Supreme Court construes Parkland Statutes and delineates role of courts reviewing discretionary administrative action in Citizens to Preserve Overton Park v. Volpe

The Supreme Court's decision earlier this month in Citizens to Preserve Overton Park v. Volpe, __ U.S. __, 1 ELR 20110 (March 2, 1971), is important to the developing field of environmental law on two levels. By its construction of two environmental protection sections of the federal highway statutes¹ the Court has substantially restricted the availability of parklands and similar "green havens"² as sites for interstate highways. Of equal significance is the Court's clarification of the role of the reviewing court where discretionary administrative action is challenged.This aspect of the opinion is applicable in varying degrees to the whole range of citizens' suits to halt environmentally destructive administrative action.³

The suit was initiated to challenge the validity of the Secretary of Transportation's final decision in November, 1969 approving the route and design of that portion of six-lane Interstate 40 to be built through Memphis's 342-acre Overton Park. Petitioners, private citizens and conservation organizations, relied on sections of the Department of Transportation Act⁴ and the Federal Aid Highway Act⁵ which prohibit the use of federal funds to build highways which pass through public parks unless there is "no feasible and prudent alternative" route and, where there is no alternative, require "all possible planning to minimize harm" to parklands. The Secretary must determine that these conditions are satisfied before authorizing the release of federal funds. Petitioners argued that the Secretary never made these determinations. They also contended that the Secretary made no supporting findings of fact, and that this alone rendered his approval invalid, because it foreclosed effective judicial review. Respondents submitted affidavits purporting to deny these allegations and moved for summary judgment. The district court (W.D.Tenn.) agreed with respondents, and its judgment was affirmed by a two-to-one decision in the Sixth Circuit.⁶

The Supreme Court reversed and remanded the case to the district court for plenary review of the Secretary's decision. The Court holds that although formal findings may not have been statutorily required, the litigation affidavits supplied by respondents in defense of the Secretary's order (which the Court characterizes as "merely 'post hoc rationalization'") were insufficient to support summary judgment.

In construing the limitations imposed by the Highway Act and the Transportation Act on the use of federal funds for highways which would invade public parks,⁷ the Court provided heartening support for [1 ELR 10036] those who seek to protect parkland from encroachment. Denying the respondents' contention that the Secretary's proper role involved a wide-ranging balancing of competing interests, the Court held that Congress intended to elevate the policy of protection of parkland to a status superior to all competing considerations:

It is obvious that in most cases considerations of cost, directness of route, and community disruption will indicate that parkland should be used for highway construction whenever possible. … The very existence of the statutes indicates that protection of parkland was to be given paramount importance. … If the statutes are to have any meaning, the Secretary cannot approve the destruction of parkland unless he finds that alternative routes present unique problems. 1 ELR at 20112.

The Court's opinion also seems likely to have a significant impact on the future nature of judicial review of administrative decisions. While the opinion states that the substantial evidence test is inapposite to the case, since it involves neither a rulemaking nor a quasi-judicial proceeding, the opinion appears to expand the meaning of "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."⁸ Furthermore, while the Court rules out de novo review of the administrative decision, it holds that the district court should "engage in a substantial inquiry" (1 ELR 20113) as to whether the applicable standards of the Administrative Procedure Act have been met.

To determine the applicable standard for review the Court refers to § 706 of the Administrative Procedure Act, 5 U.S.C. § 706 (Supp. V). Petitioners argued that the "substantial evidence" standard (§ 706 (2) (E)) was applicable because the administrative record included the transcripts of public hearings required by the Federal Aid Highway Act, 23 U.S.C. § 128 (Supp. V). Alternatively, they contended that the proper standard was whether the Secretary's decision was "unwarranted by the facts" to be established at a "trial de novo" pursuant to § 706 (2) (F).⁹ But the Court finds neither the substantial evidence standard nor the requirement of trial de novo applicable. It concludes that the public hearing under 28 U.S.C. § 128 is nonadjudicatory, quasi-legislative in nature, and not designed to produce a record that can serve as the basis for agency action.¹⁰ Trial de novo is also found to be inappropriate since the administrative action was not adjudicatory, and no factual issues not before the agency were raised in court. Prior to the Court's decision, some saw in this case an opportunity for the Court to readjust the respective roles of citizens and administrators in highway policy formulation.¹¹ By asserting the appropriateness of the substantial evidence or trial de novo standards, petitioners were implicitly arguing for an enlarged role for the public in the administration of the highway statutes. The adoption of the "substantial evidence" standard would have emphasized the importance of the record compiled at the public hearing required by 28 U.S.C. § 128 and thus conferred on the participating public more power to affect highway policy. Requring a trial de novo would have de-emphasized the importance of the record compiled by the administrator, substantially diluted any presumptions of administrative experties and regularity of the agency's decision and raised the complaining citizens to a position of near equality with the administrator in terms of power to effect ultimate highway policy.¹²

The standard of review which the Court holds applicable is the least rigorous standard of judicial review of administrative action, and perhaps the standard which is most difficult to apply.¹³ It requires the vacation of decisions which are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."¹⁴ This standard, coupled with the requirement that agency action remain within statutory, procedural and constitutional limits,¹⁵ constitutes the outer boundaries of lawful administrative action in all cases in which administrative action is subject to judicial review. It is this standard which is often the only measure of whether administrative action of the discretionary sort is valid or unlawful. The Court, in apparent awareness of these considerations, analyzes the arbitrary and capricious test "by the numbers," as much to instruct the district court (and all other lower federal courts) as to decide the case before it.

The analysis begins with the simple assertion that a [1 ELR 10037] court which is reviewing discretionary administrative action to determine whether it is lawful must first determine whether that action was within the scope of the administrator's authority.¹⁶ This investigation has been described by Professor Jaffe as a determination of whether "… the action has been [by the administrator] and can be [by the reviewing court] reasonably attributed to an application of valid factors of choice …"¹⁷ The basis for determining which factors are valid is the authorizing statute. Hence in this case the Court notes: "… as has been shown, Congress has specified only a small range of choices that the Secretary can make." The Court is of course referring to its own interpretation of the Parklands Statutes as severely restricting the Secretary's discretion.

Once the valid range of applicable factors has been determined, the reviewing court must determine that the decision-maker has relied only upon factors within that range. All too often courts have relied solely on the word of the decision maker that his mind was properly constrained. This subjective test, in light of the commitment of many administrative agencies to mission achievement (building highways, launching satellites, etc). is no test at all. Just as in this case, post hoc rationalizations can always be found for a course of action which was in fact based on other, legally irrelevant, considerations. The Court's opinion repudiates this practice by stating that to determine whether the decision-maker has relied exclusively on relevant considerations the court must find that "… on the facts the Secretary's decision can reasonably be said to be within that [lawful] range." Thus, in the context of the statutory authorization involved in this case, the Court summarized the test to be applied by the reviewing court to determine whether the action was within the administrator's scope of authority as follows:

The reviewing court must consider whether the Secretary properly construed his authority to approve the use of parkland as limited to situations where there are no feasible alternative routes or where feasible alternative routes involve uniquely difficult problems.¹⁸ And the reviewing court must be able to find that the Secretary could have reasonably believed that in this case there are no feasible alternatives or that alternatives do involve unique problems. 1 ELR 20113.

Once the reviewing court has concluded that the administrator has relied upon relevant factors it may not simply assume that the decision was valid. Professor Jaffe is again an invaluable aid:

… if the law gives an officer the power to make a choice, an action within the area of choice is legally unimpeachable. … however, there is an important exemption implied in the phrase "abuse of discretion."¹⁹

The Court adopts the language of Judge Magruder (quoted by Jaffe) in McBee v. Bomar, 296 F.2d 235, 237 (6th Cir. 1961) to make the same point. Abuse of discretion is in that case defined as "a clear error of judgment in the conclusion … reached upon a weighing of the relevant factors." Thus, if a decision is not based upon a consideration of the relevant factors, it is in excess of the administrator's power. If the decision is premised on such relevant factors, but is nevertheless clearly wrong, it is invalid as an abuse of discretion.

When is a decision a clear error of judgment? The Court does not answer this question. It does state that the "… inquiry into the facts is to be searching and careful …" but that "… the court is not empowered to substitute its judgment for that of the agency." An example of abuse of discretion provided by Professor Jaffe better explains the nature of the question:

Thus, in determining whether to license, let us say a dairy, the licensing officer may take into account cleanliness [a relevant factor]; yet a minute speck of dust on a window pane would hardly support a refusal based on uncleanliness.²⁰

Although reviewing courts are left to determine when unlawful weight has been given to any lawful factor, and this is as it should be, these courts should not conclude that the cavalier attitude which has often typified judicial review of discretionary administrative decisions is condoned in Overton. Rather the Court has outlined a charge to reviewing courts, a methodology by which difficult questions on review may be responsibly answered. No administrator's power is limitless, no discretion so wide that it may not be abused, nor so reliant upon expertise that its exercise may never be questioned.

Moreover, the Court's detailed explanation of how the court should approach review of a discretionary administrative decision plainly requires that all the facts be available for review. Cognizant of the importance of the facts to effective judicial review, petitioners had argued that the Secretary's decision was invalid since it was not accompanied by [1 ELR 10038] supporting factual findings, and requested a remand to the Secretary. To the extent that petitioners argued that the lack of findings as a procedural deficiency itself invalidated the decision, the Court disagrees and holds that formal findings are not required by statute. Nor does a Department of Transportation regulation requiring such findings which was promulgated well after the Secretary's decision apply to this case.²¹ However, the Court was aware that if the reviewing court did not have access to all facts upon which the Secretary relied for his decision, then judicial review would be a sham. Pursuant to Section 706 of the Administrative Procedure Act the Court initially concludes that the "whole record" compiled by the agency as a basis for the Secretary's decision must be before the reviewing court. But the Court goes further:

… since the bare record may not disclose the factors that were considered or the Secretary's construction of the evidence it may be necessary for the District Court to require some explanation in order to determine if the Secretary acted within the scope of his authority and if the Secretary's action was justifiable under the applicable standard … The [district] court may require the administrative officials who participated in the decision to give testimony explaining their actions. [Emphasis supplied]²²

To avoid the witness stand the Secretary is permitted to submit formal findings including the information required by DOT Order 5610.1.²³ Should the district court be dissatisfied with these findings, apparently it may still require an in-court explanation.

In another recent decision²⁴ regarding judicial review of administrative action Judge Bazelon comments on the dawning of a new era of fruitful collaboration between administrative agencies and reviewing courts. He writes:

Courts have occasionally asserted, but less often excercised, the power to set aside agency action on the ground that an impermissible factor had entered into the decision, or a crucial factor had not been considered. Gradually, however, that power has come into more frequent use, and with it, the requirement that administrators articulate the factors on which they base their decisions.²⁵

By quickening the pace at which this judicial responsibility will be fully exercised the Court in Citizens to Preserve Overton Park v. Volpe has assisted in narrowing the range of unfettered administrative discretion.

1. Section 4(f) of the Department of Transportation Act, 49 U.S.C. § 1653(f) (Supp. V), and section 138 of the Federal-Aid Highway Act, 23 U.S.C. § 138 (Supp.V) (hereafter sometimes referred to as the Parklands Statutes).

2. "… any publicly owned lands from a public park, recreation area, or wildlife and waterfowl refuge of national, state, or local significance as determined by the Federal, state or local officials having jurisdiction thereof, or any land from an historic site of national, state, or local significance as so determined by such officials …" 49 U.S.C. § 1653(f) (Supp.V).

3. The many suits now being brought under the National Environmental Policy Act, 42 U.S.C. §§ 4221-4331, et seq. e.g., Environmental Defense Fund v. Corps of Engineers of the United States Army, 1 ELR 20130 (E.D.Ark. Feb. 19, 1970), come immediately to mind. Though the statutory standards at issue in Citizens to Preserve Overton Park may differ from (and are stricter than) NEPA standards, the method of judicial implementation is the same.

4. 49 U.S.C. § 1653(f) (Supp. V).

5. 23 U.S.C. § 138 (Supp. V).

6. 432 F.2d 1307, 1 ELR 20053 (6th Cir. 1970), aff'g 309 F. Supp. 1189 (W.D. Tenn. 1970). For a complete history of the case See 1 ELR Dig. 4. A discussion of the Supreme Court's grant of certiorari is at 1 ELR 10001.

7. The pertinent language is that the Secretary "shall not approve any program or project" that requires the use of any public parkland "unless (1) there is no feasible and prudent alternative to the use of such land, and (2) such program includes all possible planning to minimize harm to such park …" 23 U.S.C. § 138 (Supp. V); 49 U.S.C. § 1653(f) (Supp. V).

8. 5 U.S.C. § 706(2)(A).

9. Petitioners' argument was two-fold: "Generally, those attacking an administrative judgment made ex parte who have not had an opportunity to present evidence to the administrator or to challenge opposing evidence to the administrator or to challenge opposing evidence are entitled to de novo factual determinations, and are entitled to relief if the administrative judgment is 'unwarranted by the facts.' § 706 (2)(F). First National Bank v. Saxon, 352 F.2d 267 (4th Cir. 1965); New Hampshire Fire Ins. Co. v. Murray, 105 F.2d 212, 217 (7th Cir. 1939); section IV, Brief Amici Curiae of Committee of 100 of the Federal City in case. Moreover, the legislative history of the Administrative Procedure Act points out that sections 706(2) (E) and (F) were meant to be correlative; with (E) governing cases where there was an administrative record based on a hearing required by statute and (F) governing all other cases. Administrative Procedure Act, Legislative History, S. Doc. No. 248, 79 Cong. 2d Sess. 39(1944-46)." Brief for Petitioners, p. 31.

10. The Court cites: H. Rep. No. 1980, 79th Cong. 2d Sess. reprinted in Senate Judiciary Committee, Legislative History of the Administrative Procedure Act.

11. Judge Celebreeze, in his dissent in the 6th Circuit apparently recognized the relationship between the substantial evidence standard and the role of the public in highway policy decisions. Citizens to Preserve Overton Park v. Volpe, 432 F.2d 1307, 1 ELR 20053, 20056 (6th Cir. 1970).

12. Of course the limited resources of the citizenry as compared with those of major administrative agency would limit their ability to effectively exercise theoretically equivalent power.

13. E.g., Western Addition Community Organization v. Weaver, 294 F. Supp. 433 (N.D.Cal. 1968), where the court equated the arbitrary and capricious standard with the substantial evidence standard.

14. 5 U.S.C. § 706 (2) (A).

15. 5 U.S.C. § 706 (2) (B), (C), (D) (Supp. V.).

16. The court here refers to L. Jaffe, Judicial Control of Administrative Action 359 (1965). This and other references to Jaffe throughout the, Court's analysis of the arbitrary and capricious standards as applied in reviewing discretionary administrative action reveal the primary source of the court's reasoning.

17. Id., at 182. Interestingly this section of Professor Jaffe's work deals with review of administrative action by mandamus. In his dissent in the 6th Circuit, Judge Celebreeze suggests that the case be remanded to the district court and there treated as a mandamus proceeding pursuant to 28 U.S.C. § 1361. Citizens to Preserve Overton Park v. Volpe, 432 F.2d 1307, 1 ELR 20053, 20056 (6th Cir. 1970).

18. The future of Overton Park may well turn on this sentence. Since the Court, disagreeing with the Secretary as to the bounds of his discretion, has laid down a new test under the Parklands Statutes, it is difficult to imagine the lower court finding that the Secretary "properly construed his authority" over a year earlier.

19. L. Jaffe, supra at 182.

20. Id.

21. DOT Order 5610.1, 1 ELR 46042 was promulgated October 7, 1970 to implement section 102(2)(C) of the National Environmental Policy Act, 42 U.S.C. § 4332(2)(C), section 4(f) of the Department of Transportation Act, 49 U.S.C. § 1653(f) and portions of section 16 of the Airport and Airway Development Act of 1970. The order was issued pursuant to Executive Order 11514 (March 5, 1970) 1 ELR 45003. Petitioners contended that although issued after the route for I-40 was approved, since this order requires the Secretary to make formal findings when he approves the use of parkland for highways, and was the law at the time of the Supreme Court's decision in this case, that under Thorpe v. Housing Authority, 393 U.S. 268, 281-82 (1969) the order should have been applied to this case. The Court distinguishes Thorpe, inter alia, on the ground that in this case there does exist an administrative record which will permit effective review. Of more lasting importance is the fact that under this order 4(f) findings and environmental impact statements required by § 102(2)(C) of the National Environmental Policy Act are to be run together. The ramifications of this, in light of the opinion in this case, are manifold. It is sufficient to note that the Council on Environmental Quality apparently considers this hybrid as something other than a 102(2)(C) statement.

22. The Court distinguishes United States v. Morgan, 313 U.S. 409 (1941), because in that case administrative findings contemporaneous with the administrator's decision were available.

23. 1 ELR 46042.

24. Environmental Defense Fund v. Ruckelshaus, __ F.2d __, 1 ELR 20059 (D.C. Cir. January 7, 1971). Judge Bazelon is of course limiting his discussion to scope of authority situations.

25. Id. at 20064.