"No Surprises"









No. 1:98CV01873(EGS)
Judge Emmett Sullivan


1. Federal defendants’ opposition to plaintiffs’ motion to compel advances several arguments, but none squarely addresses the issue posed by the motion -- i.e., how defendants and intervenors can, in defending the No Surprises rule at issue, rely on a rule change drafted following the filing of plaintiffs’ summary judgment motion without even furnishing the Court and the other parties with the administrative record underlying that recent rule change. Indeed, rather than confront that issue, defendants seek to evade it by muddling whether they are relying on the post hoc rule change in their defense of the No Surprises rule, or not.

Thus, if defendants are willing to forego reliance on the June 17 rule "clarification," then the Court should, as defendants themselves put it, "consider the validity of the No Surprises Rule based on the record developed for that regulation," Fed. Resp. at 7, and not on the basis of purported "clarifications" of that regulation hurriedly drafted following the filing of plaintiffs’ summary judgment motion. Yet if defendants and intervenors are relying on the new rule change -- as they expressly do in their summary judgment memoranda -- then, at a bare minimum, they cannot avoid furnishing the Court and the parties with the "whole record" necessary to understand and assess the meaning and significance of that rule modification. 5 U.S.C. § 706.(1)

Contrary to defendants’ apparent view, however, the Court cannot suspend the elementary rules of judicial review of agency action, as ordained by the Supreme Court and D.C. Circuit, because defendants now classify their reliance on the post hoc rule change as being only for a "limited purpose." Fed. Resp. at 11 (emphasis added). As a matter of law, defendants’ "little bit pregnant" approach has no basis in the plain language of the APA, or in the Supreme Court and Circuit precedent construing it. Once again, either defendants are relying on the mid-litigation rule change or they are not; if they are, then they cannot sidestep the APA requirement for review on the "whole record" -- rather than the partial, slanted record of the rule modification now before the Court -- simply by calling their reliance "limited."

In fact, as evidenced by defendants’ prior filing of two affidavits from the Assistant Secretary of the Interior directing the Court’s attention to the new revocation rule, defendants have obviously regarded the rule change as critical to their legal defense of the facially defective No Surprises regulation -- which, once again, provides sweeping "regulatory assurances" to Incidental Take Permit holders so long as they "comply[] with the terms and conditions of the HCP permit in good faith," 63 Fed. Reg. 8860, and says not a word about the revocation of such permits even where they are deemed to be jeopardizing species with extinction.(2)

2. Remarkably, defendants continue to insist that it was just happenstance that their new revocation rule was issued following the filing of plaintiffs’ summary judgment motion, which argued at length that one of the reasons why the No Surprises rule should be set aside is because it violates the Services’ mandatory duty under the ESA to ensure that their permitting actions do not jeopardize endangered and threatened species. Hence, defendants assert that their eleventh hour rule revision was not a transparent, post hoc effort to shore up defendants’ legal position in this litigation but, rather, the natural culmination of a "rulemaking[] which had commenced in June, 1997." Fed. Resp. at 13. Even further, defendants accuse plaintiffs’ of misguided paranoia, asserting that the "permit Revocation Rule was exactly the opposite of the ‘post hoc’ conspiracy that plaintiffs imagine," and that defendants were actually motivated by a "concern over ensuring fairness and adequate notice" by informing the Court and plaintiffs about the rule change after plaintiffs filed their motion for summary judgment. Fed. Resp. at 13 (emphasis added).

This stance, although certainly creative, bears no discernible relationship to reality for several reasons. First, as plaintiffs have previously pointed out -- with no rebuttal by defendants

-- the rules proposed for public comment two years ago simply had no counterpart to either of the new permit revocation rules issued in June 1999. See Exhibit A (attached to Plaintiffs’ Motion). Obviously, at some later point, defendants decided, in response to plaintiffs’ claims in this case, to insert the revocation rule changes into their long-pending proposal on a rulemaking proposal focused on other issues -- which explains why members of the public have never had the opportunity to comment on either of the new revocation rules appearing for the first time in the June 17, 1999 Federal Register. Not surprisingly, defendants do not say exactly when the revocation rules were crafted -- which would presumably be answered by the administrative record documents that are the subject of this motion -- while creating the totally erroneous impression that they have been in the works for the last two years.

Moreover, if defendants were truly concerned with "ensuring fairness and adequate notice" -- rather than attempting to deflect plaintiffs’ legal arguments in a pending challenge to a 1998 rule -- then the obvious question becomes: why did defendants not bother to inform the Court and the other parties regarding the prospective rule change before, rather than after, plaintiffs filed their summary judgment motion and framed all of their legal arguments on the basis of the 1998 rule and accompanying administrative record? Plainly, either (1) defendants were developing the revocation rules before plaintiffs moved for summary judgment -- in which case defendants’ acknowledged "ethical obligation . . . to bring any matters of relevant law and new factual developments to the court’s attention at the earliest opportunity," Fed. Resp. at 14 (emphasis added) should have led them to notify the Court and the parties about this development prior to plaintiffs having moved for summary judgment -- or (2) defendants were not developing the revocation rules prior to plaintiffs’ summary judgment motion, and only did so in a post hoc effort to respond to arguments raised in that motion.

Third, defendants’ position is impossible to reconcile with their own internal memorandum -- the only part of the administrative record underlying the revocation rule which defendants have deigned to confer on the Court and the parties. As plaintiffs have noted previously -- again with no rebuttal by the government -- the May 11, 1999 memorandum from the Assistant Solicitor indicates that the March 22, 1999 version of the Federal Register notice containing the new revision provision was drafted so hurriedly that it did not even "give the reader any sense of how the Service intends to implement the new revocation provision." Exhibit D to Defendants’ May 14, 1999 Notice of Filing at 2. Consequently, defendants found it necessary to withdraw that notice and replace it with one which contained a description that was "consistent with the brief the government filed on April 23, 1999 in the No Surprises rule litigation." Id. (emphasis added).

In plaintiffs’ view, it could hardly be more apparent that defendants hastily developed the new revocation provision because they believed that the No Surprises rule was vulnerable to attack on at least one of the legal grounds asserted by plaintiffs, and hence they concocted a post hoc rule "clarification" to bolster their response to plaintiffs’ pending summary judgment motion. If the Court has any lingering doubts about the circumstances underlying defendants’ June 17 rule change, however, that counsels in favor of requiring defendants to file the "whole record" concerning the rule change. As noted above, that record would definitively answer the question of when defendants began drafting the new revocation rules, and precisely why they did so. Contrary to defendants’ supposition, however, the Court and other parties are certainly not obligated to take on faith defendants’ counterintuitive and counterfactual assertion that it was a pure coincidence that the new revocation rules were developed at the very same time that the parties were briefing the legality of the No Surprises rule.

3. The disingenuous nature of defendants’ position is also reflected in their assertion that plaintiffs have somehow placed "undue pressure on the court" by not moving to compel supplementation of the administrative record before the rule change on which defendants are now relying was even approved by OMB and promulgated in the Federal Register. Thus, defendants fault plaintiffs for not "mov[ing] to compel production of the record in late May or early June," Fed. Resp. at 4 n. 5 -- even though the rule was not even promulgated until June 17, following the completion of summary judgment briefing, and does not even become effective until July 19.

Simply put, prior to June 17, there was no final permit revocation rule, let alone the

"whole record" underlying any such rule. Rather, before defendants’ June 18 notice of filing, plaintiffs and the Court had simply been informed that the Interior Department -- one of the parties in the case -- desired to promulgate such a rule at some point in the future, although they provided no timetable for its issuance nor, of course, any assurance that the Office of Management and Budget would allow its publication, at least without requiring significant changes. Indeed, as noted above, the Interior Department had already felt constrained to withdraw the first version of its Federal Register notice from OMB review because of omissions and "errors in the March 22 notice," Exhibit D to Defendants’ May 14, 1999 Notice of Filing, and, for all plaintiffs knew, the May 11 version might have been withdrawn as well and/or OMB might never have allowed the rule to be published.

Accordingly, while defendants endeavored to inject a still evolving 1999 regulatory change into this case, plaintiffs were certainly not going to burden the Court with a motion requesting the record underlying the rule change before that "whole record" -- as well as the rule change itself -- even existed. Instead, shortly after learning that the Interior Department had actually promulgated the new revocation rules, plaintiffs wrote to defendants’ counsel and requested that they make the record underlying the pertinent rule changes available to the Court and the parties. See Exhibit B. It was defendants’ refusal to accede to that reasonable request, see Exhibit C, while simultaneously insisting on relying on the recent rule change, which necessitated plaintiffs’ expedited request for relief.

4. Defendants have also failed to respond at all to the specific reasons why the Court should not rely on the new revocation rule, at least without reviewing the full record underlying the rule change. See Pfs. Mem. at 13-15. Instead, defendants have merely managed to highlight why such review is essential in view of defendants’ ever shifting and internally contradictory legal positions. Indeed, as is often the case with post hoc rule "clarifications" designed to fend off pending litigation, the rule change on which defendants rely actually confuses more than it clarifies, and hence heightens the need for some coherent, consistent explanation of defendants’ current position. See, e.g., People’s Mojahedin Organization of Iran v. United States Department of State, No. 97-1648, slip op. at 11 (D.C. Cir. June 25, 1999) ("In administrative law, we do not sustain a ‘right result-wrong reason’ decision of the agency. We send the case back to the agency so that it may fix its reasoning or change its result.") (citing SEC v. Chenery Corp., 318 U.S. 80, 88 (1942).

For example, while defendants previously asserted that the new revocation rule established a necessary "safety net" for species adversely affected by ITPs, they now appear to concede that the net effect of the 1999 rule change is to lessen still further the protection for endangered and threatened species affected by ITPs, by expressly exempting them from "prior revocation language [which] was broader, and therefore more protective, than the revocation language contained in the new Permit Revocation Rule." Fed. Resp. at 9. Indeed, defendants suggest that the result of the 1999 rule change is that endangered and threatened species are now afforded less protection than species of migratory birds which are not facing the prospect of extinction, id -- an anomalous result which is impossible to square with Congress’s intent, as discerned by the Supreme Court, to afford endangered and threatened species the "highest of priorities." TVA v. Hill, 437 U.S. 153, 174 (1978).(3)

Similarly, as noted above, while the No Surprises rule is based on the premise that ITP holders need "regulatory assurances" that the terms of their ITPs will not be significantly modified for the life of their permits (which can last for many decades or longer), defendants’ explanation for the 1999 revocation rule is based on an entirely different, and facially contradictory, premise -- i.e., that regulatory assurances need not be honored where "jeopardy to a listed species is at issue." Fed. Resp. at 6 n. 5. More to the point, if ITPs can be revoked entirely when they are jeopardizing species with extinction because of new developments -- as the Interior Department claims to have "clarif[ied]" and "confirm[ed]" in issuing its new revocation rule, Fed. Resp. at 6 -- then why is the FWS foreclosed from simply modifying such permits to require more extensive conservation measures than previously provided for in the permits -- a result which is forbidden by the No Surprises rule because of the purported need for "regulatory assurances"?

Perhaps these patent inconsistencies are addressed in some fashion in the administrative record underlying the 1999 rule change on which defendants belatedly rely, and perhaps not. In any event, however, plaintiffs do not see how the Court can take the rule change into account and still perform its critical judicial review function without at least scrutinizing all of the pertinent administrative record materials for a coherent explanation of how the new revocation rule, and its underlying rationale, interrelate with the No Surprises regulation plaintiffs have challenged. See Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50 (1983) ("It is well established that an agency’s action must be upheld, if at all, on the basis articulated by the agency itself.").

5. In the event that the Court shares plaintiffs’ concerns with the current state of the record, defendants request that the Court "provide a reasonable amount of time to search, compile, organize, index, copy, and file the documents that comprise the record" because "[p]ersonnel from both Services already face overwhelming demands and deadlines." Fed. Resp. at 12. Of course, these same personnel managed, when it suited their purposes following the filing of plaintiffs’ summary judgment motion, to rapidly draft, submit for OMB review, and publish a "clarifying" amendment to their ITP regulations. One would think that the same level of commitment should be directed towards supplying the Court with the pertinent administrative record so that the Court can knowledgeably assess the relevance of the rule modification.

In addition, since the Interior Department did not even solicit public comment on the recent revocation rules, and since, as of March 1999, the Department had not even drafted an explanatory preamble for the new revocation rule on which it is now relying, it is extremely unlikely that there is an extensive set of documents which defendants would be required to compile and file. In any event, without at least an estimate of the number of records at issue -- which perhaps defendants will be in a position to supply to the Court on Thursday -- there is no reason to believe that defendants could not file the pertinent materials in advance of the presently scheduled July 23 hearing on the parties’ cross-motions for summary judgment.(4)

  Respectfully submitted,

Eric R. Glitzenstein
(D.C. Bar No. 358287)

Katherine A. Meyer
(D.C. Bar No. 244301)

Meyer & Glitzenstein
1601 Connecticut Avenue, N.W.
Suite 700
Washington, D.C. 20009
(202) 588-5206


July 7, 1999 Attorneys for Plaintiffs


  1. Defendants suggest that there is some significance in the fact that plaintiffs have not sought the administrative record for "earlier rulemakings" -- i.e., those taking place prior to issuance of the No Surprises rule -- which defendants claim are, in some unidentified fashion, also "relevant . . . to understanding the No Surprises rule." Fed. Resp. at 11 (emphasis added). This assertion, however, confuses the whole point of plaintiffs’ motion. By definition, whatever "earlier rulemakings" defendants are alluding to did not constitute mid-litigation efforts to "clarify" the very rule under review but, rather, formed the general regulatory landscape in existence at the time plaintiffs undertook to challenge the 1998 No Surprises rule. Under Supreme Court and Circuit precedent, this distinction is crucial since, as plaintiffs explained in their opening memorandum, it is post hoc efforts to rationalize decisions previously made by agencies which have consistently been rejected by the Courts, both because they distort the judicial review function and because they place those challenging agency action at a severe disadvantage. See Pfs. Mem. at 10-11.
  2. Defendants’ assertion that the "obligation to revoke an HCP permit" where it is jeopardizing a species with extinction "was ‘implicit in the Services’ prior statements regarding No Surprises assurances’" is itself a baseless post hoc rationalization. Fed. Resp. at 7 (emphasis added). There is nothing whatsoever in the No Surprises rule, either "implicit" or otherwise, which authorizes the revocation of ITPs and, moreover, the entire thrust of the rule -- that ITP holders should have ironclad "regulatory assurances" so long as they are complying with the terms of their permits -- is, to say the least, difficult to reconcile with any such revocation authority.
  3. This apparent curtailment of the FWS’s regulatory authority to revoke ITPs may explain why the defendant-intervenors -- who the government surmises should "harbor[] concerns about the Permit Revocation Rule," Fed. Resp. at 2 n.2 -- have expressed no such "concerns" in this litigation.
  4. Similarly suspect is defendants’ suggestion that this matter would have to be delayed while the parties litigate the validity of unidentified "privilege[s]" for "materials included in the record." Fed. Resp. at 12 (emphasis added). Especially in light of defendants’ voluntary disclosure of an internal memorandum from the Interior Department’s Assistant Solicitor to the Department’s Assistant Secretary, defendants cannot seriously suggest asserting "privileges" for other, functionally identical internal memoranda which may not be supportive of defendants’ position in the litigation. Such an effort to skew the record would be fundamentally inconsistent with the government’s obligation to produce the "whole record" for the Court’s review. 5 U.S.C. § 706; see also Walter O. Boswell Memorial Hospital v. Heckler, 749 F.2d 788, 792 (D.C. Cir. 1984) (a reviewing court in an APA case should not "allow a party to withhold evidence unfavorable to its case"). Further, even aside from the Interior Department’s obligations under the APA, Circuit precedent is clear that the government may not "selectively disclose part of a privileged communication to gain an advantage in litigation." SEC v. Lavin, 111 F.3d 921, 933 (D.C. Cir. 1997); see also United States v. Western Electric Company, Inc., 132 F.R.D. 1, 3 (D.D.C. 1990) ("To the extent that US West has inadvertently or deliberately disclosed attorney-client communications, it has waived attorney-client privilege as to all communications on the subject covered by these communications.").