Opinion ID: 464791
Heading Depth: 1
Heading Rank: 3

Heading: justiciability issues

Text: 44 That Chaney does not foreclose review of an agency's statutory interpretation announced in the course of a nonenforcement decision does not, of course, mean that such review is always available. We must still determine (a) whether the plaintiff has standing to bring the challenge to the interpretation; (b) whether the interpretation qualifies as final agency action; and (c) whether the challenge of the announced interpretation is ripe for judicial review. 11
45 As the district court held, the Union clearly has standing to challenge the Department's announcement of its statutory interpretation relating to the advice and split-income issues. The Union 12 has alleged adequate facts to satisfy the tests enunciated in Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982), where the Supreme Court explained that the constitutional components of standing require that a plaintiff tenably allege that: (a) he suffered personal injury, (b) the injury is fairly traceable to defendant's challenged conduct, and (c) his injury is likely to be redressed by the relief sought. See also Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 3325, 82 L.Ed.2d 556 (1984). 46 The Union asserts that the announced interpretation has the effect of depriving it and its members of information to which the LMRDA entitles it about employer activities involving payments for indirect persuasion and payments made to supervisors for work in opposition to labor organizations. Moreover, the Union alleges that the Department's misinterpretation of the statute in these two respects removes the deterrent effect on employers and consultants that the reporting requirements create, and thus directly interferes with the Union's and its members' ability to organize workers. These allegations satisfy the injury component of the standing doctrine. See Association of Data Processing Serv. Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970) (competitive injury gives standing); International Ladies' Garment Workers' Union v. Donovan (IGLWU), 722 F.2d 795, 805-12 (D.C.Cir.1983) (union has standing to challenge action that opens door to increased competition), cert. denied, --- U.S. ----, 105 S.Ct. 93, 83 L.Ed.2d 39 (1984); see also Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 343, 97 S.Ct. 2434, 2441, 53 L.Ed.2d 383 (1977) (describing association's standing to bring suit on behalf of members). 47 Plaintiffs' allegations also satisfy the causation element of the standing doctrine, since the interpretation at issue has the effect of legalizing 13 employers' and consultants' nonreporting of activities falling into the two contested categories. See Association of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 151-52, 90 S.Ct. 827, 829, 25 L.Ed.2d 184 (1970) (standing where complaint is of injurious competition that would have been illegal but for the challenged governmental action); ILGWU, 722 F.2d at 810-11 (labor organizations had standing to challenge agency decision which rescind restrictions on employment of workers in the home). 48 Finally, plaintiffs satisfy the redressability requirement. Should the agency be required to modify its interpretation, employers will be under a legal duty to report the transactions which, under the interpretation challenged here, currently need not be reported. Moreover, a law-abiding 14 employer considering the practices at issue will be put to the choice of either reporting them or refraining from engaging in them in the first place, with the expected result that many will refrain. A decision in the Union's favor would thus clearly go a long way toward redressing the Union's injury. See ILGWU, 722 F.2d at 811-12 (as Congress passed the Act partly to provide redress to employers from unfair competition, the suggestion that effective enforcement of the Act will not have this effect directly contravenes congressional judgment underlying the Act).
49 The Administrative Procedure Act provides for judicial review of final agency action, and defines agency action as including a rule. 5 U.S.C. Sec. 704. That term, in turn, is defined as an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy. 5 U.S.C. Sec. 551(4). The term 'agency action' thus embraces an agency's interpretation of its law, and it is the finality of that action that we must consider. National Automatic Laundry and Cleaning Council v. Shultz, 443 F.2d 689, 698 (D.C.Cir.1971). 50 The Supreme Court has explained that the relevant considerations in determining finality are whether the process of administrative decisionmaking has reached a stage where judicial review will not disrupt the orderly process of adjudication and whether rights or obligations have been determined or legal consequences will flow from the agency action. Port of Boston Marine Terminal Assoc. v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 71, 91 S.Ct. 203, 209, 27 L.Ed.2d 203 (1970) (emphasis added). The inquiry is a flexible one which necessarily takes account of pragmatic considerations. See FTC v. Standard Oil of California, 449 U.S. 232, 240, 101 S.Ct. 488, 493, 66 L.Ed.2d 416 (1980). 51 In evaluating whether this announcement represents final agency action it is essential to recognize that many agencies choose to adopt interpretations through adjudications rather than through rulemaking, and that this process has been widely approved by the courts. See SEC v. Chenery, 332 U.S. 194, 202-03, 67 S.Ct. 1575, 1580-81, 91 L.Ed. 1995 (1947); Wisconsin Gas Co. v. FERC, 770 F.2d 1144, 1166 (D.C.Cir.1985). When an agency uses an adjudication as a vehicle for announcement of a new rule, therefore, the effect of the adjudication can go far beyond its immediate effect on the parties involved in the specific adjudication. In this case, for example, employers will justifiably rely on the Department's interpretation and, therefore, not report the transactions at issue. Cf. Cox v. Louisiana, 379 U.S. 559, 568-69, 85 S.Ct. 476, 482-83, 13 L.Ed.2d 487 (1965) (citizens justifiably tend to rely on administrative interpretations). In short, [an] administrative agency has available two methods for formulating policy that will have the force of law. An agency may establish binding policy through rulemaking procedures by which it promulgates substantive rules, or through adjudications which constitute binding precedent. Pacific Gas & Electric Co. v. Federal Power Comm., 506 F.2d 33, 38 (D.C.Cir.1974) (footnote omitted). This court has frequently held that an agency's interpretation of its governing statute, with the expectation that regulated parties will conform to and rely on this interpretation, is final agency action fit for judicial review. Independent Bankers Ass'n of America v. Smith, 534 F.2d 921, 929 & n. 27 (D.C.Cir.), cert. denied, 429 U.S. 862, 97 S.Ct. 166, 50 L.Ed.2d 141 (1976). See also Potomac Electric Power Co. v. ICC, 702 F.2d 1026, 1030 (D.C.Cir.1983) (one of criteria in evaluating finality is whether agency action has force of law). 52 The Department may, of course, reverse its interpretation at some future date, but that does not change the reality that the current interpretation could quite likely be used as a defense to any criminal action against an employer for activity that was permitted while the interpretation was in force. See American Law Institute, Model Penal Code Sec. 2.04(3)(b) (1985) (individual has defense when he acts in reasonable reliance upon an official statement of the law, afterward determined to be invalid or erroneous, contained in ... an official interpretation of the public officer or body charged by law with responsibility for the interpretation, administration or enforcement of the law defining the offense), and cases cited therein. In the civil context as well, there are cases supporting the proposition that an agency may not impose liability retroactively when the individual has acted in accordance with the agency's own announced interpretation of the statute. 15 See Retail Wholesale and Department Store Union v. NLRB, 466 F.2d 380 (D.C.Cir.1972); McDonald v. Watt, 653 F.2d 1035 (5th Cir.1981); NLRB v. Majestic Weaving Co., 355 F.2d 854 (2d Cir.1966). 53 Unless the agency indicates otherwise, courts are entitled to presume that a statutory interpretation announced in an adjudication represents the agency's 16 final position on the issue--to the extent that any agency position is ever final. See Abbott Laboratories v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967) (fact that no further administrative proceedings were contemplated adds to conclusion of finality); Better Government Association v. Department of State, 780 F.2d 86, 92-93 (1986) (agency guideline was final when agency indicated no intention to subject it to public notice and comment and agency expected guideline to govern); Eagle-Picher Industries v. United States E.P.A., 759 F.2d 905, 917 (D.C.Cir.1985) (absence of equivocal or tentative language indicates that decision constitutes agency's final position). Of course, in more typical cases, announcements of general policies may not be ripe for judicial review until they are actually applied against specific plaintiffs. See, e.g., Alascom, Inc. v. FCC, 727 F.2d 1212 (D.C.Cir.1984); Baltimore Gas & Electric Co. v. ICC, 672 F.2d 146 (D.C.Cir.1982). There are, however, exceptions to this principle, to which we now turn.
54 In deciding whether an agency's action is ripe for judicial review a court must  'balance its interest in deciding the issue in a more concrete setting against the hardship to the parties caused by delaying review.'  Atlantic Richfield Co. v. United States Dep't of Energy (ARCO), 769 F.2d 771, 783 (D.C.Cir.1984) (quoting Webb v. Dep't of Health & Human Servs., 696 F.2d 101, 106 (D.C.Cir.1982)). In this case, we determine that, given the purely legal nature of the issues and the unavailability of any future opportunity for review, both the court's and the parties' interests are best served through review at this stage. 55
56 An issue is fit for judicial resolution under the ripeness test, if it is (a) essentially legal, and (b) sufficiently final. See ARCO, 769 F.2d at 783; Gulf Oil Corp. v. United States Dep't of Energy, 663 F.2d 296, 310 (D.C.Cir.1981). Since we have already determined that the challenged interpretation qualifies as sufficiently final, see supra Part III.B., we need only concern ourselves with whether our review of the issue would substantially benefit from being deferred until some later date. 57 The issues presented by the underlying case are purely legal, and would not become any more concrete from further factual development. The Department has made a broad pronouncement on the indirect persuasion and split-income issues that goes far beyond the facts of any given case. The sole issue presented is whether these new interpretations are inconsistent with the statute which they interpret. Under these circumstances, the first component of the ripeness inquiry is certainly satisfied. See Pacific Gas & Elec. Co. v. State Energy Resources Conservation & Development Comm., 461 U.S. 190, 201, 103 S.Ct. 1713, 1720, 75 L.Ed.2d 752 (1983); Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 81-82, 98 S.Ct. 2620, 2634-35, (1978); Better Government Association, at 92.
58 The second facet of the ripeness inquiry requires that we examine the hardship that the plaintiff will incur if review is delayed. Often a plaintiff alleges economic hardship, claiming that the agency action requires that he expend considerable resources to stave off the threat of criminal prosecution. In such cases, the courts have held that the plaintiff's hardship is a strong element to be considered in determining whether a court should review the agency action before it is directly applied to the plaintiff. See, e.g., Abbott Labs. v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). 59 The hardship involved in this case is of a different sort, but just as compelling as that involved in cases like Abbott Labs. We start with the proposition that because of the effect that the agency action is bound to have on employers' and consultants' reporting of the types of transactions covered by the interpretations, the impact of the challenged action can be said to be felt immediately by the Union in its day-to-day affairs, and that irremediable adverse consequences may flow from a determination that this case is not currently ripe for review. Gardner v. Toilet Goods Ass'n, 387 U.S. 158, 164, 87 S.Ct. 1520, 1525, 18 L.Ed.2d 697 (1967). That the interpretations do not directly compel plaintiffs to take immediate action does not mean that the plaintiffs do not suffer immediate hardship, sufficient to trigger review. See Meltzer v. Board of Public Instruction, 548 F.2d 559, 572-73 (5th Cir.1977) (parents challenge of school regulation requiring teachers to inculcate the practice of every Christian virtue was ripe because of immediate, inevitable effect on teachers' behavior), cert. denied, 439 U.S. 1089, 99 S.Ct. 872, 59 L.Ed.2d 56 (1979); see also Better Government Association, at 93-95 (recognizing hardship where plaintiff alleged it was being deprived of statutory entitlement); American Federation of Government Employees v. FLRA, 750 F.2d 143, 144-45 (D.C.Cir.1984) (issuance of interpretation and guidance that authoritatively rejected union's statutory entitlement was ripe for immediate review since, by itself, it constituted a concrete injury). 60 The severity of the hardship is underscored by the realization that if the challenge is not ripe for review now, no review will ever be possible. The statutory interpretations on the split-income and indirect persuasion issues by their very nature will manifest themselves only in the form of repeated decisions not to take enforcement actions. Since each individual nonenforcement decision is unreviewable under the principle espoused in Heckler v. Chaney, --- U.S. ----, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985), see supra 244-45, the option of postponing judicial review until the policy is applied against the particular individual is simply not available in this case. Our choice is between addressing the challenge in its current setting or permanently withholding judicial review of the agency's interpretation of the statute. Given the plaintiffs' strong interest in securing judicial review on the statutory interpretations at issue, an interest which Congress clearly sought to protect by enacting the Administrative Procedure Act, we find that the hardship of permanently foreclosing review is clearly sufficient to make the challenge ripe. 17