Court Vacates USDA Rule Citing APA Violations

Given the broad deference afforded to federal agencies, it is rare when a court overturns an agency action challenged under the Administrative Procedure Act (APA).  In a recent decision, however, a court found that a regulation issued by the U.S. Department of Agriculture (USDA) violated the APA because it was not a “logical outgrowth” of the interim final rule that USDA had published for notice and comment.  The APA permits an agency to issue a revised final rule if the changes “are in character with the original scheme” of the proposed rule and the final rule is a “logical outgrowth” of the notice and comments from the proposed rule.   Because these conditions were not satisfied, the court held that the notice provided in the proposed rule was inadequate and that the final rule violated the APA.

In 2010, Congress enacted the Healthy, Hunger-Free Kids Act, revamping the nation’s school lunch program to increase servings of vegetables, fruits and whole grains, provide age-appropriate calories, remove trans fats, and limit levels of sodium. Schools were to gradually reduce the amount of sodium in school meals by meeting certain USDA targets over a period of ten years and to provide more whole grains. In 2017, however, the USDA proposed an Interim Final Rule to delay the sodium-reduction targets and maintain waivers from the whole grain requirement, but did not propose abandoning the whole grain requirements. Then in 2018, the USDA issued a Final Rule that eliminated the sodium-reduction targets for schools and removed the requirement that all grains be whole grain-rich. The Center for Science in the Public Interest brought this case against the USDA alleging several violations of the Administrative Procedure Act.

In its opinion, the U.S. District Court for the District of Maryland discussed each of the challenges Plaintiff raised to support vacating and remanding the Final Rule to USDA for further proceedings. Center for Science in the Public Interest v. Perdue, No. GJH-19-1004, 2020 U.S. Dist. LEXIS 64336 (Hazel, J.) (D. Md. Apr. 13, 2020).  Plaintiff made several arguments:

• that the Final Rule was inconsistent with federal law,
• that it reflected unexplained and arbitrary decisionmaking,
• that it represented an unacknowledged and unexplained change in position, and
• that USDA did not appropriately respond to public comments.

The Court sided with the USDA on all these allegations.  Of note, the Court applied Chevron analysis to determine whether the final rule is inconsistent with federal law.  The Court found that the relevant federal statutes do not unambiguously support either party’s suggested interpretation of the applicable Dietary Guidelines, so under step 2 of Chevron, the Court determine that the USDA’s action was based on a permissible construction of the statute, which is entitled to “substantial deference.”   Not surprisingly, the Court deferred to USDA’s interpretation of the federal laws governing school meals.

The Final Rule’s ultimate failing, however, was based on the Court’s determination that the Final Rule was not a “logical outgrowth” of the Interim Final Rule.

Under the APA, an agency is permitted to revise a final rule after initial notice of the proposed rule “if the changes in the original plan ‘are in character with the original scheme,’ and the final rule is a ‘logical outgrowth’ of the notice and comments already given.”   The proposed rule must enable the public “to discern what [is] at stake.”  But “if the final rule ‘substantially departs from the terms or substance of the proposed rule,’ the notice is inadequate.”  

2020 U.S. Dist. LEXIS 64336, at *9-10 (citations omitted).

On the issue of the sodium intake levels, the Interim Final Rule focused exclusively on delaying compliance requirements, not abandoning the compliance requirements altogether as the Final Rule did.  Similarly, the Interim Final Rule did not discuss eliminating the final sodium target, which the Final Rule did.  Thus the Court found that the Final Rule’s “elimination of the Final Sodium Target is not a logical outgrowth of the Interim Final Rule’s focus on delaying compliance requirements.”

Similarly with respect to whole grains, the Interim Final Rule specifically retained the requirement of one-hundred percent whole grains, while also extending the availability of an exemption to this requirement upon request.  In the Final Rule, the USDA changed what was a limited, case-by-case exemption into a new rule across the board abandoning the whole grains requirement altogether.

While extremely considerable deference is provided to federal agencies where a complex and highly technical regulatory program is concerned (and for those who spent time with the sodium intake guidelines, it certainly qualifies as that), that deference does not absolve the agency of the necessary requirements under the APA to provide sufficient notice of the Final Rule – especially, as here, when an agency completely changes its position between the Interim and Final Rules.