Pacific Legal Foundation v. Goyan

664 F.2d 1221, 62 A.L.R. Fed. 834

• Court: Court of Appeals for the Fourth Circuit
• Decided: November 27, 1981
• Docket: No. 80-1854
• Status: Published

Opinions

BRITT, District Judge.

Plaintiff, a non-profit corporation, filed this action on 3 December 1979 in the District Court of Maryland, seeking declaratory and injunctive relief prohibiting implementation of a regulation of the Food and Drug Administration (FDA). The regulation was established to provide “payment from agency funds of reimbursement for reasonable attorneys’ fees, expert witness fees, the expenses of clerical services, travel, studies, demonstrations, and other reasonable and necessary costs of participation incurred by a participant ... in an agency proceeding . . . that results in a hearing . ...”¹ Both parties filed motions for summary judgment and defendant filed a motion to dismiss based on plaintiff’s lack of standing to maintain the action. The District Court determined that plaintiff did have standing to sue and denied the motion to dismiss. Finding no dispute as to the facts, the District Court decided the legal questions presented in favor of defendant and állowed his motion for summary judgment. Plaintiff appealed.

FACTUAL BACKGROUND

On 25 August 1976 the FDA issued an advance notice ² of proposed rulemaking announcing its consideration of the rule here in question as a pilot program. The expressed purpose of the program is “. . . to determine whether the process of administrative decision-making will be enhanced by reimbursing participants whose participation in agency proceedings contributes or can reasonably be expected to contribute to a full and fair determination of the issue, but who would otherwise be unable to participate effectively.” ³

Plaintiff corporation, whose offices are in California, engages in research, study and litigation in matters affecting the public interest, such as participating in proceedings before public agencies, including the FDA. It filed comments with the FDA opposing the adoption of the proposed regulations on the ground that the expenditure of the funds necessary to implement the proposal had not been approved by the Congress.

Relying in part on a decision of the Comptroller General⁴ that it did have authority under existing law for such expenditures, the FDA issued its proposed rule on 17 April 1979.⁵ The final rule was published on 12 October 1979 and $250,000 was allocated by the FDA for the program.

The decision as to who will receive reimbursement is made by an Evaluation Board consisting of FDA officials.⁶ In deciding who should receive reimbursement, the Board is required to consider (1) the value of each applicant’s contribution to a full and fair determination of the issues in the proceedings; (2) whether the applicant represents a significant interest that would not otherwise be adequately represented; (3) whether the applicant can competently represent the interest it advocates; and (4) whether the applicant has available sufficient resources to participate effectively in the proceeding without FDA compensation.⁷ Reimbursement is limited to the rate paid by the FDA to its expert witnesses, attorneys, consultants, or other employees performing similar services.⁸

QUESTIONS FOR REVIEW

Whether plaintiff has standing to maintain this action and whether defendant has authority to spend public funds to reimburse qualified participants in its proceedings are the issues this Court has to decide. For the reasons hereafter set forth, we agree with the District Court that plaintiff has standing but disagree with the conclusion that defendant has authority to reimburse and, therefore, reverse.

I. STANDING

Only the complaint and certain exhibits were before the District Court upon its decision on the cross-motions for summary judgment. That being true:

For purposes of ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.

Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206, 45 L.Ed.2d 343 (1975).

Plaintiff alleged in its complaint:

PLF engages in research, study, and litigation in matters affecting the public interest. PLF has over 9,000 supporters and contributors from all areas of the country, who as citizens and taxpayers have a substantial interest in seeing that federal monies are expended only as mandated by Congress. . . .

PLF frequently participates in FDA proceedings and stands to be injured by the implementation of the public participation funding program. Reimbursement cannot be provided without unduly delaying agency proceedings since the officer presiding over applications for reimbursement has discretion to delay proceedings for an indeterminate period of time. PLF, once it has committed itself to a proceeding, will be devoting its limited resources to that proceeding to the detriment of other issues necessitating its representation in the public interest.

PLF will necessarily have to expend more resources in order to be certain that the public interest is represented equally as well as the special interest representatives seeking reimbursement who claim to represent “the public,” but who are unable to raise money from that “public” to support participation in FDA proceedings.

Additionally, PLF alleges that it is an “interested person” as defined in Title 21 C.F.R. 10.3(12) (1979) and thus specifically has standing to obtain judicial review of the FDA’s “final action” under Title 21 C.F.R. 10.45(d)(l)(ii) (1979).

Justice Powell in Warth, 422 U.S. at 498, 95 S.Ct. at 2205, set forth the following general principles with regard to standing:

In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues. This inquiry involves both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise.... In both dimensions it is founded in concern about the proper — and properly limited — role of the courts in a democratic society. . . .

In its constitutional dimension, standing imports justiciability: whether the plaintiff has made out a “case or controversy” between himself and the defendant within the meaning of Art. III. This is the threshold question in every federal case, determining the power of the court to entertain the suit. As an aspect of justiciability, the standing question is whether the plaintiff has “alleged such a personal stake in the outcome of the controversy” as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court’s remedial powers on his behalf.

Since plaintiff has participated in FDA proceedings in the past we agree with the conclusion of the District Court that “. .. if it is to maintain its institutional presence in these proceedings it is quite possible that it will suffer increased costs as a result of the new reimbursement procedures.” Pacific Legal Foundation v. Goyan, 500 F.Supp. 770, 773 (D.Md.1980). We find that plaintiff has alleged the requisite “direct injury” to give it standing because of the increased time and expense necessary for it to monitor not only proposals by the FDA and comments thereto, but also proposals by applicants for reimbursement under the program here in question. It would seem only natural for plaintiff to increase its vigilance and efforts if defendant’s proposed program is a success because the greater the number of direct views that are presented the more plaintiff will need to counter or support these views. We are unpersuaded by defendant’s contention that while it may be that PLF will choose to expend more time and funds in order to counter heretofore absent opposing opinions, that is a decision to be made by PLF. This begs the question as plaintiff’s motive for being interested in FDA proceedings is not relevant to the question of standing.

Finding sufficient direct injury to sustain plaintiff’s standing, we deem it unnecessary to determine whether plaintiff’s contention that it has statutory standing is correct.

II. DEFENDANT’S AUTHORITY TO REIMBURSE

It is undisputed that Congress has not specifically authorized the program here in question. The FDA contends, however, that it has the implied power to expend the funds necessary to carry out the proposal. The FDA’s reasoning, adopted by the District Court, is that since it has broad regulatory powers under the Act and since “[a]s part of its regulation of the many products subject to its jurisdiction, the FDA is often required to hold hearings and to base its decisions concerning the products it regulates solely on the record developed in those hearings,” it had the power to establish this program “to . . . enhance the efficiency and quality of its administrative proceedings by providing for a greater diversity of views.” Id. at 774. Appellants contend that no such implied authority can be found and that, instead, such expenditures are prohibited by 31 U.S.C. §§ 665(a)⁹ and 628.¹⁰ Resolution of this issue turas on an examination of both the historical context in which this dispute arises and the extent to which Congress has authorized the expenditures in question.

It has always been the practice in this country’s jurisprudence for a party to pay its own litigation expenses. Thus, in the absence of specific statutory authorization, a court is without authority to compel the losing party to pay the attorneys’ fees of his successful opponent. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975).¹¹ In that case the Supreme Court held that attorneys’ fees may not be awarded to an environmental organization which prevailed against a pipeline company in an action to prevent issuance of permits by the Secretary of Interior for construction of an oil pipeline. The Court of Appeals for the District of Columbia Circuit had awarded fees under the private-attorney-general concept, there being no statutory authorization for the award. In the course of its opinion the Court reviewed statutes wherein Congress had authorized the payment of attorneys’ fees and went on to hold that Congress — and not the courts — was in the best position to decide which statutes were important enough to warrant attorneys’ fees awards.

Alyeska Pipeline arose in the context of traditional adversary litigation where the prevailing party actually sought to shift its obligation for its own attorney’s fees to the loser. That is, of course, not precisely the issue involved in this proceeding. The FDA instead seeks to pay the expenses of participants from the public purse rather than tax them against unsuccessful participants in the administrative proceeding. Nonetheless, Alyeska Pipeline demonstrates the continuing vitality of the rule that, absent congressional authority to the contrary, participants pay their own way in legal proceedings, compelling this court to examine carefully the source of the FDA’s claimed authority.

Whether administrative agencies may reimburse public participants is a subject on which Congress has spoken on several occasions. In at least three instances, Congress has expressly authorized administrative agencies to follow the practice contemplated by the FDA rule:

1. The Magnuson-Moss Warranty-Federal Trade Improvement Act, § 202(a)(h)(l), 15 U.S.C. § 57a(h)(l) (1976), provides that the Federal Trade Commission may “provide compensation for reasonable attorneys fees, expert witness fees, and other costs of participating in a rulemaking proceeding . . . ”.

2. The Toxic Substances Control Act, § 6(c)(4), 15 U.S.C. § 2605(c)(4) (1976), makes provision for “compensation for reasonable attorneys’ fees, expert witness fees and other costs of participating in a rulemaking proceeding

3. The Foreign Relations Authorization Act, § 22, 22 U.S.C. § 2692 (1976), provides that “[t]he Secretary of State may compensate . . . for the cost of participating in any proceeding . .. any organization or person ...” meeting certain qualifications.

Even though Congress has shown its willingness to provide for participant reimbursement, it has on several other occasions expressly rejected the notion of a general authorization for all agencies to do so.¹² Although the power to spend — constitutionally reserved to the Congress¹³ — may' be delegated to others, either expressly or impliedly, a claim of implied delegation must be scrutinized carefully, especially where Congress clearly has shown it will speak in express terms when it so desires.

It was against this same background that an en banc Second Circuit decided Greene County Planning Board v. Federal Power Commission, 559 F.2d 1227 (2d Cir. 1976), cert. denied 434 U.S. 1086, 98 S.Ct. 1280, 55 L.Ed.2d 791 (1978). That decision reversed an earlier split panel, the majority of which had directed the Federal Power Commission to pay the expenses of participant intervenors in an administrative proceeding before it. As in this case, the Comptroller General had informed the Federal Power Commission that it had implied authority to reimburse participants based on its general enabling legislation. Based both on Congress’ “lively interest” in this area and on the broad holding of Alyeska Pipeline that the obligation to pay fees is to be shifted only by express congressional action, the court found no such implied authority.

Appellee seeks to escape the holding of Greene County by relying on the fact that the legislative history of the appropriations bills for 1979 and 1980 tend to indicate that funding for the program here in question was contemplated. No doubt the courts must look to any and all aspects of reported congressional proceedings to try to glean the true legislative intent. However, it must be recognized that there is more than a passing distinction between substantive. legislation and appropriations bills. Andrus v. Sierra Club, 442 U.S. 347, 99 S.Ct. 2335, 60 L.Ed.2d 943 (1979); Tennessee Valley Authority v. Hill, 437 U.S. 153, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978). In Tennessee Valley Authority, Justice Brennan, speaking for the Court, said:

. . . We recognize that both substantive enactments and appropriations measures are “Acts of Congress,” but the latter have the limited and specific purpose of providing funds for authorized programs. When voting on appropriations measures, legislators are entitled to operate under the assumption that the funds will be devoted to purposes which are lawful and not for any purpose forbidden. Without such an assurance, every appropriations measure would be pregnant with prospects of altering substantive legislation, repealing by implication any prior statute which might prohibit the expenditure. Not only would this lead to the absurd result of requiring Members to review exhaustively the background of every authorization before voting on an appropriation, but it would flout the very rules the Congress carefully adopted to avoid this need.¹⁴

437 U.S. at 190, 98 S.Ct. at 2300.

The District Court placed little weight on the rejection by Congress of the bills specifically authorizing participant reimbursement, see n.12 supra, saying “[rjeliable conclusions as to congressional intent cannot be drawn from the failure of Congress to enact legislation.” Pacific Legal Foundation, 500 F.Supp. at 775. Whether more weight should be given to committee history of an appropriation bill than to rejection of proposed legislation is debatable. Suffice to say, however, we feel that the intent of Congress must be clear to authorize a concept in congressional funding heretofore accomplished only through express authorization. In Alyeska Pipeline the Court said that Congress has not

. .. extended any roving authority to the Judiciary to allow counsel fees as costs or otherwise whenever the courts might deem them warranted. What Congress has done, however, ... is to make specific and explicit provisions for the allowance of attorneys’ fees under selected statutes granting or protecting various federal rights. . . . Congress itself presumably has the power and judgment to pick and choose among its statutes and to allow attorneys’ fees under some, but not others. But it would be difficult, indeed, for the courts, without legislative guidance, to consider some statutes important and others unimportant and to allow attorneys’ fees only in connection with the former.

421 U.S. at 260-64, 95 S.Ct. at 1623-25 (emphasis added).

Defendant argues that great weight should be given to the opinion of the Comptroller General on which he relied before instituting this program. The opinion of the Comptroller General is, of course, entitled to weight as he is the auditing agent of Congress. However, when his opinion collides with that of the courts, the latter must govern. Greene County Planning Board, 559 F.2d 1227.

On the philosophy of plans for participant reimbursement, the words of Chief Judge Kaufman, in his concurring opinion in Greene County Planning Board, are instructive:

The decision whether to expend public funds to advance an essentially private point of view by its very nature is political and, in a democracy, more appropriately made by the elected representatives of the people. All interested individuals can claim, with utmost sincerity, to represent the “public”. Some selection among potential intervenors becomes necessary, therefore, to assure a fair and balanced presentation of the various viewpoints while insuring, at the same time, that the agency does not exceed its financial constraints. Such choices are particularly unamenable to judicial structuring.

559 F.2d at 1240.

We hold that whether there shall be reimbursement for public participation in agency proceedings is a decision for the Congress and not the FDA or this Court.

The decision of the District Court is REVERSED.

1 . 21 C.F.R. 10.200 (1980).

2 . 41 Fed.Reg. 35855 (1976).-

3 . 44 Fed.Reg. 59174 (1979).

4 . That opinion advised the FDA that it could properly reimburse participants “... where [it] determines that such participants ‘can reasonably be expected to contribute substantially to a fair determination of issues before it” and “only where persons or groups lack financial resources to participate adequately.” Matter of Costs of Intervention — Food and Drug Administration, File B-139703 (Dec. 3, 1976).

5 . 44 Fed.Reg. 23044 (1979).

6 . 21 C.F.R. 10.220 (1980).

7 . 21 C.F.R. 10.220(c)(3)(i)-(iv) (1980).

8 . 21 C.F.R. 10.250(b) (1980).

9 . “No officer or employee of the United States shall make or authorize an expenditure from or create or authorize an obligation under any appropriation or fund in excess of the amount available therein; nor shall any such officer or employee involve the Government in any contract or other obligation, for the payment of money for any purpose, in advance of appropriations made for such purpose, unless such contract or obligation is authorized by law.”

10 . See note 10 on page 1225.

10. “Except as otherwise provided by law, sums appropriated for the various branches of expenditure in the public service shall be applied solely to the objects for which they are respectively made, and for no others.”

11 . There are certain well-defined exceptions. See, Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 257, 95 S.Ct. 1612, 1621, 44 L.Ed.2d 141 (1975).

12 . The following bills were, at least in part, designed to accomplish such results:

S. 1080, 97th Cong., 1st Sess., §§ 2 et seq. (1981).

S. 405, 97th Cong., 1st Sess. (1981).

Regulation Reform Act of 1979: Hearings on H.R. 3263 Before the Subcommittee on Administrative Law and Governmental'Relations of the Committee on the Judiciary, 96th Cong., 1st & 2d Sess. 1461 (1979-1980).

Public Participation in Agency Proceedings: Hearings Before the Subcommittee on Administrative Law and Governmental Relations of the Committee on the Judiciary, 95th Cong., 1st Sess. 12 (1977).

Public Participation in Federal Agency Proceedings Act of 1977: Hearings Before the Subcommittee on Administrative Practice and Procedure of the Committee on the Judiciary, 95th Cong., 1st Sess. Part 2, 73 (1977).

Public Participation in Federal Agency Proceedings: Hearings Before the Subcommittee on Administrative Practice and Procedure of the Committee on the Judiciary, 94th Cong., 2d Sess. 137 (1976).

13 . U.S.Const., Art. IV, § 3, Cl. 2.

14 . Cited by the Supreme Court was House Rule XXI(2) and Standing Rules of the Senate, Rule 16.4.