Major General Mario F. Montero, Jr
Commander
U.S. Army Military Traffic Management Command
5611 Columbia Pike (701 NAS)
Falls Church, VA 22041-5050
Re: Response to MTMC Letter Dated September 8, 1998, Addressing the Proposed Implementation of the Defense Table of Official Distances and Compliance with the Regulatory Flexibility Act; 63 Fed. Reg. 31,761 (June 10, 1998).
Dear Major General Montero:
The Office of Advocacy has reviewed the September 18 letter drafted by Daniel Rothlisberger concerning the Military Traffic Management Command’s (MTMC) proposal to establish a new table of official distances and MTMC’s compliance with the Regulatory Flexibility Act (RFA). We appreciate your response to the issues raised in our previous correspondence, and we appreciate your willingness to search for alternatives to your proposal that would be less burdensome for small businesses; however, we respectfully disagree with your conclusions regarding the need to comply with the RFA.
MTMC is certainly authorized to make changes in the method used to calculate mileage distances for purposes of implementing its programs. Moreover, MTMC’s goal of consolidating multiple distance calculation sources seems reasonable from an efficiency standpoint. Complying with the RFA does not mean that MTMC must yield any of its authority or abandon any of its goals. Instead, the RFA requires agencies to take a careful look at their regulations and determine whether small businesses will be impacted. If this initial look reveals that a substantial number of small businesses will be significantly impacted, then a more thorough analysis is required. The RFA requires agencies to analyze less burdensome alternatives, among other things. This analysis may even reveal that the proposed alternative is in fact the best alternative.
That said, the Office of Advocacy takes issue with several of the assertions contained in MTMC’s letter:
"In our view, the FPPA does not stand for the proposition that every statement on procurement policy or procedure is a "rule" within the meaning of the APA."
It is true that every statement may not be a rule, but the APA does not exempt any form of agency action from falling under the general title of a "rule." Whether or not something is a rule has to do more with whether the rights and interest of the regulated community will be substantially altered than with the terminology/title used by an agency to describe a change in policy. It may be instructive in this instance to consider the 1979 Fifth Circuit case of Brown Express, Inc. v. United States, 607 F.2d 695. The court said that the rule under consideration would not fall within the exception to the notice and comment requirement (of the APA) because it constitutes a departure from existing practice which has a significant impact on those regulated.(1)
"Indeed, we can find no court decisions or legislative history to suggest that an IRFA is required whenever notice and comment are mandated by 41 U.S.C. 418b." In fact, there probably never will be any case law to that effect. IRFA’s are not required as a matter of law (even when the APA applies) simply because notice and comment are mandated. Most rules do not require the preparation of an IRFA. The only time an IRFA is required is when an agency determines, based on a preliminary regulatory flexibility analysis, that a particular rule will have a significant economic impact on a substantial number of small entities.
"Recent cases involving proposed MTMC procurement policy changes have made clear that the FPPA, and not the APA, is the controlling statute for notice and comment requirements." What needs to be emphasized here is that the RFA applies in certain instances even when the Administrative Procedure Act does not. As outlined in our previous correspondence to your office, since notice and comment is required under the Federal Procurement Policy Act (FPPA), 41 U.S.C. 418(b), then the RFA applies(2) The case law provided in your letter merely asserts a proposition that we do not dispute—that the APA does not apply when a statutory exception (e.g., contracts, benefits, grants, etc.) exists.
We urge MTMC to continue its outreach to he industry—better dialogue makes better regulations. MTMC seems to have taken into consideration a number of alternatives to reduce the burden on small entities; however, these alternatives should be memorialized in the form of an IRFA and submitted for public comment pursuant to the RFA. In other words, MTMC has already done most of the work, the agency only needs to formalize its efforts.
Again, we thank you for your attention to these matters. Please do not hesitate to contact us at 202-205-6533 if you have any questions.
Sincerely,
Jere W. Glover
Chief Counsel for Advocacy
Shawne Carter McGibbon
Asst. Chief Counsel for Advocacy
ENDNOTES
1. See also, United States Department of Labor v. Kast Metals Corporation, 744 F.2d 1145 (5th Cir. 1984).
2. See 5 U.S.C. § 601(2), "the term ‘rule’ means any rule for which the agency publishes a general notice of proposed rulemaking pursuant to section 553(3) of this title, or any other law . . ." (emphasis added).