Justiciability of Pre-enforcement Challenge to Agency Regulations Reaffirmed

Revisiting the Arsenal Coal exception to the general rule that the exhaustion doctrine bars a challenge to administrative agency regulations until after the challenger is aggrieved by their application, the Supreme Court reaffirmed the availability of pre-enforcement review where the issue presented is ripe and the challenged regulations have an immediate impact on an industry such that the delay and uncertainty associated with enforcement and subsequent judicial review would cause hardship.  Bayada Nurses, Inc. v. Dept. of Labor and Industry, __Pa. __, ___A. 2d ___ (2010) (67 MAP 2008, decided November 17, 2010).

Bayada, a home health care provider that did not pay overtime to its employees in reliance on a 1977 regulation exempting domestic services performed in the home of the employer, was informed by the Department of Labor and Industry in 2005 of an impending audit and the Department’s new interpretation of the regulation, which would preclude Bayada from relying on the exemption.  After the Commonwealth Court majority rejected Bayada’s pre-enforcement challenge to the regulation on the merits, over the objection of dissenters who would have held that the pre-enforcement challenge was not justiciable because the controversy was not ripe, the Supreme Court ordered supplemental briefing on the pre-enforcement challenge justiciability issue raised by the Commonwealth Court dissenters.

The Supreme Court held Bayada’s pre-enforcement challenge to be justiciable, reaffirming its holding in Arsenal Coal Co. v. Dept. of Envtl. Res., 505 Pa. 198, 477 A. 2d 1333 (1984).  In Arsenal Coal, the Supreme Court permitted a pre-enforcement challenge to environmental regulations that would have imposed new restrictions on surface coal mining because the regulations would have had a significant impact on the industry and administrative exhaustion of remedies would have created delay, uncertainty and thus hardship that would be avoided by immediate judicial review.  After sua sponte raising the justiciability issue in Bayada, the Supreme Court reaffirmed the vitality of Arsenal Coal and the availability of a pre-enforcement challenge to administrative regulations.

Suggested further reading:  Darlington, McKeon, Schuckers and Brown, Pennsylvania Appellate Practice 2010-2011(West) §1502:2.