Two consumer advocacy groups recently sued the Food and Drug Administration (FDA) for delaying the compliance deadline for the agency’s 2014 menu labeling rule for a fourth time. The menu labeling rule requires menu items offered for sale in restaurants with 20 or more locations to disclose nutritional information and the number of calories in each standard menu item. FDA and Congress previously extended or delayed compliance with the menu labeling rule three times in 2015 and 2016. Before the latest delay, the most recent “compliance date” for the menu labeling rule was May 5, 2017.

FDA’s Justification of the Delay

The day before the compliance date, FDA delayed the compliance date for an additional year by issuing an interim final rule. This interim final rule stated the extension of the compliance date was (1) consistent with three executive orders and (2) done in response to questions raised by stakeholders affected by the menu labeling rule and its implementation. Two of the executive orders cited were issued by President Trump and address regulatory reform and regulatory costs. President Obama issued the third executive order, which discusses retrospective analyses of existing regulations. Since the menu labeling rule took effect in 2015, it would be considered an existing regulation, though FDA has delayed compliance with the rule. FDA also stated its desire to reconsider the menu labeling rule and indicated that the rule’s requirements may change as a result. FDA announced it would accept comments regarding the agency’s extension of the compliance date and implementation of the already-effective final rule.

Today, FDA announced an extension of the comment period. FDA will now accept comments until August 2, 2017, a few weeks prior to the next step in the litigation on the interim final rule, as discussed below.  It is possible that the agency could use the additional comments on the extension of the compliance date to further justify the delay of the compliance date.

Alleged Administrative Procedure Act Violations

In Center for Science in the Public Interest v. Price, the consumer groups challenged the interim final rule and the agency’s delay of compliance with the 2014 menu labeling rule on Administrative Procedure Act (APA) grounds. The consumer groups argued the interim final rule was arbitrary, capricious, an abuse of discretion and issued in violation of the APA’s procedural requirements, discussed below. The lawsuit asks the US District Court for the District of Columbia to vacate the FDA’s interim final rule and to declare that compliance with the menu labeling rule is required no less than 15 days after the court’s ruling. The government’s answers are due August 14, 2017.

The APA sets forth the procedures for the rulemaking process, in which agencies provide the public with notice of, and an opportunity to comment on, substantive proposed regulations. The APA has an exception from its notice and comment requirements for procedural rules. FDA relied on this exception in issuing its interim final rule.

In the event that a court were to find that the FDA’s interim final rule was a substantive rule requiring notice and comment, instead of a procedural rule, the FDA justified the interim final rule’s issuance under the APA’s good cause exceptions. The APA permits agencies to forego the notice and comment requirements if the agency for good cause finds that notice and comment are “impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. § 553(b)(B). Additionally, the APA requires a final rule to be published at least 30 days before its effective date, unless the agency finds good cause. 5 U.S.C. § 553(d)(3). The FDA argued that the “imminence of the compliance date” (one day after publication of the interim final rule) and the questions raised by regulated stakeholders constituted good cause such that an opportunity for comment was “impracticable and contrary to the public interest.”

The consumer advocacy groups asserted two violations of the APA. First, the plaintiffs argued that the FDA failed to comply with the APA’s requirements for notice and comment and publication 30 days before the effective date of the interim final rule. The consumer groups asserted that the agency lacked good cause. Second, the consumer groups argued that the FDA’s changing interpretation of the menu labeling requirements was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” and thus should be set aside as an invalid agency action under the APA’s standards of judicial review. 5 U.S.C. § 706(2)(A).

Case Law on Agency Rulemaking Delays

As the FDA’s interim final rule postpones the “compliance date” of a final rule instead of the rule’s effective date, the case raises interesting administrative law issues before the US District Court for the DC Circuit. That court previously held that a delay notice issued by an agency did not constitute a substantive rulemaking for which notice and comment was required: a “temporary stay to preserve the status quo does not constitute a substantive rulemaking because, by definition, it is not ‘designed to implement, interpret, or prescribe law or policy.’” See Sierra Club v. Environmental Protection Agency, 833 F.Supp.2d 11, 28 (D.D.C. 2012). In that case, however, the agency’s delay notice was not an interim final rule, as in the current case. Though the court found that the agency’s delay notice was not required to undergo notice and comment, the court ultimately concluded the delay notice was arbitrary and capricious, and vacated and remanded the delay notice to the agency.

Federal courts have previously considered whether an agency’s regulation delaying an effective date was issued in accordance with the APA’s procedural requirements for rulemaking. For example, in Natural Resources Defense Council v. Abraham, the US Court of Appeals for the Second Circuit found that the Department of Energy’s (DOE) delay of the effective date of energy efficiency standards was not issued consistent with the APA’s requirements. 355 F.3d 179 (2d Cir. 2004). In that case, the agency claimed the rule was a procedural rule exempt from notice and comment and the 30-day effective date requirement. The Second Circuit held that the rule was a substantive rule subject to the APA’s notice and comment requirements and cited a D.C. Circuit case finding that the “suspension of a deadline with respect to [a] whole class of individuals that had the effect of relieving them of attendant substantive obligations was [a] rule subject to notice and comment requirements.” Id. at 205. To the extent that the menu labeling rule is viewed as relieving stakeholders of the obligation to comply with the existing regulation, a court could find the interim final rule is a substantive rule subject to notice and comment and the 30 day publication requirement.

Courts generally construe the good cause exceptions “narrowly in order to avoid providing agencies with an ‘escape clause’” from the APA’s requirements. See United States v. Johnson, 632 F.3d 912 (5th Cir. 2011) (quoting United States v. Garner, 767 F.2d 104, 120 (5th Cir. 1985)). As a result, a court may find that an agency lacked good cause and that the APA’s notice and comment and publication procedures should have been followed. In Abraham, the Second Circuit also examined DOE’s good cause argument. The agency stated “it wished for more time to ‘review and consider’ the new efficiency standards, and the effective date for those standards was imminent.” Id. The court disagreed that “an emergency of DOE’s own making can constitute good cause” and cited cases from the DC, First, Fifth and Ninth Circuits with similar conclusions. Id. The Second Circuit held the DOE delay rule was issued without complying with the APA and was invalid, and as a result, failed to amend the original rule’s effective date. Id. at 206. It remains to be seen whether the court will use similar reasoning in the present case, in which the agency cited the rule’s “imminent compliance date” versus an imminent “effective date.”