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American Bar Association

ADMINISTRATIVE & REGULATORY LAW NEWS


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News from the Circuits

Ninth Circuit Splits Circuits and Holds AFDC Regulation, Valid when Adopted, Arbitrary and Capricious as a Result of Subsequent Events

Under regulations adopted in 1982 pursuant to the Aid to Families with Dependent Children program, if applicants own cars, the value of their equity in the cars in excess of $1500 is counted toward their assets to determine program eligibility, and anyone with over $1000 in assets is disqualified. This regulation has been challenged in a number of cases, but it has always survived review. In Gamboa v. Rubin 80 F.3d 1338 (1996), the Ninth Circuit declined to follow theother courts. The court had little difficulty in upholding the reasonableness of the regulation as of the time that it was adopted. However, since 1982 the effect of inflation has been to significantly reduce the quality of the car that AFDC applicants can possess without penalty. Had the $1500 been indexed for inflation, it would now be about $3000. Although a number of courts have chided the agency for not updating the limit, they have been unwilling to overturn the regulation on the basis of the effects of inflation. The Ninth Circuit, however, held that by failing to adjust the limit the Secretary thwarted the reasoning and justification originally provided for the limit, so that the limit was no longer valid. This is apparently the first time a court has ever overturned an agency regulation, valid when adopted, as a result of subsequent events. Judge Kozinski filed a scathing dissent. He noted that other than the adoption of the regulation, which the court upheld, there was no agency action to review. The proper course, he suggested, would have been for the plaintiff to have filed a petition for rulemaking, and then, if it had been denied, to have sought review of it. Then, there would have been an agency action with associated justification and reasoning to review. However, he also suggested that the statute's requirement for the Secretary to set the equity limit at "such amount as the Secretary may prescribe" committed the amount to the agency's unreviewable discretion under 5 U.S.C. § 701(a)(2).

Fourth Circuit Says Federal Courts in Section 1983 Actions Should Grant Deference to Local Housing Agency's Interpretation of Federal Law

In Clark v. Alexander, 83 F.3d 146 (4th Cir. 1996), Stacey Clark sued under Section 1983 alleging she was denied rights under federal law when her rent subsidy under Section 8 of the United States Housing Act was terminated by the Alexandria Redevelopment and Housing Authority (ARHA), the local housing agency administering the program. She contested that a person who had been arrested in her apartment for drug dealing was a "family member." Under federal regulations, criminal activity by family members is grounds for terminating rent subsidies. The court of appeals agreed with the district judge that the plaintiff should not be able to relitigate the facts that had been determined in the local agency's informal adjudication. That adjudication had comported with due process and the decision was supported by substantial evidence. She also claimed that ARHA had acted inconsistently with the federal regulation defining "family." The court noted that in an earlier case, Ritter v. Cecil County Office of Hous. & Community Dev., 33 F.3d 323 (1994), it had held that federal courts should apply Chevron deference to interpretive regulations adopted by the agency interpreting federal law. Here the interpretation of "family" had been made by the local agency's administrative law judge. The court determined that "there is no reason to limit the Ritter analysis" to local agency rules, and applying the Chevron test to the ALJ's decision, the court found it reasonable.

Ninth Circuit Vacates EPA's Approval of a State Implementation Plan under the Clean Air Act for Accepting Post-Comment Period Information, Violating the Requirement to Afford the Public an Opportunity to Comment in a Rulemaking

Under the Clean Air Act Arizona submitted a State Implementation Plan (SIP) for particulate matter in the Phoenix area to EPA for approval. EPA's approval was challenged by some Phoenix residents on the grounds that the approval violated both the Clean Air Act and the APA. The court found that EPA's action was not arbitrary or capricious or beyond the agency's statutory authority, but after the close of the comment period on the proposed SIP, EPA asked Arizona to submit additional justifications for its failure to require certain "reasonably available control measures" to reduce particulate emissions. Arizona responded with approximately 300 pages of further justification, upon which EPA relied in approving the plan. This, the court said, violated the requirements of Section 553 to allow the public an opportunity to comment on a proposed rulemaking. Ober v. U.S. E.P.A., 84 F.3d 304. While agencies are not foreclosed from considering new data after the close of a comment period, the court indicated that when the data is critical to the final decision, is substantial, and does not just expand what was already in record, then the post- comment material violates the duty under the APA to give the public a fair opportunity to comment.

Third Circuit Requires Exhaustion of Administrative Remedies in Dismissing Aliens Constitutional Challenge to Provision of Immigration and Nationality Act

The plaintiff is the brother of an assassinated Mexican government official, who left Mexico after claiming the ruling political party was covering up evidence of the crime. Unable to accede to Mexico's request for extradition because of a lack of evidence, the United States instituted deportation proceedings against plaintiff under a provision of the Immigration and Nationality Act (INA) that provides for deportation when "the Secretary of State has reasonable grounds to believe [a person's presence] would have potentially serious adverse foreign policy consequences." Plaintiff sued in district court to enjoin the use of that provision on the grounds of its unconstitutionality. The district court issued the injunction, but the court of appeals reversed, dismissing the case because the plaintiff had not exhausted his administrative remedies. Massieu v. Reno, --- F.3d ----. The court began by stating that the first question was congressional intent; only if Congress had not required exhaustion would the court consider common law exhaustion requirements and their exceptions. In determining Congressional intent, the court looked to Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994), in which the Court assessed the overall structure of the law to determine whether there was a Congressional intent to delay judicial review until after the agency had finally acted. The INA contains express exhaustion requirements for persons challenging an order of deportation, but it does not directly address challenges to instituting the proceedings themselves. Nevertheless, the court found a "discernible intent" of Congress to require exhaustion there as well, at least where the claim is one that can ultimately be reviewed after exhaustion. The court noted that Thunder Basin recognized an exception where the claim was one that would not receive appropriate review under the statutory scheme. Here the exception was not applicable, because the plaintiff's constitutional claim could be fully determined upon review of a deportation order, unlike so-called "collateral claims," such as where a class action suit was brought challenging the Immigration and Naturalization Service's means of processing cases. To the argument that the balance of interests involved when there is a constitutional claim, upon which the INS cannot even rule, tips in favor of excusing exhaustion, the court stated: "[i]n light of the clear statutory language and congressional intent, we do not think that the courts possess the authority to excuse exhaustion whenever they conclude that a balancing of the relevant factors tips in that direction."

Sixth Circuit Rejects Secretary of Labor's Interpretation of His Own Regulation in Favor of OSHRC's

In Martin v. OSHRC, 499 U.S. 144 (1991), the Supreme Court held that Chevron deference was applicable to Secretary of Labor interpretations of regulations of the Occupational and Safety Health Administration's regulations, rather than to the interpretations of those regulations by the Occupational and Safety Health Review Commission in reviewing OSHA's enforcement actions. In Reich v. General Motors Corp., 89 F.3d 313, the Sixth Circuit rejected the Secretary's interpretation, finding the regulation unambiguous and the Secretary's interpretation unreasonable. Accordingly, it upheld OSHRC's rejection of the Secretary's citation. Under OSHA's "lockout/tagout" rule, certain industrial machines must be disconnected from their power source while being serviced, so as to preclude injury to servicing workers if the machines are accidentally restarted during the servicing. The language of the regulation identifies the covered machines as those "in which the unexpected energization or start up of the machines or equipment, or release of stored energy could cause injury to employees." In GM's case, however, to restart the machines in question involved a complicated, multi-step affair that would almost necessarily alert any servicing workers. Nevertheless, OSHA cited GM, interpreting the regulation to apply to any equipment, which if it unexpectedly started would cause injury, even if the likelihood of an unexpected start was very small. OSHRC rejected the Secretary's interpretation, finding that if workers would necessarily be warned of a restart, a restart would not be unexpected. The Sixth Circuit said it found the regulation's language unambiguous; that is, it could only be interpreted the way OSHRC had interpreted it. Even if it were ambiguous, the court went on, the Secretary's interpretation was unreasonable.


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