because of the allegation that plaintiffs' efforts to discuss the proposed rule had been rejected prior to publication of the proposed rule. Mr. Malloy asserts that plaintiffs conceded at the meeting that they had not previously requested nor been denied a meeting. Malloy Aff. P 21.
After being unable to secure an agreement from Mr. Malloy that the proposed regulations would be withdrawn, plaintiffs filed this lawsuit challenging the publication of the proposed regulations in the Federal Register. They allege that the proposed regulations are contrary to the language of the Internal Revenue Code and that the proposed retroactive application of the regulations would be unwarranted, arbitrary and capricious and a discriminatory exercise of the Secretary's power. Plaintiffs moved for preliminary injunctive relief and seek a declaratory judgment and a permanent injunction setting aside the proposed regulations, as well as an order enjoining this rulemaking proceeding and requiring the process to begin de novo with an opportunity for them to participate fully.
The Court heard argument on plaintiff's motion for preliminary injunction on June 7, 1995. Because the Court concludes that the case is not ripe for review, plaintiffs' motion for a preliminary injunction is denied and the case is dismissed.
According to the traditional formulation for a preliminary injunction in this jurisdiction, a movant is entitled to injunctive relief upon a showing (1) that it has a likelihood of success on the merits; (2) that movant will suffer irreparable harm if the relief is denied; (3) that other interested parties will not suffer substantial harm if injunctive relief is granted; and (4) that the public interest favors the granting of relief or, at least, that the granting of relief is not adverse to the public interest. National Wildlife Federation v. Burford, 266 U.S. App. D.C. 241, 835 F.2d 305, 318-19 (D.C. Cir. 1987); Washington Metropolitan Area Transit Comm'n. v. Holiday Tours, Inc., 182 U.S. App. D.C. 220, 559 F.2d 841, 842-44 (D.C. Cir. 1977); Virginia Petroleum Jobbers Ass'n. v. FPC, 104 U.S. App. D.C. 106, 259 F.2d 921 (D.C. Cir. 1958).
A. Administrative Due Process Claim
Plaintiffs seek preliminary injunctive relief because they contend that the mere publication of the proposed regulations immediately rendered the Retirement CD unmarketable; that the publication is resulting in irreparable injury to ADC, Blackfeet and FNB Santa Fe, and that there is a threat of future irreparable injury to plaintiffs; that there will be no countervailing injury to the Treasury Department if the injunction is imposed because depositors will obtain the desired tax deferral by purchasing insurance company annuities; that an injunction will serve the public interest because it will stop a rulemaking proceeding that is marked by a lack of administrative due process and fails to comply with Executive Order 12866; and that the proposed regulation is contrary to the language of the Internal Revenue Code.
Plaintiffs concede that an injunction in these circumstances may be unprecedented, but argue that an extraordinary situation demands an extraordinary response. They allege that the Retirement CD and Blackfeet National Bank were specifically targeted by representatives of the insurance industry during the period of the regulations project and that, unlike the insurance industry which participated extensively, plaintiffs were denied administrative due process because they were not permitted to participate in the pre-publication regulations project. Plaintiffs contend that the affidavits and papers filed in support of the Secretary's opposition to the motion for preliminary injunction document extensive dealings between the Treasury Department and persons who wished to close down Blackfeet and stop sales of the Retirement CD, show that Treasury Department employees were instructed not to reveal the existence of the regulations project to anyone who was not already aware of it, and that the Treasury Department, although aware that ADC and Blackfeet were the specific targets of the regulations project never made any effort to contact plaintiffs.
The Secretary responds that the regulations project was not a secret; its existence was published in the Federal Register and, while its existence was not volunteered to anyone, it was not denied either. As to the participation of representatives of the insurance industry and the Treasury Department's failure to seek out the opinion of plaintiffs, defendant contends that the Treasury Department did not seek outside help from the insurance industry or anyone else either. Rather, any party that sought to participate was permitted to do so. Plaintiffs simply did not make any attempt to take part. According to Mr. Malloy, at least those representatives of plaintiffs, including Kenneth Anderson, who took part in a post-publication meeting between plaintiffs' representatives and Treasury Department staff conceded that they never requested an opportunity to speak or meet with Treasury Department staff regarding the regulations project. Malloy Aff. P 21.
"Informal contact between agencies and the public are the 'bread and butter' of the process of administration and are completely appropriate so long as they do not frustrate judicial review or raise serious questions of fairness. Home Box Office Inc. v. FCC, 185 U.S. App. D.C. 142, 567 F.2d 9, 57 (D.C. Cir.), cert. denied, 434 U.S. 829, 54 L. Ed. 2d 89, 98 S. Ct. 111 (1977); see Sierra Club v. Costle, 211 U.S. App. D.C. 336, 657 F.2d 298, 400-410 (D.C. Cir. 1981). While it may have been impolitic for the Department of the Treasury not to invite a specific response by ADC or Blackfeet, especially in view of the fact that those entities were mentioned in memoranda provided by representatives of the insurance industry, that fact does not amount to a denial of administrative due process. See Action for Children's Television v. FCC, 183 U.S. App. D.C. 437, 564 F.2d 458, 473 (D.C. Cir. 1977). The Court is persuaded by defendant's arguments that plaintiffs had full access to the regulations project because of the notice published in the Federal Register in November of 1994 and the information given to Mr. Rocap when he contacted the Insurance Branch of the Treasury Department in March of 1995. Most importantly, plaintiffs now have a second opportunity to participate because of the pendency of a public comment period followed by a scheduled public hearing.
On these facts, the defendant argues that the Court lacks jurisdiction to act on plaintiffs' complaint because the proposed regulations that have been published do not constitute "final agency action" within the meaning of the Administrative Procedures Act. See 5 U.S.C. § 704; see Franklin v. Massachusetts, 120 L. Ed. 2d 636, 112 S. Ct. 2767 (1992). As a result, defendant contends that this case is not ripe for judicial resolution.
As the Supreme Court has stated, the rationale of the ripeness doctrine is:
to prevent the Courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties.