by William Funk ¹

As the current issue of the News goes to press, the Supreme Court has not decided any administrative law or regulatory practice cases. In October, however, it did grant certiorari in three cases. One case provides yet another opportunity for the Supreme Court to address the justiciability of a suit brought by environmentalists challenging agency action alleged to be destructive to the environment. The case, Sierra Club v. Thomas, 105 F.3d 248 (6th Cir. 1997), involves a challenge to a Forest Service Management Plan, which in the environmentalists' eyes is predisposed to clear cutting at the expense of other management goals for national forests. The first question, however, is justiciability -- do the environmentalists have standing, and is the case ripe for adjudication? The answer to both questions turns on when the injury actually occurs. Here there is a split among the circuits, with the Sixth, Seventh, and Ninth Circuits holding that challenges to forest plans can be brought before there is a site-specific action (such as a particular timber sale) under the plan, while the Eighth Circuit has held that plaintiffs lacked standing to bring such an suit, because there was no imminent injury until there was a site-specific action. Justice Scalia and some other members of the Court are unlikely to side with the Sixth, Seventh, and Ninth Circuits, while other members of the Court are likely to join with those circuits. A split decision seems highly probable. In Sierra Club, there is an additional issue, if the Court gets to the merits. The Sixth Circuit held that the Forest Service had arbitrarily narrowed its consideration to clear cutting and had reached arbitrary and capricious conclusions regarding the benefit of clear cutting on recreation activities. The court opined that the Forest Service reached its conclusion because of its history of preferring timber production to other forest values and because its planning process is not the neutral, expert assessment of how the forests can best serve the American people but "is a political process replete with opportunities for the intrusion of bias and abuse."

A second case is Eastern Enterprises v. Apfel, cert. granted, 66 USLW 3291 (Oct. 21, 1997) (decided below as Eastern Enterprises v. Chater, 110 F.3d 150 (1st Cir. 1997)). It involves constitutional challenges to the Coal Industry Retiree Health Benefit Act of 1994. That Act attempted to deal with problems arising out of implementations of ERISA with respect to the multiemployer benefit plans in the coal industry by assigning liability for retiree health benefits among various companies that had historically been involved in coal mining. Liability for the benefits of a particular retiree was assigned to Eastern, because he had worked for Eastern longer than for any other employer. However, his employment with Eastern had terminated long before enactment of the Act. Accordingly, Eastern challenged the Act's assignment of liability to it as a violation of substantive due process or as a taking of its property without just compensation. Here there is no split in the circuits. Similar or identical constitutional claims have been raised and rejected by the Second, Third, Fourth, Sixth, and Seventh Circuits. The Supreme Court has denied certiorari on the issue three different times. The due process issue relies upon the retroactive nature of the legislation. In recent years, the Court has been particularly mindful of retroactive effects of laws, but nothing so far has suggested that run-of-the-mill economic legislation with retroactive liability effects would violate due process. There is a question whether retroactive legislation warrants more than "rational relationship" scrutiny. Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976), suggested it should, but the more recent Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984), suggested it should not. In any case, whatever the degree of scrutiny, the First Circuit's conclusion that only a rebirth of Lochner could avail plaintiffs in this case seems close to the mark. Moreover, the implication of any conclusion other than what all the circuits have reached would have consequences well beyond this Act, foremost among them being the likely invalidity of the Comprehensive Environmental Response, Compensation, and Liability Act (commonly referred to as Superfund), with it massive retroactive liability for hazardous waste clean ups. The takings argument seems equally tenuous, inasmuch as the Supreme Court has rejected two recent takings claims involving application of similar legislation designed to rectify problems with multiemployer pension funds, see Concrete Pipe & Prods. of Cal., Inc. v. Construction Laborers Pension Trust, 508 U.S. 602 (1993); Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211 (1986). Consequently, the greatest interest in this case is the mystery of why the Court granted certiorari.

In the third case, there is a circuit split over the validity of an Internal Revenue Service regulation defining "reserve strengthening" with respect to the calculation of losses by property and casualty insurers. See Atlantic Mutual Ins. Co. v. CIR, cert. granted, 66 USLW 3291 (Oct. 21, 1997). The Eighth Circuit in Western Mutual Ins. Co. v. CIR, 65 F.3d 90 (1995), invalidated the regulation, concluding that the statutory term was not ambiguous because the term had a well-understood meaning within the insurance industry, and the court concluded that Congress intended that meaning to govern the operation of the statute. The Third Circuit, on the other hand, held in Atlantic Mutual Ins. Co. v. CIR, 111 F.3d 1056 (1997), that the term was ambiguous, because its use in the industry is limited to the life insurance industry and in the Tax Court below there was conflicting expert testimony as to the meaning of the term in the industry. Applying Chevron v. NRDC, the court upheld the reasonableness of the Commissioner's interpretation in the regulation. It is interesting to see basic principles of administrative law being applied to tax cases; so often those principles seem to be ignored if the subject matter involves federal taxation.

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