Batterton v. Marshall
| Decision Date | 28 August 1980 |
| Docket Number | No. 78-1414,78-1414 |
| Parties | Richard A. BATTERTON, Secretary of Employment & Social Services of the State of Maryland, Appellant, v. F. Ray MARSHALL, Secretary of Labor, et al. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
John K. Anderson, Asst. Atty. Gen., Baltimore, Md., member of the bar of the Supreme Court of Maryland pro hac vice by special leave of Court with whom Joel J. Rabin, Asst. Atty. Gen., Baltimore, Md., was on brief, for appellant.
Alice L. Mattice, Atty., Dept. of Justice, Washington, D. C., with whom Barbara Allen Babcock, Asst. Atty. Gen., Earl J. Silbert, U. S. Atty., and Leonard Schaitman, Atty., Dept. of Justice, Washington, D. C., were on brief, for appellees. Mark N. Mutterperl, Atty., Dept. of Justice, Washington, D. C., also entered an appearance for appellees.
Joel J. Rabin, Baltimore, Md., was on the brief for Amicus Curiae, Mayor and City Council of Baltimore, Maryland, supporting appellant's positions.
Before BAZELON, Senior Circuit Judge, ROBINSON, Circuit Judge, and VAN DUSEN *, U.S. Circuit Judge for the Third Circuit.
Opinion for the Court filed by Senior Circuit Judge BAZELON.
This case poses the difficult but familiar problem of whether a particular agency action requires notice by publication and opportunity for comment by interested parties. The State of Maryland (Maryland) 1 alleges that the Department of Labor (DOL) violated procedural requirements in changing its methods for determining unemployment rates while implementing the Comprehensive Employment and Training Act (CETA). 2 CETA, as enacted and as amended, created training and job programs with fund disbursements pegged to unemployment levels determined by DOL's Bureau of Labor Statistics (BLS). We reverse the district court's grant of summary judgment for appellee DOL.
Appellant Maryland administers the training and job programs funded by CETA and collects its state unemployment statistics for DOL. The amicus, representing the CETA monies are distributed by the federal government to state and local sponsors of manpower training and services, public employment, and emergency job programs. The emergency job program established by Title VI of CETA disburses funds geographically by a formula in relation to the number of unemployed persons in particular locales. 4 "Unemployed persons" as defined by CETA are to be identified by "criteria used by the Bureau of Labor Statistics of the Department of Labor." 5
city of Baltimore, Maryland, is part of a combination of local government units established to administer CETA programs. 3 Appellees, officials of DOL, are responsible for administering CETA programs and for supervising the collection and computation of unemployment statistics used in allocating CETA monies
Prior to the enactment of CETA in 1973, DOL generated unemployment statistics by applying a method that had evolved over time since the New Deal. Known as the "Handbook" method, 6 this approach draws on data collected by the nationwide network of state employment security agencies created under the Wagner-Peyser Act of 1933, 29 U.S.C. §§ 49 et seq. (1976). These state agencies maintain unemployment insurance data from which DOL developed In 1974, Congress added Title VI to CETA which created a nationwide emergency jobs program as a direct response to the nation's "deteriorating economic condition." 10 As these Title VI disbursements were being computed in 1975, DOL, again without formal notice, notified the regional office supervising Maryland that another new procedure in the unemployment statistics methodology would apply to Maryland. 11 Called the "Balance of State" procedure, it adjusts the Handbook Method estimate where its addition to the state's CPS data fails to match a total benchmark figure for the state, set solely by national CPS data. 12 DOL then applied the Balance of State procedure to adjust the unemployment statistics submitted by Maryland and the Fiscal 1976 CETA allotments based on the statistics. 13
unemployment estimates. 7 DOL adopted a new methodology for collecting and computing unemployment statistics. 8 This method, devised by the DOL Bureau of Labor Statistics (BLS) relies on the state unemployment insurance data, collected under the Handbook Method, only where data from a preferred, second source are not available. This second source is the Current Population Survey (CPS) which is based on a monthly Census Bureau survey of a sample of households, drawn according to social science techniques. As survey data, however, CPS is not reliable for small numbers. So for areas with small populations, DOL continues to rely upon state unemployment insurance data, using the Handbook Method. To develop a composite figure for each state, DOL then combines the two sources of data, developed through the two different methods. This new method was never formally announced or published; DOL simply sent descriptive memoranda announcing the change to regional commissions and state unemployment security agencies. 9
Maryland then filed this suit for declaratory and injunctive relief. For the purposes of this litigation, Maryland estimated that application of the "Balance of State" procedure significantly reduced its share of Title VI CETA monies. 14 Maryland alleged (1) violations of publication requirements set by CETA and by the Freedom of Information Act (FOIA); 15 (2) violations of the Administrative Procedure Act's (APA) notice and comment requirements for rulemaking; 16 and (3) that the new method for computing unemployment statistics is arbitrary and capricious.
On summary judgment motions, the district court ruled that no procedural defect occurred in DOL's adoption of the new method, including the Balance of State procedure because (1) Congress did not explicitly require notice and comment opportunities or publication of unemployment statistics methodology; (2) such procedural requirements could interrupt the necessary gathering of statistics; (3) DOL's practice of gathering unemployment statistics occurred long before CETA, and the mere creation of CETA does not change the procedures for adopting methods of gathering unemployment statistics; and (4) adoption of the new method does not constitute a rule for the purposes of APA procedural requirements. 17 The district court also held that there was a rational basis for the new method, and accordingly ordered summary judgment for the Department of Labor.
To the extent that Maryland challenges DOL's allocation of funds for fiscal year 1976, this appeal appears to be moot; not only were the monies allocated and spent long ago, but Maryland also received extra funds, pursuant to DOL's discretionary authority, that amounted to more than the reduction Maryland estimated from application of the new methodology. 18 Nonetheless, Maryland also sought injunctive relief requiring advance notice and publication of any future modifications of the statistical methodology. 19 Moreover, changes by DOL in its methodology for determining unemployment figures used in CETA disbursements are "capable of repetition, yet evading review." 20 Therefore, we proceed with our review.
Appellant argues that DOL's methodology for developing unemployment statistics constitutes a "rule," requiring notice and comment. 21 We note that so holding can also affect the weight the agency action must be given in future agency practice and Our task is particularly difficult because, ordinarily, a methodology related to disbursement of government benefits would fall outside the APA. Section 553 explicitly exempts from all procedural requirements "a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts." 5 U.S.C. § 553(a)(2) (1976). Here, however, DOL has expressly waived this exemption by its own regulation which provides:
upon judicial review. 22 Our task is therefore a familiar one that of characterizing the product of agency action to determine its legal status and effect
It is the policy of the Secretary of Labor that in applying the rule making provisions of the APA the exemption therein for rules relating to public property, loans, grants, benefits or contracts shall not be relied upon as a reason for not complying with the notice and public participation requirements thereof. 23
As a result, the APA's examples, and judicial precedents interpreting them, do not speak directly to the case at hand. Our decision therefore must be based on the purposes and language of the APA, and on analysis of each of the relevant exemptions. Finally, we consider residual arguments proffered by the parties.
The Administrative Procedure Act (APA), 5 U.S.C. §§ 551 et seq., broadly defines an agency rule to include nearly every statement an agency may make:
(4) "rule" means 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 (.)
5 U.S.C. § 551(4) (1976). The breadth of this definition cannot be gainsaid. The APA further defines "rule making" to mean "agency process for formulating, amending, or repealing a rule," 5 U.S.C. § 551(5) (1976), and prescribes procedural requirements for these processes. Rulemaking must be accompanied by (1) advance publication in the Federal Register of the proposed rule or its...
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