ARB CASE NO. 97-127
ALJ CASE NO. 87-OFC-20
DATE: December 21, 1999
In the Matter of:
OFFICE OF FEDERAL CONTRACT
COMPLIANCE PROGRAMS,
U.S. DEPARTMENT OF LABOR,
PLAINTIFF,
v.
KEEBLER COMPANY,
DEFENDANT.
BEFORE: THE ADMINISTRATIVE REVIEW BOARD
Appearances: For the Plaintiff:
L. Denise Galambos, Esq., Pamela A. Gibbs, Esq., Richard L. Gilman, Esq., Diane A. Heim,
Esq., Willie M. Alexander, Esq., James D. Henry, Esq., Henry L. Solano, Esq., U.S.
Department of Labor, Washington, D.C.
For the Defendant:
Edward Katze, Esq., Rosemary C. Lumpkins, Esq., Constangy,
Brooks & Smith, Atlanta, Georgia
The case was now ready for review on the merits. However, because of the long
interval since the parties filed their briefs on the merits of the complaint, the Board's order also afforded the
parties an opportunity to file supplemental briefs, which we now have before us.
II. CLARIFICATIONS
Before turning to the merits of this case, we pause to discuss three matters that are
no longer in controversy, having been resolved by prior orders, but that we believe warrant fuller
discussion. These are: whether the scope of §503 coverage was a jurisdictional issue, the flaws in
the WMATA decision, and the nature of the framework within which this Board can best
decide the validity of OFCCP's interpretation of §503. As the history of this case indicates, there
was a good bit of uncertainty associated with the issues of jurisdiction and interpretation, issues which arise
under various statutes administered by the Department of Labor and adjudicated by us. And the
WMATA decision has never been thoroughly analyzed by us. We think it worthwhile, therefore,
to offer some further guidance about the analytic framework for deciding when an issue is a jurisdictional
one, to explain how the court erred in WMATA, and to describe the roles of OFCCP and this
Board when faced with ambiguity in §503 text or with issues not addressed by Congress when it
enacted and later revised §503.
A. Scope of coverage is not a jurisdictional issue
In this case, both the Assistant Secretary and the ALJ questioned whether they had
jurisdiction over the complaint absent evidence that DeAngelis was a covered employee. However, there
can be no question that the ALJ and the Assistant Secretary had jurisdiction over this case at all times.
"'Jurisdiction,' it has been observed, 'is a word of many, too many,
meanings.'" Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 90, 118
S.Ct. 1003, 1010 (1998) (internal quotation omitted) (listing common misuses of the word jurisdiction,
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including for example, statutes that say, "and the court shall have jurisdiction to grant all
appropriate relief," which is nothing more than a reference to the remedial power of the court).
"Whether the complaint states a cause of action on which relief could be granted is a question of law
and just as issues of fact it must be decided after and not before the court has assumed jurisdiction over
the controversy. If the court does later exercise its jurisdiction to determine that the allegations in the
complaint do not state a ground for relief, then dismissal of the case would be on the merits, not for want
of jurisdiction." Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776 (1946).
AccordMontana-Dakota Utils Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246,
249, 71 S.Ct. 692, 694 (1951) ("As frequently happens where jurisdiction depends on subject
matter, the question whether jurisdiction exists has been confused with the question whether the complaint
states a cause of action. * * * If the complaint raises a federal question, the mere claim confers power
to decide that it has no merit, as well as to decide that it has").
The mere claim that Keebler violated §503 of the Rehabilitation Act by
terminating DeAngelis because of her epileptic seizures conferred jurisdiction on the Department. The
question whether DeAngelis was a covered employee turned on the meaning of the "working on the
contract" clause in §503. This became a point of uncertainty because of WMATA,
and its emergence in this case was not a matter of manipulation by anyone, nor was it a frivolous question.
It was a serious question of law -- if §503 did not cover all employees of federal contractors, whom
did it cover? Such issues are merits issues and their resolution by the adjudicator are rulings on the merits.
Cf.Steel Co., 523 U.S. at 89, 118 S.Ct. at 1010 (a court has jurisdiction "'if the
right of petitioners to recover under their complaint will be sustained if the Constitution and laws of the
United States are given one construction and will be defeated if they are given another,' . . . unless the claim
'clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such
a claim is wholly insubstantial and frivolous,'" citing Bell v. Hood).
B. WMATA erred in ruling that all-employee coverage was inconsistent with the
"contract clause"
The WMATA decision rested on the incorrect premise that the contract
clause, "in employing persons to carry out such contract," had only one "plain"
meaning, or purpose -- to limit the class of persons protected by §503. "All employees of the
contractor are not swept in, which is basically what Labor is trying to do by their waiver provision. The
Act itself says, employing persons to carry out such contract are the people who are covered and Labor's
reading is far too broad." 1991 WL 185167 *1. However, by applying standard tools of statutory
construction to the question of coverage, we can see that §503 was indeed meant to apply to all
employees of a federal contractor.
1. The "contract clause" should have been construed in
context.
One of the basic precepts of statutory construction is that words and phrases should
not be parsed in isolation. National Bank of Or. v. Independent Ins. Agents of Am., Inc. 508
U.S. 439, 453, 113 S.Ct. 2171, 2182 (1993) (in expounding a statute, a court must not be guided by a
[Page 10]
single sentence or member of a sentence, but must look to the provisions of the law as a whole and to its
object and policy). In fact, it is not "an unusual judicial problem to have to seek the meaning of a law
expressed in words not doubtful of themselves, but made so by circumstances or the objects to which they
come to be applied." United States v. American Sugar Ref. Co., 202 U.S. 563, 577, 26
S.Ct. 717, 719 (1906).
Section 503 was and is part of a set of provisions in the Rehabilitation Act by which
Congress sought to assure that federal funds do not support enterprises that discriminate against persons
with disabilities. Section 501(b) requires federal agencies to implement affirmative action plans for federal
employees with disabilities. 29 U.S.C. §791(b). Section 504 prohibits discrimination based on
disability by any program or activity receiving federal assistance. 29 U.S.C. §794. As the Supreme
Court expressed it, "Congress apparently determined that it would require contractors and grantees
to bear the costs of providing employment for the handicapped as a quid pro quo for the receipt
of federal funds." Conrail v. Darrone, 465 U.S. 624, 632 n.13, 104 S.Ct. 1248, 1253
n.13 (1984). Viewed in this context, the proposition that the contract clause was intended to exclude some
employees from protection immediately becomes problematic, calling for deeper analysis.
2. The Act's legislative history did not support the notion that Congress intended to
protect some but not all employees of a federal contractor.
Once §503 and the related provisions are properly understood as
"power of the purse" mechanisms created by Congress to facilitate the employment of persons
with disabilities, a number of subsidiary questions immediately formulate themselves. Is it even plausible
that Congress was willing to contract with businesses that discriminated based on disability -- as long as
the discrimination only involved certain employees? What other purpose, consistent with §503's
remedial goal, would be served, or necessary balance struck, by limiting coverage in this way? What
should be made of the fact that nowhere in the legislative history is there the slightest hint that Congress
thought it was adopting a dual standard for employees of federal contractors? What should be made of
the fact that there is absolutely no evidence that Congress thought the effects of a federal contract on an
employer could actually be broken down and traced through the positions employees hold? What answer
could there be to the Assistant Secretary's finding in E. E. Black that, as an empirical matter, all
employees in a facility working on a federal contract are affected by that contract? These and similar
questions stand in rebuttal to WMATA's unexamined impulse.
3. The Rehabilitation Act in general and §503 in particular is remedial
legislation that must be construed liberally
Another cardinal rule of statutory construction is that remedial legislation be
construed liberally. "A liberal construction is ordinarily one which makes the statutory rule or
principle apply to more things or in more situations than would be the case under a strict
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construction." Sutherland Stat. Constr. §60.01 (5th ed. 1992). The Rehabilitation
Act as a whole, and §503 in particular, is nothing if not remedial. Cf. Darrone, 465 U.S.
at 634, 104 S.Ct. at 1254 ("[A]pplication of § 504 to all programs receiving federal financial
assistance fits the remedial purpose of the Rehabilitation Act to 'promote and expand employment
opportunities for the handicapped.' 29 U.S.C. §701(8)"). Construing the contract clause to
exclude some workers with disabilities from §503 protection is clearly restrictive, not liberal.
4. Rejecting the court's interpretation of the contract clause would not strip the clause
of meaning
Refusing to construe the contract clause as a limitation on coverage does not render
the clause surplusage. The contract clause still serves an important function. It acts as a temporal limit on
employer liability under §503. It establishes that federal contractors would be liable for
noncompliance with §503 during the life of the contract. Having been a federal contractor in the past
would not be a basis for charges under §503 in the present. Nor would §503 eligibility
depend on pre-contract employment decisions (assuming the effects of those decisions have ceased when
a new federal contract commences).
Simply put, I view Chevron deference as inapplicable to the situation where
the administering agency fails to provide an interpretation of the statute or regulation to which deference
could thus be accorded. The Supreme Court, by way of introduction to its articulation of the principle of
interpretive deference, notes that such deference is only of relevance "[w]hen a court reviews an
agency's construction of the statute which it administers." Chevron v. N.R.D.C., 467 U.S.
at 842, 104 S.Ct. at 2781.2
Consistent with this introductory clarification, the Supreme Court's articulation of the deference principle
clearly intimates that where a statute is found to be ambiguous, and the court is presented with no
administrative interpretation to which interpretive deference is owed, the reviewing court is free to
"impose its own construction on the statute." 467 U.S. at 843, 104 S.Ct. at 2782.3
I thus read Chevron to mean that the Board is free, should it so choose,
to impose its own construction on a statute or regulation where the administering agency has failed to
provide a proper agency interpretation thereof. Indeed, I do not find my understanding of
Chevron in this regard to be unique. In instances where a reviewing court has not been presented
with an agency interpretation warranting Chevron deference, the courts have proceeded to
interpret the ambiguous statute or regulation at issue. For example, in O'Connell v. Shalala, 79
F.3d 170 (1st Cir. 1996), the appellate court was presented with no agency interpretation of its regulation
to which deference could properly be accorded. Consequently, the court "approach[ed] the
statutory question without the Secretary's thumb on the scale," applying traditional canons of statutory
construction including, inter alia, "common congressional statute-drafting practices."
Id. at 179-180; accordUnited States v. 29 Cartons of ... an Article of Food,
987 F.2d 33, 38 (1st Cir. 1993) (finding that "the purely legal question facing us in this case presents
no occasion for deference," the court went on to note that "[w]hen, as now, a court is
persuaded neither by the validity of [the agency's] reasoning; nor by the interpretive fit between the agency's
rendition, on the one hand, and the language and structure of the statute, on the other hand, a court should
not defer."). See alsoAtchison, Topeka & Santa Fe Ry. Co. v. Pena, 44 F.3d
437 (7th Cir. 1994) (en banc), aff'd on other grounds, 516 U.S. 152, 116 S.Ct. 595 (1996);
Southern Ute Indian Tribe v. Amoco Production Co., 119 F.3d 816 (10th Cir. 1997); In
re Electronic Surveillance Evidence, 990 F.2d 1015 (8th Cir. 1993) (en banc); DOE v.
Reivitz, 830 F.2d 1441 (7th Cir. 1987); Frank Diehl Farms v. Secretary of Labor, 696
F.2d 1325 (11th Cir. 1983).
Justice Scalia put it most succinctly, and on point, in his concurring opinion in
Bowen v. Georgetown Univ. Hospital, 488 U.S. 204, 216, 109 S.Ct. 468, 475 (1988):
"Where an interpretive rule is held invalid, and there is no pre-existing rule which it superseded, it is
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obviously available to the agency to 'make' law retroactively through adjudication, just as courts routinely
do (and just as we indicated the Secretary of Agriculture could have done in United States v.
Morgan, 307 U.S. 183, 193, 59 S.Ct. 795, 800-801 (1939))." 488 U.S. at 222, 109 S.Ct.
at 479. Thus, assuming there were no OFCCP regulation or other agency interpretation in the instant case
to which deference would be owed, I would conclude that the Board is not required to remand to OFCCP
for its interpretation of Section 503 coverage. In my opinion, Chevron permits the Board to make
that interpretation itself, applying traditional canons of statutory construction.
Of course, this is not the situation that is before the Board in the instant case.
OFCCP, the agency charged with administration of Section 503, has provided the necessary interpretation
of the relevant provision of that statute through promulgation of 41 C.F.R. §60-741.4(a)(2)(I), which
the Board in turn held dispositive on the issue of coverage in December, 1996.4
Prior to WMATA v. DeArment, 55 (CCH) EPD ¶40,507, 1991
WL 185167 (D.D.C., Jan. 3, 1991), OFCCP's long-standing interpretation of Section 503(a) required
all-employee coverage. As the majority discusses, WMATA eliminated that interpretation. In the
aftermath of the district court's decision, the Board, on September 4, 1996, issued a Decision and Order
dismissing the instant action on the ground that OFCCP had failed to establish that DeAngelis was a
covered employee under Section 503 of the Rehabilitation Act. Immediately, OFCCP filed a motion for
reconsideration based on its recently adopted 41 C.F.R. §60-741.4(a)(2). The new regulation, at
subsection (a)(2)(I), set forth two separate coverage interpretation provisions. The first proviso addressed
the scope of coverage under Section 503 and Part 60-741 for contractor employment decisions and
practices occurring before the effective date of the 1992 Congressional amendment of Section 503.5 The second proviso addressed the
scope of coverage for employment decisions and practices occurring after the legislative enactment.6
Obviously, it is only the first coverage proviso of 41 C.F.R. §60-
741.4(a)(2)(I) that is relevant and thus of concern to the instant case. It interprets the pre-amendment
Section 503(a) proviso, "in employing persons to carry out such contract," as
limiting coverage of a government contractor's employment decisions and practices occurring before the
1992 amendment to "positions that are engaged in carrying out a contract." 61 Fed. Reg. at
19,337.7 Effectively applying
Chevron deference to the OFCCP regulation, the Board, in its December 1996 Decision and
Order, held the proviso controlling in the interpretation of pre-amendment Section 503, concluding that
DeAngelis was thus a covered employee.8 Order of Dec. 12, 1996, at 3-4. Accordingly, the Board vacated its September
4, 1996 Final Decision and Order, reinstated the instant action, and instructed the parties to proceed to the
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merits of the instant case. Id. at 5. As mentioned in the introduction to this concurrence, I agree
with the determination of the merits that the majority has now reached.
E. COOPER BROWN
Member
[ENDNOTES -- LEAD DECISION]
1 The text of §503 and its
implementing regulations were amended several times in ways relevant to this case. The current and earlier
versions of text often occupy the same or very similar sections of the C.F.R. or U.S. Code. To avoid
confusion about which version of text is being referred to, this opinion provides a date for each citation to
§503 and its implementing regulations.
2 The Rehabilitation Act
Amendments of 1992, Pub. L. No. 102-569, 106 Stat. 4334 (Oct. 29, 1992), amended the Rehabilitation
Act of 1973, 29 U.S.C. §§701-797b, substituting the term "individuals with
disabilities" for "individuals with handicaps." Title I of the Americans with Disabilities
Act of 1990 (ADA), 42 U.S.C. §§12101-12117 (1994) also addresses
"disabilities," which "represents an effort by [Congress] to make use of up-to-date,
currently accepted terminology." S. Rep. No. 116, 101st Cong., 1st Sess. 21 (1989); H.R. Rep.
No. 485 pt. 2, 101st Cong., 2d Sess. 50-51 (1990). The revision does not reflect a change in definition
or substance. Id. In this decision we will use the terms "disabilities" and
"handicaps" interchangeably.
3 Another limit on coverage was the
monetary value of the contract. Inasmuch as monetary value of the contract is not an issue in this case, we
will generally omit references to it for brevity's sake.
4 The Washington Metropolitan Area
Transit Authority (WMATA) provided shuttle bus service under contract to eight or more federal agencies,
including the Department of Defense, the Department of Labor, and the Department of the Navy. These
shuttle busses were housed in a garage with other WMATA busses and the two kinds of busses were not
segregated in the garage. The complainant in the case was a carpenter who applied but was rejected for
a position that would repair and maintain the communal garage.
5 In 1974 the Assistant Secretary
for Employment Standards was charged by the Secretary of Labor with responsibility for issuing final
orders in cases in which one of the parties challenged the ALJ's recommended decision. Sec'y Order No.
8-74 (March 12, 1974).
6 The delayed effectiveness date
was necessitated by the Paperwork Reduction Act as amended, 44 U.S.C. §3507 (Supp. 1999),
which required a final clearance of the regulations' paperwork requirements by OMB after the final rule was
published but before it could be implemented. The timing of OMB's clearance was necessarily in OMB's
hands, and the Department of Labor could not forecast when the clearance would be issued.
7 This ruling stands as law of the
case. We note, however, that the regulation is retroactive, and that the justification for retroactivity spelled
out in OFCCP's September 11, 1996 Motion to Amend appears inconsistent with Landgraf v. USI
Film Prods., 511 U.S. 244, 114 S.Ct. 1483 (1994), and Rivers v. Roadway Express, Inc.,
511 U.S. 298, 114 S.Ct. 1510 (1994).
8 That Congress did model
§503 in part on Exec. Order No. 11246 is beyond question. Consider the criticisms Senators
Williams, Randolph, Cranston and Stafford made of the Department's first implementing regulations,
promulgated on July 11, 1974. See, Letter to Labor Secretary Brennan (Aug. 21, 1974)
("there was never any contemplation by the Congress that the terms of the [§503] affirmative
action clause would vary depending upon the length or dollar value of contracts generally. Certainly, this
is not the case with the affirmative action clause required pursuant to Executive Order No. 11246. . .
."). S. Rep. No. 1297, 93th Cong., 2d Sess. (1974), Appendix.
And again, when Congress amended the Act in 1974 because it considered the
Department's coverage regulations too narrow, the Senate Report stated: "An acceptable affirmative
action program must be aimed at the entire class of employable handicapped persons, with particular
attention to those who are presently, actually, and significantly handicapped. This standard parallels the
obligation of a Federal contractor under Executive Order No. 11246 to employ persons who might be
discriminated against on the basis of national origin: the obligation extends to all ethnic groups within the
available applicant pool. . . ." Id.
9 "The court need not conclude
that the agency construction was the only one it permissibly could have adopted to uphold the construction,
or even the reading the court would have reached if the question initially had arisen in a judicial
proceeding." Chevron, 467 U.S. at 843 n. 11, 104 S.Ct. at 2782 n. 11.
10 This is undoubtedly why, in a rare
instance of a court purporting to resolve a statutory "ambiguity" without deference to the
agency, the court ultimately reached its "independent" decision by relying on the agency's view.
O'Connell v. Shalala, 79 F.3d 170, 179 (1st Cir. 1996). After asserting that the question to be
decided required resolution of ambiguous statutory text and that the agency had failed to supply an
authoritative interpretation, the court declared it would decide "without the [agency's] finger on the
scale." But in actuality, the court ended up affirming the agency position on the ground that
"Congress more likely intended the statute to be read as the Secretary urges." Id.
A classic Chevron ruling.
11 OFCCP argues that Dr. Forsyth
is not credible in his account of the phone conversation because Edmundson could not have told him
DeAngelis was still having seizures, since DeAngelis had not been at work since April 22. OFCCP makes
this claim in support of its theory that Edmundson unilaterally decided to terminate DeAngelis and that Dr.
Forsyth had no new information that would justify his alleged recommendation to terminate based on safety
concerns.
We regard the point as inconsequential, in light of the other new information Dr.
Forsyth had, and our independent judgment that DeAngelis often tried to downplay the seriousness of her
condition.
12 Many aspects of the ADA and
§§501, 503 and 504 of the Rehabilitation Act are conceptually interchangeable. The
claimant's burden of proving ability to perform the essential functions of the job with or without
accommodation is one of them. See e.g., Bragdon v. Abbott, U.S. , 118 S.Ct. 2196 (1998); Mengine v. Runyon, 114 F.3d 415, 420 (3d Cir. 1997).
[ENDNOTES - CONCURRENCE]
1 In support of its approach the
majority relies upon the "Chenery doctrine," which I consider neither applicable nor
relevant to Chevron deference analysis. The genesis of the doctrine is found in two related
Supreme Court decisions of the 1940s: Securities & Exch. Comm'n v. Chenery Corp., 318
U.S. 80, 87, 63 S.Ct. 454, 459 (1943) ("The grounds upon which an administrative order must be
judged are those upon which the record discloses that its action was based."); and Securities
& Exch. Comm'n v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 1577 (1947) ("[A]
reviewing court, in dealing with a determination or judgment which an administrative agency alone is
authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency.
If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by
substituting what it considers to be a more adequate or proper basis."). See generally
Friendly, Chenery Revisited: Reflections on Reversal and Remand of Administrative Orders,
1969 Duke L.J. 199.
2SeeThomas
Hodgson v. Sons, Inc., 49 F.3d 822, 826 (1st Cir. 1995) (Chevron mandates deference
"when a court is reviewing an agency decision based on a statutory interpretation."); In
re Electronic Surveillance Evidence, 990 F.2d 1015, 1020 n.5 (8th Cir. 1993) (Chevron
addresses "the proper deference to be given to 'an agency's construction of [a] statute which it
administers'.").
3 The Chevron deference
principle reads in its entirety: "When a court reviews an agency's construction of the statute
which it administers, it is confronted with two questions. First, always, is the question whether
Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the
end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed
intent of Congress. If, however, the court determines Congress has not directly addressed the precise
question at issue, the court does not simply impose its own construction on the statute, as would be
necessary in the absence of an administrative interpretation. Rather, if the statute is silent or
ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is
based on a permissible construction of the statute." Chevron v. N.R.D.C., 467 U.S. at
842-43, 104 S.Ct. at 2781-82 (emphasis added).
4OFCCP v. Keebler, 87-
OFC-20, Order Vacating Final Decision & Order (Dec. 12, 1996).
5 Prior to the 1992 Congressional
amendment, Section 503(a) provided that federal government contracts and subcontracts "shall
contain a provision requiring that, in employing persons to carry out such contract the party
contracting with the United States shall take affirmative action to employ and advance in employment
qualified individuals with handicaps." (Emphasis added.) The proviso within Section 60-741.4(a)(2)
that interprets pre-amendment Section 503(a) states in relevant part: "With respect to the
contractor's employment decisions and practices occurring before October 29, 1992, this part applies only
to employees who were employed in, and applicants for, positions that were engaged in carrying out a
government contract; . . . A position shall be considered to have been engaged in carrying out a contract
if [inter alia]: (A) The duties of the position included work that fulfilled a contractual obligation,
or work that was necessary to, or that facilitated, performance of the contract or a provision of the
contract. . . ." 41 C.F.R. §60-741.4(a)(2)(i).
6 The 1992 statutory amendment
removed the language "in employing persons to carry out such contract" from
Section 503(a), thereby effectively applying the requirements of Section 503 to all of a covered contractor's
or subcontractor's work force at all of its facilities with regard to employment decisions and practices
occurring after the date of enactment. See 61 Fed. Reg. 19,337. Accordingly, the implementing
regulatory proviso for Section 503(a) as amended states: "with respect to employment decisions and
practices occurring on or after October 29, 1992, this part applies to all of the contractor's positions
irrespective of whether the positions are or were engaged in carrying out a Government contract."
41 C.F.R. §60-741.4(a)(2)(I).
7 The regulatory history of Section
60-741.4(a)(2) is set forth at 57 Fed. Reg. 48,084 et seq. (Oct. 21, 1992) and 61 Fed. Reg.
19,336 et seq. (May 1, 1996).
8 Consistent with the Secretary of
Labor's delegation of adjudicatory authority to the Board under Secretary Order 2-96, 61 Fed. Reg.
19,978 (May 23, 1996), the Board reasoned, "It is well established that administrative agencies are
bound by their promulgated regulations. . ." and thus, "the validity of the regulations must be
assumed." Order of Dec. 12, 1996, at 3-4 (citations omitted).