Defining fair notice: logical outgrowth doctrine applied to the waters of the United States.

• Author: Lifton, Henry L.

Introduction

American navigable waters are an important and strategic natural resource. Exploration, commerce, and navigation marked the early water history of the United States. (1) In the nineteenth century, Congress passed statutes supporting the public right to exploration, commerce, and navigation. (2) By the twentieth century, the focus of navigable water regulation shifted to pollution control. Congress passed a series of water pollution acts culminating in the Federal Water Pollution Control Act Amendments of 1972, which included the Clean Water Act (CWA). (3) In order to support a pollution control policy, the CWA prohibits, inter alia, discharge of any dredge or fill material into navigable waters, (4) which is further defined as "waters of the United States." (5)

In the years following the passage of the CWA, the U.S. Army Corps of Engineers, historically the lead federal government proponent for navigation, defined the phrase "waters of the United States" broadly. (6) By 2000, the Corps' definition was so broad that the Supreme Court issued two decisions sharply curtailing the definition of waters of the United States. (7) In 2014, the Corps of Engineers and Environmental Protection Agency (EPA) sought to bring clarity to the scope of "waters of the United States" through notice-and-comment rulemaking ("Proposed Rule"). (8) On June 29, 2015, the agencies published a joint final rule ("Final Rule") (9) that immediately prompted lawsuits across the entire country. (10)

The legal challenges to the Final Rule seek to invalidate the regulation on both procedural and substantive grounds. (11) Procedurally, the petitioners will likely challenge whether the final rule is a logical outgrowth of the proposed rule. This current legal controversy provides a convenient backdrop to propose a new method to analyze logical outgrowth. This Note will use the Proposed and Final Rule as an administrative law case study. Part I will review the historical development of logical outgrowth doctrine. Logical outgrowth is a fact-specific inquiry. There does not exist, however, a categorical framework to help courts and agencies with evaluating agency actions. Part II proposes a new categorical framework to evaluate logical outgrowth. This Note argues that it is beneficial to group similar agency procedural cases in order to analyze agency actions and avoid defects in the procedural process. The goal, simply, is to solve problems. Part III returns to our case study and applies the newly developed framework to the waters of the United States Final Rule and argues that the Final Rule fails by applying the procedural framework established in Part II. Finally, Part IV reviews the substantive law that courts will eventually confront and argues that the Final Rule is substantively within the authority Congress delegated to the Corps of Engineers and the EPA.

1. Logical Outgrowth Doctrine

   The Administrative Procedure Act (APA), passed in 1946, is the default statute for federal agencies promulgating regulations. (12) As originally conceived, the APA provided for either formal or informal rulemaking. (13) Yet, the Supreme Court, in United States v. Florida East Coast Railway Co., read the formal rulemaking provision very narrowly and since that case, virtually all federal rulemaking, and attendant judicial review, operates in the informal rulemaking channel. (14)

   Section 553(b), the section governing APA informal rulemaking, requires federal agencies contemplating rulemaking to publish a "[g]eneral notice" in the Federal Register, (15) Furthermore, the section requires that the agency publish the "terms or substance of the proposed rule or a description of the subjects and issues involved." (16) Next, the agency receives comments from the public on the substance of the proposed rule (hence the common title: notice-and-comment rulemaking). (17) Finally, the agency publishes a final rule incorporating the technical expertise and wisdom of both the agency itself and the public comment. (18) Logical outgrowth doctrine is a judicial interpretation of the proper fit between the proposed and final rules.

   The doctrine states that an agency's final rule should be a logical outgrowth of the proposed rule. (19) This requirement prohibits agencies from using the comment period as a "carte blanche to establish a rule contrary to its original proposal." (20) But logical outgrowth is not a straightjacket on the agency--it is a balancing of an agency's need for flexibility and the public's need for fair notice. (21) It would be rather absurd to require agencies to initiate a new round of notice-and-comment rulemaking whenever a minor change occurs between the proposed rule and the final rule. (22) Otherwise an agency would not be able to learn from public comments. Ultimately, the objective of logical outgrowth is fair notice without imposing an unreasonable burden on the agency. (23)

   If an agency fails to follow proper procedure, the judicial remedy could be a complete remand of the rule, a partial remand of the rule, or a remand without vacating the rule. (24) The default remedy for procedural errors is to remand the rule to the agency for compliance with the APA's procedural requirements. (25) A procedural defect is a separate inquiry from the agency's substantive interpretation of the authorizing statute or the constitutionality of the statute itself. (26) In some logical outgrowth cases, a court will only remand the elements of the rule that did not follow proper process. (27) In some instances, a court will remand the rule for an agency to follow proper procedure, but leave the rule in place. (28) Courts understand that in some instances a complete remand would inflict large social costs, or private parties have a reliance interest in what they thought the proposed rule would be. (29) The upshot here is that courts have some flexibility in crafting a remedy, but generally a defect in the process will only delay, not stop, a regulation.

   The term logical outgrowth represents a relatively uncontroversial proposition--a final rule should be logically connected to its predecessor--but without additional explanation the phrase serves little analytical purpose. Courts of appeals have attempted to flesh out the doctrine by adding explanatory language to the amorphous concept of logical outgrowth. Thus, courts will routinely state that a final rule will be valid if interested parties "should have anticipated" that a change from the proposed to final rule was possible. (30) Another common formulation is that the interested public does not have to "divine ... the unspoken thoughts" of the agency. (31) Of course, it is one thing to repeat these phrases and entirely another to discern any applicable guidance for future courts and agencies searching for useful guidance. (32) This Note argues that there are workable categories in which to segregate different types of logical outgrowth cases. Part II is descriptive and seeks to distill workable categories of logical outgrowth by analyzing historical logical outgrowth cases.

2. Logical Outgrowth Categories

   Defining the contours of logical outgrowth doctrine is difficult, despite more than four decades of cases affirming and reversing agency rules. Before attempting to outline workable categories, it is necessary to acknowledge the limitations of such an exercise. Logical outgrowth is inherently a fact-based, case-by-case analysis; a proposed rule is either procedurally valid or not and each iteration of logical outgrowth thereafter presents a new rule and a new notice-and-comment rulemaking process. This makes logical outgrowth susceptible to a lack of clarity from case to case, and a doctrine about which it is difficult to draw any generalities. (33)

   The value of this inquiry is not found in generalizations about particular rules. Instead, the successes and failures of agency rulemaking processes are sufficiently similar across time to allow for categorical grouping and thus assist agencies, the public, and courts in avoiding the pitfalls of logical outgrowth. Part II's methodology is to identify and analyze cases, often but not exclusively, from the Court of Appeals for the D.C. Circuit, in order to group the success or failure of logical outgrowth arguments by type. (34) Section II.A defines categories where an agency is able to demonstrate that its final rule was a logical outgrowth of the proposed rule. Section II.B defines categories where the agency fails to demonstrate that it gave fair notice and the court determined there was no logical outgrowth.

   1. Categories Where Courts Affirm Logical Outgrowth

      1. Agency Contemplating Specific Change

         Courts will uphold a final rule if the notice of proposed rulemaking (NPRM) expressly asks for comment on a particular issue or otherwise makes it clear that an agency was contemplating a specific change. (35) This category of logical outgrowth is the simplest expression of the doctrine. If an agency asks for public comment on an issue and then modifies its final rule based on the comments, then logical outgrowth applies. In Owner-Operator Drivers Association v. Federal Motor Carrier Safety Administration, the agency proposed a rule for long-haul truckers that would allow them to split their ten-hour rest period into two segments, including one of at least eight hours. (36) The petitioners protested that the notice was too broad and unspecific to allow them to comment effectively. However, the notice said that the agency "will considers variety of possible changes ... including but not limited to: ... establishing a minimum time for one of the two 'splits, ' such as 5 hours, 8 hours, or some other appropriate level." (37) The final rule adopted the eight-hour requirement. (38) This represents the plainest logical outgrowth category: the agency offers options, the public provides feedback, and the agency selects one of the options. As the court in...