Changing the Rules

Changing the Rules
Basic Principle
Agencies are bound by their own rules and
adjudications until they change them
They are free to change them, but must explain
the reasons
The reasons must meet the arbitrary and
capricious or substantial evidence test
Civil v. Criminal Prosecutions
Criminal courts may read the law differently than
the agency
Can the agency create situations through mistake
or policy that do not follow the law, but are
Agency Personnel Give the Wrong Advice
Why should we care?
Should the agency be bound?
What problems would this cause?
 Unequal application of the law?
 Potential for corruption?
What holding the agency bound improve advice?
 What is the alternative for the agency?
The Agency Acts Against the Law
Same assumption - not binding
First, there must be reliance to raise the issue
 This happened in the S&L cases
The courts will look for another theory to support
the agency's action
In the S&L cases, the courts found that the
agency created a contractual obligation, which
was binding
Making the Case for Your Client
Is this a rule that the agency can waive?
Would allowing the exception create fairness
 Allowing a benefits application to be filed late
 Allowing a competitive license or bid to be filed
What is the impact on the client?
 More slack in immigration, for example
Res Judicata - General Rules for Private
Same parties, same facts
 You are bound
Issue preculusion - Same parties, same issue
 Bound on the issue
Res Judicata
Policy issues
 An agency can be involved in thousands of
cases around the US
 The same issue and parties can arise in
different courts
 District judges have different abilities and
What would be the impact of allowing res
The agency is bound by the decision in the district, or in
the circuit if a circuit case
The agency may disregard or relitigate the issue in other
districts or circuits, even against the same parties, if
there is jurisdiction
Once the United States Supreme Court rules, the agency
is bound
 What are the politics in deciding whether to appeal?
 When will the agency choose to not appeal?
 How should this affect their win-lose record?
Prospectivity and Retroactivity
Basic Principles
Retroactive criminal laws are unconstitutional
Retroactive civil laws are disfavored
 Congress must specifically intend retroactivity
 Can still be unconstitutional depending on what
they affect
Retroactive procedural rules are usually OK
Reinterpretations of the law with retroactive
effects are common
Older cases
 No retroactive application
 Can only change the rule going forward
 Does not apply if there is no old rule
New Cases
 More latitude for adjudications to retroactively
change rules, but still disfavored
 NLRB does not want to make rules
Intended to prospective only
 Congress can allow retrospective rules to correct
 Tax loopholes
 Less likely to be applied to innocent parties
Can reaudit and the like
Not applicable if there is no old rule
Not applicable to changes in interpretation of the law
Primary and Secondary
Primary retroactivity
 I cannot go back and say that you can no
longer get paid for in office chemotheraphy and
then ask for a refund for past payments
Secondary retroactivity
 I can stop paying for in office chemo in the
future and make your investment in your stand
alone cancer center worthless
Bowen v. Georgetown University
Feds change the way reimbursement is calculated on
Medicare costs
 What was the retroactive effect of this rule?
 Did the court accept this?
What if the "conditions of participation" say that you are
subject to retrospective rule changes which require
The court in a later case found that there could be
changes in the way that base year calculations were
done, even though these changed past bills