Supreme Court Decides Important Administrative Law Cases

by William Funk ¹

By the end of May the Supreme Court had already decided several important administrative law cases, with another to come [see article on the line item veto]. The most notorious was Clinton v. Jones, 117 S.Ct. ----, in which the Court affirmed the lower courts' determination that separation of powers principles in the Constitution do not compel the deferral until he leaves office of a civil damage action against the President with respect to events occurring before he took office. The President's principal argument was based upon the Court's decision in Nixon v. Fitzgerald, 457 U.S. 731 (1982), in which the Court held that Presidents have absolute immunity from civil damage actions with respect to acts taken within the "outer perimeter" of his official responsibilities. While the facts and holding of that case clearly did not comprehend the Jones case, some of the rationale for that decision was clearly relevant. In Nixon, the Court had said, "[b]ecause of the singular importance of the President's duties, diversion of his energies by concern with private lawsuits would raise unique risks to the effective functioning of government," and "[c]ognizance of . . . personal vulnerability frequently could distract a President from his public duties." These factors seemed to be an important part of the Court's rationale in Nixon. Building on these statements, the President argued that in order to avoid distracting him from his official duties, civil damage actions relating to pre-Presidential activities should be deferred until he leaves office. The Court, however, unanimously rejected this argument, saying that this language in Nixon was merely dicta. The central rationale was to avoid rendering the President "unduly cautious in the discharge of his official duties." This clearly had no relevance to the Jones case. The Court determined that there had only been three cases of a President being subject to civil damage actions for non-official conduct, and that all three cases had been resolved without apparent interference with the President's duties. Moreover, the Court said that it did not believe there was much likelihood of any substantial increase in the number of such suits in the future. Moreover, the Court discounted the separation of powers concerns because allowing the case to proceed would not involve "the encroachment or aggrandizement of one branch at the expense of the other." "But in this case there is no suggestion that the Federal Judiciary is being asked to perform any function that might in some way be described as 'executive.'" And, "[w]hatever the outcome of this case, there is no possibility that the decision will curtail the scope of the official powers of the Executive Branch."

Having concluded that separation of powers concerns did not mandate a temporary stay, the Court agreed with the district court that the trial court "has broad discretion to stay proceedings as an incident to its power to control its own docket." The potential burdens on the President, the Court held, "are appropriate matters for the District Court to evaluate in its management of the case. The high respect that is owed to the office of the Chief Executive . . . is a matter that should inform the conduct of the entire proceeding, including the timing and scope of discovery." Nevertheless, the Court found that the district court had abused its discretion in delaying the trial during the President's term in office by "tak[ing] no account whatever of the respondent's interest in bringing the case to trial." Moreover, the burden of establishing the need for delay falls on the one seeking it, and nothing in the record supported the ordered delay other than the fact that the trial might "consume some of the President's time and attention."

Justice Breyer concurred in the judgment but wrote separately to express his view that when "the President sets forth and explains a conflict between judicial proceeding and public duties, . . . the Constitution permits a judge to schedule a trial in an ordinary civil damages action . . . only within the constraints of a constitutional principle -- a principle that forbids a federal judge in such a case to interfere with the President's discharge of his public duties." Because there the claim of the President was for an automatic stay without the need to show particular interference, the President's claim failed to meet Justice Breyer's test.

The real administrative law case was Bennett v. Spear, 117 S.Ct. 1154, in which the Supreme Court reversed the Ninth Circuit's dismissal of a rancher's challenge to agency action under the Endangered Species Act [ESA]. This case was brought both under the citizen suit provision of the ESA and the Administrative Procedure Act [APA]. Both claims argued that the Fish and Wildlife Service [FWS] had acted unlawfully under the ESA, on the one hand by implicitly determining critical habitat without consideration of a statutorily required factor and on the other hand by issuing a biological opinion that was unsupported by facts. The Ninth Circuit had dismissed the case on the grounds that the rancher's commercial interests were not within the zone of interests of the ESA. Its focus had been on the ESA citizen suit provision, part of which states that "any person may commence a civil suit . . . to enjoin any person, including the United States, who is alleged to be in violation of any provision of [the ESA or its regulations]." 16 U.S.C. § 1540(g). Notwithstanding this language, the Ninth Circuit held that Congress had only intended to allow persons who sought to protect endangered species to sue under this provision, not persons who wished to protect their private interests. Justice Scalia, however, writing for a unanimous Court, disagreed, concluding that while this language cannot enlarge standing beyond its constitutional requirements, see Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), it is sufficient to indicate that Congress did not intend to limit use of the provision to environmentalists.

The government, nonetheless, argued that this citizen suit provision could not be used to sue one of the agencies administering the ESA (the FWS or the National Marine Fisheries Service [NMFS], depending on the type of listed species), alleging that they were administering it improperly, the allegation here. Rather, the government stated, such actions must be brought under the APA. Again the plain language seemed to be against the government, but another, separate part of the citizen suit provision authorizes suits "against the [FWS or NMFS] where there is alleged a failure of the [FWS or NMFS] to perform any act or duty [relating to the listing of species] which is not discretionary with the [FWS or NMFS]." This separate provision, the Court noted, would be meaningless surplusage if a person could sue FWS or NMFS under the first provision alleging any violation of the ESA. Accordingly, the Court agreed with the government's argument on this point, so the rancher could not bring this lawsuit under this part of the ESA citizen suit provision. The rancher could, however, bring one of his claims (that the FWS had violated statutory requirements in designating critical habitat) under the second citizen suit provision, because those statutory requirements were not discretionary with the FWS. As the Court said, "It is rudimentary administrative law that discretion as to the substance of the ultimate decision does not confer discretion to ignore the required procedures of decisionmaking."

There still was the question whether the remaining claim (that the FWS's biological opinion was not supported by facts) could be brought under the APA. Initially, the Court dismissed the argument that the creation of the citizen suit provision suggested that it was the exclusive means of review. The court then addressed whether the rancher's claims were within the zone of interests of the ESA. In answering this question, the Court did not look to the ESA's citizen suit provision, but to its substantive provisions, and did not look to the "overall purpose of the Act in question (here, species preservation), but . . . to the particular provision of law upon which plaintiff relies." In this case, the claim that the biological opinion had no factual basis relied upon Section 7 of the ESA, which among other things requires the agency to "use the best scientific and commercial data available" in making its opinion. "The obvious purpose of [this] requirement," the Court wrote, "is to ensure that the ESA not be implemented haphazardly, on the basis of speculation or surmise." While this furthers the goal of species preservation, it also "avoid[s] needless economic dislocation produced by agency officials zealously but unintelligently pursuing their environmental objectives." Moreover, the ESA explicitly recognizes a concern for economic consequences in various places, including in Section 7. Consequently, a rancher's commercial interests that might be affected by misapplication of Section 7 are within the zone of interests of that Section to challenge the agency's failure to use the best scientific and commercial information, and the rancher can bring an APA action.

While Bennett v. Spear is on its face an ESA case, it addresses the application of the zone of interests test generally. In Bennett, the Court suggests that is has been clear that one is to look to the interests protected by the particular provision upon which the plaintiff is relying, rather than to the interests protected by the statute as a whole, in determining whether a plaintiff is within the appropriate zone of interests. To the contrary, however, language in Clarke v. Securities Industry Ass'n, 479 U.S. 388 (1987), would suggest the opposite conclusion. There the Securities Industry Association challenged the Comptroller of the Currency's permission to a bank to open a discount brokerage; the association claimed that the action violated Section 36 of the National Bank Act. The Court responded to the government's argument that the association was not within the zone of interests of Section 36 by saying, "the Comptroller's argument focuses too narrowly on [§ 36], and does not adequately place § 36 in the overall context of the National Bank Act. . . . [w]e are not limited to considering the statute under which the respondents sued, but may consider any provision that helps us understand Congress' overall purposes in the National Bank Act." This seems directly contrary to the decision in Bennett v. Spear, and yet (or maybe, as a result) Bennett did not cite or mention Clarke. The opinion in Clarke, however, only gathered six votes, while Bennett was unanimous. Moreover, between Clarke and Bennett the Court decided Air Courier Conference of America v. American Postal Workers Union, 498 U.S. 517 (1991), another unanimous decision, in which the Court said that the zone of interests test is made with respect to the particular provision invoked by the plaintiff, not the statute as a whole, distinguishing Clarke. Thus, if any doubt remained as to the interment of Clarke, Bennett has laid it to rest.

The Court also decided a regulatory takings case, although only a preliminary issue in the case. In Suitum v. Tahoe Regional Planning Agency, 117 S.Ct. ----, a regional land use planning agency prohibited a landowner from developing his land at all, because it was within a particular environmental zone. In these circumstances, the agency grants certain transferrable development rights (TDRs) to the landowner for use elsewhere. Here, the landowner did not attempt to utilize the TDRs he was granted, but instead sued in federal court under 42 U.S.C. § 1983 for a regulatory taking of his property without just compensation. In federal cases claiming that a state has taken property through regulation, the Court has established two requirements for the ripeness of the claim: first, whether the state has in fact made a final decision regarding how the burdened property can be used; second, if it has, does the state provide a process for inverse condemnation. If the state does provide such a process, then the case is not ripe in federal courts until the person has sought and been denied compensation under that state process. Only when compensation is sought and denied, can it be said that the state denied the person just compensation, a necessary prerequisite to a takings claim. In Suitum, the lower courts had decided the first ripeness issue against the landowner, not reaching the second issue. In more routine cases, when a person seeks to develop his land and makes a particular development proposal, which is denied, the Court has said that this does not necessarily mean that the state has made a final decision regarding how the property may be developed, making the takings issue ripe, because the denial may only decide that particular development proposal; it may not suggest that other development possibilities are precluded. See, e.g., Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985). Here, the agency argued by analogy that until the landowner had attempted to use or sell the TDRs, it was unclear what kind of impact the land use restriction had on the landowner's investment backed expectations. Hence, the case was not yet ripe for decision whether there had been a taking. The Court unanimously rejected this argument. Justice Souter, for the Court, concluded that precedent clearly limited this ripeness issue to questions as to what the landowner could do with the property in question. Here it was finally decided that the landowner's property could not be developed at all. He went on, however, for himself and five other Justices, to decide that, while the TDRs had not been exercised, this did not mean that their value was unknown or unknowable, which might be relevant to the ripeness issue. There was expert testimony as to the value of the TDRs, and the Court believed that they could be valued like any other type of property, even in an unexercised state.

Justice Scalia, together with Justices Thomas and O'Connor, concurred in the judgement and in the opinion except with regard to its consideration of the relevance of the TDRs to the ripeness issue. In Justice Scalia's view, the only relevant issue to whether there was a final state decision was what could be done with the subject property. The value of the TDRs, in his view, was totally irrelevant to whether there had been a taking at all and hence to the ripeness issue. The majority's determination that the value of the TDRs was knowable, thereby overcoming any ripeness problem, suggested that the value of the TDRs was somehow relevant to whether there had been a taking at all.

The opinion by Justice Scalia raises a major question in takings law that the Court pointedly said it was not deciding -- whether the TDRs are to be treated as compensation for a taking or are to be treated as part of the person's property. If it is the former, then to the extent that the TDRs do not fully compensate the landowner, he will be entitled to additional compensation. If, however, it is the latter, then there may be no taking at all, because the landowner has not been deprived of the total economic value of his property (a per se takings) but only has seen the value diminished. Where the value is only diminished, there is a different test to determine if there has been a taking, a test that rarely results in finding a takings. While the Court said it was not deciding this issue, Justice Scalia (and Justices Thomas and O'Connor) clearly did. To them it was clear that TDRs are compensation; they are not part of the landowner's residual value in the burdened property.

As usual, there was a case mentioning Chevron v. NRDC. This time it was United States v. LaBonte, 117 S.Ct. ----, which involved a challenge to a Sentencing Guideline adopted by the United States Sentencing Commission, alleging that the Guideline was not authorized by the statute. In an opinion by Justice Thomas, the Court found that the Guideline clearly violated the plain statutory language. As a result, the Court said, there was no need to determine whether the Commission was owed deference under Chevron. Justices Breyer, Stevens, and Ginsburg disagreed. They found the language of the statute ambiguous, applied Chevron, and consequently would have upheld the Commission's Guideline. In short, nothing new.

1. Professor of Law, Lewis & Clark Law School; Editor, Administrative & Regulatory Law News.