The Medicare Act provides for reimbursement for "braces," but not for "durable medical equipment," including wheelchairs, when used in hospitals and skilled nursing facilities. OrthoConcepts created a "seating system" for persons suffering from severe musculoskeletal failure, which supports the person in a reclining position with a series of braces, all on a wheeled base. A regional office of the Health Care Finance Administration informed OrthoConcepts that the seating system would be treated as a non-reimbursable DME. Nonetheless, OrthoConcepts billed the equipment as Abraces" and in three different regions prevailed in adjudications B in two regions before carrier fair hearing officers (from which HCFA has no appeal) and in one region before an ALJ, upon OrthoConcepts' appeal from the hearing officer's denial. In the latter case, the Appeals Board denied HCFA's petition for review. HCFA responded by adopting without notice and comment HCFAR 96-1, which explicitly ruled that systems such as OrthoConcepts' were DME, not braces. OrthoConcepts sought judicial review of the HCFAR, asserting it was a substantive rule, invalid both for having been adopted without notice and comment and for being arbitrary and capricious.

In Warder v. Shalala, 149 F. 3d 73 (1^st Cir. 1998), the court held the ruling valid. The court began by noting that the agency characterized the rule as an interpretive rule, stating that it was intended to"clarify" the proper application of the statute and regulations. The court went on to say that the ruling did not establish any new standard; rather, it addressed an area of ambiguity. That is, the ruling's determination was within the terms of the statute and regulations, even if not specified by them. The court acknowledged that if the ruling changed existing law, it would have to go through notice and comment, but the court stressed that the ruling was not inconsistent with existing regulations and in fact was consistent with HCFA's prior announced policy. Finally, the court found that the ruling's binding effect on ALJs did not render the interpretive rule substantive; it distinguished between binding agency employees and binding the agency, regulated entities, and the courts. An interpretive rule, it said, citing Pierce and Davis, may bind employees, including ALJs, even if it does not bind the agency itself.

The court then turned to the merits, asking first what deference the ruling was owed. Noting some dispute over the appropriate deference due interpretive rules, the court found it unnecessary to resolve that issue, because no matter what deference was to be applied to this ruling, the agency's interpretation was an appropriate interpretation of the statute and regulations.

The Compact of Free Association Act of 1985 approved a compact between the United States, Micronesia, and the Republic of the Marshall Islands. Part of the Compact provided for free travel from these nations to the U.S. for the purpose of employment or residence. At the same time, the Compact indicated its intent that this travel would not cause adverse consequences for U.S. territories or the state of Hawaii, and in furtherance of this intent the Act required the President (who delegated his responsibility to the Secretary of the Interior, who in turn delegated it to the Director of the Office of Insular Affairs) to report annually to Congress Awith respect to the impact of the Compact on the United States territories and commonwealths and the State of Hawaii." Moreover, the Act requires the views of the governments of the territories and Hawaii on the subject to be requested and transmitted to Congress with the report. A report was filed in 1989, but no other reports were filed until 1996, after Guam and Hawaii sued, when the Office filed a cumulative report for the years 1989-1996. Reports have subsequently been filed in 1997 and 1998. The Office moved to dismiss the case on the ground that there was no final agency action, the plaintiffs lacked standing, and that the issue was moot. The district court refused and held that the reports filed were inadequate. In Guerrero v. Clinton, 157 F.3d 1190 (9^th Cir. 1998), the Ninth Circuit reversed.

The Office argued that there was no standing because there was no injury to plaintiffs, because the only concrete injury could occur from what Congress might or might not do as a result of the report, not from the report itself. Guam and Hawaii responded that they are injured by immigration pursuant to the Compact and have a procedural right analogous to rights under the National Environmental Policy Act for agencies to create Environmental Impact Statements. The court concluded, however, that Athere is nothing that can be done by way of judicial review to redress the adverse consequences of the Compact. . . . This is because only Congress can do that, and nothing that we could order with respect to the reports or their adequacy can make Congress do anything." AIn sum, no legal consequences flow from a report and it has no determinative or coercive effect upon the action of someone else. . . . Therefore, the relief requested (a better report) cannot make any legal difference." The court went on to suggest that the report was also not final agency action, because no legal consequences flow from it, citing NRDC v. Hodel, 865 F.2d 288 (D.C. Cir. 1988), in which the D.C. Circuit held that statutory requirements for agencies to report to Congress were simply not a type of agency action suitable for judicial review.

The Driver's Privacy Protection Act was enacted by Congress to limit the commerce in and easy availability of personal information contained in State motor vehicle records. The Act generally prohibits a State department of motor vehicles from making available to any person personal information about any individual obtained by the department in connection with a motor vehicle record. The Act then contains a number of exceptions, including one that allows release of personal information about an individual if the person is informed of a request and the person consents to the release. Violation of the Act by a department is punishable by a civil penalty. South Carolina challenged the law as a violation of the Tenth Amendment, citing New York v. United States, 505 U.S. 120 (1992), and Printz v. United States, 117 S.Ct. 2365 (1997).

In Condon v. Reno, 155 F.3d 453 (4^th Cir. 1998), a split panel found for South Carolina. The court recognized two lines of cases arising under Congress's exercise of its Commerce Clause powers B one that regulates states in the context of laws of general applicability, the other that directs states to implement or administer a federal regulatory program. The first line of cases is exemplified by extension of wage and hours laws to state employees in the same fashion that they apply to private employees, and the Supreme Court has determined that such laws are not violative of the Tenth Amendment. The Court's response to the second, more recent, line of cases, however, has been to find them unconstitutional. In Condon, the government argued that the Driver's Privacy Protection Act was a law of general applicability, while South Carolina argued it was a federal regulatory program the states were required to implement. Because the Act regulates only state governments, not private parties, the court held that it was not a law of general applicability. Moreover, the court found that it was not an exercise of Congress's powers under the Fourteenth Amendment (which may trump the Tenth Amendment), because the Act did not enforce any right guaranteed by the Fourteenth Amendment.