H.  Interim v. Proposed Rule

Comments: Four respondents commented on the decision to issue an interim rule, which is effective immediately, instead of a proposed rule, which does not have an immediate impact. The respondents generally posit that the mere fact that there is currently a prohibition in statute prohibiting contracting with inverted domestic corporations does not justify a claim of "urgent and compelling circumstances." A respondent stated that the fact that the prohibitions had existed in appropriations laws for several years before the interim rule was issued did not justify the claimed urgency. This respondent cited Atchison, Topeka & Santa Fe Ry. Co. v. Wichita Bd. Of Trade, 412 U.S. 800, 808 (1973), in which the Supreme Court stated that any grounds for departure from prior norms "must be clearly set forth so that the reviewing court may understand the basis of the agency's action and so may judge the consistency of that action with the agency's mandate." This respondent claimed that the Councils did not make a reasonable explanation for why they did not initiate a rulemaking for identical or substantially similar statutory restrictions dating back several years.

The respondent quotes from the Office of Federal Procurement Policy Act section 418b(a) that "no procurement policy, regulation, procedure, or form * * * may take effect until 60 days after (it) is published for comment in the Federal Register" and then states that the 60-day notice may only be waived "if urgent and compelling circumstances make compliance with such requirements impracticable."

Another respondent suggested that an interim rule was improper because it risked harming shareholders who had no role in deciding to shift a company offshore and also risked contracting officers reaching disparate conclusions. For these reasons, and the reasons discussed above, the respondents requested suspension of the interim rule.

Response: The restrictions against contracting with inverted domestic corporations in Fiscal Years 2006 and 2007 were not applicable to all Government agencies. The FAR coverage was not required for the non-Governmentwide prohibition in those fiscal years. However, the inverted domestic corporation language in the Fiscal Years 2008, 2009, and 2010 appropriations law is applicable Governmentwide, thus making it an appropriate subject for FAR coverage. The Councils do not agree that the FAR Council lacked authority to issue the coverage as an interim rule; the rule implemented an existing restriction on appropriations about which contracting officers and ordering activities may have been unaware. The Councils cannot suspend the interim rule because it may harm shareholders. The Councils are obligated to implement the statutory restriction on contracting with inverted domestic corporations.