[House Report 105-395]
[From the U.S. Government Publishing Office]
105th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 105-395
_______________________________________________________________________
FEDERAL AGENCY COMPLIANCE ACT
_______________________________________________________________________
November 8, 1997.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Gekas, from the Committee on the Judiciary, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 1544]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 1544) to prevent Federal agencies from pursuing policies
of unjustifiable nonacquiescence in, and relitigation of,
precedents established in the Federal judicial circuits, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 4
Hearings......................................................... 8
Committee Consideration.......................................... 8
Vote of the Committee............................................ 9
Committee Oversight Findings..................................... 9
Committee on Government Reform and Oversight Findings............ 9
New Budget Authority and Tax Expenditures........................ 9
Congressional Budget Office Estimate............................. 9
Constitutional Authority Statement............................... 11
Section-by-Section Analysis and Discussion....................... 11
Agency Views..................................................... 15
Changes in Existing Law Made by the Bill, as Reported............ 21
Dissenting Views................................................. 23
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Federal Agency Compliance Act''.
SEC. 2. PROHIBITING INTRACIRCUIT AGENCY NONACQUIESCENCE IN APPELLATE
PRECEDENT.
(a) In General.--Chapter 7 of title 5, United States Code, is amended
by adding at the end the following:
``Sec. 707. Adherence to court of appeals precedent
``(a) Except as provided in subsection (b), an agency (as defined in
section 701(b)(1) of this title) shall, in administering a statute,
rule, regulation, program, or policy within a judicial circuit, adhere
to the existing precedent respecting the interpretation and application
of such statute, rule, regulation, program, or policy, as established
by the decisions of the United States court of appeals for that
circuit. All officers and employees of an agency, including
administrative law judges, shall adhere to such precedent.
``(b) An agency is not precluded under subsection (a) from taking a
position, either in administration or litigation, that is at variance
with precedent established by a United States court of appeals if--
``(1) it is not certain whether the administration of the
statute, rule, regulation, program, or policy will be subject
to review by the court of appeals that established that
precedent or a court of appeals for another circuit;
``(2) the Government did not seek further review of the case
in which that precedent was first established, in that court of
appeals or the United States Supreme Court, because neither the
United States nor any agency or officer thereof was a party to
the case or because the decision establishing that precedent
was otherwise substantially favorable to the Government; or
``(3) it is reasonable to question the continued validity of
that precedent in light of a subsequent decision of that court
of appeals or the United States Supreme Court, a subsequent
change in any pertinent statute or regulation, or any other
subsequent change in the public policy or circumstances on
which that precedent was based.''.
(b) Clerical Amendment.--The table of sections at the beginning of
chapter 7 of title 5, United States Code, is amended by adding at the
end of following new item:
``707. Adherence to court of appeals precedent.''.
SEC. 3. PREVENTING UNNECESSARY AGENCY RELITIGATION IN MULTIPLE
CIRCUITS.
(a) In General.--Chapter 7 of title 5, United States Code, as amended
by section 2(a), is amended by adding at the end the following:
``Sec. 708. Supervision of litigation; limiting unnecessary
relitigation of legal issues
``(a) In supervising the conduct of litigation, the officers of any
agency of the United States authorized to conduct litigation, including
the Department of Justice acting under sections 516 and 519 of title
28, United States Code, shall ensure that the initiation, defense, and
continuation of proceedings in the courts of the United States within,
or subject to the jurisdiction of, a particular judicial circuit avoids
unnecessarily repetitive litigation on questions of law already
consistently resolved against the position of the United States, or an
agency or officer thereof, in precedents established by the United
States courts of appeals for 3 or more other judicial circuits.
``(b) Decisions on whether to initiate, defend, or continue
litigation for purposes of subsection (a) shall take into account,
among other relevant factors, the following:
``(1) The effect of intervening changes in pertinent law or
the public policy or circumstances on which the established
precedents were based.
``(2) Subsequent decisions of the United States Supreme Court
or the courts of appeals that previously decided the relevant
question of law.
``(3) The extent to which that question of law was fully and
adequately litigated in the cases in which the precedents were
established.
``(4) The need to conserve judicial and other parties'
resources.
``(c) The Attorney General shall report annually to the Committees on
the Judiciary of the Senate and the House of Representatives on the
efforts of the Department of Justice and other agencies to comply with
subsection (a).
``(d) A decision on whether to initiate, defend, or continue
litigation is not subject to review in a court, by mandamus or
otherwise, on the grounds that the decision violates subsection (a).''.
(b) Clerical Amendment.--The table of sections at the beginning of
chapter 7 of title 5, United States Code, as amended by section 2(b),
is amended by adding at the end the following new item:
``708. Supervision of litigation; limiting unnecessary relitigation of
legal issues.''.
Purpose and Summary
The Federal Agency Compliance Act, H.R. 1544, generally
prevents agencies from refusing to follow controlling
precedents of the United States courts of appeals in the course
of program administration and litigation of their programs. The
Committee on the Judiciary (hereinafter referred to as
Committee) believes that citizens who file claims or who
otherwise are involved in proceedings with federal agencies
have the right to expect that those agencies will obey the law
as interpreted by the courts. Moreover, the Committee believes
that agencies must be discouraged from relitigating settled
questions of law in multiple circuits. Unnecessary litigation
is a needless expense for both the Government and private
parties and a waste of limited judicial resources. The bill is
based upon a recommendation by the federal judiciary that
Congress ``* * * enact legislation to--(a) generally prohibit
agencies from adopting a policy of nonacquiescence to the
precedent established in a particular federal circuit; and (b)
require agencies to demonstrate special circumstances for
relitigating an issue in an additional circuit when a uniform
precedent has been established already in multiple courts of
appeals.'' 1
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\1\ Judicial Conference of the United States, Long Range Plan for
the Federal Courts 34 (1995) (Recommendation 11).
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H.R. 1544 addresses the two kinds of agency
nonacquiescence: intracircuit nonacquiescence--refusal to
follow controlling appellate precedent within a specific
federal judicial circuit; and intercircuit nonacquiescence--
relitigating in other judicial circuits issues on which
precedents have already been established in multiple
circuits.2 Regarding intracircuit nonacquiescence,
the bill generally requires an agency and all agency officials
who administer statutes and regulations within a given judicial
circuit to follow relevant existing court of appeals precedent
in that circuit. The Committee, however, recognizes that an
agency should be able to assert a position contrary to
precedent in limited circumstances, for example, such as when
intervening legal, factual, or public policy developments may
have undermined or changed the rationale for the earlier
decision.
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\2\ See Samuel Estreicher & Richard L. Revesz, Nonacquiescence by
Federal Administrative Agencies, 98 Yale L.J. 679 (1989).
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With respect to intercircuit nonacquiescence, the Committee
believes that agencies should not repeatedly relitigate legal
issues that have been consistently resolved against the
Government, or one of its agencies, by multiple courts of
appeals. The bill requires the Department of Justice and other
agency officials in such situations to consider the following
factors, among others, when deciding whether to pursue
litigation: (1) the effect of intervening changes in pertinent
law or public policy or circumstances on which the other courts
of appeals' decisions were based; (2) subsequent decisions of
the Supreme Court or the courts of appeals that previously
decided the relevant question of law; (3) the extent to which
that question of law was fully and adequately litigated in the
earlier cases; and (4) the need to conserve the resources of
the federal courts and non-agency parties to the litigation.
Although these provisions discouraging intercircuit
nonacquiescence are not subject to judicial review or
enforcement, the bill requires the Attorney General to report
annually to Congress on agency compliance.
The Federal Agency Compliance Act gives effect to the
principle of stare decisis. An appellate court's decisions
resolving legal issues form precedents, which thereafter serve
as controlling law on the legal points resolved. Stare decisis
as applied to precedents of a United States court of appeals
has been referred to as the ``law of the circuit'' doctrine.
Respect for controlling law provides stability and
predictability to our judicial system facilitating settlement
of disputes and freeing parties from relitigating established
legal precedents. It promotes uniformity by treating everyone
alike within a circuit and providing litigants with a sense of
fairness, regardless of their financial means. H.R. 1544
ensures that federal agencies, as well as other claimants and
parties, will respect the law of the circuit.
Background and Need for the Legislation
Nonacquiescence is an agency's refusal to adhere to
judicial precedent in handling or resolving a subsequent matter
that presents the same question of law under sufficiently
similar facts. As previously noted, H.R. 1544 addresses both
types--intracircuit and intercircuit
nonacquiescence.3
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\3\ Mr. Gekas, the Chairman of the Subcommittee on Commercial and
Administrative Law, with Mr. Frank of Massachusetts as an original
cosponsor, introduced H.R. 1544 on May 7, 1997. Subsequently, Mr.
Nadler, the Ranking Minority Member of the Subcommittee, among others,
joined as cosponsor of the bill. On September 11, 1997, a substantially
similar bill, S. 1166, was introduced by Senator Ben Nighthorse
Campbell.
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The routine practice of nonacquiescence generates
significant social costs. Even though a party who challenges an
agency decision in court may be certain to prevail based upon
favorable precedent, that party nonetheless has been required
to expend considerable resources to achieve that result.
Moreover, the nonacquiescent agency may continue to apply its
policy to those who are similarly situated, each of whom may
ultimately have to file suit to obtain the relief previously
deemed appropriate by the federal court. As a prerequisite to
judicial review, those aggrieved by agency action must
generally exhaust their administrative remedies, which may
involve hearings before administrative law judges, applications
to appellate boards, or other proceedings required under the
relevant statute. Thus, the process whereby an aggrieved party
ultimately receives the relief to which the party is entitled
under judicial precedent can be costly and protracted.
Agency nonacquiescence has been an ongoing problem. In
their study, Professors Samuel Estreicher and Richard Revesz
trace the practice back to the 1920s,4 noting that
since that time ``many agencies have insisted, in varying
degrees, on the authority to pursue their policies, despite
conflicting court decisions.'' 5 The Social Security
Administration (SSA) and the Internal Revenue Service (IRS)
were among those agencies cited as having practiced
nonaquiescence.6 In 1975, the report of the
Commission on Revision of the Federal Court Appellate System
(the Hruska Commission) identified significant concerns about
the impact of agency nonacquiescence practices.7 And
in the 1980s, the Social Security Administration was strongly
criticized by courts, legal scholars, and the Congress for its
repeated nonacquiescence in the face of contrary appellate
court rulings.8
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\4\ The origin of the practice of nonacquiescence at the Internal
Revenue Service is explained further in Gary L. Rodgers, ``The
Commissioner `Does Not Acquiesce,' '' 59 Neb. L. Rev. 1001, 1004-05
(1980) (footnotes omitted):
Historically, the practice began in 1924 when the Tax
Court was known as the Board of Tax Appeals. At that time
there was no procedure for direct appeal from the Board's
decision. If the Service lost, it could bring suit in
federal district court within one year to collect any
deficiency disallowed by the Board. In order that taxpayers
who were successful before the Board would not have to wait
a full year to find out if the [S]ervice planned to appeal,
the Commissioner would publish the decision to acquiesce or
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nonacquiesce.
\5\ See Estreicher & Revesz, supra note 2, at 681.
\6\ Id.
\7\ See Commission on Revision of the Federal Court Appellate
System, Structure and Internal Procedures: Recommendations for Change,
67 F.R.D. 195, app. B at 349-61 (1975).
\8\ Estreicher & Revesz, supra note 2, at 681-82. During the 98th
Congress, the House passed H.R. 3755, ``The Social Security Disability
Benefits Reform Act of 1984,'' which barred SSA intracircuit
nonacquiescence outright. The Senate took a somewhat different
approach, instead mandating procedural safeguards whenever
nonacquiescence was asserted. Although the relevant provisions in each
bill were subsequently deleted, the Conference Report noted that the
decision to eliminate them should ``not be interpreted as approval of
`non-acquiescence' by a federal agency to an interpretation of a U.S.
Court of Appeals.'' H. Conf. Rep. No. 1039, 98th Cong., 2d Sess. 37
(1984), reprinted in 1984 U.S.C.C.A.N. 3095. During the 99th Congress,
the Subcommittee on Administrative Law and Governmental Relations of
the House Judiciary Committee held hearings on ``Judicial Review of
Agency Action: HHS Policy of Nonacquiescence'' at which a substantial
body of testimony was received against the Social Security
Administration's practice. Judicial Review of Agency Action: HHS Policy
of Nonacquiescence: Hearing Before the Subcomm. on Administrative Law
and Governmental Relations of the House Comm. on the Judiciary, 99th
Cong., 1st Sess. (July 25, 1985).
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The problem of agency nonacquiescence was also recognized
at the beginning of this decade by the Federal Courts Study
Committee (the Study Committee), which was established by
Congress to perform a comprehensive review of the problems and
issues facing the federal judiciary. In its report, the Study
Committee recommended to Congress that the practice of agency
nonacquiescence in administrative adjudication of Social
Security disability claims be prohibited.9 The
recommendation responded to an assertion by the Secretary of
Health and Human Services (whose department at that time
included the SSA) of a right to disregard the precedential
holdings of the courts of appeals if the agency determined that
the relevant court decisions were not in accord with its own
policy. The Study Committee also called upon Congress to
explore whether ``legislative control'' should be applied to
other executive branch agencies as well.10
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\9\ Report of the Federal Courts Study Committee 59-60 (1990). In
the Study Committee's view, an exemption from this prohibition should
be recognized for ``test'' cases designated by the Solicitor General.
\10\ Id. at 60.
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In its 1995 recommendation for legislation to address the
continuing problem, the Judicial Conference of the United
States noted that the practice of unjustified nonacquiescence
``undermines the fundamental principle that an appellate
court's decision on a particular point of law is controlling
precedent for other cases raising the same issue.''
11 It went on to cite the practice's ``questionable
propriety and inefficiency'' and criticized it as ``unfair to
litigants, many of whom are pro se, who frequently are unaware
of precedent favorable to their cases.'' 12
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\11\ Long Range Plan for the Federal Courts, supra note 1, at 35
(commentary on Recommendation 11).
\12\ Id.
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Testifying before the Subcommittee on behalf of the
Judicial Conference, Judge Stephen H. Anderson of the United
States Court of Appeals for the Tenth Circuit stated that
nonacquiescence ``violates all our concepts of the rule of law
existing in this country for more than 200 years.''
13 He added that it is unfair to individual
claimants to force them to relitigate an issue that has
previously been decided by an appellate court. Oftentimes,
agency nonacquiesence discourages meritorious claimants from
pursuing what is their right under favorable precedent.
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\13\ Federal Agency Compliance Act: Hearing on H.R. 1544 Before the
Subcomm. on Commercial and Administrative Law of the House Comm. on the
Judiciary, 105th Cong., 1st Sess. at 11 (1997) [hereinafter Compliance
Act Hearing] (testimony of Hon. Stephen H. Anderson, Judge, U.S. Court
of Appeals for the Tenth Circuit).
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He stated:
This is a matter of the invisible statistic, the
invisible citizen claimant. What happens to the mass of
citizen claimants at the lowest level, the first desk
of an agency's consideration? That action we don't know
about. The only way that we know that something may be
wrong is the announcement over and over again, one way
or the other, by agencies that they have the right to
disregard the law set by the circuit in which they
conduct their affairs.14
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\14\ Id. at 16.
John H. Pickering, Esq., testifying on behalf of the
American Bar Association, emphasized the ``lawless'' aspect of
nonacquiescence, a label he noted was applied by former
Solicitor General Rex Lee.15 Pickering also
observed:
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\15\ Id. at 64.
Claimants, who are frequently indigent, should not be
forced to relitigate legal issues on which the agency
has not prevailed but refuses to follow or appeal.
Judge Learned Hand once said that if democracy is to be
preserved, there must be one commandment: ``Thou shalt
not ration justice.'' By continuing to pursue its
policy of nonacquiescence, the Social Security
Administration is limiting access to the justice
system, and thereby rationing justice, for: (1) the
claimant who must pursue lengthy appeals to obtain a
decision on an issue of law that could have been
resolved at the agency level; (2) claimants whose cases
are delayed because the agency's resources are spent on
duplicative efforts; and (3) claimants who may be
denied timely access to the federal court system
because the court is forced to consider anew, issues of
law that it has already decided.16
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\16\ Compliance Act Hearing, supra, note 13, at 67 (testimony of
John H. Pickering, Wilmer, Cutler & Pickering, on behalf of the
American Bar Association).
The legal and policy concerns surrounding agency
nonacquiescence have been the subject of substantial debate. In
essence, agencies consider it their responsibility to
administer national programs with standards consistent
throughout the country. They argue that adhering to divergent
precedents established by the various courts of appeals
detracts from this goal by fractionalizing those standards. In
defense of intercircuit nonacquiescence, agencies argue that to
freeze the law based upon a decision of one or two circuits
prevents the ``percolation'' of issues that ensures
comprehensive appellate review prior to final resolution by the
Supreme Court.
The Committee believes, however, that equity and orderly
governance require that agencies, like private citizens, should
obey the law enunciated by courts of competent jurisdiction. If
an agency disagrees with a court's decision, it has several
options. It can seek further review of the matter by the court
of appeals (the same panel or en banc) or by the Supreme Court
until the issue is finally resolved. It can also seek to
vindicate its position in other courts of appeals and perhaps
obtain review of the matter in the Supreme Court if conflicting
rulings are obtained among the circuits.17 If the
agency disagrees with the outcome of the judicial process, it
can petition Congress to amend the law. This structure is
consistent with the principle of separation of powers under
which it is the courts'' constitutional role to interpret the
laws governing agency actions.
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\17\ Critics argue, however, that the agencies can go to
unreasonable lengths in trying to gain a circuit decision in their
favor. See Rodgers, supra note 4, at 1018 (footnote omitted):
The IRS claims that as a rule of thumb, it will conform
to a judicial interpretation if faced with two or more
adverse decisions, but the Service surrendered to insurance
companies in Revenue Ruling 72-84 only after losing five
decisions in court. The ``dealers reserve'' issue was
litigated in the courts of six circuits before being
resolved by the Supreme Court in 1959. In the latter
instance, it should be noted that the IRS was at least
dealing with a conflict among the circuits, losing in four
circuits and winning in two before ultimately winning when
the Supreme Court affirmed the judgment favorable to the
Commissioner from the Seventh Circuit.
It is true that today some agencies assert that they fully
or generally acquiesce in controlling precedents. 18
However, some agencies do not ``acquiesce'' in a particular
court decision until agency officials review the judicial
opinion and issue a directive to agency employees to follow the
ruling in subsequent administrative proceedings.19
Thus, some agencies appear to treat controlling precedent as
having no binding effect until the agency interprets such
precedent and determines how it should be
implemented.20 Under that rationale, the agency has
become, in effect, a review level between the appellate courts
and the Supreme Court, a view that the Committee does not
share.21
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\18\ The Department of Justice has stated that today ``agency
nonacquiescence is uncommon'' and ``[w]here the government has lost a
legal issue in three circuits, the Solicitor General only rarely
permits a fourth appellate test of the issue.'' Letter from Andrew
Fois, Assistant Attorney General, Department of Justice, to Honorable
Henry J. Hyde, Chairman, Committee on the Judiciary (Sept. 17, 1997).
\19\ Compliance Act Hearing, supra, note 14, at 27 (statement of
Daniel J. Wiles, Deputy Associate Chief Counsel, Office of Chief
Counsel, Internal Revenue Service); Id. at 22 (statement of Arthur
Fried, Esq., General Counsel, Social Security Administration) The SSA
issues ``acquiescence rulings'' which explain how it will apply the
decisions of circuit courts that are at variance with the agency's
national policies. These ``rulings'' explain how SSA will apply the
appellate court holding at all levels of adjudication in the same
circuit. See also 62 Fed. Reg. 48,963 (Sept. 18, 1997) (proposed
revisions to SSA rules on application of circuit precedent to
administrative decision making).
\20\ Only last year, a court of appeals reversed an SSA decision
applying regulations the court had invalidated in an earlier case.
Although the agency explained its failure to observe the earlier
precedent on grounds that an ``acquiescence ruling'' had not been
issued, the court rejected that argument, noting:
Regardless of whether the Commissioner formally announces
her acquiescence, however, she is still bound by the law of
this Circuit and does not have the discretion to decide
whether to adhere to it. ```[T]he regulations of [SSA] are
not the supreme law of the land. ``It is, emphatically, the
province and duty of the judicial department, to say what
the law is,'' Marbury v. Madison, 1 Cranch 137, 2 L.Ed. 60
(1803) and the [Commissioner] will ignore that principle at
[her] peril.''' Hillhouse v. Harris, 715 F.2d 428, 430 (8th
Cir. 1983)(per curiam)(quoting Hillhouse v. Harris, 547
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F.Supp. 88, 93 (W.D. Ark. 1982)).
Hutchison v. Chater, 99 F.3d 286, 287-88 (8th Cir. 1996) (bracketed
language in opinion).
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\21\ Concerned about delay in an agency following relevant
precedent, the Committee adopted an amendment by Mr. Nadler aimed at
dealing with the problem of agency officials such as administrative law
judges, being barred by the agency from acquiescing until the agency
formally accepted the court's ruling, for example, through the issuance
by the Social Security Administration of an ``Acquiescence Ruling.''
The Committee believes that federal agencies are not entitled to craft
their own ``grace periods'' during which they may decline to observe
the law as stated in an otherwise binding precedent. This amendment
would make it possible for a claimant, for example, to bring a decision
of a federal court of appeals to the attention of an administrative law
judge, and have that law applied even in the absence of an
``Acquiescence Ruling'' or other agency action.
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The decision whether or not to acquiesce appears to be
premised on the view that federal agencies apply legal
principles from court rulings in the administration of a
statutory program only for reasons of comity, not because the
precedent is legally binding on the agency.22 As
long as an agency holds the view that following controlling
precedent is optional, the Committee believes that this bill is
necessary. No one is above the law, especially federal
agencies, whose officials are sworn to uphold the rule of
law.23
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\22\ United States Department of Energy v. Federal Labor Relations
Authority, 106 F.3d 1158, 1165 (4th Cir. 1997) (Luttig, J. concurring)
(quoting letter from William Kanter, Deputy Director of the Justice
Department's Civil Division Appellate Staff dated Nov. 14, 1996).
\23\ In Allegheny General Hospital v. NLRB, 608 F.2d 965 (3d Cir.
1979), the court observed:
Congress has not given to the NLRB the power or authority
to disagree, respectfully or otherwise, with decisions of
this court. For the Board to predicate an order on its
disagreement with this court's interpretation of a statute
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is for it to operate outside the law.
Id. at 970 (citation omitted). See also Lopez v. Heckler, 713 F.2d 1432
(9th Cir. 1983).
Hearings
The Subcommittee on Commercial and Administrative Law of
the Judiciary Committee held a hearing on H.R. 1544, the
``Federal Agency Compliance Act,'' on May 22, 1997. Testimony
was received from the following eight witnesses: Judge Stephen
H. Anderson of the United States Court of Appeals for the Tenth
Circuit, representing the Judicial Conference of the United
States; Arthur Fried, Esq., General Counsel of the Social
Security Administration; Daniel J. Wiles, Esq., Deputy
Associate Chief Counsel of the Internal Revenue Service;
Stephen W. Preston, Esq., Deputy Assistant Attorney General,
Civil Division of the Department of Justice; John Pickering,
Esq., representing the American Bar Association; Professor Dan
Coenen of the University of Georgia School of Law; James F.
Allsup, Esq., of Allsup, Inc., an organization that represents
Social Security disability and Medicare claimants; and Peter
Ferrara, General Counsel and Chief Economist for Americans for
Tax Reform.
Committee Consideration
On Thursday, July 24, 1997, the Subcommittee on Commercial
and Administrative Law met in open session and ordered reported
the bill H.R. 1544, by a voice vote, a quorum being present. On
Wednesday, September 17, 1997, the Committee met in open
session and ordered reported favorably the bill H.R. 1544 with
amendment by voice vote, a quorum being present.
Vote of the Committee
There were two amendments offered during full Committee
consideration of H.R. 1544. Mr. Nadler offered an amendment,
which was adopted by voice vote, providing that all officers
and employees of an agency, including administrative law
judges, are required to adhere to precedent. Ms. Jackson Lee
offered an amendment, which was defeated by voice vote, to
allow an agency to exercise its discretion not to acquiesce in
an appellate court precedent if it determines that the
precedent would impede the defense and protection of civil
liberties or civil rights.
Committee Oversight Findings
In compliance with clause 2(l)(3)(A) of rule XI of the
Rules of the House of Representatives, the Committee reports
that the findings and recommendations of the Committee, based
on oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform and Oversight Findings
No findings or recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 2(l)(3)(D) of rule XI of the rules of the House of
Representatives.
New Budget Authority and Tax Expenditures
Clause 2(l)(3)(B) of House Rule XI is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 2(l)(3)(C) of rule XI of the
Rules of the House of Representatives, the Committee sets
forth, with respect to the bill, H.R. 1544, the following
estimate and comparison prepared by the Director of the
Congressional Budget Office under section 403 of the
Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, November 4, 1997.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1544, the Federal
Agency Compliance Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Susanne S.
Mehlman (for federal costs), Kathy Ruffing (for social
security), and Pearl Richardson (for revenues).
Sincerely,
June E. O'Neill, Director.
Enclosure.
H.R. 1544--Federal Agency Compliance Act
H.R. 1544 would require federal agencies to abide by
appellate court precedents in a particular circuit when
administering policies or regulations in that circuit, except
under certain circumstances. The bill also would direct federal
agencies to avoid unnecessary relitigation of legal issues,
especially in instances where three or more judicial circuits
have handed down rulings unfavorable to the government.
Based on information from the Department of Justice, CBO
believes that federal agencies are generally in compliance with
federal law and that they usually exercise appropriate
discretion when determining whether an appeal in any particular
case is warranted. For example, the Social Security
Administration (SSA)--one of the agencies potentially most
affected by this bill--already has a policy on acquiescence
that essentially meets the requirements of H.R. 1544. However,
because its numerous administrative proceedings often involve
contentious issues such as determining disability, SSA's
administrators and administrative law judges (ALJs)
occasionally differ as to the applicability of precedents in
particular cases. This bill, by specifically reinforcing the
obligation of administrative law judges to adhere to appeals
court precedents for their particular circuit, could intensify
those differences. in some cases, most likely causing ALJs to
award disability benefits in more cases than they otherwise
would. Spending or receipts of other agencies could be
similarly affected. For example, the bill could result in a
slight revenue loss to the government if it were to cause the
Internal Revenue Service to adhere to appellate court
precedents in particular circuits more than it otherwise would.
In addition, the legislation might cause SSA and other agencies
to devote more resources to monitoring their adjudicative
proceedings. Such occurrences are likely to result in some
increase in costs or decrease in revenues to the government,
but CBO cannot predict the extent of these occurrences or their
budgetary impact.
Because enactment of the bill could affect direct spending
and receipts, pay-as-you-go procedures would apply. The bill
contains no intergovernmental or private-sector mandates as
defined in the Unfunded Mandates Reform Act of 1995 and would
impose no costs on state, local, or tribal governments.
The CBO staff contacts for this estimate are Susanne S.
Mehlman (for federal costs), Kathy Ruffing (for social
security), and Pearl Richardson (for revenues). This estimate
was approved by Robert A. Sunshine, Deputy Assistant Director
for Budget Analysis.
Constitutional Authority Statement
Pursuant to rule XI, clause 2(l)(4) of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, section 8, clause 18 of the
Constitution.
Section-by-Section Analysis
Section 1. Short title
Section 1 titles the bill as the ``Federal Agency
Compliance Act.''
Section 2. Prohibiting intracircuit agency nonacquiescence in appellate
precedent
Section 2(a) adds a new section, Section 707, at the end of
chapter 7 of title 5, United States Code, generally to prevent
agencies from pursuing intracircuit nonacquiescence. More
specifically, subsection (a) of section 707 provides that an
agency must adhere to controlling precedent established by the
United States court of appeals for a given judicial circuit in
administering a statute, rule, regulation, program, or policy
within that circuit. ``Administering'' includes agency action
in an administrative or judicial context that is required or
arises as part of the agency's responsibilities under a
statute, rule, regulation, program, or policy.
Section 707(a) also requires all officers and employees of
an agency, including administrative law judges, to adhere to
the controlling precedents in that circuit. To the extent that
those precedents affect the official duties of such persons,
they must act accordingly. This provision makes clear that
agency acquiescence does not apply only to the Secretary or
head of the agency. The Committee believes that citizens should
be able to avail themselves of favorable circuit case law at
every level of the administrative process.
Subsection (a) incorporates the same definition of
``agency'' applicable to other provisions of the Administrative
Procedure Act. While the bill does not define the term
``precedent,'' it is intended to carry its common meaning--
i.e., a decision that a court will consider as controlling
authority for an identical or similar question of law within
its jurisdiction. Requiring agencies to adhere within a given
judicial circuit to the precedents established by the
respective court of appeals, however, does not bind an agency
to rulings premised on materially distinguishable facts or
circumstances, nor does it limit an agency's ability to seek
clarification of earlier decisions.
The requirement to adhere to a precedent attaches once the
decision in which the precedent is established becomes
effective--i.e., when the mandate of the appellate court issues
in accordance with Rule 41 of the Federal Rules of Appellate
Procedure. If the parties in a case are bound by the lower
appellate decision pending Supreme Court review, it is
appropriate for that decision to serve as precedent in other
indistinguishable cases.24 Nevertheless, proceedings
in such other cases might be stayed so that final action is not
taken until after the Supreme Court acts.
---------------------------------------------------------------------------
\24\ Under Rule 41(b) of the Federal Rules of Appellate Procedure,
a party may seek a stay of the mandate.
---------------------------------------------------------------------------
Although the bill requires an agency to adhere to
controlling appellate precedent concerning the laws the agency
applies, it is not intended to alter the agency's prosecutorial
or enforcement discretion as recognized in existing case law.
Thus, even if a court of appeals decision establishes precedent
in a given circuit on what acts or omissions constitute a
violation of a particular law, this bill does not require an
agency charged with enforcement of that law to initiate or
continue administrative or judicial proceedings where an
identical or similar act or omission occurs subsequently within
that judicial circuit.
Subsection (b) of section 707 specifies those instances
when an agency is not precluded from taking a position that is
contrary to the controlling precedent established by a court of
appeals within the same circuit. This subsection, in essence,
establishes three exceptions to the requirement in subsection
(a). If none of the three exceptions are applicable to the
agency, then it must adhere to the applicable appellate
precedent within that circuit.
The first exception, stated in section 707(b)(1), applies
where the administration of a statute, rule, regulation,
program, or policy could be subject to review by either the
court ofappeals that established that precedent or by a court
of appeals for another circuit. This situation occurs where several
venue options exist under the operative statute, and it is uncertain
which circuit will ultimately consider proceedings for the pending
claim or case.
For example, any person aggrieved by a final order of the
National Labor Relations Board (NLRB) can seek review of such
order in the circuit in which the unfair labor practice in
question was alleged to have been engaged, in any circuit in
which the person resides or transacts business, or in the
United States Court of Appeals for the District of Columbia. 29
U.S.C. Sec. 160(f) (1994). Thus, during the administrative
consideration of the alleged unfair labor practice, it may be
uncertain which of the three potential circuits would review
the Board's decision. Even where multiple venues are possible,
the agency must adhere to any precedents uniformly established
by each of the court of appeals in which venue may lie. And, in
any event, appellate jurisdiction becomes certain once
proceedings are initiated in federal court.
On the other hand, other agencies have more certainty in
the venue options for judicial review. For example, while the
Social Security Act provides for federal judicial review where
the plaintiff resides or has his or her principal place of
business, SSA decisions are typically reviewed within the
circuit in which the claimant resides.25
---------------------------------------------------------------------------
\25\ See 42 U.S.C. Sec. 405(g); see also Estreicher & Revesz, supra
note 2, at 694.
---------------------------------------------------------------------------
The second exception, stated in section 707(b)(2),
recognizes that an agency should not be precluded from
asserting a position contrary to precedent if the Government
did not seek further review of the case in which that precedent
was first established either in that court of appeals or in the
United States Supreme Court because neither the Government nor
any agency or officer thereof was a party to the case; or the
decision establishing that precedent was otherwise
substantially favorable to the Government. This section ensures
that the court will have an opportunity to evaluate its
precedents in the context of agency views and expertise that
were not available in the earlier proceeding. In addition,
there may be situations where the Government did not seek
further review because the Government substantially prevailed
in the case. The fact that the Government substantially
prevails in a case should not bind it for all time to rulings
on secondary or incidental issues that did not affect the
ultimate result.
The third exception, stated in section 707(b)(3),
recognizes that changes in the law or other relevant
developments following the establishment of the precedent might
make it reasonable to question its continued validity. These
possible developments are: (1) a subsequent decision of that
court of appeals or the United States Supreme Court; (2) a
subsequent change in any pertinent statute or regulation; or
(3) any other subsequent change in the public policy or
circumstances on which that precedent was based. An agency
should not seek to relitigate an issue on which there is
established controlling precedent unless there are objectively
reasonable grounds for believing that the appellate court,
consistent with the principle of stare decisis, might decide
the issue differently.
The first development listed above involves those instances
where, in one or more cases subsequent to the establishment of
the precedent, that same appellate court or the Supreme Court
has indicated a possible need for reexamination of the issue by
questioning the validity of the prior holding, indicating a
desire to revisit the issue in a future case, or expressing
frustration at the results of the application of the prior
interpretation. The second development arises when Congress or
the agency changes a statute, regulation, or rule that was
interpreted in the precedent. Such a change, if substantive and
relevant, might provide a basis for the court to overrule or
modify its prior decision. The third development primarily
concerns changes occurring during the passage of time. Shifts
in public policy may sometimes make it reasonable to argue that
an appellate court might approach the same issue differently.
Also, after a court of appeals renders its decision, other
appellate courts might interpret the provision at issue
differently, thereby suggesting a change in circumstances that
could lead the same court to reconsider its former precedent.
The bill does not purport to abrogate or limit any other
rules or principles that may govern the acts or omissions of an
agency. For example, H.R. 1544 does not diminish any existing
obligations of agencies to acquiesce in appellate court
decisions, nor does it otherwise affect existing law with
respect to controlling precedent, the law of estoppel, or the
ethical responsibility of parties and counsel to acknowledge
and characterize faithfully any legal authority that may be
relevant in a particular administrative or judicial proceeding.
H.R. 1544 adopts a balanced approach. The three general
exceptions in section 707(b) provide federal agencies with
sufficient flexibility to adhere to valid, established
precedent so as not to interfere with continued development of
the law. If an agency asserts the applicability of any of these
three factors, a court will ultimately determine whether the
factor is applicable. Thus, H.R. 1544 preserves the judiciary's
constitutional role of interpreting the law, while allowing
agencies to administer fairly their programs.
Section 2(b) is a conforming amendment to the table of
sections at the beginning of chapter 7 of title 5, United
States Code, that adds a reference to the new section 707.
Section 3. Preventing unnecessary agency relitigation in multiple
circuits
Section 3 adds a new section 708 to chapter 7 of title 5,
United States Code, that is intended to discourage, although
not prohibit, intercircuit nonacquiescence. Section 708(a)
requires the Department of Justice and the officers of any
agency independently authorized to conduct litigation to ensure
that the initiation, defense, and continuation of proceedings
in federal court avoids unnecessarily repetitive litigation on
questions of law already consistently resolved against the
Government in multiple courts of appeals.
Section 708(a) discourages the Government from pursuing
wasteful and abusive appeals and relitigating settled questions
of law. This section provides a basic framework to guide
Justice Department and other litigating agency officials in
exercising their discretion to initiate, defend, or continue
litigation of issues that one or more agencies have litigated
repeatedly, but without success, in other circuits. This
section does not apply when the Government was not a party in
the cases in which the adverse appellate decisions were
rendered.
Agencies are expected to give careful scrutiny when
deciding whether to litigate questions of law that have been
``consistently resolved'' against the United States or an
agency thereof by the United States courts of appeals for three
or more circuits. If an agency in that situation intends to
pursue the matter in yet another forum, it should be prepared
to justify that decision based on the factors listed and any
other relevant factors. This section applies to situations
where all existing appellate case law is against the
Government's or agency's position and is based on the same or
similar rationale. It would not, however, be applicable if at
least one circuit has decided a case on grounds consistent with
the Government's or agency's position.
Section 708(b) identifies four factors that, among other
relevant considerations, must be taken into account by
supervising officials in deciding whether to initiate, defend,
or continue litigation in light of the general mandate of
subsection (a): (1) the effect of intervening changes in
pertinent law or the public policy or circumstances on which
the precedents were based; (2) subsequent decisions of the
Supreme Court or of courts of appeals that previously decided
the relevant questions of law; (3) the extent to which that
question of law was fully and adequately litigated in the
precedent-setting cases; and (4) the need to conserve judicial
and parties' resources. These factors provide general
guidelines for litigation decisions similar to the criteria
already utilized by the Solicitor General and other executive
branch officials. They are flexibleenough to permit the
relitigation of exceptional cases with critical ramifications or highly
unusual circumstances.
To justify a litigation decision, an agency should balance
its chances for success in the present case against the burdens
of additional litigation on other parties and the courts.
Because the agency must weigh practical and programmatic
considerations peculiarly within its discretion or expertise,
its compliance with this section in making that decision is not
subject to judicial review, by mandamus or otherwise (section
708(d)). Instead, pursuant to section 708(c), the House and
Senate Judiciary Committees will receive annual reports from
the Attorney General on agencies' efforts to comply with
subsection (a). This will enable the Committees to assess the
extent of agency compliance and any need for additional
legislation.
A conforming amendment changes the table of sections for
chapter 7 of title 5, United States Code, to reflect the new
section 708.
Agency Views
U.S. Department of Justice,
Office of Legislative Affairs,
Washington, DC, September 17, 1997.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: We appreciate this opportunity to
present the views of the Department of Justice on H.R. 1544,
the ``Federal Agency Compliance Act.'' For the reasons set
forth in the Department's testimony of May 22, 1997, and
summarized below, the Department strongly opposes the proposed
legislation.\1\
---------------------------------------------------------------------------
\1\ On May 22, 1997, Deputy Assistant Attorney General Stephen W.
Preston testified before the Subcommittee on Commercial and
Administrative Law of the House Judiciary Committee on H.R. 1544. In
connection with his testimony, Mr. Preston submitted a written
statement that presents the Department's views on agency
nonacquiescence in circuit precedent, as well as reasons why the
Department opposes the proposed legislation.
---------------------------------------------------------------------------
i
Section 2 of the bill (enacting new 5 U.S.C. Sec. 707),
which would require federal agencies to acquiesce in adverse
court of appeals decisions within a judicial circuit except in
certain enumerated circumstances, is unnecessary and would
impair the flexibility needed in administrative and litigation
decisionmaking. Moreover, this section could spawn a whole new
species of useless litigation. We oppose this provision for
essentially the same reasons that former Solicitor General Rex
Lee opposed a similar provision in 1984, which the Congress
declined to enact. A copy of former Solicitor General Lee's
letter to the then-Chairman of the Senate Committee on Finance
is enclosed.
Agency nonacquiescence is uncommon. Federal agencies
generally act in accordance with legal principles announced in
the holdings of appellate courts, except where
extraordinarycircumstances warrant continued litigation of a legal
issue previously decided.
There are already significant checks that work quite well
to prevent agencies from unreasonably refusing to acquiesce in
circuit precedent. The principal check, of course, is that an
adverse court of appeals' decision is generally a reliable
indicator of how future cases in the same circuit will be
decided; except where there is a point in relitigating,
agencies have an obvious incentive to follow applicable
precedent. Additional checks include the requirement of
Solicitor General approval to appeal any subsequent case in
that circuit to the court of appeals, the Equal Access to
Justice Act's authorization of attorney's fees against the
government to the prevailing party unless the agency's position
was ``substantially justified,'' and the Justice Department's
desire to maintain its credibility before the courts by not
needlessly challenging circuit precedent.
We assume that the bill is not intended to require an
agency to acquiesce in a circuit decision until after the time
for the Solicitor General to seek Supreme Court review has
expired, and the decision has therefore become final. But even
if that problem is put to one side, the proposed legislation,
if enacted, would unduly interfere with administrative and
litigation decisionmaking that is necessarily discretionary and
highly context-specific. The practical result would be to
require the government to consider seeking Supreme Court review
in cases in which the Solicitor General would otherwise forego
further review. The bill would force an agency to choose
between seeking further review of an adverse decision or
acquiescing in that decision in situations in which the former
is effectively unavailable and yet the latter is not
necessarily appropriate. A statutory restriction of
nonacquiescence to a few enumerated circumstances would be ill-
advised because there are various--albeit infrequent--
situations in which it may be entirely reasonable for the
agency to persist in its position and seek to relitigate the
issue.
To the extent that it would allow some form of judicial
review of an agency's alleged failure to acquiesce, the
proposed legislation stands to create a whole new category of
litigation and, for that reason alone, is troubling. In many
instances, court of appeals' decisions are ambiguous, and the
precise extent of a court's actual holding may be unclear,
especially with respect to cases involving different facts. The
legislation could generate separate proceedings, even trials,
on that and other issues--for example, on whether the prior
decision was really substantially favorable to the government,
or on whether it is reasonable to question the continued
validity of that precedent. The enormous costs and burdens
aside, it seems essentially pointless to invite premature and
abstract litigation concerning the appropriateness of the
agency's nonacquiescence and efforts to relitigate, as opposed
to litigation concerning the substantive agency policy that is
alleged to be inconsistent with circuit precedent and the
merits of the underlying claims.
II
Proposed 5 U.S.C. Sec. 708, which would require government
officers to ensure that the United States not engage in
``unnecessarily repetitive litigation'' by continuing to
litigate an issue of law that has been resolved against the
government by three or more courts of appeals, is also
unnecessary as a practical matter, and could inhibit the
Solicitor General in protecting the interests of the United
States.
Where the government has lost a legal issue in three
circuits, the Solicitor General only rarely permits a fourth
appellate test of the issue. While section 708 would not impose
an inflexible barrier, it could inhibit the Solicitor General
from seeking a circuit conflict in exceptionally important
cases in which the government had suffered adverse decisions in
three courts of appeals.
In nearly every Term, the Supreme Court issues a decision
rejecting rulings of three or more courts of appeals. Since the
Supreme Court is open to revisiting issues that seemed settled
in the courts of appeals, the Solicitor General should have the
discretion, where the stakes are important enough, to continue
to seek a conflict and thus to facilitate Supreme Court review
of decisions harmful to the United States.
The Department therefore strongly opposes both proposed 5
U.S.C. Sec. Sec. 707 and 708. The Office of Management and
Budget has advised that there is no objection from the
standpoint of the Administration's program to the presentation
of this report. Please feel free to call upon us if we may be
of assistance in connection with this or any other matter.
Sincerely,
Andrew Fois,
Assistant Attorney General.
------
Securities and Exchange Commission,
Washington, DC, October 16, 1997.
Hon. George W. Gekas,
Chairman, Subcommittee on Commercial and Administrative Law, Committee
on the Judiciary, House of Representatives, Washington, DC.
h.r. 1544, the federal agency compliance act
Dear Congressman Gekas: I appreciate this opportunity to
express may concerns, as the General Counsel of the Securities
and Exchange Commission, regarding the Federal Agency
Compliance Act, H.R. 1544. I recognize that this bill has
already been marked up in the House Committee on the Judiciary,
but I hope that there may still be an opportunity to modify the
proposed legislation as the legislative process moves forward.
I understand and support the core purpose of H.R. 1544--to
rein in federal agencies that deliberately refuse to follow
existing precedents of U.S. Courts of Appeals (called ``agency
nonacquiescence''). I assure you that the Commission, an
independent regulatory agency, does not engage in such a
practice. In fact, the Commission is careful to follow
applicable appellate precedent in all of its litigation and
administrative decisions.
I am concerned, however, that H.R. 1544 makes other
fundamental changes in the current system of judicial review of
agency cases that will significantly impair the Commission's
ability to fulfill its congressional mandate to protect
investors and preserve the integrity of the nation's securities
markets.
There are several troublesome aspects of the bill. As
explained below, these give rise to serious problems for the
Commission, including the potential that H.R. 1544 could
foreclose the Commission from asserting important but
controversial legal theories because those theories have been
rejected by three appellate courts, without the benefit of the
Commission's expertise, in cases in which the Commission was
not a party and did not participate. Moreover, adverse
decisions by three courts of appeals could preclude the
Commission from a legal theory even if a majority of appellate
courts endorsed it. The recent history of the
``misappropriation'' theory of insider trading, which is
discussed more fully below, and which the Commission has used
in some of its most significant securitiesfraud cases of the
last fifteen years, illustrates the potential for unintended adverse
consequences.
H.R. 1544 could foreclose the Commission from challenging ill-reasoned
judicial decisions made without the Commission's participation
and expertise.
H.R. 1544 requires federal agency officials to avoid
litigating questions of law already resolved against the
government's position in precedents established in three
appellate circuits, even if a majority of the circuits have
already endorsed the government's position. Federal securities
law is made not only in the Commission's civil law enforcement
litigation but in private securities litigation outside the
Commission's control and in criminal cases independently
prosecuted by numerous United States Attorneys' offices around
the country. H.R. 1544 would bind the Commission by adverse
decisions in those cases even though the Commission was not a
party to, or participant in, those cases and even though the
courts did not have the benefit of the Commission's expertise.
Even if the portion of the legislation relating to the
effect of adverse rulings by three courts of appeals were
limited to government cases, I believe it would still be unwise
to bind the Commission by precedents in criminal cases.
Criminal prosecutors must devote their limited resources to
more than just prosecuting securities law violations and may
not be as well-equipped as the Commission to deal with the
complex frontiers of the federal securities laws. Typically,
the Commission is not involved in criminal prosecutions at the
trial stage. The Commission may be consulted on an informal
basis in some cases when the Department of Justice determines
whether to appeal a criminal securities fraud case. If a
criminal defendant appeals, however, the Commission may not
learn about a case until a court of appeals renders its
decision. As a result, adverse precedents specific to the
securities laws administered by the Commission may develop
without the Commission's input.
Recent judicial developments in the ``misappropriation
theory'' of insider trading illustrate the potentially adverse
effects of H.R. 1544 on the evolution of the securities laws.
Up to 50% of the Commission's insider trading enforcement cases
rely on the misappropriation theory, and many of our biggest
cases were brought on that theory, such as SEC v. Drexel
Burnham Lambert, SEC v. Ivan Boesky, and SEC v. Dennis Levine.
Beginning in 1981, the Second, Seventh, and Ninth Circuits
endorsed the theory, but in 1995 the Fourth Circuit rejected it
in a criminal case. The Commission only became involved in the
Fourth Circuit case after the adverse decision, when the
government sought rehearing of the misappropriation issue by
the full court. Rehearing was denied. The government did not
seek Supreme Court review because the case was not a compelling
one on the facts. Subsequently, the Eighth Circuit, following
the Fourth Circuit's lead, also rejected the misappropriation
theory in a criminal case, reversing a conviction. The
government sought Supreme Court review of the Eighth Circuit
case, because the facts were far more favorable to the
government. The Supreme Court, fortunately, reversed the Eighth
Circuit and upheld the misappropriation theory.\1\ But events
could easily have taken a different turn.\2\
---------------------------------------------------------------------------
\1\ See U.S. v. O'Hagan, __ U.S.__, 117 S.Ct. 2199, 138 L. Ed. 2d
721 (June 25, 1997).
\2\ The facts in the Eighth Circuit might have been less favorable
for seeking review, for example. In any event, Supreme Court review is
by no means certain. Indeed, the proposed legislation might make it
more difficult to obtain Supreme Court review, since the government
would be more likely to seek review in cases for which it would not
have sought review before the legislation. Thus, H.R. 1544 would
dramatically change the calculus for determining whether to seek
review, with possibly unforeseen results.
---------------------------------------------------------------------------
If H.R. 1544 had been the law when the Eighth Circuit
decided against misappropriation, and if the Supreme Court had
not granted review, the legal theory would have been in
jeopardy. Another criminal case involving the misappropriation
theory could have arisen, and the Commission would have been at
risk of losing an important legal theory: (1) without having
had the opportunity itself to develop the arguments, and (2)
even though the entire Second Circuit (sitting en banc) and two
other courts of appeals had endorsed it.
A minority view could bar the Commission from taking a position
actually endorsed by a majority of appellate judges.
H.R. 1544 bars an agency from taking a position
``resolved'' unfavorably in ``precedents established'' by three
courts of appeals, regardless of whether one or two or even six
or eight other circuits have ruled in favor of the position.
Thus, it may be possible for a majority of appellate judges who
address an issue to endorse a government position even while
three courts of appeals reject it. As illustrated by the
misappropriation theory example above, the potential that a
minority view could become binding is not insignificant. The
Fourth Circuit decision that first rejected the
misappropriation theory departed from the views of three other
courts of appeals.\3\ That decision was followed by the Eighth
Circuit's adverse decision. Even if a majority of the courts of
appeals had endorsed the misappropriation theory, either before
or after these two decisions, that majority of appellate courts
ruling on the issue would not have prevented a minority from
removing the theory from the Commission's arsenal if just one
more court had followed the Fourth and Eighth Circuits.
---------------------------------------------------------------------------
\3\ Actually, only one Fourth Circuit judge was sitting on the
case. He wrote the opinion, in which the two district court judges
sitting by designation concurred.
---------------------------------------------------------------------------
The Commission, like other agencies with independent litigating
authority, would have special problems complying with H.R. 1544
The bill requires all government agencies to adhere to
precedent in a specific circuit unless the government did not
seek review because the decision was ``otherwise substantially
favorable'' to the government. This would create significant
problems for the Commission, and the other agencies with
independent litigating authority. Where an agency has not
participated in the decision by another agency not to seek
review in a particular case, it may be difficult to determine
the basis for not seeking review. Moreover, what may seem
substantially favorable to one agency may not seem so to
another; and it seems inappropriate to bind one agency on an
issue of importance to it based on another agency's
determination that an adverse ruling on that issue is not
important to that other agency.
This also would curtail the independence of the
Commission's litigating authority. The Commission would be
foreclosed from appealing in cases in which another agency has
declined to appeal for reasons other than that the decision was
``substantially favorable'' to the government.
H.R. 1544 would promote costly, unnecessary collateral litigation that
would consume scarce enforcement resources.
H.R. 1544 seems to assume that precedent is always clear
and unambiguous. The precise holding of many judicial
decisions, however, is not clear, particularly in complex areas
of the law such as securities regulation. Defendants in
securities fraud cases often argue for broad readings of
decisions adverse to the government.4 For this
reason, the Commission's decision to pursue a case will
frequently be open to attack under H.R. 1544. Although H.R.
1544 specifies that federal agencies and officials may not be
subject to mandamus actions, the legislation would only
encourage defendants to harass the Commission with claims for
sanctions and the like for pressing disputed positions
allegedly in violation of the restrictions of H.R. 1544.
---------------------------------------------------------------------------
\4\ The Commission, for example, has been repeatedly met with the
argument that the Supreme Court's decision in Central Bank of Denver,
N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994),
which held that there is no private right of action for aiding and
abetting securities fraud, governs in cases having nothing to do with
aiding and abetting. Defendants contend that Central Bank stands for a
variety of propositions, such as that the securities laws must be
construed narrowly and that the purpose of the securities laws to
protect investors has no bearing in interpreting the statutory text.
---------------------------------------------------------------------------
H.R. 1544 reflects a balancing of interests that may be appropriate for
the ``cookie cutter'' litigation of some agencies, but that
would be detrimental to the kind of complex enforcement
litigation in which the Commission engages
H.R. 1544 addresses problems that arise in ``cookie
cutter'' litigation about which the Committee appears
concerned, where the applicable principle is clear and is
applied over and over again in administering a benefits
program. This concern, however, does not apply to an
enforcement litigation program such as the Commission's, which
often involves questions about how prior decisions apply in new
situations, as securities violators, ever-creative, engage in
new schemes to defraud. The application of antifraud laws to
new and evolving conduct is important.
Clearly, the Committee must balance the benefits H.R. 1544
would provide in resolving the problems of administering a
benefits program that yields unfair results, against the
problems H.R. 1544 would create for enforcement litigation
programs like the Commission's. I recognize that in drafting
H.R. 1544, the Committee has focused its attention on an area
that the Committee has determined requires close attention. I
believe, however, that the Commission's litigation does not
raise the problems addressed by the legislation, and that
including the Commission's enforcement litigation within the
scope of H.R. 1544 would create problems that far outweigh any
potential benefit of including the Commission's enforcement
litigation. For this reason, I respectfully request that as the
bill moves forward, you consider whether appropriate amendments
can be made to reduce the adverse effects of H.R. 1544 on
enforcement litigation programs that routinely encounter novel
issues requiring flexibility in their resolution. As currently
drafted, H.R. 1544 does not distinguish between enforcement
litigation to protect the public by stopping and preventing
violations of law, and other kinds of agency litigation in
which an agency seeks to apply ``cookie cutter'' principles.
In sum, I urge you to consider amending H.R. 1544 to avoid
the problems it would create for the Commission. I would be
happy to meet with you to discuss further how that might be
done or to discuss in more detail the Commission's concerns.
Sincerely,
Richard H. Walker,
General Counsel.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (new matter is printed
in italic and existing law in which no change is proposed is
shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART I--THE AGENCIES GENERALLY
* * * * * * *
CHAPTER 7--JUDICIAL REVIEW
Sec.
701. Application; definitions.
* * * * * * *
707. Adherence to court of appeals precedent.
708. Supervision of litigation; limiting unnecessary relitigation of
legal issues.
* * * * * * *
Sec. 707. Adherence to court of appeals precedent
(a) Except as provided in subsection (b), an agency (as
defined in section 701(b)(1) of this title) shall, in
administering a statute, rule, regulation, program, or policy
within a judicial circuit, adhere to the existing precedent
respecting the interpretation and application of such statute,
rule, regulation, program, or policy, as established by the
decisions of the United States court of appeals for that
circuit. All officers and employees of an agency, including
administrative law judges, shall adhere to such precedent.
(b) An agency is not precluded under subsection (a) from
taking a position, either in administration or litigation, that
is at variance with precedent established by a United States
court of appeals if--
(1) it is not certain whether the administration of
the statute, rule, regulation, program, or policy will
be subject to review by the court of appeals that
established that precedent or a court of appeals for
another circuit;
(2) the Government did not seek further review of the
case in which that precedent was first established, in
that court of appeals or the United States Supreme
Court, because neither the United States nor any agency
or officer thereof was a party to the case or because
the decision establishing that precedent was otherwise
substantially favorable to the Government; or
(3) it is reasonable to question the continued
validity of that precedent in light of a subsequent
decision of that court of appeals or the United States
Supreme Court, a subsequent change in any pertinent
statute or regulation, or any other subsequent change
in the public policy or circumstances on which that
precedent was based.
Sec. 708. Supervision of litigation; limiting unnecessary relitigation
of legal issues
(a) In supervising the conduct of litigation, the officers of
any agency of the United States authorized to conduct
litigation, including the Department of Justice acting under
sections 516 and 519 of title 28, United States Code, shall
ensure that the initiation, defense, and continuation of
proceedings in the courts of the United States within, or
subject to the jurisdiction of, a particular judicial circuit
avoids unnecessarily repetitive litigation on questions of law
already consistently resolved against the position of the
United States, or an agency or officer thereof, in precedents
established by the United States courts of appeals for 3 or
more other judicial circuits.
(b) Decisions on whether to initiate, defend, or continue
litigation for purposes of subsection (a) shall take into
account, among other relevant factors, the following:
(1) The effect of intervening changes in pertinent
law or the public policy or circumstances on which the
established precedents were based.
(2) Subsequent decisions of the United States Supreme
Court or the courts of appeals that previously decided
the relevant question of law.
(3) The extent to which that question of law was
fully and adequately litigated in the cases in which
the precedents were established.
(4) The need to conserve judicial and other parties'
resources.
(c) The Attorney General shall report annually to the
Committees on the Judiciary of the Senate and the House of
Representatives on the efforts of the Department of Justice and
other agencies to comply with subsection (a).
(d) A decision on whether to initiate, defend, or continue
litigation is not subject to review in a court, by mandamus or
otherwise, on the grounds that the decision violates subsection
(a).
* * * * * * *
Dissenting Views
As a general matter, we agree that agencies should comply
with circuit court decisions. However, we dissent from H.R.
1544, the ``Federal Agency Compliance Act,'' because we believe
it to be an inappropriate means of responding to the perceived
problem of nonacquiescence.
In attempting to diminish the instances of nonacquiescence,
H.R. 1544 would create significant new problems. It would
indiscriminately reduce the discretionary authority of every
federal agency to decide when to challenge circuit court
decisions, not just the agencies that legislative proponents
claim have abused their discretion. In doing so, H.R. 1544
would diminish the effectiveness of the agencies that protect
the rights of our citizens under the labor, civil rights,
environmental, and other important laws. Moreover, the terms of
H.R. 1544 are so vague that they will inevitably lead to
uncertainty and confusion concerning their scope and
applicability.
It is for these reasons that the Department of Justice
opposes H.R. 1544, which would likely lead to a Presidential
veto if it passes. And it is for these reasons that groups such
as the AFL-CIO 1 and the Mexican American Legal
Defense and Educational Fund 2 strongly oppose its
passage. We join in dissenting from this well intentioned, but
ultimately misguided legislation.
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\1\ Letter from Peggy Taylor, Director for Dept. of Legislation,
American Federation of Labor and Congress of Industrial Organizations
(Oct. 27, 1997) [hereinafter AFL-CIO Letter].
\2\ Letter from Antonia Hernandez, President and General Counsel of
Mexican American Legal Defense and Educational Fund, to the Hon. Henry
J. Hyde, Chairman, Committee on the Judiciary (Nov. 3, 1997)
[hereinafter MALDEF Letter].
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summary of legislation
H.R. 1544 attempts to curb the perceived problem of
``intracircuit nonacquiescence'' 3 by legislatively
mandating that federal executive branch agencies adhere to
precedents of the courts of appeals for disputes which arise
within a particular circuit.4 The legislation only
permits an agency to take a contrary position to such precedent
where: (1) it is not certain whether the issue in question
``will be subject to review by the court of appeals that
established that precedent or a court of appeals for another
circuit;'' (2) the Government did not seek further review of
the case in which that precedent was established ``because
neither the United States nor any agency or officer thereof was
a party to the case'' or ``because the decision establishing
that precedent was otherwise substantially favorable to the
Government;'' or (3) ``it is reasonable to question the
continued validity of that precedent in light of a subsequent
decision of that court of appeals or the United States Supreme
Court,'' a subsequent change in the law, or any other
subsequent change ``in the public policy or circumstances on
which that precedent was based.'' The bill also permits agency
adjudicators to determine their own binding interpretations of
circuit court precedents.5
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\3\ Agency failure to comply with circuit court precedent within a
particular circuit.
\4\ H.R. 1544, 105th Cong., 1st Sess. (1997) [hereinafter H.R.
1544].
\5\ Id. Sec. 2.
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H.R. 1544 addresses the perceived problem of ``intercircuit
nonacquiescence'' 6 by requiring federal agencies to
comply with precedents established by the courts of appeals in
three or more judicial circuits for disputes which arise
outside of those circuits. In determining whether to challenge
such precedents, the agency is required to consider (1) ``the
effect of intervening changes in pertinent law or the public
policy'' or other changes in circumstances; (2) ``subsequent
decisions of the United States Supreme Court or the courts of
appeals that previously decided the relevant question of law;''
(3) ``the extent to which that question of law was fully and
adequately litigated'' when the precedents were established;
and (4) ``the need to conserve judicial and other parties'
resources.'' 7
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\6\ Agency failure to adhere to precedents outside a particular
circuit.
\7\ H.R. 1544, supra n. 4 Sec. 3.
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I. H.R. 1544 is unnecessary
In our view, H.R. 1544 is a ``solution in search of a
problem.'' The Department of Justice testified that except
where extraordinary circumstances warrant continued litigation
of a legal issue previously decided, federal agencies follow
the holding of the circuit courts of appeals. 8
Congressional intervention is particularly unnecessary with
respect to the many agencies that depend on the Justice
Department for their federal court litigation 9 due
to the appellate restrictions already imposed on them by the
Solicitor General's office. As Deputy Assistant Attorney
General Preston explained:
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\8\ See Hearing on H.R. 1544, Proposing The Federal Agency
Compliance Act Before the Subcomm. on Commercial and Administrative Law
of the House Comm. on the Judiciary, 105th Cong., 1st Sess. (May 22,
1997) (forthcoming) [hereinafter 1997 House Judiciary Hearings]
(statement of Stephen W. Preston at 1).
\9\ 28 U.S.C. Sec. 516 (1993) (except as otherwise authorized by
law, the conduct of litigation in which an agency is a party is
reserved to the Department of Justice).
In cases within the litigation authority of the
Department of Justice, the Solicitor General must
approve any appeal to a court of appeals. 28 C.F.R.
0.20. Where the government has lost a legal issue in
three circuits, an agency would ordinarily have an
uphill battle in persuading the Solicitor General to
authorize an appeal to still another circuit. The
appeal authorization process is a rigorous one, and it
is an unusual legal issue or set of circumstances that
would prompt the Solicitor General to permit a fourth
appellate test. 10
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\10\ See 1997 House Judiciary Hearings, supra n. 8 (statement of
Stephen W. Preston at 7).
Agencies are also hesitant to challenge court precedent because
they face the possibility of paying other parties' attorneys
fees under the Equal Access to Justice Act if it is determined
that the government position was not ``substantially
justified.'' 11
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\11\ 28 U.S.C. Sec. 2412(d)(1)(A) (1994) (except as otherwise
specifically provided by statute, a court shall award to a prevailing
party in any civil action, other than the United States, fees and other
expenses incurred by the party unless the court finds that the position
of the United States was substantially justified or that special
circumstances make an award unjust).
The Social Security Administration (``SSA'') is the agency
that was criticized most frequently at the hearing on H.R. 1544
before the Subcommittee on Commercial and Administrative Law.
12 SSA, however, has taken several actions to
ameliorate the problem of nonacquiescence. Prior to June of
1985, when a circuit court decision was inconsistent with SSA's
interpretation of the law and regulations, their practice was
to apply the decision only to the named litigants in that
particular case. In June of 1985, however, SSA announced a new
policy wherein they would apply such circuit court decisions at
the hearings level, following an acquiescence ruling, in
adjudicating claims in the circuit.13 In 1990, SSA
went even further adopting an explicit rule requiring such
intracircuit acquiescence.14 As recently as
September 18, 1997, SSA responded to concern that it
occasionally takes too long to issue its acquiescence rulings
by publishing a proposed regulation requiring it to offer
litigants preliminary guidance within 10 days and requiring it
either to appeal the circuit court decision or to adopt an
appropriate acquiescence ruling within 120 days. In addition to
publishing acquiescence rulings when they are issued, SSA will
be required to identify and notify individuals whose cases may
be affected by them.15
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\12\ See 1997 House Judiciary Hearings, supra n. 8, transcript at
17, 22-23, 45-46, 75-76, 83, 86-92, 99-100, 102, and 106.
\13\ See 1997 House Judiciary Hearings, supra n. 8 (statement of
Arthur J. Fried, General Counsel, Social Security Administration at 2).
\14\ 20 C.F.R. Sec. 404.985 a-c (1990) (SSA will apply a holding
from a federal circuit court which conflicts with SSA legal
interpretations, and publish an acquiescence ruling, unless SSA seeks
further review or decides to relitigate the issue despite an
acquiescence ruling after consulting the Department of Justice).
\15\ 20 C.F.R. Sec. 416.1485 (1997).
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II. H.R. 1544's categorical restrictions diminish needed discretion
H.R. 1544's narrowing of agency discretion over whether to
challenge circuit court precedents would have a number of
adverse policy consequences. As noted above, H.R. 1544 provides
only three exceptions to the intracircuit acquiescence
rule.16 It omits a number of other justifiable
exceptions--such as cases including two alternative holdings
(only one of which the agency likes) or cases involving
litigation fact patterns which do not lend themselves to
Supreme Court review (e.g., cases involving sympathetic parties
violating important laws). The net result will be to unduly
hamstring the government in developing its litigation
strategies.
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\16\ H.R. 1544, supra n. 4, Sec. 2 ((I) it is not certain whether
the issue will be subject to review by the court of appeals that
established the precedent; (II) the government did not seek further
review of the case in which the precedent was established because it
was not a party to that case or the decision was otherwise
substantially favorable; and (III) it is reasonable to question the
continued validity of the precedent).
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This is one of the principal reasons why initiatives of
this nature have been opposed on a bipartisan basis. Rex Lee,
Solicitor General under President Reagan, argued that a similar
1984 bill 17 ``represents an unprecedented
interference with the ability of the Justice Department to
determine the cases it will appeal.'' 18 Similarly,
in their recent testimony opposing H.R. 1544, the Clinton
Justice Department explained that the bill would significantly
undermine ``the Solicitor General's role in carefully screening
cases in which to seek Supreme Court review, and in
implementing the government's litigation and substantive
policies in doing so.'' 19
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\17\ Congress previously sought to address this matter with
reference to SSA in 1984, during proceedings leading up to the
enactment of the Social Security Disability Benefits Reform Act, Pub.
L. No. 98-460, 98 Stat. 1794. Prior to enactment of the final
legislation, the House passed a bill that would have required the SSA
to acquiesce to circuit court precedent in social security disability
benefits cases unless it sought Supreme Court review. See H.R. Rep. 98-
618, 98th Cong., 2d Sess. 22-26 (1984). The Senate bill did not contain
such a provision; instead it would have required the SSA to publish a
notice of nonacquiescence whenever it determined not to acquiesce. See
S. Rep. 98-466, 98th Cong., 2d Sess. 21 (1984). Congress ultimately
declined to include any provision on nonacquiescence in the Act as
finally passed. Rather than impose statutory restrictions on
nonacquiescence in the 1984 legislation, the conferees urged SSA to
change its policy of nonacquiescence. See H.R. Conf. Rep. No. 1039,
98th Cong., 2d Sess. 37, (1984).
\18\ 130 Cong. Rec. S11454 (1984) (Letter by Rex Lee, Solicitor
General, to Hon. Robert Dole).
\19\ 1997 House Judiciary Hearings, supra n. 8 (statement of
Stephen W. Preston at 4).
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Preserving the litigation prerogatives of our agencies is
an important function of separation of powers and helps foster
development of the case law. For example, in United States v.
Mendoza,20 a unanimous Supreme Court held that the
government could not be foreclosed from relitigating a legal
issue it had previously litigated unsuccessfully in another
action against a different party, even within the same judicial
circuit:
---------------------------------------------------------------------------
\20\ 464 U.S. 154 (1984).
Government litigation frequently involves legal
questions of substantial public importance; indeed,
because the proscriptions of the United States
Constitution are so generally directed at governmental
action many constitutional questions can arise only in
the context of litigation to which the government is a
party. Because of those facts the government is more
likely than any private party to be involved in
lawsuits against different parties which nonetheless
involve the same legal issues. A rule allowing
nonmutual collateral estoppel against the government in
such cases could substantially thwart the development
of important questions of law by freezing the first
final decision rendered on a particular legal issue.
Allowing only one final adjudication would deprive this
Court of the benefit it receives from permitting
several courts of appeals to explore a difficult
question before this Court grants
certiorari.21
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\21\ Id. at 160.
It is particularly important to recognize that all of the
federal agencies are unique in some respects and therefore that
the categorical prohibitions of H.R. 1544 would affect each
agency differently. Richard H. Walker, the General Counsel of
the Securities and Exchange Commission, highlighted the
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problems that his agency would face under the bill:
H.R. 1544 addresses problems that arise in ``cookie
cutter'' litigation about which the Committee appears
concerned, where the applicable principle is clear and
is applied over and over again in administering a
benefits program. This concern, however, does not apply
to an enforcement litigation program such as the
Commission's, which often involves questions about how
prior decisions apply in new situations, as securities
violators, ever-creative, engage in new schemes to
defraud. The application of antifraud laws to new and
evolving conduct is important.22
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\22\ Letter from Richard H. Walker, General Counsel, United States
Securities and Exchange Commission, to the Hon. Barney Frank (Oct. 16,
1997) [hereinafter SEC Letter].
The SEC went on to explain how acquiescence rules could prove
to be particularly damaging to them since they do not have the
opportunity to challenge adverse precedents in criminal cases
23 which can have an adverse impact on the SEC's
ability to bring civil cases.24 A number of the
independent agencies will face this same inequity under the
bill--they will find themselves hamstrung by circuit court
precedent litigated by the Justice Department, but which the
agency had no part in crafting. This is a serious flaw in H.R.
1544.
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\23\ The Justice Department has criminal jurisdiction over the
securities laws.
\24\ For example, several circuit courts issued adverse precedents
in criminal cases negating the ``misappropriation theory'' used to
challenge insider trading before the Supreme Court ultimately adopted
the SEC's view. See U.S. v. O'Hagan, __ U.S. __, 117 S.Ct. 2199, 138
L.Ed. 2271 (June 25, 1997).
---------------------------------------------------------------------------
The provision of H.R. 1544 allowing individual agency
adjudicators to develop their own interpretations of circuit
court decisions 25 would also create particularly
serious problems for some agencies. This mandate could allow
decision makers at the initial and reconsideration levels of
agency review who do not have any legal training in
interpreting and applying court decisions to develop binding
legal decisions.26 For the Social Security
Administration, this mandate could pave the way for a myriad of
conflicting legal interpretations. As SSA General Counsel
Arthur Fried noted:
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\25\ H.R. 1544, supra n. 4, Sec. 2.
\26\ Letter from Arthur J. Fried, General Counsel for Social
Security Administration, to the Hon. George W. Gekas, Chairman,
Subcomm. on Commercial and Administrative Law (July 7, 1997)
[hereinafter Fried Letter].
If each of SSA's thousands of decision makers were
responsible for interpreting circuit court holdings, it
could result in conflicting decisions by different
decision makers, even within the same circuit. SSA
would have no way to ensure uniform application of
eligibility standards as required by law, leading to
further litigation.27
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\27\ See, e.g., 1997 House Judiciary Hearings, supra n. 8
(statement of Arthur J. Fried at 3).
Finally, the requirement that an agency generally must
comply with adverse precedents issued by three circuit courts
is unduly restrictive. A review of the most recent Supreme
Court terms reveals that it is not at all unusual for the Court
to issue a decision rejecting rulings of three or more courts
of appeals.28 The SEC also has explained how a three
circuit rule could have had a serious adverse impact on the
development of securities law and made it more difficult to
successfully prosecute inside trading
perpetrators.29
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\28\ See, e.g., United States v. Gaudin, 115 S.Ct. 2310 (1995) (in
affirming Ninth Circuit ruling that materiality of false statement
under 18 U.S.C. 1001 was jury question, Supreme Court in effect
rejected the decision of every other circuit to have considered the
issue, except the Federal Circuit); Central Bank of Denver v. First
Interstate Bank of Denver, 511 U.S. 164 (1995) (Supreme Court rejected
private right of action against aiders and abettors under Securities
Exchange Act, which all 11 courts of appeal to have considered the
question have recognized); United States v. Texas, 507 U.S. 529 (1993)
(Supreme Court rejected construction of Debt Collection Act adopted by
three circuits before circuit conflict arose).
\29\ See SEC Letter, supra n. 22.
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III. H.R. 1544 is opened-ended and vague
Implementation of the provisions in H.R. 1544 would require
the interpretation of terms that are inherently vague and
ambiguous in their meaning. Under the legislation, even
seemingly appropriate exercises of discretion might be subject
to challenge. For instance, circuit court decisions frequently
are subject to a variety of legal interpretations. It may not
be possible to ascertain a decision's true scope and effect
until an opportunity arises to test it by presenting the same
court of appeals with a different factual scenario. Rather than
challenging a precedent, an agency may merely be attempting to
limit its effect. However, under H.R. 1544, such a legitimate
strategy could be subject to challenge as violating the new
acquiescence rules.
In addition, the exceptions in the bill which allow an
agency to challenge precedents are inherently subjective. In
deciding whether to take a position at variance with
intracircuit precedent, the agency must make determinations
such as whether the government did not seek further review of
the case because the precedent was ``otherwise substantially
favorable.'' Another subjective exception would require the
agency to determine whether ``it is reasonable to question the
continued validity of that precedent.'' 30 The
exceptions that apply to intercircuit precedents present
similar problems. Here the agency must consider such open-ended
factors as ``the effect of intervening changes'' in law and
policy, ``the extent to which that question of law was fully
and adequately litigated,'' and ``the need to conserve judicial
and other parties' resources.'' 31
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\30\ H.R. 1544, supra n. 4, Sec. 3.
\31\ Id.
---------------------------------------------------------------------------
Accordingly, the enactment of H.R. 1544 ultimately could
create a whole new category of litigation. This would result in
wasteful preliminary litigation over whether a case can
proceed, in addition to litigation over the substance of the
dispute. This type of collateral litigation is costly; it
consumes scarce enforcement resources; and it can create the
very type of delay that H.R. 1544 is intended to avoid.
IV. H.R 1544 will harm enforcement of the labor and environmental laws
and the civil rights laws
Perhaps most seriously, we oppose H.R. 1544 because of the
adverse consequences it will have on the ability of government
agencies to protect our citizens'' rights under important laws
concerning labor, employment, workplace safety, civil rights,
and the environment, to name but a few.
H.R. 1544 will force agencies such as the National Labor
Relations Board, the Department of Labor, the Occupational
Safety and Health Administration, the Equal Employment
Opportunity Commission, the Justice Department Civil Rights
Division, the Environmental Protection Agency, and the Bureau
of Land Management to litigate from a disadvantageous position.
Unlike the well-funded interests the government frequently
opposes in court, under the bill, the agencies will face
complex new legal constraints when they determine which cases
to appeal. To the extent this translates into less capable
enforcement of these important laws, we will all be
disadvantaged.
It is for these reasons, among others, that the AFL-CIO has
taken a position strongly opposing H.R. 1544, writing:
The AFL-CIO is particularly concerned about how this
bill would affect agencies that enforce labor and
employment laws. Although the text of the bill does not
single out any particular federal agency, the National
Labor Relations Board (NLRB) has come under severe
attack in this Congress. This bill would prevent
agencies with jurisdiction over labor matters from
properly enforcing the labor and employment
laws.32
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\32\ AFL-CIO Letter, supra n. 1.
The same concerns lie with civil rights enforcement. At the
Subcommittee markup, Rep. Jackson-Lee singled out her concern
for the adverse impact H.R. 1544 would have in this critical
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legal area:
The bottom line is how would a legislative initiative
of this kind limit the ability of federal entities to
address the systematic encroachment of the judicial
branch upon the civil liberties of the average citizen.
Particularly, the Department of Justice (its Civil
Rights Division) and the Civil Rights Divisions of
various federal agencies (e.g. The Department of Health
and Human Services), would be my primary focus in this
categorical objection to the language of H.R. 1544. The
limitation on these agencies' ability to appeal
seemingly unjust circuit court decisions to the Supreme
Court (i.e. autonomy of relitigation) in addition to
their ability to create novel and ingenious ways of
protecting the rights of citizens, is a sacred craft
that should be regulated only with the highest and most
hesitant level of scrutiny. We must do all we can to
ensure efficient and effective government, but not at
the expense of our civil rights and
liberties.33
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\33\ Markup of H.R. 1544, The Federal Agency Compliance Act, Before
the Subcomm. on Commercial and Administrative Law of the House Comm. on
the Judiciary, 105th Cong., 1st Sess. (July 24, 1997) (statement of
Rep. Jackson-Lee).
Similarly, the Mexican American Legal Defense and
Educational Fund, a staunch defender of civil rights, has taken
---------------------------------------------------------------------------
a position against H.R. 1544, noting, among other things,
* * * [b]y limiting each agency's discretion in
determining the cases it will appeal, agencies such as
the U.S. Department of Justice and the Social Security
Administration can only do less to adequately and
legally interpret and pursue particular cases deemed to
be significant in determining substantive policy.
34
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\34\ MALDEF Letter, supra n. 2 (emphasis added).
H.R. 1544 would also hamstring enforcement of a range of
laws designed to protect the environment. This is why the EPA
concurred with the Department of Justice in opposing the
legislation. In introducing the Senate counterpart legislation
to H.R. 1544 (S. 1166), Senator Campbell (R-CO), telegraphed
his intention of limiting the ability of the Bureau of Land
---------------------------------------------------------------------------
Management to protect federal lands from grazing damage:
When the Bureau of Land Management recently proposed
reform regulations for grazing permits, ranchers
challenged the new provisions. After exhausting all
administrative remedies, the ranchers took their case
to court. Following lengthy and costly litigation, the
appellate court ruled in favor of the ranchers.
However, under the nonacquiescence policy, the BLM
could refuse to abide by this ruling each and every
time this issue arises. 35
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\35\ 143 Cong. Rec. S9211 (daily ed. Sept. 11, 1997) (statement of
Sen. Campbell).
We are aware that some would argue that the fact that under
the bill agencies would be constrained in developing their
litigation strategies could be a positive or negative
development, depending on the political orientation of the
Administration. In our view, however, this argument ignores the
fact that by and large agencies are in the posture of seeking
to enforce laws designed to protect our workplace safety, civil
rights, and environmental safeguards against culpable parties.
If an agency chooses not to protect these rights, it doesn't
need the ``cover'' of acquiescence requirements such as those
set forth in H.R. 1544--the agency can simply exercise its
discretion not to bring particular enforcement actions. It is
only those agencies who desire to enforce these laws against
recalcitrant interests which will face new difficulties under
H.R. 1544. We therefore reject the assertion that H.R. 1544
will have a neutral impact on both pro- and anti-enforcement
Administrations.
conclusion
In our view, supporters of H.R. 1544 have not established
that abusive nonacquiescence exists on a sufficiently wide-
spread basis to justify legislation limiting the litigation
authority of every agency in the government. In an effort to
assist people who are having difficulty enforcing their own
individual rights, H.R. 1544 would reduce the effectiveness of
the agencies that are charged with the responsibility of
protecting the rights of our citizens as a whole, including
critical safeguards concerning employment rights, civil rights,
and the environment.
We believe that on the rare occasions when dangerous legal
precedents are written--such as Dredd Scott v. Sanford (denying
slaves constitutional rights), 36 Plessy v. Ferguson
(upholding ``separate but equal'' facilities), 37
and Korematsu v. United States (Japanese-American interment
upheld) 38--our agencies should have unfettered
discretion to challenge them. Accordingly, we dissent from this
legislation.
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\36\ 60 U.S. 393 (1856).
\37\ 163 U.S. 537 (1896).
\38\ 324 U.S. 885 (1944).
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John Conyers, Jr.
Maxine Waters.
Rick Boucher.
Sheila Jackson Lee.