Court Opinion

ID: 9495285
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:58:34.975187+00
Date Added: 2024-06-11T17:56:55.006231
License: Public Domain

LUTTIG, Circuit Judge,
dissenting.
The majority’s speculation as to the rationales that might have underlay the Department of Agriculture regulation (on the strength of which it then upholds the regulation) constitutes yeoman’s work. It is even possible that these speculated reasons were in fact the reasons that the Department promulgated the regulation. But the jurisprudential insight that eludes the majority is that it just may well be that these were not the reasons that prompted the agency’s regulation that we review today. I do not know the reasons for the agency’s inclusion of pass-through funds in gross revenue, and neither does the majority, for no reasons for that decision have been provided by the agency, either in the course of the regulation’s promulgation or in the course of this litigation. It is in this very circumstance that the Supreme Court has cautioned the courts against their own post hoc supply of reasons for agency action- and explained that the proper procedure is, instead, for the courts to require of the agency that it explain its own action, after which meaningful judicial review may then be had. I would heed the Supreme Court’s warning and hew to its mandated procedure in this case. Accordingly, I dissent.
That an agency must give’some statement of explanation for its actions is a basic precept of administrative law. As the Supreme Court admonished in Motor Vehicle Manufacturers Association of the United States, Inc. v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983), “the agency must examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’ ” Id. at 43 (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962)). The reasons provided by the agency are the only basis on which the agency’s actions may be upheld. See State Farm, 463 U.S. at 50 (“It is well-established that an agency’s action must be upheld, if at all, on the basis articulated by the agency itself.”). As the Court explicitly warned in State Farm, reviewing courts are not to rely on reasons that the agency itself has not provided: “More importantly, it is the agency’s responsibility, not this Court’s, to explain its decision.” Id. at 57.
*414From these premises, it follows (at least as a general matter) that if an agency has provided no reasons for its action, a court may not uphold that action. That is, if the Supreme Court is willing to remand to the agency on the basis of unconvincing reasons, as it did in State Farm, it follows a fortiori that agency action for which no justification at all is provided, likewise, cannot be sustained. See SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947) (“The rule is to the effect that a reviewing court ... must judge the propriety of such [agency] action solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis'.” (emphasis added)).
The majority attempts to relieve the Department of its obligation to provide an explanation, but this attempt results in yet another mis-application of law. The majority concludes that because the 1999 Appropriations Act exempts the Secretary from the notice and comment requirements of section 553(c) of the Administrative Procedure Act (APA), see 1999 Appropriations Act § 1133(a)(1), 112 Stat. 2681, 2681-47, the agency was not required to give reasons for its decision to include pass-through funds in gross revenue. See ante at 412. However, even assuming that, under section 558(c), a statement of basis and purpose is required only if notice and comment is mandated — a conclusion, incidentally, not required by the text of that provision — it does not follow (as the majority believes it does) that the agency’s decision may be upheld in the absence of any stated justification. The Secretary still must provide reasons for his decision in order to survive arbitrary and capricious review under section 706(2) (A) of the APA.
The Supreme Court has sensibly treated section 706, of its own force, as requiring the agency to provide explanation for its action, see Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971); see also Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 654, 110 S.Ct. 2668, 110 L.Ed.2d 579 (1990), reasoning that unexplained action is, by definition, arbitrary and capricious. And, per the direct authority of Overton Park, this is so even in cases where an agency is not required to make formal findings or observe the notice and comment requirement before it takes action, because, absent agency explanation, a reviewing court is unable to determine “whether the [agency’s] decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” Overton Park, 401 U.S. at 416. Therefore, as the Supreme Court has held, the proper approach under section 706 is not, as the majority does here, for the courts to speculate post hoc as to what the agency’s reasoning might have been, but, rather, for the agency itself to explain post hoc what the reasons for its action actually were. See id. at 420-21.
By positing reasons for the Secretary’s action, the majority has, pure and simple, (mis)equated arbitrary and capricious review with minimum rationality review, in contravention of the Supreme Court’s clear instruction in State Farm, that “the presumption of constitutionality afforded 'legislation drafted by Congress and the presumption of regularity afforded an agency in fulfilling its statutory mandate” are not “equivalent.” See State Farm, 463 U.S. at 43 n. 9. The Supreme Court only recently reaffirmed this principle, of which the majority stands in violation, in Bowen v. American Hospital Association, 476 U.S. 610, 106 S.Ct. 2101, 90 L.Ed.2d 584 (1986) (plurality opinion). After quoting the above noted language from State Farm, *415the Court went on to explain that “the mere fact that there is ‘some rational basis within the knowledge and experience of the [regulators]’ under which they ‘might have concluded’ that the regulation was necessary to discharge their statutorily authorized mission will not suffice to validate agency decisionmaking.” Id. at 627 (internal citations omitted). Said the Court, in a passage that represents an anticipated rejection of today’s decision by the majority, “[a]gency deference has not come so far that we [the Supreme Court] will uphold regulations whenever it is possible to ‘conceive a basis’ for administrative action.” Id. at 626.
In light of the complete absence of any agency explanation for its inclusion of pass-through funds in the calculation of gross revenue, I would, as required by Supreme Court precedent, remand to the Department for a statement of its reasons for this inclusion, a disposition that would thereafter permit meaningful judicial review. “[I]f the reviewing court simply cannot evaluate the challenged agency action on the basis of the record before it, the' proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation.” Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985). Unlike the majority, I am unwilling to speculate as to the reasons for the agency’s decision. I believe it is as unacceptable for a court to generate its own reasons for agency action, as it is to substitute its own views for those of the agency as to the propriety of particular action. The former, which the majority has indulged in here, may seem a comparatively trivial limitation on the judicial power, but it is not. It goes just as much to the legitimacy of the judicial process and the independence of the executive process as does the latter. See Chenery Corp., 332 U.S. at 196 (noting that for a court to uphold agency action where the agency has not provided sufficient reasons “would propel the court into the domain which Congress has set aside exclusively for the administrative agency”).
For these reasons, I respectfully dissent.