A holiday-shortened workweek and a pre-midterm election pause provide the opportunity to review a few miscellaneous topics.  President Obama (POTUS) issued a new Executive Order seeking to improve the security of federal government credit and debit cards, and improve the anti-fraud environment, but with limited effect.  The Office of Management and Budget (OMB) Office of Information and Regulatory Affairs (OIRA) continued an extensive series of meetings with private parties on the Department of Education (ED)’s attempts to limit government student loan defaults in for-profit colleges and universities, and some key points about OMB meetings are worth reiterating.  Finally, the United States District Court for the District of Columbia granted in part and denied in part motions to supplement an agency administrative record, posing again a problem of when an agency will be called to account.

Management by Executive Order:  Several press sources noted the fact that President Obama signed an Executive Order mandating that government credit cards and benefit cards use a digital chip in addition to the standard magnetic strip (sometimes called “chip-and-PIN technology”) – a security feature that has been available for some time, but has not yet been widely adopted because of increased cost of card manufacture.  Some in the general press have overstated the potential effect of the executive order / management directive.  The key point may be leadership by example, with the increased cost apparently absorbed by the government (or perhaps the government employees).  Much of the order simply requires planning and communication.

  The Executive Order certainly makes sense, but needs to be understood in context.  The new cards may have little effect outside government operations and protects federal employees and the government from loss more than anyone else, including the beneficiaries of Social Security and welfare benefits through a debit card (the potential amounts often are not substantial enough for a third party to divert).  The Executive Order is merely a management tool that does not directly affect private parties, though it may encourage some behavioral changes.

Gainful Employment Meetings:  Over the past several weeks, OMB has held more than a dozen meetings with interested organizations on the ED’s Gainful Employment final rule to better regulate for-profit colleges and universities to reduce federally-guaranteed loan default rates, a series of regulations that have been beset with difficulty, including multiple remands (and not enough vacatur) discussed previously from the United States Court of Appeals for the District of Columbia Circuit and from the district court.  OMB has been considering other economically significant final rule provisions for a month and everyone appears to have a view and be seeking an OMB audience.
  The Gainful Employment regulations need a careful review before any further action is taken – sadly, OMB (from the executive review perspective) and the Department of Justice (DOJ) (from the litigation / compliance perspective) need to oversee and coordinate that review to end ED’s continued inability to comply with the Administrative Procedure Act (APA) and court interpretations.  Otherwise, the parties will continue to write new episodes (and we will continue to criticize them) in this wasteful epic.

OMB Meetings:  Last April, OMB revised the way they publicly report public meetings under Executive Order 12866 and has held 232 meetings since then, although this number reflects only the commonality of the process.  Some points should be reiterated about OMB meetings and the place those meetings fit within the regulatory process.
  1. OMB meetings are “listening sessions”:  OMB attorneys, analysts, and examiners, agency officials, and even other Administration officials treat OMB meetings as a formal opportunity for interested parties to clarify issues and present data – requesters should not expect any response; OMB and the agency may ask questions but will rarely answer questions.  The key is presentation of persuasive data.
  2. Data and substance are critical:  OMB looks for substantive analysis, whether refreshing prior public comments or providing new insight.  Professionals look for ways to make a decision and pressure does not add substance.
  3. Some have decried these ex parte meetings, but such cries are more often a political statement meaning “Don’t listen to them, listen to us.”  Those complaining may not have substantive information to present.
  4. An interested party must request a meeting:  although often freely permitted, OMB may refuse to meet if they do not perceive that the meeting will be productive.  Thus, a record of “us, not them” may result in OMB seeing a requested meeting as a waste of their time.
Record Completion and Privilege:  The United States District Court for the District of Columbia last week granted in part a motion to supplement the administrative record in judicial review of a Department of the Interior (DOI) decision, but then declined to require DOI to file an index of the documents that it claimed were privileged and, therefore, not part of the administrative record, in Stand Up for California v. U.S. Department of the Interior (DOI).  Although technically an adjudication rather than a rulemaking, the same principles apply and pose a continuing problem.  The district court granted in part and denied in part the plaintiffs’ motion to supplement (actually complete) the administrative record of the agency decision, finding that certain documents were in the possession of the agency and formed part of the agency’s consideration of the decision.  On the other hand, the district court denied the plaintiffs’ motion to compel the agency to produce an index of all privileged documents that were not included within the administrative record.  The court relied on the presumption of regularity – that the agency has properly constructed the administrative record – in denying the motion to compel DOI to produce a privilege index.

  The decision on the motions is not particularly new or surprising, but together raise a question:  once the plaintiff has pierced the presumption of regularity to compel additions to the administrative record, why is the presumption still permitted to the agency to protect what may be other failures?  This issue has been raised in the past and will be raised again – and needs to be carefully considered on appellate review.
*  So that you are not surprised, there may not be a Monday Morning Regulatory Review next Monday.

Direct link to article: http://www.fedregsadvisor.com/2014/10/19/monday-morning-regulatory-review-102014-management-by-executive-order-gainful-employment-meetings-omb-meetings-record-completion-and-privilege/