VOLUME XVI SYMPOSIUM 1985 NUMBER 1
by Joe A. Tucker
*
I.
INTRODUCTION
The Fifth Circuit considered more than one hundred administrative law cases during the current survey period. Most merely reaffirmed established precedent. Noteworthy cases, however, were decided in the areas of deregulation, rulemaking, scope of judicial review, and the appealability of "final" agency orders. These cases reveal the circuit's response to recent challenges to deregulatory programs and reflect its current thinking about more traditional administrative law concerns. This article contrasts these decisions to precedent, within and without the Fifth Circuit, to impart an understanding of the circuit's contribution to the development of this area of the law.
II.
DEREGULATION, RULEMAKING, AND SCOPE OF
JUDICIAL REVIEW
A. Transportation Deregulation
The Motor Carrier Act of 1980 (MCA)l represented a major shift of direction in transportation policy by authorizing the Interstate
Commerce Commission (ICC) to institute a broad deregulation of the trucking industry. Congress found that the original Motor Carrier
Act of 1935 2 was in need of substantial modification since it was based
*
Assistant Professor of Law, Texas Tech University School of Law. B.A., University of Houston, 1977; J.D., University of Texas, 1981.
I. The Motor Carrier Act of 1980, Pub. L. No. 96-296, 94 Stat. 793 (1980) (codified as amended in scattered sections of 49 U.S.c.).
2. The Motor Carrier Act of 1935, Pub. L. No. 74-255, 49 Stat. 543 (1935) (codified as amended in scattered sections of 49 U.S.c.). One major purpose of the 1935 Act was to protect the economically weak trucking industry by eliminating excessive competition through the
1
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2 TEXAS TECH LAW REVIEW [Vol. 16:1 on "outmoded and archaic regulatory mechanisms" which had ceased to serve the public interest.
3 Congress concluded that the motor carrier industry was extremely healthy, generating $108 billion in annual revenues, and no longer in need of unnecessary federal regulations to provide protection against competition.
4 A primary purpose of the
Act was to alleviate the regulatory difficulties experienced by new carriers seeking entry to the trucking transportation business.
5 The MCA of 1980 also attempted to provide trucking concerns "greater freedom to set rates in response to market demands."6 This increased latitude in rate setting was in response to Congress' perception that trucking rates were inflated in price and would properly be decreased by market competition.
7 Reduction of inflationary rate setting, increased market competition, and avoidance of unnecessary red tape were the foremost congressional deregulatory goals. Congress also intended to preserve existing safety regulations for motor carriers, encourage energy efficiency measures, and improve transportation services for small communities.
s
Deregulation, therefore, was not unqualified but intended to eliminate the deficiencies of the antiquated Act, while retaining the provisions of the prior law that were still of utility under changed market conditions. Congress purported to provide the ICC with "explicit direction" in maintaining a balance between perceived beneficial deregulation and retention of necessary regulation and noted that "the Commission is admonished to stay within the powers specifically vested in it by the revised law."9
Like most statutory directives, however "explicit," the 1980
MCA did not anticipate all possible questions, and left a considerable number of interstitial gaps to be "filled in" by the discretionary judgment of the ICC. The ICC was well disposed to the 1980 deregulation medium of limiting entry into the carrier field. See United States v. Drum, 368 U.S. 370, 373-
74 (1962); Note, Teamsters, Truckers, and the ICC: A Political and Economic Analysis of Motor
Carrier Deregulation, 17 HARv. J. ON LEGIS. 123,128-31 (1980) (noting that profits of trucking concerns are now high due to the Motor Carrier Act regulation and therefore the act has served its purpose and deregulation should follow).
3. H.R. REP. No. 1069, 96th Cong., 2d Sess. 2, reprinted in 1980 U.S. CODE CONGo &
AD. NEWS 2283, 2284 [hereinafter cited as HOUSE REPORT]'
4. HOUSE REPORT, supra, at 2-3.
S. Id. at 3.
6. Id. at 4.
7. Id. at 6-7.
8. Id. at 9-10.
9. Id. at 10-11. Congress also provided for the appointmerit of congressional committees
"to hold periodic oversight hearings to assure that the Act is being implemented according to congressional intent and purpose." Id. at II.
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1985] ADMINISTRATIVE LAW
because the measure largely comported with the current views of the agency. Even before the adoption of the MCA of 1980, the ICC had moved in the direction of implementing a liberalization of entry and trucking route policies.
lo
The MCA amendments provided the ICC with the statutory authority to effectuate its preexisting incentive to accelerate trucking deregulation.
II
1. The Repeal of the Special Circumstances Doctrine
On October 9, 1981, the ICC issued notice of a proposed policy statement that invited public comments concerning whether the "special circumstances" doctrine l2 should be repealed in light of the Stag-
10. See, e.g., Note, supra note 2, at 145-47 (observing that the ICC's pre-1980 MCA
"pro-competitive policies. . . generated numerous court challenges"). The legislative history indicates that Congress was aware of the ICC's ongoing deregulatory activities and, although generally approving of the Commission's new policy, determined that congressional guidance was necessary:
The Committee believes that it is incumbent on the Congress to provide the Commission with guidance regarding motor carrier entry policy. A liberalized entry policy will have a significant impact on the motor carrier industry. For example, relaxed entry standards and increased competition for traffic will have a direct effect on employment in the industry and on the industry itself. Broad policy decisions of this type should be made by the Congress and should not be left to the discretion of the
Commission.
HOUSE REPORT, supra note 3, at 13.
II. In response to broad deregulation at the federal level, there are indications that motor carriers have now directed their efforts towards acquiring regulatory protection at the state level. Beilock & Freeman, Motor Carrier Perceptions of Intrastate Motor Carrier Regulations and Regulators, 51 I.C.C. PRAC. J. 275 (1984).
12. In Kansas City Southern Transport Co., Common Carrier Application, 10 M.C.C.
221 (1938), the ICC held that it would not grant licenses to railroads to engage in carrier transportation unless this transportation was directly related or supplemental to railroad business. The Commission's primary motivation for adopting the "auxiliary-to-rail" restriction was the perceived competitive advantage that the then economically powerful railroad would possess in comparison to the weaker independent trucking companies. Id. at 237.
The United States Supreme Court on two occasions upheld the Commission's authority to restrict the railroads to railroad-related trucker carrier activities. United States v. Rock Island
Co., 340 U.S. 419 (1950); ICC v. Parker, 326 U.S. 60 (1945). The special circumstances rule represented an ICC created exception to the auxiliary-to-rail restriction rule:
The doctrine allowed issuance of unrestricted authority where the rail-affiliated applicant could show a "compelling need" for its service by demonstrating (1) that a grant of unrestricted authority would not result in undue restraint of competition, and (2) that the public interest requires the proposed operation which was not being furnished by independent motor carriers.
Applications for Motor Carrier Operating Authority by Railroads and Rail Affiliates, 132
M.C.C. 978, 981 (1982). The United States Supreme Court upheld the validity of the special circumstances rule in American Trucking Ass'ns v. United States, 355 U.S. 141, 151-52 (1957)
(stating that although the ICC must recognize and apply the Act as a whole, "we do not believe that the Commission acts beyond its statutory authority when in the public interest it
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4 TEXAS TECH LAW REVIEW [Vol. 16:1 gers Rail Act of 1980 13 and the MCA of 1980. After analyzing the comments received,14 the ICC decided to abandon the doctrine finding that it was unnecessary and inconsistent with the intent of the newly enacted legislation.
IS
The Fifth Circuit had previously considered the authority of the ICC to dismantle certain other regulatory programs under the new statutory provisions and had cautiously permitted the reforms subject to the caveat that the deregulation was shown to be within the bounds of congressional intent. 16
The Fifth Circuit followed its cautious but approving approach to ICC deregulation in American Trucking Associations v. ICC.
17 Pacific Motor Trucking Company (PMT), a subsidiary of a railroad company, applied for an ICC certificate to transport general commodities without demonstrating special circumstances to justify an exempoccasionally departs from the auxiliary and supplementary provisions"). In American Trucking Ass'ns v. United States, 364 U.S. I, 6 (1960), however, the Court overturned an ICC decision that granted an unrestricted carrier license to a railroad without a finding of "special circumstances ...
13. The Staggers Rail Act of 1980, Pub. L. No. 96-448, 94 Stat. 1897 (codified at 49
U.s.c. § JOlOla (1982». In relevant part, the Act provides that:
In regulating the railroad industry, it is the policy of the United States Government--(I) to allow, to the maximum extent possible, competition and the demand for services to establish reasonable rates for transportation by rail; (2) to minimize the need for Federal regulatory control over the rail transportation system and to require fair and expeditious regulatory decisions when regulation is required; . . . (4) to ensure the development and continuation of a sound rail transportation system with effective competition among rail carriers and with other modes, to meet the needs of the public and the national defense; . . . (5) to foster sound economic conditions in transportation and to ensure effective competition and coordination between rail carriers and other modes.
[d.
14. 132 M.C.C. at 978, 978-79. Comments were received from numerous concerned parties. In summary, the United States Department of Transportation, railroads, and rail-affiliated carriers asserted that the special circumstance doctrine should be repealed in light of the enactment of the deregulation statutes and the "comparable economic positions of today's rail and truck industries." [d. at 979. Independent motor carriers, freight forwarders, and shippers contended that the doctrine should be retained. [d.
IS. [d. at 979.
16. The Fifth Circuit's recent consideration of the ICC's motor carrier restriction removal rules presents an example of the circuit's general approach to the agency's deregulation program.
17. 722 F.2d 1243 (5th Cir. Jan. 1984), petition for cerr. filed, 53 U.S.L.W. 3001 (U.S.
June 22, 1984) (No. 83-2117). The case was previously presented to a panel of the Fifth Circuit in 1982. American Trucking Ass'ns v. ICC, 682 F.2d 487 (5th Cir. 1982). The court, however, invoked the doctrine of primary jurisdiction and declined to hear the case at that time, preferring to allow the ICC to complete ongoing administrative proceedings and develop a final policy with respect to the final circumstances doctrine. [d. at 492.
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1985] ADMINISTRATIVE LAW
IS
18. 722 F.2d at 1244.
19. Id.
20. The petitioners relied on several statutory arguments to support their position. They pointed out that Congress had retained statutory provisions that indicated that the national transportation policy would be served by the maintenance of the different intermodal forms of transportation. Id. at 1251. See also 49 U.S.C. § 10101(a)(1)(A) (1982) (consistent with the transportation needs of the country "to recognize and preserve the inherent advantage of each mode of transportation"). In addition, 49 U.S.C. § I 1344(c) (1982), purports to regulate consolidations, mergers, and acquisitions of control among two or more carriers.
The petitioners contended that the two statutory provisions "buttressed" each other and indicated that "Congress intended to retain the old anti-railroad bias in licensing proceedings."
722 F.2d at 1251. The Fifth Circuit disagreed, noting that the "broad 'inherent advantages' language could be argued to support a pro-railroad position as well as an anti-railroad position." Id. The court found this interpretation supported by Congress' recognition that the relative economic positions of the trucking and rail companies had been reversed because the
"earnings by the railroad industry are the lowest of any transportation mode and are insufficient to generate funds for necessary capital improvements." Id. As a result, the court found that it was reasonable to believe that the "abolition of the special circumstances doctrine in licensing proceedings might strengthen the trucking industry by improving its competitive environment as well as strengthen the railroads financially-thus preserving 'the inherent advantages of each mode.' " Id. Moreover, the court noted the persuasiveness of the ICC's argument that the special circumstances doctrine had a "chilling effect" on intermodal transportation because it deterred companies from instituting rail-motor activities because of the time consuming process of demonstrating the existence of special circumstances. Id.
The court also rejected petitioners § l1344(c) argument, finding that even "if § 11344(c) still demands proof of special circumstances in acquisitions proceedings, we are persuaded that under the revised I.C.A. the acquisitions and licensing sections are not required to be interpreted in tandem." Id. (footnote omitted). The court left open the question whether the special circumstances doctrine is still applicable when carrier companies seek ICC approval for consolidation or acquisition. But cf. supra note 10. In addition, the court was careful to point out that the ICC "has not proposed to exempt rail-affiliated trucking companies from the requirement of participating in individual licensing proceedings," but only from the requirement of demonstrating special circumstances. 722 F.2d at 1251. See also id. at 1249-52 (discussion of the court's rejection of petitioners' related statutory arguments).
21. 5 U.S.c. § 706(2)(A) (1982).
22. Ch. 324, §§ 1-12,60 Stat. 237 (1946) (codified as amended in scattered sections of 5
U.S.c.). This article will cite to the current codified version of TitIe 5 of the U.S.C. in reference to any AP A sections discussed.
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6 TEXAS TECH LAW REVIEW [Vol. 16:1
'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.' "23 After determining the proper scope of judicial review to be applied, the court rejected the petitioners' argument that the ICC's repeal of the special circumstances doctrine was improper because it constituted a statutory "repeal by implication."24 Instead of requiring the ICC to satisfy the difficult burden of demonstrating a disfavored statutory repeal by implication, the court found that the agency need only proffer a reasonable justification for its change of a longstanding administrative interpretation or policy.25
The court found that the 1980 MCA's "radically different, deregulatory approach" provided reasonable justification for the ICC's new interpretive posture with respect to rail carrier licensure restrictions. 26 Abandonment of the special circumstances requirement was, in the court's opinion, consistent with congressional recognition of the
"change in the relative economic positions of the rail and trucking industries.'>27 Although the court was careful to note that it was not interpreting the MCA to require that the ICC place rail-affiliated applicants "on the same footing as other applicants," it did hold that the
ICC's decision to overrule the special circumstances doctrine was
"permissible as measured by our standard of review."28
American Trucking is significant as it represents the first circuit court opinion to expressly approve the ICC's repeal of the special circumstances doctrine. The court's well-reasoned decision has already been followed by the Eighth Circuit,29 and is likely to be found per-
23. 722 F.2d at 1247-48.
24. Id. at 1248. The petitioners argued that the United States Supreme Court decision in
American Trucking Ass'ns v. United States (ATA II), 364 U.S. I (1960), holding that the ICC had improperly granted a carrier license to a railroad-owned subsidiary without a consideration of special circumstances, mandated the application of the doctrine. Because the MCA of
1980 had not amended the applicable statutory language of the preexisting law, the petitioners asserted that the ICC was required to make the difficult showing that the statute had been repealed by "implication" before abolishing the special circumstances doctrine. 722 F.2d at
1248. The court disagreed with petitioners' reading of ATA II, finding that the Supreme Court had only approved the ICC's interpretation of the statute, rather than having independently construed the prior law to require the application of the special circumstances doctrine without exception. In the court's view, ATA II had only prohibited the ICC from failing to apply the doctrine in an individual adjudication, but did not prevent the ICC from overruling the doctrine entirely upon a finding of changed general circumstances. Id. at 1248-49.
25. 722 F.2d at 1249.
26. Id.
27. Id. at 1251.
28. Id. at 1248.
29. Tri-State Motor Transit Co. v. ICC, 739 F.2d 1373 (8th Cir. 1984).
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1985] ADMINISTRATIVE LAW suasive by other courts who may consider this issue in the future.
2. The ICC's Abortive Attempt to Extend Restriction Removal
Rules to Freight Forwarders
The Fifth Circuit also demonstrated a willingness to prohibit
ICC deregulatory efforts which exceeded the court's view of the agency's delegated statutory authority or resulted in a perceived noncompliance with the rulemaking provisions of the AP A. A major
fated deregulatory undertaking of the ICC was the Commission's attempt to apply its "restriction removal rules"30 to freight forwarders.
Section 6 of the Motor Carrier Act of 1980 mandated that the
ICC expeditiously remove unnecessary restrictions on existing motor carrier certificates to provide for more efficient carrier service. 3
J
In publishing a notice of proposed rulemaking in 1982, the Commission stated its position that although the statutory provision was "not detailed," it "clearly gave the Commission a significant amount of discretion in the procedures to be established and the substantive decisions to be made under them."32 The ICC initiated the rulemaking proceeding to extend existing restriction removal rules33 to freight forwarders only after an abortive 1981 attempt to apply those provisions to freight forwarders was rejected by the ICC Commissioners.34
The Commissioners, concerned about the lack of public notice, disallowed the 1981 extension since the express language of the prior rules failed to mention freight carriers. 35 The agency's 1982 notice of proposed rulemaking was intended to cure the deficiencies of the unsuccessful 1981 extension.
Even though section 6 of the MCA of 1982, like the ICC's 1980 motor carrier restriction removal rules, failed to expressly mention freight forwarders, referring instead only to motor carriers, the agency was not deterred from concluding that the provision could be applied to freight forwarders. The ICC found that "there is no indication in the Act or its legislative history that Congress intended to preclude the Commission from allowing forwarders to use procedures to
30. See 49 U.S.c. § \0922(i)(I) (1982).
31. See HOUSE REPORT, supra note 3, at 17-18.
32. ICC Notice of Proposed Rulemaking, Freight Forwarder Restrictions, 47 Fed. Reg.
8801 (1982) (proposed March 2, 1982) [hereinafter cited as Proposed Rules of 1982].
33. First enacted at 45 Fed. Reg. 86,747 (1980) (codified at 49 C.F.R. § 1165).
34. Proposed Rules of 1982, supra note 32, at 8801.
35. [d. at 8801-02.
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8 TEXAS TECH LAW REVIEW [Vol. 16:1 broaden their authorities."36 That the statute's language made specific reference only to motor carriers was not interpreted by the agency to be exclusive in nature, but only indicative of the fact that "Congress simply addressed the primary area where reform seemed most needed."37 The ICC applied a functional approach and determined that because of the "close operational relationship" between freight forwarders and motor carriers, the extension of the motor carrier restriction rules to freight forwarders would promote the deregulatory goals Congress sought to achieve by adoption of the MCA of 1980.
38
Moreover, the ICC found that the National Transportation Policy
39 supported its interpretation because the agency reasoned that permitting freight forwarders to broaden their certificates would "preserve the inherent advantages of each mode of transportation." Simply put, the agency applied the maxim "what's good for the goose is good for the gander." The Commission was unpersuaded by negative comments received during the notice and comment rulemaking period and adopted the proposed rule in Freight Forwarder Restrictions.
4D
The Fifth Circuit disproved the maxim "what's good for the goose is good for the gander" in Global Van Lines, Inc. v. ICC.
41
The court reversed Freight Forwarder Restrictions; and held that on the basis of the statutory provisions asserted by the ICC, the agency lacked the authority to apply its restriction removal rules to broaden the carrier certificates of freight forwarders.
42
The court relied on prior Fifth Circuit precedent developed in
Central Forwarding, Inc. v. ICC
43 as support for the principle that the general rulemaking authority of the ICC is limited to the "specific
36. ld. at 8802.
37. ld.
38. Jd.
39. 49 U.S.C. § 10101 (1982).
40. 132 M.C.C. 832 (1982). The amended rule was codified at 49 C.F.R. § 1165 (1983).
41. 714 F.2d 1290 (5th Cir. Sept. 1983).
42. ld. at 1293-94. In addition to the MCA and the National Transportation Policy, the
ICC also cited to general rulemaking powers under 49 U.S.C. § 10321(a) (1982) and its authority to condition the licenses of freight forwarders pursuant to 49 U.S.C. § 10923(d)(I)
(1982) to support its position. ld. at 1293. After a thorough examination of the applicable legislative history, the court found that the MCA and National Transportation Policy permitted the ICC to apply the restriction removal rules "only to motor carriers, not freight forwarders." ld. at 1293-94. The court also refused to consider the ICC's claims relating to 49 U.S.c.
§ I 0923( d)(l).
43. 698 F.2d 1266 (5th Cir. 1983).
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1985] ADMINISTRATIVE LAW 9 substantive mandates enacted by Congress."44 Although recognizing that the United States Supreme Court's decision in Mourning v. Family Publications Service, Inc. ,45 had apparently approved the "modern view" of statutory delegations of rulemaking power to agencies,46 the court held that this legal doctrine did not provide support for the
Commission's position. The court indicated its agreement with the
Seventh Circuit's opinion that the modern view doctrine "is still subject to the well-recognized rule that an administrative agency cannot exceed the specific statutory authority granted it by Congress."47
Since the court "[had] no trouble in concluding" that the statutory provisions relied on by the ICC applied "only to motor carriers, [and] not freight forwarders,"48 it found that the ICC extension was invalid.
The ICC also asserted that the rule was within its power to adopt by reason of its statutory authority49 to prescribe the conditions under which a permit may be granted to a freight forwarder. 50 The court, however, refused to consider the merits of the agency's "conditioning power" argument. The court noted that the ICC had undertaken informal rulemaking proceedings under section 553 of the APA. APA section 553(b)(2) requires that an agency providing notice of proposed rulemaking include a "reference to the legal authority under which the rule is proposed."51 The ICC, however, had not mentioned its statutory conditioning power in its proposed rulemaking notice, cited
44. 714 F.2d at 1295 (quoting Central Forwarding, Inc. v. ICC, 698 F.2d 1266, 1278 (5th
Cir. 1983».
45. 411 V.S. 356 (1973).
46. In Mourning, the Supreme Court held when a statute empowers an agency to "make
. such rules and regulations as may be necessary to carry out the provisions of this Act," then regulations adopted thereunder are valid if they are "reasonably related to the purposes of the enabling legislation." Id. at 369 (footnote omitted) (quoting Thorpe v. Housing Authority,
393 V.S. 268, 280-81 (1969».
47. 714 F.2d at 1296 (citing Atchison, T. & S.F. Ry. v. ICC, 607 F.2d 1199, 1203 (7th
Cir. 1979».
48. 714 F.2d at 1293-94.
49. See 49 V.S.C. § 10923(d)(I) (1982) which sets forth the ICC's authority to condition the permits of freight forwarders:
The Commission may prescribe necessary conditions under which a contract carrier or freight forwarder provides transportation or service, except that in the case of a motor contract carrier of property, the Commission may not require such carrier to limit its operations to carriage for a particular industry or within a particular geographic area. The Commission may prescribe the conditions when the permit is issued and at any time thereafter.
Id.
50. 714 F.2d at 1299.
51. 5 V.S.c. § 553(b)(2) (1982).
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10 TEXAS TECH LAW REVIEW [Vol. 16:1 the authority in its final decision, or offered any other opportunity for interested parties to comment on the issue. 52 Under these circumstances, the court found that the agency had failed to provide either notice or a "concise general statement of the of [the rule's] basis and purpose."53 In the court's view, to permit the agency to rely on a newly cited statutory provision after the notice and comment period had expired would violate the intent of the AP A and "encourage inadequate substantive and procedural consideration of significant issues at the agency level. "54 The court left open the question of whether the ICC could effectuate the rule under its permit-conditioning authority and expressly declined to indicate how it would rule on this issue in the future. 55
The likely result of Global Van Lines is to ensure that, at least until after an additional notice and comment rulemaking proceeding is concluded, freight forwarders must petition under a new licensing proceeding to obtain the removal of restrictions from their existing certificates. The case should properly be understood to relate to two issues: the proper observance of the informal rulemaking procedural requirements of the AP A; and the authority of a court to refuse to defer to agency discretion concerning a matter of statutory in terpretation.
The proper resolution of the first issue is clear--courts should justifiably require agencies to strictly adhere to the AP A's informal notice and comment procedural requirements. The right of interested parties to effectively comment on the legal basis of a rule would be circumvented if agencies could rely on after-the-fact rationalizations not raised during the notice and comment period. In a 1947 contemporaneous construction of section 553(b)(2) of the APA, commenting on the statute's requirement that an agency must provide a "reference to the [legal] authority under which the rule is proposed," the Department of Justice stated that the "reference must be sufficiently precise to apprise interested persons of the agency's legal authority to issue
52. 714 F.2d at 1297·98.
53. Id. at 1298 (the court also noted that the omission was more than "merely technical"). Furthermore, the court was careful to point out the fact that petitioners were provided an opportunity to discuss the ICC's conditioning power claim in a reply brief, and during oral argument, was insufficient to cure the defective notice.
54. Id. at 1299.
55. Id. at 1297.
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1985] ADMINISTRATIVE LAW 11 the proposed rule."56 When citation to the particular statutory authority relied upon is entirely omitted, parties are insufficiently informed of the proposed rule's legal basis and are prevented from meaningful participation. Courts have tended to apply a strict standard of judicial review to mandate that agency rulemaking decisions comport with the procedural requirements of the APA. 57
Global Van Lines joins this trend of cases, and utilizes the AP A procedural requirements to assure that agencies engage in fair and reasoned decision-making. Since in Vermont Yankee Nuclear Power
Corp. v. Natural Resources Defense Council, Inc. ,58 the Supreme
56. U.s. DEP'T OF JUSTICE, ATTORNEY GENERAL'S MANUAL ON THE ADMINISTRA-
TIVE PROCEDURE ACT 29 (1947) [hereinafter cited as ATT'Y GEN. MANUAL OF 1947].
57. See, e.g., Comment, The Need for an Additional Notice and Comment Period when
Final Rules Differ Substantially From Interim Rules, 1981 DUKE L.J. 377 (1981).
58. 435 U.S. 519 (1978). The Court stated that:
Agencies are free to grant additional procedural rights in the exercise of their discretion, but reviewing courts are generally not free to impose them if the agencies have not chosen to grant them. This is not to say necessarily that there are no circumstances which would ever justify a court in overturning agency action because of a failure to employ procedures beyond those required by the statute. But such circumstances, if they exist, are extremely rare.
Id. at 524.
The proper construction of Vermont Yankee is highly controversial and has invoked a prodigious amount of scholarly attention and debate. See, e.g., DAVIS, ADMINISTRATIVE LAW
TREATISE, § 6:37-3 (Supp. 1982) (contending that Vermont Yankee misconstrued the intent of the APA drafters and neglected the importance of the recognized formulation of "administrative common law" by the courts and further suggesting that the courts regularly violate the broad Vermont Yankee dicta); Scalia, Vermont Yankee: The APA, the D.C. Circuit, and the
Supreme Court, 1978 SUP. CT. REV. 345, 375-88 (asserting that the Vermont Yankee decision improperly limited judicial review of administrative rulemaking to the out-moded statutory framework of the 1946 AP A without any clear indication that this result was mandated by congressional intent); Stewart, Vermont Yankee and the Evolution of Administrative Procedure,
91 HARV. L. REV. 1805, 1814 (1981) (Supreme Court erred in Vermont Yankee by holding that judicial innovation is prohibited "in matters of administrative law governed by the AP A."
The Court's position is "contradicted by administrative law decisions in which the Court has boldly altered the established law regarding standing, ripeness, and judicial review of informal administrative action, notwithstanding the fact that these matters are regulated by the AP A. ").
But see Breyer, Vermont Yankee and the Courts' Role in the Nuclear Energy Controversy, 91
HARV. L. REV. 1833 (1981) (asserting the correctness of the Vermont Yankee decision); Byse,
Vermont Yankee and the Evolution of Administrative Procedure: A Somewhat Different View,
91 HARV. L. REV. 1823 (1981) (Vermont Yankee welcomed "as a needed corrective to an unwholesome trend in the lower federal courts" proposing that the imposition of additional procedures should derive from the agencies rather than the courts); Howarth, Informal Agency
Rulemaking and the Courts: A Theory for Procedural Review, 61 WASH. U.L.Q. 891, 913-26
( 1984).
The reaction of the courts to Vermont Yankee has been no more harmonious than that of the scholars. For a survey of court cases construing Vermont Yankee, see id. at 926-42 (observing that "few, if any, courts have adhered strictly to the letter of Vermont Yankee's admoni-
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12 TEXAS TECH LAW REVIEW [Vol. 16:1
Court forbade the application of additional judicially created procedural requirements for agency informal rulemaking, the strict observance of the AP A's minimum requirements is both necessary and appropriate.
59
The current trend among administrative agencies is to move away from ad hoc adjudication as a means of fulfilling their tion. and flatly refused even to entertain requests for rulemaking procedures which go beyond those specifically outlined in the APA·'). Irrespective of the debate concerning Vermont Yan-
kee, there is no doubt that the decision "has slowed, if not stopped, the development of judgemade 'common law' of rulemaking procedure." ADMINISTRATIVE CONFERENCE OF THE
UNITED STATES, A GUIDE To FEDERAL AGENCY RULEMAKING, 4 (1983). There is evidence, however, that the Supreme Court has begun to devote greater attention to the informal rulemaking requirements of the APA. See Motor Vehicles Mfrs. Ass'n. v. State Farm Mut.
Auto. Ins. Co., 103 S. Ct. 2856 (1983) (overruling and remanding a decision of the Nation
Highway Safety Administration to rescind rules mandating that passive restraint systems or air bags be installed in automobiles, finding that the rescission was made without a reasoned analysis and therefore "arbitrary and capricious"). Several recent lower court decisions have also vacated agency rule rescissions. See, e.g., International Ladies' Garment Workers' Union v. Donovan, 722 F.2d 795 (D.C. Cir. 1983); Action on Smoking and Health v. CAB, 699 F.2d
1209 (D.C. Cir. 1983); Center for Science in the Pub. Interest v. Department of the Treasury,
573 F. Supp. 1168 (D.D.C. 1983).
A federal circuit court judge has recently written that "State Farm may signal a renewed endorsement of Overton Park's probing review, and a rejection of the expansive reading of
Vermont Yankee's bar to judicially imposed procedural requirements." Edwards, Judicial Re-
view of Deregulation, II N. Ky. L. REV. 229, 254 (1984). Judge Edwards, however, recognizes that State Farm "is certain to create some confusion over judicial review of deregulation." Id. at 241. A major open question perceived by the judge is whether courts should apply different standards of review when determining the legitimacy of an agency's modification of existing rules as opposed to the administrative rescission of rules. Id. at 249 (Posing the question: does an agency have more discretion to change a rule within the existing regulatory framework than to rescind one altogether?).
A comparison of American Trucking and Global Van Lines points out the relevance of
Judge Edwards' inquiry. The former case involved the complete rescission of an agency rule, while the latter related to the extension of a pre-existing agency rule. An additional factor, separate and distinct from the question of scope of judicial review, however, was present in these cases. The ICC's special circumstances rule had been adopted in an adjudication, while the agency's restriction removal rules had been promulgated under the rulemaking procedures of the APA. Irrespective of the substantive merits of the ICC's decision, if the extension of the restriction removal rules constituted a substantive amendment to those rules within the mean· ing of the APA, then the agency had the additional burden of satisfying the requirements of
APA § 553(b)(2).
59. A more critical concern is that even when the APA's informal rulemaking requirements are strictly observed, these procedures are largely inadequate to address the complex needs of the modern day regulatory system. See, Howarth supra note 58, at 978. See also,
ADMINISTRATIVE LAW CONFERENCE OF THE UNITED STATES, A GUIDE TO FEDERAL
AGENCY RULEMAKING 5 (1983). During the past eight years numerous congressional attempts to amend the APA have been initiated, but have been unsuccessful. Howarth, supra note 58, at 917. In the 94th Congress, for example, a total of fourteen attempts were made to amend the APA. See Comment, The Need for an Additional Notice and Comment Period
When Final Rules Differ Substantially From Interim Rules, 1981 DUKE L.J. 377, 392 n.9S.
The only successful statutory improvements to rulemaking that Congress has been able to
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1985] ADMINISTRATIVE LAW 13 statutory responsibilities in favor of a heavier reliance on informal rulemaking.
60 Courts have accordingly paid greater attention to the informal rulemaking procedural mandates of the APA.
6
1
In its euphoric zeal to deregulate, the ICC failed to observe these procedural niceties. Global Van Lines is also significant because it properly interprets a provision of the AP A that has rarely received judicial attention.
62
Whether the court should have deferred to the ICC's interpretation of its enabling act, as opposed to engaging in an independent review of the statute's meaning, is a more difficult question to resolve.
Section 706 of the AP A states that "[ t]o the extent necessary to decision and when presented, the reviewing court shall decide all relevant enact. have been in the form of amendments to various individual enabling acts. See, e.g., id. at 386.
In Howarth's view, "[g]iven the current scope of regulatory authority and the national significance of the social and economic problems to be resolved by agencies, literal compliance with the notice and comment procedures of the APA no longer provides a politically acceptable method for the development of regulatory policy." Howarth, supra note 58, at 894. Howarth suggests that the recent congressional deregulation programs represent another legislative response to the problem. Id. If Howarth's suggested rationale is accurate, deregulation would appear to be an extremely harsh method to control agency rulemaking-in effect throwing the baby out with the bath water.
347.
60. Note, Judicial Review of Informal Administrative Rulemaking, 1984 DUKE L.J. 347,
61. Id. at 347-48.
62. The scarce judicial attention directed to § 553(b)(2) has been questionable in some instances. For example, compare Trans-Pacific Freight Conference of Japan/Korea v. Federal
Maritime Comm'n, 650 F.2d 1235 (D.C. Cir. 1980), cerr. denied, 451 U.S. 984 (1981). The
Federal Maritime Commission had failed to include a reference to the legal authority upon which the rule was based in issuing a notice of proposed rulemaking. The Commission, however, did state the statutory basis for the rule when it published the final rule after the notice and comment period had terminated. Id. at 1259. Although the court found that the agency was "technically . . . not in compliance" with APA § 553(b)(2), it held that the "defect in the notice of proposed rulemaking was not fatal." Id. Apparently the court found that the petitioners had been provided sufficient notice to comment on the substance of the rule and "[were not] prejudiced by the Commissions' failure to include specific reference to the enforcement sections of the Act until the actual promulgation." Id.
The Fifth Circuit's decision in Global Van Lines appears to be more consistent with the congressional intent in enacting § 553(b)(2). The relevant legislative history provides that:
Notice must fairly apprise interested persons of the issues involved, so that they may present relevant data or argument. The required specification of legal authority must
be done with particularity. Statements of issues in the general statutory language of legislative delegations of authority to the agency would not be a compliance with the section (emphasis added).
H.R. REP. No. 1980, 79th Congo 2d Sess., 24 (1946), reprinted in LEGISLATIVE HISTORY OF
THE ADMINISTRATIVE PROCEDURE ACT, S. Doc. No. 248, 79th Cong., 2d Sess. 258 (1946)
[hereinafter cited as APA LEG. HIST.].
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14 TEXAS TECH LAW REVIEW [Vol. 16:1 questions of law . . . and determine the meaning or applicability of the terms of an agency action."63 Despite this provision, the "custom has been to give deference or great weight to the agency's view" of statutory questions.
64 The cases, unfortunately, provide little guidance as to when a court will substitute its view of the interpretation of statutory provisions or defer to an agency construction. The judicial literature is not particularly illuminative, and the issue has been aptly described as "one of great uncertainty in which equally impressive cases may be found to cite in favor of deferring to the determination of the administrator or giving it no weight whatever."65
What is reasonably certain, however, is that different types of administrative action should not be subject to the same scope of judicial review. The nature of the agency activity reviewed is an essential factor in determining the proper degree of judicial deference to be accorded. 66 When highly technical issues are involved that require the application of sophisticated scientific expertise, courts have generally chosen to defer to the agency's presumptively greater specialized knowledge. 67 When resolution of the statutory question primarily necessitates the ascertainment of congressional intent, through an examination of legislative history or other traditional legal sources, the courts have generally substituted their judgment for that of the agency.68 Moreover, the judicial tendency to refuse deference is even greater when the court is called upon to determine whether the agency has remained within its delegated statutory authority. Section
706 of the APA clearly permits courts to exercise independent judg-
63. 5 U.S.c. § 706 (1982).
64. DA VIS, supra note 58, § 29.006, at 558.
65. Coffman, Judicial Review of Administrative Interpretations of Statutes, 6 W. NEW
ENG. L. REV. I (1983).
66. See W. GELLHORN, C. BYSE & P. STRAUSS, ADMINISTRATIVE LAW: CASES AND
COMMENTS 249-51 (7th ed. 1979).
67. See, e.g., E.I. DuPont de Nemours & Co. v. Train, 430 U.S. 112, 135 n.25 (1977)
(affording deference to the EPA because of the agency's "unique experience and expertise" and
"the complexity and technical nature of the statutes and subjects they regulate"). But cf Stever, Deference to Administrative Agencies in Federal Environmental, Health and Safety litiga-
tion-Thoughts on Varying Judicial Application of the Rule, 6 W. NEW ENG. L. REV. 35, 51-
59 (1983) (discussing the current scholarly and judicial debate concerning the application of a
"hard look" approach to closely scrutinize agency decision-making).
68. See, e.g., Red Ball Motor Freight, Inc. v. Shannon, 377 U.S. 311 (1964) (Supreme
Court substituted its judgment for that of the ICC in determining that a statute did not provide the agency with jurisdiction to regulate livestock and commodities dealers transporting sugar);
see, Edwards, supra note 58, at 256 (noting that judicial review of deregulation may also be subject to independent statutory construction).
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1985] ADMINISTRATIVE LAW 15 ment in the latter instance, since deciding issues of this nature represent the quintessential function of the judiciary.69
Considered within the above analytical framework, the legal character of the agency determination in Global Van Lines strongly suggests that the decision was properly decided. The court was required to determine whether the ICC's attempt to apply the restriction removal rules to freight forwarders was within the agency's statutorily delegated authority. The resolution of this issue did not require the application of any particular technical expertise of the agency, but instead demanded the ascertainment of legislative intent-a determination within the competence of the jUdiciary.7o
3. Perspective
A cursory review of the Fifth Circuit's docket over the past two years reveals the tremendous volume of transportation deregulation litigation brought before the court. 71 The trucking industry has demonstrated its resolve to challenge the breadth of the 1980 MCA's deregulatory scope. Judge Brown, speaking in Steere Tank Lines, Inc. v. ICC,72 one of a long line of trucking deregulations cases heard by the court during the current survey period, eloquently described the above circumstance:
With hope, this case will signal the demise of a virulent strain of
ICC cases which has recently plagued the motor carrier industry.
Frequent outbreaks have occurred over the last two years leaving
69. See, e.g., Coffman, supra note 65, at 8-10.
70. Even though the court found it important that section 6 of the MCA did not explicitly refer to freight forwarders, it is important to note that the court did not consider this circumstance as per se determinative of the case. Such a literalistic approach is foreclosed by the Supreme Court's decision in American Trucking Ass'ns v. United States, 344 U.S. 298, 312
(1953) (holding that the ICC's "promulgation of . . . rules for authorized carriers falls within the Commission's power, despite the absence of specific reference to leasing practices in the
Act"). The significant factor was the court's finding that the statutory framework of the MCA clearly provided for different treatment of motor carriers and freight forwarders. See 714 F.2d at 1290. Moreover, the legislative history failed to indicate that Congress had intended to change the historical practice of distinguishing between the two types of carriers. Id. at 1294 n.4. This combination of factors, added to the lack of explicit expression of a legislative intent to alter prior practice in this respect, influenced the court to find that the statutory provisions cited by the agency did not authorize its actions.
71. See Steere Tank Lines, Inc., v. ICC, 714 F.2d 1300, 1302 n.1 (5th Cir. 1983) (citing numerous trucking deregulation cases decided by the Fifth Circuit over the past two years).
The court upheld the ICC's application of the 1980 MCA's new entry standard that reduced the applicant's burden of proof by requiring only a prima facie showing that the proposed service would serve a "useful public purpose." Id. at 1304.
72. Id. at 1302.
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16 TEXAS TECH LAW REVIEW [Vol. 16:1 trucking firms languishing with ailing certifications. Once again, this Court faces a possible epidemic of infirm certificates and swollen transportation authority.73
Trucking regulation has been described as belonging to the category of regulations that "reflects the economic interest of the government and the regulated parties in preserving a certain economic allocation scheme."74 Congress decided to alter the pre-existing economic allocation scheme of the transportation industry by enacting the MCA of 1980 and the Staggers Rail Act of 1980. These two acts represent "the most significant changes in transportation regulation since motor carriers" were first regulated by the federal government in 1938.75 The scholarly writing is unclear about the economic effects of transportation deregulation. 76 Furthermore, the legislative history of the MCA demonstrates that Congress was also uncertain about the consequences of the deregulation. In expressing its concern "over the effect this Act may have on existing motor carriers and on the employees of these motor carriers" as well as the fear that the "legislation might result in a severe reduction in the value of motor carrier operating rights," Congress provided for the appointment of oversight committees to hold annual hearings for five years after enactment of the MCA.77 This congressional action is evidence that Congress was cognizant of the "experimental" nature of the deregulatory program, and took preparatory measures to enact further legislation in the eventuality that ensuing conditions warranted such action.
When legislatures implement policy decisions that are experi-
73. Id. (footnote omitted). It is apparent that Judge Brown thought it unlikely that his hope would be fulfilled stating that: "[als for future panels with this plague on their courthouses, we have no remedy. To them, we offer only the medical profession's universal palliative: take two aspirins and call us in the morning." Id. at 1315.
74. See O'Reilly, Judicial Review of Agency Deregulations: Alternatives and Problems for
the Courts, 37 VAND. L. REV. 509, 510 (1984).
75. Edles, The Strategy of Regulatory Change, 49 l.e.e.
PRAC. J. 626, 626 (1982).
76. There is little doubt that the effects of deregulation are unclear. See, e.g., Hynes, A
Study of How Deregulation of the Motor Common Carriers May Affect Movement of Freight In
and Out of the Center City Areas: Baltimore a Case Study, 48 l.e.e.
PRAC. J. 312 (1980); Lieb,
Regulatory Reform In Transportation: Some Interim Observations, 49 l.e.e.
PRAC. J. 273, 278
(1982) (noting that "it is still too early to render definitive judgments"); Wagner & Dean, A
Prospective View Toward Deregulation of Motor Common Carrier Entry, 48 l.e.e.
PRAC. J. 406
(1981). For an analysis of the economic implications of motor carrier deregulation, see Damus,
An Agenda For Research In Transportation Pricing In an Era of Deregulation, 49 l.C.e.
PRAC.
J. 23 (1981); Waring, Motor Carrier Regulation-By State Or By Market?, 51 l.e.C.
PRAC. J.
240 (1984).
77. HOUSE REPORT, supra note 3 at 11.
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1985] ADMINISTRATIVE LAW 17 mental in nature, and perhaps questionable in wisdom, they nonetheless perform their intended function. The transportation deregulation legislation is representative of the current spate of deregulatory programs begun under the Carter and continued by the Reagan Administration.
78 It is not the function of the judiciary to second-guess the substantive merits of legislative policy decisions unless constitutional problems are implicated. Yet expansive changes in existing regulatory programs can be expected to evoke determined resistance from quarters that will not hesitate to seek relief in a judicial forum.
In response to the current deregulatory trend, some courts have demonstrated a tendency to apply "a more exacting scrutiny even to the most policy-based instances of deregulation."79 The true import of
American Trucking and Global Van Lines lies, not only in the fact that they are cases of first impression, but also in the observation that they reveal the Fifth Circuit's intention to resist the temptation to intrude into the policy-making domain of the legislature. The Fifth
Circuit, however, has not abdicated its judicial responsibilities. The court permitted the agency deregulation validly effectuated and consistent with congressional intent. The court intervened when the agency failed to demonstrate that its proposed deregulation was properly executed and within its statutory authority. This judicious approach to an admittedly experimental legislative program is essential to ensure the necessary flexibility required to implement a complex economic allocation scheme, and should present a persuasive model for other courts confronted with deregulatory issues.
8o
78. O'Reilly, supra note 74, at 513-16.
79. [d. at 517.
80. During the survey period, the Fifth Circuit also decided several additional transportation cases worthy of mention. In Wales Transp., Inc. v. ICC, 728 F.2d 774, 782 (5th Cir.
Apr. 1984), the court distinguished Global Van Lines and found that the general rulemaking power of the ICC permitted the agency to adopt regulations reducing the amount of paperwork carriers could require from owner-operators, even though the rules substantially affected "the division of responsibilities" between the parties and reduced their "ability to contract." See also Petrou Fisheries, Inc. v. ICC, 727 F.2d 542 (5th Cir. Mar. 1984) (holding that the ICC could not retroactively apply the market dominance requirement of the Railroad
Revitalization and Regulatory Reform Act of 1976).
In a series of related cases, the court rejected challenges brought by the State of Texas against ICC action under the Staggers Rail Act of 1980. See Texas v. United States 730 F.2d
409 (5th Cir. Apr. 1984) (holding that when the contract rate rules of the Texas Railroad
Commission required more disclosure than comparable rules of the ICC, the state rules were pre-empted by the Act, and sustaining the ICC's action against constitutional challenge);
Texas v. United States, 730 F.2d 420 (5th Cir. Apr. 1984) (same result, citing 730 F.2d at 409 with approval). See also Texas v. United States, 730 F.2d 339 (5th Cir. Apr. 1984).
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18 TEXAS TECH LAW REVIEW [Vol. 16:1
Clean Water Act of 1977
Significant rulemaking and scope of judicial review issues continue to be presented in the application of the Federal Water Pollution
Control Act (FWPCA)81 and the Clean Water Act of 1977 (CWA).82
Congress' intent in enacting the FWPCA was to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters,"83 and to set a "national goal that the discharge of pollutants into navigable waters be eliminated by 1985."84 The 1972 Federal
Water Pollution Control Act Amendments created the section 404 permit program and authorized the Army Corps of Engineers (Corps) and the Environmental Protection Agency (EPA) to act to protect biologically sensitive wetlands from pollution. 85
81. Federal Water Pollution Control Act of 1972, Pub. L. No. 92·500, 86 Stat. 816 (codified as amended at 33 u.s.c. §§ 1251-1376 (1982». See generally W. ROGERS, HANDBOOK ON
ENVIRONMENTAL LAW 360-68 (1977) for an analysis of the history and purposes of the
FWPCA. A complete collection of the legislative history of the 1972 amendments has been compiled by the Congressional Research Service of the Library of Congress. See ENVIRON-
MENTAL POLICY DIVISION OF THE CONGRESSIONAL RESEARCH SERVICE OF THE LIBRARY
OF CONGRESS, A LEGISLATIVE HISTORY OF THE WATER POLLUTION CONTROL ACT
AMENDMENTS OF 1972 (1973) [hereinafter cited as LEGISLATIVE HISTORY]'
82. Clean Water Act of 1977, Pub. L. No. 95-217, 91 Stat. 1566 (codified as amended in scattered sections of 33 U.S.c.). The entire act, inclusive of the FWPCA and the 1977 CWA amendments, may be properly referred to as the CWA. Blumm, The Clean Water Act's Section
404 Permit Program Enters Its Adolescence: An Institutional and Programmatic Perspective, 8
ECOLOGY L.Q. 4\0, 410 n.1 (1980). The courts often use the nomenclature of the acts interchangeably, and this article will likewise follow this approach. This article will also cite to the current edition of the regulations, unless the prior applicable regulations have been amended or the citation is made in reference to a historical context.
83. 33 U.S.c. § 1251 (1982).
84. Id. § 1251(a)(1).
85. Congress has never provided a statutory definition of the term "wetlands." United
States v. Riverside Bayview Homes, Inc., 729 F.2d 391, 394 (6th Cir. 1984) (noting the fact, however, that the Corps and the EPA jointly enacted regulations defining wetlands and delineating the factors indicative of their presence). 33 C.F.R. § 323.2(c) (1983) provides that:
The term "wetlands" means those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs and similar areas.
Id. The legislative history of the 1977 CWA amendments, however, clearly indicates that Congress intended to provide protection to wetlands by means of the section 404 program:
The committee bill includes a provision which utilizes existing legislative mechanisms, and maintains the primary thrust of § 404 with respect to protection of wetlands from spoil and fill discharges where wetlands protection is an important public need. At the same time, the bill tries to free from the threat of regulation those kinds
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1985] ADMINISTRATIVE LAW 19
From the date of enactment of the 1972 FWPCA, the Corps demonstrated a reluctance to exercise its wetland authority and narrowly construed the scope of its jurisdiction under the ACt.
86 In 1975, however, the court in Natural Resources Defense Council, Inc. v. Cal-
laway,87 declared that the Corps had acted unlawfully in failing to exercise its wetland jurisdiction under the FWPCA and ordered the
Corps to undertake rulemaking procedures to recognize the "full regulatory mandate of the Water Act.
"88
Pursuant to the court order, the
Corps published in the Federal Register what it termed "tentative" rules to implement its section 404 jurisdiction and, after a two year period, enacted "final interim" section 404 rules.
89 of manmade activities which are sufficiently de minimis as to merit general attention at [the] State and local level and little or no attention at the national level.
S. REP. No. 370, 95th Cong., 1st Sess. 10-11, reprinted in 1977 U.S. CODE CONGo & AD.
NEWS 4326, 4336-37 [hereinafter cited as SENATE REPORT].
Numerous authorities have discussed the environmental significance and importance of wetlands. See Blum, supra note 82, at 413 n.ll and sources cited therein.
86. On April 4, 1974, the Corps published final revisions to its regulations incorporating the newly adopted section 404 permit program. 39 Fed. Reg. 12,115 (1974). The 1974 regulations, however, provided that navigable waters were "those waters of the United States which are subject to the ebb and flow of the tide, and/or are presently, or have been in the past, or may be in the future susceptible for use for purposes of interstate or foreign commerce." Id. at
12, 119. This interpretation followed the Corps' traditional position that its regulation of navigable waters under the §§ 10, 13 of the Rivers and Harbor Act, 33 U.S.c. §§ 403, 407 (1982), could not extend beyond the high water mark. See ROGERS, supra note 81, at 40 1. The courts have generally held, however, that in adopting the 1972 FWPCA amendments Congress "intended a departure from the traditional tests used to delimit Corps jurisdiction under the Rivers and Harbors Act." Deltona Corp.
V.
United States, 657 F.2d 1184, 1186 (Ct. Cl. 1981) (see also cases cited therein). During rulemaking proceedings in 1975, after several unfavorable court decisions, the Corps reconsidered its position. See 40 Fed. Reg. 31,320, 31,320-321
(1975) (where in relation to inland areas the Corps indicated that its jurisdiction "would extend landward to their ordinary high water mark and up to their headwaters, as well as to all contiguous or adjacent wetlands"). Three years after adoption of the 1974 regulations, the
Corps finally retreated from its strict construction when it noted that federal regulation must focus on all waters that form the entire aquatic system which includes adjacent wetlands. 42
Fed. Reg. 37,122, 37,128 (1977); see also, Blum, supra note 82, at 411, 441 (noting that the
EPA largely "ignored" the section 404 program until 1975, and has never "assumed an active role in 404 enforcement").
Several circuits have construed the 1972 amendments as evidencing Congress' clear intention to extend the meaning of the term navigable waters to it broadest constitutionally permissible extent. See United States v. Byrd, 609 F.2d 1204, 1209 (7th Cir. 1979); Minnesota
V.
Hoffman, 543 F.2d 1198, 1200 (8th Cir. 1976); Leslie Salt CO.
V.
Froehlke, 578 F.2d 742, 755
(9th Cir. 1975); United States
V.
Ashland Oil and Transp. Co., 504 F.2d 1317 (6th Cir. 1974).
87. 392 F. Supp. 685 (D.D.C. 1975).
88. Id. at 686.
89. Department of Defense Corps of Engineers Proposed Rules, Permits For Activities in
Navigable Waters or Ocean Waters, 40 Fed. Reg. 19,766 (1975) was the Corps initial response in compliance with the court ordered rulemaking. The experimental nature of these proposals
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20 TEXAS TECH LAW REVIEW [Vol. 16:1
Subsequent to the Corps promulgation of section 404 final rules,
Congress enacted the CWA Amendments of 1977. In the words of one commentator, the" 1977 Amendments brought an end to section
404's stormy youth, and began an adolescence in which the focus of attention shifted to the implementation of a comprehensive and effective program."90 The CWA sets forth a complex statutory scheme granting four federal agencies joint responsibilities in effectuating the section 404 program. 91 The concurrent jurisdiction and interrelationwas evidenced by the fact that the Corps actually proposed four different versions of the rules for comment. On the same date, the EPA also proposed guidelines relating to the section 404 permit process. EPA Proposed Guidelines, Discharge of Dredged or Fill Material, 40 Fed.
Reg. 19,794 (1975). The EPA likewise intimated that its proposals were interim in nature:
"EP A is aware that many questions remain to be answered regarding means of evaluating the effects of dredged or fill material discharged in navigable waters. Thus, we will continue to work with the Corps . . . to improve the analytical methodologies that underlie these guidelines." [d.
After the receipt of more than 4,500 comments, the Corps promulgated a redefinition of the term "navigable waters" to be applied in the context of the section 404 permit program.
Department of Defense Corps of Engineers Final Interim Regulations, Permits for Activities in Navigable Waters or Ocean Waters, 40 Fed. Reg. 31,320 (1975).
Two years later the Corp enacted final rules amending the 1975 regulations indicating that after "almost two years of experience in administering the Section 404 program as revised by the July 25, 1975 regulation . . . [t]his experience has revealed some problem areas that require correction." Department of Defense Corps of Engineers Final Rules, 42 Fed. Reg.
37,122, 37,125 (1977). One "problem area" in particular was the 1975 limited definition of wetlands. [d. at 37,144 (codified at 33 C.F.R. § 323.2(c». The Corps provided a full explanation of its rationale for amending the 1977 regulatory amendments:
This definition is intended to eliminate several problems . . . [t]he reference to "periodic inundation" has been eliminated. Many interpreted that term as requiring inundation over a record period of years. Our intent under § 404 is to regulate discharges of dredged or fill material into the aquatic system as it exists, and not as it may have existed over a record period of time. The new definition is designed to achieve this intent. It pertains to an existing wetland and requires that the area be inundated or saturated by water at a frequency and duration sufficient to support aquatic vegetation. . . . Concerns were also expressed over the types and amount of vegetation that would be required to establish a "wetland" under this definition. We have again used the term "prevalence" to distinguish from those areas that have only occasional aquatic vegetation interspersed with upland or dry land vegetation.
At the same time, we have changed our description of the vegetation involved by focusing on vegetation "typically adapted for life in saturated soil conditions." The old definition of "freshwater wetlands" provided a technical "loophole" by describing the vegetation as that which requires saturated soil conditions for growth and reproduction, thereby excluding many forms of truly aquatic vegetation that are prevalent in an inundated or saturated area, but that do not require saturated soil from a biological standpoint for their growth and reproduction.
[d.
90. Blumm, supra note 82, at 411.
91. The four federal agencies involved in the section 404 permitting process are the
Corps, EPA, the United States Fish and Wildlife Service (FWS), and the National Marine
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1985] ADMINISTRATIVE LAW 21 ship of shared functions between these federal agencies is a primary factor in ensuring the effective implementation of section 404.
In the administration of the section 404 permitting program, the
Corps and the EPA are two of the most important federal agencies.92
The CWA gives the Corps the authority to issue 404 permits93 and the
EP A the statutory duty to oversee the program and develop guidelines to be applied by the Corps.94 The Corps applies a "decentralized" approach to accomplish its section 404 responsibilities. 95 The
Corps delegates the authority to issue permits to several district offices, which in turn allow thirty district engineers and eleven division engineers to actually administer the permit process.96 Moreover, once a local district office has made a permit decision, the regulations provide for no further administrative appea1. 97 Although the system was criticized for its failure "to place strict controls on the discretionary power given to the District Engineers,"98 the EPA sanctioned the
Corps' approach. EPA approval of the Corps decentralization policy was based on its finding that the application of general guidelines to diverse aquatic systems "requires that the permitting agency retain the discretion to adapt the approaches and considerations in the guidelines to local conditions."99 Nevertheless, the joint Corps-EPA administration of the 404 program continued to be subjected to substantial criticism.
100
Fisheries Service. The powers and duties of the four federal agencies responsible for the implementation of the § 404 program have been analyzed in detail. See Blumm, supra note 82 at
437-45.
92. See Blumm, supra note 82, at 437.
93. 33 U.S.c. § 1344(b)(I) (1982).
94. /d.
95. 33 C.F.R. § 320.1 (a)(2) (1983) states that:
The Corps is a highly decentralized organization. Most of the authority for administering the regulatory program has been given to the thirty six district engineers and eleven division engineers. If a district or division engineer makes a final decision on a permit application in accordance with the procedures and authorities contained in these regulations (33 CFR Parts 320-330), there is no administrative appeal of that decision.
[d.
96. /d.
97. [d.
98. EPA Interim Final Guidelines, Discharge of Dredged or Fill Material, 40 Fed. Reg.
41,292 (1975).
99. [d. The EPA, however, added the caveat that "many of the approaches and considerations have been rewritten to clarify that discharges will not be allowed if it is determined that the proposed discharge will result in unacceptable harm to the aquatic system." [d. lDO. See, e.g., Blumm, supra note 82, at 437-42 (noting that the Corps decentralization
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22 TEXAS TECH LAW REVIEW [Vol. 16:1
1. The A voyelles Decisions
The Fifth Circuit Court of Appeals considered several issues of significance to the section 404 program in A voyelles Sportsmen's
League, Inc., v. Marsh (Avoyelles II).
\01
To understand the legal issues presented in Avoyelles II, it is necessary to review the procedural history of the case which encompasses three federal court cases l02 and several years of section 404 rulemaking.
A group of private landowners owning a tract of land (the Lake
Long Tract), of about 20,000. acres in A voyelles Parish, Louisiana, began land-clearing operations to convert the acreage to soybean production.
\03
The Lake Long Tract, however, was situated in an environmentally sensitive basin area.
l04 The landowners began their landclearing activities in June of 1978, but were ordered to cease the work on August 25, 1978 by the Vicksburg District of the Army Corps of
Engineers until that office could complete a wetlands determination.
\05
A consultant hired by the Corps determined that thirty-five percent of the Lake Long Tract was comprised of wetland.
\06
In October 1978, however, the Fish and Wildlife Service (FWS) informed the
Corps of its belief that the entire Lake Long Tract was wetland.
\07
The landowners, however, renewed their land-clearing operations on the sixty-five percent of the tract that the Corps held to be nonwetland acreage.
\08
The piaintiffs
\09 brought a citizen suit in federal district court has resulted in the application of different standards to permit applications among the various districts, and criticizing the EPA for failing to take active measures in overseeing and enforcing section 404). See a/so, Comment, Water-Quality Standards, Maximum Loads, and the
Clean Water Act: The Need for Judicial Enforcement, 34 HASTINGS L.J. 1245 (1983); Comment, Federal Water Pollution Laws: A Critical Lack of Enforcement by the Environmental
Protection Agency, 20 SAN DIEGO L. REV. 945 (1983).
101. 715 F.2d 897 (5th Cir. Sept. 1983).
102. Avoyelles Sportsmen's League, Inc. v. Alexander, 511 F. Supp. 278 (W.O. La. 1981),
rev'd in part and affd in part sub. nom. Avoyelles Sportsmen's League, Inc. v. Marsh, (Avoye1les II) 715 F.2d 897 (5th Cir. Sept. 1983); Avoyelles Sportsmen's League v. Alexander, 473
F. Supp. 525 (W.O. La. 1979).
103. 473 F. Supp. at 527-28.
104. [d. at 528. The Lake Long Tract lies in the Bayou Natchitoches Basin. This basin is a backwater area which serves as a major overflow tract for waters from the Red River. [d.
105. 715 F.2d at 901.
106. [d.
107. [d.
108. [d.
109. The plaintiffs were a group of environmental organizations and an interested individual. Specifically, these were: the Avoyelles Sportsmen's League, Inc.; the Environmental Defense Fund, Inc.; the National Wildlife Federation; the Avoyelles Natural Guard, Inc.; the
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1985] ADMINISTRATIVE LAW 23 under section 505 110 of the CWA against the Corps, the EPA, and the
Avoyelles Bass Runners, Inc.; the Point Basse Hunting Club, Inc.; and Ira J. Marcottee. 511 F.
Supp. at 280 n.1.
110. 33 U.S.c. § 1365(a) (1982) allows a citizen suit to be brought. The plaintiffs sought to enjoin the land-clearing activities of the private landowner defendants and also claimed that the federal agencies had failed to exercise their "mandatory duty" to properly classify the tract as wetland and require 404 permits for all of the land-clearing activities. 715 F.2d at 901-02.
For a critical analysis of the citizens suit provision see Comment, Federal Water Pollution
Remedies: Non-Statutory Remedies Are Eliminated, 17 LAND & WATER L. REV. 105, 129-36
(1982). The Fifth Circuit has extensively analyzed the citizens suit provision's standing requirements. See RITE-Research Improves the Environment, Inc., v. Costle, 650 F.2d 1312
(5th Cir. 1981), reviewed in Survey, Environmental Law, 14 TEX. TECH L. REV. 239,248-49
(1983). A number of additional parties also intervened in the case as defendants. 511 F. Supp. at 280 n.2. The Louisiana Department of Agriculture was denied the right to intervene on appeal before the Fifth Circuit. The court's opinion pointed out a noteworthy conflict of authority between the Fifth and Third circuits.
The State of Louisiana was represented in the district court as an intervenor by the Louisiana Department of Natural Resources. Subsequent to the entry of final judgment, the court granted the Department's motion to extend the time period for taking an appeal to May 10,
1982. The State then determined that it wanted the Department of Agriculture, rather than the Department of Natural Resources, to represent its interest on appeal. The Department of
Agriculture filed a motion to replace the Department of Natural Resources as intervenor on
May 20, 1982, within the appeal time extension granted by the district court but after the first notice of appeal had been filed in the case on April 5, 1982. The district court, however, denied the motion finding that the Department of Natural Resources could adequately represent the State. The Department of Agriculture filed an appeal to the Fifth Circuit for review of both the denial of its motion for intervention and the trial court judgment. 715 F.2d at 927-28.
On appeal, the Fifth Circuit dismissed the Department of Agriculture's appeal holding that the district court had lacked jurisdiction to hear its motion. The court stated the general rule that:
[T]he filing of a valid notice of appeal from a final order of the district court divests that court of jurisdiction to act on the matters involved in the appeal, except to aid the appeal, correct clerical errors, or enforce its judgment so long as the judgment has not been stayed or superseded.
Id. at 928.
FED. R. CIV. P. 24(b) provides in pertinent part that "[u]pon timely application anyone may be permitted to intervene in an action: (I) when a statute of the United States confers a conditional right to intervene; or (2) when an applicant's claim or defense and the main action have a question of law or fact in common." Although generally disfavored, a trial court may grant a motion to intervene when compelling circumstances exist even after a final judgment has been entered. United States Airlines, Inc. v. McDonald, 432 U.S. 385 (1977); see also 7A
C. WRIGHT & A. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1916 (1972 & Supp.
1983). When an appeal has been filed to a court of appeals after the entry of the district court's final judgment however, the trial court lacks authority to permit intervention unless the intervention is "in aid of the appeal." See 8B J. MOORE & J. KENNEDY, MOORE'S FEDERAL
PRACTICE ~ 24.13 (2d ed. 1982).
In Halderman v. Pennhurst State School & Hosp., 612 F.2d 131, 134 (3d Cir. 1979) (en banc), the Third Circuit construed the Supreme Court's United Airlines decision as "tacitly" overruling the principle that a district court may not consider the merits of motion for intervention after a notice of appeal has been filed in a court of appeals. The court held that a trial court has such authority, if the motion to intervene is filed "within the time limit for filing a
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24 TEXAS TECH LAW REVIEW [Vol. 16:1 private landowners, alleging violations of CWA sections 301(a), 402, notice of appeal prescribed by Rule 4(a), Fed. R. App. P." [d. In support of its construction of the United Airlines case, the Third Circuit indicated that the Supreme Court had approved the result in American Brake Shoe & Foundry Co. v. Interborough Rapid Transit Co., 3 F.R.D.
162 (S.D.N.Y. 1942). 612 F.2d at 134.
The Supreme Court did indeed cite to American Brake in a footnote and indicate its approval of the case's holding. 432 U.S. at 395 n.16. That the Court intended to extend the jurisdiction of trial courts to consider the merits of motions for intervention once appeal has been taken from a final judgment, however, is a misconstruction of the Court's opinion. First, the Court clearly indicated that its reference to American Brake, and to similar cases cited within the footnote, was in the context of "[p)ost-judgment intervention for the purpose of appeal." [d. Second, analysis of the American Brake decision strongly suggests that the Third
Circuit's construction is questionable. American Brake involved a suit concerning the reorganization and consolidation of the Interborough Rapid Transit Co. with the Manhattan Railway
Company. 3 F.R.D. at 163. Certain bondholders of Manhattan Railway objected to the reorganization. Only one of the bondholders filed suit, but did in fact also represent the interests of the other dissatisfied bondholders. The original bondholder litigant filed a notice of appeal after the trial court's final judgment, but later decided to settle the case and abandon the appeal. The district court permitted the other bondholders to intervene in order to prosecute the appeal since the motion was filed within the time in which an appeal might have been brought. [d. at 164. Under these circumstances, the result in American Brake did not abolish the rule, but fell under a recognized exception since the trial court's ruling on the motion for intervention was clearly "in aid of the appeal."
In Avoyelles II, the Fifth Circuit indicated that it "was not persuaded by the Third Circuit's reading" of United Airlines. 715 F.2d at 928. The court refused to accept the rationale of Halderman and held that the rule prohibiting district courts from considering motions of intervention after entry of final judgment and notice of appeal had been filed was still the law:
[W)e adhere to the earlier rule that the filing of a valid appeal deprives the district court of jurisdiction to hear a motion to intervene. The district court was thus without jurisdiction to entertain the motion of the Department of Agriculture; we therefore affirm, although on different grounds, the district court's refusal to grant the motion.
[d. at 929.
It is apparent that the states have a vital interest in the proper effectuation of § 404 programs within their respective jurisdictions. Congress intended for the states to assume important responsibilities under the § 404 plan. See SENATE REPORT, supra note 85, at 77-80;
Blumm, supra note 82, at 458-60. Indeed, Corps regulations provide that no permit will be issued if a state agency has denied authorization of the activities under state law. 33 C.F.R.
§ 320.4(j) (1983). Even though state law may not purport to regulate a particular activity related to the § 404 program, the Corps does give "due consideration" to the comments of any state "having jurisdiction or interest over the particular activity." [d.
The Fifth Circuit's holding does not substantially impair the ability of the states to ensure that their interests are considered in a § 404 lawsuit, either by direct intervention in the case or by other appropriate devices. After entry of final judgment in district court and subsequent to the filing of a notice of appeal to the court of appeals, a party should file a motion for substitution under FED. R. ApP. P. 43 to the appellate court. See Air Lines Pilots Ass'n v. Texas Int'l
Airlines, Inc., 567 F. Supp. 78, 81 (S.D. Tex. 1983). The problem in Avoyelles II arose because the Department of Natural Resources, the original agency representing the State of Louisiana before the trial court, failed to file an appeal to the Fifth Circuit. 715 F.2d at 928. The Department of Agriculture'S motion to intervene as a substitute was not properly submitted to the court of appeals, but to the district court after that court had already lost jurisdiction over the
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1985] ADMINISTRATIVE LAW
and 404(a).111 On November 7,1978, the district court issued a temporary restraining order prohibiting the defendant landowners from continuing land-clearing operations, and later, on January 17, 1979, ordered the federal agencies to submit a final wetlands determination to the court within sixty days.
112 a. The EPA Redetermination of the Wetland Issue
Upon reconsideration of the Corps' wetlands determination, the
EP A concluded that eighty percent of the Lake Long Tract was comprised of wetlands. 113 The EPA's finding substantially differed from the Vicksburg District's thirty-five percent wetland determination and included portions of the land that had already been cleared by the landowners pursuant to the District's approval. Furthermore, the
EP A also disagreed with the position of the plaintiffs and the FWS that the entire Lake Long tract was comprised of wetland. The EPA decision was based on its view of two major factors. These factors were the proper methodology to be applied in determining what really constituted wetlands within the meaning of section 404; and the identification of the types of land-clearing activities that required issuance of a section 404 permit.
The EPA final wetland determination criticized the Vicksburg
District's methodology because it "resulted in excluding areas containing species which meet the test established by the regulation
concentrated on unambiguous species (obligate hydrocase. Furthermore, the state appeal was not timely within the meaning of FED. R. App. P.
4(a), and the trial court had no authority to rule on the motion since it was not made "in aid of the appeal." Nevertheless, the state could have filed an amicus curiae brief to the Fifth Circuit.
FED. R. App. P. 29.
Ill. Section 301(a) of the CWA provides in pertinent part that: "Except as in compliance with this section and sections 1312, 1316, 1317, 1328, 1342, and 1344 of this title, the discharge of any pollutant by any person shall be unlawful." 33 U.S.c. § 1311 (1982). The plaintiffs alleged that the defendants' land-clearing activities constituted a discharge of pollutants in the form of "dredged and fill material" within the meaning of sections 402 and 404 of the CWA.
33 U.S.c. §§ 1342, 1344 (1982). Consequently, the plaintiffs' position was that the land-clearing was unlawful without the acquisition of a permit from the Corps or EPA. 715 F.2d at 902.
Since the discharge was not deposited in navigable waters, in the "direct" physical sense, it was essential to the plaintiffs' case to establish that the tract constituted wetland acreage defined by regulation to be a part of the "waters of the United States." See 33 C.F.R. §§ 323.2(a),
323.2(a)(7) (1983).
112. 511 F. Supp. at 281. The report filed by the agency was reprinted in the appendix of
Avoyelles II. EPA Final Wetland Determination in Civil Action No. 78428-A (1979), reprinted
in appendix Avoyelles Sportmen's League, Inc. v. Marsh (Avoyelles II), 715 F.2d 897, 930-34
(5th Cir. Sept. 1983) [hereinafter cited as Appendix].
113. 715 F.2d at 903.
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26 TEXAS TECH LAW REVIEW [Vol. 16:1 phytes) and did not properly use soil and hydrology and other scientific data to verify the significance of the other species on the tract."
114
The EPA also disagreed with the conclusion of the Vicksburg District that wetland vegetation was present on only one-third of the tract.
The agency indicated that the District's faulty findings derived from its failure to consider all relevant species of vegetation. 115 The EPA stressed that the Vicksburg District had failed to properly apply the standard of vegetation mandated by the 1977 regulations. 116 In the
EPA's view, the 1977 regulatory reference to "vegetation typically adapted for life in saturated soil conditions" had supplanted the more limited preexisting 1975 definition that described characteristic wetland vegetation "as that which requires saturated soil conditions for growth and reproduction, thereby excluding many forms of plants that are prevalent in an inundated or saturated area but that do not require saturated soil from a biological standpoint for their growth and reproduction."117 Accordingly, the EPA found the Vicksburg
District's reliance on the antiquated 1975 regulations to be obsolete. 118
In addition to finding that the Vicksburg District had failed to properly review the soil's hydrological condition, the EPA also denounced the Vicksburg Office's overreliance on topography and land elevation. Concluding that "it was inappropriate to assume that the demarcation between wetlands and uplands would necessarily occur at a given elevation throughout the tract,"119 the agency found that a wetland projection based solely on land elevation could result in either an overinclusive or underinclusive wetland determination. 120 In
114. Appendix, supra note 112, at 931. The EPA defined "obligate hydrophytes" as a species of vegetation that require saturated soil to exist as differentiated from "facultative hydrophytes" which are plant species that may adapt to saturated soil, but are also found to exist elsewhere. ld.
115. ld.
116. ld. at 932. Furthermore, the EPA stated that the Vicksburg District's "selection of species to rely on is also inconsistent with the Preliminary Guide to Wetlands of the Gulf
Coastal Plain, prepared by the U.S. Army Corps of Engineers Waterways Experimental station in consultation with EPA and with the practice of several other Corps of Engineers Districts." ld. Inconsistent application of standards and disparate § 404 decision-making are apparently routine occurrences among the district offices. See Blumm, supra note 82, at 438.
117. See Appendix, supra note 112, at 931 (emphasis in the original).
118. ld. at 931-32. The EPA emphasized that the Vicksburg District's "restricted list" of wetland indicator species resulted in an underinclusive wetland determination. ld.
119. ld. at 933. The land's tract elevation is also of importance in determining the flood duration of the land, which in turn serves as an indicator of the aquatic nature of the soil. ld.
120. ld.
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1985] ADMINISTRATIVE LAW 27 summary, the EPA rejected the District's wetland findings because the Vicksburg methodology excessively emphasized the presence of obligate hydrophytes while discounting the existence of facultative hydrophytes, failed to adequately analyze inundation and other relevant soil data, and focused on the overly simplistic factor of land elevation as a wetland indicator. 121
The EPA, however, also disagreed with the position of the FWS and the plaintiffs that the entire Lake Long tract was wetland. 122 The final EPA determination that only eighty percent of the Lake Long tract constituted wetland relied upon an analysis of three factors: the type of vegetation prevalent in the area; the soil type; and the soil inundation. 123 In the view of the agency, areas of the tract that did
"not meet either the inundation or soil elements of the regulatory definition should . . . not be included as part of a section 404 wetland determination."124 The EPA therefore decided that "only the large majority, not the entirety, of the tract was section 404 wetlands."125
The EPA's second major finding related to the ascertainment of the types of land-clearing activities that required a section 404 permit.
Prior to the landowners' commencement of land-clearing activities on the Lake Long tract, loggers had harvested hardwoods from the tract leaving tree stumps and debris to be removed. 126 The landowners used bulldozers specially fitted with shearing blades designed to scrape the top surface of the soil to minimize soil displacement. 127 The plowing process, however, occasionally gouged the ground and disturbed humus and leaf litter overlaying the soil. 128 The landowners' also collected soil, leaf litter, felled trees, and debris in piles for burning and disposal.
129
The material that failed to burn was buried in pits fifty
121. Id.
122. Id. at 933-34. The Fifth Circuit noted, however, that after the EPA's redetermination of the wetland issue, and the substantial agreement between the redetermination and the plaintiffs' and FWS's positions, the defendant federal agencies were actually more closely aligned in legal position with the plaintiffs than the private landowner defendants. This circumstance prompted the court to observe that the parties had "changed positions as nimbly as if dancing a quadrille." 715 F. 2d at 903 (quoting Vermont Yankee Nuclear Power Corp. v. Natural
Resources Defense Council, Inc., 435 U.S. 519, 540 (1978».
123. Appendix, supra note 112, at 932-33.
124. Id. at 933.
125. Id. at 934.
126. 473 F. Supp. at 528.
127. Id.
128. Id.
129. Id.
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28 TEXAS TECH LAW REVIEW [Vol. 16:1 feet long and approximately six feet deep.13o Upon completion of the leveling process, the landowners used a discing procedure to convert the land to soybean production.
\31
Finally, the landowners excavated a drainage ditch three-quarters of a mile long, and planned to construct four or five miles of additional ditches. 132
The EPA concluded that section 404 permits were not required for land-clearing operations that caused only de minimis soil displacement. 133 The agency found that the landowners' tree shearing activities resulted in de minimis soil dislodgement and that "[p]lowing, discing, and raking of the sort observed on the tract so far will not require a permit."
134
The EPA, however, held that the construction of the drainage ditches in wetland areas would require the issuance of a section 404 permit. 135 b. The District Court Opinions
The federal district court decided to bifurcate the case and hold two different trials-one proceeding addressing the question of what types of land-clearing activities would require section 404 permits and the second to consider what areas of the Lake Long tract constituted wetland acreage.
136 In the first trial, the district court reviewed the permit question.
\37
The court found that the land-clearing equipment used by the landowners were "point sources" of pollution for the purposes of section 502(14) of the FWPCA,
\38 and therefore within the coverage of the section 404 permit program. 139 The court rejected the landowners' contention that section 404(f)(I)(A) of the CWA exempted their activities from the permitting procedure as "normal farming, silviculture, and ranching activities." 140 The district court held that only agricultural operations conducted concomitant to ongoing farming or silvicultural activities were entitled to the section
130. /d.
131. Id. at 529. The court described "a disc" as involving the use of a "bowl-shaped blade that cuts into the ground and fluffs the soil up." /d.
132. /d.
133. Appendix, supra note 112, at 934.
134. Id.
135. /d.
136. 473 F. Supp. at 529.
137. /d.
138. 33 U.S.c. § 1362(14) (1982) defines the term "point source" to include "any discernible, confined, and discrete conveyance from which pollutants are or may be discharged."
139. 473 F. Supp. at 532.
140. 33 U.S.c. § I 344(f)(I)(A) (1982).
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1985] ADMINISTRATIVE LAW 29
404(f)(I)(A) exemption. 141 Moreover, the court noted that section
404(f)(2) of CWA 142 explicitly denied an exemption for any activities which resulted in a change in use of the land. The landowners' landclearing operations were found to constitute a change in use within the meaning of section 404(f)(2).143
The district court held that since the Corps regulations defined
"navigable waters" of the United States to include wetlands, and because vegetation growing on wetland tracts were part of the wetland area, the shearing of trees and the removal of vegetation from the tract resulted in "the discharge of dredged material" into navigable waters. 144 After reviewing the environmental functions of wetlands as described by the regulations, the court observed that these functions would be severely damaged, if not entirely destroyed, by the removal of the tract's vegetation. 145 The court viewed the vegetation itself-as opposed to the soil-of primary importance since it actually provided the favorable environmental benefits to the ecosystem. 146
After establishing the importance of vegetation to wetland areas, the district court rejected the EPA's conclusion that de minimis soil displacement activities were not subject to the section 404 permit requirements. 147 The court noted that the purpose of the statute would be thwarted if removal of wetland vegetation did not require acquisition of a section 404 permit. 148 In the view of the district court, the
[d.
141. 473 F. Supp. at 535 (emphasis in original).
142. 33 U.S.C § 1344(1)(2)
Any discharge of dredged or fill material into the navigable waters incidental to any activity having as its purpose bringing an area of the navigable waters into a use to which it was not previously SUbject, where the flow or circulation of navigable waters may be impaired or the reach of such waters be reduced, shall be required to have a permit under this section.
143. 473 F. Supp. at 535.
144. Id. at 531-32 (construing 33 CF.R. § 323.2(a)(c) (1983». Section 404(a) of the CWA authorizes the Corps to issue permits "for the discharge of dredged or fill material" into the navigable waters. 33 U.S.C § 1344(a) (J 982). The district court also found that the land-clearing activities resulted in a discharge of fill material within the meaning of the CWA:
Our determination that the soil and detritus was scraped up and conveyed across the tract is buttressed by the fact that many of the small sloughs were filled and the larger ones were partially filled in the landclearing process. The process had a levelling effect which also qualified the material moved as fill material.
473 F. Supp. at 532.
145. Id. at 533.
146. [d. at 533-34.
147. [d. at 536.
148. [d. at 534.
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30 TEXAS TECH LAW REVIEW [Vol. 16:1 government had focused on engineering theory and methodology rather than the policies sought to be implemented by the CWA.149 The de minimis degree to which soil may have been displaced was considered by the court to be immaterial, so long as the land-clearing activity resulted in the destruction of wetland vegetation. 150 The court held that the landowners, lacking section 404 permits, were prohibited from conducting the land-clearing activities. 151
In the second trial,152 the district court considered what areas of the tract were wetland within the meaning of section 404. The court found that the term wetlands was not a term of "pure science" but "a jurisdictional term, the product of the legislative process, of political pressure groupS."153 In the court's view, the definition of the term could be "scientifically incorrect," but still valid in a jurisdictional sense if the practical needs of the section 404 program were sat isfied. 154 Concluding in effect that the word "wetlands" was a term of art, the court looked to the section 404 regulations to determine the meaning of the terminology.
The court did not defer to the agencies' interpretation, but applied an independent analysis to construe the wetland regulations. 155
The court emphasized that the 1977 regulations broadened the scope of the 1975 regulatory definition of wetlands to encompass species of
149. [d. at 536.
150. [d. The court stated that:
If the destruction and conversion of wetlands to another purpose is accomplished, does it really matter whether it is accomplished "where no earth (other than de minimis) is moved" or otherwise?
More specifically, does it make sense, as the Government's statement implies, that the excavation of tal ditch 6 feet deep and 100 feet long requires a § 404 permit
(is destructive of wetlands) but that the clearing of 20,000 acres of forest wetlands by methods involving only de minimis movement of earth does not (is not destructive of such wetlands). The factual situation in this very proceeding demonstrates the error implicit in the Government's statement.
[d. lSI. [d.
152. 511 F. Supp. 278.
153. [d. at 288.
154. [d.
ISS. This conclusion follows because of the method the district court applied to determine the meaning of phrase "wetland." The court did not limit its review to the record compiled by the agencies, but constructed its own record:
We have been favored by the testimony and evidence of imminent agronomists, soil scientists, hydrologists and biologists. This information has been used by us to classify the types of soil and vegetation and to determine the topography and hydrology affecting the. . . tract and to determine whether the wetlands characteristics . . . are present.
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1985] ADMINISTRATIVE LAW 31 vegetation typically adapted to saturated soil.
156
The critical wetland indicator, as the court perceived it, was whether there existed a prevalence of vegetation "tolerant" to saturated soil.
157
The court concluded that "all species except the intolerant species are wetland species" and found that, although the evidence conflicted on the degree of saturation tolerance of each vegetation species subsisting on the tract, there was no dispute that "they were all tolerant to a greater or lesser degree."
158
Because the court found a prevalence of wetland vegetation on the Lake Long tract, it held that the tract was a wetland within the meaning of section 404.
159 The test applied by the court was more extensive than the agencies' interpretation of the regulations, and resulted in the court's finding that ninety percent of the tract constituted a wetland.
160 c. The Fifth Circuit Decision
The Fifth Circuit was presented with a case in which numerous private parties, three federal agencies, and a federal district court had disagreed about the resolution of complex technical issues. The court examined four factors: (1) the proper scope of judicial review which the district court should have afforded the agency determination;
(2) whether the EPA's wetland determination methodology constituted a substantive regulatory change requiring notice and comment proceedings before implementation; (3) the validity of the EPA's construction of the wetland regulations; and (4) the types of activities that required a section 404 permit.
The court found that because the CWA failed to provide a stan-
Id.
The district court also failed to refer to the AP A, or make any explanation of the scope of review it applied to the agency findings.
156. Id. at 289.
157. [d. at 290-91.
158. Id. at 291-93. In addition to adopting this broad interpretation of wetland vegetation species, the court concomitantly rejected the landowners' argument that wetlands "are restricted to deep swamp or cypress areas." Id. at 289-90. The court also found that even though the tract was only intermittently saturated throughout the year, a sufficient level of inundation existed to support wetland vegetation. Id. at 291. Accordingly, the court concluded that this sufficed to bring the land within the coverage of the § 404 regulations. See id. at 290-91.
159.
160.
See id. at 291.
See 715 F.2d at 903. The landowners also contended that enforcement of the section
404 regulations under these circumstances violated the fifth amendment's prohibition against the "taking" of private property. The district court, applying the rationale that the defendants had no constitutional right to the "highest and best use" of their property, rejected this assertion. 511 F. Supp. at 287.
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32 TEXAS TECH LAW REVIEW [Vol. 16:1 dard governing the scope of judicial review, the APA was the controlling authority. 161 The court concluded that the APA permitted reversal of agency determinations which are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," or which contravene statutory, procedural or constitutional requirements. 162 Finding that the agency decision was "entitled to a presumption of regularity," the court deemed the standard of review to be "highly deferential."163 In the court's opinion, the role of a reviewing court was limited to ascertaining whether the agency had made a
"clear error of judgment" and considered the relevant decisional factors.l64 Without an in-depth discussion of its rationale, the court decided that the relevant standard was provided by AP A section
706(2)(A). The court held that under section 706(2)(A) the EPA's findings must be affirmed unless they were arbitrary, capricious, or an abuse or discretion. The plaintiffs contended that de novo review was appropriate since the EPA's determination was a jurisdictional question; however, the court made the distinction that the issue was more a question of the extent of the EPA's jurisdiction, and therefore, was
"precisely the type of agency decision that is normally subject to limited judicial review."165 Placing great weight on the agency's utilization of scientific expertise, the court found that the arbitrary and capricious standard of review would properly provide due deference to the agency without "abdication of judicial responsibility."166 The
Fifth Circuit held that the district court's scope of review was improper since the district court substituted its own judgment instead of reviewing the agency's decision on the record. 167
The Fifth Circuit also considered the private defendants' contention that the EPA's wetland determination methodology constituted rulemaking violative of the AP A. The private defendants asserted that the divergent methodological procedures applied by the Vicksburg
161. 715 F.2d at 904.
162. Id. (quoting 5 U.S.c. § 706(2)(A).(B).(C).(D) (1982».
163. Id. (citing Citizens To Preserve Overton Park. Inc. v. Volpe. 401 U.S. 402. 415
(1971».
164. Id. (citing Overton Park. 401 U.S. at 416).
165. Id. at 906.
166. Id. at 907.
167. Id. Ordinarily. the Fifth Circuit would remand the case to the trial court to apply the correct standard of review. However. the court decided to proceed to the merits of the case. In the court's estimation. this extraordinary action was appropriate because the matter was legal in nature and "subject to our own independent review" and further warranted given that the
"litigation . . . [had] already gone on long enough." Id.
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1985] ADMINISTRA TIVE LAW 33
District and the EPA indicated that the latter agency had effectuated an amendment to a substantive rule. Because notice and comment procedures had not been afforded under AP A section 553, the defendants argued that the alleged amendment was invalid. 168 The EPA responded that the change in methodology reflected an interpretation of the Corps' existing wetlands definition and no notice and comment proceedings were required since section 553(b)(A) of the APA exempted interpretative rules from notice and comment proceedings. 169
The resolution of this issue turned on an analysis of the AP A's distinction between legislative and interpretative rules. In discerning the differences between the two types of rules, the court recognized that it was required to look "beyond the label to the substance of the administrative action." 170 The court noted that legislative rules
"grant rights, impose obligations, or produce other significant effects on private interests . . . [and] narrowly constrict the discretion of agency officials by largely determining the issue addressed."171 Conversely, the court observed that interpretative rules merely "express the agency's intended course of action, its tentative view of the meaning of a particular . . . statutory term . . . [but] do not . . . foreclose alternate courses of action or conclusively affect rights."172 Recognizing the practical difficulties inherent in applying these distinctions, the court held that the crucial considerations were the fairness of the agency's procedures and their accord with the APA's underlying policies.173 The court found that the EPA's wetland methodology was fair, and comprised "an interpretative application, not an amendment of, the 1977 definition." 174 In effect, the court discerned that the
Corps' 1977 regulations, rather than the EPA's methodology, had expanded the number of wetland indicators. As a consequence, the court viewed the landowners' "underlying contention . . . [as] nothing more than a challenge to the EPA's interpretation of the regulation." 175
168. [d. at 907-08.
169. [d. at 908.
170. [d.
171. [d. (quoting Batterton v. Marshall, 648 F.2d 694,701-02 (D.C. Cir. 1980».
172. 715 F.2d at 908 (quoting Batterton, 648 F.2d at 702). The court also observed that legislative rules are subject to less extensive judicial review than interpretative rules. [d. In addition, the court was careful to point out that an agency retains the discretion to implement its statutory responsibilities through case-by-case adjudication or by rulemaking. [d.
173. [d. at 909-10.
174. [d. at 910.
175. [d.
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34 TEXAS TECH LAW REVIEW [Vol. 16:1
Having determined that the EPA's methodology was based on a regulatory interpretation exempt from the AP A's publication requirements, the court found that the agency's interpretation did not alter the regulation and was therefore consistent with the purposes of the
CWA. The Avoye/les II court applied two principles to its analysis: first, that an agency interpretation of a statute which it administers is entitled to "substantial deference"; and second, that the "agency's construction of its own regulations is entitled to even greater deference."176 Even though the Corps, not the EPA, had adopted the 1977 regulations- and thus they were technically not the EPA's "own" regulations- the court saw "no reason to lessen our deference in this case."177 Moreover, the court viewed the technical nature of the decision as a further reason to exercise deference. 178 These factors, and the broad authority delegated by Congress to the agency, influenced the court to defer to the EPA's interpretation.
179
Although the court indicated that the interpretative comments of the 1977 regulations could be read to support a different construction, it was persuaded that the
EP A's view was more reasonable than the landowners'. 180 The court also found that the EPA's interpretation comported with congressional intent since Congress was aware of the agencies' proposed regulations to expand the wetland definition, and not only refused to reject the proposals, but extended the Corps' section 404 jurisdiction beyond the "traditional definition of 'navigable waters,' " by enactment of the
CWA of 1977. 181 Accordingly, the court held that the EPA's eighty percent wetland finding was neither arbitrary nor capricious, and reversed the district court's decision to the extent that it differed from
176. Id.
177. Id. at 911 n.27. The court found it significant that the EPA had consulted with the
Corps during the development of the regulations. Furthermore, the court noted that the EPA had added the same wetland definition to its own 1982 regulations. Id.
178. Id.at91O-11.
179. Id. at 911.
180. Id. at 9\3. The court noted that:
A reading of the entire [regulatory] definition indicates that the agencies' interpretation is the more reasonable, since wetlands are not limited to areas that are permanently inundated . . . . We fail to understand how the agency may determine whether a tract is such an area without examining its hydrology. Similarly, the definition provides that a wetland is an area that "under normal circumstances [does] support" vegetation typically adapted for life in "saturated soil conditions." It would seem that the logical method for determining whether this requirement is met is to examine whether the soil is or is likely to be frequently saturated.
Id.
181. [d. at 915.
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1985] ADMINISTRATIVE LAW 35 the agency's determination. 182
The court, although intimating that the matter should have been referred to the Corps for further administrative proceeding,183 upheld the district court and disagreed with the EPA about the types of activ-
182. Id. at 918.
183. The Avoyelles II court indicated its dissatisfaction with the procedural context in which the district court ruled on this issue. The court felt that before judicial consideration of the matter, the Corps should have been permitted to exercise its "primary jurisdiction." Id. at
918-20. In the court's view, the landowners should have been required to actually request the issuance of permits from the Corps after the EPA's redetermination of the wetlands determination. The acquisition of an additional permit ruling by the Corps, in the court's opinion,
"might have obviated the need for addressing some of the issues discussed in the district court's opinion and presently urged on appeal." /d. at 919 (footnote omitted). In any event, the court decided to rule on the merits of the activities issue since the federal agencies dropped their primary jurisdiction argument on appeal. /d. at 920.
Professor William Rogers, a noted environmental law scholar, has noted that:
The courts should surrender their jurisdiction on environmental cases only upon. firm indications that the agency is capable of, and interested in, disposing of the dispute and clear assurances that the plaintiff is being sent to a competent forum that will resolve his claims, not on a wild good chase.
ROGERS, supra note 81, at 45-46.
It is important to note that after the Corps' initial 35% wetland finding, the district court in Avoyelles I ordered the Corps and the EPA to reconsider the determination. 511 F. Supp. at
281. The Avoyelles II court noted that "[i]n deciding to give the federal defendants an opportunity to make a final wetlands determination, the district recognized that the federal defendants bore the 'primary responsibility' for the determination of which lands were wetlands." 715
F.2d at 903. The remand technique used in Avoyelles I has already been cited with favor by several courts. See Buttrey v. United States, 690 F.2d 1170 (5th Cir. 1982), cerro denied, 103 S.
Ct. 2087 (1983); Buttrey v. United States, 573 F. Supp. 283 (E.D. La. 1983); Deltona Corp.
V.
Alexander, 682 F.2d 888, 894 n.7 (11th Cir. 1982) (cited but distinguished because the Corps had never been given the opportunity to decide the extent of its jurisdiction over the plaintiff's property).
The Fifth Circuit's dicta with respect to primary jurisdiction is disturbing for several reasons. The agencies had already had "two bites at the apple," the last opportunity mandated by means of court order. Given the elapsed length of time and the delay which the parties had already been subjected to awaiting a wetland determination, the court's reasons for granting the agencies a "third bite" are unconvincing. Both agencies jointly participated in the second determination, and there is no indication that the Corps objected to the EPA's criticisms of the
Vicksburg district's methodology, or to the agency's finding as to the types of activities requiring a permit. In fact, had the two agencies differed as to the proper interpretation of the wetland regulations, then the court's deference to the EPA's construction of "its own rules" would have been questionable. It is unlikely that the Corps would have failed to apply the determination it had jointly made with the EPA, and submitted to the district court as its final decision, in any subsequent permit process. Even before the agencies reconsidered the issue a second time, thousands of acres later determined to be wetland had already been lost because the
Corps had permitted the landowners to proceed with operations on 10,000 acres of land already cleared under the Vicksburg district's improper initial wetland determination. See 473 F.
Supp. at 537. Under Roger's analysis, and the balancing of the benefits to be engendered by further administrative proceedings against the costs of further delay, the application of the doctrine of primary jurisdiction was unwarranted.
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36 TEXAS TECH LAW REVIEW [Vol. 16:1 ltIes that required a section 404 permit. In accepting the district court's findings of fact, 184 the court held that the land-clearing activities constituted a discharge of pollutants prohibited by section
301(a)185 of the CWA.186 The court also agreed with the district court that the bulldozers were point sources of pollution. 187 However, the court found it unnecessary to answer the question of whether the mere removal of wetland vegetation comprised a violation of the
CWA. 188 In the court's view more than "mere removal" was involved since the land-clearing resulted in a redeposit of materials on the land. 189 Because the court held that a redeposit of materials was a discharge constituting "fill" material under section 404, it affirmed the district court's decision that the land-clearing activities required section 404 permits. 190
In summary, the Fifth Circuit held that the district court had improperly applied a de novo scope of review, instead of the arbitrary and capricious or abuse of discretion standard. In addition, the court found that the EPA's methodology was a proper interpretation of the
1977 wetlands regulation exempt from the APA's notice and comment procedures. In reference to questions of statutory interpretation under the CWA, however, the court affirmed the majority of the district court's legal conclusions. The district court was reversed only to the extent that its ninety percent wetland determination differed from the EPA's wetland determination.
2. Perspective
Environmental law cases have made significant contributions to the law relating to the scope of judicial review of agency decisionmaking. 191 The Avoyelles decisions are also noteworthy because of their implications for agency rulemaking and interpretation of statutes and quasi-legislative rules.
184. 715 F.2d at 920-22.
185. 33 U.S.C. § 1311(a) (1982).
186. 715 F.2d at 922.
187. Id.
188. Id. at 923.
189. Id.
190. Id. at 924. The Fifth Circuit also affirmed the district court's holding that the private defendant's land-clearing activities were not normal farming operations exempt from § 404.
Id. at 925-27. The court, however, declined to consider whether the landowner's activities represented a discharge of "dredged material." Id. at 925.
191. ROGERS, supra note 81, at 15.
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1985] ADMINISTRATIVE LAW 37
Professor Kenneth Culp Davis has noted that the "action of courts with respect to scope of review is far superior to their verbiage about scope of review."192 This description aptly fits Avoyelles II.
Although the Fifth Circuit criticized the district court for failing to explain the standard of review it applied to the administrative record, the Avoyelles II court was likewise vague in describing why it found the arbitrary and capricious standard appropriate. Yet there is little doubt that the court's decision was correct. Section 404 of the CWA does not require an adjudication "determined on the record after opportunity for an agency hearing" necessary to trigger the formal procedural requirements of section 554(a) of the AP A. 193 The judicial opinions have uniformly found that the section 404 permit process is an informal adjudicatory proceeding; consequently, permit applicants do not have the right to a trial-type hearing. 194 Under the APA scheme, "the substantial evidence test is used only on questions of fact
. . . the subject of a hearing with a determination on the record. . .
[a]U questions not subject to the substantial evidence test are subject to the test of § 706(2)(A)" the arbitrary and capricious standard. 195
The court, despite its contrary intimations, applied more than one standard of judicial review to examine the agency decision. In affirming the district court's holding that the land-clearing activities required section 404 permits, the court relied on the trial court's findings-not those of the EPA. The Avoyelles II court permitted the trial court to independently determine what acts were within the scope of section 404's coverage.
Different types of administrative actions, however, are not subject to the same scope of judicial review.
l96 The Avoyelles I court failed to recognize this distinction and indiscriminately applied a de novo standard of review to the agencies' determinations. Questions of statutory interpretation are within the competence of the judiciary and amenable to independent review should the court find the agency construction inconsistent with congressional intent. The determination of land-clearing activities within the coverage of section 404 presented a question of a different nature than what areas of the tract
192. DAVIS, supra note 58 § 29.00, at 518.
193. 5 U.S.c. § 554(a) (1982).
194. See e.g., Buttrey v. United States, 690 F.2d 1170 (5th Cir. 1982), cerro denied, 103 S.
Ct. 2087 (1983); National Wildlife Fed'n v. Marsh, 568 F. Supp. 985 (D.D.C. 1983); Nofe1co
Realty Corp.
V.
United States, 521 F. Supp. 458 (S.D.N.Y. 1981).
195. DAVIS, supra note 58 § 29.00-1, at 520.
196. See supra notes 66-69 and accompanying text.
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38 TEXAS TECH LAW REVIEW [Vol. 16:1 were wetland. As to the first issue, Congress provided guidance in the form of legislative history and detailed statutory provisions to confine agency discretion. In contrast, however, Congress has never attempted to define the term wetland.
197 Congress committed the formulation of the term's definition to agency discretion. Moreover, the technical nature of wetlands determination requires the application of specialized scientific knowledge. The agencies, by reason of their superior expertise, are ordinarily more qualified to address issues of this kind. The A voyelles II decision permitted the exercise of agency expertise and properly reviewed the wetland determination under the arbitrary and capricious standard.
Avoyelles II's holding with respect to the EPA's regulatory interpretation was also of significance. The principle that agencies are afforded deference in the construction of their own regulations is well established; the concept that this same deference may be afforded to one agency's interpretation of another's regulations is not. Avoyelles II creatively applied the rule by deferring to the EPA's interpretation of the Corps' regulations. This adaptation was not only appropriate, but necessary in the specialized environmental setting in which four agencies share responsibilities. Furthermore, the court's decision gave due recognition to the development of the rules through joint consultation between the EPA and the Corps. In the absence of similar special factors, it is unlikely that the A voyelles II result will be applied to other contexts.
The court's analysis of the distinction between legislative and interpretative rules was less satisfying. There are two conflicting lines of cases proffering different tests to distinguish the alternate types of rules: the "legal effect" test cases; and the "substantial impact" decisions. The legal effect test looks to whether the "legal rights or obligations" of the regulated individuals have been affected, and if the rule has established "binding norms" that serve to confine the decisionmaker's discretion.
198 The substantial impact test is more functional in nature and provides that rules having a significant effect on regulated individuals are legislative in character and must be adopted under notice and comment proceedings.
199
Not only did the Avoyelles
II court fail to indicate which test it thought appropriate, but it also
197. See supra note 85.
198. See Asimow, Public Participation in the Adoption of Interpretive Rules and Policy
Statements, 75 MICH. L. REV. 520, 531-45 (1977).
199. Id. at 545-53.
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1985] ADMINISTRATIVE LAW 39
. indiscriminately cited to both legal effect and substantial impact cases to support its holding?OO Prior Fifth Circuit cases, however, have applied the more traditional legal effect test,201 and Avoyelles II does not suggest that the circuit is prepared to change its viewpoint. 202
The "verbiage" of A voyelles II with respect to rulemaking is less important than the court's action. Whether the EPA's methodology constituted legislative or interpretive rulemaking was not the real issue-the Vicksburg District improperly applied the regulations. The
EP A's interpretation was not a "change" but a correction of one District Office's mistaken regulatory construction. There was no real methodological dispute between the Corps and the EPA. The court, irrespective of its phraseology, refused to permit the landowners to use the AP A to prohibit the EPA's application of the correct regulatory standards.
The section 404 program has always been highly controversial, and the debate has not ended. Critics assert that "[l]ike the amphibian, the program has gradually crawled from the navigable waters and now operates in areas where ships' keels have never ventured . . . .
The current program now creates uncertainties and liabilities for all those who would dredge, fill, fell or level in all but the most arid locales. "203 Supporters of the program find the "amphibian metaphor
200. See, e.g., 715 F.2d at 908-10. For example, the court cited to Pacific Gas & Electric
Co. v. FPC, 506 F.2d 33 (D.C. Cir. 1974) and Batterton v. Marshall, 648 F.2d 694 (D.C. Cir.
1980), both "legal effect" cases. The court also cited Texaco, Inc. v. FPC, 412 F.2d 740 (3d
Cir. 1969) and Lewis-Mota v. Secretary of Labor, 469 F.2d 478 (2d Cir. 1972), both interpreted to be "substantial impact" cases. See Asimow, supra note 198, at 531-53 (classifying and discussing many of the cited cases).
201. See, e.g., American Trucking Ass'ns v. ICC, 659 F.2d 452, 462 (5th Cir. 1982), cert.
denied, 103 S. Ct. 1272 (1983) (holding that purported guidelines were actually rules within the meaning of the AP A since they established binding norms and did not leave the "decisionmakers free to exercise discretion").
202. In dictum, the A voyelles II court noted that the EPA had the discretion to proceed by
"case-by-case adjudications and interpretative orders, rather than through the rulemaking process." 715 F.2d at 909. During the survey period, the Tenth Circuit indicated that it was less willing to allow agencies to create rules of general applicability in adjudications. See First
Bancorporation v. Board of Governors of the Fed. Reserve Sys., 728 F.2d 434, 438 (10th Cir.
1984) (finding that the Board had abused its discretion "by improperly attempting to propose legislative policy by an adjudicative order"). The Ninth Circuit has also "in a series of cases
. . . [striven] to develop law that an agency with power to make law through rules may not make law 'of widespread application' in an adjudication." DAVIS, supra note 58 § 7:25, at 179.
The Fifth Circuit's reluctance to confine administrative discretion in this area, however, is consistent with the position of the majority of circuits. See id. at 183-86.
203. Parish & Morgan, History, Practice and Emerging Problems of Wetlands Regulation:
Reconsidering Section 404 of the Clean Water Act, 17 LAND & WATER L. REV. 43, 45 (1982).
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40 TEXAS TECH LAW REVIEW [Vol. 16:1 amusing, but inaccurate," and maintain that its jurisdictional breadth is necessary to protect sensitive wetlands.
204
The Fifth Circuit's Avoyelles II opinion permits the agencies to broadly interpret their regulations to protect environmentally sensitive wetlands. The Avoyelles II rationale conflicts with a decision of the Sixth Circuit issued during the survey period in United States v.
Riverside Bayview Homes, Inc. 205 In holding that undeveloped suburban land was not subject to Corps section 404 jurisdiction, the River-
side court narrowly interpreted the scope of the wetland regulations:
Congress may, indeed, have meant to extend the protections of the
Act beyond the straightforward definition it provided of "navigable waters." The question, however, is how far away from "navigable waters" Congress contemplated that the regulations under the Act could drift. It is certainly not clear from the statute that the Corps' jurisdiction goes beyond navigable waters and perhaps the bays, swamps and marshes into which those navigable waters flow.
Neither is it clear that Congress intended to subject to the permit requirement inland property which is rarely if ever flooded.
Accordingly we interpret the words 'inundated at a frequency and duration sufficient to support, and that under normal circumstances [does] support [wetlands vegetation], as set forth in the amended regulation to require frequent flooding by waters flowing from 'navigable waters' as defined in the Act. The definition thus covers marshes, swamps, and bogs directly created by such waters, but not inland low lying areas such as the one in question here that sometimes become saturated with water.
206
The significance A voyelles II holds for the section 404 program is demonstrated by the interest federal agencies and numerous private parties showed in the litigation.
207 The Fifth Circuit correctly applied administrative law principles and permitted the agencies to protect wetland areas. As demonstrated by another Fifth Circuit case issued during the survey period however, Save Our Wetlands Inc. v.
Sands,208 the court was prepared to restrict the parameters of the program. In Save Our Wetlands Inc. v. Sands, the court held that section
404 jurisdiction did not exist where a power company's land-clearing
204. Blumm, Wetlands Preservation, Fish and Wildlife Protection and 404 Regulation: A
Response, 18 LAND & WATER L. REV. 469, 477-80 (1983).
205. 729 F.2d 391 (6th Cir. 1984).
206. [d. at 397-99.
207. See supra notes 103-112 and accompanying text. The State of Florida filed an amicus curiae brief in favor of the plaintiffs' position. 715 F.2d at 907 n.20.
208. 711 F.2d 634 (5th Cir. Aug. 1983).
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1985] ADMINISTRATIVE LAW 41 activities had merely removed trees from the surface of the soil. 209
The court distinguished Avoyelles II, finding that there was no agricuI tural con version of the soil in to non wetland. 210 The two cases, considered together, show that the circuit will only allow the agencies to exercise their broad jurisdiction over land-clearing activities that cause the deposit of fill or dredged material or a conversion of wetland.
A voyelles II calls into question the effectiveness of the Corps'
"decentralized" policy211 and the ability of the EPA to oversee the section 404 program. The Corps' adoption of the program has been less than enthusiastic and, because the Corps itself conducts major dredging activities, it has been described as playing "the role of the kettle assailing the teapot. "212 Leaving the administration of section
404 to the various district offices with little supervision, and no administrative appeal of permit decisions, has resulted in a wide divergence in the application of the wetland regulations. 213 The EPA has failed to provide adequate review of district office decisions. 214 The citizen's suit provision215 has been overburdened because of agency misadministration. In the final analysis, reliance upon private citizens, and even proper judicial application of the forty year old AP A, cannot substitute for effective agency implementation of the section 404 program. Due to the Vicksburg District's misapplication of the regulations, several thousand acres of wetland were lost in Avoyelles II.216
Avoyelles II provides some indication why, even after the adoption of the FWPCA and the CWA, 300,000 acres of wetlands continue to be lost each year. 217
A.
III.
THE FINAL ORDER RULE
The Meaning of the Term "Final Order"
Section 704 of the AP A states that agency "action made reviewable by statute and final agency action for which there is no other
209. The court noted that the power company only windrowed the "cleared vegetation
. . . and allowed [it) to naturally deteriorate." Id. at 647.
210. Id.
211. See supra notes 93-100 and accompanying text.
212.
ROGERS, supra note 81, at 407.
213. See supra note 100.
214. /d.
215. 33 U.S.c. § 1365(a) (1982).
216. See 473 F. Supp. at 536-37.
217. Blumm, supra note 204, at 471 n.11.
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42 TEXAS TECH LAW REVIEW [Vol. 16:1 adequate remedy in a court are subject to judicial review" but that a
"preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action."218 Although the APA provides that a nonfinal agency action is not subject to judicial review, the statute does not define the meaning of the term "final."219 Moreover, the United States
Supreme Court has also failed to proffer a firm definition of final agency action. In the seminal case addressing this question, Abbott
Laboratories v. Gardner,220 the Court held that section 704 only requires the application of a "flexible view of finality," in the sense that the term should be interpreted "in a pragmatic way."221 The law under section 704 has therefore lacked consistency, either because courts "variously interpreted" the meaning of finality or entirely ignored the statute. 222
The AP A is not the sole source of the finality requirement. The ability of a court to review agency action may derive from either statutory or nonstatutory authority.223 Common law judicial review, however, has been gradually supplanted by statute, and at pre<;ent most agencies have statutes that govern judicial review of agency action.224 Even when agency enabling acts may be silent in this respect, the Administrative Orders Review Act, as amended by the Hobbs
Act, limits review of the decisions of certain agencies to "final orders. "225 Irrespective of any statutory finality requisite as a precondition of judicial review, courts generally ensure this result by the application of doctrines such as primary jurisdiction, exhaustion of administrative remedies, and ripeness for review. The technical difference between judicially created devices and a statutory final order requirement is that the latter is jurisdictional in nature and not subject to the court's discretion. This distinction, however, has meant little in practical application since the meaning of the term "final" had no firm definition. The interpretation of finality remained "a factual de-
218. 5 U.S.c. § 704 (1982).
219. DAVIS, ADMINISTRATIVE LAW TREATISE § 26.10, at 456 (2d ed. 1983).
220. 387 U.s. 136 (1967).
22 \. Id. at 149-50.
222. See DAVIS, supra note 219 § 26.10, at 456.
223. See Note, The Issue of Finality in Federal Agency Action, 17 NEW ENG. L. REV.
1237, 1240-53 (1982).
224. Id. at 1245.
225. Administrative Orders Review Act, 28 U.S.c. §§ 2341-2351 (1982), as amended by
Hobbs Act, 28 U.S.c. § 2342 (1982).
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1985] ADMINIS'TRATIVE LAW 43 termination unique to any statutes and circumstances involved in a case."226
Instead of formulating a separate body of jurisprudence for the consideration of diverse "final order" agency statutes, the federal courts have sometimes looked to section 1291 of Title 28 of the
United States Code to determine questions of agency finality.227 Section 1291 promotes finality by limiting the jurisdiction of the courts of appeal to "final decisions of the district courts of the United
States,"228 and offers the additional benefit of the availability of a large body of interpretive case law. The rationale of this practice is that agency finality provisions further the "same policies as the finality rule embodied in . . . [section] 1291."229
Gillespie v. United States Steel Corp. 230 is one of the most significant Supreme Court decisions addressing the meaning of finality for the purposes of section 1291. In a wrongful death action brought by the petitioner, the mother of a seaman who drowned while working on the respondent shipowner's vessel, the district court held that federallaw provided the exclusive remedy and dismissed the petitioner's state law claims.23J The petitioner did not wait for a final judgment on the merits of the federal law cause of action, but immediately filed an appeal. Although the circuit court considered the claim, it held against petitioner and affirmed the district court. 232 The Supreme
Court affirmed the circuit court's exercise of jurisdiction over the petitioner's appeal by holding that final "within the meaning of section
1291 does not necessarily mean the last order possible to made in a case. "233 Furthermore, the Court stated that:
[W]hether a ruling is "final" . . . is frequently so close a question that decision of that issue either way can be supported with equally forceful arguments, and that it is impossible to devise a formula to resolve all marginal cases coming within what might well be called the "twilight zone" of finality. Because of this difficulty this Court has held that the requirement of finality is to be given a "practical
226. Note, supra note 223, at 1256.
227. 28 U.S.c. § 1291 (1982).
228. Id.
229. Ingalls Shipbuilding Div., Litton Sys. v. White, 681 F.2d 275, 278 (5th Cir. 1982).
230. 379 U.S. 148 (1964).
231. Id. at 150.
232. Id. at 151-52.
233. Id. at 152.
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44 TEXAS TECH LAW REVIEW [Vol. 16:1 rather than a technical construction.,,234
Finding the most important consideration to be the balancing of the competing interests of "inconvenience and costs of piecemeal review" against "the danger of denying justice by delay," the Court decided that it could not "say that the Court of Appeals chose wrongly under the circumstances. "235
Recent Supreme Court cases, however, indicate that, although
Gillespie has never been overruled, its liberal view of finality has rarely been applied. 236 In Ingalls Shipbuilding Division, Litton Systems, Inc.
v. White, 237 a panel of the Fifth Circuit demonstrated that it was prepared to identify the exceptional circumstances under which strict application of the final order rule would be inappropriate. A shipfitter, injured in the course of his employment, filed a compensation claim against his employer238 pursuant to the Longshoremen's and Harbor
Workers' Compensation Act (LHWCA),239 Before a formal administrative hearing was held, however, the parties negotiated a settlement which was approved by an administrative law judge (ALJ).24O The
Director of the Office of Workers' Compensation Programs challenged the settlement and brought an appeal before the Benefits Re-
234. Id. (citations omitted) (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541,
545 (1949».
235. 379 U.S. at 152-153.
236. See, e.g., Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368 (1981) (citing the principle that a final order "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment," in holding that a district court's prejudgment decision to refuse to disqualify counsel does not constitute a final order). But cf American Export Lines, Inc. v.
Alvez, 446 U.S. 274 (1980) (plurality decision) (Court granted writ of certiorari from a decision by the highest court of a state that nonstatutory maritime law permitted a spousal claim for loss of society to be brought in a wrongful death action, even though all issues of liability were yet undecided by the state courts). The case could possibly be distinguished on the ground that considerations of federalism, rarely presented in the review of agency orders, influenced the Court to decide the merits of the action since the only federal issue had been finally decided by the state court and would eventually be presented to the Court irrespective of the resolution of other state claims. Id. at 279; see also 15 C. WRIGHT, A. MILLER & E. COOPER,
FEDERAL PRACTICE AND PROCEDURE § 3908, at 435-36 (1976) (28 U.S.c. § 1257 and § 1291
"should not be read indiscriminately together" as special considerations of "comity and federalism" are presented by the former statute); Coopers & Lybrand v. Livesay, 437 U.S. 463
(1978) (dismissing for lack of jurisdiction an appeal from a district court's prejudgment denial of class action certification because the denial was not "final" since the order was subject to revision).
237. 681 F.2d 275 (5th Cir. 1982).
238. Id. at 277.
239. 33 U.S.c. §§ 901-950 (1982).
240. 681 F.2d at 277.
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1985] ADMINISTRATIVE LAW 45 view Board.
241 The Board, finding that the ALI's factual findings were inadequate, reversed and remanded the case for further proceedings.242 The employer declined to participate in further administrative proceeding and filed an immediate appeal to the Fifth Circuit. 243
Since section 921(c) of the LHWCA244 provided that only a "final order of the Board" was subject to review by a court of appeals, the court was required to determine whether the case presented sufficient "finality" to confer subject-matter jurisdiction.245 The court applied the Gillespie test and weighed the "inconvenience and costs of piecemeal review on the one hand and the danger of denying justice by delay on the other. "246 First, the court concluded that its consideration of the merits of the case would "not raise the specter of piecemeal review."247 In the court's view, the validity of the settlement represented a question of law already decided by the Benefits Review
Board and was therefore "final. "248 Second, the court indicated that since the agency's legal position was "final," a dismissal at the current stage of the proceeding would result in needless inconvenience to the claimant. The court stressed the fact that the ALl was bound by the
Board's interpretation of the law. Pursuant to the court's reasoning, if the Board's legal view was incorrect and subject to reversal on a subsequent appeal, the claimant would suffer substantial harm "since the delay caused by dismissal could put him that much further off from the recovery to which he unquestionably is entitled."249 Under these circumstances, the court found that the case presented a "unique situation" that should be treated as an exception irrespective of technical finality.250 The court, therefore, held that the Board's order was final for the purposes of section 10 of the LHWCA.251
241. Id.
242. Id.
243. Id. at 278.
244. 33 U.S.c. § 921(c) (1982).
245. 681 F.2d at 278.
246. Id. at 279 (quoting Gillespie v. United States Steel Corp., 379 U.S. 148, 152-53
(1964».
247. 681 F.2d at 279.
248. Id.
249. Id.
250. Id.
251. Id. at 280.
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46 TEXAS TECH LAW REVIEW [Vol. 16:1
The Newpark Decisions
1. Newpark I
Less than a year after the Ingalls decision, another panel of the
Fifth Circuit was called upon to construe the same statute in Newpark
Shipbuilding & Repair, Inc. v. Roundtree (Newpark /).252 The claimant, a welder-employee of the petitioner shipping firm, filed a compensation claim for a job-related injury suffered during his first day of work on a shipping barge. Prior to joining the employ of the petitioner, the claimant had worked for twenty years as an independent contractor and been paid as much as $12.50 per hour. Petitioner, however, had compensated the employee at the rate of only $5.50 per hour. During a formal administrative hearing, the ALl found that the claimant was entitled to compensation.253 Section 10 of the LHWCA used "the average weekly wage of the injured employee"254 to determine the amount of the compensation award, but provided three different formulas for computing the average weekly wage. 255 The ALl decided to apply the formula that considered the future earning capacity of the claimant based on his previous year's gross income.256
The Board affirmed the ALl's choice of formula, but reversed and remanded for further proceedings-apparently finding that the ALl should have computed the award on the basis of the claimant's net income. 257
The Newpark I panel, finding the rationale of Ingalls persuasive, held that the Board's order was immediately appealable. 258 The court stressed that the "issue presented challenges the proper legal standard, rather than constitutes a factual dispute."259 Moreover, the court distinguished cases in which the agency determination was in a less "final posture," in the sense that the administrative record was incomplete, or presented undecided factual issues. 260 The Board's re-
252. 698 F.2d 743 (5th Cir. 1983), rev'd on reh'g, 723 F.2d 399 (5th Cir. Jan. 1984).
253. 698 F.2d at 745.
254. 33 U.S.C. § 910 (1982).
255. 698 F.2d at 748.
256. Id. at 745.
257. Id.
258. Id. at 746.
259. Id.
260. Id. at 747. The court indicated that the record was complete because it contained
"clear and ample evidence of . . . earnings history, the earnings records of . . . co-workers, and all other necessary information . . . [t]he task of applying § lO(b) to the existing record will be ministerial in nature." Id. at 747-48 n.2. In the court's opinion, the remaining un-
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1985] ADMINISTRATIVE LAW 47 mand to the ALJ was considered to be merely ministerial in nature, since it required only that the ALJ calculate the award under the legal standard set forth by the Board. In applying the Gillespie factors, the court noted that its decision on the merits would not raise the possibility of piecemeal appeals since it would "settle this question and minimize the risk of a wasted agency hearing and a later appeal."261
2. Newpark II
Sitting en bane, the Fifth Circuit Court of Appeals reversed the
Newpark I panel decision in Newpark Shipbuilding & Repair, Inc. v.
Roundtree (Newpark II).262 The court indicated that it was applying
"the well-settled general rule that a judgment or order is not final unless it ends the litigation on the merits and leaves nothing for the trier to do but execute the judgment. "263 Although the court found that the Board order had determined "a central issue of liability," it gave greater weight to the Board's remand of "the administrative proresolved question of the amount of attorney fees due was a collateral matter that did not prevent the Board's decision from being appealable on the merits. Id. at 748 n.3.
261. Id. at 748. The dissent, written by Judge Tate, strongly disagreed with the majority's analysis. Id. at 752-58 (Tate, J., dissenting). In Judge Tate's opinion, precedent provided that when "a central issue of liability has been determined to administrative finality . . . but [a] remand is ordered to calculate and make a specific monetary award" that no final order exists for the purpose of judicial review. Id. at 753.
Judge Tate also disagreed with the majority's view that the record was complete, indicating the possibility that further evidence might be necessary to ascertain the proper amount of weekly wages and to compute attorney fees. Id. at 755. The dissent also raised the hazard that the majority's lax view of finality could result in the filing of protective appeals by counsel to avoid suffering foreclosure of the right to judicial review in the fear that an agency's interlocutory order may be subsequently determined to be "pragmatically final." Id. at 756. Moreover, pointing to the present case as an example, the dissent argued that permitting a premature appeal could further prolong final resolution of the case, rather than prevent additional delay.
Id. at 755-56.
In addition, Judge Tate noted that in "a commendable effort to expedite judicial review
. . . the majority has adopted a principle of case-by-case determination of 'finality' that will, however, unsettle the relative certainty that was previously attached to that concept." Id. at
752. The dissent believed that the burden and resulting uncertainty of applying an ad hoc approach to questions of finality, outweighed any possible benefits that might accrue. Id. at
756.
Judge Tate's views concerning this matter are of particular interest since he later wrote the majority's en banc opinion in Newpark II that reversed the Newpark I panel decision. See
infra note 262. Judge Williams, who wrote the majority opinion in Newpark I, later authored the dissent in Newpark II.
262. 723 F.2d 399 (5th Cir. Jan. 1984) (en banc), cerro denied, 53 U.S.L.W. 3236 (U.S. Oct.
I, 1984) (No. 83-1716).
263. Id. at 400.
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48 TEXAS TECH LAW REVIEW [Vol. 16:1 ceedings to the administrative law judge for further findings."264 The court adopted the rationale of the Newpark I dissent,265 and found no reason to depart from the requirement of strict finality.
The en banc decision, however, exceeded the scope of the
Newpark I dissent in several important respects. First, the opinion critically analyzed Gillespie, and subsequent Supreme Court cases,266 and articulated the court's view that the Gillespie should be limited to its unique facts. The court declined to "detail the facts . . . [or] analyze the several strands of reasoning by which Gillespie, because of
. . . [its] competing considerations," proffered an unusual factual situation justifying an exception from the strict technical application of finality, "save to observe that none of Gillespie's exceptional reasons are apparent here."267 Secondly, the decision did more than reverse
Newpark I. The court, although noting that it could possibly leave
Ingalls "undisturbed, distinguishable and limited to its facts," chose to expressly overrule Ingalls deciding that "its value in occasionally permitting reviewable pragmatic finality to Board remand orders is outweighed by its erosion of the values of the finality rule. "268 The
Fifth Circuit, therefore, gave notice of its intention to strictly construe the finality requirement and reject the application of a "case-by-case methodology of determining pragmatic finality," because an ad hoc approach would be in "fundamental conflict with values and purposes of the finality rule."269 The court found it preferable to avoid the possible danger of delay, mUltiple appeals, and the filing of precautionary appeals by providing "a relatively clear test of appealability."27o
C. Perspective
Administrative finality cases can rarely be resolved by a purely jurisdictional analysis. The validity of this observation is sustained by several factors, not the least of which relates to the important distinction between finality requirements derived from statutory as compared to nonstatutory sources. 271 In the latter circumstance, the
264. [d.
265. See supra note 261.
266. 723 F.2d at 401-03. The court interpreted subsequent Supreme Court cases as indicating that the Court had afforded Gillespie a "limited construction." [d. at 402.
267. [d. at 401.
268. [d. at 407.
269. [d. at 405.
270. [d.
271. See supra notes 218-29 and accompanying text.
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1985] ADMINISTRATIVE LAW 49 application of the doctrine is subject to substantial judicial discretion, and is generally subsumed under the similarly related principles of exhaustion of administrative remedies, ripeness of review, and primary jurisdiction. Newpark II, in either its language or its intent, cannot be considered applicable to the finality requirement in the nonstatutory context. It would likewise be inaccurate to intimate that the holding of Newpark II could be applied to all statutes which purport to regulate the availability of judicial review from administrative decisions. The wide dissimilarities among these statutes suffices to demonstrate the point in issue. Some statutes provide for judicial review but designate no time limitation for the filing of such review, others provide for a time limitation but fail to specify the requirement of a "final order," while yet additional types of statutes explicitly permit pre-enforcement review or review of "interlocutory matters. "272
The Newpark II rule should relate only to those types of review statutes that expressly, or pursuant to judicial construction, limit judicial review to "final" agency orders. 273
A significant number of agency review statutes do, however, require that administrative finality exist before a court may afford judicial review,274 and Newpark II is likely to have a substantial impact
272. See, e.g., Davis, Judicial Review for Rulemaking: New Patterns and New Problems,
1981 DUKE L.J. 279, 280-81, 297-308 (providing a short description of 30 statutes mandating different procedures for judicial review of administrative decision-making).
273. One Fifth Circuit panel has apparently already distinguished Newpark II on this basis. In RSR Corp. v. Donovan, 733 F.2d 1142 (5th Cir. June 1984), the Occupational Safety and Health Administration cited a corporation for failing to pay medical benefits to employees temporarily removed or terminated from work due to job related occupational illnesses. Section II(a) of the Occupational Safety and Health Act of 1970, 29 U.S.c. § 660(a) (1982)
(OSHA) had been judicially interpreted to mandate finality of the agency decision as a prerequisite for judicial review. 733 F.2d 1144.
In finding that the agency's order was reviewable, the court stated that "[o]nly a crabbed reading . . . [of OSHA] would forbid review of an order that affirmed in part and modified in part both citations and penalties simply because the issue of what other (and additional) relief is appropriate has been remanded for determination." Id. The court distinguished Newpark II and similar cases under 28 U.S.c. § 1291 on the rationale that the divergent language of the
OSHA provision indicated that Congress intended to "impose requirements different from those we have imposed under the LHWCA and those exacted by use of the term 'final decision' in the Judicial Code." Id. at 1146 (footnote omitted).
274. See, e.g., Immigration and Nationality Act of 1952, 8 U.S.C. § 1105a (1982) (limiting the jurisdiction of the courts of appeals to direct review of "final orders of deportation").
During the survey period, the Fifth Circuit held that this provision prohibits direct appellate review of the administrative denial of a stay of deportation pending the Board of Immigration
Appeals ruling on a motion to reopen a deportation proceeding. Bonilla v. INS, 711 F.2d 43,
44 (5th Cir. July 1983). See also Civil Service Reform Act of 1978, 5 U.S.c. § 7703(a)(I)
(1982) ("Any employee or applicant for employment adversely affected or aggrieved by a final
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50 TEXAS TECH LAW REVIEW [Vol. 16:1 upon parties subject to these provisions. There is little doubt that the mandates of these statutes are jurisdictional in nature, and may not be cavalierly treated with disdain by the federal courts. Nevertheless, the jurisdictional nature of these statutes do not, in and of themselves, provide the answer to the finality riddle. Although a lack of subjectmatter jurisdiction is a complete bar to the court's ability to hear a case, the statutes fail to define finality with specificity. The judiciary has the responsibility to define the parameters and extent of its jurisdiction in problematic cases.
In Newpark II, the Fifth Circuit sought to divest itself of this burdensome task. The case is clearly intended to do more than correct a single panel's perhaps overly liberal interpretation of the LHWCA.
Newpark II sets forth a narrow and restrictive bright-line test designed to obviate the need to give individualized consideration to future statutory final order cases. The natural inclination of the judiciary to desire a panacea to rid itself of a thorny legal dilemma described by one weary judge as a "threshold question . . . unduly wasteful of judicial time"275 is understandable. Nonetheless, the
Supreme Court has never expressly overruled Gillespie, even though one noted commentator has remarked that "for the most part Gilles-
pie has either been ignored by the courts of appeals or invoked to justify appeals that could have been explained on more traditional notions of finality."276 Requiring strict technical finality in all cases "is not feasible . . . [since] [i]n some cases important rights of a party will be irremediably destroyed if he is unable to secure prompt review, and in others an issue is so readily separable from the balance of the case that there is no advantage in postponing review of that issue."277
Gillespie, though appropriately rarely applied, preserves the ability of the courts to retain needed flexibility to deal with the unusual case in which finality exists in all but a technical sense. What is unclear from Newpark II, and the question that the Fifth Circuit pointorder or decision of the Merit Systems Protection Board may obtain judicial review of the order or decision."); Atomic Energy Act, 42 U.S.c. § 2239(b) (1982) ("Any final order entered in any proceeding of the kind specified in subsection (a) of this section shall be subject to judicial review . . . . § 2342(1) (1982) (providing the courts of appeals with exclusive jurisdiction to review "final orders" of the FCC); Social Security Amendments of 1950, 42 U.S.c. § 1316(a)(3) (1982) (requiring that the Secretary must make a "final determination" before states have the right to seek review in the courts of appeals).
275. Yorkville Bank v. Bassak (In re Bassak), 705 F.2d 234, 235 (7th CiT. 1983) (Pell, J.).
276. C. WRIGHT, THE LAW OF FEDERAL COURTS § \01, at 706 (4th ed. 1983).
277. Id. at 698.
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1985] ADMINISTRATIVE LAW 51 edly declined to address, is to what degree and under what circumstances, if any, needed flexibility will be permitted in prospective extraordinary situations. Irrespective of how apparently free from uncertainty the finality issue may have been with respect to the
LHWCA, the breadth of the Newpark II decision extends beyond the limited confines of that particular statute and portends the application of a restrictive formula to a wide range of divergent circumstances.
The court's willingness to accept this eventuality is manifested by its overruling of Ingalls, a case that has received favorable treatment by other courts278-and by the court's own admittance, capable of distinction. 279
If Gillespie has any remaining life in the Fifth Circuit, it may be difficult to identify cases offering more appropriate justifications for exceptional treatment than those provided by Ingalls and Newpark I.
These cases ostensibly provided situations in which exceptional need for immediate judicial resolution was demonstrably present and the central legal issue had been finally resolved. Moreover, the legal questions were of the type particularly subject to final resolution with little risk of recurrence and the resultant harm of piecemeal appeals. If critical factual determinations yet remained to be decided, or if the agency remands involved more than the fulfillment of ministerial duties, the court's decision is unconvincing in making these conditions plain. Although Newpark II has been followed by a panel of the Eleventh Circuit in reference to another LHWCA case,280 it still is unclear to what degree other circuits will adopt or reject its apparently strict test, or limit its ambit to the LHWCA. What is likely, however, is that even within the Fifth Circuit, judges will be presented with the temptation to further torture the already strained concept of finality to provide relief in particularly meritorious cases-with little necessary guidance from Newpark II as to what appropriate factors or circumstances would warrant flexibility.
278. See, e.g., Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd., 709 F.2d 190, 213 (3d
Cir. 1983) (citing Ingalls with favor). Moreover, the rationale of Newpark I, before its reversal by the Fifth Circuit sitting en banc, had been expressly followed by the Ninth Circuit. Stone v.
Heckler, 722 F.2d 464, 467 (9th Cir. 1983).
279. 723 F.2d at 407. For further evidence that Ingalls did not portend a deluge of cases undermining the foundations of the finality rule, but was well within the capacity of the courts to distinguish when necessary, see Freeman United Coal Mining Co. v. Director, Office of
Worker's Compensation Programs, 721 F.2d 629, 632 (7th Cir. 1983) (finding "[n]o special reason for bending the rule, as in" Ingalls).
280. Jacksonville Shipyards, Inc. v. Estate of Verderane, 729 F.2d 726, 727 (11th Cir.
1984).
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52 TEXAS TECH LAW REVIEW [Vol. 16:1
The same policy considerations that support the avoidance of unnecessary multiple judicial appeals also promote the repudiation of the waste of administrative resources. In many overworked agencies the backlog of decisions may lag behind that of the courts. Delay of justice, inconvenience to the parties, and disservice to the public interest similarly transpire regardless of the stage at which the disfunction occurs. The Newpark cases provide an excellent example of this principle. What is remarkable is that the workman's compensation claimant suffered his injury on April 22, 1975,281 and no party disputed his entitlement to recovery. The agency finally ruled as to the method of his recovery, but more than nine years later the award is still in doubt.
If the agency misread the law and applied an improper formula to determine the award, an additional round of appellate litigation will most likely occur.
Congress' primary purpose in enacting statutory provisions which bypass the district courts to vest jurisdiction in the courts of appeals to review agency decisions was to eliminate unnecessary delay by relying upon administrative fact finding. 282 This fundamental intent should not be neglected when the additional interests of judicial economy are considered. One device which the courts of appeals have resorted to, even when dismissing cases for lack of jurisdiction upon a finding of non-finality, is that of "advisory" affirmance or reversal. 283
The court's "view on the merits may provide useful guidance in recurring situations,"284 even though its statements may constitute dicta.
The use of this device to lessen the effects of potential delay in usual situations is not novel to the Fifth Circuit. 285 Irrespective of the mer-
281. 698 F.2d at 745.
282. See Foti v. INS, 375 U.S. 217 (1963) (discussing the congressional intent in reference to § \06 of the Immigration and Nationality Act).
283. 15 C. WRIGHT, A. MILLER & E. COOPER, FEDERAL PRACTICE AND PROCEDURE
§ 3905, at 189-90 (Supp. 1983). Federal courts are prohibited from issuing "advisory opinions" by U.S. CONST. art. III, § 2. See WRIGHT, supra note 276. § 12. If a court, however, decides the "case in controversy" by dismissing a case for lack of jurisdiction, additional gratuitous statements of the court in reference to the merits should not be considered any more improper than other discretionary judicial dicta unnecessary to resolve the matter before the court.
284. Massachusetts v. Hale, 618 F.2d 143, 145 n.3 (1st Cir. 1980).
285. See Arango v. Guzman Travel Advisors Corp., 621 F.2d 1371, 1378 (5th Cir. 1980)
(although dismissing the action because of a lack of "an appealable final judgment," the court nonetheless, "in the interest of expediency," offered the district court "some guidance in its further handling of these issues"). Other circuits have adopted this approach when unusual circumstances indicated its propriety. See, e.g., In re I.M. Wells, Inc., 575 F.2d 329 (1st Cir.
1978); Sykes v. Krieger, 551 F.2d 689 (6th Cir. 1976).
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1985] ADMINISTRATIVE LAW 53 its of the court's finality decision in Newpark II, the case presented an appropriate opportunity to apply the extraordinary device of "advisory dismissal." Instead, the court's decision provided the agency with no guidance as to a crucial legal issue and preserved the inherent seeds of future delay.
Resort to section 1291 to resolve issues of finality has engendered no more certainty than the vague formulation of this concept under the AP A and the diverse "final order" agency statutes. "[T]he opinions of the Supreme Court on the subject of the final judgment rule do not contain clear guidance . . . [a]1though there are some cases supporting a generous attitude to appealability, they have had limited influence and coexist uneasily with precedents urging a stricter interpretation of finality."286 The danger of the broad language of Newpark
II, is that it purports to proffer a decisive rule to settle a question to which "[n]o verbal formula yet devised can . . . provide an utterly reliable guide for the future."287 Furthermore, a bright-line rule is of questionable necessity. Familiar devices such as summary dismissal or denial of oral argument, provide the appellate courts with sufficient means to readily dispense with nonmeritorious claims, while preserving needed justiciable flexibility for unusual cases.
Newpark II should not be given an overly broad construction.
The opinion by its own terms relates only to questions of statutory finality, and applies only when the statute is deemed to limit judicial review to final agency decisions. This distinction has already been noted by one Fifth Circuit panel,288 and is likely to be strictly applied in future cases. Moreover, even though the decision failed to describe the appropriate circumstances, Newpark II did not expressly foreclose the possibility of granting an exception from the requirement of strict technical finality when warranted by extraordinary conditions. This would also suggest that the Fifth Circuit will still recognize the need to permit appeal when the affect of the administrative order is not practically remediable on final appeal and the decision is "too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated. "289
286. Bachowski v. Usery, 545 F.2d 363, 370 (3d Cir. 1976).
287. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 170 (1974).
288. See supra note 273.
289. Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949). See, e.g., Exennium,
Inc. v. Karbach Enters., 715 F.2d 1401 (9th Cir. 1983).
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IV.
CONCLUSION
The cases on deregulation, rulemaking, scope of review, and appealability of final agency orders are noteworthy although the Fifth
Circuit largely applied established administrative law principles. The court indicated that deregulatory programs would be permitted to proceed without judicial interference. The court, however, demonstrated its willingness to independently review relevant statutes and legislative history to ensure that proposed deregulation was within the agency's statutory authority. Moreover, the Fifth Circuit required agencies to show due deference to proper administrative procedure by strictly construing the APA's notice and comment procedures. The circuit's deregulation decisions present a flexible approach that should serve as a model to other courts reviewing statutory economic allocation programs.
In the environmental area, the court permitted the EPA to exercise broad discretion over activities that reduce ecologically sensitive wetland areas. The court also made an interesting adaptation of traditional administrative principles by deferring to the EPA's interpretation of another agency's rules. The Fifth Circuit's refusal to limit the authority of the EPA to implement its regulatory definition of wetlands conflicts with a decision of the Sixth Circuit issued during the survey period. Finally, the court overruled precedent and gave notice of its intention to strictly construe the final order rule. The
Fifth Circuit, however, declined to develop meaningful guidelines in identifying "final" agency orders and offered a bright-line rule which may prove troublesome in the future.
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