"Sorry! What the Regulation Really Means Is.": Administrative Agencies' Ability to Alter an Existing Regulatory Landscape through Reinterpretation of Rules

By Nichols, Jason | Texas Law Review, March 2002 | Go to article overview

"Sorry! What the Regulation Really Means Is.": Administrative Agencies' Ability to Alter an Existing Regulatory Landscape through Reinterpretation of Rules


Nichols, Jason, Texas Law Review


Few legal terms of art are as well utilized in politics, criminal justice, and civil jurisprudence as "rule of law." At its most elemental, the term acknowledges that men are not above the law and consequentially requires the subordination of political acts to norms established by law.1 In the legal realm, the venerable threads of the rule of law are currently under the microscope of the federal courts. Within the Eleventh Circuit, several major Eastern U.S. utilities, led by the Tennessee Valley Authority (TVA), are defending themselves in regulatory-enforcement cases brought by the Environmental Protection Agency (EPA) by charging the EPA with a dereliction of "fair notice" in administrative rulemaking.2

At the root of the EPA enforcement action is a contest between a regulated party's need to have sufficient notice of offensive conduct and an agency's need for administrative flexibility in pursuing its often vague statutory mandates within a complex regulatory regime. At issue is whether the EPA unjustly altered its interpretations of its Clean Air Act (CAA)3 regulations to such an extent that it deprived the regulated utilities of fair notice of the new interpretations-a move that arguably deviated from the IMAGE FORMULA2

rule of law and unjustly held the unknowing utilities open to penalties they could not foresee.4 The EPA's enforcement action, then, puts the conflict between concern for individual rights and modern bureaucratic efficacy in high relief.

This Note offers a solution to the conflict embodied in the EPA enforcement. Part I sketches the factual background of the action against the utilities. Part II explores administrative law's fundamental distinction between adjudication and rulemaking and demonstrates that the EPA action is rulemaking, an arena where retroactive application of law is traditionally discouraged. Part III focuses on the sharp tension in administrative law between administrative efficacy and fairness to regulated parties, as evinced in the debate over "retroactivity jurisprudence." Courts widely condone retroactive application of administrative laws and bestow substantial deference upon agency interpretations. Courts' complicity with agency interpretations contrasts with the common law's fair-notice doctrine and its hostility for enforcement of laws devoid of reasonable notice. Part IV digests the growing body of case law from the United States Courts of Appeals that allows fair notice to act as a shield against regulatory rules and interpretations where agencies substantially alter a rule's meaning. Part V discusses an emerging retroactive rulemaking jurisprudence as seen through the lens of the Administrative Procedure Act (APA)5 and highlights the hostility some United States Courts of Appeals courts have shown toward the retroactive enforcement of regulations. Part VI offers a solution to the dilemma, focusing on a middle ground between retroactivity and fair notice. Under this approach, an agency may alter its interpretations as circumstances require, but should be limited only to prospective enforcement of those interpretations. Once the standard of fair notice has been met, the agency should have wide latitude to pursue objectives within its authority but, where regulated parties have relied upon a prior regime, the agency should be barred from exacting penalties.

Applying fair notice within the context of reliance interests encourages rulemaking under the strictures of the APA-congressional requirements that provide clarity and certainty for regulated parties while also providing the public with an opportunity to assist in molding rules. This method would allow overwhelming interpretive hegemony to agencies most of the time. But if an agency has affirmatively approved of regulated parties' interpretations of vague rules or acquiesced to those interpretations over a long period of time, causing the regulated parties to rely on that interpretation, the agency should not be allowed to substitute a new interpretation without going IMAGE FORMULA5

through formal rulemaking procedures.

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"Sorry! What the Regulation Really Means Is.": Administrative Agencies' Ability to Alter an Existing Regulatory Landscape through Reinterpretation of Rules
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