Tourus v. Drug Enforcement Admin.

• Decision Date: 17 August 2001
• Docket Number: No. 00-1132,00-1132
• Citation: 259 F.3d 731
• Parties: (D.C. Cir. 2001) Tourus Records, Inc., Petitioner v. Drug Enforcement Administration, Respondent
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 731

259 F.3d 731 (D.C. Cir. 2001)

Tourus Records, Inc., Petitioner v. Drug Enforcement Administration, Respondent

No. 00-1132

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 5, 2001

Decided August 17, 2001

On Petition for Review of an Order of the United States Drug Enforcement Administration

Pleasant S. Brodnax, III argued the cause and filed the brief for petitioner.

Laurel Loomis, Attorney, U.S. Department of Justice, argued the cause for respondent. With her on the brief was Wilma A. Lewis, U.S. Attorney at the time the brief was filed.

Before: Randolph, Rogers, and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Garland.

Garland, Circuit Judge:

Petitioner Tourus Records, Inc. seeks review of the Drug Enforcement Administration's (DEA's) denial of its application to proceed in forma pauperis in a forfeiture proceeding. We find the DEA's decision to be reasonable and supported by substantial evidence, and we therefore affirm its denial of Tourus' application.

I

In October 1999, an officer of the Richmond Hill, Georgia police department stopped a van occupied by three men. The men told the officer that they were traveling to local colleges, selling music recorded on compact discs. After searching the van, the officer confiscated more than $50,000 in cash, as well as a quantity of compact discs.

Beyond these core facts, the parties dispute the circumstances of the search and seizure. According to the officer's report, he stopped the van because it had swerved onto the highway's shoulder several times, and he searched the van because his dog alerted to the rear of the vehicle. The officer reported that he discovered burnt marijuana residue and stems in the van's rear ashtray, a bag containing $50,860 in cash bundled in increments of $1000, and 50 compact discs.

According to Tourus, the officer stopped the van without cause, found no contraband, and seized $50,860 in cash plus additional money taken from the pockets of the occupants that was not reported to the DEA. Tourus also states that the officer seized 700, rather than 50, discs. It asserts that the three men were distributing compact discs for the company, and that the $50,860 in cash were the proceeds of disc sales.

The Richmond Hill police transferred the $50,860 to the DEA, which in December 1999 initiated administrative forfeiture proceedings pursuant to 21 U.S.C. 881(d).¹ On January 20, 2000, in order to have the opportunity to contest the forfeiture in court, Tourus filed a claim of ownership. It also completed an affidavit of indigency to support its request that the DEA waive the $5000 cost bond ordinarily required to contest a forfeiture, and permit the company to proceed in forma pauperis.² The affidavit filed by Tourus showed that the company had no monthly income, no assets, no liabilities, and no expenses. In support of the waiver application, the president of Tourus, Paul Dowe, Jr., also filed an affidavit setting forth his personal finances. The affidavit stated that Dowe and his spouse had a combined monthly income of $4855, savings of $950, a computer worth $5000, recording gear valued at $3000, a home valued at $157,000, and two motor vehicles valued at $13,000 and $17,400 respectively. The Dowe affidavit further stated that the couple had two dependent children and monthly expenses totaling $3670.

On March 7, 2000, the DEA sent Dowe a letter, informing him that it had denied the application to waive the bond and proceed in forma pauperis. The letter stated, in relevant part:

Your claim for the above-referenced seized property is being returned to you because the deciding authority found that the Affidavit of Indigency you submitted in lieu of a cost bond is not adequately supported. As a result, your petition to proceed In Forma Pauperis is denied. Resp't App. at 18. On March 23, 2000, Tourus filed a petition in this court, seeking review of the DEA's denial of its application to proceed in forma pauperis.

II

Both Tourus and the government agree that we have jurisdiction to consider Tourus' petition pursuant to 21 U.S.C. 877. We agree as well. Section 877 grants this court jurisdiction to review "[a]ll final determinations, findings, and conclusions of the Attorney General under this subchapter." Because the provision under which the DEA initiated administrative forfeiture proceedings, 21 U.S.C. 881(d), is part of the same subchapter of the United States Code as 877,³ we have jurisdiction to review final determinations of the Attorney General under that provision. See Yskamp v. DEA, 163 F.3d 767, 770 (3d Cir. 1998) (holding that 877 provides courts of appeals with jurisdiction to review DEA forfeiture proceedings); Scarabin v. DEA, 925 F.2d 100, 100-01 (5th Cir. 1991) (same). And by delegation from the Attorney General, the DEA's decision to deny Tourus' in forma pauperis application became such a final determination, following its approval by the Justice Department's Asset Forfeiture and Money Laundering Section.⁴ Cf. Roberts v. United States Dist. Court, 339 U.S. 844, 845 (1950) (holding that "denial by a District Judge of a motion to proceed in forma pauperis is an appealable order"); Arango v. United States Dep't of the Treasury, 115 F.3d 922 (11th Cir. 1997) (reviewing a Customs Service denial of an in forma pauperis petition pursuant to 28 U.S.C. 1331).

Although the parties agree about our jurisdiction, they disagree about the applicable standard of review. Tourus contends that we should review the denial of its petition under the familiar standard of the Administrative Procedure Act (APA), and overturn the DEA's decision if we find it to be arbitrary or capricious. See 5 U.S.C. 706(2)(A). The government contends that our review is "strictly limited to consideration of whether the appropriate procedural safeguards were made available to Petitioner," Gov't Br. at 5, and that we lack authority to review the merits of the DEA's decision, even under the APA's deferential standard.

Tourus' view is the correct one. The cases the government cites as supporting extraordinarily limited review do not involve denials of in forma pauperis status. Rather, those cases involve review of a quite different kind of denial: the denial of a request for the mitigation or remission of an administrative forfeiture. See Yskamp, 163 F.3d at 770; Scarabin v. DEA, 919 F.2d 337, 339 (5th Cir. 1990), reh'g denied 925 F.2d 100 (5th Cir. 1991); In re $67,470.00, 901 F.2d 1540, 1543 (11th Cir. 1990); see also Arango, 115 F.3d at 925; United States v. One 1987 Jeep Wrangler, 972 F.2d 472, 480 (2d Cir. 1992). To clarify the distinction, we briefly review the procedural landscape.

Section 881 makes the provisions of the United States Code that govern forfeitures for violations of the customs laws applicable to forfeitures for violations of the drug laws. 21 U.S.C. 881(d); see Small v. United States, 136 F.3d 1334, 1335 (D.C. Cir. 1998). Under those provisions and the applicable regulations, the DEA is authorized to subject seized property to administrative forfeiture by sending written notice of its intent to forfeit to each party who appears to have an interest in the property, and by publishing such notice in a newspaper of general circulation once a week for three successive weeks.⁵ If, within twenty days after the first publication, a claimant submits a claim of ownership and posts a cost bond of the lower of $5000 or 10% of the value of the property, or successfully petitions to waive the bond and proceed in forma pauperis, the administrative proceedings are terminated and the government must proceed by filing a claim for judicial forfeiture in a federal district court.⁶

If a claimant fails to submit a claim and post bond (or successfully obtain a waiver), however, the property is administratively forfeited by default.⁷ Once property has been administratively forfeited, the only option available to one with an interest in the property is to file a petition for remission or mitigation with the seizing agency.⁸ Treating an agency's decision to grant such a petition as an "act of grace," the cases cited by the government hold that the courts may not review the merits of an agency's decision to deny mitigation or remission, but may only determine whether the agency followed the applicable procedural requirements prior to forfeiting the property. In re $67,470.00, 901 F.2d at 1543; Scarabin, 919 F.2d at 338-39; see Yskamp v. DEA, 163 F.3d at 770; Arango, 115 F.3d at 925; One 1987 Jeep Wrangler, 972 F.2d at 480; see also Ibarra v. United States, 120 F.3d 472, 475 (4th Cir. 1997). In so holding, these cases appear to treat the decision to mitigate or remit as an "agency action ... committed to agency discretion by law," a category of administrative decisions to which the judicial review provisions of the APA are inapplicable. 5 U.S.C. 701(a)(2); see 28 C.F.R. 9.7(a)(1) (2000) ("Whether the property or a monetary equivalent will be remitted to an owner shall be determined at the discretion of the Ruling Official.").

But whatever the appropriate standard may be for reviewing denials of petitions to mitigate or remit, the denial of an application for in forma pauperis status is a fundamentally different kind of decision--one that plainly is not committed to the DEA's unreviewable discretion. The applicable regulation states: "Upon satisfactory proof of financial inability to post the bond, [the deciding official] shall waive the bond requirement for any person who claims an interest in the seized property." 19 C.F.R. 162.47(e) (2000) (emphasis added).⁹ Nothing suggests that the question of "satisfactory proof" under this regulation was intended to be determined at the caprice of the agency. See Arango, 115 F.3d at 929 ("The indigency exception ... is an important means of affording equal access to [judicial forfeiture] hearings and the right to proceed as an indigent must not be...