The relationship between courts & agencies

1. The relationship between courts & agencies • As with the relationships between the executive/legislative branches and agencies, constitutional issues arise in relationships between agencies and courts • E.g., - To what extent can agencies engage in quasi-judicial decision-making without violating Article III? • We take up this question later when we discuss procedural due process. • The primary relationship between agencies and courts is more of a “nuts and bolts” issue - defined by review that courts engage in when aggrieved parties challenge agency action. • Given that Congress has delegated a great deal of authority to agency officials to make policy, what role should/do judges have in policing agency decisions?

2. Start first by looking at judicial review of LOWER COURT decisions Review of what? Standard of review When a party appeals from a lower court decision, there is an identifiable dispute and hearing from which the appeal is taken. In bench trials or motion practice, there will have been findings of fact, findings of law, procedural findings. In a jury trial, there is simply the jury decision. The courts have devised standards of review for these things: • Lower court legal conclusion • Lower court fact finding • Lower court evidentiary/procedural rulings • Jury fact finding • De Novo • Clearly erroneous • Abuse of Discretion • Deference/jury standard

3. Now think about challenges to agency action – they can be quite a bit different • Challenges can arise from agency actions that look very like court proceedings – e.g., agency enforcement hearings, or hearings re denial/suspension of license • In those cases there are likely to be findings of fact and conclusions of law as in a normal court hearing • Sometimes challenges arise from the agency’s enactment of a particular rule • In those cases, there MAY be findings of fact during the rulemaking (but rarely if its an informal rulemaking, which is most rulemakings) • Instead, challengers may argue that the agency doesn’t have the authority to make the rule or that they have misinterpreted a statute in making it (legal challenges) or simply that the rule is arbitrary and it should be overturned • Finally, agencies engage in A LOT of actions that don’t look like either rulemaking or adjudications – e.g., the Secy’s decision in Overton Part to release funds - that looks very political • How do you challenge that action or can you?

4. The purpose of judicial review re courts and agencies Appellate courts use different standards to review lower court findings because there are different purposes in reviewing law & facts: • Facts: Jury/lower court are better equipped to assess facts – deferential standard • Law: Court of appeals is best equipped to say what the law is – no deference Goals of judicial review of administrative findings are essentially the same (allocating decision-making authority to the appropriate entity). • But the reasons for that allocation are different because the nature of the action being challenged can be so different from a normal lower court hearing • And the standards of review are different (as seen in APA Sec. 706) • Underlying question with each standard is “Why allow judicial review of this particular agency action/finding?” • Will see varying deference re standards depending on the nature of the agency’s action (legal vs. political) and the role of the court/agency relationship.

5. Overton Park – the facts • DOT Act & Federal-Aid Highway Act give Sec’y of Trans. the power to approve release of funds for certain highway projects. • Those laws prohibited Sec’y from releasing funds for highways built through fed parks unless there was no other “feasible & prudent” alternative route. • Sec’y released funds for the Overton Park highway project. • Citizen group sued claiming that Secretary’s decision was invalid because it lacked formal findings. • District and appellate courts agreed with the Sec’y that no formal findings necessary. • SCT agreed no formal findings were necessary BUT granted certiorari anyway to determine whether the Secy’s decision was appropriate

6. Overton Park & Sec. 701 • APA '' 701, 702 & 704 are the primary statutes providing that judicial review is available to challenge agency actions. • Sections 702/704 generally provide that anyone aggrieved by agency action is entitled to judicial review. • Section 701 also provides that judicial review of agency action (see §§ 702 & 704) is available UNLESS: • Judicial review is precluded by statute (§ 701(a)(1)) • Why isn’t judicial review precluded in Overton Park? • Agency action is committed to agency discretion by law (§ 701(a)(2)) • What is SCT’s reasoning as to why the Secy’s action is not committed to agency discretion?

7. Overton Park and the feasibility of judicial review • Why should we infer from congressional silence in specific highway funds statutes that judicial review of the Secretary’s decision to release highway funds is available/appropriate? • Does this kind of action (releasing highway funds) lend itself to judicial review? • What barriers are there to judicial review? • Why might judicial review be important anyway?

8. APA standards of review – section 706 • Which standard(s) of review did SCT find appropriate in Overton Park? • APA '706 requires that “reviewing court shall. . . . (2) hold unlawful and set aside agency actions, findings, conclusions of law found to be (A) arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege or immunity’ (C) in excess of statutory jurisdiction, authority . . . ; (D) without observance of procedure required by law; (E) unsupported by substantial evidence if a case subject to §§ 556, 557 [(i.e., an on-the-record proceeding)]; (F) unwarranted by facts to the extent the facts are subject to trial de novo by reviewing court; …”

9. SCT’s remedy in Overton Park • SCT remands the case back to the district court for review. This review is to determine whether Sec’y acted w/in scope of authority and, if so, whether his decision was arbitrary and capricious. • This review must be based on the FULL contemporaneous record that was before the Secretary at the time he made his decision to release the funds. The district court cannot accept post hoc rationalizations (such as the trial affidavits prepared after the fact). • This is called the Chenery I principle • Given the informal nature of the Secy’s decision to release the funds, what might the DCT need to do to flesh out Secy’s reasoning (and what is allowed)?

10. First major area of judicial review of agency action – agency policy making • Consider what a finding of fact looks like: • “Exposure to ozone is harmful at levels greater than .oo1 ppm” • “The stairs were in disrepair, with many of the boards forming the planks having rotted.” • A finding of fact is based on scientific or other evidentiary bases. • Policy decisions, however, are generally “not susceptible to the same type of verification or refutation by reference to the record as are some factual questions.” So what is a policy decision? Common forms of policy decisions: (1) decision to adopt, not adopt or rescind an agency rule, (2) decision to adopt or rescind agency precedents in adjudications, (3) decision to enforce or change enforcement policies re agency rules

11. Standard of review for agency policy choices • Challenges to agency policy choices thus essentially claim that the agency’s decision between several possible/plausible courses of action are “arbitrary” • How are courts to review such challenges? They rely on APA § 706(2)(A). • APA § 706(2)(A) – reviewing court must set aside agency action, findings and conclusions if they are “arbitrary, capricious or an abuse of discretion or otherwise not in accordance with the law.” • We essentially saw this standard used in Overton Park, which was one of the SCT’s early cases in this area of law.

12. Evolution of “arbitrary & capricious” review of (aka “hard look” review) • Originally: Standard was probably meant to be quite deferential to agency. • As views of agency behavior changed, the standard evolved to the more rigorous “hard look” version. Examples: • Overton Park (SCT 1971) – a court will not “substitute” its judgment for the agency but the review must be “searching and careful.” Agency “must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment” • Greater Boston (DC Cir. 1970) – a court’s function “is to assure that the agency has given reasoned consideration to all the material facts and issues. This calls for insistence that agency articulate with reasonable clarity its reasons for the decision, and identify the significance of the crucial facts . . .” • What are courts trying to achieve with this form of review? • Reasoned decision-making by the agency/increased accountability • Avoidance of agency capture/implementation of public interest