Petition for Writ of Certiorari — Metropolitan School District of Wayne Township v. Davila

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FI°..ED

0 A —_}__MOV 50 1992

IN THE ‘QFEICE OF THE CLERK

SUPREME COURT OF THE UNITED STATES _—

OcTOBER TERM, 1992 *-

METROPOLITAN SCHOOL DISTRICT OF

WAYNE TOWNSHIP, MARION COUNTY,

INDIANA, on behalf of itself, and

all others similarly situated,

Petitioner,

¥.

ROBERT R. DAVILA, Assistant

Secretary, Office of Special

Education and Rehabilitative

Services, United States

Department of Education,

Respondent

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

PETITION FOR A WRIT OF CERTIORARI

MARGARET BANNON MILLER

GEORGE E. PURDY

GeorGE T. PATTON, JR

(Counsel of Record)

BOSE McKINNEY & EVANS

2700 First Indiana Plaza

135 N. Pennsylvania Street

Indianapolis, Indiana 46204

(317) 684-5000

November 27, 1992 Counsel for Petitioner

QUESTIONS PRESENTED

The Department of Education reads part B of the Individuals

with Disabilities Education Act (“IDEA-B”) as requiring schools

to continue to educate disabled students expelled for reasons

unrelated to their disabilities (e.g., a deaf student selling drugs

on school grounds) even though schools would not continue to

educate other students under the same circumstances. The

questions presented are:

1. Whether the Department of Education's rule is “interpre-

tive” and thus exempt from notice and comment when the

agency's rule contradicts a prior interpretation of the IDEA-B

by a federal court of appeals.

2. Whether the rule is exempt from notice and comment

because the agency interpreted the IDEA-B, even though the

agency also exercised delegated legislative authority with the

full force and effect of law that had a substantial impact on

schools across the country.

3. Whether the rule can be exempt from notice and comment

when Congress delegated lawmaking authority with the express

and unique limitation, “No other less formal method of imple-

menting such provision is authorized.”

PARTIES BELOW

The parties below include the named plaintiff, Metropolitan

School District of Wayne Township, Marion County, Indiana,

and a certified class of all public school corporations in the State

of Indiana. The defense of the appeal to the Seventh Circuit and

this petition have been filed on behalf of the named plaintiff and

the certified class.

(11)

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED .........::::ssseseseeesenneees i

PARTIES BELOW ..........::::::cceceeeeeereeseseserneensetegs il

TABLE OF CONTENTS .......:::::::essererserrettettes ii

TABLE OF AUTHORITIES ........-.::::::::rerrree iv

OPINIONS BELOW ..........:::::::::seseerereeeeeenenets 2

JURISDICTION ........:::::c:seesseseesseeeessessennsensensones 2

STATUTES INVOLVED .......---::::: sere 2

A MERMEEIE TY c.s.sccensensennncenssscvensenseonnencenscescnnsceess 2

A. The District Court Proceedings ........-- 3

B. The Court of Appeals’ Decision ........- 4

REASONS FOR GRANTING THE WRIT .......... 6

1. THE CONFLICTS IN THE LOWER COURTS

IN DISTINGUISHING LEGISLATIVE FROM

INTERPRETIVE RULES HAVE ARISEN

FROM DOCTRINAL UNCERTAINTY .....-- 7

A. Different Circuits Apply

Different Tests ...........::::seeeeeeeeeeresert 8

B. Some Circuits Consider The

“Substantial Impact” Factor,

RI i ate 11

C. This Case Is A Good Vehicle

To Resolve The Conflict ....................cc0000 12

Il. WHEN AN AGENCY RULE CONTRADICTS A

PRIOR FEDERAL COURT OF APPEALS

INTERPRETATION THE RULE IS

LEGISLATIVE, NOT INTERPRETIVE ............. 14

I]. THE NEW LETTER RAISES ISSUES FOR

SCHOOL DISTRICTS ACROSS THE

COUNTRY THAT ARE OF MANIFEST

PEAT ISUAL, TRG BINS csi scsevsinsevervesssnaceans, 19

Ee TY ccitickcuniercsakcutudemiahnemueaaenniene 21

APPENDIX

A. Opinion of Seventh Circuit Court

of Appeals (September 1, 1992) ..........00.. la

B. Opinion and Judgment of United

States District Court, Southern

District of Indiana,

Indianapolis Division

PEE Ty Bd setisenserctccisieeneabnecioan 17a

tied LST ae, &. . | Saat Ee REE mE 31a

D. Bae Ras Ee NU BRET cicatdtnsavaciccos 33a “.

E. New Letter ................... Te ee eee 39a

TABLE OF AUTHORITIES

Cases

Page

American Postal Workers Union v.

United States Postal Service,

707 F.2d 548 (D.C. Cir. 1983),

cert. denied, 465 U.S. 1100 4.) eer 11

Avovelles Sportsmen's League,

Inc. v. Marsh, 715 F.2d 897

(Sth Cir. 1983) .....ccceceseseesseserserereesssseeeneneeen 7

Batterton v. Francis, 432 CFS BiG CUGE 7} vcsuvevenss: 12

Brown Express. Inc. v. United States,

607 F.2d 695 (Sth Cir. 1979) .....:::ceseeeeeeereee 11

Chamber of Commerce v. OHSA,

636 F.2d 464 (D.C. Cir. 1980) «0... ee 6,9, 14-18

Chemical Waste Management, Inc. v. EPA,

869 F.2d 1526 (D.C. Cir. 1989) ....:.: eee 5

Columbia Broadcasting System, Inc. v.

United States, 316 U.S. 407 (1942) .....- ee 16

Community Nutrition Institute v. Young,

818 F.2d 943 (D.C. Cir. 1987) .....:::eeeeeererreeees 7,8

Doe by Gonzales v. Maher, 793 F.2d 1470

(Sth Cir. 1986), aff d on other

grounds sub. nom., Honie v. Doe,

484 U.S. 305 (1988) .........cccccceeeeeeeeeeeeeeeeeeeees 4,5,6, 13

(Vv)

Page

Doe v. Koger, 480 F.Supp. 225

NE asics ss seacadbasanaasneniinndvscnebinensen 14

Friedrich v. Secretary of Health &

Human Services, 894 F.2d 829

(6th Cir.), cert. denied,

a a oss va naicss ccgbehobeneibasunaaanacs 1]

General Motors Corp. v. Ruckelshaus,

742 F.2d 1561 ((D.C. Cir. 1984)

(en banc), cert. denied,

a BOPP CWE D inicccesvensrcicrsevecenenanscaceves 8

Guardian Federal Savings & Loan

Association v. FSLIC,

ee cee We COG... Cir, AG TB) ci vseicevcnccsissrcocens )

Industrial Safety Equipment Association,

Inc. v. EPA, 837 F.2d 1115

SM, ONIN sia ceashncashantsanaicccsdccdesnnaecuncns 1]

Jerri's Ceramic Arts, Inc. v.

Consumer Product Safety Commission,

BIS ££ 200 CO Ce. BDGD) vonsesviscsnecsssvscesvars 7

Joseph v. United States Civil Service

Commission, 554 F.2d 1140

Ne Ma PO Bg iduxsscscasensiknccincisaakesaasevseeuen 16

Kaelin v. Grubbs, 682 F.2d 595

noo os ucenunsaneuetaseenan 13

(vi)

La Casa Del Convaleciente v. Sullivan,

O65 F.2d 1175 Chat Caz. 19PZ) 00050:00..02200s.00000

Leone v. Mobil Oil Corp., 523 F.2d 1153

(D.C. Cit. 1DTS) veisiccssrescrresscssrescnserrerasesserssoess

Levesque v. Block, 723 F.2d 175

Rae Car. PGES) ciiiivcsesesccctsnsssasedicsccsccccereietiocnens

Morton v. Ruiz, 415 U.S. 199 (1974) ........: eee

National Family Planning and Reproductive

Health Associations, Inc. v. Sullivan,

No. 92-5252, 1992 U.S. App. LEXIS 28469

(D.C. Cir. Nov. 3, 1992) ........ccccccseseeeeeeseseeenes

National Motor Freight Traffic

Association v. United States,

268 F.Supp. 90 (D.D.C. 1967),

ee ee TE | ore

Noel v. Chapman, 508 F.2d 1023

(2d Cir.), cert. denied,

423 U.S. B24 (UGTD) ...-0...c0cccensssercnvsereressecnsnaee

Reynolds Metals Co. v. Rumsfeld,

564 F.2d 663 (4th Cir. 1977),

cert. denied, 435 U.S. 995 (1978) ...........::ceeee

Rocky Mountain Helicopters, Inc. v. FAA,

971 F.2d 544 (10th Cir. 1992)

Page

S-1 v. Turlington, 635 F.2d 342

(Sth Cir.) (Unit B), cert. denied,

454 U.S. 1030, 102 S.Ct. 566,

Fe ee Te CUED eancsvcenccscctessecescvcnasssviens 13

South Carolina v. Catawba Indian

Tribe, Inc., 476 U.S. 498 (1986) ...0..0 a. 21

State of Alaska v. U.S. Department

of Transportation, 868 F.2d 441

eis st rE eons deicar nwa ataintaniecsennceds 9

State of Ohio Department of Human Services v

United States Department of Health

S62 F.2d 1226 (Gth Cir. 1968) ..................0..45 11

Skidmore v. Swift & Co., 323 U.S. 134 (1944) ..... 17

Story v. Marsh, 732 F.2d 1375 (8th Cir. 1984) ..... 7

United States v. Grimaud, 220 U.S. 506 (1911)... 17

Wayman vy. Southard, 23 U.S.

Fe ED esoniw etic wondeivcoenasatavencevsees 17

Statutes

Care e Oe oe eee a

Pere 8 ee a ks 7

ae Oe ae eee 2

en a, Oe espe enachacoeanmiane

Be ET EEE erateauinacontanatiacseones

SE Ct 0 5 Sc aee ee

20 U.S.C. § 1417(b)....

28 U.S.C. § 1254(1)

28 U.S.C. § 133]

29 U.S.C. § 203(0)

29 U.S.C. § 651-678

29 U.S.C. § 657(g)(2)

Other Authorities

S.Ct. Rule 14

2 Kenneth Culp Davis. Administrative

Law Treatise (2d ed. 1979)..............

(1x)

8,9

IN THE

SUPREME COURT OF THE UNITED STATES

OcToBER TERM, 1992

METROPOLITAN SCHOOL DISTRICT OF

WAYNE TOWNSHIP, MARION COUNTY,

INDIANA, on behalf of itself, and

all others similarly situated,

Petitioner,

Vv.

ROBERT R. DAVILA, Assistant

Secretary, Office of Special

Education and Rehabulitative

Services, United States

Department of Education,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioner, Metropolitan School District of Wayne Town-

ship, Marion County, Indiana (the “School District’’), on behalf

of itself and all others similarly situated, by counsel, pursuant to

S.Ct. Rule 14, respectfully petitions this Court for a writ of

certiorari to the United States Court of Appeals for the Seventh

Circuit

[1]

OPINIONS BELOW

The opinion of the court of appeals is reported at 969 F.2d

485 and is reprinted in the appendix. Pet. App. A la-16a. The

district court’s opinion is reported at 770 F.Supp. 1331 and is

reprinted in the appendix. Pet. App. B 17a-30a.

JURISDICTION

The School District invoked federal junsdiction in the

district court under 28 U.S.C. § 1331 and the Administrative

Procedure Act, 5 U.S.C. § 702. The court of appeals reversed

the distnct court on July 30, 1992 and denied the School

District's timely petition for rehearing with suggestion for

rehearing en banc on September 1, 1992. This Court has

jurisdiction under 28 U.S.C. § 1254(1).

STATUTES INVOLVED

The relevant section of the Administrative Procedure Act, 5

U.S.C. § 553, is reproduced at Pet. App. C 3la-32a. Relevant

sections of part B of the Individuals with Disabilities Education

Act, formerly the Education of the Handicapped Act of 1975, 20

U.S.C. §§ 1412, 1417, are reproduced at Pet. App. D 33a-38a.

STATEMENT

Part B of the Individuals with Disabilities Education Act, 20

U.S.C. §§ 1411-20 (“IDEA-B” or “Act”), formerly called the

Education of the Handicapped Act of 1975, has provided federal

funding to states to support the education of disabled children

for over fifteen years. In order to qualify for funds, a state must

establish a policy assuring a free appropriate education (“FAPE”’)

to all disabled children. 20 U.S.C. § 1412(1). Most states

distribute the federal monies to local educational agencies that

provide services to eligible children. The Office of Special

Education and Rehabilitative Services of the United States

Department of Education (“OSERS") administers the Act.

In 1989, Frank E. New, Director of Special Education forthe

Ohio Department of Education, sent an inquiry to Robert R.

Davila, Assistant Secretary for Special Education and Rehabili-

tative Services. New asked Davila whether the IDEA-B re-

quired states to prov ide educational services to disabled children

who were expelled or suspended for reasons unrelated to their

disability. For example, consider two students—one deaf and

the other with hearing. Assume the two students are selling

drugs together on school grounds and that after a case confer-

ence, it is determined that deafness has no relationship to drug

selling. New’s letter asked whether school districts could

discontinue educational services to both students or whether

FAPE required schools to continue to educate the deaf student

but not the hearing student.

Davila wrote a three page response to New (the “New

Letter,” reprinted Pet. App. E 39a-42a). Davila interpreted the

IDEA-B to require states and schools to continue educational

services in cases of expulsion even when there was no causal

relationship between the student's disability and the conduct.

The New Letter states that this interpretation of IDEA-B applies

to all recipients of funds under the Act.

The Department of Education did not publish the New

Letter in the Federal Register or the Code of Federal Regula-

tions. The agency did not solicit public comment before issuing

the New Letter. The Department of Education held no public

proceedings on the New Letter. These relevant facts are

undisputed.

The District Court Proceeding.

The School District brought this action alleging that the New

Letter was alegislative rule subjectto notice and comment under

the Administrative Procedure Act (“APA”). Davila answered

that the New Letter was an interpretive rule exempt from the

APA’s notice and comment requirements. On cross-motions

———_S:i‘

for summary judgment, the district court framed the issue as

whether “the New Letter is a ‘legislative rule’ requiring notice

and comment under the APA, or, . . . merely an ‘interpretive

rule’ exempt from the APA’s requirements.” Pet. App. 26a.

The district court ruled the New Letterto be a legislative rule

subject to notice and comment for, inter alia, three reasons.

First, the New Letter could not be an interpretation of the IDEA-

B because Davila’s interpretation was contrary to a prior federal

court of appeals interpretation of the IDEA-B. Pet. App. 28a-

29a (citing Doe by Gonzales v. Maher, 793 F.2d 1470, 1482 (9th

Cir. 1986), aff d on other grounds sub. nom., Honig v. Doe, 484

U.S. 305 (1988)). Second, the New Letter imposed a new and

mandatory duty upon all school districts in the United States

without notifying school districts of the change in policy. Pet.

App. 28a. Third, the New Letter had a substantial impact on the

School District, on the class consisting of all school districts in

Indiana, and on all schoo! districts across the country. Pet. App.

19a.

The district court also relied upon the statutory language of

the IDEA-B limiting the agency's lawmaking authority. Pet.

App. 27a. Congress delegated legislative authonty to the

agency with the express limitation, “No other less formal

method of implementing such provisions is authorized.” 20

U.S.C. § 1417(b). In the distnct court's judgment, the New

Letter violated 20 U.S.C. § 1417(b) as well as the APA.

The Court of Appeals’ Decision.

The court of appeals reversed the judgment of the district

court. The court of appeals held that the notice and comment

procedures required by the APA were unnecessary. The New

Letter, the court of appeals held, was an interpretation of IDEA-

B, not a legislative rule. Pet. App. 12a.

The court of appeals admitted that the distinction between

interpretive and legislative rules is “far from crystal-clear.” Pet.

App. 6a (quoting C hemical Waste Management, Inc. v. EPA,

869 F.2d 1526, 1534 (D.C. Cur. 1989)). The court of appeals

continued by noting two different tests for distinguishing inter-

pretive and legislative rules. Pet. App. 7a. The court of appeals

applied one test, finding that the other was of “limited value.”

Pet. App. 8a. Under the test adopted, the court of appeals found

that the New Letter was an interpretive rule because (1) the

agency said the New Letter was an interpretive rule and (2) the

agency rule was based on the language and legislative history of

the IDEA-B. Pet. App. 8a-9a, 12a.

The court of appeals did not consider the district court's

reliance on the Ninth Circuit's decision in Maher, 793 F.2d at

1482. Instead, the Seventh Circuit addressed this Court's

affirmance of that decision on other grounds in Honig Vv. Doe,

484 U.S. 305 (1988). Pet. App. 14a-15a. The court of appeals

found that Honig did not reach the question at issue in this case.

Pet. App. 15a.

The court of appeals also did not consider, as the district

court did, the substantial umpact on the School District. Pet.

App. l4a. The cour of appeals found that “[p]revailing

authority” no longer examined substantial umpact as a factor

when deciding whether a rule was legislative or interpretive. /d.

The court of appeals found the district court’s reliance on

substantial impact to be urelevant. Id.

The court of appeals finally held that the New Letter did not

violate 20 U.S.C. § 1417(b). Section 1417(b), the court of

appeals reasoned, was designed to ensure that the rules neces-

sary to implement the IDEA-B would be in place early enough

to allow states to fulfill their statutory obligations by the

effective date of the statute. Pet. App. 15a. The limit on the

Department of Education's legislative authonty did not apply to

the New Letter.

———“_-eo-g

REASONS FOR GRANTING THE WRIT

This Court should grant a writ of certiorari for three reasons.

First, the federal appellate courts use different tests and factors

leading to conflicting decisions on whether a particular rule is

legislative or interpretive. In this case, the Department of

Education’s alleged interpretation in the New Letter contradicts

a judicial interpretation of the IDEA-B by a federal court of

appeals. Maher, 793 F.2d at 1482. The New Letter also has a

substantial impact on the School District. Some federal appel-

late courts would find these factors dispositive and hold the rule

legislative, while others disregard them as irrelevant and find

the rule interpretive. This case is a excellent vehicle to resolve

these conflicting tests and factors.

Second, the court of appeals found the New Letter

interpretated the IDEA-B and thus was exempt from notice and

comment despite the contrary and prior federal court of appeals’

interpretation of the IDEA-B. Maher, 793 F.2d at 1482. The

Seventh Circuit's opinion is in direct conflict with a federal

court of appeals’ decisions holding that when an agency rule”

interpreting a statute contradicts a pnor interpretation of that

same statute by a federal court of appeals, the rule cannot be

interpretive despite agency claims to the contrary. Chamber of

Commerce v. OHSA, 636 F.2d 464 (D.C. Cir. 1980).

Third, the issue of disciplining school children whose

conduct is unrelated to their disability differently than other

school children for the exact same conduct is of exceptional and

manifest national importance. Disparate disciplinary treatment

of disabled students erodes the personal responsibility neces-

sary for educational growth. Unequal treatment also has a huge

fiscal impact on schools. The School District will be required

to spend between $100,000 to $300,000 more per year as aresult

of the New Letter. The Schoo! District is the named plaintiff on

behalf all of Indiana’s 392 school districts. The special treat-

ment of disabled students in these circumstances also negatively

affects schools beyond Indiana, including all schools in the

United States and territories that receive funds under IDEA-B.

THE CONFLICTS IN THE LOWER COURTS IN

DISTINGUISHING LEGISLATIVE FROM

INTERPRETIVE RULES HAVE ARISEN FROM

DOCTRINAL UNCERTAINTY

The APA requires agencies to afford notice of a proposed

rule and opportunity for public comment prior to a rule’s

promulgation. 5 U.S.C. § 553. Congress carved out an

exception to the notice and comment requirement for “interpre-

tive mules.” 5 U.S.C. § 553(b)(A). Federal courts of appeal have

issued conflicting opinions on what agency rules fit within the

interpretive rule exception.

The court of appeals in this case admitted that the distinction

between interpretive and legislative rules is “far from crystal-

clear.” Pet. App. 6a (citation omitted). The District of Colum-

bia Circuit stated that the distinction between legislative rules

and interpretive rules is “tenuous,” “fuzzy,” and “blurred.”

Community Nutrition Institute v. Young, 818 F.2d 943, 946

(D.C. Cir. 1987) (citations omitted). Other circuits have also

noted the doctrinal uncertainty in distinguishing between inter-

pretive and legislative rules. Jerri’s Ceramic Arts, Inc. v.

Consumer Product Safety Commission, 874 F.2d 205, 207 (4th

Cir. 1989)(“‘adistinction between ‘interpretive’ rules and ‘some-

thing more,’ i.¢., ‘substantive’ or ‘legislative’ rules, is not

always easily made”); Story v. Marsh, 732 F.2d 1375, 1384 (8th

Cir. 1984)(“characterization of a rule as substantive or proce-

dural is amatter ... ‘enshrouded inconsiderable smog’” (citation

omitted); Avoyelles Sportsmen's League, Inc. v. Marsh, 715

F.2d 897, 909 (Sth Cir. 1983)(noting “fuzzy perimeters” of

interpretative rule exception), Noel v. Chapman, 508 F.2d 1023,

1030 (2d Cir.), cert. denied, 423 U.S. 824 (1975) (distinction

nes ts

“enshrouded in considerable smog”’). Administrative law com-

mentator Professor Kenneth Culp Davis stated, “the problem is

baffling.” 2 Kenneth Culp Davis, Administrative Law Treatise

§7:5 at 32 (2d ed. 1979). ‘

Different Circuits Apply Different Tests

In this uncertain legal landscape, different tests have been

used to determine what qualifies as an interpretive rule exempt

from notice and comment. The Seventh Circuit in this case

adopted the test set forth in 1984 by the District of Columbia

Circuit en banc:

First, the agency’s own label, while relevant, is

not dispositive. ... An interpretative rule simply

states what the administrative agency thinks the

Statute means, and only “‘reminds’ affected

parties of existing duties.” On the other hand, if

by its action the agency intends to create new

law, rights or duties, the rule is properly consid-

ered to be a legislative rule.

General Motors Corp. v. Ruckelshaus, 742 F.2d 1561, 1565

(D.C. Cir. 1984)(en banc), cert. denied, 471 U.S. 1561 (1985);

Pet. App. 6a-7a. If the agency claims that the rule is interpretive

and the agency intends to interpret a statute, then the rule is

interpretative and exempt from notice and comment under

General Motors. In General Motors, the court of appeals held

the rule to be interpretive. :

Three years after the District of Columbia Circuit enunci-

ated the test in General Motors, a different panel of that same

circuit applied a different test. Community Nutrition, 818 F.2d

at 946-948. The test focused on two factors. First, whether the

language employed by the agency in creating and descnbing the

rule suggested that the agency rule had present binding effect.

The court of appeals wrote, “[MJandatory, definitive language

is a powerful, even potentially dispositive, factor suggesting

that [agency rules] are substantive.” Jd. at947. Second, whether

the rule limited the agency’s discretion. The appellate court

stated, “[C]abining of an agency’s prosecutorial discretion can

in fact rise to the level of a substantive, legislative rule.” /d. at

948 (citing Guardian Federal Savings & Loan Association v.

FSLIC. 589 F.2d 658, 666-667 (if so-called interpretive rule “is

in purpose or likely effect one that narrowly limits administra-

tive discretion, it will be taken for what it is—a binding rule of

substantive law” (emphasis added)). In Community Nutrition,

the court of appeals held the rule to be legislative. See also State

of Alaska v. U.S. Department of Transportation, 868 F.2d 441

(D.C. Cir. 1989) (applying Community Nutrition test to con-

clude rule was legislative)).

Another test. one noted by the Seventh Circuit, was devel-

oped by Professor Davis for distinguishing interpretive rules

from legislative rules:

(RJules are legislative when the agency 1s

exercising delegated power to make law through

rules. and mules are interpretative when the agency

is not exercising such delegated power in issuing

them. When an agency has no granted power to

make law through rules, the rules it issues are

necessarily interpretative, when an agency has

such granted power, the rules are interpretative

unless it intends to exercise the granted

power....

Pet. App. 7a-8a (quoting 2 Kenneth Culp Davis, Administrative

Law Treatise § 7.10 at 54 (2d ed. 1979)); see also Chamber of

Commerce, 636 F.2d at 468. If Congress has delegated lawmak-

ing authority to the agency and the agency did not intended to

exercise that delegated lawmaking authority. then the agency's

rule is interpretive

The Seventh Circuit found Professor Davis’ test to be of

“limited value when an agency, like the Department of Educa-

tion, has both delegated rulemaking authority and the power to

issue interpretive rules.” Pet. App. 8a. Nonetheless, the court

of appeals in Chamber of Commerce applied Professor Davis’

test to the Department of Labor, an agency with both legislative

and interpretive authority. The District of Columbia Circuit in

that case held that the Assistant Secretary of Labor had promul-

gated a legislative rule.

Arecent federal court of appeals opinion applied yet another

test that turned on whether the agency rule constituted a change

in existing law, policy, or practice:

This court has determined that a rule is substan-

tive if it is promulgated pursuant to a direct

delegation of legislative power by Congress and

if it changes existing law, policy or practice. A

rule is interpretive if it is promulgated by an

agency having authority to issue substantive

rules and if it attempts to clarify an existing rule

but does not change existing law, policy, or

practice.

Rocky Mountain Helicopters, Inc. v. FAA, 971 F.2d 544, 546-

547 (10th Cir. 1992)(citations omitted). The court of appeals in

Rocky Mountain Helicopters found the FAA’s rule prohibiting

night vision goggles did not constitute a change in existing law,

policy or practice. /d. at 547. The appellate court also noted the

lack of a “uniform approach” in deciding whether a rule is

legislative or interpretive, giving examples of five different

tests. Id. at 547 n.2.

Some Circuits Consider The

“Substantial Lmpact” Factor, Others Do Not

In addition to different tests, the courts of appeals conflict

on whether substantial impact is a factor to be considered in

deciding whether a rule is legislative or interpretive. The district

court relied upon the New Letter’s substantial impact on the

School Distric: and all school districts in Indiana to hold the rule

legislative. Pet. App. 19a. The court of appeals found the

district court’s reliance on substantial impact misplaced, “Pre-

vailing authority rejects the proposition that a rule that has

substantial impact is necessarily legislative.” Pet. App. 14a

(citing Friedrich v. Secretary of Health & Human Services, 894

F 2d 829, 836 (6th Cir.), cert. denied, 111 S.Ct. 59 (1990);

Industrial Safety Equipment Association, Inc. v. EPA, 837 F.2d

1115, 1121 (D.C. Cir. 1988); American Postal Workers Union

v. United States Postal Service, 707 F.2d 548, 560 (D.C. Ci,

1983). cert. denied, 465 U.S. 1100 (1985)).

Other circuits, however, consider substantial impact as one

factor in deciding whether a rule is legislative or interpretive. La

Casa Del Convalecierite v. Sullivan, 965 F.2d 1175, 1179 (Ist

Cir. 1992) (‘we also look[] to the substantial impact of the rule

in determining agency intent. .. . [and] as a sign that the rule is

substantive rather than interpretive”); State of Ohio Department

of Human Services v. United States Department of Health, 862

F.2d 1228, 1233 (6th Cir. 1988)(“One factor that courts have

considered in distinguishing between legislative and interpre-

tive rules is the impact that a given rule has on those to whom

the rule applies.”); Levesque v. Block, 723 F.2d 175, 182 (ist

Cir. 1983)(substantial impact “relevant in construing the intent

of the agency in issuing the rule.”); Brown Express, Inc. v.

United States, 607 F.2d 695, 701-702 (Sth Cir. 1979)(applying

“substantial impact”); Reynolds Metals Co. v. Rumsfeld, 564

F.2d 663, 669 (4th Cir. 1977). cert. denied, 435 U.S.995

(1978 (applying “substantial impact’ ): Narional Motor Freight

Traffic Association v. United States, 268 F.Supp. 90 (D.D.C.

1967)(Burger, McGowan, Sirica, JJ.), aff d,393 U.S. 18 (1968);

2'Kenneth Culp Davis, Administrative Law Treatise § 7:16 at

77-78 (some courts consider whether rule has substantial impact

on those it affects).

This Case Is A Good

Vehicle To Resolve The Conflict

These different tests and factors that have been fully ex-

plored throughout the circuits are more than minor doctrinal!

differences; they have resulted in different outcomes. This case

present a good vehicle to resolve the conflicting tests and

factors. In this case, the district court relied upon (1) a prior and

contrary interpretation of the IDEA-B by the Ninth Circuit, (2)

a change in agency policy, and (3) a substantial impact on the

Schoo! District and all school districts across the country. From

these factors, the district court held that the New Letter was

legislative rather than interpretive.

The Seventh Circuit, however, applied a different test

neither quoting nor citing in any manner the Ninth Circuit's

opinion relied upon by the district court. The court of appeals

found that Davila thought the New Letter was an interpretation

of the IDEA-B. Pet. App 8a-9a. The appellate court then noted

that the New Letter relied upon the language of the statute and

its legislative history. Pet. App. 12a. The two parts of the

General Motors test indicated to the court of appeals that the

New Letter was interpretive.

The General Motors test applied by the court of appeals,

conflicts with this Court’s statement that administrative inter-

pretations of statutory terms—normally the subject of interpre-

tive rules—may have legislative effect. Batterton v. Francis,

432 U.S. 416 (1977). This Court stated:

Congress in § 407(a) expressly delegated to the

Secretary the power to prescribe standards for

determining what constitutes “unemployment”

for purposes of AFDC-UF eligibility... . In

exercising that responsibility, the Secretary

adopts regulations with legislative effect.

Id. at 425 (emphasis in original). These interpretations have the

“force and effect of law.” Id. at425n.9. One commentator has

urged courts to explicitly recognize that interpretive rules with

legislative effect are promulgated pursuant to delegated author-

ity to make law through rules therefore making the “interpreta-

tion” subject to the notice and comment requirements of § 553

of the APA. Kevin W. Saunders, Interpretative Rules With

Legislative Effect: An Analysis And A-Proposal For Public

Participation, 1986 Duke L.J. 346, 382.

Furthermore, in distinguishing between legislative and in-

terpretive rules, courts should pay heed to whether individual

rights and obligations are affected. Morton v. Ruiz, 415 U.S.

199, 232 (1974). Many of the tests and factors adopted by the

lower courts turn solely on what the agency intends, rather than

whether the agency rule has a substantial impact on individual

rights and duties. The doctrinal uncertainty in the appellate

courts regarding the distinction between legislative rules and

interpretive rules needs to be resolved by this Court.

On a practical level, school districts in the Ninth Circuit are

subject to two contradictory rules. In 1986, three years prior to

the New Letter, the Ninth Circuit in Maher stated:

We do not hold... . that a school may never

withhold educational services from a handi-

capped child. Ifthe child's behavior is properly

determined not to be a manifestation of his

handicap, the handicapped child can be ex-

pelled. See Kaelin. Grubbs, 682 F.2d 595,602

(6th Cir. 1982); S-/ v. Turlington, 635 F.2d 342,

248 (5th Cir.) (Unit B). cert. denied, 454 US.

1030, 102 S.Ct. 566, 70 L.Ed.2d 473 (1981);

Doe v. Koger, 480 F.Supp. 225, 228 (N.D. Ind.

1979). This conclusion does not conflict with

the [IDEA-B]. When achild’s misbehavior does

not result from his handicapping condition, there

is simply no justification for exempting him

from the rules, including those regarding expul-

sion, applicable to other children. Therefore,

when a handicapped child is properly expelled,

the school district may cease providing all edu-

cational services—just as it could in any other

case. Todo otherwise would amount to asserting

that all acts of a handicapped child, both good

and bad, are fairly attributable to his handicap.

We know that this is not so.

793 F.2d at 1482 (footnote omitted). Schools in Alaska,

Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada,

Oregon and Washington do not know whether to follow the

Ninth Circuit's binding interpretation of the IDEA-B or the

Department of Education's contrary, but likewise binding,

interpretation of IDEA-B. Pet. App. 13a.

il.

WHEN AN AGENCY RULE CONTRADICTS A PRIOR

FEDERAL COURT OF APPEALS INTERPRETATION

THE RULE IS LEGISLATIVE, NOT INTERPRETIVE

The decision of the court of appeals conflicts with Chamber

of Commerce v. OHSA, 636 F.2d 464 (D.C. Cir. 1980). At issue

in that case was the Occupational Safety and Health Act of 1970

(“OSHA Act”), 29 U.S.C. §§ 651-678 (1976), which allows a

representative authorized by employees to accompany an in-

spector during a walkaround inspection of the employee's

workplace. The question presented was whether the Occupa-

tional Safety and Health Administration (“Administration’’)

needed to provide notice and comment before requiring em-

ployers to compensate employee representatives for their

walkaround time.

In November of 1971, a union president filed a complaint

with theSecretary of Labor alieging that an employer failed to

pay employee representatives for their walkaround time. The

Assistant Secretary rejected the union’s claim relying in part

upon the Solicitor of Labor's opinion that walkaround time was

not “hours worked” under the Fair Labor Standards Act

(“FLSA”), 29 U.S.C. § 203(0). The union sought judicial

relief. The district court upheld the Assistant Secretary's

interpretation of the FLSA and OHSA Act.

On appeal, the court of appeals affirmed. Leone v. Mobil Oil

Corp., 523 F.2d 1153 (D.C. Cir. 1975). The appellate court held

that because walkaround time primarily benefited employees

and because the walkaround was conducted beyond the

employer's control, walkaround time did not constitute “hours

worked” under the FLSA. /d. at 1163-1164. Furthermore,

inasmuch as neither the terms of the OSHA Act nor its legisla-

tive history offered guidance on the payment issue, the court of

appeals also held that payment for walkaround time was not so

essential to the OSHA Act as to compel an inference of a

payment requirement from the OSHA Act itself. /d. at 1159-

1161.

In March of 1977, anew Assistant Secretary of Labor took

office. After conducting a review of the walkaround rule, the

Assistant Secretary announced for the first time that “[a]ny

emptoyer who fails to compensate employees for walkaround

time will be charged with discriminating against their workers

under Section 11(c) of the [OSHA Act].” Chamber of Com-

merce, 636 F.2d at 466 (citation omitted). The Solicitor of

Labor issued a new opinion stating that an employer's failure to

pay workers for walkaround violated § 11(c) of the OSHA Act.

On September 20, 1977, without any public proceedings, the

Assistant Secretary promulgated what she termed an “interpre-

tive rule and general statement of policy” declaring that “an

employer's failure to pay employees for tume during which they

are engaged in walkaround inspections is discriminatory under

section 11(c).” Jd. at 467 (citation omitted).

The Chamber of Commerce filed an action in district court

challenging the validity of the regulation. The district court held

that the regulation was interpretive and therefore exempt from

the notice-and-comment requirements of the APA. On review,

the court of appeals applied a test similar to the one formulated

by Professor Davis:

A rule is interpretive, rather than legislative, if it

is not “issued pursuant to legislatively-delegated

power to make rules having the force of law” or

if the agency intends the rule to be no more than

expression of its construction of a statute or rule.

Id. at 468 (citing Joseph v. United States Civil Service Commis-

sion, 554 F.2d 1140, 1153 n.24 (D.C. Cir. 1977)).

Congress had authorized the Secretary of Labor to issue

legislative rules regarding workplace inspections. 29 U.S.C. §

657(g)(2) (1976). Ascertaining that an agency intended to

exercise its legislative authority presented the District of Co-

lumbia Circuit with a “difficult inquiry.” 636 F.2d at 468. An

agency's own label is indicative but not dispositive; the appel-

late court did “not classify a rule as interpretive just because the

agency says it is.” /d. (citation omitted). Instead, “it is the

substance of what the [agency] has purported to do and has done

which is decisive.” 636 F.2d at 468 (quoting Columbia Broad-

casting System, Inc. v. United States, 316 U.S.407,416(1942)).

Despite the Administration’s claim that the challenged rule

was interpretive, the court of appeals concluded that the agency

intended the rule to be legislative. 636 F.2d at 468. In Leone,

a court of appeals held that neither the terms of the OSHA Act

nor the OSHA Act’s legislative history nor the policies under-

lying the employee walkaround right required employers to

compensate employees for walkaround time. 523 F.2d at 1159-

1161. The appellate court reminded the Administration that

statutory interpretation by an agency is not controlling on a

court. 636 F.2d at 469 (citing Skidmore v. Swift & Co., 323 US.

134, 139-140 (1944)).

The effect of the Administration’s rule exposed the agency's

intent. The Administration could not be explaining or clarifying

the OSHA Act’s language, for, as the court of appeals concluded

in Leone, the OSHA Act neither prohibits nor compels pay for

walkaround time. There was no “existing duty” to serve as the

subject of an Administration reminder. Congress had not

“legislated and indicated its will” on the question of walkaround

pay, therefore the Administration must have done more than

exercise its “‘power to fill up the details.’” 636 F.2d at 469

(quoting United States v. Grimaud, 220 U.S. 506, 517 (1911)

(quoting Wayman v. Southard, 23 U.S. (10 Wheat.) 1, 43

(1825)). The court of appeals stated, “It is clear to us that the

Administration has attempted through the regulation

to supplement the [OSHA] Act, not simply to construe it, and

therefore the regulation must be treated as legislative.” 636 F.2d

at 469.

In this case, the effect of the New Letter exposed the

Department of Education's intent. The agency could not be

explaining or clarifying the IDEA-B's language, for, as the

court of appeals concluded in Maher, the IDEA-B neither

prohibits nor compels schools to continue to educate disabled

students disciplined for reasons found to be unrelated to the

student's disability. There was no “existing duty” to serve as the

subject of Assistant Secretary Davila’s reminder. Congress had

not legislated and indicated its will on the question of continu-

ation of educational services when the improper conduct is

unrelated to the student's disability, therefore the agency must

have done more than exercise its power to fill up the details. The

————————

Department of Education in the New Letter has attempted

through regulation to supplement the IDEA-B, not to construe

it. The New Letter must be treated as legislative.

Chamber of Commerce directly conflicts with the court of

appeals opinion at issue in this petition. The Leone decision

interpreted the OSHA Act like the Maher decision interpreted

the IDEA-B: no duty arose from the statute. The Assistant

Secretary of Labor interpreted the OSHA Act after Leone to

require walkaround pay, and the Assistant Secretary of Educa-

tion interpreted the IDEA-B after Maher to require the continu-

ation of educational services when disabled students are ex-

pelled or suspended for reasons unrelated to the student's

disability. Both the Assistant Secretary of Labor and the

Assistant Secretary of Education claimed the agency rule was

interpretive and thus exempt from notice and comment. The

District of Columbia Circuit in Chamber of Commerce required

notice and comment despite the agency's claim that the rule was

interpretive, while the Seventh Circuit in this case found the

agency rule was interpretive and thus exempt from notice and

comment.

Chamber of Commerce remains good law today. The

District of Columbia Circuit cited the opinion less than one

month ago when invalidating a Department of Health and

Human Services rule prohibiting counseling on abortion. Na- |

tional Family Planning and Reproductive Health Associations,

Inc. v. Sullivan, No. 92-5252, 1992 U.S. App. LEXIS 28469

(D.C. Cir. Nov. 3, 1992). The appellate court stated , “The

proper distinction between legislative and interpretive rules is

shown even more clearly in Chamber of Commerce v. OSHA,

636 F.2d 464 (D.C. Cir. 1975).” Jd. at'* 27. The conflicting

tests and factors have resulted in conflicting results; the court of

appeals decision cannot be squared with Chamber of Com-

merce.

Il.

THE NEW LETTER RAISES ISSUES FOR SCHOOL

DISTRICTS ACROSS THE COUNTRY THAT ARE

OF MANIFEST NATIONAL IMPORTANCE

The validity of the New Letter as promulgated, without

notice and comment, affects all school districts across the

United States and territories. To comply with the additional

duty, the School District will be required to spend an additional

$100,000 to $300,000 per year. All schooi districts in Indiana

are apart of this suit. Overall, Indiana receives over $35 million

of IDEA-B funds which are now tied to the mandatory require-

ments of the New Letter.

The New Letter also applies to all states and school districts

across the country. Pet. App. 41a. School districts from Maine

to Hawaii that receive IDEA-B funds now are obliged to

continue educational services even if the disabled student is

disciplined for reasons unrelated to the student's handicap. The

California Department of Education and the New York State

School Boards Association, representing two of the nation’s

largest educational systems, have filed amicus curiae briefs in

support of this petition. This case involves more than the School

District, more than the school districts in Indiana, it involves

every school district in the nation.

Although the fiscal irnipact of the New Letter is dramatic in

these times of declining educational budgets, the individuals

who stand to lose the most are the disabled students. Because

of the New Letter disabled students will receive the message that

they will be allowed to continue their studies despite serious

violation of school rules. This case does not involve schools

disciplining disabled students for actions directly related to their

disabilities as was the case prior to the IDEA-B. Instead it

involves disparate treatment of two students who commit

similar acts in violation of the school code simply based upon

the fact that a student receives services for a disability. The

School District on behalf of all Indiana school districts asks only

for an opportunity to express tothe Department of Education the

devastating effect such disparate treatment will have upon the

mission of the public school to instill self-discipline in all

students, disabled a well as non-disabled. This is best done

through the vehicle enacted by Congress for the purpose of

obtaining public input in the regulatory area, the APA.

In enacting the IDEA-B, Congress delegated to the Depart-

ment of Education the authority to make law under the IDEA-

B. Congress, however, limited that agency’s lawmaking au-

thority in a unique manner:

In carrying out the provision of this subchapter,

the Secretary shall issue, not later than Janu-

ary 1, 1977, amend, and revoke such rules and

regulations as may be necessary. No other less

formal method of implementing such provisions

is authorized.

20 U.S.C. § 1417(b). The court of appeals held that Congress

designed this section to “ensure that the rules necessary

to implement the [IDEA-B] would be in place early enough to

allow states to fulfill their statutory obligation by the effective

date of the Act.” Pet. App. 15a (citing Appellant’s Brief at 5-

6).

Contrary to the Department of Education’s unsupported

assertion in its brief, § 1417(b) is not limited to the initial

implementation of the IDEA-B. Such a construction of the

Statute renders the terms “amend” and “revoke” in § 1417(b) to

be a dead letter:

In carrying out the provision of this subchapter,

the Secretary shall... amend, and revoke such

rules and regulations as may be necessary. No

other less formal method of implementing such

provisions is authorized.

20 U.S.C. § 1417(bemphasis added). Section 1417(b) should

not be construed to make the terms “amend” and “revoke”

meaningless surplusage. South Carolina v. Gatawba Indian

Tribe, Inc., 476 U.S. 498, 510 n.22 (an elementary canon of

construction is that a statute should not be interpreted so as to

render one part inoperative).

In addition to the democratic principles provided by the

APA, Congress expressly limited the Department of Education’s

rulemaking in this delicate and sensitive area of education: “No

other less formal method of implementing such provision is

authorized.” 20 U.S.C. § 1417(b). The court of appeals has

construed the APA and this limitation in the IDEA-B to prohibit

the School District, all school districts in Indiana, and all schools

from across the country from receiving notice of and commenting

on a Department of Education rule that will ultimately prove

detrimental to students with disabilities.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

MARGARET BANNON MILLER

GeorGE E. PuRDY

GEorGE T. PATTON, JR.

(Counsel of Record)

BOSE McKINNEY & EVANS

2700 First Indiana Plaza

135 N. Pennsylvania Street

Indianapolis, Indiana 46204

(317) 684-5000

Counsel for Petitioner

November 27, 1992

APPENDIX

3n the

United States Court of Appeals

For the Seventh Circuit

No. 91-3386

METROPOLITAN SCHOOL DISTRICT

OF WAYNE TOWNSHIP, MARION COUNTY,

INDIANA, on behalf of itself and

all others similarly situated,

Plaintiff-Appellee,

RoBERT R. Davita, Assistant Secretary,

Office of Special Education

and Rehabilitative Services,

United States Department of Education,

Defendant-Appellant.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 90 C 1435—S. Hugh Dillin, Judge.

ARGUED MAY 20, 1992—DecipEp JuLy 30, 1992

Before BAUER, Chief Judge, PosNER, Circuit Judge,

and GIBSON, Senior Circuit Judge.}

' The Honorable Floyd R. Gibson, Senior Judge for the United

States Court of Appeals for the Eighth Circuit, is sitting by

designation.

———————————7—-— 1

2a No. 91-3386

BAUER, Chief Judge. In this appeal, Robert Davila on

behalf of the United States Department of Education chal-

lenges the district court’s grant of summary judgment in

favor of the Metropolitan School District of Wayne Town-

ship and the plaintiff class. The district court held that

a letter p rting to interpret part B of the Individuals |

with Disabilities Education Act, 20 U.S.C. §§ 1411-20 (“the |

IDEA-B” or “the Act’’),2 was a legislative ruling subject

to the notice and comment procedures of the Administra-

tive Procedure Act, 5 U.S.C. § 553 (“APA’’). We reverse,

and remand for entry of summary judgment in favor of |

Davila and the Department of Education. |

The IDEA-B provides federal funding to states to sup-

port the education of disabled children. In order to qualify

for funds, a state must establish a policy assuring a free

appropriate education (‘““FAPE”’) to all disabled children.

20 U.S.C. § 1412(1). Most states distribute the federal

monies to local educational agencies that provide services |

to eligible children. The Office of Special Education and

Rehabilitative Services of the United States Department

of Education (““OSERS’’) administers the Act. The rule

at issue here was announced by OSERS in a letter writ-

ten by Davila, the Assistant Secretary for Special Educa-

tion and Rehabilitative Services, in response *o an inquiry

from Frank E. New, the Director of Special Education

for the Ohio Department of Education.

New asked whether the IDEA requires states to pro-

vide educational services to disabled children who are ex- |

pelled or suspended for an extended period for reasons

unrelated to their disability. In his letter, Davila stated

that OSERS interpreted the IDEA to require states to

2 This Act formerly was called the Education of the Handicapped

Act of 1975. Congress changed the name, effective October 30,

1990.

-— |

No. 91-3386 3a

continue services in these circumstances. The relevant

facts are undisputed: this position was not published in

the Federal Register or the Code of Federal Regulations,

and public comments were not solicited before it was

issued.

The School District for Wayne Township sued the Sec-

retary on behalf of itself and all similarly situated pro-

viders of educational services. The School District asserts

that OSERS’ position places a large financial burden on

school districts, and that the districts are entitled to notice

of the proposed rule and the opportunity to comment.

Both parties filed motions for summary judgment. The

district court agreed with the School District that OSERS’

position is a legislative rule subject to the notice and com-

ment requirements of the APA. Metropolitan School Dis-

trict of Wayne Township v. Davila, 770 F. Supp. 1331

(S.D. Ind. 1990). The district court acknowledged that “the

issue is whether . . . the New Letter is a ‘legislative rule’

requiring notice and comment under the APA, or. .

merely an ‘interpretive rule’ exempt from the APA’s re-

quirements.” Jd. at 1337.

The court applied a three-factor test to determine that

the position taken in the letter is ‘‘substantive,” and there-

fore subject to the notice and comment requirements of

§ 553 of the APA and to the restrictions of 20 U.S.C.

§ 1417(b), the section of the IDEA delegating law-making

authority to the Department of Education. Jd. at 1338.

These factors were: ‘(1) it imposes a new and mandatory

duty upon all school districts in the United States, (2) the

new duty is not expressly required by EHA [now IDEA],

and (3) contrary to the New Letter itself it is not required

by Honig v. Doe, 484 U.S. 305 (1988).”’ 770 F. Supp. at

1338.

We believe the district court used ‘‘substantive” as a

synonym for “legislative.” This usage appears in several

other district court opinions, most notably in the one upon

which the district court relied to develop its three-factor

test. See National Treasury Employees Union v. Reagan,

4a | No. 91-3386

685 F. Supp. 1346, 1856 (E.D. La. 1988). See also Energy

Reserves Group v. Federal Energy Administration, 447

F. Supp. 1135 (D. Kansas 1978). In reviewing (and revers- |

ing) Energy Reserves, the Temporary Emergency Court

of Appeals treated “substantive” in this context as a syn-

onym for “legislative.” E Reserves Group v. Federal

Energy Administration, 589 F.2d 1082, 1089 (Temp. Emer. |

Ct. App. 1978). See also American Hospital Association

v. Bowen, 834 F.2d 1037, 1045 (D.C. Cir. 1987). For these

reasons, we believe the district court here also used the

terms interchangeably.

In addition to its holding that the APA requires OSERS

| to follow the notice and comment procedures before pro-

mulgating the position expressed in Davila’s letter to

| New, the district court found that 20 U.S.C. § 1417(b) re-

quires these procedures. Section 1417(b) provides:

In carrying out the provisions of this subchapter, the

Secretary shall issue, not later than January 1, 1977,

amend, and revoke such rules and regulations as may

be necessary. No other less formal method of imple-

menting such provisions is authorized.

The district court interpreted this language to require that

any rules the Department proposed under the Act be pub-

lished in the Federal Register. Jd. at 1337. Based upon

its holding that the position announced in Davila’s letter

to New is “substantive” (legislative), and its reading of

§ 1417(b), the court concluded that the rule is invalid be-

cause OSERS failed to follow the notice and comment pro-

cedures of the APA. We find the use of the term “‘sub-

stantive” in this context misleading; an interpretation

which explains the meaning of the statute can be just as

“substantive” as a legislative rule. We prefer the inter-

pretive/legislative terminology because it avoids any po-

tential confusion.

Il.

It is well established that review of a district court’s grant

of summary judgment is de novo. See, e.g., La Preferida,

No. 91-3386 Da

Inc. v. Cerveceria Modelo, S.A., 914 F.2d 900, 905 (7th

Cir. 1990). In order to uphold a grant of summary judg-

ment, we must “view the record and all inferences drawn

from it in the light most favorable to the party opposing

the motion,” Lohorn v. Michal, 913 F.2d 327, 331 (7th

Cir. 1990), and conclude that there is no genuine issue

as to any material fact and that the moving party is en-

titled to judgment as a matter of law. Fed. R. Civ. P.

56(c). First Wisconsin Trust Co. v. Schroud, 916 F. 394,

398 (7th Cir. 1990).

In this case, we believe Davila and the Department of

Education are entitled to judgment as a matter of law.

The APA does not require administrative agencies to fol-

low notice and comment procedures in all situations. Sec-

tion 553(bX3XA) specifically excludes “interpretive rules,

general statements of policy, or rules of agency organiza-

tion, procedure, or practice,” from the notice and com-

ment procedures. See e.g., Ford Motor Credit Co. v. Mil-

hollin, 444 U.S. 555, 565 (1980) (discussing “information

letters” containing statements which begin: “The staff's

position is . . .””) (quoted in Industrial Safety Equipment

Association, Inc. v. EPA, 837 F.2d 1115, 1121 n.11 (D.C.

Cir. 1988)). Based upon our review of Davila’s letter and

controlling authority, we conclude that the letter announced

OSERS’ construction of the IDEA, and hence is an in-

terpretive rule that does not trigger the APA’s notice and

comment requirements.

We note briefly that this issue is ripe for review. Pre-

enforcement review is appropriate here because the De-

partment of Education has issued its final pronouncement

on the subject, and the Schoo! District and other plain-

tiffs must either comply with the Department’s interpreta-

tion or face potential sanctions. The Department’s posi-

tion mandates that states provide educational services to

expelled disabled children in order to comply with the

IDEA. “If a rule of conduct cannot be challenged in ad-

vance of violating it, the people subject to it are placed

in a dilemma: comply with a rule that harms them and

that they believe to be invalid or violate the rule at the

6a No. 91-3386

risk of a heavy penalty if they’ve guessed wrong and the

rule is upheld in the penalty proceeding.”’ Abbs v. Sul-

livan, Nos. 91-1928, 91-1924, & 91-2429 1992 U.S. App.

LEXIS 111489 (7th Cir. May 1, 1992) (citing 4 Kenneth

Culp Davis, Administrative Law Treatise § 25:6, at p. 369

(2d of. 1983)). In this situation, the rule can be challenged

directly. Jd.

“The distinction between interpretive (or ‘interpretative’)

and substantive (or ‘legislative’) rules is admittedly far

from crystal-clear.’’ Chemical Waste Management, Inc. v.

EPA, 869 F.2d 1526, 1534 (D.C. Cir. 1989) (citing Amer-

ican Hospital Association v. Bowen, 834 F.2d 1087, 1045

(D.C. Cir. 1987)). Chemical Waste considered an EPA in-

terpretation of a regulation which provides: ‘‘any solid

waste generated from the treatment, storage, or disposal

of a hazardous waste, including any leachate is a hazard-

ous waste.” 40 C.F.R. § 261.3(cX2Xi). The EPA determined

that the hazardousness of waste does not depend upon

the time of its disposal, and thus materials found to be

hazardous after disposal could produce hazardous byprod-

ucts requiring treatment. The court found this was a clari-

fication of an existing regulation and hence an interpretive

rule. This interpretation required treatment of materials

that heretofore had not been covered by the regulation.

This new obligation did not render the EPA’s reading of

the regulation legislative.

But we are getting ahead of ourselves. The District of

Columbia Circuit, sitting en banc, has set forth the

general principles to be used to determine whether a rule

is interpretive, and, therefore, exempt from APA’s notice

and comment requirements. The “starting point”’ of the

analysis is the agency’s characterization of the rule. Gen-

eral Motors Corp. v. Ruckleshaus, 742 F.2d 1561, 1565

(D.C. Cir. 1984) (en banc), cert. denied, 471 U.S. 1074

(1985); United Technologies Corp. v. United States Envi-

ronmental Protection Agency, 821 F.2d 714, 718 (D.C. Cir.

1987). The agency’s characterization is not dispositive, but

is a relevant factor. United Technologies, 821 F.2d at 718;

————_-eeen

No. 91-3386 Ta

General Motors, 742 F.2d at 1565; see also Friedrich v.

Secretary of Health & Human Services, 894 F.2d 829,

834-35 (6th Cir.) (noting Sixth Circuit’s adoption of prin-

ciples set out in General Motors), cert. denied, 111 S. Ct.

59 (1990).

After considering the agency’s characterization, the Gen-

eral Motors court outlined the more general distinction

between interpretive and legislative rules:

An interpretive rule simply states what the adminis-

trative agency thinks the [underlying] statute means,

and only reminds affected parties of existing duties.

On the other hand, if by its action the agency intends

to create new law, rights, or duties, the rule is prop-

erly considered to be a legislative rule.

United Technologies, 821 F.2d at 718 (quoting General

Motors, 741 F.2d at 1565). The court in United Technol-

ogies reviewed the General Motors holding, finding that

‘the entire justification for the rule [reviewed in General

Motors] was comprised of reasoned statutory interpreta-

tion, with reference to the language, purpose, and legis-

lative history of the statute. Jd. In other words, “ ‘inter-

pretive rules are statements as to what the administrative

officer thinks the statute or regulation means,’ whereas

legislative rules have ‘effects completely independent of

the statute.’ ”’ Jd. (quoting Cabais v. Egger, 690 F.2d 234,

238 & n.9 (D.C. Cir. 1982)) (emphasis in original).

This court has noted with approval Professor Davis’ test

for distinguishing interpretive from legislative rules. Pro-

duction Tool v. Employment & Training Administration,

688 F.2d 1161, 1166 (7th Cir. 1982) (quoting 2 Kenneth

Culp Davis, Administrative Law Treatise § 7.10 at 54 (2d

ed. 1979)). Davis’ formulation provides:

[RJules are legislative when the agency is exercising

delegated power to make law through rules, and rules

are interpretative when the agency is not exercising

such delegated power in issuing them. When an agen-

cy has no granted power to make law through rules,

a |

8a - No. 91-3386

the rules it issues are necessarily interpretative;

when an agency has such granted power, the rules

are interpretative unless it intends to exercise the |

granted power. . .

Id. As we pointed out in Production Tool, Professor

Davis’ formulation focuses upon the kind of power the

agency is using, and hence the force and effect of the rule. |

Legislative rules have the force and effect of law—they

are as binding upon courts as congressional enactments.

Id. at 1165. Interpretive rules, although they are entitled

to deference, do not bind reviewing courts. Batterton v.

Francis, 482 U.S. 416, 425-26 & n.9 (1977); Production

Tool, 668 F.2d at 1165. But this formulation is of limited |

value when an agency, like the Department of Education,

has both delegated rulemaking authority and the power

to issue interpretive rules. All agencies charged with en-

forcing and administering a statute have “inherent author-

ity to issue interpretive rules informing the public of the

procedures and standards it intends to apply in exercis-

ing its discretion.”’ Production Tool, 680 F.2d at 1166 (cit-

ing General Electric Co. v. Gilbert, 429 U.S. 125 (1976)). |

See also American Trucking Association, Inc. v. United

States, 688 F.2d 1337, 1841 n.5 (11th Cir. 1982), rev’d sub

nom. on other grounds, Interstate Commerce Commission

v. American Trucking Association, 467 U.S. 354 (1984)

(extending agency’s authority). Basically, then, this test |

returns us to the starting point set forth by the District

of Columbia Circuit—what kind of rule does the agency

think it has promulgated?

Here, Secretary Davila’s letter purports to be an inter-

pretation of the IDEA. Davila based the OSERS’ inter-

pretation upon the Supreme Court’s decision in Honig v.

Doe, 484 U.S. 305 (1988), and other cases interpreting

IDEA, the language of both the statute and an imple-

menting regulation (34 C.F.R. § 300.121(a)), and the legis-

lative history of the Act. These are the classic tools a

reviewing body, be it court or agency, relies upon to de-

termine the meaning of a statute. Thus, the first factor

crnntnticeeenteiiaeitaeieiael

No. 91-3386 9a

in our analysis, and an “important” one according to the

governing authority, weighs in favor of a determination

that the rule is interpretive. Friedrich, 894 F.2d at 835.

Under the more general inquiry, we must determine

whether the rule merely states what OSERS thinks the

statute means, or creates new law, rights, or duties. /d.;

United Technologies, 821 F.2d at 718. We note that a new

position does not necessarily make a rule legislative rather

than interpretive. State of Michigan v. Thomas, 805 F.2d

176, 182-84 (6th Cir. 1986); Alcarez v. Block, 746 F.2d 598,

613-14 (9th Cir. 1984); American Postal Workers Union

v. United States Postal Service, 707 F.2d 548, 559-60 (D.C.

Cir. 1983), cert. denied, 465 U.S. 1100 (1984).

The district court held that the letter announced a

“change in long standing policy of OSERS without a cor-

responding change in the underlying statute or regula-

tions.”” Metropolitan School District, 707 F. Supp. at 1337.

This holding is factually incorrect and, in this case, legally

irrelevant. There is nothing in the record to indicate that

OSERS’ position is a change in policy—in fact, it appears

that the question of whether schocls that expel disabled

students for reasons unrelated to their disability must con-

tinue to provide services, had not been considered before

May 1989. In May, a Maryland education official raised

the question, and OSERS responded in an unpublished

letter that states must continue to provide some form of

services. See Appellants’ Brief at 7. Because there was

no published policy, Frank New asked OSERS about the

issue when it arose in Ohio.

The School District points to a Memorandum issued by

the Office of Special Education Programs (a division of

OSERS), to support its argument that the agency’s posi-

tion is a change in policy. See Appellees’ Brief at 28 (cit-

ing Memorandum 87-21, 202 EHLR (Education for the

Handicapped Law Report) 372 (June 29, 1987)). The Mem-

orandum lists and answers questions about the Act posed

by state special education directors. The School District

asserts that the following question and answer state a

102 No. 91-3386

policy contrary to that announced in the letter to Frank

New:

Q. What are the issues and requirements related

to suspension and expulsion?

A. This is a complex area in which we are current-

ly better able to articulate the issues than the

answers. It is also relevant that the Supreme

Court has decided to hear a case involving sus-

pension and expulsion. Supreme Court review

was requested by Superintendent Honig of Cali-

fornia, and will take place some time after Oc-

tober 1, 1987.

OSEP’s position is that a suspension or expul-

sion of more than ten days’ duration constitutes

a change in placement which would trigger the

procedures and protections of the EHA-B....

Some courts looking at the discipline issue under

both EHA-B and Section 504 [of the Rehabilita-

tion Act of 1973] have saia that, when the mis-

behavior is unrelated to the handicapping condi-

tion, the child can be disciplined without regard

to the fact that the child has a handicap. This

is of interest because the basis for this under

the EHA-B is not entirely clear. While this may

deserve further thought, OSEP will not apply

a rule or guideline contrary to this in the ab-

sence of a generally applicable statement distrib-

uted in advance to the states.

Memorandum 87-21, 202 EHLR at 374, question 8. But

this response only discusses whether a school can suspend

or expel a disabled student (for reasons unrelated to his

disability), not whether some educational services must

be provided once the student is expelled. As counsel for

the Department pointed out at oral argument, until re-

cently it was unclear whether disabled children could be

disciplined at all under the Act. Honig v. Doe resolved

this question in the affirmative. 484 U.S. 305 (1988). The

Memorandum does not support the position that the let-

ter announced a change in longstanding agency policy.

No. 91-3386 lla

In this case, the treatment of children expelled for rea-

sons unrelated to their disabilities has never arisen. Under

the plaintiffs’ reasoning, any expression of agency opinion

on the subject necessarily would be new and, therefore,

legislative. This line of reasoning was rejected implicitly

in American Postal Workers, 707 F.2d at 558. In that

case, the Postal Service changed the computation formula

for retirement benefits for its workers. The change in the

formula reduced the expected benefits of 113,000 future

retirees. Jd. at 549. Notwithstanding the “newness” of

the rule, the court found that the new rule met the “‘clas-

sic definition of an interpretive rule’ because it “merely

interpreted the term ‘average pay’ as applied to PTF’s

[part-time flexible employees] to include only pay actual-

ly earned.” Jd. at 559.

Similarly, in Thomas, the Environmental Protection

Agency refused to accept Michigan’s proposed fugitive

dust regulations although they were nearly identical to

regulations approved five years before. 805 F.2d at 180-81.

After it approved the earlier regulations, the EPA modi-

fied its definition of “reasonably available control tech-

nology (“RACT”).” Jd. at 180. EPA informed the state

that it should use the more rigorous definition of RACT.

It stated that new information and “increased Agency con-

cern that rules be specific’? meant that it might not ap-

prove Michigan’s proposed rules. Jd. at 181. This was so

even though the statute being interpreted, Part D of the

Clean Air Act, 42 U.S.C. § 7502(bX3), remained unchanged.

The Sixth Circuit held that the EPA’s revised definition of

“reasonably available contro! technology,” which required

more detail than the old one, was interpretive. Jd. at 183.

The “definition clearly harmonizes with the language and

purpose of .. . the Clean Air Act . . . and does not create

any new law, rights or duties.” Jd. (quotations omitted).

These cases show that an agency’s change in its reading

of a statute does not necessarily make the rule announc-

ing the change legislative. That rules “‘may have altered

administrative duties or other hardships does not make

them substantive [legislative].”” Alcarez v. Block, 746 F.2d

12a No. 91-3386

543, 613 (9th Cir. 1983). Further, as we have pointed out,

the issue here is a new one, and the agency’s ruling does

not constitute a change in policy.

The rule announced in Davila’s letter satisfies the general

test of an interpretive rule. It relies upon the language

of the statute and its legislative history to determine “that

Congress did not intend for educational services to cease

for children with handicaps who were removed from schools

as a result of behavioral problems.”’ Davila Letter at 3,

Appellants’ Appendix at 19. This represents the paradig-

matic case of an interpretive rule. See United Technol-

ogies, 821 F.2d at 718. OSERS has simply stated what

it thinks the IDEA-B requires. See id.; Production Tool,

688 F.2d at 1165-67. See also American Hospital Associa-

tion v. Bowen, 834 F.2d 1037, 1045 (D.C. Cir. 1987) (in-

terpretive rules “merely explicat{e] Congress’ desires’’).

The rule is based on specific statutory provisions (“all han-

dicapped children’’), and its validity stands or falls on the

correctness of the agency’s interpretation of the statute.

In these circumstances, it is clear that the rule is an inter-

pretive one. See United Technologies, 821 F.2d at 719-20.

At oral argument, counsel for the School District as-

serted that Davila’s letter to New constituted a legislative

rule for three reasons: the Department of Education has

delegated law-making authority from Congress; Davila’s

interpretation is mandatory and binding; and it is a new

rule. Unfortunately for the School District, these factors

do not control the determination of whether an agency

has promulgated a legislative or interpretive rule. We al-

ready have discussed and rejected the contention that

“new” rules are always legislative. The remaining argu-

ments are also without merit.

Simply because an agency has the power to enact leg-

islative rules does not mean that it has exercised that

power. As we have noted, all agencies with power to ad-

minister statutes also have the authority to interpret

them. See discussion supra at 10. If the mere delegation

of rule-making authority meant all subsequent agency de-

No. 91-3386 13 a

terminations were legislative, and had to meet the notice

and comment requirements of the APA, agency function-

ing would be hamstrung. The ability to issue interpretive

rules “‘preserve(s] agency flexibility” and “allow{s) agen-

cies to explain ambiguous terms in legislative enactments

without having to undertake cumbersome proceedings.”’

American Hospital Association v. Bowen, 834 F.2d 1037,

1045 (D.C. Cir. 1987). See, e.g., United Technologies, 821

F.2d at 714 (EPA has both rule- -making authority, yet is-

sued interpretive rule); American Trucking Association,

688 F.2d at 1337 (Interstate Commerce Commission has

both, issued interpretive rules); Energy Reserves Group,

Inc. v. Department of Energy, 589 F.2d 1082 (Temp. Emer.

Ct. App. 1978) (Federal Energy Administration has both,

issued interpretive rules).

The second factor the School District relied upon at oral

argument similarly is flawed. All rules which interpret the

underlying statute must be binding because they set forth

what the agency believes is congressional intent. Could

an agency announce, ‘‘We think Congress intended this

when it enacted this statute, but you don’t have to do

it.”? Courts are not bound by an agency’s interpretation,

as we have discussed supra, but parties regulated by the

statute certainly are. Alcarez, 746 F.2d at 614. The court

in Alcarez rejected the plaintiffs argument that a bind-

ing rule is necessarily a legislative one. Jd. “{AJl) rules

are ‘binding’ on the regulated parties in the sense that

they set, for the time, the legal minima of behavioral stan-

dards. The extent to which regulations are ‘binding’ in

comparison to one another, however, is only an effect of

the distinction between substantive and interpretive rules,

not a criterion of the distinction.”’ Jd. As we discussed,

the nature of the rule dictates the degree of deference

it receives from a reviewing court.

Further, as we pointed out in Production Tool, ‘a rule

affecting rights and obligations is [not] ipso facto legisla-

tive.”’ 688 F.2d at 1166. See also American Postal Workers,

707 F.2d at 559 (conclusive change in benefits calculation

formula is interpretive). “The fact that burdens were im-

l4a No. 91-3386

posed on... plaintiffs only goes to the substantial im-

pact of the statute and the regulations, not whether

the regulations created law.” Alcarez, 746 F.2d at 613.

“{Pjenalizing the agency for +. Te what was for the

plaintiffs bad news about [the IDEA], by labeling the ex-

planation ‘substantive,’ would be like killing the messen-

ger.” Id. at 614. Davila’s letter simply explained what the

statute already requires.

Prevailing authority rejects the proposition that a rule

that has substantial impact is sate legislative. Fried-

rich v. Secretary of Health & Human Services, 894 F.2d

829, 836 (6th Cir. 1990), cert. denied, 111 S. Ct. 59 (1990);

Industrial Safety Equipment Association, Inc. v. EPA,

837 F.2d 1115, 1121 (D.C. Cir. 1988); American Postal

Workers Union v. United States Postal Service, 707 F.2d

548, 560 (D.C. Cir. 1983), cert. denied, 465 U.S. 1100

(1985). The district court relied in part upon this rationale

to find that Davila’s letter announced a legislative rule.

“(TJhe impact of a rule has no bearing on whether it is

legislative or interpretative; interpretative rules may have

a substantial impact on the rights of individuals.” Jd. at

560. The district court’s reliance upon this rationale thus

is misplaced.

The district court also found Davila’s interpretation of

the IDEA was a legislative rule because it found that con-

tinuing services are “not expressly required” by the Act.

But this rationale again implicitly rejects OSERS’ inherent

authority to interpret its governing statute. If the IDEA

expressly required services to continue after expulsion,

there would be no need for OSERS to interpret congres-

sional intent on the subject.

The district court’s final reason for holding that OSERS’

interpretation of the IDEA was a legislative rather than

interpretive rule also misconceives the governing test. The

court did not approve of the agency’s interpretation of

Honig v. Doe.

If the Supreme Court’s opinion in Honig means what

the defendant seems to think it means, i.e., that the

No. 91-3386 l5a

Act indeed uires what his letter mandates, then

the letter could perhaps be construed a interpretive.

770 F. Supp. at 1338. In other words, because the district

court disagreed with OSERS’ interpretation of Honig and

the statute, the interpretation must be legislative, and

thus in violation of the APA. The School District also

raises this argument on appeal—because Honig does not

dictate OSERS’ interpretation, that ‘interpretation’ must

be legislative. Honig did not reach this issue—it noted that

students could be suspended for behavior related to their

disability that poses an immediate threat to others. 484

U.S. at 325. But OSERS’ letter did not contend that Honig

resolved the issue. The district court seems to hold that

because Honig did not offer the interpretation adopted

by OSERS, the interpretation must be legislative. This

reasoning is in error. Simply because a reviewing court

disagrees with an agency interpretation does not render

it legislative. An agency has “inherent authority to issue

interpretive rules informing the public of the . . . stan-

dards it intends to apply in exercising its discretion.” Pro-

duction Tool, 688 F.2d at 1166. Further, the School Dis-

trict has only challenged the OSERS’ authority to issue

its interpretation, not the interpretation itself. Of course,

if the school district were entirely happy with OSERS’

reading of IDEA-B, this case would not be before us.

Nevertheless, a reviewing court’s disagreement with the

substance of an agency’s interpretive rule does not render

the interpretive rule legislative.

Finally, we do not believe that the provision of the

IDEA that delegates rulemaking authority to the Depart-

ment of Education, 20 U.S.C. §.1417(b), requires OSERS

to promulgate its interpretation of the Act through notice

and comment. See 770 F. Supp. at 1337. This section was

designed to ensure that the rules necessary to implement

the Act would be in place early enough to allow states

to fulfill their statutory obligations by the effective date

of the Act. See Appellants’ Brief at 5-6. Moreover, as we

have discussed, a grant of legislative authority (and the

agency’s exercise of that authority) does not remove the

16, No. 91-3386 |

agency’s inherent authority to issue interpretive rules.

The School District fundamentally misapprehends § 1417(b),

as well as the agency’s inherent rulemaking authority.

This delegation authorizes legislative rulemaking, it does |

not revoke interpretive authority.

III. |

For the foregoing reasons, the decision of the district |

court is REVERSED, and the case is REMANDED for entry

of summary judgment in favor of Davila and the Depart-

ment of Education.

A true Copy:

Teste:

EE EEE EEE EEE ESSE ESOS SOOO

Clerk of the United States Court of

Appeals for the Seventh Circuit

USCA AOTXXXC-92-001—Midwest Law Printing Co., Inc., Chicago—7-30-92

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

METROPOLITAN SCHOOL DISTRICT )

OF WAYNE TOWNSHIP, MARION )

COUNTY, INDIANA, on behalf of )

itself, and all others )

similarly situated, )

)

Plaintiff, ) CIVIL ACTION

YNO. IP 90-1435-C

)

ROBERT R. DAVILA, ASSISTANT )

SECRETARY, OFFICE OF SPECIAL _)

EDUCATION AND REHABILITATIVE )

SERVICES, UNITED STATES )

DEPARTMENT OF EDUCATION, )

)

Defendant

DILLIN, District Judge.

August 13, 1991

This matter comes before the Court on Defendant Robert R.

Davila’s motion to dismiss, Plaintiff Metropolitan School Dis-

trict of Wayne Township’s motion for summary judgment, and

on Defendant Robert R. Davila’s cross motion for summary

judgment. Forthe following reasons, Robert R. Davila’s motion

17a

to dismiss is denied, Metropolitan School Distnct of Wayne

Township's motion for summary judgment is granted, and

Robert R. Davila’s cross motion for summary judgment is

denied.

BACKGROUND

Plaintiff Metropolitan School District of Wayne Township,

Marion County (School District), is a local school in the State

of Indiana. Plaintiff's action has been certified as a class action

pursuant to rule 23(b)(2), Fed.R.Civ.P. The class consists of all

public school corporations in the State of Indiana. The School

District and the plaintiff's class receive funding under part B of

the Education of the Handicapped Act (EHA-B), 20 U.S.C.

§§ 1401-85. Under EHA-B, the federal government provides

funds to individual states, which then distribute the funds to

local school districts to provide educational services to handi-

capped children. To be eligible for funding, EHA-B requires

that states have in effect a policy that assures a free appropriate

education (FAPE) to all handicapped children. 20 U.S.C.

§ 1412(1).

The Office of Special Education and Rehabilitative Services

(OSERS), United States Department of Education, isthe agency

in charge of EHA-B administration. Prior to September 15,

1989, there was no OSERS requirement of any kind that

educational services must be provided to handicapped students

during periods of expulsion or suspension not casually related

to the student's handicap. The School District did not continue

education services to such expelled students, nor was it required

to do so by the State of Indiana as a condition of obtaining EHA-

B funds.

Defendant Robert Davila (Davila) is the Assistant Secretary

in charge of OSERS. On September 15, 1989, Davila authored

a letter to Frank E. New (New Letter) of the Ohio Department

of Education. In the New Letter, OSERS, through Davila,

expressed its view that the statutory requirement that aFAPE be

provided to “all” handicapped children, applies to handicapped

children during periods of long-term suspension or expulsion

resulting from misbehavior that is not a manifestation of the

child’s handicap.

The New Letter was not published in the Federal Register or

the Code of Federal Regulations. It was, however, made

available for general publication in the Education for the

Handicapped Law Report (EHLR). Paul Ash, Director of

Special Education, Indiana Department of Education (Ash),

initially read the letter in the EHLR and, based upon the letter,

now requires the School District, and the plaintiff's class, to

continue services in Indiana for expelled or suspended handi-

capped children. The School District estumates that the addi-

tional cost to it alone to comply with this requirement, based

upon previous years expulsion figures, is $100,000 to $300,000

per year.

The present litigation arises out of the School District's

complaint filed June 8, 1990. In its complaint, the School

District alleges that Davila. through the New Letter, has promul-

gated a legislative rule without following the public notice and

comment procedures mandated by the Administrative Proce-

dure Act (APA). 5 U.S.C. § 553. Davila, and OSERS, contend

that the New Letter is an interpretation of EHA-B, and, as such,

is not subject to the notice and comment requiremepts of the

APA.

DISCUSSION

Davila has moved this Court for an Order dismissing the

School District's complaint. Both parties have also filed

motions for summary judgment. As the motion to dismiss is

potentially dispositive, judicial economy requires that it be

considered first.

Motion to Dismiss

In support of his motion, Davila raises four grounds for

dismissal: [1] this Court lacks personal jurisidiction over Davila

in his individual capacity: [2] the school district has not stated

19a

a claim against Davila in his individual capacity for which relief

can be granted; [3] the school district lacks standing to bring this

action; and [4] this action is not ripe for review.

Davila’s first and second grounds for dismissal relate to the

School District’s claims against Davila in his individual capac-

ity. However, the School District has stated that because of “the

urgency of this matter . . .and the fact that this dispute goes to

form rather than substance, plaintiff is willing to proceed at this

Stage against defendant in his official capacity to avoid any

further procedural delays.” In light of this statement, the Court

grants the School District's request to amend its complaint by

interlineation in order to make clear that this action is against

Davila only in his official capacity. This being so, the Court

finds that Davila’s first two grounds for dismissal are denied as

moot.

Davila’s third ground for dismissal is that the School District

lacks standing. To have “standing” means that the party

bringing suit has a sufficient stake to obtain judicial resolution

of that controversy. Sierra Club vy. Morton, 405 U.S. 727,731,

92S.Ct. 1361, 1364, 31 L.Ed.2d 636, 641 (1972). The Supreme

Court has set forth three elements that the School District must

satisfy to have standing: (1) the Plaintiff “personally has

suffered some actual or threatened injury as a result of the

putatively illegal conduct of the defendant”; (2) the injury

“fairly can be traced to the challenged action” of the defendants;

and (3) the injury “is likely to be redressed” by a favorable

decision. Valley Forge Christian College v. Americans United

for Separation of Churchand State, Inc.,454U.S.464,472, 102

S.Ct. 752, 758, 70 L.Ed.2d 700, 709 (1982).

Davila first contends that the School District has not suf-

fered a sufficient actual or threatened injury. In support, Davila

asserts that any injury threatened to the School Distnct is

speculative. Davila argues that the threatened injury is specu-

lative for the following reasons: it is not certain that there will

be expulsions of handicapped children from the school; the state

20a

has not yet approved an EHA-B plan requiring expenditures for

expelled children; Indiana itself, as opposed to the School

District, may opt to provide the out-of-school services; and, the

School District could seek redress through administrative pro-

cesses which might eliminate the injury.

The School District states that its injury in the present action

is the application of an illegal governmental decision by a

governmental official under color of law. See Black & Decker

Corp. v. American Standard, Inc., 679 F.Supp. 1183, 1190

(D.Del.1988)(“the actual or threatened ‘injury’ from which

Plaintiffs suffer is that Plaintiffs are subject to the requirements

of an allegedly unconstitutionally statute”). Specifically, the

School District contends that application of the New Letter will

require the School District to spend between $100,000 and

$300.000. and force it to acquire additional personnel in the

coming school year.

In support of its contention that this injury is not too

speculative, the School District has adduced proof that Indiana's

Final State Plan for fiscal years 1991-93 requires services to be

continued for students who have been suspended or expelled for

reasons not casually related to their handicaps. According to

Ash, this is a change in the Indiana Plan, dictated by the New

Letter and rulings of OSERS pursuant thereto.

Finally, the School District relies on the affidavit of Dr.

Edward Bowes (Bowes), the Superintendent of the School

District since 1978. Bowes states that during the 1989-90 school

year 18 handicapped students were expelled for non-handi-

capped-related reasons, and that there is nO reason not to expect

similar actions in the future.

The Court finds that the School District has stated a suffi-

cient threatened injury, and that the testimony of Ash, combined

with the affidavit of Bowes, shows that the injury is not so

speculative as to defeat the School District's standing. In

addition, the Court has not been persuaded that there is admin-

istrative review which could redress the School District’s

charge that Davila exceeded his statutory authonity.

Davila next asserts that even if the School District has stated

athreatened injury, it has not shown that this injury can be traced

to Davila’s actions. In support, Davila vaguely argues that the

School District's injury cannot be traced to him because the

State of Indiana may have been able to arrive at Davila’s position

expressed in the New Letter independently. See Von Aulock v.

Smith, 720 F.2d 176, 181 (D.C.Cir.1983)(in regard to standing,

“the indirectness of the injury . . . may make it more difficult

to meet the minimum requirement of Article ITI”).

In opposition, the School District argues that Ash’s deposi-

tion disposes of the traceability issue. As Davila contends, Ash

does state that before the New Letter was issued the Indiana

Department of Education's legal department may have taken

various positions regarding the issue considered in the New

Letter. However, Ashalso states that based upon the New Letter,

he believes continued services are now required, where before

| they were not.

The Court finds that the School District's threatened injury

is traceable to the New Letter, and consequently the actions of

Davila. Thus, Davila’s motion to dismiss fails on this issue.

Davila argues that the “appropriate relief if plaintiff is

successful is to enjoin Dr. Davila from issuing letters, not to

enjoin him from interpreting EHA-B in his official capacity.”

However, the “appropriate relief” stated by Davila is precisely

what the School District seeks.

In its complaint, the School District has asked for an

injunction enjoining Davila from “taking any action in Indiana

to enforce his position as evidenced in the New Letter...” In

its briefs the School District has repeatedly argued that “the

ultumate correctness of defendant's position on continued ser-

vices” is neither contested nor essential to the Court’s analysis.

The School District’s briefs, coupled with the relief sought

in its complaint, makes it clear that the School District is not, as

Davilacontends, seeking to enjoin him from issuing interpretive

letters in his official capacity. Rather the School District is

seeking to enjoin Davila’s position taken in the New Letter from

being enforced until the APA's notice and comment require-

ments have been satisfied, on the theory that the Letter is not

merely interpretive but is, in fact, legislative.

The Court finds that a favorable decision on the merits of the

case would grant the relief sought by the School District. As the

School District has also stated a threatened injury traceable to

Davila. the Court holds that the School District has standing to

bring this suit. Consequently, Davila’s motion to dismiss cn the

issue of standing must be denied.

Davila’s fourth, and final, ground for dismissal is that this

cause is not ripe for decision. The doctrine of ripeness involves

the question of whether there is a substantial controversy of

sufficient immediacy and reality to warrant the issuance of a

judgment. Lake Carriers’ Ass'n v. MacMullan, 406 U.S. 498,

92 S.Ct. 1749, 32 L.Ed.2d 257 (1972). “The problem [of

ripeness] is best seen in atwo fold aspect requiring us to evaluate

both the fitness of the issue for judicial resolution and the

hardship to the parties withholding consideration.” Abbott

Laboratories v. Gardner, 387 US. 136, 149, 87 S.Ct. 1507,

1515, 18 L.Ed.2d 681, 691 (1967).

First to consider is the fitness of the issue for judicial

consideration. The School District has framed the issued

tendered in this action as “[w]Jhether defendant exceeded his

statutory grant of authority in issuing the New Letter on

September 15, 1989, . . .” Davila admits that this is a “purely

legal dispute” and that such issues are often appropriate for

review. However, citing Toilet Goods Association v. Gardner,

387 U.S. 158, 162-64, 87 S.Ct. 1520, 1523-24, 18 L.Ed.2d 697,

701-02(1967), Davila argues that “even a dispute as to authority

is not nipe where the factual context of enforcement proceedings

will improve the ability of the Court to determine the propriety

for the rule or interpretation.”

Davila asserts that “the letter does not specify the extent to

which services must be provided, that is, whether fewer services

than would be provided were the handicapped child in school,

is ‘appropriate’ [FAPE] under those circumstances.” This being

so, Davila argues that this Court would be better prepared to

“determine the appropriateness of and authority forthe interpre-

tation contained in the New Letter, when presented with a

concrete enforcement context.” The Court does not agree.

Toilet Goods, Davila’s principal authority, “involved a

challenge by manufacturers to an FDA regulation permitting the

FDA Commissioner to suspend certification if FDA inspectors

were refused access to manufacturing facilities and certain

records.” Sierra Club v. Yeutrer, 911 F.2d 1405, 1415 (10th

Cir.1990). The issue presented was whether the above regula-

tion was properly issued within the statutory authority to

promulgate regulations “for the efficient enforcement” of

the FDA act. The Court found this issue purely legal, but held

that this issue was not ripe for judicial resolution.

Considering the FDA’s authority under the “efficient en-

forcement” provision, the Supreme Court stated:

This [issue] will depend not merely on an

inquiry into statutory purpose, but concurrently

on an understanding of what types of enforce-

ment problems are encountered bythe FDA...

We believe that judicial appraisal of these fac-

tors 1s likely to stand on a much surer footing in

the context of a specific allegation of this regu-

lation than could be the case in the framework of

the generalized challenge made here.

24a

Toilet Goods, 387 U.S. at 163-64, 87 S.Ct. at 1524, 18 L-Ed.2d

at 701-02.

The Court finds that the issue presented for judicial

consideration by the School District would not be aided by a

challenge arising under a specific situation. Unlike the issue in

Toilet Goods, the issue in the present action is whether the New

Letter states legislative law requiring notice and comment under

the APA, or is an interpretation which does not. The resolution

of this issue does not depend on factors outside the APA and

EHA-B. The School District is not questioning the substantive

validity of the New Letter at this time; it questions the manner

in which it was promulgated. Accordingly, the Court holds that

the issue tendered in this action is appropriate for judicial

resolution.

The second consideration under the doctrine of ripeness is

the hardship to the parties if consideration is withheld. Davila

argues that there is no advance action required by the School

District because the need for providing homebound services

will arise only in future specific situations. Hence no hardship

to the School District will result if this action is delayed.

The School District counters that there is indeed hardship:

“plaintiff must begin the school year in less than three (3) weeks

with at least a $100,000 budgetary shortfall because Indiana

requires compliance with the defendant's position, plaintiff

must also locate and contract for additional teacher services.”

Aithough the quoted words were made with respect to the 1990-

91 school year, the same situation exists at this time with respect

to the 1991-92 year. Further, the School District argues that to

“test Indiana regulation at the expense of one child in the name

of administrative review and ripeness . . .not only needlessly

involves the student, but wastes public funds and resources to

challenge defendant's actions. . . .” The Court agrees.

The Court finds that the School District is threatened with

a concrete hardship that has an immediate impact on its day to

day affairs. Thus, this matter is ripe for judicial review. Natural

Resources Defense Council v. Thomas, 845 F.2d 1088, 1093

(D.C.Cir.1988); see Koehring Co. v. Adams, 605 F.2d 280, 282-

83 (7th Cir.1979); U.S. v. Zimmer Paper Products, Inc., 733

F.Supp. 1265 (S.D.Ind.1989)(defendant’s forced choice to

either install incinerator, which defendant believes not

required or to incur fines, was sufficient to show claim npe for

review ). For all of the above reasons, Davila’s motion to dismiss

is denied.

Summary Judgment

Summary judgment, pursuant to Rule 56, F.R.Civ.P., is

proper only when there is no genuine issue of matenal fact. Big

OTire Dealers, Inc. v. Big O Warehouse, 741 F.2d 160, 163(7th

Cir.1984). The facts in this action are not in dispute. The

position taken by Davila in the New Letter has not been

published in the Federal Register or Code of Federal Regula-

tions, nor were comments taken pnor to its being issued. Both

parties agree that the issue is whether, as the School District

asserts, the New Letter is a “legislative rule’ requiring notice

and comment under the APA, or, as Davila contends, merely an

“interpretive rule” exempt from the APA’s requirements.

“An interpretative rule expresses the agency’s view of what

another rule, regulation or statute means.” Allied VanLines, Inc.

v. Interstate Commerce Commission, 708 F.2d 297, 300 (7th

Cir.1983) (citing Pacific Gas & Electric Co. v. Federal Power

Commission, 506 F.2d 33, 37 n. 14 (D.C.Cir.1974)). It advises

the public of an agency’s construction of regulations that it

administers. American Medical Ass'n v. Heckler, 606 F.Supp.

1422, 1439 (S.D.Ind.1985) “An interpretive rule simply states

that the administrative agency thinks the statute means, and

only reminds affected parties of existing duties.” /d. (quoting

General Motors Corp. v. Ruckelshaus, 742 F.2d 1561, 1565

(D.C.Cir.1984)).

26a

In contrast to the interpretive rule, a “legislative rule is

issued by an agency pursuant to statutory authority implement-

ing the statute and ‘has the force and effect of law.’” American

Medical Ass’ n,606 F.Supp. at 1439 (citing Barterton v. Francis,

432 U.S. 416, 425 & n. 9, 97 S.Ct. 2399, 2405-06, 53 L.Ed.2d

448 (1977)). Legislative rules are those which create law,

usually implementary to an existing law. Gibson Wine Co. v.

Snyder, 194 F.2d 329, 331 (D.C.Cir.1952). The “common

understanding [is] that legislative rules usually involve matters

within agency expertise, which expertise notice and comment

procedures are intended to sharpen.” Allied Van Lines, 708 F.2d

at 300.

Having examined the New Letter, the Court finds that it is

best considered a legislative rule. On its face, the New Letter

purports to be merely Davila’s opinion of the meaning of 20

U.S.C. § 1412(1), but its effect is to change a long standing

policy of OSERS without a corresponding change in the under-

lying statute or regulations.

The authority of the Secretary of Education, Davila’s supe-

rior, is set out in 20 U.S.C. § 1417(b) as follows:

In carrying out the provisions of this subchapter,

the Secretary shall issue, not later than Janu-

ary 1, 1977, amend, and revoke such rules and

regulations as may be necessary. No other less

formal method of implementing such provisions

is authorized. (our emphasis).

Implicit in this provision is the requirement that proposed rules

be published in the Federal Register with an opportunity for

comment by interested persons prior to a rule taking effect. 5

U.S.C. § 553. Pursuant to the power granted to the Secretary,

some 425 pages of rules and regulations have been enacted,

occupying an entire volume of the Code of Federal Regulations

(CFR), 34 CFR parts 300-399 (July 1. 1990).

27a

The New Letter is obviously a substantive rule or regulation

in that (1) it imposes a new and mandatory duty upon all school

districts in the United States, (2) the new duty is not expressly

required by EHA, and (3) contrary to the New Letter itself it is

not required by Honig v. Doe, 484 U.S. 305, 108 S.Ct. 592, 98

L.Ed.2d 686 (1988).

Substantive rules implement a statute or rule, and grant

rights, impose obligations, or produce other significant effects

on private interests. National Treasury Emplovees Union v.

Reagan, 685 F.Supp. 1346 (E.D.La.1985). The New Letter and

its requirements are clearly intended to be binding on plaintiff,

plaintiff's class, and all states by the letter itself (“. . . [s]tates

receiving EHA-B funds are statutorily obligated . . .”), and by

the defendant's response to plaintiff's second set of interroga-

tories. It therefore purports to create law implementary to an

existing law, and qualifies as a substantive rule under the above

definition. See Gibson Wine Co. v. Snyder, 194 F.2d 329

(D.C.Cir.1952).

If the Supreme Court's opinion in Honig means what the

defendant seems to think it means, i.e., that the Act indeed

requires what his letter mandates, then the letter could perhaps

be construed as interpretive. However, Honig does not deal with

the situation in which a child has been suspended or expelled by

conduct having no relation to his disability, but rather to the

Situation in which the conduct anses out of the disability itself.

Honig affirms the decision of the Ninth Circuit Court of Appeals

rendered in Doe by Gonzales v. Maher, 793 F.2d 1470 (1986)

in all but one detail not here material. The key portion of the

underlying Maher decision, in so far as the present controversy

is concemed, is exactly contra the New Letter, and reads as

follows:

We do not hold, however, that a school district

may never withhold educational services from a

handicapped child. If the child’s behavior is

properly determined not to bea manifestation of

his handicap [footnote omitted], the handicapped

child can be expelled. See Kaelin v. Grubbs, 682

F.2d 595, 602 (6th Cir. 1982); S-/ v. Turlington,

635 F.2d 342, 248 (Sth Cir.)(Unit B), cert.

denied,454U.S. 1030, 102S.Ct. 566, 70 L.Ed.2d

473 (1981); Doe v. Koger, 480 F.Supp. 225, 228

(N.D.Ind.1979). This conclusion does not con-

flict with the EAHCA. When a child’s misbe-

havior does not result from his handicapping

condition, there is simply no justification for |

exempting him from the rules, including those |

regarding expulsion, applicable to other chil- |

dren. Therefore, when a handicapped child is

properly expelled, the school district may cease

providing all educational services-just as it could

in any other case. To do otherwise would

amount to asserting that all acts off a handi-

capped child, both good and bad, are fairly

attributable to his handicap. We know that this

is not so.

793 F.2d at 1482.

The Court therefore holds that in his New Letter the defen-

dant attempted to enact an administrative rule in a manner

contrary to 5 U.S.C. § 553 and 20 U.S.C. § 1417(b), and that

such action is contrary to law. Plaintiff's motion for summary

judgment is granted, and that of the defendant is denied.

Judgment will be entered accordingly.

a 29a

JUDGMENT

The Court having this day filed its entry granting the motion

of the plaintiff for summary judgment, which entry reads as

follows: (H.I.), now in accordance therewith

~ ITIS CONSIDERED AND ORDERED that the defendant,

Robert R. Davila, in his official capacity, be and he is hereby

enjoined from taking any action in Indiana to enforce his

position as set out in the New Letter as to plaintiff, or members

of its class, or the State of Indiana.

IT IS FURTHER CONSIDERED AND ORDERED that

said defendant be, and he is hereby enjoined from taking any

action in Indiana against any agency of the State or public school

corporation within the State which would require the continu-

ance of educational services to an eligible child under the

Education of the Handicapped Act during periods of long-term

suspension or expulsion not casually related to that child’s

handicap.

IT IS FINALLY CONSIDERED AND ORDERED that the

defendant pay the costs of this action.

30a

5 U.S.C. § 553. Rule making

(a) This section applies, according to the provisions thereof,

except to the extent that there is involved -

(1) a military or foreign affairs function of the

United States; or

(2) a matter relating to agency management or

personnel or to public property, loans, grants, benefits, or

contracts.

(b) General notice of proposed rule making shall be pub-

lished in the Federal Register, unless persons subject thereto are

named and either personally served or otherwise have actual

notice thereof in accordance with law. The notice shall include -

(1) -astatement of time, place, and nature of public

rule making proceedings;

(2) reference to the legal authority under which the

rule is proposed; and

(3) either the terms or substance of the proposed

rule cr a description of the subjects and issues involved.

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 prac-

tice; Or

3la

(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, unnecessary, or contrary to the

public interest.

give interested persons an opportunity to participate in the rule

making through submission of wntten data, views, or arguments

with or without opportunity for oral presentation. After consid-

eration of the relevant matter presented, the agency shall

incorporate in the rules adopted a concise general statement of

their basis and purpose. When rules are required by statute to

be made on the record after opportunity for an agency hearing,

sections 556 and 557 of this title shall apply instead of this

subsection.

(d) The required publication or service of a substantive rule

shall be made not less than 30 days before its effective date,

except -

(1) asubstantive rule which grants or recognizes an

exemption or relieves a restriction;

(2) interpretative rules and statements of policy; and

(3) as otherwise provided by the agency for good

cause found and published with the rule.

(e) Each agency shall give an interested person the right to

petition for the issuance, amendment, or repeal of a rule.

20 U.S.C. § 1412. Eligibility requirements

In orderto qualify for assistance under this subchapter in any

fiscal year, a State shall demonstrate to the Secretary that the

following conditions are met:

(1) The State has in effect a policy that assures all handi-

capped children the right to a free appropriate public education.

(2) The State has developed a plan pursuant to section

1413(b) of this title in effect prior to November 29, 1975, and

submitted not later than August 21, 1975, which will be amended

so as to comply with the provisions of this paragraph. Each such

amended plan shall set forth in detail the policies and procedures

which the State will undertake or has undertaken in order to

assure that -

(A) there is established (i) a goal of providing full

educational opportunity to all handicapped cnildren, (i) a

detailed timetable for accomplishing such a goal, and (ili) a

description of the kind and number of facilities, personnel,

and services necessary throughout the State to meet such a

goal;

(B) a free appropriate public education will be

available for all handicapped children between the ages of

three and eighteen within the State not later than Septem-

ber 1. 1978, and for all handicapped children between the

ages of three and twenty-one within the State not later than

September 1, 1989, except that, with respect to handicapped

children aged three to five and aged eighteen to twenty-one,

inclusive, the requirements of this clause shall not be applied

in any State if the application of such requirements would be

33a

inconsistent with State law or practice, or the order of any

court, respecting public education within such age groups in

the State;

capped, regardless of the severity of their handicap, and who

are in need of special education and related services are

identified, located, and evaluated, and that apractical method

is developed and implemented to determine which children

are currently receiving needed special education and related

services and which children are not currently receiving

needed special education and related services;

(D) policies and procedures are established in ac-

cordance with detailed criteria prescribed under section

1417(c) of this title; and

(E) any amendment to the plan submitted by the

State required by this section shall be available to parents,

guardians, and other members of the general public at least

thirty davs prior to the date of submission of the amendment

to the Secretary.

(3) The State has established priorities for providing a free

appropriate public education to all handicapped children, which

priorities shall meet the timetables set forth in clause (B) of

paragraph (2) of this section, first with respect to handicapped

children who are not receiving an education, and second with

respect to handicapped children, within each disability, with the

most severe handicaps who are receiving an inadequate educa-

tion, and has made adequate progress in meeting the timetables

set forth in clause (B) of paragraph (2) of this section.

34a

(4) Each local educational agency in the State will maintain

records of the individualized education program for each handi-

capped child, and such program shall be established, reviewed,

and revised as provided in section 1414(a)(5) of this title.

(5) The State has established (A) procedural safeguards as

required by section 1415 of this title, (B) procedures to assure

that, to the maximum extent appropriate, handicapped children,

including children in public or private institutions or other care

facilities, are educated with children who are not handicapped,

and that special classes, separate schooling, or other removal of

handicapped children from the regular educational environment

occurs only when the nature or severity of the handicap is such

that education in regular classes with the use of supplementary

aids and services cannot be achieved satisfactorily, and (C)

procedures to assure that testing and evaluation materials and

procedures utilized for the purposes of evaluation and place-

ment of handicapped children will be selected and administered

so as not to be racially or culturally discriminatory. Such

materials or procedures shall be provided and administered in

the child's native language or mode of communication, unless

it clearly is not feasible to do so, and no single procedure shall

be the sole criterion for determining an appropriate educational

program for a child.

(6) The State educational agency shall be responsible for

assuring that the requirements of this subchapter are carried out

and that all educational programs for handicapped children

within the State, including all such programs administered by

any other State or local agency, will be under the general

supervision of the persons responsible for educational programs

for handicapped children in the State educational agency and

shall meet education standards of the State educational agency.

This paragraph shall not be construed to limit the responsibility

of agencies other than educational agencies in a State from

35a

providing or paying for some or all of the costs of a free

appropriate public education to be provided handicapped chil-

dren in the State.

(7) The State shall assure that (A) in carrying out the

requirements of this section procedures are established for

consultation with individuals involved in or concermed with the

education of handicapped children, including handicapped in-

dividuals and parents or guardians of handicapped children, and

(B) there are public hearings, adequate notice of such hearings,

and an opportunity for comment available to the general public

prior to adoption of the policies, programs, and procedures

required pursuant to the provisions of this section and section

1413 of this title.

20 U.S.C. § 1417. Administration

(a) Duties of Secretary

(1) In carrying out the Secretary's duties under this

subchapter, the Secretary shall -

(A) cooperate with, and furnish all technical assis-

tance necessary, directly or by grant or contract, to the States

in matters relating to the education of handicapped children

and the execution of the provisions of this subchapter;

(B) provide such short-term training programs and

institutes as are necessary;

mote the education of all handicapped children within the

States; and

36a

(D) assure that each State shall, within one year

after November 29, 1975 and every year thereafter, pro-

vide certification of the actual number of handicapped

children receiving special education and related services in

such State.

(2) As soon as practicable after November 29, 1975, the

Secretary shall, by regulation, prescribe a uniform

financial report to be utilized by State educational agencies in

submitting State plans under this subchapter in order to assure

equity among the States.

(b) Rules and regulations

In carrying out the provisions of this subchapter, the Secre-

tary shall issue, not later than January 1, 1977, amend, and

revoke such rules and regulations as may be necessary. No other

less formal method of implementing such provisions is autho-

rized.

The Secretary shall take appropriate action, in accordance

with the provisions of section 1232g of this title, to assure the

protection of the confidentiality of any personally identifiable

data. information, and records collected or maintained by the

Secretary and by State and local educational agencies pursuant

to the provisions of this subchapter.

(d) Hiring of qualified personnel

The Secretary is authorized to hire qualified personnel

necessary to conduct data collection and evaluation activities

required by subsections (b), (c) and (d) of section 1418 of this

title and to carry out the Secretary s duties under subsection

37a

science ema

rs |

(a)(1) of this section without regard to the provisions of Title 5

relating to appointments in the competitive service and without

regard to chapter 51 and subchapter IT] of chapter 53 of suchtitle

relating to classification and general schedule pay rates except

that no more than twenty such personnel shall be employed at

any time.

38a

September 15, 1989

Mr. Frank E. New, Director

Division of Special Education

Department of Education

State of Ohio

933 High Street

Worthington, Ohio 43085-4087

Dear Mr. New:

Thank you for your letter to the Office of Special Education

Programs (OSEP), concerning the application of State suspen-

sion and expulsion policies under Part B of the Education of the

Handicapped Act (EHA-B). Because your inquiry raised

complex legal and policy issues, additional time was needed to

respond. We apologize for any inconvenience that this delay

may have caused you or your staff.

Specifically, you asked if it would be permissible, under both

Section 504 of the Rehabilitation Act of 1973 (Section 504) and

EHA-B, to exclude a child who is handicapped and cease

educational services to that child if it is determined that the

child’s misconduct is not a result of the child’s handicapping

condition. For the reasons set out below, we conclude that while

terminating educational services to a child who is handicapped

under these circumstances is permissible under Section 504, it

is not permissible under the EHA-B.

Section 504 is a civil rights statute enforced by the Office for

Civil Rights (OCR) that prohibits discrimination against any

person with handicaps, whereas EHA-B is a statute that estab-

lishes a financial assistance program to aid with the special

education of eligible students with handicapping conditions.

While the EHA-B establishes specific requirements that must be

39a

followed for EHA-B funding, Section 504 prohibits discrimina-

tion to be eligible for a// Federal funding. Simply stated, just

because an action is not prohibited by Section 504 prohibition

on discrimination does not mean that the action is necessarily

permissible under the EHA-B’s provisions requiring that each

child receive a free appropnate public education.

The EHA-B has been found by the U.S. Supreme Court in its

decision in Honig v. Doe, 108 S.Ct. 592 (1988), to prohibit State

or local school authorities from unilaterally excluding children

with handicaps from the classroom for dangerous or disruptive

conduct arising from their handicapping condition. However,

the Court explained that this ruling does not “leave educators

hamstrung” as follows:

Our conclusion that Sec. 1415(e)(3) means what

it says does not leave educators hamstrung. The

Department of Education has observed that,

‘[W]hile the [child's] placement may not be

changed [during any complaint proceeding],

this does not preclude the agency from using its

normal procedures for dealing with children

who are endangering themselves orothers... .’

More drastically, where a student poses an im-

mediate threat to the safety of others, officials

may temporarily suspend him or her for upto ten

school days.

This authority, which respondent in no way

disputes, not only ensures that school adminis-

trators can protect the safety of others by promptly

removing the most dangerous of students, it also

provides a ‘cooling down’ period during which

officials can initiate IEP review and seek to

40a

persuade the child’s parents to agree to an in-

terim placement. And in those cases in which the

parents of a truly dangerous child adamantly

refuse to permit any change in placement, the

10-day respite gives school officials an opportu-

nity to invoke the aid of the courts under

§ 1415(e)(2), which empowers courts to grant

any appropriate relief.

108 S.Ct. at 605.

It is the position of this Office that discipline of a child with a

handicap, whether or not the misconduct is related to the child's

handicapping condition, must be consistent with the child’s

right to educational services under the EHA-B. In order for a

State to qualify for assistance under the EHA-B, a State must

demonstrate that it “has in effect a policy that assures all

handicapped children the right to a free appropriate public

education.” 20 U.S.C. 1412(1); see also 34 CFR § 300.121(a).

Thus. we conclude that all children with handicaps — including

those who have been suspended or expelled — must be prov ided

a free appropriate public education.

This conclusion is also supported by the legislative history of the

EHA-B. The EHA-B “followed a series of landmark court cases

establishing in law the right to education for all handicapped

children.” S. REP. NO. 168, 94th Cong., Ist Sess. 6, reprinted

in 1975 U.S. CODE CONG. & AD. NEWS 1425, 1430. Mills

v. Board of Education of District of Columbia, 348 F.Supp. 866

(1972), one of the important of these cases, involved the

exclusion from educational services of children with handicaps

with behavioral problems Congress relied heavily on the Mills

decision in its deliberations over the EHA-B. Timothy W. v.

Rochester, 875 F.2d 954, 968 (Ist Cir. 1989). The Mills Court

ordered that:

4la

—————eee

No child eligible for a publicly-supported

education in the District of Columbia public

schools shall be excluded from a regular public

school assignment by a rule, policy, or practice

of the Board of Education of the District of

Columbia or its agents unless such child is

provided:

(a) adequate alternative educational ser-

vices suited to the child’s needs, which may

include special education or tuition grants and,

(b) a Constitutionally adequate prior hear-

ing and periodic review of the child’s status,

progress. and the adequacy of any educational

alternative. S. REP. NO. 168 at 6.

This supports our conclusion that Congress did not intend for

educational services to cease for children with handicaps who |

were removed from schools as a result of behavioral problems. |

In accordance with the above, local school districts in Ohio

should be made aware that States receiving EHA-B funds are

statutorily obligated to provide eligible children with handicaps

with educational services, including during those periods of

long-term suspension or expulsion where such disciplinary

action results from misbehavior that is not a manifestation of the

child’s handicap.

We hope you find this information helpful. Please let me know

if we can provide additional assistance.

Sincerely,

Robert R. Davila

Assistant Secretary

42a

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.