Committee Newsletter | Winter 2016 TABLE OF CONTENTS _________________________________________________________________________________________________________ Message from the Chair………………………………………………………………………………..2 Flytenow v. FAA: Perez and the Uber Problem By: Jacob Tewes This article discusses the D.C. Circuit’s recent decision involving the FAA and the company Flytenow, often described as the “Uber of the Skies,” and how the Supreme Court’s Perez decision and the new ride sharing economy affected the outcome of the case…...……..………..3 Pacific Process Progress: Regulatory Coherence in the Trans-Pacific Partnership By: Erik King This article discusses the regulatory coherence section of the TPP Agreement and its potential implications for administrative law in the fields of international trade and investment……….……4 Dodd-Frank’s TRID Framework Threatens Real Estate Lawyers By: Jeremy Potter This article discusses the CFPB’s recent ‘Know Before You Owe’ TRID rule and its effect on real estate lawyers………………………………………………………………………………………..5 Will Congress Make Rulemaking a Practically Impossible Task? By: Connor Raso This article from the blog “Notice & Comment” discusses the cost-benefit analysis that would be required of agencies under a rulemaking reform package being considered by the Senate…….6 Member Spotlight Robert Fitzpatrick…………………………………………………………………………………………7 News & Announcements Winter 2016 News and Updates from the ABA YLD Administrative Law & Regulatory Practice Committee, including upcoming events and programming…………………………………………..7 Endnotes…………..…………………………………………………………...…………………………9 _________________________________________________________________________________________________________

AND REGULATORY PRACTICE

YLD Administrative Law Committee Winter 2016 ______________________________________________________________________________________________________________Page | 2 MESSAGE FROM THE CHAIR Hello ABA YLD Administrative Law and Regulatory Practice Committee members!

We hope you have had a happy New Year so far. Welcome to the first quarterly newsletter of 2016! I want to thank our committee members Jeremy Potter, Erik King, Jacob Tewes, as well as ABA Administrative Law Section member Connor Raso, for contributing great articles to this newsletter. A big thank you as well to committee member Robert FitzPatrick for agreeing to be featured in the newsletter’s inaugural Member Spotlight. We want to make sure we keep providing you with interesting, relevant, and valuable articles and content in the newsletters, so your feedback is most appreciated.

We also want to make sure we are continuing to hold compelling programs on topics relevant to you and are providing you with opportunities to both learn from and network with other administrative law and regulatory practice professionals. On that note, I am interested in hosting a combined a happy hour and lecture event soon for committee members who, like myself, live or work in the Washington, D.C. area. So please let me know if you hear about a free lecture in the area (preferably something at least tangentially related to administrative law) that might fit the bill! I also hope you have gotten a chance by now to check out the recording of our most recent podcast, which provides an interesting overview of administrative law and features two great panelists.

Again, thank you for your time and interest in the ABA YLD Administrative Law and Regulatory Practice Committee. Please don’t hesitate to reach out to myself (tylerscandalios@gmail.com), committee Vice Chair Adam Barton (adam.barton@sspringleaf.com), or committee YLD Scholar Daiquiri Steele (daiquiri.steele@gmail.com) with ideas about how we can better serve you, or with questions or comments about how you can get more involved with the committee.

Please feel free to also check out our committee webpage, which contains links to past committee content as well as to other ABA and YLD resources: http://www.americanbar.org/groups/young_lawyers/committees/administrative.html

We wish you the utmost personal and professional success in the New Year!

Tyler Scandalios, Committee Chair

Adam Barton, Committee Vice Chair

Daiquiri Steele, Committee YLD Scholar

© 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

YLD Administrative Law Committee Winter 2016 ______________________________________________________________________________________________________________Page | 3 ARTICLES Flytenow v. FAA: Perez and the Uber Problem By Jacob Tewes As a company, Flytenow always fell somewhere between a social network and an airline. It allowed pilots holding at least a private pilot certificate to post their planned flights and then accept or reject passengers who asked to join them on each trip–a concept the media quickly dubbed the “Uber of the Skies.”1 Central to Flytenow’s business plan was the “expense-sharing rule,” an exception to the general ban on private pilots’ receipt of compensation. This exception can be found in the C.F.R.,2 but its nuances have been defined by a long series of interpretive rulings issued by the FAA. One such ruling held that a bulletin board soliciting riders for pre-planned routes fell within the exception.3 In 2014, however, the agency ruled that Flytenow pilots were engaging in common carriage, which requires advanced pilot ratings, increased maintenance, and the like.4 Flytenow appealed the ruling on both procedural and substantive grounds.5 For decades, a line of D.C. Circuit cases stemming from Paralyzed Veterans of America v. D.C. Arena, 117 F.3d 579, 586 (D.C. Cir. 1997) interpreted the APA6 to prevent agencies from using interpretive rules to accomplish a substantive change with the force of law.7 Relying on that line, Flytenow argued that the ruling skirted notice-and-comment rulemaking. In Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199 (2015), which the Supreme Court decided after both Flytenow and the FAA had submitted their opening briefs, the Supreme Court expressly abrogated the Paralyzed Veterans doctrine, holding instead that “the APA’s notice-and-comment requirement does not apply to interpretive rules.”8 The D.C. Circuit recognized this sea change and rejected Flytenow’s procedural argument. On the substantive issue, the D.C. Circuit held the FAA’s determination that Flytenow pilots were engaging in common carriage to be neither arbitrary nor capricious. While neither the FAA nor the Court analogized Flytenow to Uber, Flytenow did little or nothing to distance itself from that image. In reality, there are at least three discrete types of “sharing economy” companies regarding owner-operated property: volunteer groups like Meals on Wheels,9 ride-sharing companies like Carma,10 and private carriage for profit like Uber.11 The same is true for housing12 or general aviation.13 The FAA argued that Flytenow pilots were amateurs using their pilot license for profit. Perhaps Flytenow could have made headway by analogizing itself to a carpooling service, or distinguishing itself from companies that actually do purport to offer on-demand charter flights in piston aircraft,14 light jets,15 or helicopters.16 Similarly situated companies in other industries may want to check the regulations before tacitly accepting “free” PR from the Uber phenomenon. Jacob Tewes is a general practice attorney in Yankton, South Dakota, and maintains an active social media alter ego as @FlyingLawyer.

© 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

YLD Administrative Law Committee Winter 2016 ______________________________________________________________________________________________________________Page | 4 Pacific Process Progress: Regulatory Coherence in the Trans-Pacific Partnership

By Erik King The United States and eleven other countries17 recently agreed on the text of the Trans-Pacific Partnership (“TPP”) Agreement, a trade deal with far-ranging consequences. The TPP, which has not yet come into force, is the first U.S. trade agreement to include a chapter on “regulatory coherence.” The ultimate effects of this proposed chapter remain to be seen, but its mere inclusion in the text to which twelve nations representing almost 40 percent of the world’s GDP18 have agreed speaks volumes about the importance of administrative law in international trade and investment. The regulatory coherence chapter is meant to promote national and international interagency coordination on relevant issues and reduce regulatory barriers to trade and investment.19 The chapter is currently written in mostly aspirational language. For example, the parties “affirm the importance of” considering input from stakeholders in the development of regulations.20 The parties also make clear that each nation still retains the sovereign right to identify its own regulatory priorities and implementation levels.21 However, the chapter sets forth certain core regulatory practices to which the parties should generally adhere, such as public access to regulatory information, explanation of grounds for choosing particular solutions, and review mechanisms. These practices are common in the United States, but may not be common for all the TPP parties. In contrast to the chapter’s optional language, Article 25.3 states that each party “shall” make the “scope of its covered regulatory measures” publicly available within a year of when the TPP takes effect. Each party essentially determines which of its regulatory measures are “covered” under the chapter. This promotes flexibility, but could also weaken the coherence initiative if, for instance, the parties choose diverging regulations to be covered (or vastly different scopes of the same types of regulations), and the nations end up enhancing cooperation on only insignificant matters. On the other hand, because the economies of the TPP parties are already intertwined and will likely deepen their interactions through globalization, there is a strong chance that TPP nations will take the opportunity to bring domestic benefits through cross-border regulatory cooperation on significant issues, even if only gradually over time. This is not to say that the substance of the wide range of regulations affecting the deal will become uniform or even substantially similar (which will probably never happen), but the focus on robust regulatory design, enforcement, and review processes has the potential to enhance transparency and increase trade between the parties while simultaneously allowing agencies from different countries to more effectively pursue their respective missions. Erik King is a contractor attorney with Lockheed Martin supporting a government client onsite, focusing on financial and international fraud.

© 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

YLD Administrative Law Committee Winter 2016 ______________________________________________________________________________________________________________Page | 5 Dodd-Frank’s TRID Framework Threatens Real Estate Lawyers By Jeremy D. Potter To say that “TRID” is a buzzword among some administrative law & regulatory practice attorneys would be an understatement. The Consumer Financial Protection Bureau’s (CFPB’s) amendments to the Truth In Lending and Real Estate Settlement Procedures Acts’ (TILA & RESPA) required certain residential mortgage loan disclosures and were announced as the Know Before You Owe rule. The rule then morphed into the RESPA-TILA Integrated Disclosures, transitioned again during implementation to the TILA-RESPA Integrated Disclosures or TRID, and eventually returned (at the CFPB’s urging) to the Know Before You Owe disclosures. However, most real estate and banking practitioners still refer to the rule, and its implications, as TRID. TRID’s initial impact appeared to be on software vendors that assist the title insurance agents, mortgage origination companies, and creditors in their process management, document production, and compliance. For example, one software company that supports lenders and creditors added 3,500 new data fields and 10,000 new calculations behind the scenes in order to generate the TRID disclosures properly. Compliance with TRID involves the proper disclosure language as well as formatting certain fees and figures down to the hundredth or thousandth decimal place. Effective for new residential loan applications on October 3, 2015 or after, however, TRID’s initial impact may soon be overshadowed by a long-term legacy that threatens practicing real estate lawyers. Approximately 11 states, by law or by custom, utilize licensed attorneys to issue title insurance policies and settle mortgage transactions. As recently as 2013, the ABA published tips for engaging these folks when contemplating a real estate loan transaction. TRID is silent as to the contract preparation or review portion of the transaction, yet shifts all responsibility for the loan disclosures, consummation, proceeds/disbursement and transaction management to the lender. That shift turned out to be complicated and difficult for many settlement providers, but, most specifically, challenging for small firms or solo practitioners who engage in the practice of residential loan closings. TRID not only shifts the authority onto lenders for the production and delivery of required disclosures. The rule also marries an older CFPB policy requiring lenders to conduct extensive vendor management over settlement providers with performing a TRID closing. Whereas some creditors addressed vendor management years ago, most state banks, community lenders, and mortgage companies used TRID as a way to demand closing attorneys meet the American Land Title Association’s (ALTA) Best Practices and/or additional institutional requirements. The result has been a perfect storm for real estate lawyers, especially in the 11 states that require an attorney’s expertise in the transaction. Unable to invest in technology or slow to embrace training, many attorneys are not keeping up with the changing landscape of residential real estate finance. If nothing else, the early legacy of TRID has been to put our colleagues on notice that CFPB rewrote the rules on residential real estate practice. Pun intended. Jeremy Potter is the General Counsel & Chief Compliance Officer of Norcom Mortgage an East Coast independent mortgage company headquartered in Avon, CT. Potter is also the Vice Chair for the State Legislative & Regulatory Committee of the Mortgage Bankers Association.

© 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

YLD Administrative Law Committee Winter 2016 ______________________________________________________________________________________________________________Page | 6 Will Congress Make Rulemaking a Practically Impossible Task? By Connor Raso [Editor’s note: The below article is a reproduction, with permission, of a recent post from “Notice and Comment,” a joint blog of the Yale Journal on Regulation and the ABA Section of Administrative Law and Regulatory Practice. Authors from both organizations regularly contribute posts to the blog, and the topics of the posts run the administrative law gamut (including a regular review of the most recent D.C. Circuit cases). Lawyers with an interest in administrative law will find the blog topical, educational, and entertaining.] A bipartisan group in the Senate is working on a large package to reform the rulemaking process. Negotiations are ongoing but the New York Times reported last week that the package is likely to require agencies to engage in additional cost-benefit analysis that would be subject to judicial review. In joint work, I have argued that cost-benefit analysis can be used to kill controversial rules rather than to improve the quality of policymaking. For a quick summary, see Floyd Norris’ column. The big question is whether the new cost-benefit provisions in the proposed legislation are designed to encourage good policymaking or merely to provide new tools to kill controversial rules. This is a critical issue, as the provisions would apply to rulemaking across the entire federal government. We don’t have the final legislative language yet, but we have a strong clue to what it will likely be. Last October, the Senate Homeland Security and Government Affairs Committee approved a cost-benefit analysis bill that seems likely to be included in the working group’s proposal (this was one of four rulemaking reform bills approved by the Committee, which I detailed here). The bill would greatly expand the number of cost-benefit analyses that are subject to judicial review (currently, most such analyses are reviewed only by the Office of Management and Budget). As my prior work suggests, there are good reasons to be skeptical of judicial review of cost-benefit analysis. The bill is not nearly as extreme as some of the prior legislation detailed in my account, but it contains some broad and troubling provisions. For instance, the bill requires agencies to design rules “to impose the least burden on society” (which sounds skewed in favor of deregulatory rules) and to “base decisions on the best reasonably obtainable information.” These standards might sound reasonable in the abstract, but in practice they may be abused by opportunistic litigants and ideological courts, assuming that agencies won’t start to nix issuing rules on controversial subjects to begin with. My account of the SEC’s experience with judicial review of cost-benefit analysis is a harbinger of what would happen on a much broader scale were the bill to become law. The result would be to choke bad and good regulations alike. Connor Raso serves as counsel at the U.S. Security Exchange Commission (SEC), and he lives in the Washington, D.C., metro area. This article reflects the author’s personal views alone, and does not necessarily reflect the views of the SEC or the U.S. government.

© 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

YLD Administrative Law Committee Winter 2016 ______________________________________________________________________________________________________________Page | 7 Member Spotlight From now on we will be including Member Spotlights in our newsletters. Our inaugural Member Spotlight is of Robert FitzPatrick. Robert FitzPatrick is a Social Security attorney with the state-wide Texas law firm of Jim S. Adler & Associates. Robert regularly represents claimants at administrative appeals hearings before Administrative Law Judges (ALJs) of the U.S. Social Security Administration (SSA). Robert also frequently handles administrative appeals before the SSA’s Appeals Council in Falls Church, Virginia, and further appeals in U.S District Court. U.S. District Court social security cases routinely involve litigation on issues of agency policy. Robert especially enjoys writing briefs appealing ALJ and Appeals Council decisions. One of his favorite professional moments is the first time he won a case for his client on remand, after convincing the Appeals Council to remand the case to the ALJ. Robert has been exclusively practicing Social Security law since 2012. He attended Texas Wesleyan University for his undergraduate degree and received his Juris Doctor degree from Oklahoma City University. Robert lives and works in Dallas, Texas, and handles cases throughout Texas and the surrounding states. If you are interested in being featured in a Member Spotlight in our next newsletter, please contact Chair Tyler Scandalios at tylerscandalios@gmail.com.

NEWS AND ANNOUNCEMENTS

Social Media Team Update The Social Media Team is pleased to announce the new Social Media Policy! The purpose of this policy is to provide direction on appropriate and effective ways to utilize social media on behalf of the ABA YLD when delivering content, facilitating engagement, and communicating with both members and non-members. The policy includes such information as sample posts, proper use of our social media channels, and of course directions for using the online spreadsheet we set up to capture posts from across the division. The new policy can be found at: http://www.americanbar.org/content/dam/aba/administrative/young_lawyers/leadership_portal/social_media_policy.authcheckdam.pdf Disaster Legal Services Team The DLS team is currently implementing DLS in Mississippi, Texas, South Carolina, and California. Earlier this year, we implemented DLS in Texas, Wyoming, Saipan, and Kentucky. We expect this to be a busy year on the DLS font, as NASA predicts that this year’s El Nino is going to be the worst ever. The DLS team encourages all young lawyers to be prepared in the event of an emergency or disaster, and to coordinate with your local or state bar association to help disaster survivors. More information about the DLS program can be found on our website.

© 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

YLD Administrative Law Committee Winter 2016 ______________________________________________________________________________________________________________Page | 8 National Conferences Team Update In addition to the regular activities of the ABA YLD National Conferences Team during the ABA Midyear meeting, this Team is putting together a social media photo scavenger hunt. New attendees will have the opportunity to be a part of a scavenger hunt that allows them to meet seven YLD leaders, receive their business cards, and also take a selfie and post it to their social media accounts with the hashtag #YLDmidyear16. The first person to have a selfie with each YLD leader and receive their signature on a business card will receive a generous gift from the ABA YLD National Conferences Team.

Also, here is information about upcoming conferences:

YLD Spring Conference May 5 – 7, 2016 St. Louis, MO

Request for Volunteers and Writers: The Administrative Law & Regulatory Practice (ALRP) Committee is looking for practitioners interested in publishing an article in the Committee newsletter. Publishing an article in the ALRP Committee newsletter is an effective and easy way to gain nationwide exposure and demonstrate your writing ability and substantive knowledge. If you are interested in writing and getting published, please contact Vice-Chair of the ALRP Committee and Newsletter Editor Adam Barton, and provide him with a brief description of the article you are interested in submitting. We also welcome volunteers to be subjects of Member Spotlights in the next edition of the newsletter. Also, if you are interested in becoming involved with the ALRP Committee in some other capacity, please contact Chair Tyler Scandalios. For more information on our committee and its activities, please visit our committee page.

© 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

YLD Administrative Law Committee Winter 2016 ______________________________________________________________________________________________________________Page | 9 ENDNOTES 1 See, e.g., Sarah Buhr, So I Flew In An “Uber For Tiny Planes”, TechCrunch, June 20, 2014, http://techcrunch.com/2014/06/20/uber-for-x-in-a-tiny-plane/; Lauren Gardner, Uber, but for planes, Politico, August 23, 2015, http://www.politico.com/story/2015/08/the-faa-vs-uber-for-planes-121620. 2 14 C.F.R. § 61.113(c). 3 FAA Legal Interpretation fromKenneth Geier, Regional Counsel, to Paul Ware (Feb. 13, 1976). 4 FAA Legal Interpretation from Mark Bury, Assistant Chief Counsel for International Law, Legislation, and Regulations to Rebecca MacPherson (Aug. 13, 2014); FAA Legal Interpretation from MarkBury to Gregory Winton (Aug. 14, 2014). 5 Flytenow, Inc. v. F.A.A., 808 F.3d 882 (D.C. Cir. 2015). Flytenow also attempted three “unavailing” constitutional arguments. Id. at 894. 6 5 U.S.C. § 553(b) (2000). 7 See, e.g., Appalachian Power Co. v. EPA, 208 F.3d 1015, 1024 (D.C. Cir. 2000); Alaska Prof’l Hunters Ass'n v. FAA, 177 F.3d 1030, 1034 (D.C. Cir. 1999). 8 Flytenow, 808 F.3d at 889. 9 http://www.mealsonwheelsamerica.org/. 10 https://carmacarpool.com/ 11 https://www.uber.com/ 12 See, e.g., Couchsurfing (http://www.couchsurfing.com/about/how-it-works/) (volunteer); Kangaroom (http://kangaroom.net/) (room sharing service); Airbnb (https://www.airbnb.com/) (temporary home rental service). 13 See, e.g., Jill W. Tallman, Pilots N Paws Plans National Rescue Flyout Oct. 3, Aircraft Owners and Pilots Association, August 3, 2015, http://www.aopa.org/News-and-Video/All-News/2015/August/03/pilots-n-paws-plans-national-flyout (volunteer); SkyPool (http://www.skypool.com/home.htf) (carpooling); Michelle Seaton, Uber Apps for Private Jets, September 1, 2015, http://robbreport.com/aviation/uber-apps-private-jets (private carriage). 14 See, e.g., Hyte (http://www.hyteapp.com), 15 See, e.g., Jetsmarter (https://jetsmarter.com), Victor (https://www.flyvictor.com), or the aptly named Ubair (site forthcoming). 16 See, e.g., Flyblade (https://www.flyblade.com/), Uber Chopper (https://newsroom.uber.com/tag/uberchopper/). 17 The parties to the current agreement are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam 18 See United States Trade Representative, “Overview of the Trans Pacific Partnership,” available at https://ustr.gov/tpp/overview-of-the-TPP. 19 The effort to reduce non-tariff barriers through enhanced international regulatory cooperation accords with Administrative Conference of the United States (ACUS) Recommendation 2011-6, which was substantially adopted by Executive Order 13609. 20 Trans-Pacific Partnership, art. 25.2 ¶ 2. 21 See, e.g., id. art. 25.2; art. 25.5.

© 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.