Administrative Procedure Act Litigation: The Changing Regulatory Landscape, The Role Of Industry, And Emerging Issues

As the Trump Administration concludes its fifth month, industry is facing a changing regulatory landscape that offers both opportunities and challenges. In this period of transition, litigation under the Administrative Procedure Act (APA) has played, and will continue to play, a more important role than ever in shaping the burdens facing regulated industries. The lawyers in WilmerHale's Administrative Law Practice have been litigating cases, advising clients, and closely tracking developments in this changing environment. We offer below some thoughts on (1) the changing regulatory landscape, (2) the role of industry at this time, and (3) the emerging administrative law issues that will be important for our clients in the months and years ahead.

1. THE CHANGING REGULATORY LANDSCAPE

   Transitions between administrations often result in a period of significant regulatory upheaval. The current transition is no exception. The outgoing Obama Administration finalized a number of regulations in its final months. Now, under the Trump Administration, agencies are reconsidering their approaches to many critical regulatory and policy questions. All of this has already generated—and will continue generating—a significant amount of APA litigation. Some of that litigation in the future may address the degree to which agencies have met their obligations under the APA to explain adequately changes in agency policy and to allow the public to comment on those changes.

   Litigation Over Obama Administration Actions

   A number of the regulations promulgated by the Obama Administration in its final months were successfully blocked in APA litigation. For example, in January 2017, a team of WilmerHale lawyers obtained a preliminary injunction against a new "interim final" regulation promulgated by the Department of Health and Human Services (HHS) without notice and comment that would have interfered with the relationship between patients with end-stage renal disease and their health insurers.1 In December 2016, a district court preliminarily enjoined HHS regulations enacted under the Affordable Care Act prohibiting discrimination based on gender identity and termination of pregnancy.2 And in November 2016, a district court preliminarily enjoined the Department of Labor's new overtime regulations that would have increased the minimum wage.3

   In some cases, courts have stayed challenges to permit the Trump Administration to reconsider the regulations at issue. On March 22, 2017, the district court hearing the challenges to the Obama Administration's deferred action immigration program stayed the litigation.4 On April 27, 2017, the DC Circuit granted the Trump Administration's motion to stay the challenge to the EPA's rule limiting mercury and other toxic emissions from coal-fired power plants.5 And on April 28, 2017, the DC Circuit granted the Trump Administration's motion to hold the litigation challenging the "Clean Power Plan" in abeyance.6 But not all challenges have been stayed. The U.S. Supreme Court, for example, declined to stay proceedings in the challenge to EPA's "Waters of the United States" rule.7

   Policy Reversals by the Trump Administration

   Meanwhile, the Trump Administration has begun to reconsider numerous regulatory regimes. Some agencies have already taken actions to reverse Obama Administration policies. For example, the State Department has changed course and issued a permit for the Keystone pipeline, and the Departments of Education and Justice have withdrawn their prior guidance document addressing gender-identity discrimination.

   But many of the most significant changes will come in the months ahead as agencies review existing regulations governing a wide range of industries. The executive orders issued by President Trump create a roadmap for much of this change. One early executive order pronounced that "whenever an executive department or agency ... publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed."8

   Other orders address particular regulations. For example, one executive order requires the Secretary of the Treasury to review regulations governing the financial services industry.9 Another calls on all executive agencies to "immediately review existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law."10 The same order specifically requires EPA to review the "Clean Power Plan" and regulations governing oil and gas development.11 A separate order requires EPA to review the "Waters of the United States" rule.12 The Trump Administration has also announced that EPA will reopen its consideration of automobile fuel economy standards.13 And finally, President Trump has directed the Department of Labor to review the Fiduciary Duty Rule.14

   Agency Obligations When Changing Course

   In light of the policy reversals already under way and expected in the months ahead, it is important to consider the obligations the APA imposes on administrative agencies seeking to change course.

   To alter regulations previously finalized, an agency typically must follow the notice and comment...