Opinion ID: 164215
Heading Depth: 3
Heading Rank: 1

Heading: Count One: Alleged Violation of the Letter-of-Reference Requirement

Text: 23 The first count of the plaintiffs' complaint alleges that ten of Governor Owens' nominees were appointed without a requisite letter of reference from the interest or organization they were to represent. 43 C.F.R. § 1784.6-1(e). The plaintiffs claim the failure to abide by its regulation rendered the agency's appointments arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law under the Administrative Procedure Act, (APA) 5 U.S.C. § 706(2)(A) & (D). The defendants admit that letters of reference for the Governor's nominees were not submitted with his recommendations, but letters (which were supplied to the district court and are part of the record on appeal) accompanied the nominations sent to the Secretary for decision. Since the letters of reference were considered by the secretary, they argue, the issue is really one relating to the adequacy of the letters for which the regulation, 43 CFR § 1784.6-1(e), provides no standards and, hence there is no law to apply, rendering the issue one committed to agency discretion under Section 701(a)(2) of the APA. 24 The APA § 701(a) provides an exemption from judicial review for those cases where: (1) statutes [expressly] preclude judicial review, 5 U.S.C. § 701(a)(1); or (2) agency action is committed to agency discretion by law. 5 U.S.C. § 701(a)(2). We agree with the defendants, but from a more global perspective. 25 Exemption from judicial review of agency decisions is narrow. Heckler v. Chaney, 470 U.S. 821, 830, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985). Generally, § 701(a)(2) will be applied when a statute or regulation is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion. Id. In such cases, the statute can be taken to have `committed' the decisionmaking to the agency's judgment absolutely. Id. The exception, however, is not limited to only those cases in which enabling legislation is drawn so broadly there is no law to apply. American Bank, N.A. v. Clarke, 933 F.2d 899, 902 (10th Cir.1991). Whether and to what extent a particular statute precludes review is determined not only from its express language, but also from the structure of the statutory scheme, its objectives, its legislative history and the nature of the administrative action involved. Id. (emphasis added) (quoting Block v. Commty. Nutrition Inst., 467 U.S. 340, 345, 104 S.Ct. 2450, 81 L.Ed.2d 270 (1984)). 26 [A]n administrative agency is not a slave of its rules. Health Sys. Agency of Okla. v. Norman, 589 F.2d 486, 490 n. 5 (10th Cir.1978) (internal citation and quotations omitted). Although it is axiomatic that duly promulgated rules will have the force and effect of law, not every agency-made law is of such a nature that its violation should invalidate agency action. See French v. Edwards, 13 Wall. 506, 80 U.S. 506, 511, 20 L.Ed. 702 (1871). In certain instances, agencies are permitted to waive compliance with their own procedural rules. It is the nature of the administrative action involved that provides the foundation for this exception to the reviewability of agency decisions. American Bank, 933 F.2d at 902. 27 The Supreme Court directly addressed this principle in American Farm Lines v. Black Ball Freight Serv., 397 U.S. 532, 538-39, 90 S.Ct. 1288, 25 L.Ed.2d 547 (1970). There, the Interstate Commerce Commission (ICC) granted a motor carrier's application for temporary operating authority despite the fact that the carrier's application did not contain certain information required by the ICC's regulations. Competing motor carriers contended that the ICC was required by its own rules to reject the application. In rejecting the competing carrier's position, the Court noted the regulation was adopted to facilitate the ICC's own information gathering and was not intended primarily to confer important procedural benefits upon individuals.... Id. at 538, 90 S.Ct. 1288. The Court relied upon the established principle that: 28 [I]t is always within the discretion of a court or an administrative agency to relax or modify its procedural rules adopted for the orderly transaction of business before it when in a given case the ends of justice require it. The action of either in such a case is not reviewable except upon a showing of substantial prejudice to the complaining party. 29 Id. at 539, 90 S.Ct. 1288 (quoting NLRB v. Monsanto Chem. Co., 205 F.2d 763, 764 (8th Cir.1953)). 30 Thus, Black Ball Freight carves out a limited exception to the general rule that agencies are required to adhere to their own regulations. This limited exception turns on whether the regulations were intended to confer important procedural benefits upon the parties before the agency or whether they are merely procedural rules for the orderly transaction of agency business. Even if it is determined that the regulations are of the latter type, an agency will be required to adhere to its own regulations where the complaining party will suffer substantial prejudice in the absence of such adherence. 31 With these principles in mind, we turn to the plaintiffs' allegations in count one of their complaint. The controlling statutes, the FLPMA and FACA, are silent as to the materials, if any, the Secretary must review in deciding whom to appoint to advisory committees. The controlling statutes, therefore, provide no law to apply to review the Secretary's decision regarding the appointment of individuals for the Colorado RACs. 32 However, the agency's regulations governing the appointment of RAC members may also be a basis for their claim. The regulation relied on by the plaintiffs states: 33 In making appointments to resource advisory councils the Secretary shall consider nominations made by the Governor of the State or States affected and nominations received in response to public calls for nominations pursuant to § 1784.4-1. Persons interested in serving on resource advisory councils may nominate themselves. All nominations shall be accompanied by letters of reference from interests or organizations to be represented. 34 43 C.F.R. § 1786.6-1(e). 35 We must first consider whether this regulation provides law to apply. The regulation plainly instructs that all nominations shall include: 1) letters of reference, 2) from interests or organizations to be represented. Assuming this language provides adequate guidance to apply judicial review, our inquiry does not end here. 3 36 We must then ask if the regulation proscribes agency action which by its nature is for the benefit of the agency's orderly transaction of business, or whether it confers a benefit on the plaintiffs. The plaintiffs maintain the purpose of the reference letter requirement ... is to ensure that the nominees in fact represent the interests they claim to, and that they are qualified to represent them. (Appellants' Br. at 18). In essence, the plaintiffs argue the purpose of the requirement is to provide the agency with needed information. It is not uncommon for the internal procedure exception enunciated in Black Ball Freight to be applied in situations where the regulation specifies the content of submissions to the agency. See e.g., United States v. Caceres, 440 U.S. 741, 754 n. 18, 99 S.Ct. 1465, 59 L.Ed.2d 733 (1979); Central Freight Lines, Inc. v. United States, 669 F.2d 1063, 1070 (5th Cir.1982) (procedural rules designed for processing applications may be relaxed or waived). 37 Here, the agency's regulations do not state how the Secretary is to assess the letters of reference or what weight should be given to those letters. They may well establish an applicant's bona fides as a member of or spokesman for an interest group. On the other hand, they may only provide a starting place for the Secretary's background inquiry. The regulations do not limit the Secretary's information gathering solely to reference letters. In fact, the plaintiffs allege the Governor was contacted about his nominees by the Bureau of Land Management Colorado State Director before she made her recommendation to the Secretary. Thus, additional information regarding the nominees was acquired through at least one avenue. Presumably, unsolicited letters from interest groups would also be considered. Moreover, the quality and legitimacy of the person or organization authoring the letter of reference requires evaluation. At bottom the appointment decision is left to the Secretary's discretion, subject only to the ultimate result that a fair balance of membership be achieved. Therefore, as in Black Ball Freight, the regulation here is not intended to confer important procedural benefits on a party; it is, instead, a procedural aid for the benefit of the agency. 4 38 We next inquire whether the plaintiffs were substantially prejudiced by the agency's acceptance of the Governor's nominations without an accompanying letter of reference from the interest or organization to be represented. This question is more accurately phrased in this case as whether the acceptance of the nominees' applications without the letters of reference denied the plaintiffs a fair opportunity to be appointed to a position on the RAC. Only two plaintiffs identified a direct interest in the appointment process, Houdek and Peters. This is not a situation where the Secretary prevented the plaintiffs from submitting relevant information that would promote their candidacies. Rather, their applications comprised two of approximately fifty applications submitted with an accompanying letter of reference. In other words, had the Secretary not accepted the ten nominees who did not have letters of reference from an interest or organization, the remaining nominees would have had one chance in fifty, as opposed to one chance in sixty, for appointment to the RAC. We do not find this difference amounts to substantial prejudice to the applicants who submitted letters of reference. Therefore, the regulation at issue in Count One of plaintiffs' complaint falls within the exception enunciated in Black Ball Freight, and is not reviewable by the court. 39