Polyweave Corp. Packaging v. Buttigieg
| Decision Date | 20 October 2022 |
| Docket Number | 21-5929 |
| Citation | 51 F.4th 675 |
| Court | U.S. Court of Appeals — Sixth Circuit |
| Parties | Polyweave corporation, Packaging, Inc., a Delaware Plaintiff-Appellant, v. Peter Paul Montgomery Buttigieg, Secretary, United States Department of Transportation, in his official capacity, Defendant-Appellee. |
Argued: May 5, 2022
Appeal from the United States District Court for the Western District of Kentucky at Owensboro. No. 4:21-cv-00054-Joseph H. McKinley, Jr., District Judge.
ARGUED:
Sheng Li, NEW CIVIL LIBERTIES ALLIANCE, Washington, D.C., for Appellant.
Edward Himmelfarb, UNITED STATES DEPARTMENT OF JUSTICE, Washington D.C., for Appellee.
ON BRIEF:
Sheng Li, NEW CIVIL LIBERTIES ALLIANCE, Washington, D.C Christopher Wiest, CHRIS WIEST, ATTORNEY AT LAW, PLLC Crestview Hills, Kentucky, for Appellant.
Edward Himmelfarb, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.
Before: ROGERS, KETHLEDGE, and MURPHY, Circuit Judges.
When Congress places judicial review of certain types of agency action in the court of appeals rather than the district court, this jurisdictional allocation cannot be circumvented by suing in the district court to challenge agency procedures used (or omitted) in the proceedings leading to such actions, at least where court-of-appeals jurisdiction provides a fully effective forum to address such arguments. This venerable principle without more supports the district court's dismissal of plaintiff's claims in this case.
Plaintiff Polyweave Packaging, Inc. makes packaging for the safe transportation of hazardous materials. Following an investigation of Polyweave, the Pipeline and Hazardous Materials Safety Administration-an operating administration within the Department of Transportation-issued an order finding that Polyweave had violated federal regulations and assessed a civil penalty of $14,460. In addition to seeking judicial review of that civil-penalty order in the court of appeals, Polyweave brought this action in district court seeking injunctive and declaratory relief to prevent the Department of Transportation from rescinding a regulation known as Subpart D. Subpart D sets forth several requirements for enforcement actions taken by DOT operating administrations, such as the enforcement proceeding against Polyweave. Polyweave argues that the DOT improperly rescinded Subpart D and alleges that Polyweave has incurred procedural injury in the underlying enforcement proceeding as a result. The district court however lacked jurisdiction over Polyweave's claims because the court of appeals' exclusive jurisdiction over judicial review of the underlying agency order bars Polyweave from attempting to litigate the rescission of Subpart D in the district court.
As alleged in the complaint, the Pipeline and Hazardous Materials Safety Administration (PHMSA) began investigating Polyweave in March 2015 after one of the PHMSA's inspectors paid an unannounced visit to Polyweave's Madisonville, Kentucky facility. On December 30, 2016, PHMSA attorneys signed a Notice of Probable Violation, alleging that Polyweave had committed four violations of federal regulations prior to November 2015. Polyweave learned about that notice in February 2017, and Polyweave's president asked the PHMSA's Office of Chief Counsel to adjudicate the matter. The PHMSA's Chief Counsel issued an order on July 20, 2020, finding that Polyweave had committed the violations and assessing a fine of $14,460. Polyweave was served with this order on March 8, 2021,[1] and Polyweave timely filed an administrative appeal. After Polyweave filed the separate lawsuit in district court, the PHMSA issued a final order denying Polyweave's administrative appeal, and Polyweave timely filed an appeal of that order to the Sixth Circuit pursuant to 49 U.S.C. § 5127.
The crux of the separate litigation in the district court below involves a set of regulations known as Subpart D, which was originally promulgated by the Secretary of the Department of Transportation to establish certain requirements to be followed in enforcement proceedings. Subpart D was promulgated on December 27, 2019, following a memorandum by the DOT's general counsel, titled, "Procedural Requirements for DOT Enforcement Actions" and Executive Order 13982, titled, "Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication." Administrative Rulemaking, Guidance, and Enforcement Procedures, 84 Fed.Reg. 71714, 71715-16, 71718 (Dec. 27, 2019) (); see also R. 1-2 (General Counsel Memo); Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication, 84 Fed.Reg. 55239 (2019) (Executive Order 13982). The then-Secretary, Elaine Chao, promulgated Subpart D pursuant to her general rulemaking authority under 49 U.S.C. § 322(a). Administrative Rulemaking, Guidance, and Enforcement Procedures, 84 Fed.Reg. at 71718. The DOT did not engage in notice and comment rulemaking when adopting Subpart D because the final rule "merely incorporate[d] existing internal procedures applicable to the Department's administrative procedures into the Code of Federal Regulations." Id. at 71716.
Subpart D set out several requirements that "appl[ied] to all enforcement actions taken by each DOT operating administration (OA) and each component of the Office of the Secretary of Transportation (OST) with enforcement authority." 49 C.F.R. § 5.53 (2020); Administrative Rulemaking, Guidance, and Enforcement Procedures, 84 Fed.Reg. at 71729. Polyweave acknowledges that some of these requirements are "procedural rules of agency organization, procedure, or practice." Polyweave also contends that some of the requirements in Subpart D are "substantive rules affecting Polyweave's due-process rights and protections." These requirements include: 49 C.F.R. §§ 5.59 (Enforcement policy generally), 5.61 (Investigative functions), 5.65 (Proper exercise of prosecutorial and enforcement discretion), 5.67 (Duty to review for legal sufficiency), 5.69 (Fair notice), 5.83 (Duty to disclose exculpatory evidence), 5.97 (Basis for civil penalties and disclosures thereof). See 84 Fed.Reg. at 71729-71732. For example, Subpart D requires DOT operating administrations-such as the PHMSA-to follow the principle articulated in Brady v. Maryland, 373 U.S. 83 (1963), and disclose any exculpatory evidence in the agency's possession to the subject of the enforcement action. 49 C.F.R. § 5.83 (2020); see Administrative Rulemaking, Guidance, and Enforcement Procedures, § 5.83, 84 Fed.Reg. at 71731.
On April 2, 2021, following the change of presidential administrations, the current Secretary, Pete Buttigieg, rescinded Subpart D.[2] See 86 Fed.Reg. 17292, 17294 (2021). The Secretary did not engage in notice and comment as part of the decision to rescind Subpart D because, he said, the rescission "revises only internal processes applicable to the Department's administrative procedures," and the rule is therefore "a rule of agency procedure for which notice and comment are not required." 86 Fed.Reg. at 17293; see 5 U.S.C. § 553(b)(A).
While Polyweave's administrative appeal of the civil-penalty order was pending, Polyweave brought this action in district court seeking injunctive and declaratory relief to prevent the Secretary from rescinding Subpart D. Polyweave explains in its appellate briefing that it filed suit "to restore Polyweave's due-process rights in its ongoing administrative appeal." In its complaint, Polyweave contended that, if the Secretary had not improperly rescinded the requirements outlined in Subpart D, the PHMSA would not have been able to assess the civil penalty against Polyweave in the underlying enforcement proceeding.
At bottom, Polyweave contends that the rescission of Subpart D violated the Administrative Procedure Act for two reasons: first, Polyweave argues that the Secretary's decision should be set aside because the Secretary's reasons for rescinding Subpart D are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law"; second, Polyweave asserts that the Secretary failed to provide it with notice and an opportunity to comment on the decision to rescind Subpart D.
The Secretary moved to dismiss Polyweave's claims, arguing that the district court lacked jurisdiction because Polyweave did not have standing to assert those claims and because 49 U.S.C. § 5127 placed exclusive jurisdiction over Polyweave's claims in the court of appeals, not the district court. The district court granted the motion to dismiss. The district court evaluated each of Polyweave's asserted injuries and concluded that none was sufficient to establish standing to challenge the rescission of Subpart D.
The district court also considered in the alternative whether Polyweave's claim was barred by the exclusive-jurisdiction provision of PHMSA's organic statute. The court determined that the language of the exclusive-jurisdiction provision, 49 U.S.C. § 5127, did not bar Polyweave's APA claims because the language of the statute limits the scope of the exclusive jurisdiction to final action of the Secretary under Chapter 51 of Title 49 (enforcement actions for transport of hazardous waste), not to "the Secretary's rulemaking authority generally." Further, the court determined that Polyweave's challenge was not inescapably intertwined with the underlying enforcement action.
The court alternatively concluded that, even if it had jurisdiction, Polyweave was not entitled to a preliminary injunction because Polyweave had not established a likelihood of success on the merits of either of its claims or that Polyweave would suffer irreparable...
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