Opinion ID: 699520
Heading Depth: 3
Heading Rank: 2

Heading: Retroactive application of AGD after Hyde

Text: 44 We consider first whether Harper and Hyde apply to this case. Although those cases surely appear to require the retroactive application of AGD against National, the Commission argues that it is unclear whether Harper applies here because the overruling of Chevron Oil does not necessarily govern in the context of agency action. In this regard, the agency contends that Beam and its progeny are grounded on Article III of the Constitution, which is inapplicable to administrative agencies, and that this and other courts have recognized that the overruling of Chevron Oil does not necessarily govern in the context of agency action, for which it cites Laborers' Int'l Union v. Foster Wheeler Corp., 26 F.3d 375, 387-88 n. 8 (3d Cir.1994); Atlantic Richfield v. DOE, 977 F.2d 611, 614 (Temp.Emer.Ct.App.1992); and District Lodge 64 v. NLRB, 949 F.2d 441, 447 (D.C.Cir.1991). 45 The Commission's argument is unpersuasive for two reasons. First, Article III is not the Supreme Court's only basis for requiring the retroactive application of judicial decisions. Although the Court in Harper noted that the nature of judicial review strips [a court] of the quintessentially legislative prerogative to make rules retroactive or prospective as [it] sees fit, --- U.S. at ----, 113 S.Ct. at 2516, which does indirectly marshal the force of Article III against prospectivity, the Court also noted that the selective application of new rules violates the principle of treating similarly situated parties the same. Id. Indeed, Justice Souter in Beam seemed to rely primarily upon the latter point; he reasoned that selective retroactivity breaches the principle that litigants in similar situations should be treated the same, a fundamental component of stare decisis and the rule of law generally. Beam, 501 U.S. at 537-38, 111 S.Ct. at 2444. We see no reason why that pre-constitutional rationale would apply with any less force when it falls to an agency rather than a court to apply a judicial decision. See District Lodge 64, 949 F.2d at 447 (citing Justice Souter's opinion in Beam and observing that concern for equity and the rule of law would seem applicable also in the agency context). 46 Second, the Commission's Article III argument seems to miss the distinction between an administrative agency's retroactive application of a judicial decision--the case before us here--and the agency's retroactive application of its own adjudicative decision. Because Article III does not apply to an agency adjudication, the Commission may have some freedom to apply its own decisions prospectively even after Harper. Id. (Beam does not clearly foreclose selective retroactivity of an agency's own adjudications). But see UFCW, Local No. 150-A v. NLRB, 1 F.3d 24, 35 (D.C.Cir.1993) (stating that Harper and Beam may apply even to the retroactive application of agency adjudications) (emphasis in original); Southwestern Public Service Company v. FERC, 952 F.2d 555, 563 (D.C.Cir.1992) (FERC should take note of our recent suggestion that [Beam ] may forbid agencies to apply rules with selective retrospectivity). Because the decision of an Article III court, however, announces the law as though [it] were finding it--discerning what the law is, rather than decreeing what it is ... changed to, or what it will tomorrow be, Beam, 501 U.S. at 549, 111 S.Ct. at 2451 (Scalia, J., joined by Marshall, J. and Blackmun, J., concurring in the judgment), all parties charged with applying that decision, whether agency or court, state or federal, must treat it as if it had always been the law. The agency must give retroactive effect to the ruling of a federal court because of the nature of that court. Just as an Article III court may not issue an advisory decision, it may not issue a decision for less than all seasons, for some citizens and not others, as an administrator shall later decide. In sum, the decision of a federal court must be given retroactive effect regardless whether it is being applied by a court or an agency. 47 Our conclusion here is not at all inconsistent with the three cases upon which the Commission relies. Neither District Lodge 64 nor Foster Wheeler deals with the question whether an agency must apply a judicial decision retroactively. Instead, they consider only whether Harper requires an agency to apply its own adjudications retroactively. While Atlantic Richfield does deal with an agency's retroactive application of a judicial decision, it was decided before Harper or Hyde; the court declined to require the agency to apply an earlier court decision retroactively, but it did so purportedly as a remedial matter. See District Lodge 64, 949 F.2d at 447 (if Beam is applicable to this case, its application does not entitle [the appellant] to the desired remedy ...). In sum, neither the rationale underlying the Harper doctrine nor the decisions cited by the Commission give us any reason to believe that an agency may decline to apply a federal court decision retroactively. 48 Because we think that Harper and Hyde do apply here, we do not need to determine whether the Commission correctly applied Chevron Oil. Instead, we need to determine only whether retroactive application of our decision in AGD, vacating Order No. 436, to National's CD reduction on Tennessee for well-established legal reasons, does not determine the outcome of [this] case,Hyde, --- U.S. at ----, 115 S.Ct. at 1751, or presents any other special circumstance, id., such as grave disruption or inequity to National. Ryder, --- U.S. at ----, 115 S.Ct. at 2033. We turn now to consider, under those standards, whether National's arguments provide any reason for the Commission to award Tennessee a remedy other than the retroactive application of AGD (and consequent vacatur of National's election of CD reduction). 49 National says that the Commission's conclusion that it did not detrimentally rely upon the CD reduction option by foregoing its right to CD conversion is arbitrary and capricious. This claim is based upon National's premise that such reliance requires that we provide Tennessee with a remedy other than the retroactive application of AGD. After Hyde, however, it is clear that simple reliance of the sort at issue in Chevron Oil  and in Hyde, see --- U.S. at ----, 115 S.Ct. at 1751, is insufficient to warrant a departure from the rule of Harper. We are cognizant, moreover, of the Commission's conclusion that National's reliance arguments, even if valid, would not place the equities in National Fuel's favor and overcome the legal presumption for retroactivity, Fourth Order at 61,650--a conclusion to which we owe considerable deference, see Towns of Concord, Norwood, and Wellesley v. FERC, 955 F.2d 67, 76 (D.C.Cir.1992) (Commission's discretion at its zenith when the challenged action relates to the fashioning of remedies). Against all of this, National offers us no reason to believe that the retroactive application of AGD to National's CD reduction would create the sort of grave disruption or inequity that might warrant relief from retroactivity per Harper. See Ryder, --- U.S. at ---- - ----, 115 S.Ct. at 2036-38. 50 Furthermore, it is clear that the retroactive application of AGD to vacate National's CD reduction would fall into none of the four circumstances that Justice Breyer identified in Hyde. There is here involved no previously existing, independent legal basis (having nothing to do with retroactivity) for denying relief, no well-established general legal rule that trumps AGD, nor any principle of law ... that limits the principle of retroactivity itself. The only exception to the rule of Harper even possibly applicable here is the first, which allows the court (or agency) retroactively applying the new judicial decision to find an alternative way of curing the problem infecting the rule of law that the new rule replaced. The Court conceived that exception with the special circumstance of the tax cases in mind: a state court may cure the constitutional defect in a state tax law where the violation depends, in critical part, upon differential treatment of two similar classes of individuals ... either by similarly burdening, or by similarly unburdening, both groups. Id.; see, e.g., McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, Fla. Dept. of Business Regulation, 496 U.S. 18, 40-41, 110 S.Ct. 2238, 2252-53, 110 L.Ed.2d 17 (1990); Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989). This suggests that an administrative agency may be able to cure the problem that a court has found in its order--such as inadequate support in the record--and repromulgate the order with retroactive effect. We need not resolve that question today, however; while the Commission may have had the discretion to choose an alternative way of curing the problems we identified in AGD, its decision in Order No. 500-H to abandon the CD reduction provision made retroactive vacatur of the CD elections that pipeline customers had made the only way to cure the APA violation we had identified.