Cabais v. Egger, s. 81-2258
| Decision Date | 23 September 1982 |
| Docket Number | Nos. 81-2258,s. 81-2258 |
| Citation | 690 F.2d 234 |
| Parties | , Unempl.Ins.Rep. CCH 21,697 Lawrence CABAIS, et al. v. Roscoe EGGER, Commissioner of the Internal Revenue Service, et al. to 81-2260 and 81-2264. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeals from the United States District Court for the District of Columbia (D.C. Civil Action Nos. 80-02470 and 80-02580)
Stanley S. Harris, U. S. Atty., Michael Kimmel and Leonard Schaitman, Attys., Dept. of Justice, Washington, D. C., were on the brief for appellants in Nos. 81-2258, 81-2260 and cross-appellees in Nos. 81-2259 and 82-2264.
Wendy L. Kahn, Washington, D. C., with whom John Fillion, Jordan Rossen, Detroit, Mich., and Jonathan A. Weiss, New York City, were on joint brief for Intern. Union, et al., appellees in Nos. 81-2258 and 81-2260 and cross-appellants in Nos. 81-2259 and 81-2264.
Robert M. Raives, New York City, entered an appearance for Nat. Retired Teachers Ass'n, et al., appellants in No. 81-2259 and cross-appellees in No. 81-2260.
Before ROBINSON, Chief Judge, SWYGERT, * Senior Circuit Judge, and WALD, Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge SWYGERT.
These consolidated appeals involve the pension offset provision of the Federal Unemployment Tax Act ("the Federal Act" or "FUTA"), 26 U.S.C. §§ 3301 et seq. The plaintiffs, Lawrence Cabais, et al., are individuals who allege injury resulting from the pension offset provisions. The plaintiffs, International Union, United Automobile Aerospace and Agricultural Implement Workers of America, UAW, et al., are unions and associations representing in these cases retired persons whose memberships are allegedly injured by the same offset provision. (The plaintiffs will be referred to collectively as "Cabais.")
Some background information is essential to an understanding of the issues presented in these appeals. Unemployment insurance in this nation is a joint federal-state responsibility. Under the Federal Act, employers must pay federal unemployment taxes on wages paid while each state provides unemployment compensation to claimants in accordance with state law. If the laws of a state comply with minimum federal standards established under the Federal Act, employers in that state are allowed a ninety percent credit against FUTA tax liability. In addition, the states themselves receive federal grants to cover the necessary costs of administering the state program if the In 1976, Congress enacted section 3304(a)(15) of the Federal Unemployment Tax Act to require that all states offset work-related pension income from unemployment benefits after September 30, 1979. The effective date of this section was delayed by amendment until April 1, 1980. It appeared that section 3304(a)(15) might be repealed or further amended prior to its April 1, 1980 effective date but, in fact, no amendment was passed until September 26, 1980.
program meets the requirements of section 303 of the Social Security Act, 42 U.S.C. § 503(a), as well as the standards under the Federal Act. Each year the Secretary of Labor examines the laws of each state and certifies those states which comply with the minimum federal standards. 1 The Department of Labor informs state agencies of the minimum federal requirements they must meet to remain certified primarily by issuing Unemployment Insurance Program Letters. In determining whether a state's unemployment compensation system is in compliance with federal standards, the Secretary of Labor relies on the positions he has taken in the letters. A state which is not in compliance can be decertified but the Secretary must provide the state with a hearing
In March 1980 the Department of Labor issued Unemployment Insurance Program Letter 24-80. The subject matter of the letter was the 1976 amendments to the Federal Act and the letter reminded states of the April 1, 1980 effective date. On April 16, 1980 the Secretary of Labor wrote to the governors of several states and informed the governors that their respective states had not passed legislation which conformed with the 1976 amendments and "recommended" that the states pass such legislation retroactive to April 1, 1980. In October 1980 Unemployment Insurance Program Letter 7-81 was issued. The subject matter of this letter was the September 1980 amendments to the pension offset provisions of the Federal Act.
The plaintiffs challenged the reductions called for by section 3304(a)(15) on three alternative grounds:
(1) the amendments to the Federal Act violated the United States Constitution;
(2) the position of the Department of Labor as set out in the letters was inconsistent with the statute; and
(3) the letters 24-80 and 7-81, and the letter of April 16, 1980 were procedurally invalid under the Administrative Procedure Act ("APA"), 5 U.S.C. § 553, and the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552.
The district court rejected plaintiffs' constitutional claim on the merits, dismissed the statutory claim, and ruled that the letters and the letter of April 16, 1980 were substantive rules subject to the notice and comment provisions of the APA and the publication provisions of FOIA.
The defendants in this case, Roscoe Egger, the Commissioner of Internal Revenue, and Raymond Donovan, the Secretary of Labor (referred to collectively as "Secretary"), appeal from the judgment of the district court on two grounds:
(1) the rules contained in the letters and the April 16, 1980 letter are interpretative rules and are not subject to the requirements of the APA or FOIA; and
(2) the states are indispensable parties under Rule 19 of the Federal Rules of Civil Procedure and should have been joined as parties.
On cross-appeal the plaintiffs raise the issues of statutory interpretation dismissed by the district court. As cross-appellees, the Secretary asserts that the issues of statutory construction are not ripe for review.
We conclude that, with one exception, the action undertaken by the Department of Labor in the letters and the April 16, 1980 letter constitutes interpretative rules exempt from APA procedures. Further, we do not reach the issues of statutory interpretation because they are not ripe for review.
Before beginning our analysis of whether the rules involved in this appeal are interpretative or substantive, there is a need to clarify the applicable law. The district court concluded that the letters and the April 16, 1980 letter are subject to the notice and comment provisions of the APA solely because they have a "substantial impact" on recipients of unemployment insurance. (Memorandum Opinion, Aug. 27, 1981 at p. 9.) This court erred in using the substantial impact test. At one time, the test was used to determine the applicability of APA procedures by asking essentially whether the agency action had an impact on the rights and interests of private parties. See, e.g., Lewis-Mota v. Secretary of Labor, 469 F.2d 478 (2d Cir. 1972); Texaco, Inc. v. FPC, 412 F.2d 740 (3d Cir. 1969); National Motor Freight Traffic Ass'n v. United States, 268 F.Supp. 90 (D.D.C.1967) (three-judge court), aff'd per curiam, 393 U.S. 18, 89 S.Ct. 49, 21 L.Ed.2d 19 (1968). Since Vermont Yankee Nuclear Power Corp. v. National Resources Defense Council, Inc., 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460, it is clear that a court cannot engraft additional procedures on agency action beyond those contemplated by the APA (or another specific Act). 2 Simply because agency action has substantial impact does not mean it is subject to notice and comment if it is otherwise expressly exempt under the APA. 3 In other words, as an independent basis for determining the applicability of APA procedures, the substantial impact test has no validity. Nonetheless, there is no "reason to doubt the continued vitality of the substantial impact test as ... one of several criteria for evaluating claims of exemption from (the APA)." Batterton v. Marshall, 648 F.2d 694, 709 n.83 (D.C.Cir.1980).
There are four basic exemptions to the notice and comment requirements of the APA:
(1) interpretative rules;
(2) general statements of policy;
(3) rules of agency organization, procedures or practice; and
(4) the "good cause" exception.
5 U.S.C. § 553(b)(3)(A) & (B). Although the substantial impact test may be useful in determining whether agency action is a general statement of policy (see, e.g., Pickus v. Board of Parole, 507 F.2d 1107, 1112 (D.C.Cir.1974)), or whether agency action is exempt for good cause, this circuit has declined to use the test for distinguishing between substantive and interpretative rules. 4 In British Caledonian Airways, Ltd. v. CAB, 584 F.2d 982 (D.C.Cir.1978), this court stated that "(m)erely because a rule has a wide ranging effect does not mean that it is 'legislative' rather than interpretative." 5 Interpretative and substantive rules may both vitally affect private interests, 6 thus, the substantial impact test has Generally speaking, it seems to be established that "regulations," "substantive rules" or "legislative rules" are those which create law, usually implementary to an existing law; whereas interpretative rules are statements as to what the administrative officer thinks the statute or regulation means.
no utility in distinguishing between the two. The proper test for resolving the substantive-interpretative dichotomy is found in Gibson Wine Co. v. Snyder, 194 F.2d 329, 331 (D.C.Cir.1952):
Using this test, 7 it is our conclusion that the rules enunciated in the letters and the letter of April 16, 1980 are, with one exception, interpretative rules exempt from the rulemaking procedures of the APA. 8
Unemployment Insurance Program Letter 7-81 (and Change I)
All but one of the directives are interpretative rules. For the most part, the letter simply construes the language and intent of 26 U.S.C. § 3304(a)(15) and "remi...
To continue reading
Request your trial
-
Perdue v. Crocker National Bank
...that regulation as legislative in character, but that such impact is a proper factor for judicial consideration. (See Cabais v. Egger (D.C.Cir.1982) 690 F.2d 234, 237.)There is one exception to the foregoing principles: if the agency labels the regulation as legislative and promulgates it i......
-
Duggan v. Bowen, Civ. A. No. 87-0383.
...means .." (emphasis added). See also American Hospital Association v. Bowen, 834 F.2d 1037, 1045 (D.C.Cir.1987); Cabais v. Egger, 690 F.2d 234, 238 (D.C.Cir.1982); Batterton v. Marshall, 648 F.2d 694, 704-5 (D.C.Cir. Fiscal intermediaries are bound by defendants' policy — if home health car......
-
International Union, UAW v. Donovan, Civ. A. No. 81-1954.
...the imposition of the Lopez rule or the initiation of decertification proceedings, if DOL executed its threats. See Cabais v. Egger, 690 F.2d 234, 240 (D.C.Cir.1983). But the Handbook Policy has had a sufficiently direct negative impact on many plaintiffs to warrant judicial review at this ......
-
Wilson v. Sullivan
...a court to conclude that a rule is interpretive: Where the agency reminds parties of an existing duty, id. at 1046 (citing Cabais v. Egger, 690 F.2d 234 (D.C.Cir.1982)); where the agency clarifies the meaning of a particular term in a statute or regulation, id. (citing American Postal Worke......
-
DUE DEFERENCE: KISOR, STINSON, AND THE UNITED STATES SENTENCING COMMISSION.
...[a statute], not simply to construe it'" or if it "effect[s] a change in existing law or policy." (first citing Cabais v. Egger, 690 F.2d 234, 238 (D.C. Cir. 1982); then citing Citizens to Save Spencer Cnty. v. EPA, 600 F.2d 844, 876 n.153 (D.C. Cir. 1979); then quoting Chamber of Com. of t......