Opinion ID: 454815
Heading Depth: 3
Heading Rank: 1

Heading: Concise General Statement of Basis and Purpose.

Text: 66 With respect to section 553(c), the government argues that the Secretary did not have a duty to incorporate in the rule prohibiting the FmHA from refinancing its own loans a concise general statement of its basis and purpose or, if he did, the statement provided was sufficient. Specifically, the government contends that (1) such a statement was not required because the regulation was not a major revision; (2) the statement that was issued pertaining to the regulation eliminating the ban against refinancing loans less than five years old was sufficient to satisfy the mandate of section 553 with respect to the regulation at issue; and (3) because the regulation did not change prior policy, the Secretary was not obliged to publish a statement of its basis and purpose. As the government concedes, the rationale behind all three of these arguments is the same: that the 1981 regulation in question did not alter pre-existing FmHA policy and practice and therefore a separate and distinct statement of basis and purpose for that regulation was not required. This logic, however, even if valid, is ultimately unavailing; the government's arguments simply do not go far enough to save the regulation. 67 We assume arguendo that the government is correct in asserting that a regulation merely reaffirming prior policy and practice need not conform strictly to section 553(c)'s requirement of a basis and purpose statement. Nonetheless, the government cannot have its proverbial cake and eat it too. If the 1981 regulation is to be exempt from the requirements of section 553(c) because it does nothing more than clarify and restate well-established policy, that policy must have been previously adopted fully in accordance with the procedures of the APA. Otherwise, an agency that wished to forego compliance with section 553(c) could simply do so and, if not challenged in time, issue a clarifying regulation invulnerable to attack on section 553(c) grounds. Cf. United States Steel Corp. v. EPA, 595 F.2d 207, 215 (5th Cir.1979) (holding that post-promulgation comments do not satisfy mandate of section 553 because [a]n agency that wished to dispense with pre-promulgation notice and comment could simply do so, invite post-promulgation comment, and republish the regulation before a reviewing court could act.). The directives of the APA are not so easily avoided. 68 In the case at hand, the government asserts that it promulgated a regulation preventing the refinancing of FmHA loans in 1974 as part of its regulatory response to the 1974 Amendments to the Housing Act of 1949. The pertinent regulation reads as follows: 69 Loans ordinarily will not be made to refinance long-term real estate loans guaranteed or insured by the Federal Housing Administration (FHA) or the Veterans Administration (VA) or of the type generally made by lenders such as the Federal Land Banks (FLB) or insurance companies. When it is necessary to refinance such debts, the total debt will not be refinanced if a part of the debt can be refinanced on a sound basis with the lender's agreement. In such a case, that part of the debt to be refinanced will not include more than existing delinquencies plus the next installment to become due that the borrower will be unable to pay. 70 7 C.F.R. Sec. 1822.7(3) (1975). Pretermitting the not insubstantial question of whether this regulation actually served to prohibit the FmHA from refinancing its own loans, we find that, to the extent it did preclude such refinancing, the regulation was not promulgated in accordance with the mandate of section 553(c). 71 It is evident that the 1974 regulations were published without opportunity for prior comment and without a general concise statement of basis and purpose. See 39 Fed.Reg. 44,992, 44,993 (1974). The Secretary justified noncompliance with section 553(c) in the regulation itself by invoking the good cause exception of section 553(b)(B). According to this provision, notice and public procedures need not be followed when an agency finds that they are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. Sec. 553(b)(B). 23 It is well established, however, that this exception is to be read narrowly in order to avoid providing agencies with an escape clause from the requirements Congress prescribed. Petry v. Block, supra, at 1200; United States Steel Corp., supra, at 214; see generally Jordan, The Administrative Procedure Act's Good Cause Exception, 36 Admin.L.Rev. 113, 119 (1984). Moreover, an agency invoking the good cause exception must incorporate[ ] the finding and a brief statement of reasons therefor in the rules issued. 5 U.S.C. Sec. 553(b)(B). The explanation provided in the 1974 rules states that the changes made will enable the agency to expedite needed benefits of the Act to the public and to delay issuance of such regulations by publishing for public comment would be contrary to the public interest. 39 Fed.Reg. at 44,993. 24 72 We need not consider whether the Secretary's reasons for invoking the good cause exception warranted the immediate promulgation of the vast number of the 1974 regulations. Irrespective of how adequate this explanation is to justify application of the good cause exception to the rules implementing the loan program and the 1974 Amendments, we do not see how this explanation is relevant with respect to the Secretary's policy denying refinancing to FmHA borrowers. The urgent need to extend some refinancing assistance to the public simply does not justify issuing regulations, discretionary with the Secretary, cutting off refinancing assistance to a whole class of borrowers on a permanent basis without first giving the public the least notice and an opportunity to comment. This of course is not to say that the FmHA was obliged to extend refinancing to FmHA borrowers while notice and comment procedures were being implemented. However, we will not allow a regulation otherwise subject to section 553 procedures to piggyback on regulations properly issued in response to a sudden exigency when to do so would result in that regulation being chiseled into bureaucratic stone. American Federation of Government Employees v. Block, 655 F.2d 1153, 1157 (D.C.Cir.1981) (regulations responding to much more than emergency must be promulgated through public procedures); see also American Transfer & Storage Co. v. ICC, 719 F.2d 1283, 129394 (5th Cir.1983) (relying on interim nature of rules in finding that good cause exception was applicable); National Federation of Federal Employees v. Devine, 671 F.2d 607, 612 (D.C.Cir.1982) (limited scope of the agency's emergency order influences our finding that OPM had good cause to dispense with prior notice and comment). 73 In short, we hold that, at least to the extent the 1981 regulation instituted new policy, the Secretary has failed to comply with the procedures required by section 553(c) of the APA. Moreover, assuming arguendo that section 553(c)'s requirement of a general concise statement of basis and purpose was inapplicable or less applicable because the 1981 regulation was merely clarifying past policy, we conclude again that the mandate of the APA was not followed. The Secretary in promulgating the 1974 regulation--allegedly establishing the challenged policy for the first time--lacked the good cause necessary to preclude, on a permanent basis and without complying with section 553(c) procedures, FmHA borrowers from receiving refinancing assistance. The good cause exception of section 553(b)(B) is designed to provide agencies with a safety valve when delay would do real harm; it does not extend to agencies the same prerogative of silence usually reserved to legislatures. See United States v. Nova Scotia Food Products Corp., supra, at 252. 74