Lessons in the Tricky Navigation of Drafting

Every now and then it helps when you are working on something to see what happened with other things like it. As Congress, the commercial space industry, and lobbyists contemplate legislation for non-traditional private actors in outer space, it may be wise to revisit the perils of imprecision.

Look what happened to the “navigable waters of the United States” in the hands of the U.S. Army Corps of Engineers. They grew some. The Supreme Court did a fine job of describing a regulator’s first shy, then creeping, then galloping jurisdictional expansion over the course of five Presidential administrations in Rapanos v. United States by expanding what “navigable waters” mean.

The Clean Water Act requires a permit to discharge a pollutant into navigable water. Justice Scalia, with his usual verve, described the predicament that Mr. Rapanos faced starting in April 1989, when Mr. Rapanos

backfilled wetlands on a parcel of land in Michigan that he owned and sought to develop. This parcel included 54 acres of land with sometimes-saturated soil conditions. The nearest body of navigable water was 11 to 20 miles away. Regulators had informed Mr. Rapanos that his saturated fields were “waters of the United States,” 33 U. S. C. § 1362(7), that could not be filled without a permit. Twelve years of criminal and civil litigation ensued.

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In deciding whether to grant or deny a permit, the U. S. Army Corps of Engineers (Corps) exercises the discretion of an enlightened despot, relying on such factors as “economics,” “aesthetics,” “recreation,” and “in general, the needs and welfare of the people,” 33 CFR § 320.4(a) (2004). The average applicant for an individual permit spends 788 days and $271,596 in completing the process, and the average applicant for a nationwide permit spends 313 days and $28,915—not counting costs of mitigation or design changes.

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The enforcement proceedings against Mr. Rapanos are a small part of the immense expansion of federal regulation of land use that has occurred under the Clean Water Act—without any change in the governing statute—during the past five Presidential administrations.

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One of the statute’s principal provisions is 33 U. S. C. § 1311(a), which provides that “the discharge of any pollutant by any person shall be unlawful.” “The discharge of a pollutant” is defined broadly to include “any addition of any pollutant to navigable waters from any point source,” § 1362(12), and “pollutant” is defined broadly to include not only traditional contaminants but also solids such as “dredged spoil, . . . rock, sand, [and] cellar dirt,” § 1362(6). And, most relevant here, the CWA defines “navigable waters” as “the waters of the United States, including the territorial seas.” § 1362(7).

(Most citations and page numbers omitted).

At first the Corps was becomingly modest in its approach, and interpreted “navigable waters” in the ordinary way, as “interstate waters that are ‘navigable in fact’ or readily susceptible of being rendered so.”  We might, perhaps, think back to steam boat captains in days of yore asking each other whether a stretch of the Mississippi was navigable or whether they’d run aground on sand bars.

Instead, as Justice Scalia informed us:

After passage of the CWA, the Corps initially adopted this traditional judicial definition for the Act’s term “navigable waters.” After a District Court enjoined these regulations as too narrow, the Corps adopted a far broader definition. The Corps’ new regulations deliberately sought to extend the definition of “the waters of the United States” to the outer limits of Congress’s commerce power.

The Corps’ current regulations interpret “the waters of the United States” to include, in addition to traditional interstate navigable waters, 33 CFR § 328.3(a)(1) (2004), “[a]ll interstate waters including interstate wetlands,” § 328.3(a)(2); “[a]ll other waters such as intrastate lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, or natural ponds, the use, degradation or destruction of which could affect interstate or foreign commerce,” § 328.3(a)(3); “[t]ributaries of [such] waters,” § 328.3(a)(5); and “[w]etlands adjacent to [such] waters [and tributaries] (other than waters that are themselves wetlands),” § 328.3(a)(7). The regulation defines “adjacent” wetlands as those “bordering, contiguous [to], or neighboring” waters of the United States. § 328.3(c). It specifically provides that “[w]etlands separated from other waters of the United States by manmade dikes or barriers, natural river berms, beach dunes and the like are `adjacent wetlands.'” Ibid.

Lesson One: don’t rely on the name of the term if that’s what you really mean.  That broad definition of navigable waters as “waters of the United States” allowed the Corps endless leeway in interpreting what was meant by “navigable waters.”  The word “navigable” in the name didn’t limit the waters to those that could actually be navigated.  My own suspicion is that the drafters didn’t mean to include water in prairie potholes.  If I’m right, the better place for “navigable” would have been in the definition than in the name.

Lesson Two: don’t forget that there are other actors out there who will influence the interpretation of the language you have crafted.  It was the courts who pushed the Corps toward a more expansive approach.  The Corps went with it.  How did the courts become involved?  I would imagine an environmental group sued the Corps and won.  That broad definition gave the Corps all the room it needed to extend its reach.

Lesson Three: don’t rely on the present occupants of an agency to be there forever.  Write as if the future depended on it.  “Navigable waters” grew to include water in prairie potholes, even though no one’s going to get a rowboat in a pothole, much less a steamboat.  These changes took place over decades, but that broad definition provided the tools for the expansion from the outset.   Although the Supreme Court finally set some limits on the Corps’ reach, it took Mr. Rapanos a long time and a lot of money to be rescued.

Note for the non-lawyers:  The laws Congress writes go in the United States Code (USC).  When regulatory agencies such as the Corps or the Federal Aviation Administration issue their requirements in accordance with the law Congress wants them to administer, the agencies locate their regulations in the Code of Federal Regulations.  If there is a conflict between the United States Code and the Code of Federal Regulations, the United States Code wins because the Constitution vests the power to make laws in the Congress.  The regulatory agencies are in the Executive Branch, and are merely carrying out the directions Congress supplied through the United States Code.

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NASA’s Civil Penalties as Adjusted for Inflation

On June 26, 2016, NASA released an interim final rule and request for public comments to adjust its civil monetary penalties to account for inflation.  Its new penalties apply to false claims, use of appropriated funds for lobbying or influencing certain contracts, and failures to report certain lobbying transactions.

Effective date:  August 25, 2017.

Comment deadline:  although the notice purports to request public comment, it does not provide a comment deadline.  Section V of the preamble invites comment. Because this is an interim final rule, an agency may change its rule in response to comments.  As the Federal Register explains:

Interim Final Rule: When an agency finds that it has good cause to issue a final rule without first publishing a proposed rule, it often characterizes the rule as an “interim final rule,” or “interim rule.” This type of rule becomes effective immediately upon publication. In most cases, the agency stipulates that it will alter the interim rule if warranted by public comments.  If the agency decides not to make changes to the interim rule, it generally will publish a brief final rule in the Federal Register confirming that decision.

UPDATE as of 7/12/17:  NASA issued a correction stating that the deadline for the public to file comments is July 26, 2017.  That’s pretty soon.

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Inflating the Penalties for Commercial Space Transportation

To account for inflation, the Federal Aviation Administration issued a final rule that adjusts the fines—“civil penalties” in FAA lingo—that the agency may impose for violations of its regulations and statutes. The agency has to do this because several laws require inflation adjustments to ensure that the threatened fines of regulatory agencies continue to have a deterrent effect.   The laws include the Federal Civil Penalties Inflation Adjustment Act of 1990, the Debt Collection Improvement Act of 1996, and, most recently, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The 2015 Act amended the formula for and frequency of agency inflation adjustments, requiring an initial “catch-up” adjustment, followed by annual adjustments of civil penalty amounts using a statutorily mandated formula. The FAA implemented the initial adjustment in July 2016. This new rule provides the first of the annual adjustments. The FAA notes that the new law:

provides a formula for annual inflationary adjustments that increase civil penalty maximums and minimums by a cost-of- living adjustment (COLA). Under the FCPIAA, as amended by the 2015 Act, the COLA for each civil penalty is the percent change between the U.S. Department of Labor’s Consumer Price Index for all-urban consumers (CPI–U) for the month of October of the calendar year preceding the adjustment and the CPI–U for the month of October of the previous calendar year. Any resulting increase must be rounded to the nearest $1.

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To derive the 2017 adjustment, the FAA must multiply the maximum or minimum penalty amount by the percent change between the October 2016 CPI–U and the October 2015 CPI– U. In this case, October 2016 CPI–U (241.729)/October 2015 CPI–U (237.838) = Multiplier (1.01636).5 Accordingly, the agency multiplied the civil penalty maximums and minimums provided in current 14 CFR 13.301 and 406.9 by 1.01636 to derive the updated maximums and minimums provided in this final rule.

Relying on an interpretation of the 2015 law from the Office of Management and Budget, the FAA did not issue a notice of proposed rulemaking for public comment. This final rule changes the minimum and maximum penalties effective April 10, 2017, the day the rule was published in the Federal Register.

The FAA’s space transportation regulations do not contain minimum or maximum penalties like the FAA’s aviation regulations do. Instead, the commercial space regulation, 14 C.F.R. § 406.9, implements the single penalty listed in 51 U.S.C. ch. 509 (aka the Commercial Space Launch Act). When Congress initially granted the FAA the authority to impose civil penalties, it capped the amount at $100,000.00 per violation per day. 51 U.S.C. § 50917. The United States Code still says that. With the passage of its various inflation adjustment laws, Congress mandated a global search and replace on civil penalties, including those imposed for violations of space regulations. Thus, the FAA’s own new requirement now says:

14 C.F.R. § 406.9 Civil Penalties.

(a) Civil penalty liability. Under 51 U.S.C. 50917(c), a person found by the FAA to have violated a requirement of the Act, a regulation issued under the Act, or any term or condition of a license or permit issued or transferred under the Act, is liable to the United States for a civil penalty of not more than $229,562 for each violation. A separate violation occurs for each day the violation continues.

The FAA will not necessarily claim a civil penalty as high as that, and, to my knowledge, has yet to do so.  Agencies are allowed discretion in deciding the size of a penalty, and will typically attempt to impose smaller fines for first-time violations.

 

 

 

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Are There Two Regimes for Commercial Space Transportation?

I received a question in response to Monday’s post that raised foundational issues: why are there are two regimes to address commercial space transportation? The writer referred to the United States Code and the Code of Federal Regulations. Not everyone who reads this blog is a lawyer, and middle school civics doesn’t really cover the administrative state, so this post will go over fundamentals. The quick answer is that there are not two regimes. The regulatory regime is a subset of the legislative regime. The regulatory regime carries out Congress’s legislative directions.

The mechanics of it all

We all learned in school that there are three branches of government. Congress, which is the legislative branch, writes the laws. The executive branch, headed by the President and consisting of all the agencies, carries out the laws. And the judiciary tells the first two if they got anything wrong when someone complains. Things are, of course, more complicated than that. Continue reading

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