Opinion ID: 771451
Heading Depth: 2
Heading Rank: 4

Heading: Retroactive Application of the Regulations

Text: 33 Given our conclusion that the statute itself does not create enforceable obligations on private parties, the only way in which we could find that Sheahan had a duty to provide plaintiff with disclosures regarding lead-based paint hazards would be to conclude that a duty existed under the regulations. We have already explained that such a duty cannot come from the proposed regulations because proposed regulations do not have binding legal effect. See LeCroy Research Sys. Corp., 751 F.2d at 127. 34 Nor, for the reasons discussed below, can we apply the final regulations retroactively. First, a strong presumption exists against the retroactive application of regulations. Retroactive legislation presents problems of unfairness because it can deprive [parties] of legitimate expectations and upset settled transactions. Eastern Enters. v. Apfel, 524 U.S. 498, 501 (1998). Retroactivity is not favored in the law. Thus administrative rules will not be construed to have retroactive effect unless their language requires this result. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988). In fact, we are prohibited from applying a regulation to conduct that took place before its enactment in the absence of clear congressional intent where the regulation would 'impose new duties with respect to transactions already completed.' Rock of Ages Corp. v. Secretary of Labor, 170 F.3d 148, 158 (2d Cir. 1999) (quoting Landgraf v. USI Film Prods., 511 U.S. 244, 280 (1994)). 35 Plaintiff Sweet argues that Congress, by clearly mandating the effective date of October 28, 1995, not only authorized retroactivity but mandated it. We disagree. No express language in the Lead-Based Paint Act requires that the regulations be applied retroactively. The statute mandated that final regulations would take effect on October 28, 1995, but this was necessarily based on the assumption that final regulations would be promulgated by that date. 36 We agree with Sweet that the agencies' failure to promulgate final regulations before the date specified in the Lead-Based Paint Act contravened Congressional intent. However, we cannot remedy the agencies' failure by holding Sheahan liable for allegedly neglecting his disclosure obligations when those obligations did not exist, at least under the federal statute, at the time Sheahan entered into the lease with Sweet. Congress expressly delegated to the agencies the responsibility for developing regulations, and the statutory language makes the private landlords' disclosure obligations contingent on the promulgation of those regulations. Applying a duty of disclosure to Sheahan's lease agreement with Sweet would be unfair because, at the time the lease commenced, Sheahan could not be sure of what his disclosure requirements would be under the forthcoming regulations. See Sipes v. Slaughter, 89 F. Supp. 2d 1199, 1203 (D. Kan. 2000) (faced with the same legal issue raised in this case, finding that the retroactive application of the final regulations was prohibited on grounds of procedural fairness); see generally Landgraf, 511 U.S. at 265 (Elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly; settled expectations should not be lightly disrupted.). Moreover, applying the regulations to create a duty on Sheahan would require us to override the agencies' specific, stated intention that the regulations not become effective until December 6, 1996. This would be inconsistent with our finding that the regulations are entitled to Chevron deference. See infra Part V. 37 The district court argued that Sheahan would not be prejudiced by requiring his compliance with the disclosure requirements before the final regulations were published. 6 The court stated: 38 The statute specifically set[s] forth the specific conduct required of sellers and lessors, and stated that such conduct would be required on and after October 28, 1995. Furthermore, the proposed regulations, which were published more than one year before Sweet moved into the subject apartment, contained the same basic disclosure requirements and stated that such disclosure would be required in any transaction to sell or lease target housing on or after October 28, 1995. 59 Fed. Reg. 54997. Sheahan would only be prejudiced if he were held responsible for acts of disclosure contained in the final regulations which were not in the statute or proposed regulations. That is not the case here, however. Sheahan is accused of failing to comply with conduct specifically contained in the Lead Based Paint Act and which is substantially similar in the proposed regulations. Therefore, Sheahan cannot show prejudice. 39 1999 WL 1011921, at . 40 We do not accept this argument, which would require Sheahan to comply with the disclosure requirements in the proposed regulations. Until the final regulations were made effective, it was reasonable for individuals to believe that the statute and the proposed regulations placed no obligations on them. See LeCroy Research Sys. Corp., 751 F.2d 123 at 127 (If the Commissioner wanted this [proposed] regulation to have binding effect, it could have been issued as a temporary regulation .) Supporting such thinking is the language of the 1994 proposed regulations, which directly declared that EPA and HUD believe that the effective date of the rule should be no earlier than 1 year after promulgation of the final rule, even if this occurs later than October 28, 1995. EPA and HUD believe that this interpretation is the one most consistent with Congressional intent. 59 Fed. Reg. 54,984-85. 41