Bloomberg Law - The full Federal Circuit posed tough questions for the Department of Veterans Affairs and a veterans group fighting over the court’s ability to consider pre-enforcement challenges to agency interpretive rules at oral argument Thursday.
The National Organization of Veterans’ Advocates Inc. asked the U.S. Court of Appeals for the Federal Circuit to overturn a 2017 precedential decision in which it said it lacks jurisdiction to review interpretive rules in the VA’s internally binding administrative staff manual.
“The VA wants to block the court from even looking at these rules,” Roman Martinez of Latham & Watkins LLP argued for NOVA. The agency shouldn’t be able to “hide behind threshold procedural issues” like whether the manual is binding, whether the rules are final, and whether the case is timely, he said.
Some judges expressed concern about the practical effects of NOVA’s position. Others worried the VA was trying to get away with something.
The en banc argument was the court’s first by phone. The court has been conducting panel arguments by phone since April as a pandemic precaution. As with those hearings, the two-hour argument Thursday ran smoothly, aside from a few moments where the judges forgot to unmute their lines, briefly dropped from the call, or weren’t able to effectively interrupt the attorneys.
Burden on Court, Agencies
Judge Jimmie V. Reyna worried about how many cases could arise from the hundreds of changes the VA makes to its manual every year.
“If we were to grant your claim, aren’t we looking at a flood on this court’s docket of pre-enforcement challenges?” he asked Martinez. “Wouldn’t that undermine the agency’s determinations, and more importantly, wouldn’t it also hurt the veterans in the long run?”
Martinez answered that there’s no reason to assume that every change to the manual will face legal challenge.
Judge Richard G. Taranto picked up on a similar line of questioning, asking about the 175 manual provisions made just this year.
“It feels like what might be happening here—which might be absolutely correct under the statute—is a large shift to where we’re deciding many legal issues without the benefit of rulings by the specialist Veterans Court,” he said. “That gives me some pause.”
Martinez answered that it was Congress’ decision to make the Federal Circuit the first stop for veterans challenging rules that are generally applicable to all cases.
Judge Raymond T. Chen wondered if the case would apply to other agencies. “There are a lot of agencies out there and they all have manuals,” he said.
He asked which kinds of manual information would have to be published in the Federal Register and opened to notice and comment.
“I don’t think this would be burdensome on the agencies at all,” Martinez said.
Agencies can publish a notice incorporating a rule published elsewhere by reference, he said, giving the example of the patent office practice of cross-referencing its examiner’s manual rather than publishing the whole change in the Federal Register.
Judge Timothy B. Dyk looked for ways to help NOVA’s position. He suggested it add in three member vets with pending disability claims to avoid questions that the organization doesn’t have standing. And the group should challenge the earlier version of one rule that was published in the Federal Register rather than the version republished in the manual, to ensure the court has jurisdiction, he said.
Hiding New Provisions
Judge Todd M. Hughes questioned Justice Department attorney Eric P. Bruskin, arguing for the VA, about whether the agency was trying to classify rules in a way that makes them immune from judicial review.
“I’m concerned that your position that the manual provisions aren’t reviewable would allow the agency to hide provisions that should have gone through notice and comment or otherwise been published,” he said.
Putting a provision in the manual doesn’t hide it from review, Bruskin said. “The Federal Circuit can still invalidate a manual provision if it finds it should have gone through notice and comment.”
Chen questioned whether the manual is really binding if it only applies to the claim examiners and not to the Board of Veterans Appeals. “Why would the VA go to all the trouble of producing all these manual provisions that bind one arm of the agency but not another arm?”
The manual is meant to ensure uniformity and consistency among the examiners, who aren’t lawyers, Bruskin said.
“Congress intended most challenges to agency actions to be channeled through the Veterans Court within only a limited exception for certain opinions binding on the entire agency,” he said.
Only 11 of the court’s 12 active judges participate: Judge Kimberly A. Moore, whose husband is a Latham & Watkins partner, recused herself.
The case is NOVA v. Secretary of Veterans Affairs, Fed. Cir., No. 20-1321, en banc argument 10/8/20.