N.C. Growers Assoc., Inc. v. United Farm Workers, No. 11-2235

Decided: December 21, 2012

The Fourth Circuit Court of Appeals affirmed the district court’s ruling that regulatory action by the Department of Labor (“the Department”), which suspended some regulations and reinstated others regarding temporary agricultural workers, was rule making under the Administrative Procedures Act (“APA”).  Furthermore, the Department failed to comply with the APA’s “notice and comment” requirement.

The Department of Labor promulgated regulations in 1987 in order to effectuate Congressional intent under the Immigration Control and Reform Act to give preference to domestic agricultural workers over foreign agricultural workers, known as H2-A workers.  These regulations set up procedures for hiring H2-A workers, which included a formula for paying the workers known as the “adverse effect wage rate” (AEWR).  The AEWRs provide for a minimum hourly wage rate for H2-A workers and ensure that H2-A wages do not have an adverse effect on domestic agricultural wages.  In 2008, the Department passed new regulations which changed the way AEWRs are calculated.  It is not disputed that the 2008 regulations were validly promulgated.  Many agricultural employers relied on the 2008 regulations when planning for the 2009 growing season.  In 2009, the new Secretary of the Department sought to suspend the 2008 regulations for numerous reasons, mainly dealing with the complexity of a new regulatory scheme and the economic impact of the new regulations.  The proposed suspension would reinstate the 1987 regulations and would allow for those that filed under the 2008 regulations to continue to employ that scheme.  The suspension would only be in effect for a nine month period.  In May of 2009, the Department published a final rule suspending the 2008 regulations.  In June, 2009, the N.C. Growers Association (NCGA) and other similar organizations filed suit seeking an injunction.  The district court granted summary judgment and a preliminary injunction on the basis that the 2009 suspension violated the APA.  The United Farm Workers’ and other farm labor unions (Farm Workers) intervened and filed a counter-claim, seeking the difference in wage rates between the 1987 and the 2008 regulations.  The district court, based on the fact that the 2009 suspension was arbitrary and capricious, dismissed the Farm Worker’s suit with prejudice.  This appeal followed.

The Fourth Circuit agreed, stating that while review of agency decisions is narrow, courts must be strict in reviewing an agency’s compliance with procedural rules.  If the agency action consists of “rule-making” as defined in the APA, the Department would be required to comply with a “notice and comment” period before promulgating a rule.  The Court first said that the 2009 suspension constituted “rule-making” because the 1987 regulations had no legal effect at the time, and reinstatement of them was equivalent to formulating a new rule.  Furthermore, this suspension was not similar to previous precedent because in those instances, Congress caused the suspension of the regulation and the APA’s focus on notice and comment is not affected when Congress compels agency action.  In addition, the Department cannot rely on the good cause exception to the APA notice requirement because the Department did not implicitly or explicitly rely on the exception in its proposed rule.  Instead, the Department concluded that notice and comment did apply and that the Department had complied with the requirements by republishing the previous comments to the 1987 and 2008 regulations.  Finally, the Departments restriction of content and brief 10-day comment period did not fully comply with the APA requirements.

Full Opinion

-Jonathan M. Riddle

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