The Closing of 2016 in Regulatory Compliance

Ryan Meade
Director of Regulatory Compliance Studies at Loyola University Chicago School of Law


Early before dawn on the last day of the 2016 Federal Register, 19 pistachio handlers in the United States were greeted with an easier compliance burden for 2017.  But we’ll return to that later.

Why January 1 starts the new year is a bit confusing and seems mostly arbitrary (I’ve always thought the spring equinox would be a better new year day than January 1).  January 1 has off and on again been an important legal day.  The new Roman consuls took office on January 1 just as many State governors do in modern times, and legislatures often choose January 1 as the compliance date for new laws.  Regulations, however, don’t follow a tidy calendar year start. Regulations generally begin at 60 or 30 days after publication in the Federal Register (depending on various factors). They can also begin less than 30 days after publication under limited circumstances. See generally, the closest Administrative Law hornbook near you. By the mercy of the Executive, the effective date can be postponed longer than 60 days after publication — sometimes 90 days, 120 days, or even one year.  To be sure, there are regulations that are timed to start on January 1 (particularly payment-related rules), but generally in the world of regulations, January 1 is not that big of a deal.  Except when it comes to the Federal Register page count.

On January 1, or more usually January 2 with January 1 being a federal holiday — and this year even more accurately January 3, a new volume of the Federal Register begins and the page count starts over again.  The Federal Register ended 2016 with quite a bang: 97,110 pages.  It was a record.  But it’s not clear what the size of the page count means.  The bulk of what is published in the Federal Register is official commentary on proposed, interim, and final rules.  Along with regulations, the Federal Register is chock full of Executive Orders and various notices agencies are required by law to publish.  Whether what is published in the Federal Register is law is a sticky topic.  Properly promulgated regulations are treated as having the force and effect of law, but what about commentary?  The commentary isn’t law but you would be a foolhardy lawyer or compliance officer to ignore the agency’s commentary on a regulation. It’s the agency that enforces the regulation it is commenting on, so it’s not a bad idea to understand what the agency believes its regulation to mean. There are many regulations (and statutes) which we don’t understand their meaning until they are enforced. Take it from a regulatory lawyer, it’s a good idea to pay attention to the Federal Register commentary.

With all this in mind, did the Executive Branch publish 97,100 pages of laws in 2016?  Not technically, but functionally it did. Commentary is not law but it cannot be ignored in trying to figure out how to comply with a regulation. If the commentary is essential to complying with a law, then it seems to me the commentary on a law is functionally law.  With my legal theory hat on, this makes me cringe to write that commentary on a law is functionally law. It shouldn’t be that way, but practicing law isn’t always about what the law should be. The humdrum daily routine of a regulatory lawyer is trying to figure out what the regulated actor should do to conform to the state’s expectations.  In today’s administrative state, that means the commentary in the Federal Register and all 97,110 pages this year are mighty important and need to be read like laws.

To the extent the page count tells a story, this year it doesn’t tell the whole story.  January 1 is even more arbitrary this year when trying to decipher the world of regulations through the prism of the Federal Register.  In the midst of a presidential transition, the total page count for the December 30, 2016 edition of the Federal Register is no more important than the total page count on January 3, 2017.  What’s happening now is a high boil of regulatory output trying to beat the clock of January 20, 2017.  Accordingly, we will keep an eye on the volume of pages in the Federal Register between now and Noon on January 20.  We are past the 30 day mark for the usual publication of final rules, so what usually happens in presidential transition periods is what is happening in this transition period over the next three weeks: final rules that can be made effective in under 30 days are being published with great ferocity.  But that doesn’t mean those “under 30 days” rules are all that’s being published.  The Federal Register is, and will continue to be, full of final rules that have an effective date after the inauguration in an attempt to make the new administration say “yes” or “no” to the previous administration’s regulations. The final regulations that have an effective date after January 20 will tend to have a character of regulations that will be politically difficult for the new administration to say “no” to.  This is the way it works without respect to which party is on the way out.  A couple of hours after the inauguration on January 20, there will likely be a stay placed on all pending regulations that are not effective (as there has been since 1981) and the new administration will embark on a review.  Over the course of 2017, we will read the “yes’s” and and “no’s” in the Federal Register.

But back to the end of a year of lots of pages of the Federal Register.  One of the last regulations published in the year was about pistachios.  The action turned an interim rule into a final rule to be effective the next day. The regulation by the Department of Agriculture implemented a recommendation by the Administrative Committee for Pistachios (that’s a real thing) to decrease the “assessment rate” for pistachios grown in three States.  The commentary on the regulation is short. It’s worth reading if you like pistachios and it’s worth reading even more if you grow or are a “handler” of pistachios. You will learn a lot in three pages on pistachios (particularly about how little money is made by pistachio farmers per acre — an astonishing fact to me as a lover of pistachios who is deeply aware of their steep price tag in stores), but for the life of me I was having a difficult time figuring out what the Department’s notice meant by an “assessment rate.”  There are dollars (actually, portions of cents per pound of pistachios) associated with the “assessment rate” but the notice is written in a way that obscures what an assessment rate is.  On a second read it finally became obvious  that “assessment rate” just means “tax.”  The new regulation lowers the “assessment rate” on 19 (and only 19) “handlers” of pistachios. A handler of pistachios is any entity that hulls and dries pistachios or places pistachios “into the current of commerce.”  So this regulation, more or less, lowers a tax.  I have rarely met a tax I haven’t liked to be lower, so this strikes me as a good regulation on the bald face of lowering taxes on domestically produced products. (Though I am still puzzling over why there are special taxes on pistachio middlemen to begin with).

This is the stuff of the administrative state. It’s messy and nerdy and hard to tell sometimes (most of the time?) what it has to do with the common good.

Finally, in case you are wondering, 97,110 pages of the Federal Register with pages printed on both sides is 242 inches tall, that’s a tad over 20 feet.  I learned this from Googling it.

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Here at the Inside Compliance blog we end our first year. Thank you to the students who tackled timely and interesting issues.  It is not easy for law students to find time to contribute to the blog and its accompanying Journal.  I appreciate their work and commitment.  We had a great kick-off year.  The Center for Compliance Studies was established.  We published the first issue of the Loyola Journal Of Regulatory Compliance (second issue out in late spring).  We hosted a full-day symposium in September with a range of papers and panels exploring compliance and ethics under the theme “Complying with Law” (videos to be posted in the next couple of weeks).  We received accreditation review from the Compliance Certification Board for over 40 on-campus and online compliance and regulatory-related courses.  At the core of this work is a desire by students to study and understand the role of compliance programs and the regulated actor in the administrative state.

And for employers, please take note of the law students listed as Bloggers on the right hand side of this page.  These are future compliance officers for a variety of industries.  They are interested in regulations and the compliance profession.  10 years ago, probably even five years ago, it was inconceivable that there would be a gaggle of students studying to be compliance officers.  Hire them!  That will make this pistachio loving professor have a very happy new year.

Happy New Year to all.