News from the Circuits

Executive Order Barring Federal Contracting with Employers Who Hire Permanent Strike Replacements Held Reviewable and Unlawful

A year ago, citing his authority under the Federal Property and Administrative Services Act, President Clinton issued E.O. 12,954 barring the government from contracting with employers who hire permanent replacements for striking workers. The Order was accompanied with determinations that hiring permanent replacements leads to longer strikes and harms the employer's knowledge, skill, and expertise, all to the detriment of their supplying high quality and reliable goods and services to the government. Pursuant to the Order the Secretary of Labor promulgated implementing regulations, which were challenged by business on the grounds that the Order violated the National Labor Relations Act, the FPASA, and the Constitution. The district court denied relief. In Chamber of Commerce v. Reich, --- F.3d ---- (1996), the D.C. Circuit reversed. The first issue in the case was the reviewability of the Order itself. The government argued that under Franklin v. Massachusetts, 112 S.Ct. 2767 (1992), and Dalton v. Specter, 114 S.Ct. 1719 (1994), the Order is not judicially reviewable under the APA because the President is not an "agency." The court held that whether or not the Chamber can challenge the Order under the APA in an action against the Secretary, as opposed to against the President, there exist non-statutory grounds for reviewing alleged unlawful actions of executive officers, citing American School of Magnetic Healing v. McAnnulty, 187 U.S. 94 (1902), which found a cause of action inherent in the rule of law. The court further said that the enactment of the APA did not eliminate this pre-existing non-statutory cause of action. On the merits, the court acknowledged the President's broad authority under the FPASA, under which Orders have been upheld prohibiting the government from doing business with companies discriminating on the basis of race or ignoring Presidentially-set wage and price standards. See Contractors Ass'n of Eastern Pa v. Secretary of Labor, 442 F.2d 159 (3d Cir. 1971); AFL-CIO v. Kahn, 618 F.2d 784 (D.C. Cir. 1979)(en banc). In those cases, however, the Orders did not implicate other statutes, whereas here the Order is inconsistent with the NLRA's protection of employers' rights to hire permanent replacements for strikers. Finding that the Order was an attempt to regulate the labor marketplace, rather than merely a purchasing decision by a market participant, the court held that it was preempted by the NLRA.

Separation of Powers Concerns Do Not Immunize President from Lawsuits Based Upon Pre-Presidential Activity and Do Not Justify a Broad Delay of Discovery or Trial

In Jones v. Clinton, 72 F.3d 1354 (1996), the Eighth Circuit held, with one judge dissenting, that the analysis used by the Supreme Court in Nixon v. Fitzgerald, 457 U.S. 731 (1982), to determine Presidential immunity for Presidential acts does not justify immunity for pre-Presidential acts. In Nixon, the Court was concerned Presidential decisionmaking might be affected by possible concerns about personal liability in lawsuits, but "[t]his rationale is inapposite where only personal, private conduct by a president is at issue." Moreover, quoting Marbury v. Madison, the court refused to assess the merits of Ms. Jones' suit as a prerequisite to her bringing suit, "The very essence of civil liberty certainly consists in the right of every individual to claim protection of the laws." Rather, the court said that "judicial case management sensitive to the burdens of the presidency and the demands of the president's schedule" would suffice.

D.C. Circuit Panel Upholds FDA Nutritional Labeling Regulation but Splits Over Whether Chevron or State Farm is the Correct Standard to Apply

Under the Nutrition Labeling and Education Act of 1990, the Food and Drug Administration establishes voluntary guidelines for retail stores to provide nutritional labeling of raw produce and fish. If the FDA finds that retailers overall are not in "substantial compliance" with the voluntary guidelines, it is to issue mandatory labeling requirements. In Arent v. Shalala, 70 F.3d 610 (1995), public interest groups challenged the FDA's regulation defining "substantial compliance." Both the challengers and the government phrased their arguments in terms of Chevron, but the majority in an opinion written by Judge Edwards found Chevron inapposite. The issue in a Chevron analysis, he said, is whether the agency is acting within its statutory powers. Here, however, there was no question that the agency was acting within its powers when it defined "substantial compliance"; the question was whether its definition was arbitrary and capricious. Applying Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile Ins.. Co., 463 U.S. 29 (1983), the court found that the FDA had considered the relevant factors and articulated an explanation for its decision that represented a reasonable accommodation in light of the facts before the agency. Judge Wald agreed that the rule was valid, but to her Chevron was the proper analysis. In her view, this case raised a "second-step" Chevron question -- whether the agency's interpretation of the statute was permissible -- not a question whether the agency had made "a rational connection between the facts found and the choice made," the hallmarks of arbitrary and capricious review.

Ninth Circuit Requires Formal APA Adjudication to Satisfy Due Process Clause Hearing Requirements Implicated by Denial of Indian Group's Tribal Status

Beginning in 1972, in order for individual Indians to obtain various government benefits, they must be members of a recognized tribe. The Samish Indian tribe sought and was denied tribal recognition from the Secretary of Interior under regulations that provided for notice-and-comment proceedings but no hearing. In Greene v. Babbitt, 64 F.3d 1266 (1995), the Ninth Circuit held that due process requirements were triggered because individual tribal members were deprived of a property interest in the receipt of government benefits to which they were otherwise entitled by the government's denial of tribal recognition. As to what process was due, the court noted that the Department regulations did not provide for calling witnesses, making argument before the entity making the decision, or even access to the evidence used in making the decision. Moreover, the court indicated that the lack of procedural safeguards created a real risk of wrongful denial here, because at least one other recognized tribe opposed the Samish and the Department's "informal decision-making, behind closed doors with an undisclosed record, is not an appropriate process for the determination of matters of such gravity." The court conceded that the APA's formal adjudicatory process did not apply according to its terms, but it found that the district court did not err in choosing it as a model in the absence of other alternatives.

D.C. Circuit Finds Board's Refusal to Waive Statutory Limitations Period Reviewable and Holds that Denial of Waiver was Arbitrary and Capricious for Not Explaining the Decision

The Army Board for Correction of Military Records is authorized to correct a person's service records when "necessary to correct an error or remove an injustice." There is a three-year period of limitations in which a person may file a request for a correction, but the Board "may excuse a failure to file within three years after discovery if it finds it to be in the interests of justice." In three separate cases involving requests for corrections long after the limitations period, the Board denied waivers with the language: "The applicant has not presented and the records do not contain sufficient justification to conclude that it would be in the interest of justice to excuse the failure to file within the time proscribed by law." In petitions to review these determinations, the government argued that the decision to grant a waiver was unreviewable as committed to agency discretion by law. In Dickson v. Secretary of Defense, 68 F.3d 1396 (1995), the court found the decisions reviewable, finding the use of the word "may" inadequate to confer unreviewable discretion. On the merits, the court found that the decisions were arbitrary and capricious because "the Board failed to provide anything approaching a reasoned explanation for its decisions." Here the boilerplate language simply did not enable a court to discern any reasoning or basis for the Board's decision. Judge Silberman reluctantly concurred in the conclusion that the decisions were reviewable, although he indicated that the "interest of justice" standard "is without determinable substantive content." More importantly though, he dissented from the remand because he believed that the decision to grant or not to grant a waiver is subject to a greater level of deference than ordinary agency action. Requiring consistency and reasoned decisions assures the rule of law, but granting waivers from normal requirements of law, appropriate in order to mitigate harsh impacts in unusual situations, is at odds with the basic notion of the rule of law. Granting waivers is more in the nature of granting pardons. To establish the same sort of procedural rigor to these decisions is likely to impede, not foster, the exercise of the waiver authority to the detriment of persons like the plaintiffs.