# Congressional Intervention in the Administrative Process: Legal and Ethical Considerations > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/crs%3ARL32113 ## Record - **Collection:** Congressional research report - **Document type:** CRS Report - **Published:** September 25, 2003 - **Citation:** RL32113 ## Text Congressional Intervention in the Administrative Process: Legal and Ethical Considerations /name redacted/ Legislative Attorney September 25, 2003 Congressional Research Service 7-.... www.crs.gov RL32113 CRS Report for Congress Prepared for Members and Committees of Congress Congressional Intervention in the Administrative Process Summary When congressional committees engage in oversight of the administrative bureaucracy, or when Members of Congress intervene in agency proceedings on behalf of private constituents or other private entities with interests affecting the Members’s constituency, such interventions involve varying degrees of intrusion into agency decisionmaking processes. This report will briefly examine the currently applicable legal and ethical considerations and standards that mark the limits of such intercessions. The report initially reviews the judicial development and application of standards for determining whether congressional pressure or influence will be deemed to have tainted an agency proceeding. It concludes that the courts, in balancing Congress’s performance of its constitutional and statutory obligations to oversee the actions of agency officials against the rights of parties before agencies, have shown a decided predilection for protecting the congressional prerogatives. Thus where informal rulemaking or other forms of informal decisionmaking are involved, the courts will look to the nature and impact of the political pressure on the agency decisionmaker and will intervene only where that pressure has had the actual effect of forcing the consideration of factors Congress did not intend to make relevant. Where agency adjudication is involved a stricter standard is applied and the finding of an appearance of impropriety can be sufficient to taint the proceeding. But even here the courts have required that the pressure or influence be directed at the ultimate decisionmaker with respect to the merits of the proceeding and that it does not involve legitimate oversight and investigative functions, before they will intervene. The report next examines the conduct of Members of Congress and their staffs intervening in administrative matters from the perspective of ethics and conflict of interest rules, statutes and guidelines bearing upon a Member’s and staffer’s official duties. It notes that since congressional intervention and expressions of interest in administrative matters from a Member’s office are recognized as legitimate, official representational and oversight functions and duties of Members of Congress, the primary focus of the ethical and statutory conduct restraints is limited to(1) any improper enrichment or financial benefit accruing to the Member in return for, or because of, his or her official actions and influences, including the receipt of gifts or payments, or existing financial interests in, or relating to the matter under consideration; and (2) any overt coercion or threats of reprisals, or promises of favoritism or reward to administrators from the Member’s office which could indicate an arguable abuse of a Member’s official representational or oversight role. Additionally, ethical guidelines in Congress incorporate an “appearance” standard for Members which would counsel a Member to adopt office procedures and systems which would prevent an appearance of a “linkage” between interventions and the receipt of things of value, particularly legitimate campaign contributions, and which would assure that decisions to intervene are based on the merits of a particular matter. Congressional Research Service Congressional Intervention in the Administrative Process Contents I. Introduction .............................................................................................................................1 II. Current Judicial Standards Governing Congressional Influence on Agency Decisionmaking .......................................................................................................................2 A. The Nature of the Proceeding ...........................................................................................3 B. The Foundation Cases.......................................................................................................7 1. Pillsbury Co. v. FTC....................................................................................................7 2. D.C. Federation of Civic Associations v. Volpe ............................................................8 3. The Critique of Pillsbury and D.C. Federation .......................................................... 10 C. Adjudicatory Rulings Since Pillsbury ............................................................................. 11 1. Koniag v. Kleppe....................................................................................................... 12 2. Gulf Oil Corporation v. FPC ..................................................................................... 13 3. Peter Kiewit Sons’ Co. v. U.S. Army Corps of Engineers ............................................ 14 4. Power Authority of the State of New York v. FERC..................................................... 15 5. State of California v. FERC ....................................................................................... 15 6. ATX, Inc. v. U.S. Department of Transportation ......................................................... 16 D. Informal Decisionmaking Rulings Since D.C. Federation............................................... 18 1. American Public Gas Association v. FPC .................................................................. 18 2. Town of Orangetown v. Ruckelshaus.......................................................................... 20 3. Chemung County v. Dole ........................................................................................... 20 4. DCP Farms et al v. Yeutter........................................................................................ 21 E. Interference With Agency Rulemaking Proceedings ........................................................ 23 1. Texas Medical Association v. Mathews ...................................................................... 23 2. United States ex rel Parco v. Morris .......................................................................... 24 3. Sierra Club v. Costle ................................................................................................. 24 F. Influence That Could Abuse the Agency Investigatory Process ........................................ 27 1. SEC v. Wheeling-Pittsburgh Steel Corp. .................................................................... 27 2. United States v. Armada Petroleum Corp................................................................... 30 3. United States v. American Target Advertising, Inc. ..................................................... 31 G. Summary and Conclusions.............................................................................................. 31 III. Ethical Standards and Considerations .................................................................................. 36 A. House and Senate Guidelines.......................................................................................... 39 1. Opinion of the House Committee on Standards of Official Conduct ........................... 39 2. Senate Rule on Intervention....................................................................................... 40 B. Intervention and Receipt of Things of Value.................................................................... 41 1. Bribery...................................................................................................................... 41 2. Illegal Gratuities........................................................................................................ 42 3. Compensation/Conflicts of Interest............................................................................ 44 4. Extortion................................................................................................................... 45 5. Conspiracy to Defraud the Government ..................................................................... 45 6. Campaign Contributions and Interventions ................................................................ 48 7. Gifts.......................................................................................................................... 57 C. Personal Financial Interest in the Matter ......................................................................... 61 D. Conduct During Interventions......................................................................................... 64 E. Issues in Particular Intervention Contexts........................................................................ 68 1. Federal Employment and Personnel Matters .............................................................. 68 2. Federal Contracts ...................................................................................................... 70 Congressional Research Service Congressional Intervention in the Administrative Process 3. Judicial Intervention.................................................................................................. 71 F. Conclusions Concerning Ethical Issues............................................................................ 73 Contacts Author Contact Information ...................................................................................................... 74 Congressional Research Service Congressional Intervention in the Administrative Process I. Introduction The inevitable tension between Congress and the Executive created by our constitutionally mandated system of separated but shared powers has been the source of continual interbranch conflict. One manifestation of this struggle occurs when congressional committees engage in oversight of the administrative bureaucracy; another when Members of Congress attempt to intervene in administrative proceedings on behalf of private constituents or other private entities with interests affecting the Member’s constituency. Both such interventions involve varying degrees of intrusion into agency decisionmaking processes. On relatively rare occasions these interventions have resulted in court actions challenging the congressional intercession as exertions of undue political influence on agency decisionmakers which violate the due process rights of participants in the proceedings in question and impugn the integrity of the agency decisional processes; or in disciplinary proceedings before ethics committees of either House alleging that such Member actions violated institutional rules or other ethical standards. Such challenges have arisen in the context of congressional intercessions into rulemakings, ratemakings, informal decisionmaking, adjudications, and agency investigations that arguably would lead to an adjudicatory proceeding. Past high profile incidents raising questions regarding the legal and ethical propriety of congressional exertions of influence on administrative decisionmaking have surprisingly produced only a paucity of authoritative commentary on and analysis of the guiding principles and standards applicable to the constitutional bases of the roles Members play when they act as part of the committee oversight process or in their individual representative capacities. 1 This report is designed to provide a contemporary overview of applicable guidelines and considerations in the judicial and congressional forums. Toward that end, Part II reviews the judicial development and application of standards for determining whether congressional pressure or influence will be deemed to have tainted an agency proceeding. It concludes that the courts, in balancing Congress’s performance of its constitutional and statutory obligations to oversee the actions of agency officials against the rights of parties before agencies, have shown a decided predilection for protecting the congressional prerogatives. Thus where informal rulemaking or other forms of informal decisionmaking are involved, the courts will look to the nature and impact of the political pressure on the agency decisionmaker and will intervene only where that pressure has had the actual effect of forcing the consideration of factors Congress did not intend to make relevant. Where agency adjudication is involved a stricter standard is applied and the finding of an appearance of impropriety can be sufficient to taint the proceeding. But even here 1 With respect to judicial standards concerning the exertion of congressional influence, see Richard J. Pierce, Jr., Administrative Law Treatise, Vol. II, sec. 9.8, 675-79 (4th Ed. 2002) (Pierce Treatise) (courts should “recognize[] the need to permit political oversight with respect to policy issues Congress has entrusted to agency decisionmakers.”); Richard J. Pierce, Jr., Political Control Versus Impermissible Bias In Agency Decisionmaking: Lessons form Chevron and Mistretta, 57 U. of Chic. L. Rev. 481 (1990)(same)(Political Control); Note, Judicial Restrictions on Improper Influence in Administrative Decision-making: A Defense of the Pillsbury Doctrine, 6 J. of Law and Politics 135 (1989)(calling for imposition of “appearance of impropriety” standard in any agency proceeding involving congressional intervention.); Block, Orphaned Rules in the Administrative State: The Fairness Doctrine and Other Orphaned Progeny of Interactive Regulation, 76 Geo. L.J. 59 (1987)(“[M]embers of Congress should not be judicially constrained in their efforts to communicate with agencies” during the informal rulemaking process.); Parnell, Congressional Interference in Agency Enforcement: The IRS Experience, 89 Yale L.J. 1360 (1980)(“The power of Congress to investigate the IRS is wide-ranging and may effectively be limited only by discretion and prudence.”); Note, Judicial Limitation of Congressional Influence on Administrative Agencies, 73 Northwestern L. Rev. 931 (1979)(“When the source [of congressional influence] is an authorized committee investigation, no administrative proceeding should be invalidated unless administrative bias as to adjudicative facts can be discerned.”) Congressional Research Service 1 Congressional Intervention in the Administrative Process the courts have required that the pressure or influence be directed at the ultimate decisionmaker with respect to the merits of the proceeding and that it does not involve legitimate oversight and investigative functions before they will intervene. Part III of the report examines the conduct of Members of Congress and their staffs intervening in administrative matters from the perspective of ethics and conflict of interest rules, statutes and guidelines bearing upon a Member’s and staffer’s official duties in this area. It notes that since congressional intervention and expressions of interest in administrative matters from a Member’s office are recognized as legitimate, official representational and oversight functions and duties of Members of Congress, the primary focus of these ethical and statutory conduct restraints is limited to(1) any improper enrichment or financial benefit accruing to the Member in return for or because of his or her official actions and influences, including the receipt of gifts or payments, or existing financial interests in, or relating to the matter under consideration; and (2) any overt coercion or threats of reprisals, or promises of favoritism or reward to administrators from the Member’s office which could indicate an arguable abuse of a Member’s official representational or oversight role. Additionally, there are ethical guidelines in Congress incorporating broad “appearance’ standards for Members which could raise ethical concerns in relation to the acceptance of gifts, favors, donations, and benefits, including campaign contributions, by Members from those who are directly affected by the Member’s official duties, even in the absence of a showing of any corrupt bargain, express payment, or any direct connection to an official act. While campaign contributions from private individuals to Members have a facial legitimacy and necessity in our government and electoral system which other forms of monetary transfers to legislators (such as gifts) do not, and may be treated differently, both Houses of Congress advise members and staff to avoid any appearance of a “linkage” between campaign contributions and interventions. Such guidance would counsel a Member to adopt office procedures and systems for evaluating requests for assistance which would prevent any appearance that interventions decisions are based upon the receipt of things of value, particularly legitimate campaign contributions, and which would assure that decisions to intervene are, rather, based on the merits of a particular matter. II. Current Judicial Standards Governing Congressional Influence on Agency Decisionmaking Support for claims that an exercise of congressional influence in an agency proceeding may serve as basis for a challenge to the end product of that decisional process rest on two foundation cases, a 1966 decision of the Fifth Circuit Court of Appeals in Pillsbury Co. v. FTC2 and a 1971 ruling of the District of Columbia Circuit Court of Appeals in D.C. Federation of Civic Associations v. Volpe,3 and a relative handful of judicial rulings since then which have grappled with the question of whether particular instances of exertion of congressional pressure would serve to taint such a proceeding. While this case law makes it clear that there are limits to congressional intercession, whether those limits have been breached in a particular instance is often far less clear. Analysis has been made difficult by the relative dearth of decisions and the reluctance of courts in those 2 354 F.2d 952 (5th Cir. 1966). 3 459 F.2d 1231 (D.C. Cir. 1971), cert. denied 405 U.S. 1030 (1972). Congressional Research Service 2 Congressional Intervention in the Administrative Process cases to venture beyond the factual confines of the dispute. The absence of a congressional spokesperson in most of the cases to present the legislative interest may also be a complicating factor. Close analysis of the apparently disparate and sometimes seemingly conflicting judicial decisions, however, reveals a consistent underlying pattern that allows for rationalization of the holdings and for the formulation of guidelines for application in future situations. The determinative factors for the courts appear to be the nature of the proceeding involved, the impact the political pressure had on the decisionmaker, and whether the object of the political intercession is to reflect the views of members on issues of law and policy. This part of the report will examine the extant case law to explicate the manner in which the courts are formulating the differing standards that are applied to the various types of administrative proceedings and the underlying rationale for their actions. A. The Nature of the Proceeding The law of undue influence is a still-evolving, difficult to define area of jurisprudence that does not as yet yield ready answers when applied to particular complex and often politically charged fact situations. The relatively small body of case law that has developed, however, reflects the growing sensitivity of the courts to appearing to be engaging in unwarranted intrusions into the political process. Problems in this area are not subject to easy categorization or generalizations; case by case evaluations have been the norm. However, the case law does provide broad guidelines within which analysis may proceed: Where agency actions resembles judicial action, where it involves formal or informal adjudication, or formal rulemaking, insulation of the decisionmaker from political influence through public pressure or unrevealed ex parte contacts has been deemed justified by basic notions of due process to the parties involved. 4 But where agency action involves informal rulemaking of generally applicable policy, thus closely resembling the legislative process, there is deemed to be far less justification for judicial intervention to protect the integrity of the process5 In practice, however, these categorizations serve only as useful starting points for analysis. The courts have eschewed mechanical application of these categories. That is, an agency proceeding that has adjudicatory elements will not be pigeonholed automatically as a case requiring the highest level of judicial scrutiny.6 Similarly, an informal rulemaking may not be reflexively dealt with as a matter of pure policymaking and accorded extreme deference. 7 Rather, the courts appear to be making their determinations in this area by ascertaining where on the adjudication/policymaking continuum the proceeding falls and then applying the factors most appropriate to that particular situation. 8 The task of analysis in such cases is thus threefold: (1) 4 E.g., Pillsbury Co. v. FTC, 354 F.2d 952 (5th Cir. 1966). 5 Sierra Club v. Costle, 657 F.2d 298, 400-01 (D.C. Cir. 1981). 6 See, e.g., Gulf Oil Corp. v. FPC, 563 F.2d 588 (3d Cir. 1977). Also compare Association of National Advertisers v. FTC, 627 F.2d 1151 (D.C. Cir. 1979), cert denied 447 U.S. 421(1980)(hybrid rulemaking proceeding held legislative nature). 7 Texas Medical Association v. Mathews, 408 F. Supp. 303 (W.D. Tex. 1976). 8 See Sokaogon Chippewa Community v. Babbitt, 929 F. Supp. 1165, 1174-76 (W.D. Wisc. 1996) (“[T]he propriety of congressional contacts depends on the nature of the administrative proceeding”); Sierra Club v. Costle, 657 F. 2d 298, (continued...) Congressional Research Service 3 Congressional Intervention in the Administrative Process determination of the type of proceeding involved; (2) identification and application of the factors relevant to that type of proceeding; and, if taint is involved, (3) determining the remedies that may be available. The following discussion will treat each of these issues in turn. It seems useful, however, to start with an overview and description of the distinguishing elements of the various proceedings in the continuum as it moves from adjudication toward varieties of informal, nonrecord decisionmaking. Administrative action pursuant to the Administrative Procedure Act (APA)9 is either adjudication or rulemaking. The two processes differ fundamentally in purpose and focus and as a consequence have imposed on them sharply divergent statutory and constitutional procedural requirements. 10 Thus the APA defines “adjudication” as the “agency process for the formulation of an order.”11 The term “order” is then defined as “the whole or part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than a rulemaking but including licensing.”12 A “rulemaking” is the “agency process for formulating, amending, or repealing a rule.”13 Finally, a “rule” is defined to mean: . . . the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefor or of valuations, costs, or accounting, or practices bearing on any of the foregoing.14 The definitive explanation of the interrelationship of these definitions and the dichotomous scheme of the APA was provided the Attorney General in 1947.15 The object of the rule making proceeding is the implementation or prescription of law or policy for the future, rather than the evaluation of a respondent’s past conduct. Typically, the issues relate not to the evidentiary facts, as to which the veracity and demeanor of witnesses would often be important, but rather to the policy-making conclusions to be drawn from the facts . . . Conversely, adjudication is concerned with the determination of past and present rights and liabilities. Normally, there is involved a decision as to whether past conduct was (...continued) 400 (D.C. Cir. 1981). 9 5 U.S.C. 551 et seq. (2000). 10 Assoc. of National Advertisers, Inc. v. FTC 627 F.2d 1151, 1160-61 (D.C. Cir. 1979), cert. denied 447 U.S. 921 (1980). 11 5 U.S.C. 551 (7) (2000). 12 5 U.S.C. 551 (6) (2000). “Licensing” is defined to include “the agency process respecting the grant, renewal, denial revocation, suspension, annulment, withdrawal, limitation, amendment, modification, or conditioning of a license.” 5 U.S.C. 551 (9)(1988). 13 5 U.S.C. 551 (5) (2000). 14 5 U.S.C. 551 (4) (2000). 15 Attorney General’s Manual on the Administrative Procedure Act 14 (1947). The manual is a contemporaneous interpretation of the APA. Because of “the role played by the Department of Justice in drafting the legislation,” its interpretation and explanations have been accorded significant deference by the courts. See Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 546 (1978); Assoc. of National Manufacturers, Inc. v. FTC, supra footnote 6, 627 F.2d at 1160 n. 15. Congressional Research Service 4 Congressional Intervention in the Administrative Process unlawful, so that the proceeding is characterized by an accusatory flavor and may result in disciplinary action.16 In sum, then, rulemaking involves the formulation of a policy or interpretation which the agency will apply in the future to all persons engaged in the regulated activity. Adjudication is the administrative equivalent of a judicial trial. It applies policy to a set of past actions and results in an order against (or in favor of) the named party. The focus of rulemaking is prospective. The primary focus of adjudication is retrospective. Administrative rulemaking and adjudication may be conducted pursuant to either informal or formal procedures. Informal rulemaking requires the administrative agency, following publication of a proposed rule in the Federal Register, to provide “interested persons an opportunity to participate in the rulemaking through submission of written data, views or arguments.”17 Courts reviewing such proceedings are required to uphold informal rulemaking decisions unless those decisions are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 18 Formal rulemaking is invoked when “rules are required by statute to be made on the record after opportunity for agency hearing.”19 Under the APA, formal rulemaking must include a trial-type hearing at which a “party is entitled to present his case or defense or oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts.”20 Judicial review of formal rulemaking requires a court to set aside a rule that is “unsupported by substantial evidence” on the record.21 Formal adjudication is governed by section 554 of the APA and arises in “every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing.”22 Section 554 incorporates the procedural requirements of section 556 and 557 and affords parties to a formal adjudication the right to present evidence and to conduct cross examination.23 Judicial review of formal adjudication, like that of formal rulemaking, is governed by the substantial evidence standard. Informal adjudication occurs when an agency determines the rights or liabilities of a party in a proceeding to which section 554 does not apply.24 The APA makes no provision for informal adjudications—adjudications unaccompanied by the protections of an on the record, formal, judicial-like trial. But since these informal adjudications involve individual rights rather than issues of general policy, the courts have recognized they implicate constitutional due process 16 See also U.S. v. Florida East Coast Ry., 410 U.S. 224, 244-46 (1973). 5 U.S.C. 553 (c) (2000). 18 5 U.S.C. 553 (2) (A). 19 5 U.S.C. 553 (c). 20 5 U.S.C. 553 (d). 21 5 U.S.C. 706 (2)(E). 22 5 U.S.C. 554 (a). 17 23 5 U.S.C. 554 (b)-(d). Section 557(d) also prohibits ex parte contracts with or by anyone “who is or may be reasonably expected to be involved in the decisional process” of an adjudicatory proceeding. 24 See, e.g. Camp v. Pitts, 411 U.S. 138, 140-42 (1973)(per curiam); Aircraft Owners and Pilots Assoc. v. FAA, 600 F.2d 965, 969-70 (D.C. Cir. 1979); United States Lines, Inc. v. FMC, 584 F.2d 519 (D.C. Cir. 1978). Congressional Research Service 5 Congressional Intervention in the Administrative Process values. 25 Thus, although due process does not generally require a full scale judicial trial, informal adjudications must nevertheless conform “with the notion of a fair hearing and with the principles of fairness implicit in due process.”26 In such proceedings, the agency’s final decision is reviewed under the APA’s arbitrary and capricious standard which requires a court to conduct a “searching and careful” inquiry based upon “the full administrative record that was before the [agency decisionmaker] at the time he made his decision.”27 It is important to note that informal decisionmaking, that is, governmental actions that are taken without an evidentiary hearing and formal record, constitute by far the vast bulk of government decisionmaking. As one commentator has noted: ... However defined, informal action is the mode in which government operates. A common and loose figure is that ninety percent of the government’s business is accomplished by informal action. The figure is much too low. In terms of quantity, surely much less than one percent of the actions of the federal government are based upon evidentiary hearings. And, if one were possessed of a divine calibrator that could measure “importance,” it is doubtful that weighing the transactions by their importance would reduce the predominance of informal action in the operations of government.28 As a consequence, this category of decisionmaking has been accorded special attention by the courts. A final important category of agency action that has been the subject of undue influence litigation is investigation. Most administrative action, including much of that which occurs in an informal as well as in a formal proceeding, is conditioned by information obtained through an agency’s prior investigation. Administrative agencies do not have unrestricted power to demand information merely for satisfying their curiosity. The agency’s command can be enforced only if it is authorized by law and issued in a lawful manner. Additionally, constitutional limitations hedge administrative power to investigate. Within these constraints, the courts have acknowledged the importance of judicial deference to administrative agencies in conducting investigations.29 Agency decisions to conduct investigations are deemed “committed entirely to agency discretion”30 and are unreviewable except where they are made in “bad faith” and the enforcement of the administrative process would be an abuse of the judicial process. 31 25 Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 542 (1978); Sierra Club v. Costle, 657 F.2d 298, 400 (D.C. Cir. 1981). 26 U.S. Lines v. FMC, 584 F. 2d 519, 539 (1978). 27 Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 420 (1971); U.S. Lines v. FMC, supra footnote 26, 584 F.2d at 541-42. 28 Gardner, The Informal Actions of Government, 26 Amer. U. L. R. 799, 799-800 (1977). The types of administrative decisions that may comprise the legal category of “informal actions” would include settlement, negotiation and alternative dispute resolution; review and disposal of applications and claims for social welfare benefits, immigration matters, etc.; test and inspection programs; suspensions, seizures and recalls; informal supervision (such as in bank regulation); the use by agencies of publicity; and responses to requests for agency advice and declaratory orders, among others. See, Ernest Gellhorn and Ronald M. Levin, Administrative Law and Process, 156-90 (1997). 29 See, United States v. La Salle National Bank, 437 U.S. 298, 316-17 (1978). 30 City of Chicago v. United States, 396 U.S. 162, 165 (1969); Chum Mechling Corp. v. United States, 566 F.2d 722, 724-25 (D.C. Cir. 1977); Dresser Industries, Inc. v. United States, 596 F.2d 1231, 1235 N.1 (5th Cir. 1979), cert denied, 444 U.S. 1044 (1980); SEC v. Howatt, 525 F.2d 226, 229 (1st Cir. 1975); Kixmiller v. SEC, 492 F.2d 641, 645 (D.C. Cir. 1974) (per curiam). 31 United States v. American Target Advertising, Inc., 257 F.3d 348 (4th Cir. 2001). SEC v. Wheeling-Pittsburgh Steel (continued...) Congressional Research Service 6 Congressional Intervention in the Administrative Process The cases indicate, at least in their rhetoric, that identification and categorization of the subject proceedings are significant. We turn now to a review of the pertinent case law which serves to illustrate the types of factors the courts have identified as relevant in different kinds of proceedings. B. The Foundation Cases 1. Pillsbury Co. v. FTC The seminal case with respect to the nature and extent of permissible congressional intercession into agency adjudicatory or quasi-adjudicatory proceedings is the 1966 decision of the Court of Appeals for the Fifth Circuit in Pillsbury Company v. Federal Trade Commission,32 which held a Federal Trade Commission (FTC) divestiture order invalid because the Commission’s decisional process had been tainted by impermissible congressional influence. At issue was an intense interrogation at a Senate subcommittee hearing of the FTC Chairman and several members of his staff on a key issue in an antitrust adjudication involving the Pillsbury Company which was then pending before the Commission. The Senators expressed opinions on the issue and criticized the FTC for its interpretation of section 7 of the Clayton Act in a previous interlocutory order in Pillsbury’s favor.33 The clear message of the Senate committee criticism was that the FTC should have ruled against Pillsbury.34 In its subsequent final decision the Commission ruled as the Committee had suggested. The appeals court found the Senate inquiry to be an “improper intrusion into the adjudicatory process of the Commission.” The court based its holding on the fact that the agency was acting in a judicial capacity. As a consequence, the private litigants had a “right to a fair trial” and the “appearance of impartiality” as part of the general guarantees of procedural due process when the agency is acting in a judicial or quasi-judicial capacity. The court emphasized the judicial nature of the function the agency was performing and explained that in order to protect the integrity of that type of process, it was proscribing the subcommittee’s action because it cast doubt upon the “appearance of impartiality” of the decisionmakers, and not because of any finding that the Commission had actually been influenced. ... However, when [a congressional] investigation focuses directly and substantially upon the mental decisional processes of a Commission in a case which is pending before it, Congress is no longer intervening in the agency’s legislative function, but rather, in its judicial function. At this latter point, we become concerned with the right of private litigants to a fair trial and, equally important, with their right to the appearance of impartiality, which cannot be maintained unless those who exercise the judicial function are free from powerful external influences ... (...continued) Corp., 648 F.2d 118 (3d Cir. 1981) (en banc); United States v. RFB Petroleum, Inc., 793 F.2d 528, 532-33 (Em. Appl. 1983); United States v. Phoenix Petroleum Corp., 571 F. Supp. 16 (S.D. Tex 1982); United States v. Armada Petroleum Corp., 562 F. Supp. 43 (S.D. Tex. 1982). 32 354 F.2d 952 (5th Cir. 1966). 33 Early in the proceeding, the FTC had issued an interlocutory order announcing it would use the rule of reason rather than a per se rule to evaluate acquisitions under the Clayton Act. 34 The committee chairman’s questioning of the FTC chairman, as well as that of the committee members was hostile and pointed and expressed the strongly held view that the FTC should use the per se rule, and both the senators and the FTC chairman frequently referred to the facts of the Pillsbury case to illustrate their views. See 354 F.2d at 955-62. Congressional Research Service 7 Congressional Intervention in the Administrative Process To subject an administrator to a searching examination as to how and why he reached his decision in a case still pending before him, and to criticize him for reaching the “wrong” decision, as the Senate subcommittee did in this case, sacrifices the appearance of impartiality—the sine qua non of American judicial justice—in favor of some short-run notions regarding the Congressional intent underlying an amendment to a statute, unfettered administration of which was committed by Congress to the Federal Trade Commission. It may be argued that such officials as members of the Federal Trade Commission are sufficiently aware of the realities of governmental, not to say “political,” life as to be able to withstand such questioning as we have outlined here. However, this court is not so “sophisticated” that it can shrug off such a procedural due process claim merely because the officials involved should be able to discount what is said and to disregard the force of the intrusion into the adjudicatory process. We conclude that we can preserve the rights of the litigants in a case such as this without having any adverse effect upon the legitimate exercise of the investigative power of Congress. What we do is to preserve the integrity of the judicial aspect of the administrative process.35 2. D.C. Federation of Civic Associations v. Volpe D.C. Federation of Civic Associations v. Volpe,36 decided by the D.C. Circuit five years later, provides an apt counterpoint to Pillsbury. D.C. Federation also involved a claim of undue congressional influence but not within the context of a judicial or quasi-judicial proceeding. The principles enunciated by the court as necessary to establish a claim of taint in such a situation mark out the boundaries of permissible congressional action which have influenced courts since then. D.C. Federation involved the approval by the Secretary of Transportation of construction of the Three Sisters Bridge across the Potomac River. Two issues were presented: first, whether the Secretary failed to comply within statutory requirements prior to approval of construction; and second, whether the Secretary’s determinations were tainted by extraneous pressures. With regard to the first issue, a majority of the court found that in a number of critical respects the Secretary had failed to comply with applicable statutory standards which therefore required a remand for further agency determinations. Although this finding would have been sufficient to dispose of the case, Judge Bazelon chose to deal with the “taint” issue. That involved the allegation that threats by the Chairman of the House appropriation subcommittee, which had jurisdiction over the funding of District of Columbia’s transportation construction projects to deny funds for the District’s proposed subway system unless the bridge project was approved and whether those threats had a legal impact on the Secretary’s subsequent approval decision. Judge Bazelon stated that he was “convinced that the impact of this is sufficient, standing alone, to invalidate the Secretary’s action. Even if the Secretary had taken every formal step required by every applicable statutory provision, reversal would be required, in my opinion, because extraneous pressure intruded into the calculus of considerations on which the Secretary’s decision was based.”37 Judge Bazelon pointed out that he was alone in this opinion: “Judge Fahy, on the other hand, has concluded that since critical determinations cannot stand irrespective of the allegations of 35 Id. at 964. 459 F.2d 1231 (D.C. Cir. 1971), cert. denied 405 U.S. 1030 (1972). 37 459 F.2d at 1245-46. 36 Congressional Research Service 8 Congressional Intervention in the Administrative Process pressure, he finds it unnecessary to decide the case on this independent ground.”38 But it is to be noted that the disagreement between Judges Bazelon and Fahy was not as to the applicable principle of law but rather as to whether the district court below had found there had been any consideration by the Secretary of extraneous influence: While Judge Fahy is not entirely convinced that the District Court ultimately found as a fact that the extraneous pressure had influenced the Secretary—a point which is for me clear—he has authorized me to note his concurrence in my discussion of the controlling principle of law: namely, that the decision would be invalid if based in whole or in part on the pressures emanating from Representative Natcher. Judge Fahy agrees, and we therefore hold, that on remand the Secretary must make new determinations based strictly on the merits and completely without regard to any considerations not made relevant in the applicable statute.39 Judge Bazelon’s opinion makes it clear that the court’s standard—that extraneous congressional influences actually shown to have had an impact on an agency decision will taint such administrative action40–is crafted for the special administrative circumstances of the situation before it: where the decisional process was neither judicial or legislative in nature. The District Court was surely correct in concluding that the Secretary’s action was not judicial or quasi-judicial, and for that reason we agree that much of the doctrine cited by plaintiffs is inapposite. If he had been acting in such a capacity, plaintiffs could have forcefully argued that the decision was invalid because of the decisionmaker’s bias or because he had received ex parte communications. Well-established principles could have been invoked to support these arguments, and plaintiffs might have prevailed even without showing that the pressure had actually influenced the Secretary’s decision. With regard to judicial decisionmaking, whether by court or agency, the appearance of bias or pressure may be no less objectionable than the reality. But since the Secretary’s action was not judicial, that rationale has no application here. If, on the other hand, the Secretary’s action had been purely legislative, we might have agreed with the District Court that his decision could stand in spite of a finding that he had considered extraneous pressures. Beginning with Fletcher v. Peck, the Supreme Court has maintained that a statute cannot be invalidated merely because the legislature’s action was motivated by impermissible considerations (except, perhaps, in special circumstances not applicable here). Indeed, that very principle requires us to reject plaintiffs’ argument that the approval of the bridge by the District of Columbia City Council was in some sense invalid. We do not sit in judgment of the motives of the District’s legislative body, nor do we have authority to review its decisions. The City Council’s action constituted, in our view, the approval of the project required by the statute. Thus, the underlying problem cannot be illuminated by a simplistic effort to force the Secretary’s action into a purely judicial or purely legislative mold. His decision was not “judicial” in that he was not required to base it solely on a formal record established at a public hearing. At the same time, it was not purely “legislative” since Congress had already established the boundaries within which his discretion could operate. But even though his action fell between these two conceptual extremes, it is still governed by principles that we 38 Id. at 1246. Id. 40 Judge Bazelon emphasized that he believed that under the circumstances of the case, the congressional threats involved were taken into account by the Secretary: “In my view, the District Court clearly and unambiguously found as a fact that the pressure exerted by Representative Natcher and others did have an impact on Secretary Volpe’s decision to approve the bridge.” 459 F.2d at 1246. 39 Congressional Research Service 9 Congressional Intervention in the Administrative Process had thought elementary and beyond dispute. If, in the course of reaching his decision, Secretary Volpe took into account “considerations that Congress could not have intended to make relevant,” his action proceeded from an erroneous premise and his decision cannot stand. The error would be more flagrant, of course, if the Secretary had based his decision solely on the pressures generated by Representative Natcher. But it should be clear that his action would not be immunized merely because he also considered some relevant factors.41 Thus, the court appeared to view undue influence cases as classifiable on a continuum, with the applicable standard dependant on where on the continuum the nature of the case places it. If a proceeding is one in which judicial or quasi-judicial functions are being exercised, then the highest standard of conduct is required, and only a showing of interference with merely the “appearance of impartiality,” without proof of actual partiality or other effect of the extraneous influences, is necessary.42 If the decisionmaking is “purely legislative” (policymaking) in nature, such as takes place in informal rulemaking, then the courts will be most deferential, even in the face of heavy extraneous pressures, to the political nature of the process. Finally, where a decisional process involves application of ascertainable legislative standards by an agency official in a situation that cannot be categorized as either judicial or legislative, i.e., informal decisionmaking, then a claim of impermissible interference will be sustained only on a showing of actual effect. The courts appear to have been guided by this suggested mode of analysis. 3. The Critique of Pillsbury and D.C. Federation The rulings in Pillsbury and D.C. Federation have received surprisingly limited attention over the years, but what commentary there is has been generally critical, emphasizing both courts’ failure to give proper weight to the values of the political process in such cases.43 An influential 1990 article by Professor Richard J. Pierce, Jr., a leading administrative law scholar, reflects practical concerns raised by the decisions.44 Pierce agrees that the Pillsbury court reached a defensible result in light of the circumstances presented: the contested issues of fact were at least arguably adjudicatory in nature rather than legislative and the intense interrogation could be viewed as pressure to resolve the facts against Pillsbury, thereby creating the appearance of impropriety. Thus, even though it is impossible to determine whether the FTC’s resolution of those facts was in fact influenced by the hostile questions, Pierce argues that one could infer that the FTC purposely resolved adjudicative facts against Pillsbury in response to the committee’s attacks. Pierce’s concern, however, is that the 5th Circuit did not decide the case on this narrow ground, but announced the far broader principle that “[w]hen [a congressional] investigation focuses directly and substantially upon the mental decisional processes of a Commission in a case before it, Congress is . . . intervening [impermissibly] in the agency’s adjudicatory function.”45 Application of such a broadly stated prohibition in future cases, Pierce asserts, could result in findings attributable to congressional pressure without regard to the actual context of the congressional proceeding and would constitute an unjustified judicial interference with the political process of policymaking. Whether to apply the rule of reason or a per se rule to acquisitions under the 41 459 F.2d at 1246-48 (footnotes omitted). The court quite clearly accepted the Pillsbury doctrine. See 459 F.2d at 1246 notes 75-78. 43 See commentaries listed in footnote 1. 44 Political Control, supra footnote 1. 45 Political Control at 500, quoting Pillsbury. 42 Congressional Research Service 10 Congressional Intervention in the Administrative Process Clayton Act is purely a policy decision . . . Legislators should be free to express their views on this policy issue, and FTC commissioners should be free to change their minds and adopt those views. This is the political process functioning properly. It is of no consequence to the judiciary whether the FTC changes its policy because it is persuaded by the merits of the legislators’ arguments, or because it fears that the legislature will retaliate . . . Similarly, the courts should not distinguish between policy decisions made through rulemaking and policy decisions developed in adjudicatory proceedings. To paraphrase Justice Holmes, judicial process values should trump political process values only when an agency has singled out an individual for adverse treatment.46 While finding Pillsbury’s holding defensible, Professor Pierce deems D.C. Federation indefensible, “stand[ing] for the principle that two politically accountable branches cannot compromise their frequently differing policy preferences.”47 In Pierce’s view, the case was about a political dispute over the allocation of transportation funds between the administering agency and the key congressional appropriating subcommittee. The secretary preferred seeing a subway built; the subcommittee (and Congress) wanted a bridge built. After a heated public dispute, a political compromise was effected whereby both projects would go forward. But the appeals court intervened finding that the secretary’s decisions, which were part of the political deal, were infected with impermissible bias as a result of legislative branch pressure. In the words of the court, “the impact of this pressure is sufficient, standing alone, to invalidate the Secretary’s action.”48 In Professor Pierce’s view: D.C. Federation is hard to explain in a democracy in which two politically accountable branches of government share the power to make policy. The agency was not adjudicating a dispute involving individual rights; nor was it resolving contested issues of adjudicative fact. Perhaps the case stands for the principle that the two politically accountable branches cannot compromise their frequently differing policy preferences. But if so, it is a singularly arrogant decision. The Constitution created a system of shared and coordinated policymaking by the two politically accountable branches. The Framers included many features to force compromise between the two branches: The President’s role in the legislative process, the Senate’s role in approving policymaking officials for the executive branch, the Senate’s role in ratifying treaties and the exclusive power of the House to initiate tax and appropriations bills. Our nation would be ungovernable in the absence of constant policy compromises between the executive and legislative branches.49 As will be seen in the following review of the undue influence case law since the decisions in Pillsbury and D.C. Federation, Professor Pierces’s pragmatic views appear to have been influential. C. Adjudicatory Rulings Since Pillsbury Since the decision in Pillsbury, while courts have continued to recognize verbally the vitality of that precedent, only one court has actually overturned a quasi-judicial agency proceeding on grounds of undue political influence, and the most recent judicial rulings have evinced a clear 46 Id. at 500-01. Id. at 496. 48 D.C. Federation, supra 459 F.2d at 1244. 49 Political Control at 496-97. See also Pierce Treatise, supra footnote 1, at 676-78, reiterating and updating his 1990 critique of Pillsbury and D.C. Federation. 47 Congressional Research Service 11 Congressional Intervention in the Administrative Process predilection to defer to congressional actions where they involve the legitimate exercise of legislative oversight and investigative functions. 1. Koniag v. Kleppe The solitary ruling referred to occurred in Koniag v. Kleppe,50 in which a district court set aside adjudicatory decisions of the Secretary of the Interior with respect to the eligibility of several communities to receive land and money under the Alaska Native Claims Settlement Act (ANSCA), at least in part because it found improper congressional pressure exerted on the Department and the Secretary. There, a congressional subcommittee held oversight hearings on the administration of the Act while the proceedings in question were pending. The district court, however, found that the hearings went substantially beyond the oversight function. The hearings took place during the time that the validity of certain claims being advanced by the plaintiffs was being litigated before the Secretary and following upon earlier correspondence which the Congressman had addressed to various subordinates of the Secretary. The stated purpose of the hearings was to present a forum for discussing the implementation of the Act but in fact the Committee, through its chairman and staff members, probed deeply into details of contested cases then under consideration, indicating that there was “more than meets the eye.” The entire rule-making process was re-examined, travel vouchers and other information were sought to probe the adequacy of the investigations made, all papers in the pending proceedings were demanded, the accuracy of data and procedures was questioned, and constantly the Committee interjected itself into aspects of the decisionmaking process. 51 When the departmental officials expressed concern about the integrity of the quasi-judicial administrative process, the Chairman several times stated that it was not his purpose to pressure the Department, but he many times stated his doubts that the law was being properly carried out. The court noted: “On key issues now in dispute before the Court, representatives of the Government were obligated to take positions as to the interpretation of the Act. A strenuous effort was made by the Chairman to encourage protest and appeals, coupled with comments indicating his clear impression that all that could be done was being done and that some of the results being reached were contrary to congressional intent.”52 Two days before the Secretary made his determination on the eligibility of the villages, the Chairman sent a letter to him requesting that he postpone his decision on the matter pending a review and opinion by the Comptroller General because it “appears from the testimony [at the hearings] that village eligibility and Native enrollment requirements of ANSCA have been misinterpreted in the regulations and that certain villages should not have been certified as eligible for land selections under ANSCA.”53 On these facts the district court vacated the Secretary’s eligibility decisions and reinstated the decisions initially rendered by the Bureau of Indian Affairs (BIA). 50 405 F. Supp. 1360 (D.D.C. 1975), modified sub nom. Koniag v. Andrus, 580 F.2d 601 (D.C. Cir. 1978), cert. denied, 439 U.S. 1052 (1978). 51 405 F. Supp. at 1371. 52 Id. at 1371-72. 53 Id. Congressional Research Service 12 Congressional Intervention in the Administrative Process On appeal, the District of Columbia Circuit Court of appeals disagreed in part with the lower court’s application of the relevant law but not with its validity. Thus, with regard to the Chairman’s conduct of the hearings, the appeals court found fault with the district court’s ruling because none of the agency officials subjected to the Chairman’s interrogations was an agency decisionmaker. The hearings in question were called by Congressman Dingell in June of 1974 at the time the Board and the Secretary were considering most of these cases.... During the hearings Congressman Dingell made no secret of his displeasure with some of the initial BIA eligibility determinations. Nevertheless, we think the Pillsbury decision is not controlling here because none of the persons called before the subcommittee was a decisionmaker in these cases. One possible exception was Mr. Ken Brown, a close advisor to the Secretary who briefed him on the cases at the time he decided to approve the Board’s recommended decisions. However, even if we assume that the Pillsbury doctrine would reach advisors to the decisionmaker, Mr. Brown was not asked to prejudge any of the claims by characterizing their validity. See Pillsbury Co. v. FTC, supra at 964. The worst cast that can be put upon the hearing is that Brown was present when the subcommittee expressed its belief that certain villages had made fraudulent claims and that the BIA decisions were in error. This is not enough.54 With regard to the Chairman’s letter, however, the court of appeals found “it compromised the appearance of the Secretary’s impartiality,” and thereby tainted the decision, citing Pillsbury approvingly. But rather than reinstate the BIA decisions, the matter was remanded to the Secretary since three and a half years had passed and a new Secretary of a new Administration had taken office, thus making possible a fair and dispassionate treatment of the matter.55 2. Gulf Oil Corporation v. FPC Other than Koniag, reviewing courts have consistently upheld congressional intercessions into adjudicatory proceedings against undue political influence challenges. In Gulf Oil Corporation v. FPC,56 for example, petitioners sought to overturn a Federal Power Commission (FPC) order requiring delivery of larger quantities of natural gas. In upholding the order, the appeals court rejected a claim that members and staff of the FPC had been subjected to improper interrogation and interference in the decision of the matter by the Subcommittee on Oversight and Investigations of the House Interstate and Foreign Commerce Committee at hearings and in correspondence. The court recognized the relevance of Pillsbury to such an adjudicatory proceeding but acknowledged that it had to be sensitive to the legislative importance of congressional committees in oversight and investigation and recognized that “their interest in the objective and efficient operation of regulatory agencies serves a legitimate and wholesome function with which we should not lightly interfere.”57 Balancing the interests of integrity of an adjudicatory proceeding and congressional oversight, the court found determinative distinctions between Pillsbury and the case before it. First, the court found that the subcommittee was not concerned with the merits of the agency’s decision, as was the situation in Pillsbury, but “was directed at accelerating the disposition and enforcement of the FPC’s compliance procedures.”58 54 580 F.2d at 610. Id. 56 563 F.2d 588 (3d Cir. 1977). 57 563 F.2d at 610. 58 Id. at 611. 55 Congressional Research Service 13 Congressional Intervention in the Administrative Process Nor did the court find any effort to influence the Commission in reaching any decision on the specific facts of the case or any factual prejudice. Any intrusions into the merits of the FPC’s decision were found to be “incidental to the purpose of accelerating” the agency’s disposition of the case. Those “incidental intrusions” were found not to have had serious influence on the agency because (1) the interrogation did not reflect the majority view of the subcommittee; (2) the agency did not accede to Members’ requests and continued with the show cause proceeding; and (3) the ultimate resolution of the issue was the same as it had been in proceedings concluded a year prior to the hearings in question. 59 Concluding that the claim of prejudice could not be sustained under the facts and circumstances of the case, the court recapitulated the factors it had taken into consideration: Weighing these factors–the importance and need for Congressional oversight of regulatory agencies, the Commission’s evident strong backbone in resisting subcommittee pressure, the Commission’s identical resolution of each issue in its prior decision, the entirely legal nature of the Commission’s decision, and our agreement with that decision– against our commitment to the principle that administrative agencies must be allowed to exercise their adjudicative functions free of Congressional pressure, we conclude that the legislative conduct in this case did not affect the fairness of the Commissions proceedings and does not warrant our setting aside the Commission’s order.60 3. Peter Kiewit Sons’ Co. v. U.S. Army Corps of Engineers In Peter Kiewit Sons’ Co. v. U.S. Army Corps of Engineers,61 the appeals court dealt with the effects of the conduct of a Senator at prior congressional investigations on the subject of debarment of government contractors convicted of bid-rigging and similar offenses, and his recommendations and status inquiries contemporaneous with an ongoing debarment proceeding. The plaintiff, the subject of the debarment proceeding, claimed that the Senator’s persistence in the subject area, and his particular interest in its case, compromised the integrity of the administrative proceeding. The district court agreed. On appeal, the District of Columbia Circuit Court reversed. The appeals court acknowledged that a judicial or quasi-judicial proceeding could be invalidated by the appearance of bias or pressure and that under that standard “pressure on the decisionmaker alone, without proof or effect on the outcome, is sufficient to vacate a decision.”62 Thus, “[t]he test is whether ‘extraneous factors intruded into the calculus of consideration’ of the individual decisionmaker.”63 In the case before it, the court found neither actual nor apparent congressional interference since the Senator had never communicated directly with the ultimate decisionmaker in the debarment, the Assistant Judge Advocate General for Civil Law, nor was it shown that that official was even aware of the Senator’s communications. 59 Id. Id. at 612. 61 714 F.2d 163 (D.C. Cir. 1983). 62 714 F.2d at 169. 63 Id. at 170 (emphasis by court). 60 Congressional Research Service 14 Congressional Intervention in the Administrative Process 4. Power Authority of the State of New York v. FERC Challenged congressional communications in an adjudicatory setting were next rejected in Power Authority of the State of New York v. FERC.64 This was an action for review of a series of decisions by the Federal Energy Regulatory Commission (FERC) which involved, inter alia, the claim that four Members of Congress allegedly engaged in ex parte communications with FERC in connection with a proceeding for a declaratory order regarding the allocation of power generated by waters of the Niagara River. The communications in question consisted of a letter from two House Members to President Reagan which the President forwarded to the Chairman of FERC, and a press conference attended by the four defendants, FERC officials and the public, at which the petitioners urged reversal of an administrative law judges’s decision against them. At the time FERC was considering petitions for rehearing, one of the petitioners filed a motion with FERC to deny rehearing because the proceeding had been tainted. The Commission denied the motion on the ground that the ex parte communications had not undermined “the integrity of ... [the Commission’s] processes.” That same decision also resolved the merits of the proceeding and the Municipal Electric Utilities Association of New York (MEUA) and other parties sought appellate review. The Second Circuit Court of Appeals summarily rejected MEUA’s contentions with the following analysis: Ex parte communications by Congressmen or any one else with a judicial or quasijudicial body regarding a pending matter are improper and should be discouraged. On the other hand, the mere existence of such communications hardly requires a court or administrative body to disqualify itself. Recusal would be required only if the communications posed a serious likelihood of affecting the agency’s ability to act fairly and impartially in the matter before it. Gulf Oil Corp. v. FPC, 563 F. 2d 588, 611-12 (3d Cir. 1977). In resolving that issue, one must look to the nature of the communications and particularly to whether they contain factual matter or other information outside of the record, which the parties did not have an opportunity to rebut. See Professional Air Traffic Controllers Organization v. FLPA, 672 F. 2d 109, 112-13 (D.C. Cir. 1982); United States Lines v. Federal Maritime Commission, 584 F.2d 519, 533-34 (D.C. Cir. 1978). The communications here fall far short of meeting these requirements. No new evidence was introduced. There was nothing secret about the letters. MEUA was promptly made aware of the correspondence by the Commission and had a full opportunity to comment and respond. Since MEUA had no rebuttal evidence to offer– indeed, none was called for - an evidentiary hearing was unnecessary. The Commission properly denied MEUA’s motion.65 5. State of California v. FERC The two most recent appellate court rulings continue the trend of the courts not to interfere with congressional attempts to influence quasi-adjudicatory proceedings, emphasizing judicial recognition of the important constitutional role of oversight and investigation and the demonstrated ability of agencies to shield their sensitive adjudicatory processes from due process intrusions. In State of California v. FERC,66 an applicant for a license to build a hydroelectric 64 743 F.2d 93 (2d Cir. 1984). 743 F.2d at 110. 66 966 F.2d 1541 (9th Cir. 1992). 65 Congressional Research Service 15 Congressional Intervention in the Administrative Process facility challenged the award of a conditioned license on the grounds, among others, that letters from the Chairman of the House Energy and Commerce Committee unduly influenced, and thereby tainted, the entire sequence of Federal Energy Regulatory Commission orders which resulted in the conditioned license, relying on the Pillsbury case. In three letters to FERC, the Chairman complained that the agency had not followed the recently enacted dispute resolution procedures under the Federal Power Act.67 In response to those complaints, FERC reopened dispute resolution negotiations with State and federal fish and wildlife agencies prior to the conclusion of the licensing process. The Chairman also sent two letters to the agency urging it to review its two decades old interpretation of the Federal Land Policy and Management Act (FLPMA) that a hydroelectric project sponsor was not required to obtain a right-of-way permit over public lands from the Bureau of Lands Management of the Department of Interior because FERC had exclusive jurisdiction over federal hydroelectric development. The Chairman put forth a contrary view and requested and received support for that view in a report by the General Accounting Office (GAO). FERC, after initially rejecting the Chairman’s contention and reaffirming its long held interpretation during the course of the licensing proceeding, reversed its course after receiving the GAO report. The appeals court rejected both objections, holding that neither rose “to the level of undue congressional influence described in Pillsbury nor do they adversely affect the appearance of impartiality in this case.”68 FERC’s decision to open the dispute resolution process after receipt of the Chairman’s letters was designed, the court found, to “correct a procedural problem” and “was based on its own independent analysis of the record in this proceeding, and was an effort to establish fair procedures to allow the parties and the Commission to investigate.”69 Since the negotiation requirements were so recent both the Chairman “and the Commission were understandably concerned about getting off to a good start.”70 With respect to the successful urging that FERC change its long held interpretation of FLPMA, the court explained that Pillsbury was not implicated because “FERC gave a reasoned explanation for its reversal of its original interpretation of FLPMA, and this provides substance for its claim that it addressed and resolved the right-of-way issue under its own independent and detailed analysis of the issue.”71 The court further noted that the fact that it found (later in its ruling) that the reversal of its past interpretation was legally incorrect was irrelevant since the record of the proceeding supported that it had gone through a process of reasoned analysis. “In short, [the Chairman’s] letters, expressing his views on the 10(j) and FLPMA issues, do not constitute the type of intense and undue congressional influence that was present in Pillsbury.”72 6. ATX, Inc. v. U.S. Department of Transportation Finally, in ATX, Inc. v. U.S. Department of Transportation,73 the appeals court found that vocal, hostile, and intense opposition of Members of Congress to the application of ATX, Inc. to operate a new airline in Boston, Atlanta and Baltimore/Washington, did not fatally flaw the proceeding 67 16 U.S.C. 803 (j) (1996) (10(j) procedures). 966 F.2d 1552. 69 Id. 70 Id. 71 Id. 72 Id. 73 41 F.3d 1522 (D.C. Cir. 1994). 68 Congressional Research Service 16 Congressional Intervention in the Administrative Process held by the Department of Transportation (DOT), and that DOT’s denial of the application on the ground that ATX was unfit was reasonable. The pertinent facts of the controversy are essentially as follows. Congressional opposition to ATX arose even prior to the filing of its application, based largely on the perceived reputation of Frank Lorenzo, its founder and majority owner, from his previous record of management of a major airline. Twenty one Members of Congress wrote the Secretary of DOT urging him to deny ATX’s application even before it had been filed, because of Lorenzo’s alleged unfitness to own and operate an airline. 74 Most of the signatures on the letter were members of the House committee with jurisdiction over DOT, including the chair of the full committee, the chair of the Aviation Subcommittee, and the chair of the Oversight Subcommittee. After ATX filed its application, 125 House and Senate members wrote the Secretary to declare their opposition to Lorenzo. Two congressmen introduced legislation to prohibit Lorenzo from re-entering the airline industry.75 The Secretary responded by acknowledging receipt of the letters, refusing to comment on the merits, and putting the correspondence in a file for “contacts outside the record of the case.”76 During the hearing on the application one of the congressional letter writers was allowed to testify as to his opposition. Ultimately the Department rejected the application on the ground that ATX “lacked both managerial competence to operate an airline and a disposition to comply with regulatory requirements.”77 In rejecting the undue influence challenge, the court acknowledged that the size, vocality, and source of the congressional opposition toward the applicant in this quasi-judicial proceeding required close judicial scrutiny to allay due process concerns with the alleged appearance of bias. The court explained ... In the nonjudicial context, we have suggested that the way to cure the appearance of bias may be to establish “a full scale administrative record which might dispel any doubts about the true nature of [the agency’s] action.” Volpe, 459 F. 2d at 1249. With respect to the nexus requirements, we have never questioned the authority of congressional representatives to exert pressure, see id., and we have held that congressional actions not targeted directly at the decision makers-such as contemporaneous hearings–do not invalidate an agency decision. See Koniag, 580 F. 2d at 610. Under this framework, it is apparent that none of the congressional pressure challenged by ATX is sufficient to invalidate the adjudication.78 The court commented that the influence with which it was concerned is “when congressional influence shapes the determination of the merits.” The court commented that the lengthy opinion supporting the decision based on the administrative record “was clear and open to scrutiny and [the] decision was fully supported by the record. There is no reason for us to infer that the letters influenced his decision inasmuch as he did not reverse the ALJ’s recommendation nor was the merits decision a close one on the record.”79 The testimony of the congressman at the hearing did not create “a fatal appearance of bias as it was based almost entirely on information already 74 41 F.3d at 1524. Id. at 1525. 76 Id. 77 Id. at 1526. 78 Id. at 1528. 79 Id. at 1528-29 (emphasis in original). 75 Congressional Research Service 17 Congressional Intervention in the Administrative Process available to the ALJ, was void of threats and was not relied on in any of the decisions, which were accompanied by extensive findings and reasons.”80 The court concluded: In addition we find no evidence that the legislative activity actually affected the outcome on the merits. See Kiewit, 714 F. 2d at 169; Volpe, 459 F. 2d at 1246. Neither the Department’s final decision nor the ALJ’s two decisions mentioned the testimony of the congressman, the congressional letters or the proposed legislation. All of the congressional contacts were placed in the administrative record and ATX responded to them. . . . Finally, the record manifests that both the Secretary and his acting Assistant Secretary were noncommittal in their reactions to the congressional contacts. Secretary Peña’s response to the correspondence stressed that it was inappropriate for him to discuss the merits of the case with the congressmen. *** . . . Here, the nexus between the pressure exerted and the actual decision makers is so tenuous and the evidence so adequately establishes ATX’s ineligibility for an airline certificate that we conclude political influence did not enter the decision maker’s “calculus of consideration.”81 D. Informal Decisionmaking Rulings Since D.C. Federation 1. American Public Gas Association v. FPC American Public Gas Association v. FPC82 was a case that arose from a FPC ratemaking conducted pursuant to section 553 of the APA. The Commission first issued Opinion 770, in July 1976, and on rehearing, issued Opinion 770-A in November of the same year. In August 1976, while the rehearing was pending, Representative John Moss, chairman of the Oversight Subcommittee of the House Interstate and Foreign Commerce Committee, summoned the Commissioners to appear at a hearing. Representative Moss, who with three other members of the subcommittee had been parties to the proceeding before the FPC, subjected the Commissioners to what the reviewing court described as an “intensive examination.” Decisions underlying Opinion 770 came under attack, notwithstanding the fact that the Commission had warned the congressmen that those decisions were subject to reconsideration on rehearing. In the D.C. Circuit’s words: The questioning was not confined to explication of “what the Opinion means and what its implications are.” Chairman Moss went further, stating: “I am most committed as an adversary. I find that I am outraged by Order 770. I find it very difficult to comprehend any standard of just and reasonableness in the decision and I would not want the record to be ambiguous on that point for one moment.” 80 Id. at 1529. 81 Id. at 1529, 1530. See also, Pierce Treatise, supra footnote 1, at 678-79, discussing, with approval, the appeals court ruling in ATX. 82 567 F.2d 1016 (D.C. Cir. 1977), cert. denied, 435 U.S. 907 (1978). Congressional Research Service 18 Congressional Intervention in the Administrative Process These expressions, coupled with what the court characterized as the Subcommittee Counsel’s adversarial interrogation about particular factors in the cost analysis of Opinion No. 770, formed the basis of the claim of prejudice.83 In reaching the question whether the Commission should be disqualified, the Court related the facts of Pillsbury and described its holding at length. It then observed: We doubt the utility of classifying the ratemaking undertaken in the present proceedings by the Power Commission as entirely a judicial, or a legislative function, or a combination of the two, for in any event the need for an impartial decision is obvious ... Congressional intervention which occurs during the still-pending decisional process of an agency endangers, and may undermine, the integrity of the ensuing decision, which Congress has required be made by an impartial agency charged with responsibility for resolving controversies within its jurisdiction. Congress as well as the courts has responsibility to protect the decisional integrity of such an agency.84 However, despite this rhetorical obeisance to the spirit of Pillsbury, the court did not disqualify the agency, because the producers, though fully aware of all these facts, failed to ask the Commission to disqualify itself. The court said that a party cannot, with knowledge of the alleged taint, stay silent in hopes of a favorable decision, and then, when the decision is unfavorable, seek its reversal on the ground of partiality: “A party, knowing of a ground for requesting disqualification, cannot be permitted to wait and decide whether he likes subsequent treatment that he receives.”85 But the court did not end its analysis there. It went on to ask whether the interference was so serious as to require it sua sponte to void the result and set forth the factors it took into account in concluding that it would not: ...the character and scope of the interference alleged; the fact that the parties who raise the disqualification question seem not to have deemed what occurred to impair the impartiality of the Commission itself independent of the result it reached; the fact that in one important respect, and indeed the issue that was most vehemently examined by the Congressmen, namely the correctness of the Commission’s decision respecting the income tax component, the Commission left standing the disposition criticized at the Subcommittee hearing; the fact that there is nothing to lead the court to find that actual influence affected Opinion No. 770A; and the fact that insofar as any actions of the Commissioners themselves are concerned no appearance of partiality is evident.86 In essence, then, the court’s decision turned on its finding of no actual impact of the congressional intervention on the agency decision. Since the court earlier made clear it understood the differing standards applied by the Pillsbury and D.C. Federation rulings,87 it would appear to have considered the proceeding closer in type or form to D.C. Federation. 83 567 F.2d at 1068. Id. at 1069. 85 Id. 86 Id. at 1070. 87 Compare the discussion of Pillsbury at 567 F.2d at 1068, with that of D.C. Federation at 567 F.2d at 1069, footnote 101. 84 Congressional Research Service 19 Congressional Intervention in the Administrative Process 2. Town of Orangetown v. Ruckelshaus In Town of Orangetown v. Ruckelshaus,88 the Town sought to prevent the Environmental Protection Agency (EPA) and the New York State Department of Environmental Conservation (NYSDEC) from approving grants that would modernize an outmoded and overloaded sewage treatment plant. It was argued that improper political pressure by state and local officials on EPA caused EPA to reconsider and relax certain conditions on the grants that it had originally imposed that were important to the Town. The Second Circuit held that in a non-adjudicatory proceeding involving the disbursement of funds it had to be shown that “political pressure was intended and did cause the agency’s action to be influenced by factors not relevant under the controlling statute.”89 Here, the court stated, “The potential effect of proposed grant on area development is one of the relevant factors for the EPA to consider . . . and elected officials should not be precluded from bringing those factors to administrators’ attention. [citing Sierra Club v. Costle] Orangetown ‘may not rest upon mere conclusory allegations’ of improper political influence as a means of obtaining a trial.”90 Since the EPA decision whether to impose conditions on the grants was not adjudicatory in nature but “an administrative one dealing with the disbursement of grant funds, and required no adversary proceeding,” the appeals court concluded that he Town did not have the status of a party and was not entitled to notice and opportunity to be heard. “Consequently, such communications as the EPA had with the two public officials did not deprive [the Town] of due process.”91 3. Chemung County v. Dole Chemung County v. Dole92 involved a protest over the award of a contract by the Federal Aviation Administration (FAA) to locate and build a flight service station. The contract was originally awarded to Elmira, New York (in Chemung County) but was rescinded and then awarded to Buffalo, New York. It was claimed that the change was improperly effected by the political pressure brought on the FAA by two New York congressmen. Adopting the rule announced in its Town of Orangetown ruling, the appeals court found no undue political influence: The full extent of Representatives Kemp and Nowak’s efforts on behalf of the NFTA was their having written letters to the FAA and their staffs and having met with the GAO investigator. Appellees object to the Representatives’ letter to the FAA asking it to refrain from formally entering into a contract with Chemung County while the GAO audit was underway. The FAA had a right to suspend performance of a contract pending a GAO audit. If the audit proved that NFTA had submitted the lowest bid (as it did so prove), the FAA had the obligation to award the contract to NFTA. See 41 U.S.C. §253b (1982). Thus this letter urged the FAA to take action directly authorized by the statutory scheme governing the award of contracts. Similarly, the Representatives’ letter to the FAA urging the agency to re-evaluate its telecommunications cost estimates in light of the GAO’s findings was also proper. This letter was also an attempt to persuade the FAA to abide by its statutory obligations, not ignore them. As noted above, an award of a government contract to anyone except the bidder with 88 40 F.2d 185 (2d Cir. 1984). 740 F.2d at 188. 90 Id. 91 Id. at 188-89. 92 804 F.2d 216 (2d Cir. 1986). 89 Congressional Research Service 20 Congressional Intervention in the Administrative Process the most advantageous proposal would violate the FAA’s statutory obligations, and the Representative acted properly in bringing a possible violation of this duty to the agency’s attention–even if it helped their home districts.93 4. DCP Farms et al v. Yeutter Finally, in DCP Farms et al v. Yeutter94 the 5th Circuit addressed the issue whether the denial of farm subsidy payments had been tainted by the intercession of a powerful congressman prior to commencement of a Department of Agriculture adjudication and thereby required the application of Pillsbury’s “mere appearance of bias” standard. The adjudication was to be held to determine whether an aggregation of 51 irrevocable agricultural trusts was entitled to large subsidies in the face of a statute that limited farm subsidies to $50,000 per “person.” The effect of the trust scheme would have been to allow DCP Farms $1.4 million in subsidies for the 1989 crop year. Prior to the award decision, the Department’s Inspector General (IG) issued a report on abuses of the farm subsidy program which highlighted DCP Farms as an example of “egregious violations of the $50,000 per person limit.”95 The report received considerable publicity and reached the attention of the jurisdictional subcommittee of the House Agriculture Committee. Staff of the subcommittee chairman met with Department officials to discuss the issues raised by the IG report in late 1989. DCP Farms was specifically discussed. In December 1989 the Chairman wrote to the Secretary of Agriculture about the reports of abuses in the subsidy program and cited DCP Farms as an example of the continued abuse of the statutory limit. He urged careful review of schemes involving irrevocable trusts, particularly in light of the fact that he had had assurances in the past from USDA officials that no legislative action was needed with respect to the treatment of such trusts. The chairman received assurance from the Secretary that the DCP Farms case was under administrative review and that the Department would “take a very aggressive position in dealing with this case.”96 In June 1990 an administrative decision was issued finding that DCP Farms had adopted schemes to evade the payment limitation provisions of the law and was ineligible to receive any subsidy payments for the 1989, 1990 and 1991 crop years. DCP Farms appealed and requested a hearing, which was set for December 12, 1990. Before the hearing date DCP Farms learned of the meeting with the chairman’s staff and of the chairman’s letter and successfully sued to enjoin the hearing on the ground, among others, that improper congressional interference denied then due process.97 The Fifth Circuit rejected the argument in an opinion that recognizes the need to permit political oversight with respect to policy issues Congress has entrusted to agency decisionmakers. The appeals court first rejected the applicability of Pillsbury because “the contact here occurred well before any proceeding which could be considered judicial or quasi-judicial . . . There was no hearing on the merits of DCP Farms’ application for farm subsidy payments because DCP Farms abandoned the administrative process for this litigation.”98 The court saw the dispute between DCP Farms and the Department as part of a larger policy debate and rejected any connection 93 804 F.2d at 222. 957 F.2d 1183 (5th Cir. 1992), cert. denied, 506U.S. 953 (1992). 95 957 F.2d at 1186. 96 957 F.2d at 1186. 97 Id. at 1186-87. 98 Id. at 1187. 94 Congressional Research Service 21 Congressional Intervention in the Administrative Process between the preliminary processing of DCP Farms’ application and the appeals hearing that would raise Pillsbury issues: In short, the congressional communication here was not aimed at the decisionmaking process of any quasi-judicial body. Congressman Huckaby was concerned about the administration of a congressionally created program. The dispute between the USDA and DCP Farms was part of a larger policy debate. Applying Pillsbury’s stringent “mere appearance of bias” standard at this juncture of administrative process would erect no small barrier to Congressional oversight. It reflects an insular view of these administrative processes for which we find no warrant. We are unwilling to so dramatically restrict communications between Congress and the executive agencies over policy issues. Appearance of bias is not the standard.99 The proper standard for this type of case, the court advised, is whether the communication actually influenced the agency’s decision. This is appropriate, the court explained, because it protects the proper and effective workings of the political process: This focus on the intrusion of improper extraneous factors into the agency’s decisionmaking process recognizes the political reality that “members of Congress are requested to, and do in fact, intrude in varying degrees, in administrative proceedings.” S.E.C. v. Wheeling-Pittsburgh Steel Corp., 648 F. 2d 118, 126 (3d Cir. 1981) (en banc). It would be unrealistic to require that agencies turn a deaf ear to comments from members of Congress. The agency’s duty, so long as it is not acting in its quasi-judicial capacity, is simply to “give congressional comments only as much deference as they deserve on the merits.” Id. We are cautious in reading extraneous factors too broadly, lest they impair agency flexibility in dealing with Congress. In particular, an agency’s patient audience to a member of Congress will not by itself constitute the injection of an extraneous factor. Nor would a simple plea for more effective enforcement of a law be the injection of an improper factor. A truly extraneous factor must take into account “considerations that Congress could not have intended to make relevant,” D.C. Federation, 459 F. 2d at 1247. Congressional “interference” and “political pressure” are loaded terms. We need not attempt a portrait of all their sinister possibilities, even if we were able to do so. We can make plain that the force of logic and ideas is not our concern. They carry their own force and exert their own pressure. In this practical sense they are not extraneous. That a congressman expresses the view that the law ought not sanction the use of fifty-one irrevocable trusts to gain $1.4 million in subsidies is not impermissible political “pressure.” It certainly injects no extraneous factor. We find no due process right in these preliminary efforts to persuade the government to grant farm subsidies sufficient to exclude the political tugs of the different branches of government, and we see nothing more here. We reject the holding of the district court that DCP Farms could ignore the administrative procedure yet available to it and turn to the consequence of this bypass of remedies.100 99 Id. at 1187-88. Id. at 1188. 100 Congressional Research Service 22 Congressional Intervention in the Administrative Process E. Interference With Agency Rulemaking Proceedings 1. Texas Medical Association v. Mathews In one of the first cases to be decided after D.C. Federation, a district court applied its principles to find an impermissible congressional intervention in an agency rulemaking proceeding. In Texas Medical Association v. Mathews,101 the court considered plaintiff’s contention that congressional pressure should invalidate a decision of the Department of Health, Education and Welfare (HEW) dividing Texas into nine Professional Standards Review Organizations (PSRO). HEW, after consulting with the plaintiff and several other interested groups, first announced it would form one statewide PSRO. But after a lengthy meeting with Senator Wallace Bennett, sponsor of the PSRO legislation, and a senior staff member of the Senate Finance Committee, an HEW official abruptly changed his mind and called for the division of Texas into nine PSRO’s. The court noted that while it had no evidence as to what Senator Bennett or the staffer may have said during the meeting, HEW was unable to adequately explain its sudden reversal of decision with regard to the number of PSRO’s so soon after the meeting.102 Moreover, the court found “proof of a pattern of undue influence by the same Congressional sources permeating HEW’s entire administrative process relative to PSRO designation for Texas.”103 Applying D.C. Federation’s principle that “agency action is invalid if based, even in part, on pressures emanating from Congressional sources,”104 the court concluded that “the fact that an agency decision is a ‘little pregnant’ with pressures emanating from Congressional sources is enough to require invalidation of the agency action. Especially should this be the law where, as here, the invasive Congressional source has financial leverage on the involved agency.”105 The fact that the agency action involved in Mathews was in the nature of a rulemaking would not appear to be an inapt or inconsistent application of D.C. Federation. When Judge Bazelon noted there that the courts would give absolute deference to legislative actions, it is clear from the context that he was referring to such action by a legislative body, there the D.C. Council, a political body directly accountable to its constituency in the electoral process. Where similar legislative action (informal rulemaking) is taken by an administrative agency, the courts accord great but not absolute deference to that process since it is not directly accountable to the electorate. A finding of taint in an informal rulemaking is therefore not foreclosed by the D.C. Federation rationale. Thus the court in Mathews held that the normal presumption in favor of the agency’s decision was overcome by the evidence of the pervasive and invasive nature of the congressional intrusions. However, while the ruling is not inconsistent with D.C. Federation, the holdings in U.S. ex rel Parco v. Morris, and Sierra Club v. Costle, to be discussed next, appear to reflect more accurately the nature and extent of the currently prevailing judicial deference to congressional attempts to influence policymaking in the rulemaking process. 101 408 F. Supp. 303 (W.D. Tex 1976). Id. at 312-13. 103 Id. at 310. 104 Id. at 306. 105 Id. at 313. 102 Congressional Research Service 23 Congressional Intervention in the Administrative Process 2. United States ex rel Parco v. Morris United States ex rel Parco v. Morris106 involved a challenge by deportable aliens to the rescission by the Immigration and Naturalization Service of a longstanding operating instruction which would have allowed them to extend the date of their voluntary departure. Plaintiff’s contended, inter alia, that the change in policy was precipitated by the direct pressure applied by Representative Peter Rodino who was then chairman of the subcommittee responsible for the oversight of the administration of the immigration laws. It was conceded that Representative Rodino’s request was the direct impetus for the change in policy. The court rejected the contention based on its reading of the D.C. Federation. That holding, it said, was based upon a “public and enforceable threat” by a congressman to withhold public funds for a particular purpose unless an agency official acceded to the congressman’s wishes, and evidence that the official’s decision was based in part on that pressure.107 The court went on to note the importance of the nature of the proceeding in analysis of such cases. However, Judge Bazelon’s analysis of this principle distinguishes sharply between agency action which is “judicial” or “quasi-judicial” and agency action which is “legislative.” The former concept related to agency adjudication of a particular, individual case, or when it renders a decision on the record compiled in formal hearings; in such instance the consideration of extraneous pressuring influences undermines the fairness of the hearing accorded the adverse parties. Id. at 1246; accord, Pillsbury Co. v. FTC, 354 F. 2d 952, 964 (5th Cir. 1966); Texas Medical Assoc v. Mathews, 408 F. Supp. 303 (W.D. Tex. 1976); Koniag, Inc. v. Kleppe, 405 F. Supp. 1360, 1371-73 (D.D.C. 1975) (Gesell, J.). On the other hand, when the agency action is purely “legislative,” as in the informal rulemaking involved here, the decision “cannot be invalidated merely because the ... action was motivated by impermissible considerations” any more than can that of a legislature. D.C. Federation, supra, 459 F. 2d at 1247; cf. Fletcher v. Peck, 10 U.S. (6 Cranch) 87, 129-313, 3 L.Ed. 162 (1810).108 The court concluded that since plaintiffs did not claim that Representative Rodino had interfered with the “quasi-judicial decision to deny them extended voluntary departure,”109 but rather were attacking the motivation of the official in changing the agency’s policy, a “purely’ legislative action,110 they had to meet a more stringent standard of proof. The court ruled they had failed to do so.111 3. Sierra Club v. Costle The seminal case in this line is Sierra Club v. Costle,112 in which the appeals court found no taint of the rulemaking proceeding there for failure to docket post-comment period meetings with the Senate majority leader. The court concluded that it would not set aside a rulemaking simply on the grounds that political pressure had been exerted in the process. It ruled that there has to be a 106 426 F. Supp. 976 (E.D. Pa 1977). Id. at 982. 108 Id. 109 Id. 110 Id. 107 111 Id. The court ultimately declared the rescission invalid for failure to comply with the APA’s rulemaking and publication requirements, 5 U.S.C. 552 (a)(1), 553 (2000). 112 657 F.2d 298 (D.C. Cir. 1981). Congressional Research Service 24 Congressional Intervention in the Administrative Process showing that “the content of the pressure on this [decisionmaker] is designed to force him to decide upon factors not made relevant by Congress in the applicable statute” and also that the determination made “must be affected by those extraneous considerations.”113 More particularly, it was alleged that an “ex parte blitz” conducted after the comment period for an informal rulemaking had caused the Environmental Protection Agency (EPA) to back away from its support of a more stringent emission standard and was therefore unlawful and prejudicial.114 Postcomment period communications included a number of oral conversations and briefings between agency officials and private parties and other government officials, including the majority leader of the United States Senate and the President of the United States. The appeals court initially noted that the statute in question there did not require the docketing of all post-comment period conversations and meetings and refused to apply a blanket rule requiring such docketing. To the contrary, where the nature of the rulemaking is general policymaking, the court expressed the view that “the concept of ex parte contacts is of more questionable utility.” Indeed, the court deemed informal contacts vital to the effectiveness and legitimacy of our governmental processes. Under our system of government, the very legitimacy of general policymaking performed by unelected administrators depends in no small part upon the openness, accessibility, and amenability of these officials to the needs and ideas of the public from whom their ultimate authority derives and upon whom their commands must fall. As judges we are insulated from these pressures because of the nature of the judicial process in which we participate; but we must refrain from the easy temptation to look askance at all face-toface lobbying efforts, regardless of the forum in which they occur, merely because we see them as inappropriate in the judicial context. Furthermore, the importance to effective regulation of continuing contact with a regulated industry, other affected groups, and the agency to win needed support for its program, reduce future enforcement requirements by helping those regulated to anticipate and shape their plans for the future, and spur the provision of information which the agency needs.115 However, the court inferred from the statutory scheme that oral comments “of central relevance to the rulemaking” should be placed in the record. Although the court conceded that this allows the agency to decide in its own discretion which comments are relevant, the court did not find this to be a persuasive enough consideration to require a more stringent rule. EDF is understandably wary of a rule which permits the agency to decide for itself when oral communications are of such central relevance that a docket entry for them is required. Yet the statute itself vests EPA with discretion to decide whether “documents” are of central relevance and therefore must be placed in the docket; surely EPA can be given no less discretion in docketing oral communications concerning which the statute has no explicit requirements whatsoever. Furthermore, this court has already recognized that the relative significance of various communications to the outcome of the rule is a factor in determining whether their disclosure is required. A judicially imposed blanket requirement that all postcomment period oral communications be docketed would, on the other hand, contravene our limited powers of review, would stifle desirable experimentation in the area by Congress and the agencies, and is unnecessary for achieving the goal of an established, procedure-defined 113 657 F.2d at 409. Id. at 386. 115 Id. at 400-01 (footnotes omitted). 114 Congressional Research Service 25 Congressional Intervention in the Administrative Process docket, viz., to enable reviewing courts to fully evaluate the stated justification given by the agency for its final rule.116 The appeals court concluded that none of the non-docketed post-comment meetings, including those with the Senate majority leader and the President, required docketing. It underlined its view that informal rulemaking involving general policymaking is akin to the legislative process and therefore the courts should be wary of attempting to probe too deeply. It stated that before an administrative rulemaking could be overturned simply on the grounds of political pressure, it had to be shown that “the content of the pressure on the [decisionmaker] is designed to force him to decide upon factors not made relevant by Congress in the applicable statute” and also that the determination made “must be affected by those extraneous considerations.”117 Although the meetings were called at the behest of the majority leader “in order to express ‘strongly’ his views”118 on the subject of the rulemaking, it found that the agency made no commitments to him nor was there evidence that he used “extraneous” pressures to further his position. The court characterized the Senator’s efforts, since they were exerted in a rulemaking proceeding, as within the accepted boundaries of the political process. ... Americans rightly expect their elected representatives to voice their grievances and preferences concerning the administration of our laws. We believe it entirely proper for Congressional representatives vigorously to represent the interests of their constituents before administrative agencies engaged in informal, general policy rulemaking, so long as individual Congressmen do not frustrate the intent of Congress as a whole as expressed in statute, nor undermine applicable rules of procedure. Where Congressmen keep their comments focused on the substance of the proposed rule—and we have no substantial evidence to cause us to believe Senator Byrd did not do so here—administrative agencies are expected to balance Congressional pressure with the pressures emanating from all other sources. To hold otherwise would deprive the agencies of legitimate sources of information and call into question the validity of nearly every controversial rulemaking.119 Similarly, with regard to a meeting involving the President, the court held that as long as there is factual support in the record for the agency’s outcome, it does not matter that “but for” the Presidential input it would have gone the other way. Of course, it is always possible that undisclosed Presidential prodding may direct an outcome that is factually based on the record, but different from the outcome that would have obtained in the absence of Presidential involvement. In such a case, it would be true that the political process did affect the outcome in a way the courts could not police. But we do not believe that Congress intended that the courts convert informal rulemaking into a rarified technocratic process, unaffected by political considerations or the presence of Presidential power.120 116 Id. at 402-04 (footnotes omitted). Id. at 409. 118 Id. at 409. 119 Id. at 409-10 (footnote omitted). 120 Id. 117 Congressional Research Service 26 Congressional Intervention in the Administrative Process F. Influence That Could Abuse the Agency Investigatory Process 1. SEC v. Wheeling-Pittsburgh Steel Corp. On rare occasions the claim is made that an agency investigation has been instigated by congressional pressure or influence and the claim is made by the subject of such investigation that it is tainted by the political intervention. On even rarer occasions agencies have sought to fend off congressional oversight of closed or ongoing investigations because of concern that present and future open cases could be compromised by turning over requested internal deliberative documents. Agencies argue that such disclosures, even from closed investigations, might be utilized by attorneys representing potential targets of investigations, or defendants in civil and criminal actions, as evidence that the investigations or prosecutions are politically motivated and not driven by legitimate investigatory concerns and are thereby tainted. This notion is said to be supported by the appellate court ruling in SEC v. Wheeling-Pittsburgh Steel Corp.121 It is argued that Wheeling-Pittsburgh precludes any agency contact with Members of Congress which would give the appearance that an agency is acting at the behest of a Member or committee and that its proper course is to avoid any appearance that its enforcement efforts are being pursued at Congress’ bidding. The claim, however, does not appear to be an accurate portrayal of either the Wheeling-Pittsburgh ruling or the case law that preceded or followed it. The Wheeling-Pittsburgh court made it clear that a court will deem a request for the enforcement of an administrative subpoena an abuse of the judicial process only if it was in fact shown that the subpoena was issued because of congressional influence, the agency knew its process was being abused, that it knowingly did nothing to prevent the abuse, and that it vigorously pursued the frivolous charges. Under the standard articulated by the appeals court the motivation of the Members of Congress is irrelevant; the focus is on the actual impact of the congressional intercession on the motivation of the agency itself. Simply the appearance of impropriety is not enough to taint the proceeding. SEC v. Wheeling-Pittsburgh Steel Corp. involved the initiation of an informal investigation of Wheeling-Pittsburgh Steel Corporation after the receipt by the Securities and Exchange Commission of a letter from a United States Senator suggesting that Wheeling had violated Section 10(b) of the Securities Exchange Act of 1934, and rule 10b-5a promulgated thereunder. During the period of the initial informal investigation, there was considerable contact between the SEC staff attorney conducting the investigation and the Senator’s office and with competitors of Wheeling who were in alleged complicity with the Senator. The Senator was also actively pursuing the passage of legislation that would prevent Wheeling from obtaining Federal loan guarantees if it was under investigation by a Federal agency. Thereafter, the SEC ordered a formal investigation of the matter. Pursuant to the formal investigation order, the SEC issued a subpoena duces tecum to Wheeling and its chief executive officer. He refused to answer certain questions and the agency sought enforcement. Wheeling defended on the grounds, inter alia, that the subpoena was issued in bad faith and for the purpose of harassment; and that the investigation constituted an abuse of the SEC’s investigatory power by competitors of Wheeling who were opposed to the grant of certain Federal loan guarantees to Wheeling. The district court refused to enforce the subpoena. Although it specifically rejected the claim of bad faith on the part of the agency, it concluded that, “under the totality of circumstances,” 121 482 F. Supp 555 (W.D. Pa. 1979), vacated and remanded, 648 F.2d 118 (3d Cir. 1981)(en banc)(WheelingPittsburgh). Congressional Research Service 27 Congressional Intervention in the Administrative Process enforcement would be an abuse of the court’s process.122 The court reached this conclusion because it believed that the SEC had allowed biased third parties to improperly influence the investigation process, although it conceded that the agency did not adopt the biased motives of the third parties.123 A panel of the Third Circuit reversed, concluding that a court could not refuse to enforce administrative subpoenas issued in good faith pursuit of a statutorily authorized purpose. The court concluded that bias of third parties was irrelevant where the agency had proceeded in good faith and that to invalidate agency action on the basis of an abuse of process theory independent of the bad faith defense was improper. The case was reargued before the Third Circuit en banc, which by a 6-4 vote remanded the case to the district court in light of its ruling that even in the absence of bad faith on the part of an agency, it would not enforce an administrative subpoena if it was issued because of congressional influence and it was shown that the agency knew its process was being abused, that it knowingly did nothing to prevent the abuse, and that it vigorously pursued the frivolous charges.124 We do not doubt the usefulness to administrative agencies of information gained from third parties. Nor do we doubt that frequently the motivations of informants are less than altruistic. See United States v. Cortese, 614 F.2d 914 (3d Cir. 1980). But we cannot simply avert our eyes from the realities of the political world: members of Congress are requested to, and do in fact, intrude, in varying degrees, in administrative proceedings. One commentator has said recently of the Internal Revenue Service: [A]though the IRS ultimately must be accountable to Congress, whose members are in turn accountable to the people, the IRS also has a constitutional duty to execute the tax law faithfully by determining and administering it properly. The IRS must give congressional comments only as much deference as they deserve on the merits, for the agency has no duty to placate particular congressmen or committees. Given the fine line between lawmaking and law enforcement, it is always difficult to say when one shades into the other, but clearly there is an inevitable tension between congressional oversight powers and the executive exercise of delegated powers to interpret, articulate, and execute the tax laws. Parnell, Congressional Interference in Agency Enforcement: The IRS Experience, 89 Yale L.J. 1360, 1368 (1980) (footnotes omitted). The duty of the SEC, therefore is not to ignore information given to it by congressmen, but to “give congressional comments only as much deference as they deserve on the merits.” Id. An administrative agency that undertakes an extensive investigation at the insistence of a powerful United States Senator “with no reasonable expectation” of proving a violation and then seeks federal court enforcement of its subpoena could be found to be using the judiciary for illicit purposes. We need not lend the process of the federal courts to aid such behavior.125 The appeals court made it clear that the bad faith defense need not be the sole basis for denial of enforcement, and that agency acquiescence in an abuse of its own process may lead to a finding of abuse of the court’s process. The court distinguished between the two, noting that “bad faith 122 482 F.Supp. 555, 567 (W.D. Pa. 1979). 482 F.Supp. at 565-66. 124 648 F.2d at 125. 125 Id. at 126 (footnotes omitted). 123 Congressional Research Service 28 Congressional Intervention in the Administrative Process connotes a conscious decision by an agency to pursue a groundless allegation,” while “an agency may be found to be abusing the court’s process if it vigorously pursued a charge because of the influence of a powerful third party without consciously and objectively evaluating the charge.”126 The court also emphasized the point that it was improper for the district court to have taken into account the motivation of third parties in determining either bad faith or abuse of process. “This court has previously made clear that the proper focus in a challenge to an administrative subpoena is motivation of the agency itself, not that of third parties,” citing United States v. Cortese, 614 F.2d 914, 921 (3d Cir. 1980).127 The requirement of a finding of “institutional” bad faith rather than that of an individual agent, or the refusal to allow attributing the motives of third parties to an agency, is well established. 128 The court concluded: At bottom, this case raises the question whether, based on objective factors, the SEC’s decision to investigate reflected its independent determination, or whether that decision was the product of external influences. The reality of prosecutorial experience, that most investigations originate on the basis of tips, suggestions, or importunings of third parties, including commercial competitors, need hardly be noted. That the SEC commenced these proceedings as a result of the importunings of Senator Weicker or CF&I, even with malice on their part, is not a sufficient basis to deny enforcement of the subpoenas. See Cortese, 614 F.2d at 921. But beginning an informal investigation by collecting facts at the request of a third party, even one harboring ulterior motives is much different from entering an order directing a private formal investigation pursuant to 17 C.F.R. § 202.5 (1980), without an objective determination by the Commission and only because of political pressure. The respondents are not free from an informal investigation instigated by anyone, in or out of government. But they are entitled to a decision by the SEC itself, free from third-party political pressure, that a “likelihood” of a violation exists and that a private investigation should be ordered. See 17 C.F.R. § 205.2(a). The SEC order must be supported by an independent agency determination, not one dictated or pressured by external forces. If an allegation of improper influence and abdication of the agency’s objective responsibilities is made, and supported by sufficient evidence to make it facially credible, respondents are entitled to examine the circumstances surrounding the SEC’s private investigation order. The court should be guided by twin beacons: the court’s process is focus of the judicial inquiry and the respondent may challenge the summons on any appropriate ground.129 In sum, then, it would appear that the Third Circuit, while accepting the possibility of finding that political pressure can taint an investigative proceeding under a variety of theories, has imposed on a litigant the burden of establishing the factual predicate to support such a determination which may prove quite formidable. It certainly appears no less an obstacle than the showing of actual effect required in other non-adjudicatory situations.130 126 648 F.2d at 125 n. 9. 648 F.2d at 127. 128 United States v. LaSalle National Bank, 437 U.S. 298, 316 (1978); United States v. Target Advertising, Inc., 257 F.3d 348, 355 (4th Cir. 2001); Pickel v. United State, 746 F.2d 176, 184 (3d Cir. 1984); EEOC v. Michael Construction Co., 706 F.2d 244, 251 n. 7 (8th Cir. 1983); NLRB v. Interstate Dress Carriers, Inc., 610 F.2d 99, 112 (3d Cir. 1979). 129 648 F.2d at 130. 127 130 See e.g., American Public Gas Association v. FPC, 567 F.2d 1016, 1070, (D.C. Cir. 1977), cert. denied 435 U.S. 907 (1978) (ratemaking); State of California v. FERC, 966 F.2d 1541 (9th Cir. 1992) (lengthy series of correspondence between FERC and Chairman of Energy and Commerce Committee which resulted in agency (1) reopening a factfinding proceeding and (2) reversing a longstanding interpretation of its authority, held not undue congressional (continued...) Congressional Research Service 29 Congressional Intervention in the Administrative Process On the other hand, Wheeling-Pittsburgh represents something of a liberalization in an area where court review of agency requests for enforcement of administrative subpoenas has traditionally been severely circumscribed and narrow.131 Indeed, the development has been severely criticized, 132 and some courts appear to have rejected Wheeling-Pittsburgh and are adhering to the traditional standard of high deference to agency subpoena issuance decisions.133 In fact, it may be that the somewhat more expansive review of such situations afforded by Wheeling-Pittsburgh may be limited to cases arising in the Third Circuit.134 In any event, we are aware of no court that has utilized the Wheeling-Pittsburgh standard to refuse to enforce an administrative subpoena because of alleged undue congressional influence. Indeed, the Wheeling-Pittsburgh court itself did not find that the SEC had been guilty of an abuse judicial process; it remanded the case to the district court to make findings consonant with its opinion. 2. United States v. Armada Petroleum Corp. Several courts have subsequently applied the Wheeling-Pittsburgh rationale in cases involving the issuance of subpoenas by the Department of Energy to resellers of petroleum products who had refused to voluntarily supply documents in the course of a valid agency audit. In each case the defendant company claimed, inter alia, that the Chairman of the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee had exerted improper influence on the agency official making the decision to issue the subpoena. In each instance the courts rejected the claims.135 In United States v. Armada Petroleum Corp., for example, the court acknowledged Wheeling-Pittsburgh’s holding that an agency may not order an investigation “because of political pressure to do so,” but found that where, as in the case before it, “the Congressional involvement is directed not at the agency’s decision on the merits but at accelerating the disposition and enforcement of the pertinent regulations, it has been held that such legislative conduct does not affect the fairness of the agency’s proceedings and does not warrant setting aside its order.”136 (...continued) influence because the agency made its decisions based upon “its own independent and detailed analysis of the issue[s].”). 131 See e.g., United States v. LaSalle National Bank, 437 U.S. 298, 316-17 (1978); United States v. Morton Salt Co., 338 U.S. 632, 652 (1950); City of Chicago v. United States, 396 U.S. 162, 165 (1969) (agency decisions to conduct investigations are “committed entirely to agency discretion); Union Mechling Corp. v. United States, 566 F.2d 722, 724-25 (D.C. Cir. 1977), Dresser Industries Inc. v. United States, 596 F.2d 1231 1235 n. 1(5th Cir. 1979), cert. denied, 444 U.S. 1044 (1980). 132 See Comment, SEC v. Wheeling-Pittsburgh Steel Corp.: Bad Faith and Abuse-Of-Process Defense to Administrative Subpoenas, 82 Colum.L.Rev. 811 (1982). 133 See e.g., United States v. Aero Mayflower Transit Co., 831 F.2d 1142, 1146-47 (D.C. Cir. 1987) (a court only has discretion to conduct an evidentiary hearing in a subpoena enforcement case in the unlikely situation where the party opposing the subpoena has presented affidavit evidence that the agency “is acting without authority or where its purpose in harassment of citizens.”); United States v. Teeven, 745 F.Supp. 220, 224-227 (D. Del. 1990) (discussing Aero and concluding that Wheeling-Pittsburgh is still controlling in Third Circuit). 134 See, United States v. Westinghouse Electric Corp., 788 F.2d 164, 166-67 (3d Cir. 1986)(citing Wheeling-Pittsburgh approvingly); EEOC v. University of Pennsylvania, 850 F.2d 969, 980 (3d Cir. 1988) (expressly recognized continued vitality of Wheeling-Pittsburgh on abuse of process issue), aff’d 493 U.S. 182 (1990). 135 United States v. FRB Petroleum, Inc., 703 F.2d 528, 532 (Em. Appeals 1983); United States v. Phoenix Petroleum,571 F. Supp. 16 20 (S.D. Tex 1982); U [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3ARL32113. Public record. Not legal advice.