-

 



U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20210

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TEURL

ISSUE DATE

October 5, 1995

RESCISSIONS

None

EXPIRATION DATE

 

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 01-96

 

TO

:

ALL STATE EMPLOYMENT SECURITY AGENCIES

 

FROM

:

MARY ANN WYRSCH
Director
Unemployment Insurance Service

 

SUBJECT

:

The Legal Authority of Unemployment Insurance Program Letters and Similar Directives

  1. Purpose. To advise States of the position of the Department of Labor (Department) regarding the legal authority for Unemployment Insurance Program Letters (UIPLs) and other Departmental directives which affect the Federal-State Unemployment Insurance (UI) Program.

  2. References. The Administrative Procedure Act (APA), 5 U.S.C. 551-559; the Social Security Act (SSA); and the Federal Unemployment Tax Act (FUTA).

  3. Background. Departmental directives for the UI program include UIPLs, General Administration Letters (GALs), Handbooks, the Employment Security Manual (ESM) and various transmittals of model legislation for implementing Federal law requirements. These directives are issued to the States under authority delegated by the Secretary of Labor.

    The Department issues directives to set forth official agency policy. These directives state or clarify the Department's position, particularly with respect to the Department's interpretation of the minimum Federal requirements for conformity or compliance, thereby assuring greater uniformity of application of such requirements by the States. Oftentimes these directives provide information in the public interest which is vital to guiding the States' courses of operations.

    States have raised questions regarding what weight these directives carry as interpretations of Federal law. These inquiries have come from State legislators, State Attorney General offices, other State officials and attorneys in Legal Services. It has sometimes been argued that, since the interpretations in these directives are not found in the Code of Federal Regulations, they have no legal effect. This UIPL is issued to advise States that these directives do, in fact, have legal effect.

  4. Discussion. The APA contains requirements to determine which rules are subject to its notice and comment procedures (ultimately leading to publication in the Code of Federal Regulations) to have force and effect as well as provisions for those rules which are not subject to those procedures. The APA, originally enacted on June 11, 1946, and later revised by P.L. 89-554, (5 U.S.C. 551-559) was passed in part to assist the various Federal government agencies in their administration of statutes under their jurisdiction. The APA recognizes that some functions and some operations of Federal agencies do not lend themselves to a formal procedure. For this reason, the APA provides for different types of rules including "substantive" or "legislative" rules and "interpretative" rules. Section 553(b) of the APA, which requires that a general notice of proposed rule making must be published in the Federal Register, makes two exceptions to this requirement, one of which is relevant here as follows:

    Except when notice or hearing is required by statute, this subsection does not apply--

    (A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; . . . .

    The test for determining if a rule is interpretative, and thus not subject to the requirement of a published notice of proposed rulemaking, is found in Gibson Wine Co., Inc. v. Snyder et. al., 194 F.2d 329 (D.C. Cir. 1952). In Gibson, the court addressed an interpretative ruling transmitted by the Deputy Commissioner of the Internal Revenue Service. The court stated on page 331:

    Administrative officials frequently announce their views as to the meaning of statutes or regulations. Generally speaking, it seems to be established that "regulations," "substantive rules" or "legislative rules" are those which create law, usually implementary to an existing law; whereas interpretative rules are statements as to what the administrative officer thinks the statute or regulation means. [Emphasis supplied.]

    Under Gibson, an interpretative rule is one which explains or defines particular terms in a statute or is an opinion of an official, having authority on a particular subject, as to the meaning of a statute or regulation. Id. at 331-332.

    British Caledonian Airways, Ltd. v. C.A.B., 584 F.2d 982 (D.C. Cir. 1978), is a leading case concerning the use of interpretative rules. The court stated that the agency was "construing the language and intent of the existing statute and regulations in order to . . . remove uncertainty "which is "a function peculiarly within the ability and expertise of the agency." Id. at 991. The agency's actions were entirely appropriate "to illuminate the meaning" of its regulations. Id. at 993. Another court has stated that, when interpretative rules reiterate or explain an explicit statutory obligation, they can even help "make sense" of inconsistent statutory direction created by acts of Congress as long as they do not impose a new procedure or obligation which is not derived from the language of the statute or regulation. American Hospital Association v. Bowen, 640 F. Supp. 453, 460 (D.D.C. 1986).

    In Cabais v. Egger, 690 F.2d 234 (D.C. Cir. 1982), the court held that a UIPL was not subject to the APA notice and comment procedures when it construed the language and intent of a statute and reminded States of existing duties, and where the UIPL did not grant or deny rights nor impose obligations which did not already exist in statute. (1)

    Even if an interpretative rule has a wide ranging effect or a "substantial impact" on individuals, this does not mean it is subject to notice and comment procedures. Following the U.S. Supreme Court decision in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council Inc., 435 U.S. 519, 524 (1978) that courts are generally not free to impose on agencies requirements that exceed those required by the APA, courts have rejected the "substantial impact" test. See Cabais, 690 F.2d at 237-238); Rivera v. Becerra, 714 F.2d 887 (9th Cir. 1983). The Rivera court, which specifically addressed UIPLs, stated that agencies are not required to comply with a notice and comment procedure for interpretative rules which have a substantial effect because Congress considered the matter and explicitly excepted interpretative rules and general statements of policy from this procedure. Id. at 890-891. The court observed that agencies now freely issue interpretative rules as guidance and that unnecessarily restrictive procedures should not be imposed beyond that contemplated by the APA. Id.

  5. Action Required. State Administrators are requested to provide the above information to the appropriate staff.

  6. Inquiries. Direct questions to the appropriate Regional Office.

    Directives issued pursuant to this exception to the notice requirement are not issued in lieu of "substantive" or "legislative" rules. Rather, interpretative rules are just that: they interpret existing law or serve as a reminder of duties under existing law.

    b. Deference to Agency Interpretations. Departmental directives setting forth interpretative rules are entitled to deference in judicial proceedings. In Skidmore v. Swift & Co., 323 U.S. 134, 139-140 (1944), the Supreme Court noted that an agency's interpretative bulletins and informal rulings provided a practical guide which constituted "a body of experience and informed judgment to which courts and litigants may properly resort for guidance." Id. at 140. The court observed that it has given "considerable and in some cases decisive weight" to other Federal agency interpretations, where the weight of such a judgment in a particular case would "depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements. . . ." Id. at 140.

    The Supreme Court has consistently affirmed the principle of judicial deference to administrative interpretations, most recently in Martin v. OSHRC, 111 S.Ct. 1171, 1179 (1991). See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, reh. den, 468 U.S. 1227 (1994). Furthermore, the U.S. Court of Appeals for the D.C. Circuit decided that an agency's own assertion that its order is purely interpretative is entitled to a significant degree of credence. British Caledonian, 584 F.2d at 992.

1The Cabais court did, however, conclude that, in one area, a UIPL did create a substantive rule since, contrary to the broad latitude granted to the states in the statute, the UIPL imposed "an obligation on the States not found in the statute itself." Id. at 239.