# Petition for Writ of Certiorari — Department of Transportation v. Air Transport Ass'n of America > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0988%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1991 - **Citation:** 498 U.S. 1023 ## Text UNITED STATES DEPARTMENT OF TRANSPORTATION, ET AL., PETITIONERS v. . AIR TRANSPORT ASSOCIATION OF AMERICA, ET AL. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT JOHN G. ROBERTS, JR. Acting Soliciter General STUART M: GERSON Assistant Attorney General STEPHEN L. NIGHTINGALE Assistant to the Solicitor General ANTHONY J. STEINMEYER JOHN F. DALY . Attorneys Department of Justice PHILLIP D. BRADY Washington, D.C. 20530 General Counsel (202) 514-2217 PAUL M. GEIER Assistant General Counsel foi Litigation Department of Transportation Washington, D.C. 20590 GREGORY S. WALDEN Chief Counsel pee Federal Aviation Administration Sete Washington, D.C. ee a © BEST AVAILABLE COPY — * 4 ee “> ~ iy I.% ‘. g od > - a Crp cI >» 4 e Ps ~ be » Se An Me wl roe es . os & , “5 BABE ERE HPT: QUESTION PRESENTED Whether regulations setting forth procedures for Fed- eral Aviation Administration civil penalty proceedings were “rules of agency organization, procedure, or prac- tice’ exempt from the notice-and-comment requirement of the Administrative Procedure Act. (I) II PARTIES TO THE PROCEEDING The petitioners, respondents below, are the United States Department of Transportation; Samuel Skinner, Secretary of Transportation; the Federal Aviation Ad- ministration; and James B. Busey, Administrator of the FAA. The respondents are Air Transport Association of America, the petitioner below, and National Air Carrier Association, Inc., American Trans-_Air, Inc., Southern Air Transport, Inc., World Airways, Ine, Air Line Pilots Association, Aircraft Owners and Pilots Associa- tion, America West Airlines, Inc., Albert O. McCauley, Duncan Black Parker, and Herbert G. Vance, petition- ers-intervenors below. TABLE OF CONTENTS Page IIT sacs ninesnnsinidshslivinnnionashpcinsegneheannicenedumanabsne 1 i can ceheenhsh beeeebebahinehansacueneneene 1 Statutory provisions involved ......................-....-..:ss:-ss+0-+0+- 2 npn bnsebnadinnenaneannesaneconnenne 2 Reasons for granting the petition ..................-.....-.......-.---+- 8 NE 26 otek besoin bnaeiielpsectcantenenacnabedenaece la is Ss cdc h een cthncanenaanntabennacinnsnateuunecauminetes 32a ceed itis alsa anginneninnanlinenbnansicanennsabeeasnsatoensonises 33a i scan inneegnatmninninenseceionenateys 35a ar cas scan ttnesieuatnptetinnngnnpcenesnanennsny 92a TABLE OF AUTHORITIES Cases: : Akron, Canton & Youngstown R.R. v. United States, 370 F. Supp. 1231 (D. Md. 1974) ........... 17 Alcaraz v. Block, 746 F.2d 593 (9th Cir. 1984) .... 17 American Hosp. Ass’n V. Bowen, 834 F.2d 1037 indies cceiniianadinnniionsveneananinnan 10, 19 American Transfer & Storage Co. v. ICC, 719 F.2d cen sialihinllibansiesnicncmenmee 18 American Trucking Ass’n y. United States, 688 F.2d 1837 (11th Cir. 1982), rev’d, 467 U.S. 354 SE ET SE rr eee 18 Associated Diy Goods Corp. v. EEOC, 543 F. Supp. 950 (E.D. Va. 1982), nev'd, 720 F.2d 804 ER Pe 19, 20 Batterton v. Francis, 482 U.S. 416 (1977) ............. 13 Batterton v. Marshall, 648 F.2d 694 (D.C. Cir. a lh is caneemnancncmunsbniaanennndacence 18-19 British Caledonian Airways, Ltd. v. CAB, 584 TE | Ca 19 Brown Express, Inc. v. United States, 607 F.2d I a ciinsenininncncnnnensimenssonsainee 18 Broyles, In re, FAA Order No. 90-23 (Sept. 14, iE RR EE ee 22 IV Cases—Continued : Page Buckeye Cablevision, Inc. v. United States, 438 ee ee Cee Ge SED attire. 20 Cabais v. Egger, 690 F.2d 234 (D.C. Cir. 1982)... 10,18 Carroll, In re, FAA Order No. 90-21 (Aug. 16, RRO Es ie ee CRN Me PEN Ee Rr a ve 22 Chrysler Corp. Vv. Brown, 441 U.S. 281 (1979)... 9,12 Colautti v. Franklin, 489 U.S. 379 (1979) ............ 12 Continental Airlines, Inc., In re, FAA Order No. ee Fie itcitciacteiniicininhiecinniccenectn eines 22 Degenhardt, In re, FAA Order No. 90-20 (Aug. RRR ARES ere eet eater oR aAe eN 22 Energy Reserves Group, Inc. v. DOE, 589 F.2d 1082 (Temp. Emer. Ct. App. 1978) ................... 17 Friedrich v. Secretary of HHS, 894 F.2d 829 (6th REGRESS Set ere ee goths a 17 Jean V. Nelson, 711 F.2d 1455 (11th Cir. 1983), modified, 727 F.2d 957 (11th Cir. 1984), aff’d, Gar ee ee a a 18 Lamoille Valley R.R. v. ICC, 711 F.2d 295 (D.C. 5g eRe RN oa ae obec ee. Weare Ab) OL OO ci 20 Levesque V. Block, 723 F.2d 175 (1st Cir. 1983) -... 17 Lewis-Mota v. Secretary of Labor, 469 F.2d 478 I SU sileicahnca iccihclieienintica tsk Undeienecalp aliases 17 National Motor Freight Traffic Ass’n v. United States, 268 F. Supp. 90 (D.D.C. 1967), aff’d, Re ee See eee 4,10 Neighborhood TV Co. v. FCC, 742 F.2d 629 (D.C. A SURELIRBV Caco ks one eS NY OSE 20 Ohio Dep’t of Human Servs. v. United States Dep’t of HHS, 862 F.2d 1228 (6th Cir. 1988) __.. 17 Pennsylvania v. United States, 361 F. Supp. 208 (M.D. Pa.), aff’d, 414 U.S. 1017 (1978) -............ 17 Pharmaceutical Mfrs. Ass’n Vv. Finch, 307 F. I Fe EU SUNG OD cicneciebcksecccancesicesieeininceeeics 17 Philadelphia Citizens in Action Vv. Schweiker, 669 fp bk Rg BRS eR rOr EN 25 Pickus v. United States Bd. of Parole, 507 F.2d ba Ta EE Re eee ae ae 17 Rivera Vv. Becerra, 714 F.2d 887 (9th Cir. 1983), cert. denied, 465 U.S. 1099 (1984) .......... 17 Southern California Edison Co. v. FERC, 770 F.2d RU Ce I I ite entasrciietnnecestieicsitataninrancinniinn 15, 16 Vv Cases—Continued: Page USAir, Inc., In re, FAA Order No. 90-22 (Aug. | TRS as Rae ae asker, Se kee ee aN 22 United States Dep’t of Labor v. Kast Metals Corp., 744 F.2d 1145 (Sth Cir. 1984) 200. 18 Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 485 U.S. 519 II es icpatheighcchaciethcthaceiictdta iad lial 18, 15, 17, 20 Constitution, statutes and regulation: U.S. Const. Amend. V (Due Process Clause) .......... 5 Act of July 4, 1966, Pub. L. No. 89-487, §1, 80 a a 13 Act of June 5, 1967, Pub. L. No. 90-23, §1, 81 ee PARR 20 Vole UOT fey Nc bee 12-13 Act of Dec. 15, 1989, Pub. L. No. 101-236, § 1, 103 RRR I cS Ua eA eo 3 Act of May 4, 1990, Pub. L. No. 101-281, § 1(a), EEE ERIN wa ae Mite oar eR GTC Re Neots DN a 3 Act of Aug. 15, 1990, Pub. L. No. 101-870, 104 EGR NGT OR Scene ek ieee ee as ee I 8, 96a Administrative Procedure Act, ch. 324, §3, 60 EI SEES rane a en Tee De mn TEE See 12, 14 Administrative Procedure Act: 8 Ee a ee eS = 12 FEES noe 2, 13, 14, 92a i cca aie 12, 13 EE COCO ST 12 3) SE EERE eanapeaeee 2,9, 10, 11, 18, 15, 16, 92a 3 |), SS eee Siicueuie 11 ik eG FRc: 2,11, 12, 14 SUB eee ce (A)-(B) .............................<.... 4 Or i iccctansintestintciesicenimanioteneaniin 4 ic I ia cisennnncseiereneenscnscnnconasinss 9 bio 5 STS area 24 Airport and Airway Safety and Capacity Expan- sion Act of 1987, § 204(g), 49 U.S.C. App. 1475 ‘i “S & + R=SvRaSe renee reeee 2-3, 94a 49 U.S.C. App. 1475 (d) (1) (Supp. V 1987) .... 3 49 U.S.C. App. 1475 (d) (4) (Supp. V 1987)... 3 49 U.S.C. App. 1874(d) (2) (Supp. V 1987) -............ 15 49 U.S.C. App. 1471(a) (1) (Supp. V 1987) -............ 15 VI Miscellaneous: Page 133 Cong. Rec. $15,294 (daily ed. Oct. 28, 1987).... 2 K. Davis, Administrative Law of the Eighties RR AE OOD AEE fe ee a ea ea 17 1 K. Davis, Administrative Law Treatise (2d ed. ES UE EST Orn yaa Se NSE Ae ee TOR 19 2 K. Davis, Administrative Law Treatise (2d ed. 1979) ...... SS EE ee ae ae a 17 Be Ey A COT csc ccnceccccscecececcccscccccceccceceee 25 53 Fed. Reg. 34,646 (1988) 20... cece cececeeeeceeeeeee 8 55 Fed. Reg. (1990) : A tats adi chbnd chastbaniabeaansatbliniaeebacsi 7 EE eee oe 7 I ial calinieebebins 7 By ee II Oy, ROD ini cecncencccnccccccssececcccessesces 7,21 pp. 27,549-27,550 (July 3, 1990) ...00000.. ee. 22 Bs Ee CP iy BOD avacnccciscccncceccnccsnsccecsccccccess 21 SP I I UD kins ncn cdcccccececsnnccacaccosees 22 pp. 27,584-27,585 (July 3, 1990) 0.0. 21 S. Doc. No. 248, 79th Cong., 2d Sess. (1946)... 9 Note, The Substantial Impact Test: Victim of the Fallout from Vermont Yankee?, 53 Geo. Wash. a es Se ci ERE ince A 17 United States Dep’t of Justice, Attorney General’s Manual on the Administrative Procedure Act Re RE OTe LW RL EOL CN 18 Iu the Supreme Court of the United States OCTOBER TERM, 1990 No. UNITED STATES DEPARTMENT OF TRANSPORTATION, ET AL., PETITIONERS Vv. AIR TRANSPORT ASSOCIATION OF AMERICA, ET AL. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS - FOR THE DISTRICT OF COLUMBIA CIRCUIT The Acting Solicitor General, on behalf of the United States Department of Transportation; Samuel Skinner, Seeretary of Transportation; the Federal Aviation Ad- ministration; and James B. Busey, Administrator of the FAA, petitions for a writ of certiorari to revie’ the judgment of the United States Court of Appeals for the District of Columbia Circuit in this case. OPINIONS BELOW The opinion of the court of appeals (App., infra, la- 3la) is reported at 900 F.2d 369. JURISDICTION The judgment of the court of appeals was entered on April 13, 1990. A petition for rehearing was denied on June 18, 1990. App., infra, 32a. On September 7, 1990, the Chief Justice extended the time for filing a peti- tion for a writ of certiorari to and including October 5, (1) 2 1990. This Court has jurisdiction under 28 U.S.C. 1254(1). STATUTORY PROVISIONS INVOLVED Sections 551(4) and 553 of Title 5 of the United States Code and Section 204(g) of the Airport and Air- way Safety and Capacity Expansion Act of 1987, 49 U.S.C. App. 1475 (Supp. V 1987), are set out in an appendix (App., infra, 92a-96a). STATEMENT In this case, a divided panel of the court of appeals struck down regulations establishing procedures for civil penalty proceedings conducted by the Federal Aviation Administration. The majority held that the regulations were invalid because the FAA failed to comply with the notice-and-comment requirement of the Administrative Procedure Act. In so doing, the majority rejected the government’s contention that the challenged rules fell within the exception to that requirement for “rules of agency organization, procedure, or practice” (5 U.S.C. 553(b)(A)). By a 5-5 vote, the court of appeals de- clined to rehear that question in bane. 1. Until 1987, the FAA had only limited authority to adjudicate claims for civil penalties based upon viola- tions of the Federal Aviation Act and associated regula- tions. With the exception of certain cases involving the transportation of hazardous materials, the agency was required to refer violations subject to civil penalties to the Department of Justice, which would then determine whether to pursue enforcement proceedings in federal district court. In 1987, recognizing that competing demands on the U.S. Attorneys’ offices had led to sporadic enforcement, Congress provided the FAA with additional authority to assess civil penalties.’ Section 204(g) of the Airport 1See 1383 Cong. Rec. $15,294 (daily ed. Oct. 28, 1987) (remarks of Sen. Wilson). 3 and Airway Safety and Capacity Expansion Act of 1987, 49 U.S.C. App. 1475 (Supp. V 1987), empowered the FAA to conduct a “demonstration program” in which the agency could assess civil penalties in amounts up to $50,000.00. As originally enacted, the program was to re- main in effect for two years, through December 30, 1989. 49 U.S.C. App. 1475(d) (4). The FAA’s authority to assess civil penalties has since been extended on several occasions, most recently through August 1, 1992.* The statute provides that a penalty is to be assessed “only after notice and an opportunity for a hearing on the record in accordance with [5 U.S.C. 554].” 49 U.S.C. App. 1475(d) (1). On September 7, 1988, in or- der to prescribe procedures through which its new en- forcement authority could be exercised, the FAA promul- gated its “Rules of Practice for FAA Civil Penalty Ac- tions.” 53 Fed. Reg. 34,646 (1988) [hereinafter Rules of Practice]. The Rules of Practice set out a compre- hensive set of procedures for civil penalty proceedings— covering such matters as pleadings, representation of parties, scheduling, discovery, motions, hearings, and ad- ministrative appeals. App., infra, 38a-9la. The FAA made the rules effective immediately upon their publica- tion in the Federal Register. App., infra, 35a; see id. at 37a. 2. The Air Transport Association of America (ATA), a trade association consisting of American air carriers, petitioned the United States Court of Appeals for the District of Columbia Circuit for review of the Rules of 2 Unless otherwise indicated, all citations to 49 U.S.C. App. are tc Supplement V to the 1982 edition of the United States Code. 3 See Act of Dec. 15, 1989, Pub. L. No. 101-236, § 1, 103 Stat. 2060 (four-month extension) ; Act of May 4, 1990, Pub. L. No. 101- 281, §1(a), 104 Stat. 164 (additional three-month extension); Act of Aug. 15, 1990, Pub. L. No. 101-370, 104 Stat. 451 (extension through August 1, 1992). * The Rules of Practice, together with excerpts from the explana- tory statement accompanying them, are set forth in an appendix. App., infra, 35a-91a. 4 Practice, and other parties intervened to challenge the rules. See p. ii, supra. The ATA and the intervenors argued, inter alia, that the Rules of Practice were in- valid because the FAA had promulgated them without complying with the notice-and-comment requirement of the APA, 5 U.S.C. 553(b)-(c). The government re- sponded that the Rules of Practice were exempt from the notice-and-comment requirement, because they were “rules of agency organization, procedure, or practice” and because the agency had properly found, in view of the time constraints placed by Congress on the civil penalty program, that good cause existed for dispensing with notice and comment. See 5 U.S.C. 553(b) (A)-(B) ; App., infra, 35a-37a. A divided court of appeals held that neither exception to the notice-and-comment require- ment was applicable. a. The majority (Edwards and Mikva, JJ.) ruled that the exemption for “rules of agency organization, proce- dure, or practice” does “not apply to agency action that ‘substantially alter[s] the rights or interests of regu- lated’ parties.” App., infra, 2a. The Rules of Practice failed that test, the majority held, “because they sub- stantially affect civil penalty defendants’ ‘right to avail [themselves] of an administrative adjudication.’” Ibid. (quoting National Motor Freight Traffic Ass’n v. United States, 268 *. Supp. 90, 96 (D.D.C. 1967) (three-judge court), aff’d mem., 393 U.S. 18 (1968)). See App., in- fra, 11a, 13a, 14a, 15a, 18a-19a. The majority dismissed as “unpersuasive” the gov- ernment’s contention that the Rules of Practice were rules of agency “procedure” or “practice” because they established procedures for civil penalty proceedings and had no effect on substantive obligations imposed on the aviation community. App., infra, 1la-12a; see id. at 18a. “Rather than focus on whether a particular rule is ‘pro- cedural’ or ‘substantive,’” the majority declared, the circuit’s prior decisions mandated a “functional analy- sis.” Id. at 12a. Under this analysis, “[w]here nomin- aa 5 ally ‘procedural’ rules ‘encode[] a substantive value judgment’ or ‘substantially alter the rights or interests of regulated’ parties,” the exemption for rules of agency procedure is unavailable (id. at 13a); that exception is a “mere ‘housekeeping’ measure” reserved for rules or- ganizing an agency’s “internal operations” (id. at 17a; see id, at 12a, 18a). An agency can be allowed “to forgo notice and comment,” the majority said, “only when the subject matter or the circumstances of the rulemaking divest the public of any legitimate stake in influencing the outcome.” Jd. at 1la; see id. at 15a-16a, 24a. Applying this “functional analysis,” the majority found that the Rules of Practice “substantially affect a civil penalty defendant’s right to an administrative ad- judication” under the Due Process Clause and the APA. App., infra, 13a. Whether or not the Rules of Practice violate any such right, the majority explained, the rules embodied “discretionary—indeed, in many cases, highly contentious—choices concerning what process civil pen- alty defendants are due,” and those choices “ ‘encode[d] a substantive value judgment’ * * * on the appropriate balance between a defendant’s right to adjudicatory pro- cedures and the agency’s interest in efficient prosecu- tion.” Id. at 18a & n.8. Thus, the majority declared, “'t]he FAA was no less obliged to engage in notice and comment before taking action affecting these adjudica- tory rights than it would have been had it taken action affecting aviators’ ‘substantive’ obligations under the Federal Aviation Act.” Id. at 13a. In fashioning a remedy, the majority acknowledged that not all of the Rules of Practice “touch on civil pen- alty defendants’ rights to adjudication,” but it neverthe- less refused to limit its decision to rules having such an effect. App., infra, 16a n.12. “At a minimum,” the court said, “the FAA was obliged to engage in notice and com- ment before promulgating the Rules implementing the APA’s procedures for formal adjudication, see 5 U.S.C. §§ 554, 556-557.” Ibid. The decision prohibited the FAA 6 from initiating any new penalty proceedings—or going forward in pending cases—under the Rules of Practice. Id. at 23a. Acknowledging the disruption that would ac- company wholesale dismissals of civil penalty proceed- ings, however, the majority permitted the agency to hold pending cases in abeyance until it had promulgated new rules in accordance with the court’s decision. /bid. But the majority noted that a defendant would “be free to raise the defense that the FAA could not have success- fully prosecuted him but for the agency’s reliance” on any aspect of the rules that might be abandoned in a subsequent rulemaking. Ibid. The majority also took “no position on whether parties whose cases have reached a final determination under the [Rules of Practice] may now raise the procedural invalidity of the Rules as a ground for seeking review.” Id. at 23a-24a.° b. Judge Silberman dissented. While observing that “{ljines between substance and procedure in various areas of the law are difficult to draw,” he concluded that Congress ‘“‘made that difference critical” in the APA and thus obligated courts “to implement a viable distinction between ‘procedural’ rules and those that are substan- tive.” App., infra, 25a. In “a spectrum of rules running from the most substantive to the most procedural,” he continued, the-former would be “those that regulate ‘pri- mary conduct’” and the latter would be rules, such as those at issue here, “which deal with enforcement or ad- judication of claims of violations of the substantive norm.” Id. at 26a. He suggested that the majority’s 5 The majority also held that the notice-and-comment issue was ripe for review (a conclusion with which the dissent agreed), App., infra, Ta-9a; id. at 25a (Silberman, J., dissenting) ; that there was no “good cause,” as that APA term had been interpreted by the courts, justifying the FAA’s decision not to engage in notice- and-comment rulemaking, id. at 19a-20a; and that the agency’s failure to follow that course was not cured by its willingness to receive and respond to comments submitted after the Rules of Practice became effective, id. at 20a-22a. We do not seek further review of these determinations. cea 7 analysis—which found the Rules of Practice not to be “rules of agency * * * procedure” because they affected a right to an adjudication—was “circular reasoning” (id. at 26a-27a) and would “result[] in the obliteration of the distinction that Congress demanded” (id. at 29a). Judge Silberman also noted that the majority’s reasoning would make it “impossible for any agency general coun- sel, in the future, safely to advise agency heads that a given set of proposed rules are procedural and do not have to be published for comment” (id. at 26a). 3. The government filed a petition for rehearing with a suggestion of rehearing in banc. By a 5-5 vote, the court of appeals denied rehearing in banc. App., infra, 33a-34a. 4. After the case had been argued, but before the panel issued its decision, the FAA published a Federal Register notice proposing modifications of its rules to meet some of the specific objections advanced by the ATA and the intervenors. 55 Fed. Reg. 7980 (1990). When the panel issued its decision, the agency was on the verge of promulgating those amendments in final form. In an effort to minimize disruption of its enforce- ment program, the FAA issued the amendments, sus- pended their effective date, and simultaneously published all of the Rules of Practice, as amended, as a proposed rule. 55 Fed. Reg. 15,110, 15,134 (1990). Final, amended rules of practice were issued, after the agency had received comments from the public, on July 3, 1990. 55 Fed. Reg. 27,548 (1990). These rules became effec- tive on August 2, 1990. pape aaa eee ta aaa ae eee ens 8 REASONS FOR GRANTING THE PETITION The majority’s holding—that the FAA’s Rules of Practice did not qualify as “rules of agency organiza- tion, procedure, or practice” because they substantially affected civil penalty defendants’ right to an administra- tive adjudication—represents a serious departure from the basic structure of the APA. The court’s decision also conflicts squarely with a decision from the Ninth Circuit upholding procedural rules issued by FERC. In that case, the Ninth Circuit specifically rejected a contention that the applicability of the exemption depended on the magnitude of a rule’s impact on private parties’ inter- ests. This Court’s review is warranted to resolve both the scope of the exception for rules of agency procedure and the much-debated question of whether rules having a “substantial impact” on private parties are ineligible for the exceptions to the notice-and-comment require- ment. The court of appeals’ decision is important to the FAA and other federal agencies. The decision casts doubt on the substantial number of civil penalty proceedings that were pending at the time of the decision. The majority’s interpretation will certainly encourage challenges to rules of procedure promulgated by other agencies with- out notice and comment. Finally, as the dissent noted, the practical effect of the decision is to make it impossi- ble for agencies to rely in the future on the exemption for “rules of agency organization, procedure, or prac- tice.” With the possible exception of the most mundane housekeeping provisions; any procedural regulation promulgated without notice and comment will be vulner- able to a post hoc determination that it encodes a value judgment, extends beyond an agency’s internal opera- tions, substantially alters the rights or interests of reg- ulated parties, or calls in some measure for public par- ticipation—all grounds relied upon by the majority be- low, but not specified in the statute. 9 1. The APA divides agency rules into several categor- ies and prescribes the procedures required for promulga- tion of each type. As this Court has observed, the “cen- tral distinction” is “between ‘substantive rules’ on the one hand and ‘interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice’ on the other.” Chrysler Corp. v. Brown, 441 U.S. 281, 301 (1979). When issuing “substantive rules,” an agency must employ notice-and-comment rulemaking and, in general, must postpone the effective date of a final rule until 30 days after it has been published in the Federal Register. See 5 U.S.C. 553(b)-(d). The — other categories referred to in Chrysler Corp.—interpre- tative rules, general statements of policy, and rules of agency organization, procedure, and practice—are ex- empt from the notice-and-comment requirement and may be made effective immediately upon publication. 5 U.S.C. 553 (b)-(d). The drafters of the APA—confident that “[t]he mean- ing of the phrase ‘substantive rule’ [was] well defined in court decisions and upon principle” (S. Doc. No. 248, 79th Cong., 2d Sess. 19 (1946) )—chose not to include statutory definitions of the categories of rules referred to in Section 553. Nevertheless, as the dissent noted, a court is obliged to adhere to ..1e basic framework set out in the statute—.e., “to implement a viable distinction between ‘procedural’ rules and those that are substan- tive.” App., infra, 25a. a. In this case, the majority dismissed that “central distinction” (Chrysler Corp. v. Brown, 441 U.S. at 301) altogether. Responding to the dissent’s criticism that its analysis would “result[] in the obliteration of the dis- tinction” between procedure and substance “that Con- gress demanded” (App., infra, 29a), the majority de- clared iconoclasticly that “there is no such ‘distinction’ to obliterate for purposes of section 553(b)(A)” (id. at 17a). Likewise, the majority dismissed the FAA’s con- 10 tention that the Rules of Practice did not affect the sub- stantive obligations of the aviation community as “irreie- vant.” Id. at 18a. Instead of attempting to apply the distinction set forth in the statute, the majority devised a “functional approach” having absolutely no connection to the statu- tory text. Nothing in the statute suggests that the ap- plicability of the notice-and-comment requirement de- pends on the magnitude of its effect on “ ‘the rights or interests of regulated’ parties” (App., infra, 18a).° The 6 The majority relied heavily on National Motor Freight Ass’n Vv. United States, supra, in fashioning its analytical approach. In that case, a three-judge court sustained a challenge to a rule establishing a mechanism through which a shipper and a carrier could voluntarily agree to “reparations”—in effect, refunds of amounts paid by the shipper—subject to a determination by the ICC that the original rate charged was unlawful. The precise basis for the holding was opaque, but the court appears to have relied upon its judgment that the rule was sufficiently significant in its impact to trigger the notice- and-comment requirement. See, e.g., 268 F. Supp. at 95 (informal, voluntary reparations procedure was not “so insignificant in nature and impact as to fall outside the rule-making requirements of Section [553)”) ; 268 F. Supp. at 97 (ICC took a “significant step” that was “within the purview of the Congressional prescription of rule- making requirements contained in Section [553]”). Contrary to the majority’s suggestion in this case, the National Motor Freight court did not hold that any rule affecting a right to an adjudication would trigger Section 553. Indeed, the language invoked by the majority in this case was an excerpt from an observation having no relevance to the issue presented here. Referring to the fact that carriers and shippers who agifeed to reparations would obtain an ICC ruling on the legality of amounts previously paid, the court stated that “[a] right to avail oneself of an administrative adjudi- cation of this kind does not become trivial simply because it is optional.” 268 F. Supp. at 96. Nothing in the opinion remotely suggests that this observation was integra! to the court’s holding. As the dissent noted (App., infra, 30a), this Court’s summary affirmance of National Motor Freight did not constitute approval of the three-judge court’s reasoning. In Cabais v. Egger, 690 F.2d 234, 237 (1982), the D.C. Circuit suggested that National Motor Freight had been undercut by Vermont Yankee. The rule at issue in National Motor Freight—which created a new remedy in the wian—J——h—————— 11 APA does not distinguish between rules that “encode a substantive value judgment” and those that do not, nor does it suggest that courts should inquire whether an agency has made “discretionary” or “contentious” choices bearing on private parties’ rights or interests (id. at 13a). ‘There is nothing presumptively non- procedural about rules “implementing the APA’s proce- dures for formal adjudication” (id. at 16a n.12; see id. at 12a); on the contrary, such rules would seem to be “procedural” almost by definition. Nor does the text of the APA provide any support for the proposition that a rule of agency procedure cannot extend beyond an agency’s “internal operations” (id. at 17a, 18a). b. The various judicial “tests” articulated in the ma- jority’s opinion—in the main, excerpts lifted from vari- ous prior D.C. Circuit opinions—were applied as sub- stitutes for the statutory text. The majority justified this approach with the observation that “[t]he char- 4 acterizations ‘substantive’ and ‘procedural’ * * * do not guide inexorably to the right result, nor do they really advance the inquiry very far.” App., infra, 18a. In so doing, the majority overlooked provisions of the APA that cast considerable light on the distinction between “substantive rules” and “rules of agency organization, procedure, or practice’ in favor of a smorgasbord of extra-statutory standards that have developed a life of their own—independent of the law enacted by Congress. Various provisions of the APA make it clear that the majority’s analysis is untenable. First, Section 553 does not apply at all to “a matter relating to agency management or personnel” (5 U.S.C. 558(a)(2)). Thus, if the additional exception set out in Section 553(b) (A) is limited to “internal operations,” context of a statute in which Congress had assigned specific roles to the courts and the ICC in reparations cases—bears no resem- blance to the rules at issue here. 12 as the majority stated, it is superfluous.’ It is, of course, an “elementary canon of construction that a statute should be interpreted so as not to render one part in- operative.” Colautti v. Franklin, 489 U.S. 379, 392 (1979). Second, the reference in Section 553(b) (A) to “rules of agency organization, procedure, or practice” is a shorthand reference to a category of rules described more fully in the APA’s publication requirement. In enumerating the categories of materials that agencies would be required to publish, the predecessor of Section 552, 60 Stat. 238 (§ 3), distinguished between “substan- tive rules adopted as authorized by law and statements of general policy or interpretations formulated and adopted by the agency for the guidance of the public,” on the one hand, and, on the other (emphasis added) : (1) descriptions of [an agency’s] central and field organization including delegations by the agency of final authority and the established places at which, and methods whereby, the public may secure infor- mation or make submittals or requests; [and] (2) statements of the general course and method by which its functions are channeled and determined, includ- ing the nature and requirements of all formal or in- formal procedures available as well as forms and instructions as to the scope and contents of all papers, reports, or examinations. '*! 7 Contrary to the majority’s suggestion (App., infra, 12a, 17a- 18a), this Court’s decision in Chrysler Corp. v. Brown, 441 U.S. at 309-310, did not determine that the APA exception for “rules of agency organization, procedure, or practice” is limited to “‘house- keeping” matters. When it spoke of a “housekeeping” statute in Chrysler Corp., the Court was referring to 5 U.S.C. 301. See App., infra, 26a-27a n.2 (Silberman, J., dissenting). 8 We have cited to this provision because it was enacted at the same time as the exception for “rules of agency organization, proce- dure, or practice” and is thus the best indicator of the intention of the Congress that enacted that exception. The current version of Section 552(a) reflects amendments enacted in 1967, Act of 13 This provision and Section 553 may properly be read in pari materia.® Thus, it is clear that the “rules of agency * * * procedure” encompassed by Section 553(b) (A) include those establishing “all formal or informal pro- cedures available” (plainly, to the public), not just the internal housekeeping matters encompassed by the ma- jority’s interpretation. Finally, the APA definition of a “rule,” 5 U.S.C. 551(4), contrasts procedural rules with rules that are designed to implement, interpret or prescribe law or policy. According to that definition, a rule is “the whole or a part of an agency statement of general or particu- lar applicability and future effect” June 5, 1967, Pub. L. No. 90-23, § 1, 81 Stat. 54. (These amendments were originally enacted in 1966, see Act of July 4, 1966, Pub. L. No. 89-487, § 1, 80 Stat. 250, but were reenacted to incorporate them in the 1966 recodification of Title 5.) The amendments are not, in our view, material to the issues presented here. ® The “substantive rules adopted as authorized by law and state- ments of general policy or interpretations formulated and adopted by the agency for the guidance of the public” are unmistakable references to the “substantive rules,” “general policy statements,” and “interpretative rules” referred to in Section 553. The other paragraphs thus may be taken as a description of the “rules of agency organization, procedure, or practice” referred to in Section 558. The Attorney General’s Manual on the APA relied heavily on the parallel between the predecessors of Sections 552 and 553 in ex- plaining the intent of those provisions. It stated that “the rules of organization and procedure which an agency must publish pur- suant to section 3(a)(1) and (2) [quoted above in text] are not ordinarily subject to the requirements of section 4(a) and (b) [now 5 U.S.C. 553(b) and (c)].” United States Dep’t of Justice, Attorney General’s Manual on the Administrative Procedure Act 30 & n.8 (1947). This Court has relied upon the Manual’s inter- pretations of the tategories of rules established by the APA, “be- cause of the role played by the Department of Justice in drafting the legislation.” Vermont Yankee Nuclear Power Corp. V¥. Natural Resources Defense Council, Inc., 435 U.S. 519, 546 (1978). See Batterton v. Francis, 432 U.S. 416, 425 n.9 (1977). 14 —‘“designed to implement, interpret, or prescribe law or policy or” —‘describing the organization, procedure, or prac- tice requirements of an agency * * *” The second of these categories is the same as the cate- gory of “rules of agency organization, procedure, or prac- tice’”” exempted by Section 553(b) (A) from notice-and- comment rulemaking. Here again, it is clear that the drafters envisaged a distinction between rules that im- plemented the agency’s substantive mission—those that “implement, interpret, or prescribe law or policy’—and those that set forth the agency’s procedures and practice requirements. In short, the drafters of the APA did not share the majority’s view that there is no intelligible difference between procedure and substance. Nor did they leave courts with nothing to apply but an abstract distinction between procedural and substantive rules. The various provisions of the APA discussed above sketch a common- sense distinction between substantive rules—rules that are designed to implement or prescribe law (see 5 U.S.C. 551(4) )—and procedural rules—rules setting forth “all formal and informal procedures available” (60 Stat. 238), including the agency’s “practice requirements” (5 U.S.C. 551(4) }. There is no need to resort to the various tests applied by the majority in this case, and doing so distorts the pertinent inquiry. Whatever the result of the refined analyses invoked by the majority below, when one looks at the APA and the FAA Rules of Practice it seems plain that the Rules of Practice are rules of agency “procedure” or “practice.” They set forth formal and informal procedures and practice requirements of the FAA for civil penalty proceedings. They do not purport to “implement, interpret, or prescribe law or policy’—— i.e., the standards governing the aviation community or the penalties for violations of those standards.’® Those 10 The majority stated that the Rules of Practice “established a schedule of civil penalties, including fines of up to $10,000 for | 15 standards are prescribed in the Federal Aviation Act or in substantive rules issued after notice and comment. ce. Finally, the APA does not, as the majority sug- gested, empower courts to exercise their judgment as to whether or not “the need for public participation [is] ‘too small to warrant it’” (App., infra, 24a; see id. at 11a, 15a-16a). Congress weighed the benefits of public par- ticipation in rulemaking against the costs and struck the balance by specifying categories of rules which could be promulgated without resort to notice-and-comment rule- making. As this Court observed in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 485 U.S. 519, 523 (1978), the APA “‘set- tled ‘long-continued and hard-fought contentions, and enacts a formula upon which opposing social and polit- ical forces have come to rest.’” “[{G]enerally speaking,” Section 553 of the APA “established the maximum pro- cedural requirements which Congress was willing to have the courts impose on agencies in conducting rulemaking procedures.” 435 U.S. at 524. Just as these principles pro- hibit the imposition of procedural requirements more stringent than those specified by Section 553, they also re- quire that Section 553’s exceptions be evenhandedly con- strued. The decision in this case—which narrows the ex- ception for “rules of agency organization, procedure, or practice” to rules governing an agency’s “internal opera- tions” and makes the availability of the exception de- pendent upon criteria that have no foundation in the statutory text-—represents a serious departure from the basic structure of the APA and thus from the principles set forth in Vermont Yankee. 2. There is a square conflict between the court of ap- peals’ decision in this case and the Ninth Circuit’s deci- sion in Southern California Edison Co. v. FERC, 770 violations of the safety standards of the Federal Aviation Act and related regulations.” App., infra, 5a. The majority was mistaken. The regulations merely reiterate penalties set forth in the statute. Compare App., infra, 4la-438a with 49 U.S.C. App. 1874(d) (2), 1471 (a) (1). a | 16 F.2d 779 (1985). In Southern California Edison, two utilities challenged a rule, promulgated without prior notice and comment, establishing procedures for final ap- proval of rates for power marketed by the Bonneville Power Administration.’ The utilities argued that notice- and-comment rulemaking was required because certain of the rules “would have a substantive effect on parties to BPA final rate approval proceedings.” Jd. at 783. The court rejected that contention, explaining (ibid.) : Section 553(b) (3) (A) of the APA exempts “rules of agency organization, procedure, or practice” from the notice and comment requirement. In light of that express exemption, we have rejected the notion that procedural rules with a substantive impact are sub- ject to the notice and comment requirements. * * * As noted above, the regulations pertain to the pro- cedural aspects of FERC’s approval of BPA rates: intervention, requests for refunds for interim rates and for final confirmation and approval. Accord- ingly, we conclude that the promulgation of 18 C.F.R. $ 300.21 was not subject to the APA’s notice and comment requirement. Under Southern California Edison’s interpretation of the exception for rules of agency procedure, it is irrele- vant whether a rule has a “substantive impact” on private parties. By contrast, in this case, the majority ruled that the exception does not apply to agency action that sub- stantially affects the rights or interests of regulated par- ties. App., infra, 2a. There is a square conflict between these approaches. This conflict did not arise with this ease. There has long been disagreement among the courts of appeals with respect to the question whether a so- called “substantial impact” test has any legitimate role 11—n 1981, the FERC issued an interim rule establishing proce- dures for interim approval of BPA rates. After receiving comments on the interim rule, the FERC issued a final rule that added a new provision establishing procedures for final rate approval. That new provision was made immediately effective. The parties and the court assumed that Section 553 applied separately to the new provi- sion issued without prior notice. 770 F.2d at 781-783. 17 to play in determining the rules to which the notice-and- comment requirement applies. Before Vermont Yankee, courts relied heavily on the “substantial impact” test in applying the exceptions to the notice-and-comment requirement of the APA.” Fol- lowing Vermont Yankee, however, the Ninth Circuit re- jected the substantial impact test altogether, finding it inconsistent with this Court’s admonition that courts were not to “engraft|] their own notions of proper pro- cedures upon agencies entrusted with substantive func- tions by Congress” (435 U.S. at 525). See Rivera v. Becerra, 714 F.2d 887, 889-891 (9th Cir. 1983), cert. denied, 465 U.S. 1099 (1984); Alcaraz v. Block, 746 F.2d 5938, 613 (9th Cir. 1984) ." 12 See, e.g., Pickus v. United States Bd. of Parole, 507 F.2d 1107, 1114 (D.C. Cir. 1974) ; Lewis-Mota v. Secretary of Labor, 469 F.2d 478, 482 (2d Cir. 1972); Akron, Canton & Youngstown R.R. V. United States, 370 F. Supp. 1231, 1236-1240 (D. Md. 1974) (three- judge court) ; Pennsylvania v. United States, 361 F. Supp. 208, 220- 222 (M.D. Pa.) (three-judge court), aff'd mem., 414 U.S. 1017 (1973); Pharmaceutical Mfrs. Ass’n Vv. Finch, 307 F. Supp. 858, 863 (D. Del. 1970). See also 2 K. Davis, Administrative Law Treatise §§ 7:18-7:20 (2d ed. 1979) ; K. Davis, Administrative Law of the Eighties § 7:20 (1989); Note, The Substantial Impact Test: Victim of the Fallout from Vermont Yankee?, 53 Geo. Wash. L. Rev. 118 (1985). 13 At least in cases involving the distinction between interpreta- tive and legislative rules, the Sixth Circuit seems to have rejected the test. Friedrich v. Secretary of HHS, 894 F.2d 829, 836 (1990) (“extent of the impact is not an indicative factor in our search for the proper characterization of” the rule at issue); Ohio Dep’t of Human Servs. Vv. United States Dep’t of HHS, 862 F.2d 1228, 1233- 1234 (1988). Similarly, the First Circuit has restricted the role of the “substantial impact” test in that context. Levesque v. Block, 723 F.2d 175, 182 (1983) (in distinguishing between interpretative and legislative rules, “whether a rule has a substantial impact may be relevant in construing the intent of the agency in issuing the rule”). See also Energy Reserves Group, Inc. v. DOE, 589 F.2d 1082, 1093-1098 (Temp. Emer. Ct. App. 1978) (opinion of Becker, J.) (criticizing the substantial impact test). 18 Other circuits have continued to employ the substan- tial impact test in applying express exceptions to the notice-and-comment requirement. For instance, the Fifth Circuit has described the substantial impact test as “the primary means by which courts look beyond the label ‘procedural’ to determine whether a rule is of the type Congress thought appropriate for public participation.” United States Dep’t of Labor v. Kast Metals Corp., 744 F.2d 1145, 1153 (1984); accord Brown Express, Inc. Vv. United States, 607 F.2d 695, 701-702 (5th Cir. 1979) (substantial impact test is “proper test * * * in consid- ering a rule that may arguably fall under the exemp- tions for ‘procedural rules’”). In Kast Metals, the Fifth Cireuit specifically declined to follow the Ninth Circuit in rejecting the substantial impact test. 744 F.2d at 1154 n.19." Before this case, the D.C. Circuit had given conflicting signals regarding its adherence to the “substantial im- pact” test. In Cabais v. Egger, 690 F.2d 234, 237 (D.C. Cir. 1982), the court declared that “[s|imply because agency action has substantial impact does not mean it is subject to notice and comment if it is otherwise ex- pressly exempt under the APA.” The court also observed that “the substantial impact test has no utility in dis- tinguishing between” interpretative rules and substan- tive rules, but suggested that the test “may be useful” in applying other exceptions to the notice-and-comment re- quirement. Jd. at 237-238. See also Batterton v. Mar- 14 The Eleventh Circuit, although viewing the former Fifth Cir- cuit’s decision in Brown Express as part of the law of its circuit, has gone to unusual lengths to criticize it, in dicta, as contrary to Vermont Yankee. See American Trucking Ass’n Vv. United States, 688 F.2d 1337, 1351-1352 & n.20 (11th Cir. 1982), rev’d on other grounds, 467 U.S. 354 (1984); Jean v. Nelson, 711 F.2d 1455, 1479- 1480 & nn.18, 20 (11th Cir. 1983), modified on other grounds on rehearing, 727 F.2d 957 (11th Cir. 1984) (en banc), aff’d, 472 U.S. 846 (1985). See also American Transfer & Storage Co. v. ICC, 719 F.2d 1283, 1285 (5th Cir. 1983) (noting that Brown Express had been “much criticized”’). ’ 19 shail, 648 F.2d 694, 707-709 & n.83 (D.C. Cir. 1980). In American Hosp. Ass’n V. Bowen, 834 F.2d 1037, 1047 (D.C. Cir. 1987), the court observed—with respect to the exception for procedural rules—that its cases had “gradually shifted focus from asking whether a given procedure has a ‘substantial impact’ on parties * * * to inquiring more broadly whether the agency action also encodes a substantive value judgment or puts a stamp of approval or disapproval on a given type of behavior.” This shift in focus, the court observed, “‘reflect(ed] a can- did recognition that even unambiguously procedural measures affect parties to some degree.” Ibid. The decision in the instant case represents an abrupt departure from the trend described in American Hospi- tal Ass’n. The stated basis for the decision was a de- termination that the Ruies of Practice “substantially af- fect” the rights of civi! penalty defendants to an admin- istrative adjudication. App., infra, 2a, lla, 13a. Like decisions of the Fifth Circuit, the majority’s analysis makes the effect of a rule the decisive factor in the ap- plication of the APA exception for rules of agency procedure.” This case presents the Court with an excellent oppor- tunity to resolve a square conflict—between the D.C. and the Fifth Circuits on the one hand and the Ninth on the other—over whether the availability of the exemp- 15 The majority claimed not to rely on the “substantial impact” test. App., infra, 17a. However, its explanation of how its approach differed from that test is unpersuasive. There is no difference be- tween a test that focuses on whether procedural rules “substantially affect” the rights or interests of regulated parties and one that focuses on whether the rules have a “substantial impact” on private parties. The National Motor Freight case, the principal authority on which the majority relied, has been credited with originating the substantial impact test. See Associated Dry Goods Corp. v. EEOC, 543 F. Supp. 950, 964 (E.D. Va. 1982), rev’d, 720 F.2d 804 (4th Cir. 1983); British Caledonian Airways, Ltd. v. CAB, 584 F.2d 982, 989 (D.C. Cir. 1978). See also 1 K. Davis, Administrative Law Treatise § 6.29, at 589 (2d ed. 1978). 20 tion for “rules of agency organization, procedure, or practice” depends on the magnitude of a rule’s effects on private parties. The validity of the “substantial impact” test has been widely discussed in the circuits during the 11 years since Vermont Yankee, in the context of sev- eral exemptions to the notice-and-comment requirement. The debate continues. The D.C. Circuit, the court in which “the vast majority of challenges to administrative agency action are brought,” Vermont Yankee, 435 U.S. at 537 n.14, is sharply divided over the merits of the majority’s approach. It denied the government’s sugges- tion of rehearing in banc by a 5-5 vote. Even if the full D.C. Cireuit were to resolve the confusion in its decisions in the near future, the conflict between the Fifta and Ninth Circuits would remain. Only this Court is in a position to restore consistency to this area of the law."® 3. The decision in this case is important to the FAA and to all other federal agencies that are subject to the APA. 16 The majority’s assertion that the APA exception for procedural rules is limited to rules organizing agencies’ “internal operations” (e.g., App., infra, 18a) is also in conflict with decisions that have applied that exception to rules governing proceedings involving regulated parties. See Associated Dry Goods Corp. v. EEOC, 720 F.2d 804, 812 (4th Cir. 1983); Buckeye Cablevision, Inc. v. United States, 438 F.2d 948, 953 (6th Cir. 1971); Neighborhood TV Co. v. FCC, 742 F.2d 629, 636-639 (D.C. Cir. 1984); Lamoille Valley R.R. v. ICC, 711 F.2d 295, 327-328 (D.C. Cir. 1983). The majority de- scribed those decisions as “inapposite.” Although the rules at issue in those cases “did affect ‘the manner in which the parties present themselves or their viewpoints to the agency,’” the majority stated, “they did not affect any component of a party’s statutory or con- stitutional right to avail himself of an administrative adjudication” and thus “ ‘the need for public participation’ in the rulemaking process was ‘too small to warrant it.’” App., infra, 15a-16a. The distinction suggested by the majority is unworkable; further, it suggests, erroneously, that courts are to determine when the need for public participation rises to the level justifying notice and com- ment. Congress made that judgment in the APA in distinguishing between substantive and procedural rules. 21 a. The decision casts doubt upon a substantial num- ber of civil penalty proceedings that were conducted in part under the Rules of Practice struck down by the court. As of the date of the court of appeals’ opinion, the FAA had issued 5860 notices of proposed civil pen- alty, the first step toward assessing a penalty under the demonstration program. Over 1100 of the notices were issued to ATA’s members. By the date of the panel’s decision, 2128 of those matters (including 76 to which an ATA member was a party) had been resolved by means of orders assessing penalties, the final agency ac- tion in such a proceeding.’"’ We are advised that some of the remaining cases have been dismissed. Nevertheless, there are presently pending thousands of cases to which the Rules of Practice were applied before they were struck down. Those cases were held in abeyance between the date that the court of appeals issued its opinion and August 2, 1990, the effective date of the amended rules of prac- tice promulgated by the FAA following notice and com- ment. See 55 Fed. Reg. 27,548 (July 3, 1990). In its de- cision, the court of appeals stated that a defendant in any such case “will * * * be free to raise the defense that the FAA could not have successfully prosecuted him but for 17 An FAA civil penalty proceeding commences with the issuance of a notice of proposed civil penalty. A party receiving such a notice has several options. It may submit the amount of the proposed penalty, invoke an informal procedure for resolving disputes, and, with or without employing the informal procedure, request a formal hearing. 55 Fed. Reg. 27,574 (July 3, 1990). After an ALJ has issued a decision following such a hearing, a party wishing to chal- lenge an unfavorable decision has rights to administrative appeals. Id. at 27,584-27,585. An order assessing civil penalty is the final step in any proceeding in which a civil penalty defendant agrees to pay or is found liable for a penalty. Depending on the extent to which a party pursues available procedures, such an order may be entered following a voluntary payment in response to a notice of proposed penalty, at any stage of the administrative proceeding in which the party declines to proceed further, or following exhaustion of all administrative appeals. 22 the agency’s reliance on some aspect of the Penalty Rules abandoned in the new scheme.” App., infra, 23a. Al- ready, the Administrator of the FAA has issued five decisions—two of them involving ATA members—in which he has addressed sua sponte the question whether amendments to the Rules of Practice struck down by the court might have affected the outcome.’* As cases pend- ing on April 13, 1990, are brought before the Adminis- trator, he will undoubtedly be called upon to address that issue with increasing frequency.” 18 Jn re Broyles, FAA Order No. 90-23 (Sept. 14, 1990); In re Continental Airlines, Inc., FAA Order No. 90-18 (Aug. 22, 1990) ; In re Degenhardt, FAA Order No. 90-20 (Aug. 16, 1990); In re Carroll, FAA Order No. 90-21 (Aug. 16, 1990); In re USAir, Inc., FAA Order No. 90-22 (Aug. 16, 1990). In each of these cases, ex- cept for Degenhardt, the civil penalty defendant asserted that the Rules of Practice were invalid because they had been issued without notice and comment and that, as a result, any penalty had to be vacated. The Administrator rejected that contention, noting that the decision in this case expressly permitted the FAA to hold pend- ing proceedings in abeyance. However, in each case, he went on to consider the claim reserved by the court of appeals. In four cases, he found no basis for a conclusion that the application of the Rules of Practice (as opposed to the subsequent, amended rules) could have affected the outcome. In USAir, he found that a change re- garding service of a notice of proposed penalty could have affected the outcome, and he vacated the penalty at issue. No significance should be attributed to the fact that the Ad- ministrator has so far addressed the issue raised by the court of appeals’ majority swa sponte. The amended rules did not become effective until August 2, 1990, and upon their effective date, all time periods prescribed by those rules began to run anew. 55 Fed. Reg. 27,549-27,550 (July 3, 1990). A 50-day limit applies to briefs challenging decisions issued by an ALJ. Id. at 27,584. Because of this circumstance (and extensions granted by the agency), no brief in chief was filed by a civil penalty defendant between August 2 and October 1, 1990. 19 One party against whom a civil penalty had been assessed before the court of appeals decision has petitioned for review in the Sixth Circuit and has argued that the Rules of Practice are invalid by virtue of the agency’s failure to follow the notice-and-comment re- quirement. Playter v. FAA, No. 90-3420 (6th Cir.). The case has been fully briefed, but has not yet been scheduled for argument. 23 After the court of appeals’ decision, the agency an- nounced it would voluntarily entertain requests to re- mand cases in which a civil penalty defendant can dem- onstrate that an amendment to the Rules of Practice would likely have affected the outcome of a case. 55 Fed. Reg. 15,125 (1990). However, there remains a live con- troversy concerning whether the notice-and-comment re- quirement was applicable to the Rules of Practice. If (as we maintain) the requirement was inapplicable, the failure to employ notice-and-comment rulemaking would provide no basis for invalidating any penalty assessed in a case pending at the time of the court of appeals’ de- cision. Under the court of appeals’ decision, by contrast, the agency’s determinations will remain vulnerable to challenge on that ground—under standards left unclear by that decision. Defendants denied remands by the agency will be in a position to argue that the court of appeals’ decision entitles them to relief.”° b. The standards set forth in the majority’s opinion will invite challenge to any existing procedural rule that has been issued without notice and comment and will make it impossible, in practice, to rely on the exception for rules of procedure. Ironically, while the majority dismissed the statutory distinction between procedural and substantive rules as unhelpful (see App., infra, 18a), it employed a “functional analysis” (id. at 12a) that is far less determinate. Under that approach, the *° There is no doubt that at least some of the parties that chal- lenged the rule retain an interest in the outcome of this case. For instance, ATA’s members were parties to approximately 1100 cases as of the date of the court of appeals’ opinion. ATA petitioned for review as a representative of its members; thus, to the extent its members have a continuing controversy with the FAA, ATA con- tinues to have a live dispute with the FAA. The same may be said of other parites representing members to which the Rules of Prac- tice were applied and of air carriers that are parties to proceedings in which the Rules of Practice were applied at some point. We are advised that the civil penalty proceedings brought against the three individual intervenors have been dismissed; the Rules of Practice invalidated by the court of appeals will not be applied to them. The case is moot as to those individuals. 24 exception for procedural rules wil! not apply to any rule that substantially alters the rights or interests of af- fected parties, including statutory rights to administra- tive procedures. See id. at 2a, 13a. The effect on a pro- cedural right can be substantial without rising to the level of a violation (see id. at 18a n.8), but it is not sufficient that the rule merely affects “the manner in which the parties present themselves to the agency” (id. at 15a). It is also relevant whether a rule “encode[s] a substantive value judgment” on “the appropriate balance between a defendant’s right to adjudicatory procedures and the agency’s interest in efficient prosecution” or ex- tends beyond “internal operations.” Id. at 13a, 17a, 18a. The majority acknowledged that “not all of the proce- dures established by [the Rules of Practice] touch on civil penalty defendants’ rights to adjudication,” but de- clined to specify which were invalid under that test. Jd. at 16a n.12. As the dissent noted, standards of this nature will make it “impossible for any agency general counsel, in the future, safely to advise agency heads that a given set of proposed rules are procedural and do not have to be published for comment.” App., infra, 26a. Virtually any rule of agency procedure will be vulnerable to a claim that it substantially affects a procedural right or runs afoul of another of the majority’s formulations.” 21 Under 5 U.S.C. 557(c), for example, a party to a hearing is entitled to submit “proposed findings and conclusions” before a decision is rendered. Under the majority’s analysis, a rule limit- ing a written filing to a fixed number of pages might be said to affect the right to file proposed findings and conclusions and to encode a substantive value judgment on the appropriate bal- ance between that right and the agency’s interest in efficient ad- judication. In fact, in this case, the ATA specifically challenged a rule that obligated parties to offer their proposed findings orally, except in complex cases. App., infra, 83a-84a. It is impossible to determine whether such a rule would pass muster under the ma- jority’s analysis or, in terms of that analysis, to discern a line that would distinguish it from a page limit. 25 The express statutory exceptions to the notice-and- comment requirement serve the valuable purpose of obviating “lengthy administrative procedures” in cir- cumstances where Congress has determined they are not essential. See Philadelphia Citizens in Action v. Schwei- ker, 669 F.2d 877, 881 (3d Cir. 1982). While many agencies voluntariiy engage in notice-and-comment rule- making when issuing procedural rules (including the DOT and FAA when time permits, see 44 Fed. Reg. 11,044 (1979) ), the flexibility afforded by the exception to the notice-and-comment requirement for procedural rules remains important to agencies in various circum- stances. This case—in which the FAA was given the task of creating and implementing a major enforcement program and reporting to Congress within 18 months— illustrates the importance of the exception. The excep- tions to the notice-and-comment requirement embody a legislative decision that agencies should have discretion to promulgate certain categories of rules without notice and comment; Congress’s “explicit judgment * * * as to when administrative agencies may dispense with formal rulemaking procedures must be respected.” 669 F.2d at 881. 26 CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. JOHN G. ROBERTS, JR. Acting Solicitor General * STUART M. GERSON Assistant Attorney General STEPHEN L. NIGHTINGALE Assistant to the Solicitor General ANTHONY J. STEINMEYER PHILLIP D. BRADY JOHN F. DALY General Counsel Attorneys PAUL M. GEIER Assistant General Counsel for Litigation Department of Transportation GREGORY S. WALDEN Chief Counsel Federal Aviation Administration OCTOBER 1990 * The Solicitor General is disqualified in this case. APPENDIX A UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT Argued February 2, 1990 Decided April 13, 1990 As Amended April 27, 1990 No. 89-1195 AIR TRANSPORT ASSOCIATION OF AMERICA, PETITIONER Vv. DEPARTMENT OF TRANSPORTATION ; SAMUEL SKINNER, SECRETARY OF TRANSPORTATION ; FEDERAL AVIATION ADMINISTRATION ; AND JAMES B. BUSEY, ADMINISTRATOR, RESPONDENTS On Petition for Review of an Order of the Federal Aviation Administration Before: MIKVA, EDWARDS and SILBERMAN, Circuit Judges. Opinion for the Court filed by Circuit Judge Ep- WARDS. Dissenting opinion filed by Circuit Judge SILBER- MAN. EDWARDS, Circuit Judge: The issue in this case is whether respondent governmental agencies (collec- tively “Federal Aviation Administration” or “FAA”’) (la) 2a were obliged to engage in notice and comment pro- cedures before promulgating a body of regulations governing the adjudication of administrative civil penalty actions. See 53 Fed. Reg. 34,646 (1988) (codified at 14 C.F.R. pt. 13) (“Penalty Rules” or “Rules’). The FAA issued the Penalty Rules pur- suant to a temporary enabling statute intended to augment the agency’s authority to enforce compliance with aviation safety standards. See 49 U.S.C. app. § 1475 (Supp. V 1987). Petitioner Air Transport As- sociation of America (“Air Transport”) contends that the FAA’s failure to comply with the notice and comment requirements of the Administrative Pro- cedure Act (“APA’’), see 5 U.S.C. §553 (1988), renders the Penalty Rules invalid. The FAA main- tains that it was justified in dispensing with notice and comment under the “rules of agency organization, procedure, or practice” and “good cause” exceptions to section 553. See id. § 553(b) (A)-(B). We grant the petition for review. It is well estab- lished that the exemption under section 553(b) {37 (A), for “rules of agency organization, procedure, or practice,” does not apply to agency action that “sub- stantially alter[s] the rights or interests of regulated”’ parties. American Hosp. Ass’n v. Bowen, 834 F.2d 1037, 1041 (D.C. Cir. 1987). The Penalty Rules fall outside the scope of the exception because they sub- stantially affect civil penalty defendants’ “right to avail [themselves] of an administrative adjudica- tion.” National Motor Freight Traffic Ass’n v. United States, 268 F. Supp. 90, 96 (D.D.C. 1967) (three-judge panel), aff'd mem., 393 U.S. 18 (1968). Moreover, because we find that the time constraints of the enabling statute did not impose an insurmount- able obstacle to complying with the applicable notice 3a and comment requirements of the APA, we also reject the FAA’s reliance on the “good cause’ exception under section 553(b)(B). Consequently, we hold that the Penalty Rules are invalid and that the FAA may not initiate new prosecutions until it has com- plied with the procedural requirements of the APA. I. BACKGROUND In December of 1987, Congress enacted a series of amendments to the Federal Aviation Act relating to civil penalties. See Pub. L. No. 100-223, § 204, 101 Stat. 1519 (codified in scattered sections of 49 U.S.C. app.). Among other things, these amendments raised to $10,000 the maximum penalty for a single viola- tion of aviation safety standards, see 49 U.S.C. app. § 1471(a)(1) (Supp. V 1987), and established a “demonstration program” authorizing the FAA to prosecute and adjudicate administrative penalty ac- tions involving less than $50,000, 49 U.S.C. app. $1475 (Supp. V 1987).’ Under the terms of the demonstration program, the FAA was granted the authority to assess administrative penalties for a two- year period beginning on December 30, 1987, see id. § 1475(d) (4), and was to report to Congress on the effectiveness of the program within eighteen months, see Pub. L. No. 100-223, § 204(i) (2), 101 Stat. 1521. Congress’ goal in enacting this legislation was to strengthen the enforcement powers of the Federai Aviation Administration. Before the 1987 amend- ments, the FAA could propose a maximum civil pen- i The Administrator, or his delegate, may assess a civil penalty for a violation arising under this chapter or a rule, regulation, or order issued thereunder, upon written notice and finding of violation by the Adniinistrator. Id. § 1475 (a). 4a alty of only $1,000 per violation and had no enforce- ment authority of its own.? When an alleged violator disputed a penalty, the FAA was obliged to refer the case to the United States Attorney’s office for prosecu- tion in federal district court; relatively few such cases were prosecuted, however, because of competing work obligations facing U.S. Attorneys. See 133 CONG. REC. $15,294 (daily ed. Oct. 28, 1987) (statement of Sen. Wilson); 53 Fed. Reg. 34,646 (1988). Under- standably, Congress did not view this as a particu- larly effective system for assuring compliance with aviation safety standards. By raising the maximum penalty and giving the FAA the power to prosecute penalty actions administratively, Congress sought to “close the holes in the FAA’s safety net” and thereby “provide[] an incentive for airlines to ensure that [their safety] systems are maintained at the highest of standards.” 133 CoNnG. REC. $15,294 (statement of Sen. Wilson).° At the same time, however, Congress remained at- tentive to the adjudicative rights of civil penalty de- fendants. Congress provided that the FAA could as- sess a civil penalty “only after notice and opportunity for a hearing on the record in accordance with section 2 However, the FAA did have the authority to assess civil penalties of up to $10,000 for violations of the Hazardous Materials Transportation Act, 49 U.S.C. app. § 1809(a) (1) (1982), and to prosecute such violations administratively, see 49 C.F.R. § 18.16 (1988). The Penalty Ruies govern admin- istrative penalty actions under both the Federal Aviation Act and the Hazardous Materials Transportation Act. See 49 C.F.R. §§ 18.201 (a) (2) (1989). 8 Nonetheless, civil penalty actions may still be brought in federal district court, see 49 U.S.C. app. §§ 1471, 1487 (1982), which retains exclusive jurisdiction in civil penalty actions involving more than $50,000, see id. § 1475 (c). a ee 5a 554 of [the APA].” 49 U.S.C. app. § 1475(d) (1). As the conference report accompanying section 1475 explained, the express incorporation of the APA’s procedural protections was designed to achieve two purposes : First, the requirement is intended to advise the FAA of the appropriate level of procedural for- mality and attention to the rights of those as- sessed civil penalties under this demonstration program. Secondly, this requirement is intended to provide reasonable assurance to the potential subjects of such civil penalties that their due process rights are not compromised. H.R. CONF. REP. No. 484, 100th Cong., 1st Sess. 81 (1987). Approximately nine months after enactment of section 1475, the FAA promulgated the Penalty Rules. See 53 Fed. Reg. 34,646 (1988) (codified at 14 C.F.R. pt. 13). Effective immediately upon their issuance, the Penalty Rules established a schedule of civil penalties, including fines of up to $10,000 for violations of the safety standards of the Federal Aviation Act and related regulations. See 14 C.F.R. § 13.16(a) (3) (1989). The Penalty Rules also es- tablished a comprehensive adjudicatory scheme pro- viding for formal notice, settlement procedures, dis- covery, an adversary hearing before an ALJ and an administrative appeal. See id. §§ 13.201-13.235. In explaining why it dispensed with prepromulgation notice and comment, the FAA emphasized the proce- dural character of the Penalty Rules and the time constraints of section 1475. See 53 Fed. Reg. 34,646, 34,652-53. The FAA did respond to postpromuiga- tion comments but declined to make any amendments to the Rules. See 54 Fed. Reg. 11,914 (1989). 6a Congressional oversight of the section 1475 demon- stration program is ongoing. In its report to Con- gress, the FAA vigorously defended the Penalty Rules. See Respondent’s Supplemental Addendum at 1-54. Others, including commercial and noncommer- cial aviators and the Administrative Law Section of the American Bar Association were less enthusiastic, criticizing what they perceived to be the Rules’ sys- tematic procedural bias in favor of the FAA. See Petitioner’s Supplemental Addendum 2-40. In re- sponse to the controversy, Congress declined FAA’s request to extend section 1475 by two years, and in- stead extended the statute by only four months. See Pub. L. No. 101-236, §1, 103 Stat. 2060 (1989). Supporters of this legislation emphasized that exten- sion “should not be viewed as approval of the FAA’s procedures” but only “as a way to preserve the status quo while” Congress “review[s] . . . how the major concerns coming from every segment of the aviation community are going to be resolved.” 135 Conca. Rec. H8917 (daily ed. Nov. 17, 1989) (statement of Rep. Hammerschmidt) ; id. (statement of Rep. Val- entine). Indeed, on March 6, 1990—approximately one month after this case was argued—the FAA is- sued a notice of proposed rulemaking announcing the agency’s intention to amend some of the individual Rules that have provoked the most controversy. See 55 Fed. Reg. 7980 (1990). In its petition for review, Air Transport raises two challenges to the Penalty Rules.‘ First, it attacks the procedural adequacy of the Rules, arguing that * Air Transport petitioned directly to this court pursuant to 49 U.S.C. app. § 1486 (1982). See generally Deutsche Luf- thansa Aktiengesellschaft v. CAB, 479 F.2d 912, 915-16 (D.C. _ Cir. 1973). | aneenenc een Ta the FAA was obliged by section 553 of the APA to permit notice and comment before the Rules became effective. Second, Air Transport attacks the sub- stantive adequacy of the Rules on the ground that they establish adjudicatory procedures inconsistent with section 554 of the APA. In a previous order, we deferred consideration of the FAA’s motion to dismiss the petition on ripeness grounds and directed the parties to address this issue in their briefs on the merits. We now find that Air Transport’s pro- cedural challenge to the Penalty Rules is ripe for re- view and grant the petition on that ground.° II. ANALYSIS A. Ripeness The FAA contends that, under the ripeness doc- trine, Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967), this court should defer review of the Penalty Rules until after the agency has had an opportunity to apply the Rules in the concrete settings of admin- istrative adjudications. Compare Webb v. Depart- ment of Health and Human Servs., 696 F.2d 101, 107-08 (D.C. Cir. 1982) (fact-specific challenge to regulation not ripe before regulation is applied) with Better Gov’t Ass’n v. Department of State, 780 F.2d 86, 92-93 (D.C. Cir. 1986) (purely legal challenge is ripe before application). In other words, the agency claims that Air Transport’s preenforcement challenge to the substance of the Penalty Rules should be barred as unripe. We need not reach that issue, however, because Air Transport’s petition for review raises two issues: (1) the claim that the 5 Consequently, we do not reach petitioner’s challenge to the substance of the Penalty Rules. We also express no opin- ion on whether that challenge presents issues ripe for review. a 8a agency was required to use notice and comment rule- making in promulgating the Penalty Rules (the “pro- cedural” challenge), and (2) the claim that, whether or not notice and comment was required, certain of the Penalty Rules are unlawful as promulgated (the “substantive” challenge). Because we find merit in the procedural challenge, we need not address whether Air Transport’s substantive chalienge is ripe. As FAA counsel acknowledged at oral argument, the first of the two claims, the procedural challenge, is clearly ripe for review. In applying the ripeness doctrine, we ask first whether the challenge in ques- tion is “purely legal”; if so, it is presumptively re- viewable. See, e.g., Better Gov’t Ass’n, 780 F.2d at 92. Next “we determine whether the court or the agency would benefit from the postponement of re- view until the agency action or policy in question has assumed either a final or more concrete form.” /d. Only if these inquiries raise significant “doubts about the fitness of the issue for judicia! resolution” do we look to the “hardship” prong of the ripeness test, con- sidering whether the effect of the challenged action on the petitioner’s primary conduct outweighs the in- stitutional interests in deferring review. Consolidated Rail Corp. v. United States, No. 89-1074, slip op. at 5 (D.C. Cir. Feb. 16, 1990) ; see Askins v. District of Columbia, 877 F.2d 94, 97-98 (D.C. Cir. 1989). Applying these criteria, we have no trouble con- cluding that Air Transport’s procedural challenge to the Penalty Rules is ripe. The challenge is purely legal; whether the Penalty Rules are subject to the APA’s notice and comment procedures can be deter- mined solely from the text, the legislative history and the judicial interpretations of section 553. See Better Gov’t Ass’n, 780 F.2d at 92. Furthermore, there are 9a no judicial or agency interests militating in favor of deferring review. Neither the application of the Penalty Rules nor even the possible amendment of individual Rules will have any bearing on whether the Rules as a whole were unlawfully promulgated.° And until that question is settled, it will provide a possible basis for review in every penalty action ad- judicated by the FAA. Thus, “in light of our conclusion that this matter is clearly fit to be heard, we need not consider whether petitioners would suffer any hardship from our postponing its resolution.” Consolidated Rail Corp., supra, slip op. at 6. Accordingly, we hold that petitioner’s procedural challenge is ripe for review. B. The Merits Section 553 of the APA obliges an agency to pro- vide notice and an opportunity to comment before promulgating a final rule.’ No question exists that 6 The FAA does not contend that the possible expiration of section 1475 affects the ripeness of the petition for review. No reason exists to believe that Congress will permit the FAA’s civil penalty program to lapse; and, in any event, we cannot predicate our jurisdiction on speculations as to what actions Congress may or may not take. 7 Section 553 provides in relevant part: (b) General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or other- wise have actual notice thereof in accordance with law. The notice shall include— (1) a statement of the time, place, and nature of public rule making proceedings ; (2) reference to the legal authority under which the rule is proposed ; and [Continued] 10a the Penalty Rules fall within the scope of the APA’s rulemaking provisions. See 5 U.S.C. § 551(4)-(5) (1988). Nonetheless, the FAA maintains that the Penalty Rules were exempt from the notice and com- ment requirements for two, independent reasons: first, because they are “rules of agency organization, procedure, or practice,” id. §553(b)(A); and sec- ond, because the time constraints of section 1475 gave the FAA “good cause” to find that prepromul- gation notice and comment would be “impracticable, unnecessary, or contrary to the public interest.” id. § 553(b)(B). The FAA also argues that its enter- tainment of postpromulgation comments cured any violation of section 553. 7 [Continued] (83) either the terms or substance of the proposed rule or a description of the subjects and issues in- volved. Except when notice or hearing is required by statute, this subsection does not apply— (A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or (B) when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unneces- sary, or contrary to the public interest. (c) After notice required by this section, the agency shall give interested persons an opportunity to partici- pate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose. pen lla Section 553’s notice and comment requirements are essential to the scheme of administrative governance established by the APA. These procedures refiect Congress’ “judgment that . . . informed administra- tive decisionmaking require[s] that agency decisions be made only after affording interested persons” an opportunity to communicate their views to the agency. Chrysler Corp v. Brown, 441 U.S. 281, 316 (1979). Equally important, by mandating ‘“open- ness, explanation, and participatory democracy” in the rulemaking process, these procedures assure the legitimacy of administrative norms. Weyerhaeuser Co. v. Costle, 590 F.2d i011, 1027 (D.C. Cir. 1978). For these reasons, we have consistently afforded a narrow cast to the exceptions to section 553, permit- ting an agency to forgo notice and comment only when the subject matter or the circumstances of the rulemaking divest the public of any legitimate stake in influencing the outcome. See, e.g., Batterton v. Marshall, 648 F.2d 694, 704 (D.C. Cir. 1980); American Bus Ass’n v. United States, 627 F.2d 525, 528 (D.C. Cir. 1980). In the instant case, because the Penalty Rules substantially affected civil penalty defendants’ right to avail themselves of an admin- istrative adjudication, we cannot accept the FAA’s contention that the Rules could be promulgated with- out notice and comment. 1. “Rules of Agency Organization, Procedure, or Practice” The FAA argues that the Penalty Rules are ex- empt as “rules of agency organization, procedure, or practice” because they establish “procedures” for ad- judicating civil penalty actions. According to the FAA, it would have been obliged to permit public 12a participation in the rulemaking process only if the Penalty Rules affected aviators’ “substantive” obliga- tions under the Federal Aviation Act. We find this analysis unpersuasive. Our cases construing section 553(b) (A) have long emphasized that a rule does not fall within the scope of the exception merely because it is capable of bear- ing the label “procedural.” See, e.g., Reeder v. FCC, 865 F.2d 1298 (D.C. Cir. 1989) (per curiam). In Reeder, we examined a body of rules governing the submission of “counterproposals” to the allotment of FM radio frequencies by the Federal Communications Commission. Although the rules purported merely to define the procedures for the submission of counter- proposals, we recognized that these procedures in fact foreclosed agency consideration of counterproposals based on the upgrading of existing FM stations. See id. at 1305. Because the agency previously did permit applicants to submit counterproposals based on up- grading plans, we held that the agency should have engaged in notice and comment before depriving ap- licants’ of this right. See id.; see also Batterton, 648 F.2d at 707-08 (procedures affecting entitlement to federal grants not exempt); Pickus v. United States Bd. of Parole, 507 F.2d 1107, 1113 (D.C. Cir. 1974) (procedures affecting parole determinations). Rather than focus on whether a particular rule is “nrocedural” or “substantive,” these decisions employ a functional analysis. Section 553(b)(A) has been described as essentially a “housekeeping” measure, Chrysler Corp. v. Brown, 441 U.S. 281, 310 (1979), “Tt]}he distinctive purpose of . . . [which] is to en- sure ‘that agencies retain latitude in organizing their internal operations,’” American Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1047 (D.C. Cir. 1987) (quot- ing Batterton, 648 F.2d at 707) (emphasis added). I ttt cect > sn | 13a Where nominally “procedural” rules “encode[] a sub- stantive value judgment” or “substantially alter the rights or interests of regulated” parties, however, the rules must be preceded by notice and comment. /d. at 1047, 1041. The Penalty Rules fall outside the scope of section 553(b)(A) because they substantially affect a civil penalty defendant’s right to an administrative ad- judication. Under both the due process clause, see Lipke v. Lederer, 259 U.S. 557, 562 (1922), and the . APA, see 5 U.S.C. §§ 554, 556 (1988), a party has a right to notice and a hearing before being forced to pay a monetary penalty. Congress expressly directed the FAA to incorporate these rights into its civil pen- alty program. See 49 U.S.C. app. § 1475(d)(1); H.R. CoNF. REP. No. 484, 100th Cong., 1st Sess. 81 (1987). In implementing this mandate, the FAA made discretionary—indeed, in many cases, highly contentious—choices concerning what process civil penalty defendants are due. Each of these choices “encode[d] a substantive value judgment,” American Hosp. Ass’n, 834 F.2d at 1047, on the appropriate bal- ance between a defendant’s right to adjudicatory pro- cedures and the agency’s interest in efficient prosecu- tion.” The FAA was no less obliged to envage in no- tice and comment before taking action affecting these adjudicatory rights than it would have been had it taken action affecting aviators’ “substantive” obliga- tions under the Federal Aviation Act. See, e.g., Na- 8 In noting that the FAA made discretionary choices deter- mining the specific form of civil penalty defendants’ adjudi- catory rights, we do not, of course, suggest tha’ the choices made violated those rights. Section 553 stands for the propo- sition that interested parties have a right to influence agency decisionmaking even when the decisions made are substan- tively lawful. l4a tional Ass’n v. Schweicker, 690 F.2d 932, 949 (D.C. Cir. 1982) (notice and comment required for rules “eliminating the qualified right” to present reim- bursement claims to agency secretary rather than intermediary), cert. denied, 459 U.S. 1205 (1983); Brown Express, Inc. v. United States, 607 F.2d 695, 702-03 (5th Cir. 1979) (notice and comment required for rules eliminating notice of award of temporary carrier licenses). Indeed, this is the teaching of the seminal decision in National Motor Freight Traffic Ass’n v. United States, 268 F. Supp. 90 (D.D.C. 1968) (three-judge panel), aff'd mem., 393 U.S. 18 (1968). In National Motor Freight, the court ® reviewed a body of Inter- state Commerce Commission rules establishing a scheme for the administrative adjudication of carrier overcharge claims. Rejecting the claim that the rules ‘merely established precedures for implementing sub- stantive statutory rights, the court held that the agency’s decision to establish “[a] right to avail one- self of an administrative adjudication” was itself one that the APA required to be open to public participa- tion. Id. at 95-96. National Motor Freight was sum- marily affirmed by the Supreme Court, and remains binding precedent. See 1 K. DAvis, ADMINISTRATIVE LAW TREATISE § 6.29, at 589 (2d ed. 1978) (decrib- ing National Motor Freight as “[t]he most authorita- tive decision” on the scope of section 553(b)(A)). In our view, it is controlling in the case before us. The cases cited by the FAA do not suggest a con- trary conclusion. The FAA puts its primary emphasis on American Hospital Association. At issue in that ® On the three-judge panel were then Circuit Judge Burger, Circuit Judge McGowan and District Judge Sirica. Judge McGowan wrote the opinion for the court. l5a case were a series of agency directives and manuals defining the “enforcement strategy” of review boards assigned to investigate Medicare reimbursement claims by hospitals. See 834 F.2d at 1049-52. We held that these materials were covered by section 553 (b)(A) because we recognized that the public has no legitimate interest in influencing an agency’s “dis- cretionary deployment of enforcement resources,” id. at 1057 n.4—a classic “internal” matter, essential to how an agency constitutes itself, cf. Heckler v. Chaney, 470 U.S. 821, 831-32 (1985). Nothing in American Hospital Association detracts from the principle that the public does have a legitimate inter- est in participating in agency decisions affecting stat- utory and constitutional rights “to avail oneself of an administrative adjudication.” National Motor Freight, 268 F. Supp. at 96.”° Also inapposite are various decisions in which we have applied section 553(b)(A) to rules that reg- ulate such matters as the timing of applications for benefits, see, e.g., Lamoille Valley R. Co. v. ICC, 711 F.2d 295, 328 (D.C. Cir. 1983); Ranger v. FCC, 294 F.2d 240, 243-44 (D.C. Cir. 1961), or the timing of the agency’s processing of such applications, Neigh- borhood TV Co., Inc. v. FCC, 742 F.2d 629, 637-38 (D.C. Cir. 1984). The rules at issue in these cases did affect “the manner in which the parties present them- selves or their viewpoints to the agency,” Batterton, 648 F.2d at 707, but they did not affect any compo- nent of a party’s statutory or constitutional right to avail himself of an administrative adjudication. They 10 Indeed, in American Hospital Association, the bulk “of regulations ... regarding [agency review board] procedures” had been subject to notice and comment rulemaking and were therefore not being challenged. 834 F.2d at 1043 (emphasis added). MMi 16a were all cases, in short, in which “the need for public participation” in the rulemaking process was “too small to warrant it.” Jd. at 704." The Penalty Rules, in contrast, affect the entire range of adjudicatory rights guaranteed by the due process clause, the APA and section 1475(d)(1)—matters far too important to be withdrawn from public deliberation. See Na- tional Motor Freight, 268 F. Supp. at 96-97.” In criticizing our reliance on National Motor Freight, the dissent argues that agency action that is 11 In characterizing the principle underlying these decisions, we have sometimes spoken broadly, describing section 553 (b) (A) as exempting the “technical regulation of the form of agency action and proceedings.” Pickus, 507 F.2d at 1113. But we have never suggested, much less held, that section 553(b) (A) exempts measures that regulate the form of agency proceedings when these measures also affect a statu- tory or constitutional right to administrative adjudication. Cf. id. (“category” of “technical regulation of the form of agency action and proceedings” does not “include any action which goes beyond formality and substantially affects the rights of those over whom the agency exercises authority”). 12 Of course, not all of the procedures established by the Penalty Rules touch on civil penalty defendants’ rights to adjudication. We reject the FAA’s contention, however, that we should identify which individual Rules fall within the scope of section 553(b)(A) and invalidate only those. At a minimum, the FAA was obliged to engage in notice and comment before promulgating the Rules implementing the APA’s procedures for formal adjudication, see 5 U.S.C. §§ 554, 556-557 (1988), and deprived of these particular Rules, the FAA’s penalty program clearly cannot function. Moreover, the FAA promulgated the Penalty Rules as an in- tegrated whole. Because identifying the combination of pro- cedures that best reconciles the needs of the agency and the rights of civil penalty defendants involves discretionary law- making powers delegated by Congress to the FAA, it would be inappropriate for us selectively to invalidate individual Rules while leaving the FAA’s adjudicatory scheme intact. Cf. SEC v. Chenery Corp., 332 U.S. 194, 196 (1947). 17a expressly exempt under the APA is not subject to no- tice and comment rulemaking simply because it has a “substantial impact” on regulated parties. We agree with this assertion, but it is irrelevant because it begs the question whether the Penalty Rules are included within the exemption of section 553(b)(A). We rely on National Motor Freight not to show that the Penalty Rules have a “substantial impact” on avia- tors, but to show that rules affecting the right to avail oneself of an administrative adjudication are not within the express terms of section 553(b)(A). No case in this circuit has ever suggested otherwise. The dissent also contends that we have “obliterated” the distinction between substance and procedure. But, as the case law clearly illustrates, there is no such “distinction” to obliterate for purposes of section 553 (b)(A). The dissent refuses to come to terms with the precedent characterizing this exception to notice and comment rulemaking as a mere “housekeeping”’ measure, Brown, 441 U.S. at 310, applicable to rules “ ‘organizing | agencies’ | internal operations.’ ”’ Amer- ican Hosp. Ass’n, 834 F.2d at 1047 (quoting Bat- terton, 648 F.2d at 707) (emphasis added). The dissent’s infusion of a rigid “procedure’’-“‘substance” distinction is not only inconsistent with our prece- dent, see, e.g., Reeder, 865 F.2d at 13805; Batterton, 648 F.2d at 707-08, but is also inconsistent with the statutory text. Section 553(b)(A) does not exempt “rules of procedure” per se, but rather “rules of agency organization, procedure, or practice.”” The dis- sent’s exclusive fecus on the word “procedure” thus violates the well established principle of construction “that ‘words grouped in a list should be given related meaning.’” Dole v. United Steelworkers, 110 S. Ct. 184 929, 935 (1990) (quoting Massachusetts v. Morash, 109 S. Ct. 1668, 1673 (1989) ).** In sum, the FAA’s contention that it did not affect the “substantive” obligations of aviators under the Federal Aviation Act is irrelevant. “The characteri- zations ‘substantive’ and ‘procedural’—no more here than elsewhere in the law—do not guide inexorably to the right result, nor do they really advance the in- quiry very far.” National Motor Freight, 268 F. Supp. at 96. In using the terms “rules of agency or- ganization, procedure, or practice,’”’ Congress intended to distinguish not between rules affecting different classes of rights—“substantive” and “procedural”— but rather to distinguish between rules affecting dif- ferent subject matters—“the rights or interests of reg- ulated” parties, American Hosp. Ass’n, 834 F.2d at 1041, and agencies’ “ ‘internal operations,’” id. at 1047 (quoting Batterton, 648 F.2d at 707). Because the Penalty Rules substantially affect civil penalty defendants’ “right to avail [themselves] of an admin- istrative adjudication,” members of the aviation com- munity had a legitimate interest in participating in 18 The dissent’s suggestion that we have disregarded Ver- mont Yankee Nuclear Power Corp. v. NRDC, 485 U.S. 519 (1978), raises a false issue, for it assurmes the answer to the question posed. In Vermont Yankee, the Supreme Court held that reviewing courts cannot impose on an agency procedural requirements not found in the APA. See id. at 549. Section 553 of the APA expressly directs agencies to engage in notice and comment rulemaking; the issue in this case is whether the FAA had any ground to disregard this procedural obliga- tion. Because the dissent’s use of Vermont Yankee presup- poses, incorrectly, in our view, that the Penalty Rules fall within the exception in section 553(b)(A), the dissent’s reliance on the case adds nothing to the position sought to be advanced. TN | 19a the rulemaking process. National Motor Freight, 268 F, Supp. at 96. 2. “Good Cause” We also disagree that the two-year duration of sec- tion 1475’s demonstration program furnished the FAA with “good cause” to dispense with notice and comment procedures. Like the other exceptions, the good cause exception is to “be narrowly construed and only reluctantly countenanced.” New Jersey v. EPA, 626 F.2d 1038, 1045 (D.C. Cir. 1980). In particular, we have explained that statutory time limits do not ordinarily excuse compliance with the APA’s pro- cedural requirements. In New Jersey v. EPA, we reviewed a set of regulations issued pursuant to a six- month time limit. Adopting the reasoning of two of our sister circuits, we held that the statutory deadline did not constitute good cause to forgo notice and com- ment absent “ ‘any express indication’ ” by Congress to this effect. /d. at 1043 (quoting Sharon Steel Corp. v. EPA, 597 F.2d 377, 380 (3d Cir. 1979) ). See also Council of Southern Mountains, Inc. v. Donovan, 653 F.2d 573, 581 (D.C. Cir. 1981) (“ ‘[T]he mere exist- ence of deadlines for agency action... [can] not in itself constitute good cause for a § 553(b)(B) ex- ception.’” (quoting United States Steel Corp. v. United States EPA, 595 F.2d 207, 213 (5th Cir.), reh’g granted in part on other grounds, 598 F.2d 915 (5th Cir. 1975) ). New Jersey v. EPA is controlling here. Congress did not express an intention to relieve the FAA of the legal obligation to engage in notice and comment pro- cedures before promulation of the Penalty Rules. In- deed, section 1475 did not even set a formal deadline for implementation of the agency’s authority to assess 20a civil penalties. It is true that the two-year duration of the “demonstration program,” along with the asso- ciated eighteen-month reporting deadline, see Pub. L. No. 100-223, § 204(i) (2), 101 Stat. 1521, encouraged the FAA to act with reasonable dispatcn. But we be- lieve that the FAA, using expedited notice and com- ment procedures if necessary, could have realized this objective short of disregarding its obligations under the APA. Cf. Phillips Petroleum Co. v. United States EPA, 803 F.2d 545, 559 (10th Cir. 1986) (noting broad discretion of agency to determine length of comment period) .”* Finally, the FAA is foreclosed from relying on the good cause exception by its own delay in promulgating the Penalty Rules. The agency waited almost nine months before taking action to implement its author- ity under section 1475. At oral argument, counsel for the FAA conceded that the delay was largely a prod- uct of the agency’s decision to attend to other obliga- tions. We are hardly in a position to second guess the FAA’s choices in determining institutional priorities. But insofar as the FAA’s own failure to act materi- ally contributed to its perceived deadline pressure, the agency cannot now invoke the need for expeditious action as “good cause” to avoid the obligations of sec- tion 553(b). See National Ass’n of Farmworkers v. Marshall, 628 F.2d 604, 622 (D.C. Cir. 1980). 3. Postpromulgation Comment Finally, we reject the FAA’s contention that its response to comments after promulgation of the Pen- alty Rules cured any noncompliance with section 553. 14 We note in this regard that the FAA has adopted an accelerated twenty-four-day comment period in its pending notice of provosed rulemaking. See 55 Fed. Reg. 7980. —EE———EEE 2la Section 553 provides “that notice and an opportunity for comment are to precede rule-making.” New Jer- sey v. EPA, 626 F.2d at 1050. We strictly enforce this requirement because we recognize that an agency is not likely to be receptive to suggested changes once the agency “‘put[s] its credibility on the line in the form of ‘final’ rules. People naturally tend to be more close-minded and defensive once they have made a ‘final’ determination.” National Tour Brokers Ass’n v. United States, 591 F.2d 896, 902 (D.C. Cir. 1978). Although we have suggested that there might be cir- cumstances in which “defects in an original notice [could] be cured by an adequate later notice” and op- portunity to comment, we have emphasized that we could reach such a conclusion only upon a compelling showing that “the agency’s mind remain[ed] open enough at the later stage.” McLouth Steel Prods. Corp. v. Thomas, 838 F.2d 1317, 1323 (D.C. Cir. 1988); see Reeder, 865 F.2d at 1034; see also New Jersey v. EPA, 626 F.2d at 1050 (noting “the pre- sumption that post hoc comment was not contemplated by the APA and is generally not consonant with it’). The FAA has not come close to overcoming the pre- sumption of closed-mindedness in this case. It made no changes in the Penalty Rules in response to public comments. Nor did the language of FAA’s published replies suggest that the agency had afforded the com- ments particularly searching consideration. See Mc- Louth Steel Prods. Corp., 838 F.2d at 1323. Under the circumstances, then, we cannot discount the possibility that, had the FAA entertained com- ments before the Penalty Rules became final, it “might have decided [on] a different accommodation” of the agency’s enforcement needs and civil penalty defendants’ procedural rights. Brown, 441 U.S. at 316. Indeed, if the FAA had entertained prepromul- 22a gation comments and taken those comments seriously, it might very well have averted the public outery un- derlying the agency’s pending notice of proposed rule- making. C. Remedy Having determined that the FAA promulgated the Penalty Rules in violation of the APA’s notice and comment requirements, we must next consider the ap- propriate remedy. Ordinarily, when agency rules have been invalidated, the agency may not rely on those rules until they have been repromulgated in ac- cordance with the APA. See, e.g., Reeder, 865 F.2d at 1306. We find such a disposition appropriate in this case; therefore, we hold that the FAA may not initiate new prosecutions under the Penalty Rules unless and until they are repromulgated. Insofar as the FAA’s pending notice of proposed rulemaking seeks public comment on the individual Rules that the agency intends to amend, the agency may rely on the outcome of that rulemaking as a partial fulfillment of this mandate. This disposition, however, does not address the status of pending civil penalty actions. Counsel in- formed us that as of the date on which this case was argued, the FAA had initiated some 4,800 prosecu- tions, only a handful of which had progressed to the stage of an administrative hearing. The FAA re- mains free, of course, to refer these cases to the United States Attorney for prosecution in district court. See 49 U.S.C. app. §§ 1471(a) (1), 1487(a), (b). Nonetheless, we remain sympathetic to the FAA’s concern that leaving the agency with solely this option would oblige it to forfeit the considerable investment it has made in prosecuting these cases and 23a would frustrate Congress’ intent to tighten enforce- ment by providing an administrative forum for their adjudication. So long as it “act[s] within the bounds of the stat- ute and without intruding upon the administrative province,” the court sitting in review of an adminis- trative agency “may adjust its relief to the exigencies of the case in accordance with the equitable principles governing judicial action.” Ford Motor Co. v. NLRB, 305 U.S. 364, 373 (1939); accord Indiana & Michi- gan Elec. Co. v. FPC, 502 F.2d 336, 346 (D.C. Cir. 1974), cert. denied, 420 U.S. 946 (1975). In the past, we have employed our broad remedial powers to mini- mize disruption of congressional and administrative objectives when invalidating a rule promulgated in violation of the APA’s notice and comment proce- dures. See, e.g., Rodway v. United States Dep’t of Agriculture, 514 F.2d 809, 817 (D.C. Cir. 1975) (per- mitting agency to continue reliance on procedurally defective regulations implementing food stamp pro- gram pending new rulemaking). We believe that the exercise of our equitable re- medial powers is appropriate in this case as well. Con- sequently, although the FAA may not initiate new prosecutions under the Penalty Rules, we hold that the FAA is free to hold pending actions in abeyance while it engages in further rulemaking. If and when the FAA promulgates a final rule for adjudication of administrative penalty actions, it may then resume prosecution of these cases. A defendant in such a case will also be free to raise the defense that the FAA could not have successfully prosecuted him but for the agency’s reliance on some aspect of the Penalty Rules abandoned in the new scheme. Finally, we take no position on whether parties whose cases have reached a final determination under the Penalty Rules 24a may not raise the procedural invalidity of the Rules as a ground for seeking review. III. CONCLUSION An agency may dispense with the notice and com- ment requirements of section 553 “only where the need for public participation is overcome by good cause to suspend it, or where the need is too small to warrant it.” Batterton, 648 F.2d at 704 (footnote omitted). Neither of these conditions obtains in this case. The FAA did not have good cause to forgo notice and comment procedures, for nothing in sec- tion 1475 either excused or mandated noncompliance with section 553. Nor was this a case in which the need for public participation was ‘too small to war- rant it’; civil penalty defendants have a legitimate interest in influencing agency action affecting their statutory and constitutional “right to avail [them- selves] of an administrative adjudication.” National Motor Freight, 268 F. Supp. at 96. We therefore grant the petition for review and order the FAA not to initiate further prosecutions under the Penalty Rules until the agency has engaged in further rule- making in accord with section 553. Nonetheless, pur- suant to our remedial powers, we hold that the FAA is free to hold pending cases in abeyance and resume prosecution upon the repromulgation of a scheme for adjudicating administrative civil penalty actions under section 1475. It is so ordered. 25a SILBERMAN, Circuit Judge, dissenting: I quite agree with the majority that the question whether the FAA was obliged to issue the proposed rules for notice and comment is ripe,’ but I disagree with the major- ity’s answer to the question because I think the rules fall, by ample measure, within the “procedural” ex- emption of section 553(b) (A), which exempts from notice and comment “rules of agency organization, procedure, or practice.” To be sure, the rules in this case could as well be described as rules of “practice” (covering the practice of the parties and attorneys before the FAA) and also in some respects rules of “agency organization” (dealing with the interrela- tionship between the administrative law judges and the Administrator). I use the term “‘procedure”’ here to cover all three concepts. Lines between substance and procedure in various areas of the law are difficult to draw and therefore often perplex scholars and judges. But Congress, when it passed the Administrative Procedure Act, made that difference critical, and we are therefore obliged to implement a viable distinction between “proce- dural” rules and those that are substantive. See, e.g., Chrysler Corp. v. Brown, 441 U.S. 281, 301 (1979) (“The central distinction among agency regulations found in the APA is between ‘substantive rules’ on the one hand and ‘interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice’ on the other.’’) ; Reeder v. FCC, 865 F.2d 1298, 1305 (D.C. Cir. 1989); American Hospital Ass’n v. Bowen, 834 F.2d 1037, 1047 (D.C. Cir. 1987); Neighborhood TV Co., Inc. v. FCC, 742 F.2d 1 Although I do not believe petitioner’s challenge to the fairness of the rules is ripe, there is no point in discussing that issue in light of the majority’s disposition. 26a 629, 636-37 (D.C. Cir. 1984); Lamoille Valley R.R. Co. v. ICC, 711 F.2d 295, 328 (D.C. Cir. 1983) ; Bat- terton v. Marshall, 648 F.2d 694, 707 (D.C. Cir. 1980). The majority opinion, in effect, abandons the effort, finding in Reeder, American Hospital Ass’n and Batterton a disposition to challenge the Supreme Court’s Chrysler Corp. analysis that I do not discern in those cases—or in any other. Accordingly, it will be impossible for any agency general counsel, in the future, safely to advise agency heads that a given set of proposed rules are procedural and do not have to be published for comment. Therefcre, I dissent. If we assume a spectrum of rules running from the most substantive to the most procedural, I would de- scribe the former as those that regulate “primary conduct” in the way that term is used in Toilet Goods Ass’n, Inc. v. Gardner, 387 U.S. 158, 164 (1967), and the latter are those furthest away from primary con- duct. In other words, if a given regulation purports to direct, control, or condition the behavior of those institutions or individuals subject to regulation by the authorizing statute it is not procedural, it is sub- stantive. At the other end of the spectrum are those rules, such as the ones before us in this case, which deal with enforcement or adjudication of claims of violations of the substantive norm but which do not purport to affect the substantive norm. These kinds of rules are, in my view, clearly procedural. Rules are no less procedural because they are thought to be important or affect outcomes. Congress did not state, when it passed the APA, that all but insignificant rules must be put out for notice and comment.” And to say, as does the majority, that the 2 The majority erroneously quotes Chrysler Corp. as refer- ring to the procedural exemption as a “mere ‘housekeeping’ Oe AL 2 nee PS Tiledma td CSE Rae 27a rules are covered by section 553’s notice and comment requirement because they “substantially affect a civil defendant’s right to an administrative adjudication,” Maj. Op. at 12 (emphasis in original), is, I respect- fully submit, circular reasoning. It assumes the con- clusion by describing petitioner’s interest in the agency’s adjudicatory procedures as if it were a sub- stantive right. It also implicitly suggests that peti- tioner is correct on the merits in claiming the agency’s adjudicatory procedures are illegal. In determining whether particular rules must be put out for com- ment, surely the APA does not contemplate that a reviewing court would be influenced by whether or not it thought procedural rules were illegal. If, as argued by petitioner, the rules violate its rather ill- defined notion of administrative due process (peti- tioner’s primary claim on the merits seems to be that the rules offend the views of the American Bar Asso- ciation) or even constitutional due process, that is an entirely separate matter which can be raised in a concrete setting. Admittedly, not all our cases fit precisely along the continuum I described above. When an agency, rather than publishing rules which define a substantive norm to which regulated groups must conform or which flesh out enforcement procedures to effectuate such compliance, instead adopts rules dealing with the award of benefits, a slightly different but similar measure.” See Maj. Op. at 15. In fact Chrysler Corp. char- acterized 5 U.S.C. § 301—the provision authorizing executive department heads to prescribe regulations for the governing of their departments—and not the APA procedural exemp- tion as a “housekeeping statute.” See Chrysler Corp., 441 U.S. at 309-10. The Court then compared § 301 to the APA exemption, indicating that the procedural exemption at least includes day to day internal government business. 28a analysis is used to distinguish substantive from pro- cedural rules. Sometimes the Government’s prospec- tive award of benefits is actually designed, in part, to affect primary conduct—such as the standards used to determine whether to renew a broadcast license or the criteria employed to determine eligibility for un- employment insurance. But typically, benefits are bestowed in accordance with preexisting qualifica- tions or status. In those circumstances, it cannot be said that the rules seek to condition primary conduct. We still think of such rules as substantive because de- fining eligibility for a benefit program is the very essence of the program. It is in this context that in Batterton v. Marshall, 648 F.2d 694 (D.C. Cir. 1980), we said that substantive rules are those that affect the “rights and interests of parties.” See id. at 707. In Batterton, Maryland challenged the Department of Labor’s adoption of a new method of calculating local unemployment rates, which in turn determined the amount of CxTA job training funds each state and locality would receive. We categorized those new rules as substantive because they altered the criteria by which Government benefits would be distributed rather than simply change the manner in which claimants for benefits communicated to the agency the nature of their substantive claim. See id. at 707- 08. Similazvly, in Reeder v. FCC, 865 F.2d 1298 (D.C. Cir. 1989), a radio station objected to the FCC adop- tion of rules governing counterproposals to the agency’s allotment of new FM channels throughout the United States. We decided that the procedural exemption was inapplicable because the FCC had altered its decisionmaking criteria for new station al- lotments. See id. at 1304-05. In contrast, in Neighborhood TV Co., Inc. v. FCC, 742 F.2d 629 (D.C. Cir. 1984), we concluded that ne 29a FCC rules that froze contested applications for “translators” (devices which amplify and rebroadcast television signals) and then processed rural applica- tions before urban ones were procedural because the rules did not alter the standards by which those ap- plications would be judged. See id. at 637-38. We also pointed out that our earlier decisions in Kessler v. FCC, 326 F.2d 673 (D.C. Cir. 1963), and Ranger v. FCC, 294 F.2d 240 (D.C. Cir. 1961), found the challenged rule exempted from the notice and com- ment requirements precisely because the FCC rules did not regulate the radio stations’ right to broadcast its signals at a particular station. See Neighborhood TV, 742 F.2d at 638. Of course, procedure impacts on outcomes and thus can virtually always be described as affecting sub- stance, but to pursue that line of analysis results in the obliteration of the distinction that Congress de- manded. We avoided that snare only recently in American Hosp. Ass’n v. Bowen, 834 F.2d 1037, 1047 (D.C. Cir. 1987), where we held, over a strong dis- sent in many respects redolent of the majority opin- ion here, that HHS rules that set forth the enforce- ment priorities for peer review organizations (acting as agents to ensure medically reasonable and neces- sary hospital health care), as well as some adjudica- tory procedures similar to those contained in the rules before us, did not have to be published for comment. Although it was argued that the procedures would af- fect hcespital behavior by discouraging activity in the zone of an enforcement priority, we nevertheless held that the rules did not “encode[] a substantive value judgment or put[] a stamp of approval or disapproval on a given type of behavior.” Jd. at 1047. We recog- nized that hospital costs would be affected by the en- forcement scheme, but that was not enough to bring BEST AVAILABLE COPY 30a the rules out of the procedural safe harbor. See id. at 1051. The case at bar involves rules that are, a fortiori, procedural because, unlike in American Hos- pital Ass’n, it is not even argued here that primary behavior—the safety efforts of the airlines—is even affected by the adjudictory rules. Deviating from our previous and recent emphasis on primary conduct, the majority asserts that a pro- posed rule that allegedly infringes on “the right to avail oneself of an administrative adjudication” is “substantive.” See Maj. Op. at 13. But the quoted language comes from an old and now discredited dis- trict court case, National Motor Freight Traffic Ass’n v. United States, 268 F. Supp. 90 (D.D.C. 1967), aff'd mem., 393 U.S. 18 (1968). The Supreme Court summarily affirmed the judgment of the district court in National Motor Freight, and therefore we are not bound by the district court’s reasoning. See Ander- son v. Celebrezze, 460 U.S. 780, 785 n.5 (1983) (“A summary disposition affirms only the judgment of the court below, and no more may be read into our ac- tion than was essential to sustain that judgment.’’) ; Illinois Election Bd. v. Socialist Workers Party, 440 U.S. 173, 782-83 (1979). We have specifically dis- approved of National Motor Fright’s “substantial im- pact” analysis, moreover, because of the Supreme Court’s command in Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519 (1978), to avoid en- grafting additional procedures on agency action be- yond those required by the APA. See Cabais v. Eg- ger, 690 F.2d 234, 237 (D.C. Cir. 1982) (“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.’’).* 8’ Even if National Motor Freight were still good law and binding on us, our case is arguably distinguishable because 3la It might be thought that there is something vaguely underhanded about an agency publishing important rules without an opportunity for those affected to comment. And lawyers and judges tend to prefer, on the margin, added procedure. But as Cabais makes clear, we have been admonished somewhat dramati- cally by Vermont Yankee to not add more procedure to the APA than Congress required. I am afraid the majority opinion by obliterating the distinction be- tween substance and procedure in section 553 does just that. the only issue before us is the specific content of FAA adjudi- cative procedures and not whether such a remedial avenue exists at all. In National Motor Freight, freight carriers chal- lenged an ICC plan of administrative adjudication of alleged carrier overcharges. Congress had explicitly authorized only judicial remedies to recover excessive rates. In the absence of such authority, the district court concluded that the right to an administrative route to reparations itself was a signifi- cant determination by the Commission that granted shippers an easier path to recover excess payments. See National Motor Freight, 268 F. Supp. at 95-96. Thus, the court decided that the provision of a new remedy was a new right or inter- est afforded to shippers. In contrast, Congress specifically empowered the FAA to adopt rules to adjudicate civil penal- ties. See 49 U.S.C. app. § 1475(d) (1). After National Motor Freight, the courts that adopted the “‘substantial impact” rea- soning found the requisite impact when the agency created new rights and obligations. See British Caledonian Airways, Ltd. v. CAB, 584 F.2d 982, 989 (D.C. Cir. 1978). 32a APPENDIX B UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 89-1195 AIR TRANSPORT ASSOCIATION OF AMERICA, PETITIONER v. DEPARTMENT OF TRANSPORTATION, RESPONDENT Before: Mikva, Edwards and Silberman, Circuit Judges ORDER [Filed Jun. 18, 1990] Upon consideration of respondents’ petition for re- hearing, filed May 29, 1990, it is ORDERED, by the Court, that the petition is de- nied. Per Curiam FOR THE CouRT: CONSTANCE-—~DUPRE Clerk ey a A By: /s/ Robert A. Bonner ROBERT A. BONNER Deputy Clerk Circuit Judge Silberman would grant the Petition For Rehearing. 33a APPENDIX C UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 89-1195 AIR TRANSPORT ASSOCIATION OF AMERICA, PETITIONER Vv. DEPARTMENT OF TRANSPORTATION, RESPONDENT Before: Wald, Chief Judge; Mikva, Edwards, Ruth B. Ginsburg, Silberman, Buckley, Williams, D. H. Ginsburg, Sentelle and Thomas, Cir- cuit Judges ORDER [Filed Jun. 18, 1990] Respondents’ Suggestion For Rehearing En Banc has been circulated to the full court. The taking of a vote was requested. Thereafter, a majority of the judges of the court in regular active service did not vote in favor of the suggestion. Upon consideration of the foregoing it is ORDERED, by the Court en banc, that the sugges- tion is denied. Per Curiam FOR THE COURT: CONSTANCE L. DUPRE Clerk 34a By: /s/ Robert A. Bonner ROBERT A. BONNER Deputy Clerk Circuit Judges Silberman, Williams, D. H. Gins- burg, Sentelle and Thomas would grant the sugges- tion for rehearing en banc. 35a APPENDIX D DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 13 [ Docket No. 25690; Amdt. No. 13-18] Rules of Practice for FAA Civil Penalty Actions AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final rule; request for comments. SUMMARY: This final rule sets forth revised initia- tion procedures and new rules of practice in FAA civil penalty actions. The rules are needed to pro- vide detailed procedures for on-the-record hearings required in civil penalty actions by legislation re- cently passed by Congress. The rules are intended to provide an appropriate level of procedural formality in civil penalty proceedings, focus attention on the rights of individuals subject to civil penalties, and ensure that due process is afforded those individuals during the civil penalty enforcement process. DATES: The final rule is effective on September 7, 1988. Comments must be received on or before No- vember 7, 1988. 7 * * * * SUPPLEMENTARY INFORMATION: Comments Invited The new rules contained in this amendment are purely procedural rules to govern on-the-record hear- 36a ings required by statute. The amendments to the current regulations are required so that the regula- tions will conform to existing and recently enacted statutory authority. Because both the procedural rules and revised regulations are required to imple- ment the recently enacted legislative amendment to the Federal Aviation Act of 1958, they are being adopted without notice and prior public comment. However, the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11034; February 26, 1979) provide that to the maximum ex- tent possible, Department of Transportation (DOT) operating administrations should provide an oppor- tunity for public comment on regulations issued without prior notice. Accordingly, interested persons are invited to par- ticipate in the rulemaking by submitting written data, views, or arguments as they may desire. Com- ments must include the regulatory docket or amend- ment number identified in this final rule and be sub- mitted in duplicate to the address above. All com- ments received will be available in the Rules Docket for examination by interested persons. These rules may be changed in light of the comments received on this final rule. Commenters who want the FAA to acknowledge receipt of comments submitted on this final rule must submit a preaddressed, stamped postcard with those comments on which the following statement is made: “Comments to Docket No. 25690.” The postcard will be date stamped by the FAA and refunded to the commenter. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket. * * * * * 37a Reason for No Notice and Immediate Adoption These rules are needed immediately to implement the statutory authority [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0988%3A1. Public record. Not legal advice.