulgating such standards therefore may be set aside if found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." ... 13 Is the Standard the Same for Rescissions or Modifications of Rules? We believe that the rescission or modification of an occupant-protection standard is subject to the same

test. Section 103(b) of the Act, 15 U. S. C. 1392(b), states that the procedural and judicial review provisions of the Administrative Procedure Act "shall apply to all orders establishing, amending, or revoking a Federal motor vehicle safety standard," and suggests no difference in the scope of judicial review depending upon the nature of the agency's action. 14 Does the Same Test Result in Stricter Publication Requirements?

Accordingly, an agency changing its course by rescinding a rule is obligated to supply a reasoned analysis for the change beyond that which may be required when an agency does not act in the first instance. Why does changing the record take more information? Think about this as we talk about Fox. 15 Addressing the Factual Basis for the Rule

How could the agency have fixed the imbalance between automatic seatbelts and air bags? [42] The agency did not explain why it chose to rescind the rule, rather than fixing it. What did court criticize in the handling of automatic seatbelts? [49] Although the issue is closer, we also find that the agency was too quick to dismiss the safety benefits of automatic seatbelts. NHTSA's critical finding was that, in light of the industry's plans to install readily detachable passive belts, it could not reliably predict "even a 5 percentage point increase as the minimum level of expected usage increase." What is some people did use the seatbelts? 16

How Does the Statute Drive this Case? What is the mandate of the statute? What is being compared in the cost benefit analysis? Is it the just the costs to the manufacturer? Why does this push toward regulation if it is technically feasible? What do you think was the effect on the courts analysis of knowing that several car makers started offering airbags as options in the 1970s? 17

What Else Was Going On: Crashworthiness Regulations The Unintended Consequences of crashworthiness regulations 18 The Seat Belt Saga V

1984 - DOT (Libby Dole) promulgated a reg requiring automatic seat belts or airbags in all cars after 1989, unless 2/3 of the population were covered by state seat belt laws, and the laws met certain criteria What did some states do? $5 penalty No stop No meaningful seat belt defense Most State laws did not meet the criteria 19 The Modern Automotive World

Late 1980s safety becomes a selling point and the market changes. 1997 - most newer cars had airbags Marketing then turns to how many air bags and other safety features. Now active safety is the selling point. Autonomous cars are also being sold based on safety. 20

F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502 (2009) Federal law prohibits the broadcasting of "any ... indecent ... language," 18 U. S. C. 1464, which includes expletives referring to sexual or excretory activity or organs, see FCC v. Pacifica Foundation, 438 U. S. 726 (1978). This case concerns the adequacy of the Federal Communications Commission's explanation of its decision that this sometimes forbids the broadcasting of indecent expletives even when the offensive words are not repeated.

(This is not a review of a notice and comment rule.) 21 Does State Farm Require More Info for Changes and Rescissions? From the lower court in Fox: In overturning the Commission's judgment, the Court of Appeals here relied in part on Circuit precedent requiring a more substantial explanation for agency action that changes prior policy. The Second Circuit has interpreted the Administrative Procedure Act and our opinion in State Farm as requiring agencies to make clear " `why the original reasons for adopting the [displaced] rule or policy are no

longer dispositive' " as well as " `why the new rule effectuates the statute as well as or better than the old rule.' 22 Remember What the Court Said in State Farm Accordingly, an agency changing its course by rescinding a rule is obligated to supply a reasoned analysis for the change beyond that which may be required when an agency does not act in the first instance. 23

What does the Fox Court Say About the State Farm Standard? We find no basis in the Administrative Procedure Act or in our opinions for a requirement that all agency change be subjected to more searching review. The Act mentions no such heightened standard. And our opinion in State Farm neither held nor implied that every agency action representing a policy change must be justified by reasons more substantial than those required to adopt a policy in the first instance. 24

The Fox Test To be sure, the requirement that an agency provide reasoned explanation for its action would ordinarily demand that it display awareness that it is changing position. An agency may not, for example, depart from a prior policy sub silentio or simply disregard rules that are still on the books. And of course the agency must show that there are good reasons for the new policy. But it need not demonstrate to a court's satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better, which the conscious change of course adequately indicates.

25 The Fox Test As Applied in a Lower Court The United States Supreme Court established a four part test in Fox to determine whether a policy change complies with the APA: (1) the agency displays awareness that it is changing position; (2) the agency shows that the new policy is permissible under the statute; (3) the agency believes the new policy is better; and (4) the agency provides good reasons for the new policy. The new policy must include a reasoned explanation ... for disregarding facts and circumstances that underlay or were engendered by the prior policy, if the new policy rests upon factual

findings that contradict those underlying its prior policy. Indigenous Envtl. Network v. US Dep't of State, No. CV-17-29-GFBMM, 2018 WL 5840768, at *12 (D. Mont. Nov. 8, 2018) 26 Fox on Why the Agency in State Farm Needed More Explanation This means that the agency need not always provide a more detailed justification than what would suffice for a new policy created on a blank slate. Sometimes it must -- when, for example, its new policy rests upon factual findings that contradict those which underlay its prior policy; or when its prior policy has engendered serious reliance interests that must be taken into account. It would be arbitrary or capricious to ignore such

matters. In such cases it is not that further justification is demanded by the mere fact of policy change; but that a reasoned explanation is needed for disregarding facts and circumstances that underlay or were engendered by the prior policy. 27 Making Sense of State Farm and Fox If you base the modification or rescission on the same facts and analysis, changing only the policy decision, you only need to explain the basis for the policy decision and its legal justifications.

This will need to more detailed if there is significant reliance on the old rule. If you change the facts and/or analysis (as in State Farm), you need to explain the new facts and/or analysis and why they differ from those used in the prior rule. 28 How Might the Court Apply These Tests to Trump Rule Modifications/Rescissions Waters of the United States (WOTUS) The governing United States Supreme Court precedent is a 4-4-1 split. To the extent that the WOTUS

modification just changes from the Kennedy opinion to the Scalia opinion, do the underlying facts change? The Clean Power Plan Modifying this rule requires changing the facts and analysis for the social cost of carbon, i.e., the damages caused by climate change. 29

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