Additional Reading for Class 5 April 28 09 Case Excerpts on Notice and Comment Procedural Adequacy.

Description

Smith Additional Materials for Class #5 (Tues., April 28) – Page 1RECENT JUDICIAL ATTEMPTS TO PROTECT THEINTEGRITY OF PUBLIC PARTICIPATIONBY ENFORCING APANOTICE AND COMMENT REQUIREMENTSThree (and a half) Case Studiesth(Additional Reading for Class #5, Tuesday, April 28 )NOTE: Below you will find excerpts from three relatively recent appellate cases ruling onarguments by regulated parties that an agency violated Section 553 of theAdministrative Procedure Act by giving inadequate notice. The different courts come todifferent conclusions.As you read each case consider the following generic questions:1. By what legal standard(s) do the judges decide the case?2. For each case, consider the relative merits of the challengers’ view that the agencyimpaired its public participation rights through inadequate notice and relatedprocedures, and the agency’s view that it sufficiently complied with informal APArequirements. Which side persuades you more? Why?3. Notice how in each case a judicial finding that the agency violated the APA did (orwould, had the court so decided) have suspended application of the regulatory guidancein question, perhaps delaying the regulatory process or throwing the process into somechaos. This might be an unintended byproduct of a pure-hearted challenger honestlywishing merely to participate meaningfully in public proceedings – or an impure-heartedchallenger might be “using” the APA for venal strategic advantage. Which do you ...

Informations

• Publié par: Sies
• Nombre de lectures: 23
• Langue: English

Extrait

Sm ith Additional M aterials for Class #5 (Tues., April 28) – Page 1

RECENT JUDICIAL ATTEMPTS TO PROTECT THE INTEGRITY OF PUBLIC PARTICIPATION BY ENFORCING APA NOTICE AND COMMENT REQUIREMENTS Three (and a half) Case Studies (Additional Reading for Class #5, Tuesday, April 28 th )

NOTE: Below you will find excerpts from three relatively recent appellate cases ruling on arguments by regulated parties that an agency violated Section 553 of the Administrative Procedure Act by giving inadequate notice. The different courts come to different conclusions. As you read each case consider the following generic questions: 1. By what legal standard(s) do the judges decide the case? 2. For each case, consider the relative merits of the challengers’ view that the agency impaired its public participation rights through inadequate notice and related procedures, and the agency’s view that it sufficiently complied with informal APA requirements. Which side persuades you more? Why? 3. Notice how in each case a judicial finding that the agency violated the APA did (or would, had the court so decided) have suspended application of the regulatory guidance in question, perhaps delaying the regulatory process or throwing the process into some chaos. This might be an unintended byproduct of a pure-hearted challenger honestly wishing merely to participate meaningfully in public proceedings – or an impure-hearted challenger might be “using” the APA for venal strategic advantage. Which do you think is going on in the case at hand – and how, if at all, does that affect your view of the court’s resolution? 4. Speaking of that, do you agree with the court’s (a) decision and (b) logical explanation for its decision? Has the decision well served important policies at stake in the regulatory process? Do you think the court well served the intent of the Congress that passed Section 553 of the APA? Does the decision pass the “fairness” test? 5. Although these cases – like all judicial decisions – are significantly affected by logical reasoning, legal rules, etc., like all judicial decision-making, these cases also may be affected by such practical and political issues as –the judges’ overall sympathy with, or suspicion about, the merits of the regulatory matters at issue and the agency’s position (including whether the agency seems to be following Congress’ intent); and –the judges’ sympathy with the challengers’ position and perspective. Notice and assess these issues in each case, as you read it.

Sm ith Additional M aterials for Class #5 (Tues., April 28) – Page 2

6. Finally, notice the underlying “regulatory context” of which each case is an interesting example. Notice how the agency got authority from Congress to engage in the activity in question. Notice references to the Code of Federal Regulations (C.F.R.), the Federal Register, and other sources of administrative guidance we have studied. Etc., etc...

Case #1: A Case of Inadequate Initial Notice United States C ourt of Appeals, Second Circuit. N A TIO N AL B LA C K M E DIA COA LITIO N and The New York Affiliate, National Black M edia Coalition, Petitioners, v. FED ER AL CO M M UN IC ATIO NS CO M M ISSIO N and United States of Am erica, Respondents, Association For Broadcast Engineering Standards, Inc. and National Association O f Broadcasters, Intervenors. 791 F.2d 1016 Decided M ay 27, 1986. David Silberm an, F.C.C., W ashington, D.C. (Jack D. Sm ith, Gen. Counsel, FCC, Daniel M . A rm strong, Associate G en. C ounsel, FC C , Douglas H . Ginsburg, Asst. Atty. Gen., John J. Powers III, U.S. Dept. of Justice, Jonathan David, of counsel), for respondents.  (W illiam J. Potts, Jr., John P . Crigler, Haley, Bader & Potts, W ashington, D.C., Henry L. Baum ann, Barry D. Um ansky, National A ss'n of Broadcasters, W ashington, D.C., of counsel), for intervenors.  B efore OAKES, KEARSE and PIERCE, Circuit Judges. PIERCE, Circuit Judge:  This is a petition to review a report and order of the Federal C om m unications C om m ission ("FC C " or "C om m ission"), released M ay 7, 1985, concerning frequency allocations on fourteen AM broadcast channels known as AM foreign clear

channels. Petitioners National Black M edia Coalition and its New York affiliate ("National Black M edia") challenge the FCC's departure from its m inority preference policy in new rules governing applications for broadcast licenses on these channels. Petitioners claim that the FCC failed to observe proper procedure and that its decision to abandon this non-technical criterion does not rest on a rational basis.  W e agree with petitioners that the FC C did not give proper notice to interested parties in its Notice of Proposed Rulem aking ("Notice") and, in addition, that it relied on inadequately disclosed data to reach its conclusions. The FCC published a notice in which it announced that it proposed to adopt the m inority preference policy, but then it declined to do so in its final report and order without providing a m eaningful opportunity for com m ent as required by Section 4 of the Adm inistrative Procedure Act, 5 U.S.C. §§ 553(b), c 1982 . Furtherm ore, studies and m aps relied upon by the FCC in its report and order w ere not exposed to public com m ent, so that the Com m ission cannot be said to have considered all the relevant factors in m aking its decision. Its order must therefore be overturned as arbitrary and capricious. B A CKGR O U N D In order to apply for an AM broadcast license, an applicant m ust dem onstrate that its station will operate in com pliance with "technical acceptance criteria" designed to prevent interference with other AM stations. See  47 C.F.R. 73.37 a 1985 . In addition, FCC rules have included five threshold requirem ents that applications for new AM stations m ust satisfy. Beginning in 1973, these "non-technical criteria" initially required that an applicant locate its station in an unserved or underserved location. In 1980, the FCC added further non-technical eligibility criteria for the twenty-five A M channels know n as the U .S. Class *1019  I-A clear channels. As an alternative to establishing a station in an unserved or

Sm ith Additional M aterials for Class #5 (Tues., April 28) – Page 3

underserved area, a new applicant could also m eet the non-technical criteria for a license if it w ere a m ino rity-o w n e d e n te rp rise or a non-com m ercial entity. See Clear Channel Broadcastin in the AM Broadcast Band,  78 F.C.C.2d 1345, 1368-70,  reconsid. denied,  83 F.C.C.2d 216 1980 , aff'd sub nom . Loyola U niversit v. FC C 670 F.2d 1222 D.C.Cir.1982 ; 47 C.F.R. 73.37 e 2 . These "non-technical criteria" are the subject of the present appeal.  In the past, international agreem ents prohibited broadcast stations in the United States from establishing any new nighttim e operations on AM foreign clear channels. As a result of an agreem ent between the U nited States and Canada and negotiations which are expected to lead to agreem ents between the U nited States, M exico and the Baham as, restrictions on the num ber of stations w hich m ay operate full-tim e on the subject fourteen AM stations will be relaxed. In M arch 1984, the FC C proposed both technical and non-technical rules to govern applications for new full-time service on these channels. See Notice of Proposed Rulem aking, Nighttim e O perations on Canadian, M exican, and Baham ian AM Clear Channels  49 Fed.Re . 18567 published M ay 1, 1984 ("Notice"). In its proposal the FCC stated that, as a result of the short period of tim e which had elapsed between the 1980 proceeding regarding the twenty-five U.S. Class I-A clear channels and the current proceeding, the resolution of the pertinent issues had rem ained unchanged. Thus, the Com m ission proposed to apply the sam e technical and non-technical eligibility criteria to licensing applications for the foreign clear channels as had been adopted for the twenty-five U.S. Class I-A clear channels. The public interest, the FC C stressed, was best served by continuing to prom ote the three goals of the 1980 proceeding: "(1) first or second local nighttim e radio outlets to unserved or underserved com m unities; (2) m ore m inority-ow ned stations; (3) additional noncom m ercial stations." Noting that the 1980 clear channels proceeding had predicted that only 100 to 125 new stations would result from that proceeding, the Com m ission concluded that "opportunities to m eet these needs still rem ain inadequate today." The FCC thus p ro p o s e d to e x te n d th e fiv e th re s h o ld non-technical eligibility requirem ents as set forth in 47 C .F.R. 73.37 e 2 i - v  to the fourteen AM foreign clear channels. However, the Com m ission

"invite[d] any other proposals that would likely result in the greatest overall benefit to the public," and in its form al invitation to com m ent, noted that it proposed to adopt the non-technical criteria "substantially as proposed in this Notice of Proposed Rule M aking or in accordance w ith such variants, m odifications, or alternatives within the scope of the issues of this proceeding, as we m ay find preferable after considering the entire record."  *1020  Thirty-four parties filed com m ents in response to the Notice. M ost of the com m ents were subm itted by daytim e-only stations w hich sought authorization to provide nighttim e service on the fourteen AM foreign clear channels. These com m entators either suggested adding another threshold standard to the non-technical criteria to perm it daytim e-only stations to apply for licenses, or waiving the criteria for daytim e-only stations, or deleting the criteria altogether. National Black M edia applauded the Com m ission's proposal to continue the non-technical eligibility criteria and noted that the dem and for m inority-owned stations rem ained largely unsatisfied.  The FC C in a report and order released M ay 7, 1985, decided not to adopt the non-technical eligibility requirem ents of Section 73.37 e 2 after all. The Com m ission reviewed studies that it had conducted on sam ple foreign clear channels to determ ine whether new stations could be established on these frequencies in com pliance with FCC interference standards. The studies, it is revealed, show ed that "[i]n m uch of the country, particularly the populous areas, these frequencies could not be used to create new stations, full-tim e or otherw ise, w ithou t causing de structive interference to the existing daytim e- only and full-tim e stations on the channel." The agency pointed to m aps appended to its report which purportedly showed the lim ited areas in which new AM stations could be established without causing interference. The Com m ission concluded that rather than letting these frequencies "lie fallow in m ajor portions of the country," they should be used to enable daytim e-only stations to operate at night. Furtherm ore, it is noted that such a policy would enable daytim e-only stations to com pete m ore effectively by rem oving lim its on their broadcasting tim e. W hile the FC C adm itted that the foregoing does not apply to certain areas of the country, it concluded that because "the areas in which these new stations would be located are concentrated in the unserved or underserved portions of the

Sm ith Additional M aterials for Class #5 (Tues., April 28) – Page 4

country, acceptance criteria are not needed to funnel growth toward areas of greatest need. M oreover, these frequencies would continue to be available for m inority or public radio applicants. " FC C Com m issioner Henry M . R ivera dissented, contending that the deletion of the non-technical acceptance criteria lacked a rational basis in the face of underrepresentation of m inorities in the broadcast industry. [A Question from Professor Sm ith: How significant is it that one of the Com m ission’s ow n m em ber agreed with the critics about procedural inadequacy? As a practical m atter, did this m ake the court m ore com fortable with reversal?] Petitioners challenge the Com m ission's report and order on several grounds. They contend that the Comm ission failed to provide interested parties with sufficient notice of the decision to abandon the m inority preference policy. Further, petitioners claim that the Com m ission did not take all relevant factors into account when form ulating its new policies and thus its decision m ust be overturned as arbitrary and capricious. W e agree with petitioners that the Com m ission did not provide the public with notice of its intention to delete the non-technical criteria w hich includes its m inority preference policy; nor did it adequately disclose the studies and m aps on which it based its decision. FN 2  Thus, its decision cannot be said to be grounded on all the relevant factors and it m ust be reversed as arbitrary and capricious. FN 2.  W e decline to reach petitioners' claim that there is inadequate evidence to support the FCC 's abandonm ent of the m inority preference policy. See Bowm an Transp., Inc. v. Arkansas-Best Freight S s. Inc. 419 U .S. 281, 285-86, 95 S.Ct. 438 441-42 42 L.Ed.2d 447 1974 . Since notice and the opportunity to com m ent were insufficient, the substance of the FCC 's conclusions need not be exam ined at this review . [Q uestion from Professor Sm ith: W hat is the practical significance – in term s of the future options open to the agency – of the court’s only reaching the “procedural inadequacy” issue and not the “evidentiary adequacy” issue?]  D ISC USSIO N

[Initially the court discussed several procedural objections to its reaching the m ain issues as to rulem aking procedural adequacy. The court’s dism issal of those objections is om itted...]\  Section 4(b)(3) of the Adm inistrative Procedure Act, 5 U.S.C. 553 b 3 , provides that: G eneral notice of proposed rule m aking shall be published in the Federal Register, unless persons subject thereto are nam ed and either personally served or otherwise have actual notice thereof in accordance with law. The notice shall include-- * * *  (3) either the term s or substance of the proposed rule or a description of the subjects and issues involved.  In addition, the agency m ust allow interested persons an opportunity to com m ent on the proposed rules. Id.   553 c . The adequacy of notice is a critical starting point which affects the integrity of an adm inistrative proceeding. Notice is said not only to im prove the quality of rulem aking through exposure of a proposed rule to com m ent, but also to provide fairness to interested parties and to enhance judicial review by the developm ent of a record through the com m entary process.... W hile a final rule need not be an exact replica of the rule proposed in the N otice, the final rule m ust b e a "lo g ic a l o u tg r o w th " o f th e ru le proposed....Clearly, " 'if the final rule deviates too sharply from the proposal, affected parties will be deprived of notice and an opportunity to respond to the proposal. AFL-C IO , 757 F.2d at 338 (quoting ' " Sm all Refiner, 705 F.2d at 547 .  The test that has been set forth is whether the agency's notice would " 'fairly apprise interested persons of the subjects and issues' [of the rulem aking]." Sm all Refiner 705 F.2d at 547 (quoting Am erican Iron & Steel Institute v. EPA  568 F.2d 284, 293 (3d Cir.1977 ).  It is clear that here the notice given by the Com m ission was wholly inadequate to enable interested parties to have the opportunity to provide m eaningful and tim ely com m ent on the proposal which culm inated in the final decision of th e ag e ncy to dele te th e no n -te c hn ic a l requirements. The Notice clearly stated that the FC C intended to adopt the m inority preference policy and other non-technical requirem ents in the

Sm ith Additional M aterials for Class #5 (Tues., April 28) – Page 5

rules for AM foreign clear channels. The FC C even recited the rationale for the proposed rule. Yet, the final rule took a contrary position. See AFL-C IO , 757 F.2d at 338-39 ("A determ ination of whether notice [is] adequate ... turns, then, on an exam ination of the notice ... provided in relation to the final rule which was ultim ately adopted."). The FC C now attem pts to defend its notice by contending that interested parties were invited to subm it other proposals and that the Notice stated that *1023  the rules governing the use of the fourteen AM channels w ould be prom ulgated "substantially as proposed in this Notice of Proposed Rule M aking or in accordance w ith such variants, m odifications, or alternatives w ithin the scope of the issues of this proceeding, as [the Com m ission] m ay find preferable after considering the entire record." These statem ents in the N otice can hardly be said to have apprised interested parties of the Com m ission's intention to abandon the non- technical requirem ents. If this were enough notification of such intention, an agency could sim ply propose a rule and state that it m ight change that rule without alerting any of the affected parties to the scope of the contem plated change, or its potential im pact and rationale, or any other alternatives under consideration. As one court has pointed out: "[u]nfairness results unless persons are 'sufficiently alerted to likely alternatives' so that they know whether their  interests are 'at stake.' In cases where an adm inistrative agency has failed to give the public advance notice of the scope of its proceedings, courts have invalidated the decisions m ade." S artan Radiocastin ,  619 F.2d at 321  (quoting South Term inal Cor . v. EPA, 504 F.2d 646, 659 1st Cir.1974 and citing cases).  Furtherm ore, the com m ents of other interested parties do not satisfy an agency's obligation to provide notice. In AFL-C IO  757 F.2d 330  the court held that notice was insufficient when a final rule differed significantly from the proposed rule. In that case, it appeared that the change was prom pted by a suggestion contained in one of the com m ents. The court noted that the N otice signaled no contem plated change from the proposed rule and found the com m ents inadequate to supply notice: Neither can we properly attribute notice to the other appellants on the basis of an assum ption that they would have m onitored the subm ission of com m ents. "As a general rule, [an agency] m ust itself  provide notice of a regulatory

proposal. Having failed to do so, it cannot bootstrap notice from a com m ent. The [Adm inistrative Procedure Act] does not require com m ents to be entered on a public docket. Thus, notice necessarily m ust com e--if at all--from the agency."  Id. at 340 (quoting Sm all Refiner 705 F.2d at 549 (em phasis in original)). The cases cited by respondent in this regard are inapposite. See, e.g., W JG T ele hone C o. v. FC C  675 F.2d 386, 389 D.C.Cir.1982 (final rule im plicit in FCC's notice); E th l C or . v. EP A  541 F.2d 1, 48-49 & n. 100 D.C.Cir.  (en banc) (three com m ent periods; reproposed regulations clearly indicated alternative under consideration), cert. denied,  426 U.S. 941, 96 S.Ct. 2663,  49 L.Ed.2d 394 1976 ; California Citizens B and Ass'n v. United States, 375 F.2d 43, 48-49 9th Cir.  (m odification did not have real im pact), cert. denied,  389 U.S. 844, 88 S.Ct. 96, 19 L.Ed.2d 112 1967 . Further, the FC C 's conclusions w ere, by its ow n adm ission in its report and order, based on m aps which were appended to that order and internal studies. These m aps and studies were not disclosed throughout the proceeding and thus parties had no opportunity to com m ent on their m ethodology or conclusions. It is clear that " '[i]t is not consonant with the purpose of a rulem aking proceeding to prom ulgate rules on the basis of inadequate data or on data that, [in] critical degree is know n only to the agency. ' " Nova Scotia Food Prods. 568 F.2d at 251 (quoting Portland Cem ent Ass'n v. Ruckelshaus  486 F.2d 375, 393 D.C.Cir.1973 , cert. denied,  417 U.S. 921, 94 S.Ct. 2628, 41 L.Ed.2d 226 1974  (em phasis added in Nova Scotia Food Prods. )). The FC C contends that these studies were based on public data and were largely corroborated by the com m ents; however, it is "the m ethodology used" in creating the m aps and studies, and "the m eaning to be inferred" from them , id. at 251 , that should have been a part of the public record. This non- disclosure thus prevented petitioners and perhaps others from m aking relevant com m ents. For exam ple, petitioners contend that the FCC's studies them selves support a finding that, contrary to the Com m ission's conclusions, a significant num ber of licenses could be granted to applicants from currently served areas *1024 w ithout creating interference. The agency, therefore, cannot be said to have taken into account all relevant factors in reaching its decision. "In this circuit we have said that 'it is "arbitrary or capricious" for an

agency not to take into account all relevant factors in m aking its determ ination.' " Id. (quoting Hanly v. M itchell, 460 F.2d 640, 648 2d Cir. , cert. denied, 409 U.S. 990, 93 S.Ct. 313, 34 L.Ed.2d 256 1972 ). A reviewing court is obligated to set aside a final agency action if it is found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" or m ade "without observance of procedure required by law. " 5 U .S .C . 706 2 A , D .  W e hold that, in failing to provide notice of its decision to abandon its m inority preference policy, the FCC did not com ply with the notice provision of the Adm inistrative Procedure Act. Furtherm ore, the Com m ission's action m ust be set aside because it used critical, yet unpublished, data to reach its conclusions and likely did not take all the relevant factors into account in the rulem aking proceeding. W e therefore grant the petition for review and rem and to the Com m ission for proceedings not inconsistent with this opinion. ------------------------------------------ Case #2: Initial Notice Found A dequate, under A Deference-to-the-Agency Policy United States Court of Appeals, Federal Circuit. M O RTG AG E IN VESTO RS CO RPO RA TIO N O F O HIO , Petitioner, v. GO BER , Acting Secretary of Veterans Affairs, Respondent. 220 F.3d 1375 Aug. 11, 2000. *1376  Steven C. Du re' , Carlton, Fields, W ard,  Em m anuel, Sm ith & C utler, P.A., of St. Petersburg, Florida, argued for petitioner. W ith him on the brief was Jill H. Bow m an .  G erald M . Alexander , Attorney, Com m ercial Litigation Branch, Civil Division, Departm ent of Justice, of W ashington, D C , argued for respondent. W ith him on the brief were David W . O den , Assistant Attorney General; David M . Cohen , Director; and M ark A. M elnick , Assistant Director.  Before NEW M AN , RADER , and LIN N , C ircuit

Page 6

Judges.  RADER , Circuit Judge. M ortgage Investors C orporation of Ohio (M IC), a private corporation which specializes in refinancing g o v e r n m e n t - s e c u r e d F e d e r a l H o u s i n g Adm inistration (FH A) or Veterans Adm inistration {VA} loans, petitions this court for direct review of a m odification of a Departm ent of Veterans Affairs (DVA) rule, Loan G uaranty: Requirem ents for Interest Rate Reduction R efinancin Loans,  RIN 2900-A192, 64 Fed.Re . 19906 et seq., (Apr. 23, 1999). This court has original subject m atter jurisdiction to review this rule under 38 U.S.C. § 502 1994 . The rule governs som e aspects of DVA's Interest Rate Reduction Refinancing Loan (IRRRL) Program , 38 U.S.C. 3710 1994 . MIC challenges the new rule's sufficiency under the Adm inistrative Procedure A ct (APA), 5 U.S.C. § 553 1994 . This court finds the new rule to be neither arbitrary nor capricious, and DVA to have follow ed the APA's procedural requirem ents. I.  Under 38 U .S.C. 3703 1994 , DVA can guarantee a percentage of a veteran's private m ortgage loan. The IRRRL program continues that guarantee when the veteran refinances the loan to obtain a lower interest rate. Before the rule change, no DVA review or approval was required for refinancing if the original loan was not m ore than three m onthly paym ents past due. On October 8, 1997, DVA announced a change in the three-paym ent rule by publishing an "interim final rule." The "interim final rule" stated that DVA approval w as not required for an IR R RL refinancing if the loan was "current," i.e., not *1377 "delinquent." Further, except in certain circum stances, the rule required that the refinancing had to reduce the veteran's new loan paym ent. The "interim final rule" did not define th e te rm s "c u rre n t" an d "de lin q u e n t." Nonetheless, the rule m ade clear that the veteran could not skip any m onthly loan paym ents before the refinancing, and effectively converted the three-paym ent grace period into a one-paym ent grace period. D VA sought to change the rule because "a sm all num ber of lenders ha[d] been urging veterans to apply for loans under conditions that increase[d]

the risk of loss to both the veteran and the G overnm ent." 62 Fed.Re . 52503 O ct. 8, 1997 . DVA asserted that in som e cases refinancers had added "exorbitant costs" to loans, while the borrow ers benefited by only a very sm all interest rate reduction. See id.  at 52503-04.  DVA determ ined that lenders had encouraged veterans to skip paym ents on the old loan and use the savings to pay the costs of the new loan, or for som e other purpose. See id.  As a result of these practices, som e veterans had experienced an increase in their m onthly paym ent notwithstanding the new loan's lower interest rate. See id.  As published, the new rule w as to be effective upon publication, but DVA solicited public com m ent until Decem ber 8, 1997. M IC filed a petition for judicial review and injunctive relief in this court on N ovem ber 20, 1997. DVA rescinded the interim final rule on Decem ber 1, 1997, m aking M IC's petition m oot.  On June 3, 1998, DVA published a "proposed rule," which was sim ilar to its earlier interim final rule. A gain the proposed new rule reduced the three-m onth grace period to one m onth. This proposed rule set no effective date and solicited com m ents from interested parties until August 3, 1998. DVA also noted that it would take account of com m ents it had already received on the interim final rule in its consideration of the new proposed rule. This proposed rule defined a "delinquent" loan as any loan whose scheduled m onthly paym ent was m ore than thirty days past due. See 63 Fed.Re . 30163 June 3, 1998 .  On April 23, 1999, DVA published a "final rule," with an effective date of May 24, 1999, in the Federal Register. In this publication, DVA discussed at length the public com m ents and alternative proposals it had received. See  64 Fed.Re . 19906-09 A ril 23 1999 . For technical reasons, DVA delayed the final rule's effective date until June 7, 1999. In M ay 1999, M IC filed a petition in this court requesting a stay, pending review, of the interim final rule, partially on the ground that DVA had not com plied with the APA. M IC 's petition was denied. See M ortgage Investors C orp. of Ohio v. W est,  220 F.3d 1375 (Fed.Cir.1999).  In the petition that is the subject of this appeal, M IC argues that DVA violated the APA. Specifically, M IC charges that the final rule is arbitrary and capricious. Further, M IC com plains

Page 7 of procedural illegalities, asserting that the DVA did not provide a fair opportunity for public com m ent before adoption of the rule, did not provide an opportunity for the public to obtain and refute certain m aterials that "served as the im petus of the rule," was not genuinely responsive to the public com m ents, and kept no accurate record of the rule-m aking process. II.  The AP A sets forth the following procedure for agency rule m aking: [the court’s repetition of Section 553 language is om itted...] .... In brief, the APA requires publication of notice of proposed rulem aking in the Federal Register and an opportunity for interested persons to participate in the process through appropriate subm issions. The agency m ust then consider "the record so m ade" in adopting a rule....  Under the section of the AP A quoted above, agency decisions are entitled to considerable deference, and with respect to fact-finding, substantial evidence in the record is sufficient to support an agency's finding, even if a preponderance of the evidence m ay show otherwise....  To determ ine w hether an agency action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," this court exam ines whether the agency considered relevant factors or clearly erred in its judgm ent; this court w ill not, how ever, substitute its ow n judgm ent for the agency's....In inform al rule-m aking cases such as this, courts often consider three questions: "(1) whether the rulem aking record supports whatever factual conclusions underlie the rule; (2) whether the policy determ inations behind the rule are rational; and (3) whether the agency has adequately explained the basis for its conclusion."... [A Question from Prof. Sm ith: W hat policies and practicalities are behind the typically defential judicial approach to agency judgm ent? Do you agree that courts should be so restrained? Are im portant oversight opportunities lost as a result?]

III. M IC argues that the DVA "dem onstrably closed its m ind to public com m ent" by prom ulgating a final rule that was virtually identical to the interim final rule, even after com m ent had been received.  *1379  The APA does not expressly require agencies to keep an "open" m ind, whatever such a subjective term m ight m ean. Rather, 553 c requires agencies to afford interested persons an opportunity to participate in public rule m aking through subm ission of written data, views, or argum ents. Section 553  requires consideration of whatever data and view s are subm itted. Such consideration has been considered to dem onstrate an "open m ind." See Advocates for Highw ay & Auto Safety v. Federal Hi hw a Adm in.  28 F.3d 1288, 1293 D .C .C ir.1994  ("A review of com m ents subm itted and the responses m ade persuades u s th a t th e a g e n c y a p p ro a c h e d th e post-prom ulgation com m ents with the requisite open m ind").  The record show s that during the solicitation period, the agency received m any relevant com m ents and considered them in the published final rule. The agency also considered, and responded to, propo sals for alternative procedures. The agency considered and responded to com m ents questioning the need for reducing m onthly paym ents on loans, com m ents decrying the thirty-day delinquency rule, com m ents questioning whether poor quality refinance loans were m ade under the prior rule, com m ents noting the effect of interest rates on d e fa u lt ra te s , c o m m e n ts s u gg e stin g a com prom ise sixty-day delinquency period, com m ents attacking a thirty-day delinquency rule, comm ents perceiving dangers to delinquent debtors, com m ents predicting an adm inistrative overload under the new rule, and com m ents pointing out various specific problem s borrowers m ight face. The agency also discussed in detail s e ve ra l c o m m e nts b y in div id ua ls , a n d suggestions for alternatives to the proposed rule.  See  64 Fed.Re . 19906-09 .  DVA also com plied with the APA in its consideration of letters it received during 1998 from two U.S. Congressm en. These letters asserted that the proposed rule change was "not

Page 8 in the veterans' best interest" and objected to the new DVA procedures. The letters further suggested that the rule change was contrary to the intent of Congress. In its response to these letters, DVA explained its reasons for seeking a change and quoted the House Com m ittee report w hich accom panied the bill establishing the IR R RL program . The agency also discussed the points brought up in the letters in its publication of the final rule on April 23, 1999. These responses dem onstrate that the DV A considered the views of these interested parties--which alone satisfies the APA.  In sum , the record show s that the agency received and considered relevant com m ents. This court, in light of the record, could "see what m ajor issues of policy were ventilated by the inform al proceedings and why the agency reacted to them the way it did." State of South Carolina ex rel Tindal v. Block  717 F.2d 874, 886 (4th Cir.1983  (internal quotation m arks and citations om itted). Therefore, the agency com plied with the statutory requirem ents of the APA, including the requirem ent to consider w hatever data and view s were subm itted. IV.  M IC asserts that DVA did not afford interested parties an opportunity to refute data about trends in IRRRL foreclosure rates, "which served as the im petus of the rule." M IC argues that DVA thus violated the APA's notice and com m ent provisions.  For its part, DVA adm its awareness of relevant sta tistics on fore clos ure ra te s befo re it prom ulgated its final rule, but states that it did not "rely on" those statistics in prom ulgating the rule. The APA requires notice of the "substance of the proposed rule" or a "description of the subjects or issues involved." 5 U.S.C. 553 . Title 5 does not, however, expressly require that interested parties receive notice of, and an opportunity to com m ent on, antecedent factual underpinnings for agency rule m aking. Our sister circuits have invalidated rule-m aking procedures for agency failure to disclose critical factual underpinnings for rule m aking, but the settings for those invalidations *1380 w ere different than that in this case. See, e.g., N ational Black M edia C oalition v. FC C  791 F.2d 1016 2d Cir.1986 (FCC found to have acted arbitrarily for withholding technical data that justified a departure from m inority preferences in apportionm ent of new AM broadcast licenses);

United States Lines, Inc. v. Federal M aritim e Com m 'n  584 F.2d 519 D.C.Cir.1978  (FM C withheld data about shipping capacity from a shipping agreem ent). In the cited instances, the inform ation withheld was so central to the decisional process that its nondisclosure was tantam ount to refusing to describe the subject or issues in the rulem aking proceeding. In such rare instances, nondisclosure of the central "subjects or issues involved" in the rule m aking by withholding the data prom pting the decisional change can offend the APA. W hile DVA had access to statistics on foreclosure rates by year, the departm ent perform ed no analyses based upon this data which can be said to have defined the subject or issue of its rule-m aking proceeding. DVA discerned a trend toward increasing foreclosure rates for loans in the IRRRL program . This trend m ay have been am ong the factors that suggested a review of the IR R RL program , but DVA did not rely upon it to define the issues the departm ent associated with the program . The record shows that, in addition to discerning a trend, DVA undertook investigations into the legislative history of the program , the nature of advertising for IRRRL refinancing by certain loan providers, and the effect of the program on veterans. DVA set forth this process, and its results, in its notices of the proposed rule m aking. DVA ultim ately collected a large num ber of com m ents on all of the prem ises for its action, and its ultimate decision was fram ed with adversarial com m ent in full view. D VA's public notice initially defined adequately the subjects and issues involved in its proposed new rule. The num bers that resulted in DVA's perception of a trend were not "key" to its decision-m aking, and therefore need not have been published with DVA's original notice. Cf. National Assoc. of U tilit C om m 'rs v. FC C  737 F.2d 1095, 1121 D.C.Cir.1984  ("An agency's denial of a fair opportunity to com m ent on a key study m ay fatally taint the agency's decisional process."). Therefore, DVA did not offend the APA by not publishing this data.  Moreover, the record does not show that DVA relied on any specific data, and particularly not the withheld data, in prom ulgating its rule. MIC points only to a single e-m ail com m unication within DVA in which the author professes surprise and distress over elevated foreclosure rates on IRRRLs for the previous four years, as evidence that DVA relied heavily on the undisclosed data. The e-m ail

Page 9 m em o notes that the causes of this phenom enon "cannot be determ ined without additional research" and characterizes these statistics as a "cause for alarm ." MIC says this comm unication shows that the annual foreclosure data was "critical to the decisional process." To the contrary, it is hard to conclude that a single intra-agency m em o is evidence of agency- wide reliance on its content. Even if the m em o shows som e awareness of the trend data at the agency, it still does not show that the data rises to the level of defining the very subject and issue of the rule m aking. See Conference of State Bank Supervisors v. Office of Thrift Su ervision  792 F.Supp. 837, 843 D.D.C.1992 . In sum , DV A did not offend the APA by declining to disclose som e inform ation underlying its proposed rule. [Questions from Prof. Sm ith: (1) Is this court’s effort to distinguish the undisclosed data in this case from the data in National Black Media Coalition convincing? (2) A critic w ould say that the result of this court’s holding on undisclosed data is that an agency is allowed to rely without specific disclosure on vague “trends” in unanalyzed data, but m ust disclose data that it actually subjects to com prehensive analysis and study. This, the critic could continue, encourages “im pressionistic” agency decisions and discourages agencies from rigorous analysis. Do you agree? Are there countervailing considerations that justify this court’s approach?] V. In conclusion, DVA supplied an adequate record to support its rule change and its com pliance with APA procedures. In an inform al rule- m aking procedure such as this, the agency need only supply a record adequate to show com pliance with APA requirem ents....An agency need not produce a full adjudicatory record....M oreover, if factual determ inations *1381  involved in an agency's decision are prim arily of a judgm ental or predictive nature, com plete factual support in the record for an agency's judgm ent or prediction, based on the expert knowledge of the agency, is neither possible nor required. See FCC v. National Citizens Com m ittee for Broadcastin ,  436 U.S. 775, 813-814, 98 S.Ct. 2096, 56 L.Ed.2d 697 1978 . Therefore, this court finds the new rule to be not arbitrary and capricious, and D VA to have followed the APA's procedural requirem ents in adopting it.