Supreme Court's test for judicial review of administrative discretion in Citizens to Preserve Overton Park v. Volpe: confusion compounded in Sierra Club v. Hardin (Tongass National Forest)

In its decision in Citizens to Preserve Overton Park v. Volpe, __ U.S. __, 1 ELR 20110 (March 2, 1971) the Supreme Court attempted to analyze and clarify the role of a reviewing court before which discretionary administrative action has been challenged. In its opinion the Court construed the statutory standards defining the Secretary of Transportation's authority to approve the location of federally funded highways in public parks, and then instructed the district court to determine (1) whether the Secretary had considered factors outside the scope of these standards and (2) whether the Secretary, though he considered all relevant factors, had weighted them in a manner which constituted an abuse of his discretion. (See previous discussion 1 ELR 10035).

The decision in Overton Park leaves uncertain the meaning of important aspects of the concept of abuse of discretion, and the recent district court decision in Sierra Club v. Hardin, 1 ELR 20163 (D. Alas. March 25, 1971), illustrates this uncertainty.

In Overton Park the Court states that in order to make a finding of abuse of discretion:

… the court must consider [1] whether the decision was based on a consideration of the relevant factors and [2] whether there has been a clear error of judgment. L. Jaffe [Judicial Control of Administrative Action] 182 [1965]. See McBee v. Bomar, 296 F.2d 235, 237 (6th Cir. 1961); In re Josephson, 218 F.2d 174, 182 (1st Cir. 1954); Western Addition Community Organization v. Weaver, 294 F. Supp. 433 (N.D. Calif. 1968). See also Wang Wing Hang v. Immigration and Naturalization Serv., 360 F.2d 715, 719 (2d Cir. 1966). 1 ELR 20113 (Stress added).

The Court's statement that administrative action must be premised on "relevant factors" is confusing, because before taking up the question of abuse of discretion, presumably the reviewing court has already concluded that the discretionary action under review was within the scope of the administrator's authority. This view, which suggests that the same factors that define an administrator's authority also define the "relevant factors" which he must consider in exercising that authority, is supported by the analysis of Professor Jaffe referred to by the Court. Unless the Court means by "scope of authority" something else than the purview defined by relevant factors" — and the Court gives absolutely no indication that it does — we must assume that it has used loose language and that it still intends [1 ELR 10063] to keep separate, after Overton Park, the preliminary question, "did the administrator act within the scope of his authority?" from the question, "acting within his authority, did the administrator abuse his discretion?"

The Court's definition of abuse of discretion appears therefore to rely primarily upon the phrase "clear error of judgment." The Court, however, does not expand on the meaning of "clear error of judgment," which forces us back on the examples and definitions available in the four cases cited by the Court.

The clearest definition of "abuse of discretion" and "clear error of judgment" in these four cases is a quotation by Judge Magruder in McBee v. Bomar, supra, of Chief Judge Magruder, in In re Josephson, supra. In In re Josephson the 1st Circuit was reviewing a discretionary decision of a district court — not an administrative agency — in a mandamus proceeding:

"Abuse of discretion" is a phrase which sounds worse than it really is. All it need mean is that, when judicial action is taken in a discretionary matter, such action cannot be set aside by a reviewing court unless it has a definite and firm conviction that the court below committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors. One is reminded of the "clearly erroneous" standard in Rule 52(a) of the Federal Rules of Civil Procedure. Id.

The petitioner in Josephson sought mandamus to reverse the discretionary decision made by Judge Wyzanski of the U.S. District Court for Massachusetts to transfer a stockholder derivative action to the U.S. District Court for New Mexico. The court concluded that this discretion had not been abused.

The alleged abuse of discretion in McBee v. Bomar, supra, was a state trial court's refusal to grant a continuance. The case was on appeal from a federal district court's denial of McBee's petition for a writ of habeas corpus. The district court had determined that the state trial court's discretionary refusal to grant the continuance had not deprived McBee of his constitutional right to effective counsel. Because the state trial court was lax in fully investigating the facts supporting McBee's motion for continuance, the sixth Circuit ordered the district court to issue the habeas corpus writ.

It is significant that both Josephson and McBee involved review of trial court decisions made in the preliminary stages of judicial proceedings. Appellate review of such trial court decisions has traditionally been more restricted than appellate review where the trial court has made findings of fact at trial on the merits without a jury, in which the standard of review, according to Fed. R. Civ. P. 52(a), is the "clearly erroneous" standard.¹ Yet as the quote from In re Josephson reveals, Chief Judge Magruder, and presumably all who quote and cite him, feel that the clear error of judgment standard is similar to the "clearly erroneous" test of Fed. R. Civ. P. 52(a). This paradox will be pursued, infra. It is sufficient for the purposes of this part of the discussion to point out that the "clear error of judgment" test to determine whether an administrator has abused his discretion, adopted by the Supreme Court in Overton Park, appears to be the same test applied by appellate courts in determining whether a trial court has improperly decided a preliminary motion (e.g. continuance, transfer) and is even similar to the "clearly erroneous" standard applied by appellate courts in determining whether the factual findings of a trial court sitting without a jury should be set aside.

The third case cited by the Court in Overton Park confuses, because it appears to suggest the "substantial evidence" test clearly rejected in Overton Park. Moreover, it does not in any way clarify the meaning of "clear error of judgment" or "clearly erroneous". In Western Addition Community Organization v. Weaver, 294 F. Supp. 433 (N.D.Calif. 1968), the court reviewed the Secretary of HUD's approval of the Western Addition Area II Urban Renewal Project. Specifically, plaintiffs challenged the Secretary's approval of the state's relocation housing plan as an abuse of discretion. The district court stated that the applicable test was "… whether the Secretary's discretion concerning the satisfactoriness of the relocation plan has been exercised not arbitrarily but reasonably upon some substantial and supporting factual basis." Id., at 443. Since the decision in Weaver was on plaintiff's motion for preliminary injunction and defendant's motion to dismiss, no application of the stated test is made, the court going no further than to decide that review is proper and to state the applicable test.

The final case cited by the Court in Overton Park, Wong Wing Hang v. Immigration and Naturalization Serv., 360 F.2d 715 (2nd Cir. 1966), examines McBee and Josephson and concludes that the "clear error of judgment" standard applied in those cases is in fact the same as the "clearly erroneous" test of Fed. R. Civ. P. 52(a). However, the Wong Wing Hang court concludes that such a definition is not applicable to review of the exercise of discretion by an administrative officer. Instead, it suggests that discretion is abused

… only when the action "is arbitrary, fanciful or unreasonable which is another way of saying that discretion is abused only where no reasonable man would take the view" under discussion. See Delno v. Market St. Ry. Co., 124 F.2d 965, 967 (9th Cir. 1942). Id.

[1 ELR 10064]

This wording is similar to that used by the Weaver court. However this court's statement that the "clear error of judgment" test of McBee and Josephson is the "clearly erroneous" test of Rule 52(a) and that it should not be applied by a court reviewing administrative exercise of discretionary power is not easily reconciled with the Supreme Court's parallel citation to all four cases. Moreover, if the phrase used by the Court in Overton Park, "clear error of judgment," means the same thing as "clearly erroneous" in the decision cited and Rule 52(a), serious questions arise as to the meaning of the Supreme Court's decision in Overton Park with respect to judicial review of administrative action.

With this background we now attempt to assess the desirability of the standard of review petitioners obtained from the Court in Overton Park. Petitioners had argued that the Secretary's decisions should be found invalid unless supported by "substantial evidence," i.e., that amount and quality of evidence a reasonable man would require. This standard is similar to the test applied by a trial court to determine whether to direct a verdict or grant judgment n.o.v. The Court rejected this standard, 1 ELR 20113, which would normally imply that it had determined that some lesser degree of judicial oversight of the Secretary's decisions was appropriate. The standard it found applicable, however, was the "clear error of judgment" test similar to the "clearly erroneous" standard used by appellate courts to determine whether the findings of fact made by a trial judge should be sustained. Since a factual finding of a trial judge could be found clearly erroneous by an appellate court, but nevertheless if embodied in a jury verdict could be sustained as not unreasonable, it appears that the test found applicable by the Supreme Court in Overton Park envisions broader review of administrative decisions than would have been appropriate if the substantial evidence standard had been adopted. Thus, it is quite possible that the petitioners in fact got a more favorable standard than they had requested.

To obtain perspective on the implications of the Court's rejection of the "substantial evidence" standard, the meaning of "substantial evidence" must be plumbed as well. Professor Davis, in his discussion of the substantial evidence test, quotes N.L.R.B. v Columbian Enameling and Stamping Co., 306 U.S. 292, 300 (1939), in which the Supreme Court said that "substantial evidence" means that amount and quality of evidence which would be "… enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury." K. Davis, Administrative Law, § 29.02 (1959) (Emphasis added). Arguing that this definition still applies after passage of the APA (see Universal Camera Corp. v. N.L.R.B., 340 U.S. 474 (1951)), Professor Davis offers a further explanation of the standard:

The scope of review of findings of a judge without a jury, however, is different from the scope of review of administrative findings [under the substantial evidence test] and of jury verdicts, for findings of a judge may be upset if they are "clearly erroneous." Because findings may be "clearly erroneous" without being unreasonable so as to be upset under the substantial evidence rule, the scope of review of administrative findings is narrower than the scope of review of a judge's findings. Davis, supra. (Emphasis added).

Two inconsistent conclusions can be drawn from a comparison of the foregoing analysis of the Supreme Court's definition of abuse of discretion and Professor Davis' explanation of substantial evidence. (1) "Abuse of discretion" is the functional equivalent of "clearly erroneous," the test applied by an appellate court to test the factual findings of a trial court sitting without a jury. The substantial evidence test, which is less generous in allowing review, is applied by a trial judge to determine whether a jury verdict should be directed or set aside. Therefore, the abuse of discretion test adopted by the Supreme Court in Overton Park actually imposes upon the administrative exercise of discretionary power a greater scope of judicial review than would have been the case had the Court found applicable the substantial evidence standard proposed by petitioners. (2) On the other hand, the Supreme Court may not have intended by its four citations to imply that its standard for review of the abuse of discretion has a broader scope than has the substantial evidence test. Perhaps the Court only meant its standard to be a rejuvenated version of "abuse of discretion" which broadens the review function of courts when the administrative exercise of discretionary power is challenged. Although this conclusion appears more consistent with prior law, and a more reasonable reading of the extremely abbreviated discussion of the issue in Overton Park, the uncertainty in the decision detracts from its effectiveness in clarifying the already complex law of administrative review.

The district court decision in Sierra Club v. Hardin, 1 ELR 20161 (D.Alas. March 25, 1971), provides an interesting example of the potential impact of Overton Park upon the role of reviewing courts before which discretionary administrative action has been challenged. In Sierra Club v. Hardin the federal district court was asked to review the Secretary of Agriculture's decision to sell timber from the Tongass National Forest and to allow land within the forest to be used as a lumber mill site. The plaintiffs alleged that these actions violated the Secretary's obligations under various statutes including the Multiple Use-Sustained Yield Act of 1960, 16 U.S.C. § 528 et seq., and the National Environmental Policy Act, 42 U.S.C. §§ 4321 and 4331 et seq. In responding to this argument the district court approached review of the Secretary's action essentially through the two-step analysis used by the Supreme Court in Overton Park. The court first considers whether the challenged actions are reviewable and finds that they are. Then it determines whether the Secretary's actions were legal.

Implementing familiar principles of administrative [1 ELR 10065] law reiterated by the Supreme Court in Overton Park, the district court specifically found that it could review the Secretary's decision, because (1) Congress had not precluded review of such administrative determinations by express statutory language, and (2) the authority to decide delegated to the Secretary was not so broad and extensive as to bar review entirely, as it would be if the actions had been totally committed to the Secretary's discretion. The court concludes that "… the fact that the management of the national forests under these statutes inevitably involves a substantial amount of discretion in interpreting these directives does not preclude the possibility of review." 1 ELR 20166. However, having determined that the Secretary's decision is reviewable, the court declines to fulfill the obligation which this decision imposes. Rather, the court limits its review to deciding whether or not the Secretary complied with the "mandatory procedures required by the relevant statutes." 1 ELR 20166. Apparently, "compliance with mandatory procedures" merely rephrases the familiar rule that administrative action must be within the scope of the administrator's authority. In justifying its decision to restrict its review to the question of whether the Secretary acted within the scope of his authority, the court reasons that the Secretary's ultimate decision depended upon the weight which he gave to the factors of decision prescribed by the governing statutes, and since there was no statutory language through which the court could determine whether the weights given were correct, the court concluded that the weight given by the Secretary must be governed solely by his untrammeled discretion and could not be questioned.

To this point the court's reasoning is consistent. However, the Court goes on in effect to say that the possibilities of review are not exhausted merely because statutory language spelling out the relative weights to be attached to various factors of decision is not available. 1 ELR 20166. Rather, the court implies that if it is not satisfied with the result reached by the administrator, that it may still find — on some basis not articulated by the court — that an "abuse of discretion" has taken place which justifies the court's substituting its judgment for that of the administrator. The court does not explain how it will determine in these circumstances whether the administrator has abused his discretior: The opinion in Overton Park would appear to require that the court's determination be based upon a review of the administrator's weighing of the relevant factors in order to determine if a clear error of judgment has been committed. The court, however, expressly refused to attempt such review in the absence of statutory language which indicated how weighing is to be done.

In conclusion, the court in the Tongass Forest case appears to distinguish two kinds of reviewable abuse of administrative discretion. The first is review of the mis-weighing of factors of decision in direct contradition of a statutory command to weigh in a particular manner. The court appears to find such review permissible. The opinion in Overton Park approves review at least in this instance, and probably reaches further. The second type of review mentioned in the Tongass Forest case is more troublesome. The court indicates that reviewable abuse of discretion can occur even where there exists no statutory language setting out the relative weights to be attached to the factors of decision, but the court nevertheless declines to review and does not explain what principles would govern such review if it were undertaken. Overton Park suggests that regardless of whether or not Congress has set out the relative weights of the factors of decision, a reviewing court must nevertheless make a determination. The Supreme Court in Overton Park stated:

Scrutiny of the facts does not end … with the determination that the Secretary has acted within the scope of his statutory authority. Section 706(2) (A) requires a finding that the actual choice was not "arbitrary. capricious, an abuse of descretion or otherwise not in accordance with law." 5 U.S.C. § 706(2) (A). 1 ELR 20113.

All that Overton Park requires is that the court make a determination and in doing so that it apply the "abuse of discretion," or "clear error of judgment," standard. As discussed above, the breadth of the abuse of discretion standard set out in Overton Park is uncertain. Clearly it does not require the reviewing court to change places with the administrator. Other aspects of the standard developed by the Supreme Court, however, are less clear. This lack of clarity unfortunately extends to Sierra Club v. Hardin.

1. See, e.g., Gold Strike Stamp Co. v. Christensen, 436 F.2d 791 (10th Cir. 1970). On review of a district court decision to allow a suit to proceed as a class action the 10th Circuit stated: "The question of whether to allow a suit to proceed as a class action is one primarily for the determination of the trial judge. If he applies the correct criteria to the facts of the case, the decision should be considered to be within his discretion . …

From the findings of fact made by Judge Christensen … it is apparent that he did apply the correct criteria and his finding that the class action should proceed did not constitute an abuse of discretion." Id., at 792-93.