Supreme Court Could Decide Whether Retroactive Rulemaking Requires Express Statutory Authorization

[Update: The Supreme Court denied cert on Monday, November 7, 2011.]

At its conference tomorrow, the Supreme Court will consider whether to grant cert in a D.C. Circuit case only an admin lawyer could love: National Petrochemical & Refiners Ass’n v. EPA, No. 11-102 (S. Ct.). The question is whether an agency may promulgate retroactive rules based on merely implicit congressional authorization.

The law generally frowns upon retroactive rulemaking where not explicitly authorized by statute. But in a 23-year-old concurrence, Justice Scalia suggested an exception might apply where the agency misses a statutory deadline for rulemaking. The missed deadline “may” provide “implicit authorization” for retroactive rulemaking, despite the Administrative Procedure Act’s definition of rules as having “future effect.” The D.C. Circuit adopted Justice Scalia’s suggestion in a case involving untimely regulations implementing the Energy Independence and Security Act of 2007, which requires that certain volumes of renewable fuel to be used every year. The EPA failed to promulgate the new renewable fuel standards by the statute’s December 2008 deadline; instead the agency promulgated its standards in March 2010 with a July effective date. To make up for lost time, the agency rolled the 2009 volume requirement into the 2010 requirement and demanded that the combined total volume be consumed in 2010 despite the mid-year effective date.

Judge Judith W. Rogers held that any retroactive effect in this regulatory scheme was implicitly authorized by the structure of the Act. Aside from the the missed deadline itself, the the necessary gap between promulgation and a regulation’s effective date made for the possibility of a few months of retroactivity even if the regulation had been promulgated on time. And the panel pointed to a statutory default renewable fuel standard applicable to a predecessor statute (but not the EISA) as evidence of “Congress’ focus on ensuring the annual volume requirement was met regardless of EPA delay.”

Judge Janice Rogers Brown and Chief Judge David B. Sentelle dissented from the denial of rehearing en banc, arguing that the panel’s exception violates the Supreme Court’s clear-statement requirement for retroactive rulemaking and creates perverse incentives for agency delay.

From the panel decision:

EPA had clear albeit implicit authority under the EISA to apply both the 2009 and 2010 volume requirements in the 2010 calendar year in order to achieve the statutory purpose.

From the dissent from denial of rehearing en banc (citations omitted):

The enactments of Congress itself will not be given retroactive effect absent a demonstration of “clear congressional intent” in the form of an “unambiguous directive” or “express command.” And it is axiomatic that an administrative agency’s power to promulgate legislative regulations is limited to the authority delegated by Congress.” It follows that an agency lacks “power to promulgate retroactive rules unless that power is conveyed by Congress in express terms.” . . .

We have no authority to grant an agency a free pass to promulgate retroactive rules just because it can’t or won’t get the job done within the time Congress mandates. . . . The better course would have been to reaffirm the clear-statement rule declared by the Bowen majority and repeated in our most recent pronouncements on retroactive rulemaking. “An agency may not promulgate retroactive rules absent express congressional authority.”

From the cert petition in Nat’l Petrochemical & Refiners Ass’n v. EPA, No. 11-102  (S. Ct. July 21, 2011) (citations omitted):

The Federal and Second Circuits have also considered whether an agency could issue a retroactive rule to compensate for missing a statutory deadline, and both courts held–contrary to the D.C. Circuit–that the agency could not. . . .

The question presented is exceptionally important because it bears directly on Congress’s ability to impose effective deadlines on agencies. The dissent from the denial of rehearing en banc identified the problems with the court of appeals’ missed-deadline exception:

This exception in particular seems ill advised from the perspective of good administration. In practice, it lets agencies like the EPA get away with violating explicit congressional time limits by promulgating untimely regulations with retroactive effects. The missed-deadline exception creates perverse incentives, rewarding dilatoriness and making regulatory burdens even less predictable. If an agency can accomplish tomorrow what the statute says to do today, Congress will lose a common and effective means of directing agency priorities. . . .

[T]he question presented will only become more important in the future because of the number of deadlines that Congress has recently imposed in significant legislation. The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act, for example, imposes no fewer than twenty deadlines for rulemaking by a variety of agencies. Likewise, the recent health care law contains at least nine deadlines for regulatory action.

Despite the panel’s recognition of implicit statutory authorization for retroactive rulemaking, the D.C. Circuit has since re-articulated the old clear-statement rule: “It is well settled that an agency may not promulgate a retroactive rule absent express congressional authorization.” Northeast Hosp. Corp. v. Sebelius, No. 10-5163 (Sept. 13, 2011) (Griffith, J., joined by Garland, J., with concurrence in the judgment by Kavanaugh, J.).


(Hat Tip:

One response to “Supreme Court Could Decide Whether Retroactive Rulemaking Requires Express Statutory Authorization

  1. Pingback: D.C. Circuit Approves Retroactive Application of FERC’s New Interpretation of the Natural Gas Act | D.C. Circuit Review

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