Bartlett v. USDA: Futility, Legal Question and Equitable Estoppel Revisited

by Katherine Kennedy

The Eight Circuit recently upheld a district court decision dismissing a group of suit against the U.S. Department of Agriculture (“USDA”) on the grounds that the plaintiffs did not exhaust their administrative remedies. In a case before the Honorable Raymond Gruender, Bartlett v. U.S. Dept. of Agric., 716 F.3d 464 (8th Cir. 2013), thirty-eight individuals and entities who farm corn and soybeans in several counties in Iowa (collectively, the “Producers”) brought action against federal and state agencies and officials, alleging that defendants used an improper price-election figure when calculating payments for which the farmers allegedly were eligible under the Supplemental Revenue Assistance Payments Program (SURE Program). The defendants are the USDA; the Farm Service Agency (“FSA”); the Farm Service Agency for the State of Iowa (“Iowa FSA”); Secretary of Agriculture Thomas J. Vilsack; Acting Administrator of the Farm Service Agency, Bruce Nelson; and Executive Director of the Iowa Farm Service Agency, John Whitaker (collectively, the “Government”). The USDA, through its division the FSA, implements the SURE Program at the federal level.

Congress created the SURE Program through the Food Conservation and Energy Act of 2008.  The FSA is responsible for adopting regulations to administer the program. The SURE Program provides disaster assistance payments to eligible producers for losses in crop production or quality resulting from a natural disaster. Under the SURE Program, eligible producers may receive sixty percent of the difference between the disaster assistance program guarantee (“SURE guarantee”) and the total actual revenue of the farm. Pursuant to a statutory formula, the SURE guarantee is equal to 120 percent of the product of three factors, one of which is the “price election for the commodity elected by the eligible producer” (“price election”). FSA regulations define “price election” as “the crop insurance price elected by the participant multiplied by the percentage of price elected by the participant.” State committees, such as the Iowa FSA, and local county committees are responsible for administering FSA programs on the local level. As part of their responsibilities, these FSA subdivisions use federal and statutory formulas to calculate and issue SURE Program payments under the supervision of the FSA.

This case was an issue of administrative remedies before seeking a federal court’s review. A SURE program participant may seek administrative review of certain adverse county committee determinations by requesting reconsideration by the county committee, appealing to the state committee, requesting reconsideration by the state committee, agreeing to mediation, or appealing to the USDA National Appeals Division (“NAD”). The NAD is a separate subdivision within the USDA and is independent of all other USDA agencies and offices, including local department officials. The Secretary of Agriculture appoints the Director of the NAD and the NAD Director makes the final administrative decision as to whether an agency decision is appealable. Only “final determination[s]” by the NAD are “reviewable and enforceable” by district courts.

Yet under the statutory framework, not all county committee decisions are eligible for administrative review. By regulation, neither the FSA nor the NAD has the authority to review matters of “general applicability.” The relevant FSA regulations state that unappealable county committee determinations include decisions regarding:

“(1) Any general program provision or program policy or any statutory or regulatory requirement that is applicable to similarly situated participants; [or] (2) Mathematical formulas established under a statute or program regulation and decisions based solely on the application of those formulas.” 7 C.F.R. § 780.5(a).

The regulations provide both the State Executive Director and the NAD Director with the authority to determine whether an adverse county committee decision is appealable. However, the State Executive Director's determination is not a final agency action; rather, it “is considered by FSA to be a new decision.” So, only the NAD Director has the final authority to determine whether an FSA decision falls into the categories of issues that are eligible for administrative appeal, and only a final decision of the NAD is reviewable by a district court.

The Producers each submitted an application for a SURE Program payment for the 2008 crop year. The dispute in this case centers on the price election figure that the county committees used to calculate the Producers' SURE Program payments. Specifically, the Producers alleged that the price election should have been determined by using the price election figure in each of their individual crop insurance policies, rather than the price election figures established by the USDA's Risk Management Agency (“RMA”). The Producers argued that the county committees' decision to use the RMA price election figures resulted in SURE Program payments that were erroneously low, and in some cases, zero.

The Court reviewed this case de novo and first addressed whether the exhaustion statute was jurisdictional or not. The applicable statute, 7 U.S.C. § 6912(e), provides that “a person shall exhaust all administrative appeal procedures established by the Secretary or required by law before the person may bring an action in a court of competent jurisdiction against (1) the Secretary [of the USDA]; (2) the [USDA]; or (3) an agency, office, officer, or employee of the [USDA].” The Court previously held “that § 6912(e) is nothing more than ‘a codified requirement of administrative exhaustion’ and is thus not jurisdictional.” 440 F.3d at 999 (quoting Salfi, 422 U.S. at 757, 95 S.Ct. 2457). The Court held that the Producers' failure to exhaust their administrative remedies is not a jurisdictional bar to review and the court may consider whether exhaustion is excused under a limited number of exceptions.

The Producers advanced three alternative arguments as to why they were not required to exhaust their administrative remedies: 1) further appeal within the USDA would have been futile, 2) their claim raised a purely legal question, and 3) the Iowa FSA's misconduct equitably estops the Government from asserting the failure to exhaust defense.

Futility: The Producers argued that their failure to exhaust should be excused as futile because the NAD lacked authority to hear their appealability claim, and even if it possessed such authority, the USDA did not have authority to grant effective relief on the underlying price election issue. The rule is: “An administrative remedy will be deemed futile if there is doubt about whether the agency could grant effective relief.” The Court then used the McCarthy v. Madigan case from the Supreme Court to provide examples of specific circumstances that render an administrative remedy futile. 503 U.S. 140 (1992). The Court in this case then calls the Producer’s argument circular: “By assuming that the price election issue is one of general applicability, Producers' argument necessarily makes its conclusion that the question is unappealable. However, the question of general applicability is what would be at issue had the Producers appealed the question of appealability to the NAD.”

The Court then analyzed this argument within the framework of agency discretion. The Court stated that since the ultimate authority to interpret 7 C.F.R. § 780.5 and determine whether a decision is appealable lies not with the FSA county committees but with the NAD, the Producers should have taken the review to the next step. Further, the FSA county committee decision letters sent to the Producers acknowledged that their appealability determination is neither final nor dispositive by outlining the available appeal procedures. The Court held that because the NAD is vested with final authority to determine whether an issue is appealable, an FSA decision that an issue is not appealable does not make an appeal to the NAD futile, and the Producers' attempt to treat the FSA's appealability determination as final amounts to an end run around the administrative appeal process.

Legal Question: The Producers argued that the legal question exception excuses their failure to exhaust. Under the legal question exception, also called the legal issues exception, a party's failure to exhaust should be excused if the issues “are legal questions which are not suitable for administrative resolution and are more properly resolved by the courts.” However, the legal issues exception is extremely narrow and should only be invoked if the issues involved are ones in which the agency has no expertise. The Court continues stating that in requiring exhaustion in cases that call for agency expertise, the requirement prevents premature interference with agency processes, so that the agency may function efficiently and correct its own errors. It also “afford[s] the parties and the court the benefit of [the agency's] experience” and “complete[s] a record which is adequate for judicial review.” The parties had offered different principles to apply to this exception.

The Court noted that Congress specifically vested the NAD with the authority to determine appealability. Through this appealability review, SURE participants call upon the NAD to draw on its expertise in interpreting the statutes to determine whether a matter is subject to further USDA review. The Court held, though, that the Producers did not avail themselves of that expertise, and by intentionally bypassing the administrative appeal process and proceeding directly to federal district court, they undermined the purposes of exhaustion and “premature[ly] interfer[ed] with agency processes.”

Equitable Estoppel: The Producers argued that the Government should be equitably estopped from asserting the defense of failure to exhaust administrative remedies based on allegedly misleading statements regarding exhaustion contained in the FSA letters and by statement, a contention squarely rejected by the D.C. Circuit in Deaf Smith, 162 F.3d at 1214. The Supreme Court has warned circuit courts about applying the doctrine of equitable estoppel to the government. This Court does note, though, that that does not mean the government is entirely immune. However, It does increase the burden an opposing party must carry in order to prevail on its estoppel claim. Therefore, to succeed on a claim of equitable estoppel against the government, a plaintiff must prove all the elements of equitable estoppel and also that the government committed affirmative misconduct.

The Supreme Court has imposed a more stringent standard for estopping the government because there is a strong public interest in upholding the rule of law, even where hardship may result to individuals in particular cases. The claimant bears the “heavy burden” of establishing that the government engaged in affirmative misconduct. If a claimant satisfies the affirmative misconduct requirement, he then must prove the four traditional elements of estoppel: (1) a “false representation by the government;” (2) government intent to induce the claimant to act on the misrepresentation; (3) a lack of knowledge or inability to obtain true facts on the part of the claimant; and (4) the claimant's “reliance on the misrepresentation to his detriment.” Rutten v. United States, 299 F.3d 993, 995 (8th Cir.2002).

The Court held that the Producers failed in their equitable estoppel claim because they could not prove affirmative government misconduct. Although no precise definition of affirmative misconduct exists outside the immigration context, the Eighth Circuit states that case law makes it clear that affirmative misconduct is something more than mere negligence. Further, because the Producers were told in their letters that there was another step to take in their administrative review, the Court held that the Producers fail on the underlying elements of estoppel.

Thus, the Court held that since the Producers were unable to demonstrate that any of the limited exceptions to the administrative exhaustion requirement applied, the district court did not err in dismissing their suit for failure to exhaust. 

Baby Veronica Case Creates Confusion Regarding Indian Child Welfare Act

by Katherine Kennedy

The Supreme Court’s recent decision in Adoptive Couple v. Baby Girl created confusion concerning tribal sovereignty. The 1978 Indian Child Welfare Act (ICWA), the statute at issue, is intended to keep Native American children from being taken from their homes and typically placed with non-Native American adoptive or foster parents, in an effort to preserve familial bonds between birth parents and their children. But in a 5-4 ruling, the Court said federal law doesn’t require that a Native American child be taken away from her adoptive parents and given to her biological father. It is now uncertain how this opinion will fare for Native American rights: will this strengthen tribal sovereignty or harm it in the long run? On June 25, 2013, Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Stephen Breyer joined Justice Samuel Alito, who wrote the majority opinion. Justice Sonia Sotomayor wrote the dissenting opinion. She was joined by Justices Antonin Scalia, Ruth Bader Ginsburg and Elana Kagan.

The prospective adoptive parents filed a petition to adopt “Baby Veronica” (AKA “Baby Girl”). Her biological father, a member of a Native American tribe, opposed adoption, and the Cherokee Nation intervened. The Charleston County Family Court denied the adoptive parents’ petition and required the prospective adoptive parents to transfer the child to her father. The prospective adoptive parents appealed. The South Carolina Supreme Court affirmed the lower court’s decision. The Supreme Court granted certiorari.

The tone and outcome of this case is immediately apparent from Justice Alito’s opening paragraph:

“This case is about a little girl (Baby Girl) who is classified as an Indian because she is 1.2% (3/256) Cherokee. Because Baby Girl is classified in this way, the South Carolina Supreme Court held that certain provisions of the federal Indian Child Welfare Act of 1978 required her to be taken, at the age of 27 months, from the only parents she had ever known and handed over to her biological father, who had attempted to relinquish his parental rights and who had no prior contact with the child. The provisions of the federal statute at issue here do not demand this result.”Adoptive Couple v. Baby Girl, 12-399, 2013 WL 3184627 (U.S.S.C. 2013).

           

This case turned on the fact that the child was never in the father’s custody. The Court held that this case differs from a normal interpretation of 25 U.S.C. § 1912(f) since it involves a parent that never had custody of the child. The Court further held that § 1912(d), which conditions involuntary termination of parental rights with respect to a Native American child on a showing that remedial efforts have been made to prevent the “breakup of the Indian family,” is inapplicable when, as here, the parent abandoned the child before birth and never had custody of the child. The Court further clarified that § 1915(a), which provides placement preferences for the adoption of Native American children, does not bar a non-Native American family like Adoptive Couple from adopting a Native American child when no other eligible candidates have sought to adopt the child. The Court reversed the South Carolina Supreme Court's judgment and remanded for further proceedings.

After a tumultuous romance, the birth parents of the child in this case ceased dating and called off their engagement. Via text message, the birth mother asked the biological father if he would like to pay child support or terminate his parental rights. The biological father chose the latter option. Birth mother then decided to put Baby Girl up for adoption. Because birth mother believed that biological father had Cherokee Indian heritage, her attorney contacted the Cherokee Nation to determine whether the biological father was formally enrolled. The inquiry letter misspelled biological father's first name and incorrectly stated his birthday. Cherokee Nation responded that, based on the information provided, it could not verify Biological Father's membership in the tribal records.

Working through a private adoption agency, the birth mother selected the adoptive couple, non-Native Americans living in South Carolina, to adopt Baby Girl. Adoptive couple supported birth mother throughout her pregnancy and they were present at the birth. Justice Alito seemed most impressed that the adoptive father cut the umbilical cord. The next morning, birth mother signed forms relinquishing her parental rights and consenting to the adoption. Adoptive couple initiated adoption proceedings in South Carolina a few days later, and returned there with Baby Girl. After returning to South Carolina, the adoptive couple allowed the birth mother to maintain a relationship with the baby.

In this case, it was undisputed that had Baby Girl not been 3/256 Cherokee, the biological father would have had no right to object to her adoption under South Carolina law. The South Carolina Supreme Court held that the biological father is a “parent” under the ICWA and that two statutory provisions—namely, § 1912(f) and § 1912(d)—bar the termination of his parental rights. The Court did not decide whether biological father is a “parent” for purposes of these statutes, persuaded by adoptive parents’ arguments. The Court held that even if he was within the definition of the statute, the Court still held that neither § 1912(f) nor§ 1912(d) bars the termination of his parental rights.

The Court found the argument that the biological father’s custody would not cause harm to the child flawed, because according to the Court, this is not an issue of a prospective custody. The Court says that the analysis that the State Supreme Court followed hinged on the following: “Specifically, § 1912(f) provides that “[n]o termination of parental rights may be ordered in such proceeding in the absence of a determination, supported by evidence beyond a reasonable doubt, ... that the continued custody of the child by the parent or Indian custodian is likely to result in serious emotional or physical damage to the child.” Since the statute specifically refers to continued custody, § 1912(f), then, does not apply in cases where the Native American parent never had custody of the  child.

According to the Court, the primary mischief the ICWA was designed to counteract was the unwarranted removal of Native American children from Native American families due to the cultural insensitivity and biases of social workers and state courts. “The statutory text expressly highlights the primary problem that the statute was intended to solve: “an alarmingly high percentage of Indian families [were being] broken up by the removal, often unwarranted, of their children from them by nontribal public and private agencies.” § 1901(4).” The Court distinguished this intent from the case at bar: when, as here, the adoption of a Native American child is voluntarily and lawfully initiated by a non-Native American parent with sole custodial rights.  The ICWA's primary goal of preventing the unwarranted removal of Native American children and the dissolution of Native American families is not implicated. Thus, since the biological father never had custody of his daughter, the South Carolina Supreme Court erred in finding that § 1912(f) barred termination of Biological Father's parental rights.

The Court provides guidance as to the statutory term “breakup,” relating to the statute’s intent to prevent the “breakup” of familial relations by the mischief that ICWA was enacted to redress. Justice Alito held that just as the continued custody requirement was not met here to require biological father’s sought-after remedy, the term “breakup” should be read within the same context of “continued custody.” Since the biological father “abandoned” his child, he cannot claim that the adoption caused the breakup of his familial relations. So the Court held that the South Carolina Supreme Court erred in finding that § 1912(d) barred termination of Biological Father's parental rights.

Justice Alito also held that § 1915(a)'s preferences are inapplicable in cases where no alternative party has formally sought to adopt the child. This ICWA section states: “[i]n any adoptive placement of an Indian child under State law, a preference shall be given, in the absence of good cause to the contrary, to a placement with (1) a member of the child's extended family; (2) other members of the Indian child's tribe; or (3) other Indian families.” The Court held that this section does not apply because there cannot be a preference to apply if no alternative party that is eligible to be preferred under § 1915(a) has come forward. Since the adoptive couple was the only party seeking custody of the baby, and since her biological parents did not seek custody of their daughter, and since the Cherokee nation did not seek the adoption of the girl even after intervening in the adoption proceedings, the Court held that this argument also fails.

In Justice Alito’s concluding paragraph, he warns that the State Supreme Court decision would put certain vulnerable children at a great disadvantage solely because any ancestor, even a remote one, was Native American. Further, “…As the State Supreme Court read §§ 1912(d) and (f), a biological Indian father could abandon his child in utero and refuse any support for the birth mother—perhaps contributing to the mother's decision to put the child up for adoption—and then could play his ICWA trump card at the eleventh hour to override the mother's decision and the child's best interests.” Justice Alito also warns that if the State Supreme Court’s decision were to stand, adoptive parents would be cautious to adopt and sue to determine rights before becoming entangled in equal protection concerns and ancestors claiming custody over adoptive parents. Thus, it seems that this case has made it clear that a biological parent who wants custody of his/her child who is adopted by a non-Native American non-relative, should: be an active parent during pregnancy, pay some support during the child’s life, be active within the tribal nation, and should offer evidence that his/her continued custody would be broken up by adoption by a non-Native American non-relative couple or person. However, it is unclear how this decision will affect tribal sovereignty and if this holding will affect “all Indian parents who have never had custody of their children, no matter how fully those parents have embraced the financial and emotional responsibilities of parenting,” as Justice Sotomayor’s dissent warns.

Justice Sotomayor’s dissent outlines the implications of this holding due to the fact that the father has a federally acknowledged and protected parent-child relationship that this Act was designed to protect, and that Justice Alito’s analysis of § 1912 is too simple. According to the dissent, § 1912 does not require that a “parent” carryout the functions of a parent to keep that title. The dissent states that Justice Alito and the majority give on one hand and take from another by stating that the majority illogically concluded that ICWA's substantive protections are available only to a subset of “parent[s]”: those who have previously had physical or state-recognized legal custody of his or her child. Further, the dissent states that such a narrow definition of “breakup” is inappropriate; noting that nothing in the text of subsection (d) indicates that a blood relationship should be excluded from the category of familial “relationships” that the provision aims to save from “discontinuance.”

However, the crux of the dissent rests in this paragraph:

“The majority is willing to assume, for the sake of argument, that Birth Father is a “parent” within the meaning of ICWA. But the majority fails to account for all that follows from that assumption. The majority repeatedly passes over the term “termination of parental rights” that, as defined by § 1903, clearly encompasses an action aimed at severing Birth Father's “parent-child relationship” with Baby Girl. The majority chooses instead to focus on phrases not statutorily defined that it then uses to exclude Birth Father from the benefits of his parental status. When one must disregard a statute's use of terms that have been explicitly defined by Congress, that should be a signal that one is distorting, rather than faithfully reading, the law in question.”

This case truly demonstrates the different schools of judicial interpretation currently serving on the Supreme Court bench. It seems that the textualists, originalists, and strict constructionists have carved an exception to the ICWA framework in this case. The applicability of this rule will challenge agencies to reconsider Native American child adoptions and the procedure so as to avoid challenges and trial. Only time will tell. 

Free State Foundation Comments on City of Arlington Decision

by Katherine Kennedy

Notice and Comment is pleased to share the following article by Randolph J. May, the President and Founder of The Free State Foundation, on the Supreme Court's recent opinion in City of Arlington, Tex. v. F.C.C.. The Free State Foundation is an independent, non-profit, Section 501(c)(3) free market-oriented think tank founded in 2006.

As we wrote about here, the City of Arlington decision does away with the distinction between jurisdictional and non-jurisdictional statutory interpretation traditionally used in analyzing agency interpretation. In the opinion, Justice Scalia stated that “[o]nce those labels are sheared away, it becomes clear that the question in every case is, simply, whether the statutory text forecloses the agency's assertion of authority, or not.”

May's article, entitled "Chevron Deference and Regulatory Reform," describes the holding in detail and demonstrates the concern for the implications of this holding, as voiced by Chief Justice Roberts. "...[A]n agency cannot exercise interpretative authority until it has it; the question whether an agency enjoys that authority must be decided by a court without deference to the agency." Although the debate about the future and effects of this holding is seemingly endless, May takes the opportunity to propose regulatory reform. The article focuses on regulatory reform measures that would alter decision-making frameworks within agency commissions, consistent with previous legislation generated in the House and through suggestions for statutory edit. May's process-oriented regulatory reform suggestions are specific to FCC reform, but perhaps his observations and suggested framework will provide the impetus for Congress to act.

 

From October 1999-May 2006, May was a Senior Fellow and Director of Communications Policy Studies at The Progress & Freedom Foundation, a Washington, D.C.-based think tank. Prior to joining PFF, he practiced communications, administrative, and regulatory law as a partner at major national law firms. From 1978 to 1981, May served as Assistant General Counsel and Associate General Counsel at the Federal Communication Commission.

May has held numerous leadership positions in American Bar Association. He is a past Chair of the ABA Section of Administrative Law and Regulatory Practice and represents the Section in the ABA House of Delegates. He is also a Fellow of the National Academy of Public Administration.

BALCA Overrules Long-Standing HealthAmerica Precedent

by Adam J. Rosen

The Board of Alien Labor Certification Appeals has recently issued a potentially groundbreaking decision in Sushi Shogun, 2011-PER-02677 (May 28, 2013), directly overruling HealthAmerica, 2006-PER-00001 (July 18, 2006) (en banc).  Sushi Shogun started with the filing of an ETA Form 9089, Application for Permanent Employment Certification, (“the Application”), for Labor Certification under 8 USC § 1182(a)(5)(A).  The Application was filed on behalf of the alien Maria Ramos with the U.S. Department of Labor (DOL) pursuant to the regulations at 20 CFR Part 656.  However, DOL denied the Application because the employer input the prevailing wage as $10.04 instead of correctly as $10.14.  In appealing this decision, the employer pointed out that the correct prevailing wage was on the Prevailing Wage Determination.  While BALCA acknowledged that this “was the result of typographical errors,” the employer’s challenge was precluded by 20 CFR § 656.11(b) prohibiting any modification of the ETA Form 9089.

The process for sponsoring a foreign national for permanent employment in the United States generally requires that an employer begin with the framework established by the Secretary of Labor pursuant to 8 U.S.C. § 1182(a)(5)(A), Section 212(a)(5)(A) of the Immigration and Nationality Act, in 20 CFR Part 656.  This process, commonly known as the Labor Certification process, requires the employer to obtain a Prevailing Wage Determination from the DOL based upon which the sponsor will establish an offered wage for the job opportunity in the Application.  In Sushi Shogun, the prevailing wage that was assigned by the DOL’s National Prevailing Wage Center was $10.14 per hour.  With the PWD in hand, the employer proceeds with a series of recruitment steps that are prescribed by 20 CFR § 656.17(e), including a notice posted at the worksite to inform similarly employed U.S. workers that the employer is proceeding to submit an ETA Form 9089.  Alternatively, when there is a collective bargaining agreement, this notice must be provided to the union leadership for the worksite of the sponsored position.  Once these steps are completed, the employer must prepare its ETA Form 9089 online at DOL’s dedicated website for filing.

The problem in Sushi Shogun derives from what the employer described as the considerable amount of time that the DOL took before denying the Application.  In the Federal Register notice promulgating the rules at 20 CFR Part 656, the DOL’s Office of Foreign Labor Certification stated that no changes of any kind would be allowed to the ETA Form 9089 because an application would be completely adjudicated within 45 to 60 days.  As a result of that expeditious processing an employer would be able to re-file the Application while using the same recruitment efforts.  In HealthAmerica, 2006-PER-00001, the employer argued that given the considerable expense of recruitment required to file an ETA Form 9089 balanced against the fact that the error on the Form was typographical in nature, the denial should be reversed.  In reaching the HealthAmerica decision, the full complement of BALCA considered several factors: the evidently typographical nature of the error on the form itself, evidence prepared prior to filing the Application corroborating the nature of the error being maintained by the employer and that 20 CFR Part 656 was otherwise complied with.  The HealthAmerica decision also considered the substantive due process test of Mathews v. Eldridge, 424 U.S. 319 (1976), balancing the public and private interest.  The ability to overcome denials based on HealthAmerica has arisen in many circumstances involving an actual typographical error as in Sushi Shogun or when information is missing from the Application form.

The Sushi Shogun employer argued in its request for reconsideration that denial was unwarranted post-audit because the error, i.e., $10.14 instead of $10.04, “was a ‘minor typographical error’.”  Id. at 2.  The record included the PWD and the notice of filing that stated the prevailing wage correctly as $10.04.  The Certifying Officer explained that correcting this error is prohibited by 20 CFR § 656.11(b): “Requests for modifications to an application will not be accepted for applications submitted after July 16, 2007.”  DOL and the employer did not disagree over what was the prevailing wage, only whether the typographical error constituted a prohibited “modification.”  Under HealthAmerica, issued before the May 17, 2007 promulgation of 20 CFR § 656.11(b), and its progeny issued after that date, this type of mistake was not held to constitute a “modification” prohibited by the regulation.  Yet in Sushi Shogun, BALCA ruled that “[u]nfortunately for the Employer, HealthAmerica has effectively been overruled by the promulgation of 20 CFR § 656.11(b).”  Id. at 3.

While Sushi Shogun states that this position is prescribed by the rule’s “plain language,” BALCA does not explain why it issued multiple decisions specifically based on HealthAmerica’s rationale that a typographical error does not warrant denial well after this regulation was promulgated.  Such as in a case like Pa’lante LLC, 2008-PER-00209 (May 7, 2009).  Pa’lante LLC involved an ETA Form 9089 that only included the sponsored worker’s experience with the filing employer.  The worker, however, was satisfying the education requirement of the case based on an opinion that based on the education he had plus experience earned before joining the filer he had the equivalent to the required degree.  The Application was denied by the Certifying Officer because it failed to show the worker had the “required minimum education, training, and experience prior to hire by the petitioning Employer.”  Id. at 4.  BALCA ultimately reversed the denial because evidence of the experience not listed on the form but used towards the degree equivalent was included in the materials prepared pre-filing pursuant to 20 CFR § 656.10(f) (imposing recordkeeping mandate on filers).  BALCA’s reasoning stemmed directly from HealthAmerica and related to the typographical error holding of that case.

The Pa’lante panel quoted from HealthAmerica, noting that “the Employer’s omission on the Form 9089 was not a mere typographical error, but a failure to report information essential to the CO’s review of the application.”  Pa’lante reversed the denial, about two years after 20 CFR § 656.11(b) was promulgated, holding the case  was “is similar to HealthAmerica insofar as the documentation needed to prove that the application actually complied with the regulations was documentation constructively considered to have been submitted by the Employer under PERM’s recordkeeping provisions.”  2008-PER-00209, at 6.

At the end of the analysis of Sushi Shogun, the most obviously unanswered question is whether HealthAmerica’s application of the Mathews v. Eldridge substantive due process test to the adjudication of the ETA Form 9089 will survive to benefit another employer.  If substantive due process does survive to bring another application back from denial, the challenge will be for BALCA to balance the reasoning warranting substantive due process with its decision in Sushi Shogun.

Adam Rosen is a Member of the Murthy Law Firm and a Supervising Attorney in the Special Projects Department. He represents companies and individuals before U.S. Citizenship and Immigration Services (USCIS), the Department of Labor (DOL), the Department of State (DOS), and various other government agencies with regard to both immigrant and nonimmigrant employment- and family-based applications and petitions.

DC Circuit Says District Courts Lack Jurisdiction to Hear FSLMRS Cases

by Lou Kolodner

On May 24, 2013, the U.S. Court of Appeals for the D.C. Circuit affirmed a district court dismissal of a challenge by the American Federation of Government Employees (National AFGE), several local AFGE chapters that represent Air Reserve Technicians (ARTs), and ART Mark Winestead (jointly, the "Plaintiffs" or the "Appellants").  The Appellants challenged three Air Force instructions requiring ARTs to wear military uniforms while performing civilian duties.  The district court dismissed the challenge for lack of subject matter jurisdiction because the Plaintiffs failed to exhaust administrative remedies under the Civil Service Reform Act (CSRA).  The Circuit Court noted that the district court "erroneously used the administrative exhaustion doctrine," but affirmed the district court’s dismissal for lack of subject matter jurisdiction.  The case hinged on three key facts: the CSRA provides for ways to challenge Air Force instructions; parties cannot challenge the instructions under the Administrative Procedures Act (APA); and the statute places original review in the courts of appeals and not the district courts.

The Plaintiffs represent employees throughout the federal government, including ART bargaining units.  An ART is a federal employee who is required to maintain membership in the Selected Reserve of the Air Force and is assigned to a civilian position as a technician.  In this case, the Plaintiffs challenged three instructions issued by the Air Force on August 6, 2007 requiring ARTs to wear military uniforms while performing civilian duties.  The Plaintiffs challenged the instructions claiming they cause confusion between military and civilian status and wearing the uniform while working imposes rules of conduct that would not otherwise apply to the ARTs.

In 2008, the Plaintiffs filed a complaint in federal district court arguing that under the APA the instructions are arbitrary and capricious, contrary to law, and that the Secretary lacked the authority to issue the instructions.  The District Court dismissed the complaint because the Plaintiffs "failed to exhaust administrative remedies under the CSRA."

Title VII of the CSRA, known as the Federal Service Labor-Management Relations Statute (FSLMRS), protects federal workers against a broad range of personnel practices and provides the workers with causes of action and remedies when their rights are violated.  It is "an integrated scheme of administrative and judicial review.”  United States v. Fausto, U.S. 439, 445 (1988).  Title VII of the CSRA governs federal labor-management relations and federal employees "may not circumvent” Title VII "by seeking judicial review outside the CSRA's procedures."  Grosdidier v. Chairman, Broad. Bd. Of Governors, 560 F.3d 495, 497 (D.C. Cir.), cert. Denied, U.S. 989 (2009); Steadman v. Governor, U.S. Soldiers’ & Airmen’s Home, 918 F.2d 963, 967 (D.C. Cir. 1990).

Under the FSLMRS, to challenge management actions a party must invoke an arbitration procedure, or a local union can bargain over the action.  If the union requests to bargain over the action and management asserts the action is non-negotiable, the union can appeal the designation of non-negotiability to the Federal Labor Relations Authority (FLRA).  After arbitration, either party may file exceptions to the arbitrator’s award with the FLRA.  Either party can appeal an FLRA order in the D.C. Circuit or in the Circuit in which the party resides or transacts business.  Therefore, an FLRA order may only be reviewed in a court of appeals; not in district court.  The court dismissed National AFGE’s complaint noting that it could not seek relief under FSLMRS and therefore should be allowed to seek relief in district court under the APA.  Rather than allowing National AFGE to challenge the instructions outside of the FSLMRS procedures, the court determined that National AFGE may not raise the claim at all.

The court explained that the Plaintiffs have at least three administrative options to challenge the dress code: (1) a local can attempt to bargain over the dress code; (2) a local can allege that the imposition of the dress code violates a law, rule or regulation affecting the conditions of employment; or (3) file an unfair labor practice charge.  The court pointed out that one or more local chapters have begun each of the three options to challenge the instructions.

SCOTUS Revisits Chevron in Recent Opinion

by Katherine Kennedy

The following case stems from two Texas cities, Arlington and San Antonio, petition for review of a declaratory ruling by the Federal Communications Commission (FCC) establishing reasonable time frames under the Telecommunications Act for a state or locality to act on wireless facility siting applications. Judge Owen of the United States Court of Appeals for the Fifth Circuit denied the petitions in part and dismissed the petitions in part (668 F.3d 229).

Relying on Circuit precedent, the Court of Appeals held that the Chevron framework applied to the threshold question whether the FCC possessed statutory authority to adopt the 90– and 150–day timeframes allowed in the overarching statute, The Communications Act of 1934, as amended. Applying Chevron, the Court of Appeals found “§ 332(c)(7)(A)'s effect on the FCC's authority to administer § 332(c)(7)(B)'s limitations ambiguous,”  and held that “the FCC's interpretation of its statutory authority” was a permissible construction of the statute.  On the merits, the court upheld the presumptive 90– and 150–day deadlines as a “permissible construction of § 332(c)(7)(B)(ii) and (v) ... entitled to Chevron deference.” 

The United States Supreme Court granted certiorari in part to answer the limited question of whether ... a court should apply Chevron to ... an agency's determination of its own jurisdiction. On May 21, 2013, Justice Scalia, in his opinion, held that 1) a court must defer under Chevron to an agency's interpretation of a statutory ambiguity that concerns the scope of the agency's jurisdiction, and 2) Chevron deference applied to the FCC declaratory ruling. City of Arlington, Tex. v. F.C.C., 11-1545, 2013 WL 2149789 (U.S. 2013). After lengthy discussion of the history of the two part Chevron test, Justice Scalia does away with the distinction between jurisdictional and non-jurisdictional statutory interpretation traditionally used in analyzing agency interpretation. Justice Scalia stated that “[o]nce those labels are sheared away, it becomes clear that the question in every case is, simply, whether the statutory text forecloses the agency's assertion of authority, or not.”

Justice Scalia was heavily persuaded by H. Edwards & L. Elliott, Federal Standards of Review 146 (2007) which states that “In practice, it does not appear to matter whether delegated authority is viewed as a threshold inquiry.” Further, Justice Scalia goes on to say that a federal judge who plays the role of an ancient Roman diviner in these types of cases, sifting through vast legislation to figure out if the agency at issue has jurisdiction over the topic at issue, is not really engaging in reasoned decision-making. Rather, the purpose of Chevron that resounds in every case dealing with agency statutory interpretation is that judges ought to refrain from substituting their own interstitial lawmaking for that of an agency. Thus, Justice Scalia seems to assert that characterizing the case as jurisdictional or non-jurisdictional is a commonplace game to signal the need for a Chevron analysis.

One group of respondents contended that Chevron deference is inappropriate here because the FCC has “assert[ed] jurisdiction over matters of traditional state and local concern. Justice Scalia, with minimal airtime, stated that this party has incorrectly comingled administrative law with the issue of federalism. However, the opinion ends in a stark contrast with the dissent. The opinion states that those who assert that applying Chevron to “jurisdictional” interpretations “leaves the fox in charge of the henhouse,” meaning that those who believe the distinction between jurisdictional and non-jurisdictional statutory interpretation overlook the reality that a separate category of “jurisdictional” interpretations does not exist. Justice Scalia feels that doing away with this distinction and by not by establishing “an arbitrary and undefinable category of agency decisionmaking that is accorded no deference” is instead, taking seriously, and applying rigorously, in all cases, statutory limits on agencies' authority.

The court then states, which is probably the clearest take home message of this case: That where Congress has established a clear line, the agency cannot go beyond it; and where Congress has established an ambiguous line, the agency can go no further than the ambiguity will fairly allow. But in rigorously applying the latter rule, a court need not pause to puzzle over whether the interpretive question presented is “jurisdictional.” If “the agency's answer is based on a permissible construction of the statute,” according to the majority, that is the end of the matter. 

Fourth Circuit Affirms Corp of Engineers Decision to Issue Mining Permit

by Katherine Kennedy

On May 15, 2013, Judge Niemeyer of the United States Court of Appeals for the Fourth Circuit affirmed a district court ruling in favor of the U.S Army Corps of Engineers (the Corps) decision to issue a mining permit.  Ohio Valley Envtl. Coalition, Inc. v. U.S. Army Corps of Engineers, 12-1999, 2013 WL 1987234 (4th Cir. 2013). Four environmental groups brought suit to challenge a fill permit issued under Section 404 of the Clean Water Act (CWA). The groups felt that the Corps, in conducting its analysis for the Section 404 permit, “materially misapprehended” the baseline conditions in the relevant watershed, thus corrupting its analysis of the cumulative impact that the mine would have on the streams in the watershed. The groups brought this challenge under the National Environmental Policy Act and Administrative Procedure Act alleging that the Corps acted arbitrarily and capriciously in determining that the valley fill would not have a significant cumulative impact on the water quality in the relevant watershed.

The suit was centered on a proposed surface coal mine adjacent to Reylas Fork (a stream) in Logan County, West Virginia. The Highland Mining Company received a number of permits to allow the project to move forward.  The West Virginia Department of Environmental Protection (WVDEP) issued a permit under the Surface Mining Control and Reclamation Act (SMCRA) to do the mining, finding that the proposed mine would not cause material damage to the hydrologic regime. The WVDEP also issued a water quality certification under Section 401 of the CWA, concluding that the proposed mine would not cause or contribute to violations of the State's EPA-approved water quality standards. Further, the WVDEP issued a National Pollutant Discharge Elimination System (NPDES) permit under Section 402 of the CWA, finding that the proposed sediment pond for the mine would not have significant adverse effects. The Corps also issued a fill permit under Section 404 of the CWA, authorizing Highland Mining to place rock overburden into the adjacent valley of Reylas Fork as part of the mining process. The Corps issued the permit without an environmental impact statement, finding that the fill would not have a substantial cumulative impact on the water quality in the relevant watershed.

Under guidelines issued by the EPA, the Corps could issue a Section 404 permit only after concluding that the mining activity would not cause or contribute to violations of the State's water-quality standards or to the significant degradation of waters of the United States. During notice and comment, the EPA warned that "the direct and cumulative impacts from this and future mines will be persistent and permanent and cannot be sufficiently or effectively compensated through the proposed mitigation." After receiving EPA's comments, Highland Mining requested that the Corps stay its consideration of the permit application until Highland Mining had an opportunity to allay the EPA's concerns. Thereafter, the Corps, the EPA, and Highland Mining consulted each other and agreed to modifications to the conditions of the permit. After the Corps released its Combined Decision Document and Section 404 permit, environmental groups brought suit to challenge the permit and decisions supporting the permit.

The Circuit Court held that the Corps did not misapprehend the baseline conditions for the permit. After lengthy discussion of the Corps’ data and analysis, the court reasoned that the cumulative analysis  considered data not only from the impact area, but also from other tributaries and that the Corps considered the relevant factors, evaluating both the impact site and the entire watershed. Only after this evaluation did the Corps reach its informed judgment as to the baseline conditions.

For its second argument, the Environmental Coalition challenged the Corps' finding that the cumulative insignificance was "arbitrary and capricious." The environmental groups felt that this was because the Corps irrationally dismissed the strong correlation between surface coal mining activities and downstream biological impairment. Under the Coalition's reading of the Combined Decision Document, the Corps failed to take a "hard look" at potential environmental consequences because the Document is "not supported by any reasoned analysis of, or expert opinion about, the science on conductivity and stream impairment."

The court also held against the environmental groups on this challenge. The court was persuaded by the measures the Corps adopted as conditions of its Section 404 permit. These special conditions incorporated a series of best management practices designed to minimize increases in conductivity and total dissolved solids associated with the Highland Mining’s mining activities. The conditions also required that if the monitoring showed that the mining activities were resulting in adverse impacts to water quality, Highland Mining would be required to initiate remedial actions, provide additional water quality-based mitigation under the terms of the permit, or both. Since all of these conditions were incorporated as conditions of the Section 404 permit, the court held that the Corps’ finding to continue the project was not arbitrary and capricious. The court found that this process was significant and since it resulted in a two-year delay of the issuance of the Section 404 permit, the decision was not arbitrary and capricious.

The court also held that the Corps did take a hard look at the Environmental Coalition's concerns. Specifically, the Coalition stated that the Corps failed to take a hard look at conductivity and stream impairment. However, the court held that the record amply shows that the Corps grappled with the issue extensively, rationally finding that (1) the connection between conductivity and stream impairment was not strong enough to preclude a permit and (2) the compromise measures agreed to by the EPA and Highland Mining would successfully mitigate the potential for adverse effects.

The court stated in dicta that the disagreement between the Coalition and the Corps can be reduced to no more than a substantive disagreement. The court notes that it is limited, and we may not "use review of an agency's environmental analysis as a guise for second-guessing substantive decisions committed to the discretion of the agency." Thus, the court held that the Corps' predictive judgment in this case was based on facts and recommendations, adduced during a lengthy consultation between the Corps, Highland Mining, the EPA, and the WVDEP, and we conclude that this process satisfies NEPA's procedural requirement to take a "hard look."