Opinion ID: 409578
Heading Depth: 2
Heading Rank: 3

Heading: Procedural Failings

Text: 74 On 20 October 1980 MarAd's Office of Trade Studies and Statistics presented the Office of Subsidy Contracts with a report of twenty-two, single-spaced pages on the Bay Ridge application. 75 The first three and one-half pages provide background material. There follows nine and one-half pages summarizing the various comments, replies, rejoinders, and motions of interested parties. The remainder of the report discusses the application in terms of the factors listed in the interim rule and ends by recommending its approval. 75 Two days later the Office of Subsidy Contracts presented a report to the Maritime Subsidy Board, also recommending approval of Richmond's application. 76 The report is sixty-two pages, double-spaced. After six pages of background material, the report contains forty-nine pages of analysis of the Bay Ridge application in terms of the interim rule. This analysis, though somewhat more detailed, largely tracks that of the 20 October report. In fact, large sections are taken verbatim from the earlier report. The 22 October report concludes with seven, double-spaced pages of recommended findings and determinations to be made, and actions to be taken. 76 Neither of these reports were published. They only came to light during the course of the litigation following MarAd's decision. Instead of publishing the reports, on 13 November MarAd took the last seven pages of the 22 October memorandum and, after changing the tense of the verbs so that recommendations became actions, sent them to the interested parties in a four-page, single-spaced letter. 77 Only three paragraphs of that letter, approximately one page, deal with the merits of the Bay Ridge application, and those paragraphs are wholly conclusory, mostly just repeating the language of the interim rule or stating, without any support, ultimate facts relevant to factors listed in the rule. 78 The remainder of the letter consists of background filler, deferment of other pending applications, details of the repayment transaction and a denial, in advance, of all requests for reconsideration. 77 MarAd's 13 November letter clearly falls far short of the required explanation for its action. It contains no constitutive facts and no analysis of the major issues so sharply contested by the interested parties to the proceeding. Yet no further explanation was proferred. MarAd could not have more flagrantly violated both judicial precedent and its own binding rule. 78 We have chided MarAd in the past for having clipped off the last five pages of (a staff) memorandum and recorded it as its own 'finding and determination' in the matter and sent it along, in haec verba, to appellants by letter .... 79 The admonition obviously did not strike home. 79 Appellees argue that the inadequacy of the 13 November letter as an explanation of MarAd's action is merely a technical failing remedied by subsequent disclosure of the 22 October memorandum, allegedly adopted in toto by MarAd at a 10 November meeting. 80 But it is, to say the least, very strange procedure for an agency to adopt a document as the foundation for its decision and then reveal only the last seven pages of it until forced to fuller disclosure by litigation. Moreover, the 22 October memorandum gives rise to problems of its own, both procedural and substantive. 80 Most of the controversy during the Bay Ridge proceeding centered on a single, general issue. It was not seriously disputed that there were no opportunities for the Bay Ridge in the foreign trade, or that both Seatrain and Richmond were in serious financial straits, or that the government stood to lose a great deal of money if the Bay Ridge was unable to generate sufficient income to pay off its guaranteed loans. The crucial issue was the effect that admission of the Bay Ridge would have on the domestic tanker market. Could the Bay Ridge be absorbed without noticeable effect, or would its entrance cause a tanker glut harmful to the stability of the trade? This question resolves into numerous, more specific issues such as anticipated Alaskan crude oil production, probable tanker supply, and demographics. The amount and type of shipping required turns on how much of the oil produced is consumed locally or on the West Coast, which is a short haul from Alaska, and how much proceeds to the East or Gulf Coasts via the Panama Canal, a long haul requiring transshipment at the west side of the Canal. Large vessels, VLCCs such as the Bay Ridge, are most efficiently employed in carriage from Alaska to the Canal. 81 Prior to its 22 October staff memorandum, MarAd had produced and made available to interested parties two studies of these issues. One, dated 26 August 1980, compared MarAd's own estimates as to production, tanker supply and demand with those submitted by the applicant. 81 The other, dated 24 September 1980, presented and compared two different scenarios, one based on U.S. Department of Energy forecasts and one based on projections of the California Energy Commission. 82 82 As noted, both these reports were made available. The parties were able to comment upon and respond to them, arguing either that the forecasts should be altered or, agreeing with the forecasts, that certain conclusions should be drawn from them. The facts and figures in the 22 October memorandum, however, were different from those in both the earlier reports. MarAd based its analysis on, and drew its conclusions from, a new set of forecasts without disclosing them to the parties for comment. 83 We have said before that even in an informal adjudication parties have a right to be informed of and comment on staff positions. 83 Our cases make clear the importance of such comment in allowing a court to review the action taken by the agency, as well as in facilitating informed agency decisionmaking itself. 84 This importance is augmented in cases such as this one, where MarAd has refused in advance to entertain any petitions for reconsideration. 84 Richmond claims that appellant was already familiar with most of the basic data in the 22 October report. Indeed, Richmond cites the affidavit of a vice-president of the economic consulting firm employed by ITOC, claiming that (t)he basic data in the October Memorandum were substantially in agreement with the economic analysis previously submitted by ITOC. 85 From this Richmond concludes that ITOC's only possible complaint is with MarAd's methodology and analysis. But an agency has no obligation to give the parties a preview of its analysis or statement of its tentative conclusion. 86 85 Richmond certainly has a point. An agency is not obliged to publish a tentative opinion for comment. Otherwise, an absurd and endless process could ensure: notice and comment procedures followed by a tentative opinion followed by comment followed by a new tentative opinion (necessary to take account of and respond to the new set of comments) and so on. But where an agency's analytic task begins rather than ends with a set of forecasts, sound practice would seem to dictate disclosure of those forecasts so that interested parties can comment upon the conclusions properly to be drawn from them. We do not wish to lay too much stress upon the particular point. But the failing is part of an overall picture of totally unacceptable agency practice: A staff report was produced. It differed in fundamental respects from prior staff reports to which interested parties directed their comments. (Misdirected their comments, we now should say.) MarAd relied on the report in making a decision with substantial economic consequences. But the decision was published without any explanation. The report remained buried in the bowels of the agency. 86 All standards of fairness and due process in administrative law preclude such behavior. And the only way to ensure that it will not continue is to refuse to accept the decision resulting from it.