D.C. Circuit Makes It More Difficult for New Administrations to Stop "Midnight" Rules

It may now require notice and comment to rescind final rules that were never published in the Federal Register.

This morning the U.S. Court of Appeals for the D.C. Circuit issued a decision that could make it more difficult for incoming presidential administrations to undo last-minute rules adopted by the outgoing administration.

In Humane Society of the United States v. Department of Agriculture (or HSUS v. USDA), a divided panel concluded that if a new regulation is finalized but has not been published in the Federal Register, it may not be rescinded without a new notice-and-comment rulemaking.

Judge Tatel wrote for the majority (joined by Judge Millett). His opinion begins:

At the culmination of a five-month rulemaking, the Department of Agriculture announced a final rule designed to protect show horses from abuse. As required by the Federal Register Act, the agency transmitted the signed rule to the Office of the Federal Register, which made it available for public inspection. But on the day President Trump took the oath of office, his Chief of Staff directed executive agencies to withdraw all pending rules. The question in this case is whether 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. We hold that it must.

And it concludes:

The APA demands procedural regularity both when an agency formulates new law and when it repeals the old. Although political transitions may provide a sound basis for a change in policy, they do not relieve agencies of their procedural obligations. Because a rule made available for public inspection prescribes law with legal consequences for regulated parties, the APA requires the agency to undertake notice and comment before repealing it.

Judge Rao dissented. Her opinion begins:

Across administrations and for many decades, Executive Branch agencies have exercised their discretion to withdraw rules before publication in the Federal Register—sometimes due to a presidential transition, but also in the ordinary course of rulemaking. In this case, the United States Department of Agriculture ("USDA") withdrew a rule after it was made available for "public inspection" at the Office of the Federal Register, but before it was published. The majority holds that this withdrawal was the "repeal" of a rule requiring notice and comment procedures because the agency's rule was prescribed at the moment of public inspection. But we have never assessed a rule's finality or the end of the rulemaking process from public inspection at the regulatory printing press. To the contrary, publication determines the adoption, finality, and effectiveness of a substantive rule.

By cutting off agency discretion at public inspection—a mere ministerial moment on the way to publication—the majority imposes a judicial burden on agency procedures that conflicts with this circuit's precedent, the statutory framework for rulemaking, and a longstanding regulation permitting withdrawals prior to publication.

I think Judge Rao has the better of the argument, but I doubt the full court will wish to consider this question en banc. The real question is whether the executive branch sees this question as important enough to seek certiorari. I would doubt that too, but we'll see. This case certainly implicates broader questions about the ability of the President to set policy priorities for the federal government, and those issued might interest some justices on the Court. Reversing this decision would be one way to help ensure elections have consequences.