The Regulatory Litigation group handles three general categories of matters: litigation over agency rulemaking; civil litigation against agencies; and civil litigation in highly regulated environments.
The majority of federal administrative rules are promulgated pursuant to the Administrative Procedures Act, although some statutes and agencies have more bespoke rulemaking authority and procedures. Most state governments have one or more state law analogs to the APA. In addition to formal APA-style rulemaking, most federal and state agencies have less formal processes for establishing rules, communicating preferred interpretations, and establishing enforcement priorities, including: advisory opinions, guidance memoranda, legal letters, administrative law complaints, and Frequently Asked Questions documents.
We represent clients in all stages of the rulemaking process, from helping craft comments and otherwise engaging directly with the agency to challenging rules in judicial or administrative courts. By pairing our regulatory and litigation practices, we help craft a rulemaking strategy that will be both efficacious with the agency, but also will create an administrative record that positions our clients well for any ensuing litigation or arbitration. Rules may be improper procedurally if not adopted in the correct manner, for example, with proper notice and comment, or rules may be improper substantively, if they exceed an agency’s statutory mandate or otherwise violate constitutional or statutory law.
Sidley has a long track record of success challenging state and federal agency rules. We currently represent a state medical association in a series of APA challenges to regulations issued by the Departments of HHS, Labor, and Treasury, implementing the independent dispute resolution process established by the No Surprises Act, a new federal law governing reimbursement for out-of-network healthcare services. We also represent plaintiff trade organizations in a challenge to motor vehicle fleet emissions and sales quota regulations, adopted by Minnesota from California pursuant to a provision in the federal Clean Air Act, which gives California the unique right among states to promulgate and metastasize its own separate emissions rules. Additionally, we currently represent an energy trader in an APA challenge to a series of Federal Energy Regulatory Commission (FERC) orders suspending market pricing rules.
Government-Facing Civil Litigation
Litigating against state entities of any sort is particularly challenging, as governments enjoy myriad advantages over ordinary litigants. Governments have tremendous discretion in construing and enforcing their statutes and regulations, and can even amend their regulations in mid-dispute. We represent clients in a wide range of disputes with federal and state agencies over the scope and interpretation of their laws and regulations.
Our advocacy frequently occurs out of the public eye. We often represent clients subject to agency investigations or civil enforcement actions — especially in cases that raise questions of first impression about the agency’s jurisdiction or authority. Working closely with Sidley’s regulatory practices, we develop the client’s strongest arguments and urge them upon the agency, with the goal of avoiding litigation altogether. In recent years, we have prevailed upon numerous agencies to close investigations without further action.
When litigation is necessary, we have an established track record of success. We recently represented a national trade association in trial court litigation against the Small Business Administration over its decision to exclude homebuilders and multi-family housing operators from eligibility for COVID relief under the Paycheck Protection Program to a favorable outcome. We also recently prevailed on behalf of a national oil company in an action to allocate a portion of cleanup costs for a defunct molybdenum mine to the United States as a former owner of the site. We represented a state legislature in an action challenging the constitutionality of the federal Government Employee Rights Act (GERA). And, we prevailed at trial on behalf of a national poultry company against claims by the U.S. Department of Agriculture that mixing genetically different breeds of chickens in the same poultry-growing “tournament” constituted unfair and deceptive trade practices in breach of the Packers and Stockyards Act.
Our cases often involve challenging constitutional issues. We represent a Jewish Chabad in a lawsuit against the Village of Atlantic Beach, New York, challenging the constitutionality of the Village’s attempt to use eminent domain to seize property purchased by our client for use as a worship and community center. Also in New York, we represent an outdoor advertising company in an action challenging the City of New Rochelle’s authority to compel the removal of all billboards in the City.
We previously represented an energy company against claims of market manipulation raised by FERC, which involved complex constitutional and statutory challenges to FERC’s jurisdiction to proceed. Our team previously represented insurance providers in constitutional challenges to retroactive state insurance legislation altering the terms of pre-existing life insurance contracts in multiple jurisdictions. Additionally, we successfully represented a Christian high school in California challenging the state’s Interscholastic Federation’s decision to selectively impose sanctions exclusively on Christian high schools for allegedly supporting purportedly illegal football games during the COVID pandemic shutdown.
Litigation in Highly Regulated Industries and Spaces
Even where a government entity is not a party to an action, the regulatory environment may play a key role in shaping the law and factual grounds for the litigation. Thus, even in some litigation or arbitrations between private businesses or individuals, knowledge of the regulatory environment is essential. Heavily regulated entities sometimes have special defenses, protections, or legal arguments available to them. On occasion, regulators will take a particular interest in private litigation that impacts their regulated community and our familiarity with these nuances can prove consequential.
We have represented railroad clients in several lease disputes with telecommunications providers who maintain fiber optic cables along railroad rights of way. Both are highly regulated industries, and both have the power of eminent domain. These private commercial disputes implicate federal and state regulatory agencies and extraordinary powers held by private corporations. We have represented a large technology firm in a dispute with another large technology firm also in a contract dispute relating to the development of a flight management system and its redeployment from a military to a civilian flight platform. This matter implicated not only contract law, but familiarity with Federal Aviation Administration and Department of Defense contracting and engineering procedures, as well as the methods governing software development and certification. Additionally, we defeated claims by a losing mayoral candidate in San Francisco that our clients, two billboard operators, had unlawfully conspired with the incumbent to suppress the challenger’s First Amendment rights.