Consumers Union of US, Inc. v. Cost of Living Council

• Decision Date: 13 May 1974
• Docket Number: No. DC-17.,DC-17.
• Citation: 491 F.2d 1396
• Parties: CONSUMERS UNION OF UNITED STATES, INC., et al., Plaintiffs-Appellants, v. COST OF LIVING COUNCIL et al., Defendants-Appellees, The Business Roundtable, Defendant-Intervenor.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

491 F.2d 1396 (1974)

CONSUMERS UNION OF UNITED STATES, INC., et al., Plaintiffs-Appellants, v. COST OF LIVING COUNCIL et al., Defendants-Appellees The Business Roundtable, Defendant-Intervenor.

No. DC-17.

Temporary Emergency Court of Appeals.

January 11, 1974.

Rehearing Denied February 4, 1974.

Certiorari Denied May 13, 1974.

COPYRIGHT MATERIAL OMITTED

Alan M. Silbergeld, Consumers Union, Washington, D. C. (Peter H. Schuck, Consumers Union, Washington, D. C., and of counsel, Lobel, Novins & Lamont, Washington, D. C., with him on the brief), for appellants.

James Elkins, Atty., U. S. Dept. of Justice, Washington, D. C. (Irving Jaffe, Acting Asst. Atty. Gen., William E. Nelson and William White, Attys., U. S. Dept. of Justice, with him on the brief), for the Government-appellees.

John G. DeGooyer, Hamel, Park, Mc-Cabe & Saunders, Washington, D. C., for intervenor.

Before TAMM, Chief Judge, and HASTIE and ESTES, Judges.

Certiorari Denied May 13, 1974. See 94 S.Ct. 2387.

ESTES, Judge.

This is an appeal under Section 211 of the Economic Stabilization Act of 1970, as amended (the Act), by plaintiffs, Consumers Union of United States, Inc., William D. Hathaway, and Peter J. Petkas, from orders of the United States District Court for the District of Columbia denying plaintiffs' motion for summary judgment and granting the motions for summary judgment made by the defendants, the Cost of Living Council (CLC), Dr. John T. Dunlop, its Executive Director, and William N. Walker, its Acting Deputy Director, and by defendant-intervenor, The Business Roundtable.

On July 17, 1973 plaintiffs filed their complaint in the district court seeking a declaratory judgment that certain of the CLC's public disclosure regulations, 6 C. F.R. §§ 102.50 et seq., were illegal, and seeking an injunction rescinding those regulations and requiring the issuance of new regulations which comply with Section 205 of the Act. On August 22, 1973 plaintiffs filed an amended complaint to reflect the fact that Phase IV regulations had replaced the Phase III regulations challenged by the original complaint. On October 15, 1973 the motion of The Business Roundtable to intervene as a defendant was granted with defendants' approval but over plaintiffs' objection. The district court granted the defendants' and the defendant-intervenor's motions for summary judgment on November 2, 1973. Plaintiffs filed their notice of appeal with this Court on November 6, 1973.

Three principal issues are involved in this appeal. One of these issues, which has not been raised by any of the parties or the court below, will be considered first.

EXHAUSTION OF ADMINISTRTIVE REMEDIES

Part 102 of the CLC's regulations is entitled "Public Access to Records." Plaintiffs are challenging the legality of those parts of Subpart F (6 C.F.R. §§ 102.51-102.56) of Part 102 which declare what information submitted to the CLC shall or shall not be subject to public disclosure. Subparts B and C provide an administrative procedure whereby requests for information may be filed with the CLC's Assistant Director for Public Affairs. Subpart E provides that adverse determinations made by the Assistant Director may be appealed within 30 days to the Director of the CLC.

In this case no information was requested of the CLC until August 17, 1973, one month after the original complaint had been filed in the district court. On that date the CLC Assistant Director received from Mark Silbergeld, an attorney for plaintiff Consumers Union, a letter request for certain information. The reply of the Assistant Director, received by the plaintiff on October 19, 1973, summarized the provisions of Subpart F and pursuant thereto refused to make available most of the information sought. On November 6, 1973, the same day that a notice of appeal was filed with this Court from the November 2, 1973 district court orders, Consumers Union wrote to the CLC Director, Dr. John T. Dunlop, to appeal from the October 19, 1973 determination by the Assistant Director. The record does not reflect that Dr. Dunlop has made a determination of the administrative appeal.

This Court follows the wellknown rule requiring exhaustion of administrative remedies. City of New York v. New York Telephone Co., 468 F.2d 1401 (T.E.C.A.1972).¹ Clearly, plaintiffs did not exhaust their administrative remedies before filing the action below. Strict application of the doctrine would require us to dismiss this case. In determining whether to apply the doctrine, it is appropriate to consider whether the policies that give rise to the doctrine would be furthered by its application to the circumstances of the case, and whether exceptions to the rule are present.

One reason often given for requiring exhaustion is that after a dispute has been determined by all available administrative procedures, the issues in dispute between the parties will be better framed and thus more susceptible of judicial determination. In the present dispute, however, there are no factual issues in dispute, and the question involved is a purely legal one as to whether the CLC's public disclosure regulations are in violation of Section 205 of the Act. That question was adequately framed by the pleadings and exhibits in the district court, which ruled for the defendants on their motions for summary judgment. Since there is no question as to the nature of the issues in dispute between the parties, this policy reason behind requiring exhaustion does not favor application of the doctrine to this case.

A second reason for the doctrine is that requiring exhaustion will insure that the agency is given an opportunity to apply its particular administrative expertise to the question being reviewed. This policy is usually applied to the determination of technical factual disputes or to the determination of disputes involving the agency's interpretation of its own regulations or orders. In both situations the reviewing court would be aided by having the informed opinion of the agency. In this case, however, there is neither a technical factual dispute nor a dispute involving the CLC's interpretation of its orders or regulations. Instead, as mentioned above, the dispute is a legal one only, and there is no question as to the interpretation of the CLC's regulations. Those regulations are clear ; the dispute is whether they are in excess of the authority given by Section 205 of the Act. We find that this policy reason for exhaustion would not be furthered by application of the doctrine to these circumstances.

A third reason for requiring exhaustion is that if, through the administrative review process, the agency is made aware of the faults of its policies, it may change them on its own volition, thus removing the need for judicial review or making moot a pending judicial proceeding. "In this respect we have noted in our cases to date a healthy trend towards amendment of regulations when error or oversight has been pointed out to the agency." City of New York v. New York Telephone Company, 468 F.2d 1401, 1403 (T.E.C.A.1972). Were it not for the fact that plaintiffs' views as to the illegality of these regulations have been repeatedly made known to the CLC since May 30, 1973, we might consider this an appropriate case for the application of this policy. On May 8, 1973 the CLC issued its proposed regulations for the implementation of Section 205, inviting interested persons to participate in the proposed rule making by submitting written data, views, or comments. On May 30, 1973 plaintiff Hathaway filed comments contending that the proposed regulations were illegal in violation of Section 205. On May 29, 1973 and June 4, 1973 plaintiff Petkas filed comments of the same import. On May 18, 1973 the CLC announced the scheduling of a hearing for June 6, 1973, for the purpose of hearing comments on the proposed regulations by interested parties. Plaintiffs Hathaway and Petkas attended the hearing and testified in opposition to the proposed regulations. On June 15, 1973 the CLC promulgated as final regulations the proposed regulations which had been the subject of the hearings and comments above. Under these circumstances it would not appear likely that the CLC would now decide to replace its regulations because of plaintiff Consumers Union's administrative appeal.

Thus we decide that under the exceptional circumstances of this case the doctrine of exhaustion of administrative remedies does not prevent our consideration of this appeal. We emphasize, however, that in the usual case arising under the Economic Stabilization Act, policies favoring exhaustion will no doubt apply, and plaintiffs should be extremely wary of commencing actions in court when an adequate administrative remedy lies open to them but has not been pursued.

WHICH FIRMS MUST DISCLOSE?

Under Phase III of the Economic Stabilization Program, quarterly reports to the CLC were required of all firms with annual sales or revenues of $250 million or more. 6 C.F.R. § 130.-21(b). Public disclosure was required of all such firms. (6 C.F.R. § 102.50). Under Phase IV regulations, the number of firms required to report has been extended to include all firms with annual sales or revenues of $50 million or more (6 C.F.R. § 150.161), but the regulations retain the Phase III requirement that public disclosure applies only to those firms with annual sales or revenues of $250 million or more. (6 C.F.R. § 102.-51). Plaintiffs contend that this Phase IV requirement is in violation of Section 205(b) (1), which provides in relevant part that "Any business enterprise subject to the reporting requirements under section 130.21(b) of the regulations of the Cost of Living Council in effect on January 11, 1973, shall make public any report. . . ."

The public disclosure section in question, Section 205 of the Act, was added to the statute during Phase III as a part of the Economic Stabilization Act Amendments of 1973, P.L. 93-28, April 30,...