Opinion ID: 78464
Heading Depth: 3
Heading Rank: 1

Heading: Applying the Form LM-10 Reporting Requirements to DLCs

Text: Warshauer argues that the Secretary's advisory applying the Form LM-10 reporting requirement to DLCs requires notice and comment rulemaking because it is a new rule that changes the substantive state of the existing law. The Secretary argues that notice and comment is not required because the advisory is an interpretive rule that merely states what the Department of Labor thinks § 203(a)(1) means. The rule applying the Form LM-10 reporting requirements to DLCs is an interpretive rule. First, it is relevant that the Secretary characterizes the rule as interpreting § 203(a)(1). Second, the Secretary's interpretation is drawn directly from the plain language of the statute. See supra Part III.A. (discussing the plain language of § 203(a)(1)). Third, the rule only reminded affected parties of existing duties required by the plain language of the statute. It did not create any new law, right, duty, or have any effect independent of the statute. Thus, the rule is a prototypical example of an interpretive rule issued by an agency to advise the public of the agency's construction of the statutes and rules which it administers. Shalala v. Guernsey Mem'l Hosp., 514 U.S. 87, 99, 115 S.Ct. 1232, 131 L.Ed.2d 106 (1995) (quoting Chrysler Corp. v. Brown, 441 U.S. 281, 302 n. 31, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979)) (internal quotation marks omitted). See also Caraballo v. Reich, 11 F.3d 186, 195 (D.C.Cir.1993) (A statement seeking to interpret a statutory or regulatory term is ... the quintessential example of an interpretive rule.). The Secretary was authorized not to create a duty for DLCs but to explain the duty created by § 203(a)(1). Having established that the rule is interpretive, we turn to Warshauer's second argument. Warshauer relies upon a line of cases originating in the DC Circuit, which take the following position. If affected parties substantially and justifiably rely to their detriment on a well-established, definitive, and authoritative interpretation of an agency regulation, then the agency must use the notice and comment process before adopting an inconsistent interpretation because the agency has in effect amended its rule. Alaska Prof'l Hunters Ass'n v. FAA, 177 F.3d 1030, 1034 (D.C.Cir.1999); see also MetWest Inc. v. Sec'y of Labor, 560 F.3d 506, 509-11 (D.C.Cir.2009); Paralyzed Veterans of Am. v. D.C. Arena L.P., 117 F.3d 579, 586 (D.C.Cir.1997). The Fifth Circuit has adopted the Alaska Professional Hunters/Paralyzed Veterans approach, Shell Offshore Inc. v. Babbitt, 238 F.3d 622, 629 (5th Cir.2001), and the Eighth and Third Circuits have mentioned this approach in dicta, see Minnesota v. CMS, 495 F.3d 991, 996-97 (8th Cir.2007) (dicta); SBC Inc. v. FCC, 414 F.3d 486, 498 (3d Cir.2005) (dicta). However, some tension exists between the several circuits that have addressed this issue. The First, Second, Fourth, Sixth, Seventh, and Ninth Circuits agree that changes in interpretations do not require notice and comment because both the original and current positions constitute interpretive rules. [3] Miller v. California Speedway Corp., 536 F.3d 1020, 1033 (9th Cir.2008); St. Francis Health Care Ctr. v. Shalala, 205 F.3d 937, 947-48 n. 11 (6th Cir.2000); Warder v. Shalala, 149 F.3d 73, 81 (1st Cir.1998); Hoctor v. United States Dep't of Agric., 82 F.3d 165, 170 (7th Cir.1996); Chen Zhou Chai v. Carroll, 48 F.3d 1331, 1341 (4th Cir.1995), superseded on other grounds by statute, 8 U.S.C. § 1101(a)(42)(B), as recognized in Li v. Gonzales, 405 F.3d 171, 176 (4th Cir.2005); White v. Shalala, 7 F.3d 296, 304 (2d Cir.1993). [4] Because the APA excepts interpretive rules from notice and comment requirements, in order for notice and comment to be necessary, the later rule would have to be inconsistent with another rule having the force of law, not just any agency interpretation regardless of whether it had been codified. Warder, 149 F.3d at 81 (quoting Chief Probation Officers v. Shalala, 118 F.3d 1327, 1337 (9th Cir.1997) (brackets omitted)). We need not (and do not) take sides in this debate, because we conclude that Warshauer failed to satisfy even the Alaska Professional Hunters/Paralyzed Veterans approach. Warshauer presents evidence suggesting that the Secretary chose not to enforce the requirements of § 203(a)(1) against DLCs until the publication of the disputed website advisory. [5] However, assuming that such an enforcement policy existed, it does not rise to the level of a well-established, definitive, and authoritative interpretation. Two cases from the DC Circuit are instructive. In MetWest, the plaintiff argued that the Occupational Safety and Health Administration (OSHA) improperly altered its interpretation of a regulation without engaging in notice and comment rulemaking. 560 F.3d at 509. In 1991, OSHA promulgated a regulation prohibiting the removal of contaminated needles from equipment used to extract blood  an action that reflected the development and use of disposal blood tube holders. Id. at 508. However, until October 2003, OSHA declined to enforce this regulation against employers who continued to work with reusable blood tube holders. Id. at 508-09. First, the court noted that OSHA had never definitively stated that reusable holders were permissible. Id. at 509-10. Second, the court held that OSHA had never established an authoritative interpretation of its regulation on which MetWest justifiably relied .... Id. at 511. Finally, the feasibility of the affected parties switching to disposable blood tube holders was clear. Id. Accordingly, the court held that OSHA was not required to engage in notice and comment rulemaking before it ramped up its enforcement of [the regulation at issue]. Id. at 511-12. The DC Circuit's opinion in Alaska Professional Hunters provides an appropriate contrast. Beginning in 1963, the FAA... consistently advised [Alaskan] guide pilots that they were not governed by regulations dealing with commercial pilots. 177 F.3d at 1031. Alaskan guide pilots relied on this advice to open and build up businesses. Id. at 1035. Then, in January 1998, the FAA published a notice announcing that Alaskan guide pilots would have to comply with all regulations governing commercial pilots. Id. at 1033. The DC Circuit later made clear that forced compliance would have driven Alaska's tourism operations out of business. See MetWest, 560 F.3d at 511. The FAA's explicit advice, consistently dispensed for over thirty years, represented more than a mere enforcement policy; it rose to the level of a well-established, definitive, and authoritative interpretation upon which the affected parties relied to their detriment. Alaska Profl Hunters Ass'n, 177 F.3d at 1035. Therefore, the court held that the agency... in effect amended its rule, something it may not accomplish without notice and comment. Id. at 1034. While we express no opinion on the soundness of the decision in Alaska Professional Hunters, we conclude that the instant case is analogous to MetWest. There is no evidence that the Secretary consistently and explicitly advised DLCs that they were not required to comply with § 203(a)(1). Evidence of the agency's prior enforcement policy  representing mere acquiescence to non-filing  is not sufficient to trigger notice and comment rulemaking.