Opinion ID: 484728
Heading Depth: 3
Heading Rank: 1

Heading: The General Statement of Policy Exception

Text: 14 The APA does not define the term general statements of policy as it is used in section 553. See Burroughs Wellcome Co. v. Schweiker, 649 F.2d 221, 224 (4th Cir.1981); Pacific Gas and Electric Co. v. Federal Power Commission, 506 F.2d 33, 37 (D.C.Cir.1974). However, it is defined in the Attorney General's Manual on the Administrative Procedure Act, which was issued in 1947, just after the APA's enactment, 7 as statements issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power. Attorney General's Manual on the Administrative Procedure Act 30 n. 3 (1947) (emphasis added); Guardian Federal Savings and Loan Association v. Federal Savings and Loan Insurance Corp., 589 F.2d 658, 666 (D.C.Cir.1978); see also Pacific Gas, 506 F.2d at 38. When officials or agencies have been delegated discretionary authority over a given area, such as the Attorney General and the INS in the field of immigration, see 8 U.S.C. Sec. 1103 (1982); Jean v. Nelson, 711 F.2d 1455, 1466 (11th Cir.1983), rev'd in part as moot, 727 F.2d 957, 962 (11th Cir.1984) (en banc), aff'd, 472 U.S. 846, 105 S.Ct. 2992, 86 L.Ed.2d 664 (1985); 8 K. Davis, Administrative Law Treatise Sec. 8.10 (2d ed. 1979), such policy statements serve a dual purpose. Besides informing the public concerning the agency's future plans and priorities for exercising its discretionary power, they serve to educate and provide direction to the agency's personnel in the field, who are required to implement its policies and exercise its discretionary power in specific cases. See H. Friendly, The Federal Administrative Agencies 145-46 (1962) (one of the values of the policy statement [is] the education of agency members in the agency's work), quoted in Noel v. Chapman, 508 F.2d 1023, 1030 (2d Cir.), cert. denied, 423 U.S. 824, 96 S.Ct. 37, 46 L.Ed.2d 40 (1975); Bonsfield, Some Tentative Thoughts on Public Participation in the Making of Interpretative Rules and General Statements of Policy Under the APA, 23 Admin.L.Rev. 101, 115 (1970-71) (It may be that 'general statements of policy' are rules directed primarily at the staff of an agency describing how it will conduct agency discretionary functions, while other rules are directed primarily at the public in an effort to impose obligations on them.), quoted in Noel, 508 F.2d at 1030. 15 When a federal agency issues a directive concerning the future exercise of its discretionary power, for purposes of APA section 553, its directive will constitute either a substantive rule, for which notice-and-comment procedures are required, or a general statement of policy, for which they are not. See Pacific Gas, 506 F.2d at 38; 5 U.S.C. Sec. 553(b)-(d). The critical factor to determine whether a directive announcing a new policy constitutes a rule or a general statement of policy is the extent to which the challenged [directive] leaves the agency, or its implementing official, free to exercise discretion to follow, or not to follow, the [announced] policy in an individual case. Jean, 711 F.2d at 1481; accord Ryder Truck Lines, Inc. v. United States, 716 F.2d 1369, 1377 (11th Cir.1983), cert. denied, 466 U.S. 927, 104 S.Ct. 1708, 80 L.Ed.2d 181 (1984); American Mining Congress v. Marshall, 671 F.2d 1251, 1263 (10th Cir.1982); Burroughs Wellcome, 649 F.2d at 224; Guardian Federal, 589 F.2d at 666-67. 16 To the extent that the directive merely provides guidance to agency officials in exercising their discretionary powers while preserving their flexibility and their opportunity to make individualized determination[s], it constitutes a general statement of policy. Guardian Federal, 589 F.2d at 666-67; Noel, 508 F.2d at 1030; see Ryder, 716 F.2d at 1377; Jean, 711 F.2d at 1481. In such cases, Congress has determined that notice-and-comment rulemaking would be of limited utility, see 5 U.S.C. Secs. 553(b)(A), 553(d)(2), and parties can challenge the policy determinations made by the agency only if and when the directive has been applied specifically to them. See Jean, 711 F.2d at 1481-82 & n. 23; Pacific Gas, 506 F.2d at 38. In contrast, to the extent that the directive narrowly limits administrative discretion or establishes a binding norm  that so fills out the statutory scheme that upon application one need only determine whether a given case is within the rule's criterion, it effectively replaces agency discretion with a new binding rule of substantive law. Ryder, 716 F.2d at 1377 (emphasis added); Jean, 711 F.2d at 1481; Guardian Federal, 589 F.2d at 666-67. In these cases, notice-and-comment rulemaking proceedings are required, as they would be for any other substantive rule, see 5 U.S.C. Sec. 553(b), (d), and they will represent the only opportunity for parties to challenge the policy determinations upon which the new rule is based. See Pacific Gas, 506 F.2d at 38. 9 17 Thus, for the 1978 and 1981 Operating Instructions to qualify under section 553's general statement of policy exception, as Fitzpatrick contends, they must satisfy two requirements. First, they must operate only prospectively. Burroughs Wellcome, 649 F.2d at 224; Iowa Power and Light Co. v. Burlington Northern, Inc., 647 F.2d 796, 811 (8th Cir.1981), cert. denied, 455 U.S. 907, 102 S.Ct. 1253, 71 L.Ed.2d 445 (1982); American Business Association v. United States, 627 F.2d 525, 529-31 (D.C.Cir.1980); Mast Industries, Inc. v. Regan, 596 F.Supp. 1567, 1579 (Ct.Int'l Trade 1984); Attorney General's Manual, at 30 n. 3. But cf. Jean, 711 F.2d at 1478-79 (suggesting that general statements of policy need not operate exclusively in the future); K. Davis, Administrative Law Treatise Sec. 7.5, at 169-70. Second, they must not establish a binding norm or be finally determinative of the issues or rights to which [they are] addressed, but must instead leave INS officials free to consider the individual facts in the various cases that arise. Ryder, 716 F.2d at 1377; Jean, 711 F.2d at 1481 & n. 21; American Mining Congress, 671 F.2d at 1263; Burroughs Wellcome, 649 F.2d at 224; Iowa Power and Light, 647 F.2d at 811; American Business Association, 627 F.2d at 529-30; Guardian Federal, 589 F.2d at 666-67; Pacific Gas, 506 F.2d at 38; Mast Industries, 596 F.2d at 1579; see American Trucking Associations, Inc. v. ICC, 659 F.2d 452, 463, 474 (5th Cir.1981), cert. denied, 460 U.S. 1022, 103 S.Ct. 1272, 75 L.Ed.2d 493 (1983). We conclude that the 1978 and 1981 Operating Instructions satisfy both these requirements. 18 We note that two considerations that Mada relies upon to establish that the 1978 and 1981 Operating Instructions do not constitute general statements of policy are not determinative of the issue. First, Mada appears to assume that if an agency's decisions applying a particular regulation are reviewable by courts, then the regulation must automatically be a substantive rule for which notice-and-comment rulemaking procedures are required. Thus, he maintains that our decision in Nicholas, 590 F.2d at 802, holding that the 1978 Operating Instruction created judicially enforceable rights, necessarily implies that the 1978 Instruction was not merely a general statement of policy. 19 The determinations of whether an agency's decisions implementing a particular directive are subject to judicial review and whether the directive itself constitutes a general statement of policy exempt from section 553's notice-and-comment requirements are not necessarily interdependent. The two issues involve different statutory provisions, are analyzed under different standards, and arise at different chronological stages of a directive's history. 20 To qualify as a general statement of policy under section 553, as noted above, a directive must not establish a binding norm and must leave agency officials free to consider the individual facts in the various cases that arise and to exercise discretion. Ryder, 716 F.2d at 1377. In contrast, for an agency's action pursuant to a particular directive to be unreviewable by the courts under APA section 701(a)(2), it is not alone sufficient that the action involves agency discretion; courts must also have no meaningful standard against which to judge the agency's exercise of discretion.... [or] to evaluate [it] for 'abuse of discretion.'  Heckler v. Chaney, 470 U.S. 821, 105 S.Ct. 1649, 1655, 84 L.Ed.2d 714 (1985); see Western Medical Enterprises, Inc. v. Heckler, 783 F.2d 1376, 1380 (9th Cir.1986) (discretionary decisions by agencies are not subject to judicial review under section 701(a)(2) only  'in those rare instances where statutes [or regulations] are drawn in such broad terms that in a given case there is no law to apply ' ) (quoting Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 821, 28 L.Ed.2d 136 (1971)) (other citations omitted); Abdelhamid v. Ilchert, 774 F.2d 1447, 1449 (9th Cir.1985) (acknowledging that  'even under statutes [or regulations] granting an official the broadest discretion, there will be some [cases] arising [for] which the court will ... have law to apply '  and that will therefore be judicially reviewable) (quoting Strickland v. Morton, 519 F.2d 467, 470 (9th Cir.1975) (citations omitted)). 21 Moreover, the determination that a directive constitutes a general statement of policy is binding in future cases, and is based exclusively upon the language and structure of the directive itself. See, e.g., Ryder, 716 F.2d at 1377. In contrast, determination of whether agency actions implementing that directive are reviewable under section 701(a)(2) must be made on a case-by-case basis, and are made only after the agency has applied the directive in a particular situation and a specific complaint has been filed. See Abdelhamid, 774 F.2d at 1449 (quoting Strickland, 519 F.2d at 470). ( [T]he test ... of when a reviewing court lacks jurisdiction due to [section] 701(a)(2), is not whether a statute viewed in the abstract lacks law to be applied, but rather, whether in a given case  there is no law to be applied.') (citing Overton Park, 401 U.S. at 410, 91 S.Ct. at 821) (emphasis in original); accord Abdelhamid, 774 F.2d at 1449 (determination under section 701(a)(2) must be made in the context of a particular complaint). 22 Because of these differences between section 553 and section 701(a)(2), courts confronted with claims based on the two provisions have tended to address and analyze them separately. See, e.g., Noel, 508 F.2d at 1029-30; see also Alaniz v. Office of Personnel Management, 728 F.2d 1460, 1463-64, 1467-69 (Fed.Cir.1984); Iowa Power and Light, 647 F.2d at 811-12 (implicitly finding agency decision reviewable under section 701(a)(2)). Furthermore, several courts have suggested that agency decisions made pursuant to general statements of policy may be judicially reviewable at least for abuse of discretion. See Jean, 711 F.2d at 1481-82 & n. 23; Pacific Gas, 506 F.2d at 38-40. For all these reasons, we conclude that our decision in Nicholas, finding determinations made pursuant to the 1978 Operating Instruction reviewable, does not foreclose the possibility that the 1978 Instruction constitutes a general statement of policy for purposes of section 553. 10 23 Second, Mada apparently assumes that the 1978 Instruction cannot constitute a general statement of policy under section 553 because the INS's replacement of the 1978 Operating Instruction with the 1981 Instruction diminishes the likelihood that he and other similarly situated aliens will be granted deferred action status, and eliminates their opportunity to obtain judicial review. In essence, Mada suggests that if the repeal of an agency directive will cause a substantial impact to the rights of a specific class it cannot be exempt from section 553's notice-and-comment requirements. However, we have expressly rejected the argument that, for the purposes of imposing notice-and-comment requirements on [an] agency for a particular rule, [courts should] look to the 'substantial impact' of the rule. Alcaraz v. Block, 746 F.2d 593, 613 (9th Cir.1984) (citations omitted); accord Rivera v. Becerra, 714 F.2d 887, 890-91 (9th Cir.1983), cert. denied, 465 U.S. 1099, 104 S.Ct. 1591, 80 L.Ed.2d 124 (1984); see Southern California Edison Co. v. FERC, 770 F.2d 779, 783 (9th Cir.1985). We have concluded that  '[s]imply because agency action has substantial impact does not mean it is subject to notice and comment if it is otherwise expressly exempt under the APA.'  Alcaraz, 746 F.2d at 613 (citations omitted); accord Rivera, 714 F.2d at 890-91 (citing the Supreme Court's admonition in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 435 U.S. 519, 524, 98 S.Ct. 1197, 1202, 55 L.Ed.2d 460 (1978), that courts should not impose procedural requirements upon agencies beyond those expressly provided in the APA); contra United States Department of Labor v. Kast Metals Corp., 744 F.2d 1145, 1153-54 & n. 19 (5th Cir.1984) (adopting a more limited interpretation of Vermont Yankee's admonition). 24 In determining whether particular regulations or directives qualify for one of section 553's exemptions from notice-and-comment requirements, we have focused upon the effect of the regulation or directive upon agency decisionmaking, not the public at large. 11 See, e.g., Southern California Edison, 770 F.2d at 783 (discussing rules of agency organization, procedure, or practice); Alcaraz, 746 F.2d at 613 (discussing interpretative rules); but cf. Note, An Analysis of the General Statement of Policy Exception to Notice and Comment Procedures, 73 Georgetown L.J. 1007 (1985) (arguing that substantial impact test should be applied in conjunction with the binding norm test to determine whether a directive constitutes a general statement of policy.) Therefore, to the extent that the 1978 and 1981 Operating Instructions satisfy the two requirements noted above--operating prospectively and not establishing a binding norm they constitute general statements of policy for purposes of section 553.