The Good Cause Exception to Notice and Comment Rulemaking: Judicial Review of Agency Action
Released: 2016-01-29T00:00:00

Introduction

Federal agencies issue numerous rules pursuant to congressionally delegated authority. These rules have the force and effect of law. The Administrative Procedure Act (APA) generally requires agencies to follow certain procedures when promulgating rules. The statute's "good cause" exception, however, permits age ncies to forgo Section 553's notice and comment requirement if "the agency for good cause finds" that compliance would be "impracticable, unnecessary, or contrary to the public interest" and to bypass its requirement that rules be published 30 days before implementation if good cause exists. In 2012, the Government Accountability Office (GAO) found that between 2003 and 2010 federal agencies issued about 35% of major rules and about 44% of nonmajor rules without a notice of proposed rulemaking (NPRM). Of those rules issued without an NPRM, agencies justified their action most often by invoking the good cause exception. However, federal courts reviewing this agency practice have varied in their analysis—as to the proper standard of review, whether there are actually two good cause provisions, and what factors justify the exception—resulting in confusion as to precisely what constitutes "good cause." This report will examine judicial analysis of the good cause standard and map several factors that lead courts to uphold or reject agencies' invocation of the exception.

Notice and Comment Rulemaking

The APA imposes procedural requirements on the actions of executive branch agencies. Agencies engaged in "formulating, amending, or repealing" a rule are subject to either the APA's formal or informal rulemaking provisions. A rule is "an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency." If an agency's organic statute requires rulemaking to be "on the record," then the APA's formal rulemaking procedures are required. Otherwise, the informal notice and comment rulemaking provisions of Section 553 of the APA apply. The most common process for issuing rules is under the latter category.

Section 553 requires agencies to provide the public with notice of a proposed rulemaking. The notice must include "(1) the time, place, and nature of public rulemaking proceedings; (2) reference to the legal authority under which the rule is proposed; and (3) either the terms or substance of the proposed rule or a description of the subjects and issues involved." The public then has an opportunity to submit written comments on the rule. Following consideration of these comments, the agency publishes a final rule with a "concise general statement of [its] basis and purpose." Such rules must be published in the Federal Register not less than 30 days before the effective date.

However, the APA contains several exceptions to Section 553's procedural requirements. First, certain subject areas are wholly exempt from the requirements of Section 553. Second, certain "rules" issued by agencies that do not regulate public conduct with the "force and effect of law" are exempt from Section 553's notice and comment requirements. These include rules concerning "agency organization, procedure, or practice," or procedural rules, as well as interpretive rules and general statements of policy, or nonlegislative rules. Such "rules" differ from the substantive, or legislative, rules subject to Section 553 that do bind the public's behavior. Third, certain legislative rules are exempt from Section 553's notice and comment requirement when an "agency for good cause finds" that issuing a proposed rule and holding a comment period would be "impracticable, unnecessary, or contrary to the public interest." Finally, the 30-day publication requirement does not apply when an agency finds good cause.

The APA's "good cause" exception(s) thus permits agencies to issue substantive rules that bind the public without following Section 553's notice and comment requirement and to waive the 30-day publication requirement. However, the proper standard for invoking the exemption is unclear; commentators have noted the vagueness of the applicable terms. Federal courts are divided on the proper standard of review when faced with challenges to agencies' use of the exemption to forgo notice and comment procedures. And judicial analysis of agencies' use of the exception appears to consider a wide range of factors without a clear limiting principle. Further, courts divide as to whether a failure to include a formal statement of reasons in the rule when bypassing Section 553's requirements is fatal to the rule's validity.

Are There Actually Two Good Cause Standards?

Section 553(b)(B) of the APA provides that compliance with notice and comment rulemaking may be bypassed when an "agency for good cause finds" that doing so would be "impracticable, unnecessary, or contrary to the public interest"; Section 553(d) provides that the 30-day publication rule may be waived for good cause. Some courts have indicated that these are two distinct standards; others do not always distinguish between the two. Courts that do conceptualize them differently note that notice and comment rulemaking allows public participation, while "the purpose of the thirty-day waiting period is to give affected parties a reasonable time to adjust their behavior before the final rule takes effect." In making the latter determination, the D.C. Circuit has noted that agencies "should 'balance the necessity for immediate implementation against principles of fundamental fairness which require that all affected persons be afforded a reasonable amount of time to prepare for the effective date of its ruling.'" In addition, some courts have indicated that the test for good cause to waive notice and comment is more stringent than to waive the 30-day rule.

However, courts sometimes decline to decide whether the two standards are different, ruling that the circumstances do or do not support good cause under both exceptions, or do not acknowledge that the two might differ in substance. In fact, some courts distinguished between the two in some cases, but not in others.

Whether courts distinguish conceptually between the two standards or not, at a functional level, the two can sometimes operate independently. Courts will sometimes find that good cause exists to issue immediately applicable emergency regulations, but conclude that there is no reason the agency cannot make them temporary, subject to notice and comment procedures. In addition, courts have sometimes found good cause for an agency to issue an immediately applicable interim rule when the agency permits comment on the final rule.

What Constitutes Good Cause?

Leaving aside disagreements over the proper standard of review, under what circumstances have courts upheld agency invocations of good cause to bypass notice and comment rulemaking? The APA's text limits good cause to an agency finding that compliance with notice and comment rulemaking is "impracticable, unnecessary, or contrary to the public interest." However, judicial application of these factors tends to converge. Consequently, leaving aside minor or technical rules where compliance with Section 553 is unnecessary, it may be helpful to divide good cause cases into several categories: (1) emergencies; (2) contexts where prior notice would subvert the underlying statutory scheme; and (3) situations where Congress intends to w aive Section 553's requirements.

Emergencies

Concern for public safety can constitute good cause to bypass notice and comment procedures. For example, in 2004, the D.C. Circuit upheld the Federal Aviation Administration's (FAA) rule, promulgated without notice and comment, covering the suspension and revocation of pilot certificates on security grounds. The agency argued that the regulation was necessary to protect the public against security threats. The court accepted this contention, ruling that the "legitimate concern over the threat of further terrorist acts involving aircraft in the aftermath of September 11, 2001" supported the good cause finding. Likewise, the Ninth Circuit upheld an FAA rule that established special operating procedures for air tour operators. The agency argued that current regulations were insufficient to protect public safety, as the regulation was promulgated after seven helicopter accidents in the preceding year. The court accepted the agency's position and upheld the good cause finding.

However, the "mere existence" of a deadline is usually insufficient to establish good cause. Courts have generally rejected good cause exemptions when agencies argue that statutory deadlines alone justify bypassing notice and comment procedures or the 30-day publication requirement. Instead, some "exigency" is required, independent of the deadline itself, which merits dispensing with Section 553's requirements. Importantly, courts have precluded efficiency goals and concern for agency convenience from qualifying as exigencies.

For example, courts may find good cause when circumstances outside an agency's control make compliance with notice and comment rulemaking or the 30-day publication requirement impracticable. This can include situations where an agency, faced with a statutory or regulatory deadline to promulgate regulations, invokes good cause to support an order deferring a rule's implementation. This exception is only appropriate in "exceptional circumstances. Otherwise, an agency unwilling to provide notice or an opportunity to comment could simply wait until the eve of a statutory, judicial, or administrative deadline, then raise up the 'good cause' banner and promulgate rules without following APA procedures." For example, the D.C. Circuit ruled that the Office of Personnel Management's deferment of a health plan enrollment period because of recent litigation uncertainty and threats to the financial stability of the program did not violate the APA. In that case, litigation in other courts, combined with losses associated with a major health benefit provider, created an emergency situation wherein commencement of the enrollment period without deferment would have "posed a serious threat to the financial stability of the benefit program." These circumstances were outside of the agency's control, not leaving enough time to comply with notice and comment procedures. Consequently, the court found that good cause existed to waive Section 553's requirements.

Similarly, swift action may be permitted when, due to circumstances outside of an agency's control, a regulation is needed in the public interest. For example, in 1981 the Eighth Circuit upheld a temporary FAA rule allocating air carrier slots at National Airport in Washington, DC. Previously, air carriers had traditionally agreed on the appropriate slots through air scheduling committees, which reported their agreement to the FAA. In 1980, for the first time in the scheduling committees' history, the air carriers could not come to an agreement. The court noted the need for notice to the airlines and the public for scheduling purposes, and concluded that "the rapid resolution of the slot allocation problem at National was not only in the interest of the traveling public, particularly on the eve of the winter holiday season, but also consistent with the national interest in the efficient utilization of the navigable airspace." The court thus upheld the agency's good cause finding to shorten the comment period and make the rule effective immediately. In contrast, concerns about the fiscal health of one regulated entity might not rise to this level. For instance, in 2012, the EPA promulgated an interim final rule (IFR) without notice and comment that permitted heavy-duty diesel engine manufacturers to sell noncompliant engines if they paid certain penalties. The D.C. Circuit found that the purpose of the IFR was not to prevent any threat to the public, but instead "to rescue a lone manufacturer from the folly of its own choices." Absent some important public interest, or even a systemic threat to an entire industry and its customers, saving one regulated entity—which could have avoided the problem if it made better business decisions—did not constitute good cause.

Importantly, conclusory claims by an agency of an emergency situation, unaccompanied by independent facts, are insufficient to constitute good cause. In a leading case for this proposition, the D.C. Circuit invalidated the Federal Energy Regulatory Commission's (FERC's) issuance of an interim rule that required pipeline companies to make disclosures and give advance notice prior to constructing new facilities or replacing existing ones. Previously, the agency automatically approved the construction of new facilities. In a shift of policy, the agency simultaneously published a Notice of Proposed Rulemaking to solicit comments on a forthcoming final rule as well as a binding interim rule. The agency defended the interim rule as, among other things, necessary to prevent environmental damage from companies accelerating the construction of new facilities before the final rule came into force. However, the court found that good cause to do so had not been established. It ruled that the agency had not provided a sufficient factual basis to accept this reasoning. At bottom, the agency relied upon its own expertise in predicting that, without the interim rule, firms would rush to begin new projects that would harm the environment. Because the agency failed to provide evidence beyond its own expertise on the matter, the D.C. Circuit refused to uphold a finding of good cause.

Congressional Intent

As discussed above, the mere existence of a statutory deadline, in and of itself, is usually insufficient to constitute good cause. However, Congress can implicitly waive the APA's requirements. For instance, when Congress imposes certain procedures, which, taken together with a deadline, are irreconcilable with Section 553's requirements, then courts may read congressional intent to waive the APA's requirements.

Similarly, some courts have found that the imposition of a congressional deadline can support a good cause finding. For example, the congressional imposition of a stringent deadline which makes agency compliance with Section 553 impracticable can constitute good cause. Similarly, when the issuance of interim rules is necessary in order to comply with a new law, good cause to waive Section 553's requirements can be established. That said, whether Congress intended to waive these procedures in a particular situation is largely a fact-specific inquiry. In the past, courts have divided as to whether Congress so intended in the same statutory scheme.

Harm Caused by Prior Notice

Courts have sometimes found good cause when advance notice of a rule would cause harm to the public. For example, the Ninth Circuit upheld the Secretary of Agriculture's invocation of good cause to bypass the APA's 30-day publication requirement when issuing rules governing the orange market. Pursuant to the Agricultural Marketing Agreement Act, the Secretary is authorized to regulate the market in certain commodities and issue rules regarding volume restrictions every week. With regard to navel oranges, a committee holds a regular meeting, open to the public, to decide on the appropriate volume restrictions for the next week. The decision is then recommended to the Secretary, who actually issues the binding rule. The court reasoned that requiring the Secretary to give 30-day advance notice of each rule would cause harm by forcing the agency to predict the proper restrictions in advance of when a reasonable determination could actually be made. The committee in charge of formulating recommendations revises its projections "right up until, and occasionally even during, the week in question." The court concluded that it could not require compliance with this requirement "without throwing the entire regulatory program out of kilter." However, the court ruled that good cause had not been established to bypass the notice and comment requirements. While it was impracticable to predict the final rule a month in advance, nothing precluded the Secretary from notifying the public of the meeting and permitting comments every week.

Similarly, courts have found good cause when compliance with Section 553 would subvert the rule or underlying statute's purpose. This has occurred several times in the context of government price controls. For example, in response to the 1970's oil crisis, the Federal Energy Administration (FEA) issued regulations to equalize prices without notice and an opportunity to comment. The Temporary Emergency Court of Appeals upheld the good cause invocation, finding that given the emergency conditions behind the oil price legislation and the potential "price discrimination and other market dislocations" that could be caused by advance notice of the rule, the agency had good cause to bypass notice and comment rulemaking. Likewise, courts have upheld good cause invocations when notice of a price increase would worsen oil supply shortages, as well as in circumstances where "announcement of a future price freeze would generate a 'massive rush to raise prices.'"

Standards of Review

One potential reason for confusion regarding the issue is disagreement regarding the appropriate standard of review when agencies invoke the good cause exception. As an initial matter, federal courts appear to agree that the good cause exception is to be "narrowly construed." Executive agencies bear the burden of persuasion in convincing a court that good cause exists, and the exception is not to be used as an "escape clause" to avoid rulemaking procedures when convenient for the agency. "Bald assertions" by an agency that comments are unnecessary in a particular situation do not create good cause. Otherwise, the exception would swallow the rule. In other words, agencies must provide courts with a sufficient reason showing why good cause exists in order to justify bypassing Section 553's procedural requirements. Courts are divided, however, as to the proper standard of review when an agency does so.

As relevant to agency rulemaking, the APA, in Section 706, direct courts to

hold unlawful and set aside agency action, findings, and conclusions found to be— arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; [or] without observance of procedure required by law.

Judicial Review of Agency Action

Courts employ a variety of legal doctrines when reviewing agency action. These standards are conceptually distinct, however, from judicial review of trial court proceedings. Broadly, courts review agency factual findings, discretionary decisions, and legal conclusions, although distinguishing between these situations can be difficult. The amount of deference given by a court to the agency's decision varies depending on which agency action is under review.

However, courts do not always explicitly adopt standards of review, sometimes concluding that an agency's construction of a statute stands or fails under multiple standards. In addition, judicial review of agency's fact-findings can simultaneously include consideration of substantial discretionary decisions, complicating the precise scope of review. Further, distinguishing differences between the potential outcomes under each standard can sometimes be a difficult analytical exercise. Nevertheless, an explanation of the various standards can be helpful in understanding the nature of federal court review.

Review of Legal Conclusions

Courts review agencies' legal conclusions according to several standards. When a plaintiff challenges an agency action as inconsistent with statute, courts must interpret the meaning of the legislative provision. In the case of ambiguity, courts grant Chevron deference to agencies' interpretations of their own statutory authority if Congress intended to permit the agency to "speak with the force of law." In Chevron U.S.A., Inc. v. Natural Resources Defense Council , the Supreme Court ruled that when courts review an agency's "construction of [a] statute which it administers," "[s]tatutory ambiguities" are resolved, "within the bounds of reasonable interpretation, not by the courts but by the administering agency." Chevron deference in such cases requires courts to defer to an agency's construction of an ambiguous statute if the agency's interpretation is reasonable. In United States v. Mead , the Supreme Court clarified that Chevron deference applies "when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority." Congressional intent to do so with regard to a specific statute can be shown by, for example, a specific grant of power to conduct rulemaking or adjudications.

Otherwise, agencies' legal interpretations are given less deference by courts. This is not to say however, that agency interpretations necessarily receive no weight at all. The Court indicated in Skidmore v. Swift and Co . that when an agency interprets a "highly detailed" "regulatory scheme" and the agency has "the benefit of specialized experience" then the agency's view is accorded "a respect proportional to its 'power to persuade.'" The agency is not exercising delegated authority to interpret its statutory provision, so resolution of the question is for the judiciary. Nonetheless, courts will give consideration to the agency's interpretation, the "weight" of which "will depend upon the thoroughness evident in [the agency's] consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade."

Finally, when courts review agency legal interpretations regarding compliance with statutes it does not administer or the Constitution, such review can be still stricter—courts sometimes review agency compliance with the APA's procedural requirements de novo , or without any deference at all to the agency's decision. Under the APA, agency actions can be challenged for failing to comply with "procedure required by law." For example, if an agency categorizes an action as an interpretive rather than legislative rule, it may bypass Section 553's notice and comment rulemaking procedures. Courts reviewing whether the rule in question is actually legislative or interpretive will sometimes review the issue de novo , refusing to grant any deference to the agency because the agency has not been granted authority by Congress to administer the APA.

Review of Factual Determinations and Discretionary Decisions

In contrast, courts review agency factual findings in formal proceedings under the "substantial evidence" test. The APA distinguishes between formal proceedings, which must include trial-type procedures, and informal proceedings, which are not subject to the same strictures, at least by the APA. In formal proceedings, the agency's factual findings are "made on the record." The Supreme Court has explained that under this review, courts examine whether the facts are supported by "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." However, the APA does not specify a particular type of review for agency factual determinations in informal proceedings. Instead, the APA's "catch-all" provision for judicial review of agency action, the "arbitrary and capricious" standard, includes review of agency factual determinations in this context. Lower courts appear to agree that the difference in the amount of evidence required between the two standards is nominal, although formal proceedings must be supported with evidence found within the record, while informal proceedings can be supported with any evidence an agency had before it when it made a decision.

Courts also review agency discretionary decisions and will invalidate actions found to be "arbitrary, capricious, [or] an abuse of discretion." While courts applying this standard of review "must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment," the "scope of review ... is narrow and a court is not to substitute its judgment for that of the agency." This means "the agency must examine the relevant data and articulate a satisfactory explanation for its action including a 'rational connection between the facts found and the choice made.'" A court might consider whether the agency

relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

For example, when the Federal Food and Drug Administration approves a drug for the market, or the Environmental Protection Agency issues a permit that controls the amount of pollutants discharged in a geographic area, federal courts review these decisions under the arbitrary and capricious standard.

Standard of Review When Agencies Invoke the Good Cause Exception

As mentioned above, courts differ as to the proper standard of review when agencies invoke the good cause exception. One pitfall is the proper characterization of the agency's action—is an agency determination that good cause exists to bypass Section 553 a discretionary decision or a legal conclusion? Challenges to agency discretionary decisions are governed by Section 706(2)(A)'s arbitrary and capricious standard, while procedural challenges pursuant to Section 706(2)(D) that an agency failed to comply with the provisions of the APA are often reviewed de novo . Some courts have applied the former standard when reviewing good cause determinations, others the latter. Because judicial review de novo is a much more "exacting standard" than the "deferential" posture of arbitrary and capricious review, the selection of a standard can be important. Complicating matters, however, is the practice of some courts to not clearly adopt either standard, but focus instead on simply "narrowly constru[ing]" the provision. This "interpretive framework has been developed separate and apart from [the APA's text], derived from the legislative history of the good cause exception." Finally, still another standard of review has been highlighted by at least one circuit as distinct: a mixed standard that incorporates both arbitrary and capricious and de novo review. Here, the court reviews de novo "whether the agency's asserted reason for waiver of notice and comment constitutes good cause, as well as whether the established facts reveal justifiable reliance on the reason," while "any factual determinations made by the agency to support its proffered reason are subject to arbitrary and capricious review."

Recent judicial analysis of the Attorney General's actions pursuant to the Sex Offender Registration and Notification Act (SORNA) illustrates the divergence respecting interpretations of the good cause exception. SORNA requires states to establish sex offender registries and mandates that convicted sex offenders register their place of residence and employment with the state registry. However, SORNA authorized the Attorney General to "specify the applicability" of those requirements to sex offenders convicted before the law's enactment or its "implementation in a particular jurisdiction." The Attorney General issued an interim rule applying SORNA's requirements retroactively and relied on the good cause exception to bypass the notice and comment rulemaking requirements as well as the 30-day publication rule. Various individuals convicted of failing to register under the statute pursuant to the interim rule's authority brought challenges to the Attorney General's invocation of the good cause exception.

The interim rule specified two reasons supporting a finding of good cause to bypass Section 553's requirements. First, "to eliminate any possible uncertainty about the applicability of the Act's requirements," and second, "to protect the public from sex offenders who fail to register through prosecution and the imposition of criminal sanctions."

The Fourth and Sixth Circuits appear to have reviewed the determination de novo , the Fifth and Eleventh Circuits applied the arbitrary and capricious standard, and the Ninth, Third, and Eighth Circuits expressly declined to decide the appropriate standard of review, ruling that the Attorney General's invocation of good cause would fail even under the deferential arbitrary and capricious standard. Interestingly, the standard of review does not precisely mirror the outcomes in the cases. The Fourth Circuit, apparently applying de novo review, and the Eleventh Circuit, applying the arbitrary and capricious standard, both upheld the Attorney General's good cause finding. In contrast, the Sixth Circuit used de novo review to invalidate the good cause invocation, while the Fifth, Ninth, Third, and Eighth Circuits found the Attorney General's action to fail even under the more deferential arbitrary and capricious standard. These courts appear to fundamentally disagree as to what factors agencies may invoke when supporting a good cause finding.

Seemingly applying de novo review, although in an abbreviated fashion, the Fourth Circuit upheld the Attorney General's action for three reasons. First, "the need for legal certainty" as to whether SORNA applied retroactively; second, "[d]elaying implementation" of the rule posed a danger to public safety; and third, the Attorney General did permit public comments after the interim rule was promulgated. Although conducting a substantially lengthier analysis, the Eleventh Circuit also upheld the Attorney General's good cause finding under arbitrary and capricious review, focusing primarily on the threat to public safety. The court ruled that the Attorney General only had to show that there was "good cause to believe that delay would do real harm." It found that "the retroactive rule reduced the risk of additional sexual assaults and sexual abuse by sex offenders by allowing federal authorities to apprehend and prosecute them," and "removes a barrier to timely apprehension of sex offenders." In addition, the court noted that the agency was given discretion to determine whether SORNA applied retroactively, and given the importance for convicted sex offenders who "need[ed] to know whether to register," there was a need for legal certainty in the matter.

In contrast, the circuits that rejected the Attorney General's good cause determination did not find the professed need to eliminate uncertainty or protect public safety sufficient. These courts found the Attorney General's arguments to be largely conclusory, failing to establish independent facts that compelled a good cause finding. First, these courts reasoned, a bare desire to offer guidance to parties affected by a rule, standing alone, is not sufficient reason to find good cause. Otherwise, the exception "would swallow the rule." In passing SORNA and leaving to the Attorney General whether to retroactively apply its terms to sex offenders, Congress itself had necessarily created some delay in SORNA's applicability. The Attorney General's "conclusory" arguments of harm were "not sufficient to upset this balance." Second, the Attorney General's public safety argument was "nothing more than a rewording of the statutory purpose Congress provided in the text of SORNA." Many laws presumably protect the public, so "[i]f the mere assertion that such harm will continue while an agency gives notice and receives comments were enough to establish good cause, then notice and comment would always have to give way."

What Happens When a Court Rejects an Agency's Good Cause Finding?

The appropriate remedy when a court rejects an agency's good cause finding can also vary. The APA provides that courts "shall ... hold unlawful and set aside agency action" that violates "procedure required by law." However, it also instructs courts to take "due account" of the "rule of prejudicial error." Consequently, when courts find that agencies failed to comply with the APA's rulemaking requirements, they will sometimes vacate the rule, but may not do so if the failure to comply with those procedures was harmless. Likewise, when courts reject an agency's good cause finding, the agency's rule may be vacated and remanded to the agency to comply with the APA. However, in certain circumstances, the court may find that the lack of good cause was harmless, such as when the larger purposes of Section 553 of the APA are met despite certain technical compliance errors. In addition, some courts have found that an agency lacked good cause and remanded to the agency to follow Section 553, but nonetheless left the challenged rules in place pending the completion of new proceedings that comply with the APA.

Presidential Transitions

Agency use of the good cause exception can also be important in the context of presidential transitions. Recent outgoing presidential administrations have engaged in "midnight rulemaking," whereby federal agencies increase the number of regulations issued during the final months of a presidential administration. A subsequent presidential administration of a different party, however, may have different policy priorities. Nonetheless, once a rule is finalized by an agency, repeal of a rule requires compliance with Section 553's notice and comment procedures. Further, while courts might uphold a change from one administration to the next in an agency's legal interpretation contained in a rule if the agency receives deference on the matter, if no deference is given to an agency's construction of a statute, then the agency will not be able to adopt a contrary construction in the future.

Consequently, in order to gain control of the rulemaking process, some Presidents have sought to impose a moratorium on new regulations at the beginning of their administration. For example, at the beginning of the George W. Bush Administration, White House Chief of Staff Andrew Card issued a memorandum to federal agencies on January 20, 2001, instructing them to (1) "send no proposed or final regulation to the Office of the Federal Register," (2) withdraw rules that had been sent to the Office but not yet published, and (3) postpone the effective date of regulations that had been published but not yet gone into effect for 60 days. Likewise, early in the Obama Administration, on January 20, 2009, White House Chief of Staff Rahm Emanuel issued a similar memorandum to federal agency heads.

In response to both memorandums, agencies that delayed the effective date of rules sometimes justified their actions by arguing that the delay was supported by good cause. The majority of these invocations were not reviewed by courts; however, in 2004, the Second Circuit Court of Appeals invalidated a Department of Energy (DOE) rule delaying the effective date of certain efficiency standards. On February 2, 2001, DOE issued a "final rule," without notice and comment, delaying the effective date of certain efficiency standards. The agency's final rule cited to the January 20, 2001, Card Memorandum and was effective immediately. The delay rule also noted that good cause existed to bypass Section 553 because the agency wanted more time to consider the standards and because of the imminence of the date the standards would be effective. Various parties challenged, among other things, DOE's issuance of this final rule delaying the effective date of the efficiency standards. In finding that there was no good cause to support bypassing notice and comment procedures in this situation, the court's analysis did not examine the significance (if any) of the Card memorandum. Instead, the court ruled that "an emergency of DOE's own making" cannot constitute good cause. Further, the court noted that no emergency existed, the only thing "that was imminent was the impending operation of a statute intended to limit the agency's discretion (under DOE's interpretation), which cannot constitute a threat to the public interest." Consequently, the court invalidated the rule.

Congressional Proposals to Alter the Standard

Various changes to the APA's good cause exception have been proposed by Members of Congress and commentators. During the 114 th Congress, a bill was introduced that aims to restructure Section 553's requirements. Among other things, the bill would require agencies to provide notice of proposed rulemakings to the public and the Office of Information and Regulatory Affairs; to provide 60 or 90 days, depending on the rule, for comments; and in certain circumstances, to provide a public hearing for the consideration of certain factual issues.

Under this bill, if an agency for good cause finds that compliance with Section 553 is unnecessary, then it may issue a final rule. However, if the agency for good cause finds that compliance is impracticable or contrary to the public interest, the agency may issue an interim rule, but must subsequently engage in notice and comment proceedings before the rule is finalized. In addition, during the 60 days after a presidential inauguration, agencies may delay implementation of rules that have not been finalized for 90 days for reconsideration. The bill does not, however, appear to alter the applicable standard of review for good cause, or specify what factors a reviewing court should consider.