Regional Management v. Legal Services , 186 F.3d 457 ( 1999 )

Filed: August 3, 1999
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
Nos. 98-2165(L)
(CA-97-1311-6-20)
Regional Management Corp., etc., et al,
Plaintiffs - Apellees,
versus
Legal Services Corporation,
Defendant - Appellant.
O R D E R
The court amends its opinion filed July 28, 1999, as follows:
On page 2, section 3, line 7 -- counsel’s name is corrected to
read “Benjamin T. Zeigler.”
On page 10, footnote 7, line 4 -- a period is added in the
citation after “D.C. Cir.”
For the Court - By Direction
/s/ Patricia S. Connor
Clerk
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
REGIONAL MANAGEMENT
CORPORATION, INCORPORATED;
REGIONAL FINANCE CORPORATION OF
SOUTH CAROLINA, INCORPORATED, and
REGIONAL FINANCE CORPORATION OF
No. 98-2165
GEORGIA, INCORPORATED,
Plaintiffs-Appellees,
v.
LEGAL SERVICES CORPORATION,
Defendant-Appellant.
REGIONAL MANAGEMENT
CORPORATION, INCORPORATED;
REGIONAL FINANCE CORPORATION OF
SOUTH CAROLINA, INCORPORATED, and
REGIONAL FINANCE CORPORATION OF
No. 98-2166
GEORGIA, INCORPORATED,
Plaintiffs-Appellants,
v.
LEGAL SERVICES CORPORATION,
Defendant-Appellee.
Appeals from the United States District Court
for the District of South Carolina, at Greenville.
Henry M. Herlong, Jr., District Judge.
(CA-97-1311-6-20)
Argued: May 5, 1999
Decided: July 28, 1999
Before MURNAGHAN, LUTTIG, and WILLIAMS, Circuit Judges.
_________________________________________________________________
Vacated and remanded in part and affirmed in part by published opin-
ion. Judge Luttig wrote the opinion, in which Judge Williams joined.
Judge Murnaghan wrote a separate concurring opinion.
_________________________________________________________________
COUNSEL
ARGUED: Susan Macdonald Glenn, NELSON, MULLINS, RILEY
& SCARBOROUGH, L.L.P., Columbia, South Carolina, for Appel-
lant. Gregory J. English, WYCHE, BURGESS, FREEMAN &
PARHAM, P.A., Greenville, South Carolina, for Appellees. ON
BRIEF: Joel H. Smith, NELSON, MULLINS, RILEY & SCAR-
BOROUGH, L.L.P., Columbia, South Carolina, for Appellant. Wal-
lace K. Lightsey, Benjamin T. Zeigler, WYCHE, BURGESS,
FREEMAN & PARHAM, P.A., Greenville, South Carolina, for
Appellees.
_________________________________________________________________
OPINION
LUTTIG, Circuit Judge:
Appellees Regional Management Corp. and its affiliates (collec-
tively "Regional") filed a complaint with the Legal Services Corpora-
tion alleging that certain recipients of Legal Services' funds violated
the Legal Services Corporation Act ("LSC Act") when they lobbied
against Regional before the South Carolina General Assembly and the
Georgia Commissioner of Insurance. Legal Services concluded that
neither instance of lobbying violated the LSC Act, and Regional
sought judicial review in federal district court of the Corporation's
resolution of its complaint. The district court ruled in favor of
Regional with regard to the lobbying in South Carolina, but in favor
of Legal Services with regard to the lobbying in Georgia.
For the reasons that follow, we conclude that there is no basis for
judicial review of Legal Services' decision on Regional's complaint.
2
We therefore vacate the district court's judgment and opinion and dis-
miss Regional's claim. We also affirm the district court's dismissal
of Regional's suit against Legal Services under the Freedom of Infor-
mation Act, because that suit is not yet ripe.
I.
Appellant Legal Services, which Congress established by the LSC
Act, 42 U.S.C. §§ 2996-2996l, disburses federal money to local legal
services programs, known as "recipients," to support legal assistance
to the poor in civil matters. The LSC Act, however, imposes numer-
ous restrictions on recipients' use of Legal Services' funds, id.§ 2996f(a)&(b), and charges Legal Services with enforcing those
restrictions, id. § 2996e(b).
Among the funding restrictions that the LSC Act imposes is a ban
on lobbying federal, state, or local officials, whether executive or leg-
islative. Id. § 2996f(a)(5). There are some exceptions to this ban,
however, such as for lobbying that is "necessary to the provision of
legal advice and representation" of an "eligible client . . . with respect
to such client's legal rights and responsibilities," or for testimony or
similar activity that has been requested by an agency or legislative
body. Id. Regulations promulgated by Legal Services pursuant to the
LSC Act implement the lobbying ban and the exceptions. See 45
C.F.R. pt. 1612.1
Appellee Regional is a lender, apparently concentrating on provid-
ing credit to those who have poor credit histories or are otherwise
high credit risks. In 1994-95, the time of the underlying events in this
case, Legal Services' recipients included Palmetto Legal Services,
Inc. ("PLS"), South Carolina Legal Services Association ("SCLSA"),
and the Neighborhood Legal Assistance Program ("NLAP"). SCLSA
received its funding via PLS. During this time, Susan Berkowitz, an
attorney, registered lobbyist, and the director of SCLSA, successfully
_________________________________________________________________
1 Congress has, in recent years, used annual appropriations bills to
impose further restrictions on lobbying, which has led Legal Services to
modify its regulations. See Legal Aid Soc'y of Hawaii v. Legal Servs.
Corp., 145 F.3d 1017, 1021-22 (9th Cir.), cert. denied, 119 S. Ct. 539(1998).
3
lobbied the South Carolina General Assembly to pass Act 135 of
1995, which imposed severe restrictions upon companies such as
Regional, costing it, Regional contends, millions of dollars in lost rev-
enue. Soon thereafter, Berkowitz, joined by employees of PLS and
NLAP, journeyed to Georgia at the request of the Georgia Commis-
sioner of Insurance, where they successfully opposed Regional's
application for a license to do business in that State.
In February 1996, Regional filed a complaint with Legal Services
pursuant to the complaint procedure of 45 C.F.R. § 1618.3, claiming
that both the South Carolina and the Georgia lobbying violated the
LSC Act and the then-applicable regulations. Soon thereafter,
Regional, concerned that Legal Services might be receiving inaccu-
rate information from the recipients, Berkowitz, and others, filed sev-
eral requests under the Freedom of Information Act ("FOIA"), 5
U.S.C. § 552, which applies to Legal Services pursuant to 42 U.S.C.
§ 2996d(g), for all documents that Legal Services had created or
received as part of the investigation. Legal Services denied these
requests, invoking its policy of not releasing documents relating to an
ongoing investigation to a target of that investigation and concluding
that the policy should extend to Regional's request. In December
1996, Legal Services issued its decision, concluding that there was no
violation of the LSC Act or regulations in either lobbying incident
and, thus, that no disciplinary action was needed. It thereupon pro-
duced the documents that Regional had requested under FOIA.
Regional filed the present action in the federal district court in May
1997, seeking "judicial review" of Legal Services' "final agency
action." Regional requested a declaratory judgment that the lobbying
violated the LSC Act; restitution of funds to Legal Services; termina-
tion of funding to PLS, SCLSA, and NLAP;2 and termination of the
offending employees of those recipients. In a second cause of action,
Regional alleged violations of FOIA.
The district court, in a thorough opinion, 10 F. Supp. 2d 565 (D.
S.C. 1998), first concluded that it had jurisdiction to hear Regional's
_________________________________________________________________
2 Although SCLSA apparently no longer receives funds from Legal
Services, PLS still does. We therefore reject Legal Services' claim that
Regional's suit is moot regarding the South Carolina incident.
4
challenge to Legal Services' decision. Although the court agreed with
the numerous courts that have held that the LSC Act creates no pri-
vate right of action, and also concluded that the judicial review provi-
sions of the Administrative Procedure Act ("APA"), 5 U.S.C. § 701et seq., do not provide a basis for reviewing Legal Services' decision,
see 42 U.S.C. § 2996d(e)(1), it followed the lead of several courts that
have nonetheless found authority to review certain Legal Services
actions under a pre-APA standard of review, which requires a court
to consider only whether an agency action has a rational basis. The
district court viewed this standard of review, however, as functionally
identical to the APA's "arbitrary and capricious" standard of review,
see 5 U.S.C. § 706(2)(A).
On the merits, the district court first held that there was no rational
basis for Legal Services' conclusion that Berkowitz's lobbying in
South Carolina was in the service of a client. That conclusion by
Legal Services, the court explained, was devoid of factual support,
and the lobbying was thus a blatant violation of the LSC Act and reg-
ulations. The court held that Legal Services had a rational basis for
concluding that the Georgia lobbying fell under the exception for tes-
timony requested by a governmental official. Finally, the court dis-
missed Regional's FOIA claim as moot because Regional had
received the requested documents.
Legal Services appeals from the district court's ruling with regard
to the South Carolina lobbying and chiefly argues that the district
court should not have reached the merits of the dispute regarding that
lobbying incident (or the one in Georgia), because there is no basis
for judicial review of Legal Services' decision on Regional's com-
plaint. Regional cross-appeals from the district court's ruling on the
Georgia lobbying and also from the dismissal of its FOIA claim.
II.
The chief, and ultimately dispositive, issue before us is whether
Legal Services' decision that Legal Services' recipients did not ille-
gally lobby against Regional in either South Carolina or Georgia is
subject to judicial review. Because Congress has exempted such a
decision by Legal Services from review under the APA, and because
nothing in the LSC Act itself provides Regional a private right of
5
action against Legal Services, we conclude that Regional has no basis
for obtaining judicial review of Legal Services' resolution of its com-
plaint.
There are generally only two possible bases for judicial review of
federal agency action. First, and most often applicable, is the APA,
which "provides the generally applicable means for obtaining judicial
review of actions taken by federal agencies." Clouser v. Espy, 42 F.3d
1522, 1528 n.5 (9th Cir. 1994). Second, a substantive statute may pro-
vide a private right of action for judicial review of an agency action.
See Lujan v. National Wildlife Fed'n, 497 U.S. 871, 882 (1990) (sug-
gesting that only a "specific authorization in the substantive statute"
or "the general review provisions of the APA" would permit judicial
review of the agency action that respondent challenged); id. (noting
that respondent "does not contend that either[of the substantive stat-
utes that the agency allegedly violated] provides a private right of
action for violations of its provisions. Rather, respondent claims a
right to judicial review under . . . the APA."); Worthington Compres-
sors, Inc. v. Costle, 662 F.2d 45, 49-50 (D.C. Cir. 1981) (holding that
APA provided "appellants' only basis for judicial review," since
Noise Control Act, which agency had allegedly violated, provided no
private right of action). See also Chrysler Corp. v. Brown, 441 U.S.
281, 316-17 (1979); Jersey Heights Neighborhood Ass'n v.
Glendening, 174 F.3d 180, 1999 WL 184610, * 3, 8-9 (4th Cir. 1999).3
_________________________________________________________________
3 The Supreme Court has suggested that there may be some exceptional
cases where judicial review of agency action would always be available,
even if Congress did not specifically authorize it (through the APA or
otherwise) or actually precluded it explicitly, or at least that there are cer-
tain areas where the presumption in favor of judicial review is particu-
larly strong. The two chief areas of this sort appear to be constitutional
claims, see Bowen v. Michigan Academy of Family Physicians, 476 U.S.
667, 672-73, 681 n.12 (1986); see also Webster v. Doe, 486 U.S. 592,
602 (1988); Heckler v. Chaney, 470 U.S. 821, 838 (1985); cf. Lebron v.
National R.R. Passenger Corp., 513 U.S. 374, 392 (1995), and claims by
a party facing a governmental action against it for violating regulations
or laws whose applicability or validity it wishes to challenge, see Adamo
Wrecking Co. v. United States, 434 U.S. 275, 278-79, 283 (1978); cf.
F.C.C. v. Schreiber, 381 U.S. 279, 286-88 (1965). But Regional raises
neither sort of claim, nor do we think any other special circumstance
6
When Congress in a substantive statute has not explicitly created
a private right of action for review of an agency action, an implied
one may exist in favor of a particular plaintiff, but only if Congress
"intended to create the private remedy sought by the plaintiff[ ]."
Suter v. Artist M., 503 U.S. 347, 364 (1992). See Cort v. Ash, 422
U.S. 66 (1975) (setting out factors to guide this determination). The
burden is on the plaintiff to demonstrate such an intent, Suter, 503
U.S. at 364, and the requirement in order for a plaintiff to succeed is
"a stringent one," Donaldson v. Department of Labor, 930 F.2d 339,
347-48 (4th Cir. 1991), particularly given the Court's generally "re-
strictive attitude," id., toward creating implied rights of action.
Applying the above rules to the particular agency action that
Regional challenges -- that is, Legal Services' decision, in response
to Regional's complaint, that its recipients did not violate 42 U.S.C.
§ 2996f(a)(5) when they lobbied against Regional -- it is clear that
judicial review of such an action is not available to Regional. The
APA's judicial review provisions unquestionably do not apply, and
the LSC Act does not provide a private right of action to Regional to
challenge such a decision by Legal Services.
First, the LSC Act, in conjunction with the APA, precludes judicial
review under the APA of decisions such as the present one. The LSC
Act provides that Legal Services "shall not be considered a depart-
ment, agency, or instrumentality of the Federal Government . . .
[e]xcept as otherwise specifically provided in this subchapter." 42
U.S.C. § 2996d(e)(1). With the exception of the two subsections
immediately following this provision, id.§§ 2996d(f)&(g), which
relate to particular aspects of employee benefits and to the applicabil-
ity of FOIA to Legal Services, respectively, there is no provision in
the LSC Act that appears to "specifically provide[ ]" for considering
Legal Services to be a federal agency.4 More particularly, no provi-
_________________________________________________________________
exists in this case. Indeed, if ever congressional preclusion of judicial
review of an agency action were allowed, it would be here, where
Regional, at bottom, is merely challenging a quasi-adjudication by Legal
Services involving not the rights of Regional but those of Legal Services'
own recipients.
4 See also 42 U.S.C. § 2996c(g) (applying open-meeting requirements
of 5 U.S.C. § 552b to Legal Services' Board and advisory councils). Cf.
5 U.S.C. App. § 8G(a)(2) (providing that Legal Services is a "Federal
entity" for purposes of Inspector General Act).
7
sion of the LSC Act "specifically provide[s]" for considering Legal
Services to be an agency with regard to its resolution of complaints
alleging lobbying in violation of section 2996f(a)(5). Therefore, Legal
Services may "not be considered," id.§ 2996d(e)(1), a federal agency
for purposes of the action that Regional challenges. Since the APA's
judicial review provisions apply only to action by a federal agency,
see 5 U.S.C. § 702; id. § 704; see also Franklin v. Massachusetts, 505
U.S. 788, 796 (1992), judicial review of Legal Services' decision on
Regional's complaint is not available under the APA. 5
Second, the LSC Act creates no private right of action for Regional
against Legal Services. It is undisputed that the Act provides no
explicit private right of action, and there is no basis for finding that
Congress intended to create an implied private right of action for
Regional to challenge Legal Services' application of section
2996f(a)(5). Regional has certainly not satisfied its burden of showing
an intent by Congress to create a right of action-- in its briefs it
never even discusses the standards for meeting that burden.6 Further-
_________________________________________________________________
5 Our conclusion that there is no judicial review under the APA of the
action that Regional challenges is consistent with the view of every other
circuit court to consider the APA's applicability to actions by Legal Ser-
vices. See Texas Rural Legal Aid, Inc. v. Legal Servs. Corp., 940 F.2d
685, 696 (D.C. Cir. 1991); San Juan Legal Servs., Inc. v. Legal Servs.
Corp., 655 F.2d 434, 438-39 (1st Cir. 1981); Spokane County Legal
Servs., Inc. v. Legal Servs. Corp., 614 F.2d 662, 669 (9th Cir. 1980). See
also Lebron v. National R.R. Passenger Corp., 513 U.S. 374, 391-92
(1995).
6 To the extent that Regional does make an argument that an implied
right of action exists in a case such as this, that argument appears to be
twofold, and is unconvincing. First, Regional contends that because sec-
tion 2996f(a)(5) imposes a duty on Legal Services to enforce its limita-
tions, see 42 U.S.C. § 2996f(a)(5) ("[T]he Corporation shall . . . insure
that no funds made available to recipients" are used for unauthorized lob-
bying), there must be some judicial means for Regional to enforce this
duty. Regional's conclusion, however, does not follow from its premise,
because Congress need not, and indeed often does not, rely on private
parties to enforce statutory duties. See,e.g., Suter v. Artist M., 503 U.S.
347, 360-61, 363-64 (1992); California v. Sierra Club, 451 U.S. 287,
295 (1981). Such is the case in the LSC Act. See Grassley v. Legal Servs.
Corp., 535 F. Supp. 818, 824-25 (S.D. Iowa 1982) (surveying the LSC
8
more, we find no reason to suppose that Congress, while exempting
from judicial review under the APA Legal Services' resolution of
complaints involving section 2996f(a)(5), nevertheless, through its
silence in the LSC Act, intended to grant a private right of action to
parties such as Regional to challenge that very same action. See
Carlin v. McKean, 823 F.2d 620, 622-23 (D.C. Cir. 1987). Cf. Clarke
v. Securities Indus. Ass'n, 479 U.S. 388, 395 & n.9 (1987); Japan
Whaling Ass'n v. American Cetacean Soc'y, 478 U.S. 221, 230 n.4
(1986); (viewing question of whether plaintiff had basis for judicial
review as simply one of whether APA provided one, where substan-
tive statutes did not include provisions for judicial review of agency
action); Barlow v. Collins, 397 U.S. 159, 173 (1970) (opinion of
Brennan, J.) ("When the legality of administrative action is at issue,"
and a statute has "preclude[d] judicial review" under the APA, "the
plaintiff is out of court.").
Nothing in the terms of the LSC Act suggests that parties such as
Regional are part of any "special class to be benefitted by," Cannon
v. University of Chicago, 441 U.S. 677, 690 (1979), the Act in general
or section 2996f(a)(5) in particular. Indeed, Congress in the LSC Act
as a whole specifically identified another group as the Act's special
beneficiaries -- that is, "indigents who have legal grievances but who
are unable to afford the legal means necessary to redress them."
Grassley v. Legal Servs. Corp., 535 F. Supp. 818, 823 (S.D. Iowa
1982) (holding that LSC Act provides no implied cause of action to
enforce its bans on lobbying and certain political activities). See 42
_________________________________________________________________
Act, and concluding that "[t]he legislative scheme, therefore, is one of
Corporation and, ultimately, congressional oversight. The presence of a
nonjudicial means of enforcement is indicative of a congressional intent
not to create an implied private cause of action.").
Second, Regional appears to contend that it should have a right of
action simply because it exhausted Legal Services' complaint procedures
before suing in federal court. But the existence of a right of action and
of an exhaustion requirement are separate issues, even though complying
with the latter, where it exists, is usually a condition for invoking the for-
mer. See, e.g., Block v.Community Nutrition Inst., 467 U.S. 340, 346-47
(1984); Volvo GM Heavy Truck Corp. v. Department of Labor, 118 F.3d
205, 209-11 (4th Cir. 1997); Grassley, 535 F. Supp. at 827.
9
U.S.C. § 2996 (congressional findings and declaration of purpose).
Further, the intended special beneficiaries, if any, of section
2996f(a)(5)'s limitations upon lobbying are not those against whom
Legal Services' recipients might lobby, but rather the recipients' cli-
ents, who benefit by having the Legal Services program protected
from political pressures. See 42 U.S.C.§ 2996(5) (congressional find-
ing that "to preserve its strength, the legal services program must be
kept free from the influence of or use by it of political pressures").
More likely, however, there is no special beneficiary of that section,
since it is "no more than a general proscription of certain activities,"
Grassley, 535 F. Supp. at 822. And "a general proscription of certain
activities . . . does not indicate an intent to provide for private rights
of action." California v. Sierra Club, 451 U.S. 287, 294 (1981).7
Finally, we address what appears to be Regional's primary argu-
ment for judicial review in this case. It relies upon three courts of
appeals that have concluded that judicial review of certain actions by
Legal Services was available and claims that the holdings of those
cases should apply here. See Texas Rural Legal Aid, Inc. v. Legal
Servs. Corp., 940 F.2d 685 (D.C. Cir. 1991); San Juan Legal Servs.,
Inc. v. Legal Servs. Corp., 655 F.2d 434 (1st Cir. 1981); Spokane
County Legal Servs., Inc. v. Legal Servs. Corp., 614 F.2d 662 (9th
Cir. 1980).8 But because those cases are readily distinguishable, they
do not assist Regional, and we take no position on whether they were
correctly decided.
The cases upon which Regional relies are distinguishable for two
reasons. First, they did not involve alleged violations of section
2996f(a)(5). Second, the provisions of the LSC Act that they did
involve implicitly provide, at least arguably (and unlike section
_________________________________________________________________
7 We also note that the legislative history on the existence of a private
right of action, to the extent that it provides any guidance, supports our
conclusion. Compare Grassley, 535 F. Supp. at 823-24, 826, with Texas
Rural Legal Aid, Inc. v. Legal Servs. Corp., 940 F.2d 685, 697 (D.C. Cir.
1991). Where neither the language nor legislative history of a statute sug-
gests any intent to create a private right of action, there is no need to
inquire further. Sierra Club, 451 U.S. at 297.
8 Regional also cites numerous district court opinions, but all from
within the circuits that decided Texas Rural and Spokane County.
10
2996f(a)(5)), for some sort of judicial review when Legal Services
acts under them, because they impose on Legal Services some of the
same requirements that the APA imposes on agencies subject to it.
See Texas Rural, 940 F.2d at 690 (in challenge to regulations promul-
gated by Legal Services, explaining that "LSC . .. is required [under
42 U.S.C. § 2996g(e)] to engage in notice-and-comment rulemaking
. . ., indicating that Congress intended that it be treated for these
purposes like an agency of the government") (emphasis added);
Wilkinson v. Legal Servs. Corp., 27 F. Supp. 2d 32, 44, 62 (D. D.C.
1998) (stating that Congress in section 2996g(e) "specifically pro-
vided," consistent with section 2996d(e)(1), for treating Legal Ser-
vices as a federal agency, and explaining Texas Rural as holding that
"the LSC Act impliedly provides for judicial review when LSC exer-
cises its rulemaking authority vis-a-vis its grantees"); San Juan, 655
F.2d at 439 (noting, in recipient's challenge to funding decision,
extensive procedural rights that section 2996j provides to recipients
whose funding Legal Services wishes to terminate, and concluding
that Congress would not have "specifically provided" such rights "if
it did not assume that judicial review would be available to a grantee
who claimed that it was denied" those rights); Multnomah Legal
Servs. Workers Union v. Legal Servs. Corp., 936 F.2d 1547, 1556
(9th Cir. 1991) (limiting Spokane County to "funding decisions" and
emphasizing that "we are not free to read [section 2996d(e)(1)] out of
the LSC Act").
Thus, whatever the bases for judicial review may have been in
these cases, they were clearly derived from the particular provisions
of the LSC Act before those courts.
We therefore hold that because nothing in the LSC Act "specifi-
cally provide[s]," 42 U.S.C. § 2996d(e)(1), for treating Legal Services
as a federal agency, and thus as subject to the APA's provisions for
judicial review, when it addresses a complaint alleging a violation of
section 2996f(a)(5), and because nothing in the LSC Act itself pro-
vides to the alleged victim of that violation any basis for judicial
review, Regional has no cause of action to challenge in federal court
Legal Services' decision that its recipients did not unlawfully lobby
against Regional. Accordingly, the proper course for the district court
was to dismiss Regional's first cause of action without reaching its
merits.
11
III.
In addition to its claim of a violation of the LSC Act, Regional also
brought a claim that Legal Services violated FOIA, which specifically
applies to Legal Services, see 42 U.S.C.§ 2996d(g), when it delayed
its release to Regional of requested documents. The district court dis-
missed the FOIA claim as moot, because Regional has received those
documents. We affirm, concluding that Regional's challenge to the
particular alleged violation of FOIA from the delayed release of docu-
ments is moot for the reason that the district court gave, and that its
challenge to Legal Services' alleged policy of not disclosing to third
parties documents relating to an ongoing investigation is not ripe for
review.
It is undisputed that a challenge to a particular denial of a FOIA
request becomes moot if an agency produces the requested docu-
ments. See, e.g., Payne Enter., Inc. v. United States, 837 F.2d 486,
490-91 (D.C. Cir. 1988). Thus, because Legal Services fully complied
with Regional's requests in December 1996, when Legal Services
completed its investigation, Regional's challenge to the denials of its
requests prior to December 1996 is moot.
Regional argues, however, that it is also challenging the policy
behind Legal Services' denials, and relies on Payne for the rule that
such a suit does not become moot upon release of the requested docu-
ments. Payne, 837 F.2d at 491. See City of Houston v. Department of
Housing and Urban Dev., 24 F.3d 1421, 1430 (D.C. Cir. 1994).
Although Regional correctly states the rule of Payne (on whose merits
we need not pass), a suit under that rule may only proceed if the claim
is ripe, City of Houston, 24 F.3d at 1429-30; see Payne, 837 F.2d at
492-94; Webb v. Department of Health and Human Servs., 696 F.2d
101, 106-07 (D.C. Cir. 1982), and Regional's is not.
The inquiry to determine the ripeness of a claim is twofold, looking
to "the fitness of the issue for judicial decision and the hardship to the
parties of withholding court consideration." Abbott Lab. v. Gardner,
387 U.S. 136, 149 (1967). The question of an issue's fitness for judi-
cial decision in turn has two parts -- (1) "the agency's interest in
crystallizing its policy before that policy is subject to review"; and (2)
"the court's interest in avoiding unnecessary adjudication and in
deciding issues in a concrete setting." City of Houston, 24 F.3d at
1430-31 (internal quotation marks omitted). A court must balance
12
these two interests (the agency's and the court's) against the hardship
to the plaintiff from withholding court consideration at a given time.
See id.Regional's claim is not ripe, because Legal Services' policy is not
necessarily "crystallized"; judicial resolution of the claim would
almost certainly amount to unnecessary adjudication; and Regional
will suffer little, if any, hardship from delay. First, it is not clear
whether Legal Services actually has a fully developed policy of with-
holding from third parties documents relating to an ongoing investiga-
tion. It does have a policy of withholding such documents from the
target of the investigation, a policy rooted in FOIA itself. See 5
U.S.C. § 552(b)(7)(A). But according to Legal Services (and Regional
does not contest this claim), Regional's request for documents relat-
ing to an ongoing investigation was the first such one that Legal Ser-
vices had received that was not from "a program under review."
Although Legal Services did extend the policy to cover Regional's
request, it is possible that, upon reconsideration in a future case, Legal
Services would alter its position, especially since current Legal Ser-
vices regulations on FOIA requests do not specifically cover this cir-
cumstance, see 45 C.F.R. § 1602.9, and since, as the district court
noted, such an extension of the policy may conflict with our decision
in Wellford v. Hardin, 444 F.2d 21, 24 (4th Cir. 1971).
Second, because Regional has given us no reason to think that it
is likely to have any cause to file another complaint with Legal Ser-
vices over lobbying by recipients anytime soon, and thus no reason
to think that Legal Services' alleged policy will affect it -- or, for that
matter, anyone else, given that in the twenty-five years of Legal Ser-
vices' existence, Regional's FOIA request is apparently the first of its
kind -- adjudication of Regional's prospective claim appears unnec-
essary.
Third, for the same reason, any hardship that Regional may face
from delaying adjudication of Legal Services' alleged policy until
Regional again suffers from it will be minimal. Legal Services' policy
has no "direct and immediate," Abbott Lab., 387 U.S. at 152, effect
on Regional that would amount to hardship. Indeed, the policy has no
present effect at all, much less a "direct" one, "on the day-to-day busi-
ness" of Regional (regardless of what effect the lobbying may have
had). Id. Regional, unlike plaintiffs in cases where courts have found
13
challenges to an agency's FOIA policies ripe, does not "rely heavily
and frequently on FOIA," Better Gov't Ass'n v. Department of State,
780 F.2d 86, 93 (D.C. Cir. 1986). See Payne, 837 F.2d at 494. On the
contrary, "[t]he only hardship [Regional] will endure as a result of
delaying consideration of this issue is the burden of having to file
another suit." Webb, 696 F.2d at 101 (finding unripe a challenge to
agency's regulation governing FOIA requests). And whether that bur-
den will ever even exist depends upon multiple contingencies -- it
will arise only in the unlikely event that Legal Services' recipients (of
which SCLSA is no longer one) again lobby against Regional, again
do so successfully or at least in such a way as to cause difficulties for
Regional, Regional again seeks to "participate" in the investigation9
and thus brings a FOIA request, and Legal Services again delays
granting the request for the same reason it did here. In light of all of
these considerations, we agree with the district court that Regional's
FOIA claim, in whatever form, is not justiciable, and we affirm its
dismissal.
IV.
Accordingly, there being no basis for judicial review of Legal Ser-
vices' determination that its recipients did not violate 42 U.S.C.
§ 2996f(a)(5) in lobbying against Regional, and Regional's FOIA
claim not being ripe for review, we vacate the district court's judg-
ment with regard to the former claim and remand with instructions to
dismiss that claim, and we affirm the dismissal of the FOIA claim.
VACATED AND REMANDED IN PART; AFFIRMED IN PART
_________________________________________________________________
9 Regional's FOIA request appears actually to be a means of somehow
enabling it to participate in Legal Services' internal investigation, appar-
ently as a handmaiden of sorts to Legal Services. Regional's cause of
action under FOIA included a request for an order that "in any subse-
quent proceedings with LSC, Regional be allowed to review all commu-
nications between the Recipients and Employees and LSC and to take
discovery from the Recipients and Employees, including written inter-
rogatories, requests for production of documents, and depositions." Like
Legal Services, we are unaware of any authority in the LSC Act for a
right to such "participation" in an investigation of others.
14
MURNAGHAN, Circuit Judge, concurring:
I am in agreement with the result reached in the lead opinion to the
extent that it finds the actions of the Legal Services Corporation
("LSC" or "Corporation") unreviewable and Regional Management
Corporation's claim under the Freedom of Information Act moot. I
disagree, however, with the reasoning advanced in the opinion regard-
ing reviewability and so write separately.
The lead opinion concludes that, because the Corporation is not
subject to the Administrative Procedures Act ("APA") and because
the Legal Services Corporation Act ("LSC Act") does not provide a
private right of action, the Corporation's decision that certain recipi-
ents of the Corporation's funds did not unlawfully lobby the South
Carolina General Assembly and the Georgia Commissioner of Insur-
ance is not subject to judicial review. To the contrary, there exists a
presumption of reviewability that can be overcome only if Congress'
intent to preclude such review is "fairly discernible in the statutory
scheme." Block v. Community Nutrition Institute, 467 U.S. 340, 350-
51 (1984). There is no such congressional intent evident in the case
at bar. The case does involve, however, the Corporation's exercise of
its discretion not to bring an enforcement action, which is beyond the
power of judicial review. On that basis, the district court's decision
should be vacated.
There are generally three mechanisms through which a litigant can
challenge the legality of a federal agency's action: (1) the agency can
be governed by the APA; (2) a particular regulatory scheme can con-
tain an explicit provision for obtaining judicial review of agency
actions under that scheme; or (3) the statute the litigant claims to be
violated can provide a litigant with a private right of action to enforce
the act. See Hoefler v. Babbitt, 139 F.3d 726, 728 (9th Cir.), cert.
denied, 119 S.Ct. 70 (1998). Since the Corporation is not "a depart-
ment, agency, or instrumentality, of the Federal Government," 42
U.S.C.A. § 2996d(e)(1), its decisions are not reviewable under the
APA. See Spokane County Legal Services, Inc. v. Legal Services
Corp., 614 F.2d 662, 669 (9th Cir. 1980); Texas Rural Legal Aid, Inc.
v. Legal Services Corp., 940 F.2d 685, 690, 696 (D.C. Cir. 1991).
Furthermore, the LSC Act does not contain any provision for judicial
review of the Corporation's decision, nor any provision that affords
15
Regional Management Corporation ("Regional") a private right of
action. The Corporation, therefore, concludes (as does the lead opin-
ion) that Congress did not intend the Corporation's actions to be gen-
erally subject to judicial review.1
Contrary to the Corporation's conclusion, however, "[s]tatutory
silence ... does not indicate a legislative intent to preclude judicial
review." San Juan Legal Services, Inc. v. Legal Services Corp., 655
F.2d 434, 438 (1st Cir. 1981) (relying on Stark v. Wickard, 321 U.S.
288, 309-10 (1944)). As the First Circuit explained in San Juan Legal
Services, "[t]here is no presumption against judicial review and in
favor of administrative absolutism unless that purpose is fairly dis-
cernible in the statutory scheme. And the preclusion of judicial review
`is not lightly to be inferred.'"2 655 F.2d at 438 (finding nothing in
the LSC Act or its legislative history suggesting that judicial review
of a defunding hearing is precluded) (internal citations omitted); see
also Texas Rural Legal Aid, 940 F.2d at 697 (finding "nothing in the
Act or the legislative history to suggest that [Congress] meant to insu-
late LSC's actions from judicial review"). Indeed, absent "clear and
_________________________________________________________________
1 As support for its conclusion, the Corporation points to the legislative
history of the Act. When the LSC Act was amended in 1977, the House
Report stated that the amendments to the Act would reaffirm the "exclu-
sive authority" of the Corporation to insure compliance with the Act. H.
Rep. No. 95-310, 95th Cong., 1st Sess. 6 (1977), reprinted in 1977
U.S.C.C.A.N. 4503, 4504. The House Report further noted that the Act
"assures that the Corporation is accountable directly and only to the Con-
gress. That accountability mechanism has worked well and must be pre-
served." Id. at 4508. These quotations from the House Report, however,
do not refer to judicial reviewability. As the paragraphs preceding the lat-
ter quotation make clear, and as the District of Columbia Circuit noted
in Texas Rural Legal Aid, 940 F.2d 685, the "statement ... refers only to
Congress's concern to `protect the Corporation from inappropriate con-
trol by the Executive Branch' .... It simply does not address the issue of
judicial review of LSC action." 940 F.2d at 697 (internal citations omit-
ted).
2 The First Circuit in San Juan Legal Services recognized that most of
the cases on which it relied "involved government agencies and were
decided in the shadow of the Administrative Procedure Act." 655 F.2d
at 438 n.6. The court concluded, however, that the principles were just
as applicable to the situation at issue. Id.16
convincing evidence"3 of a contrary congressional intent, there is a
"presumption in favor of judicial review" of administrative action.4
Armstrong v. Bush, 924 F.2d 282, 291 (D.C. Cir. 1991) (relying on
Abbott Laboratories v. Gardner, 387 U.S. 136, 141 (1967)); see also
Electricities of North Carolina, Inc. v. Southeastern Power
Administration, 774 F.2d 1262, 1266 (4th Cir. 1985) ("Agency
actions are presumptively subject to judicial review except where
Congress manifests its intent to preclude such review.") (relying on
Abbott Laboratories, 387 U.S. at 140-41); Duncan v. West, 153 F.3d
719, 1998 WL 387191 (4th Cir. June 24, 1998) (unpublished) (recog-
nizing strong presumption that Congress intends judicial review of
administrative action), cert. denied, 119 S.Ct. 411 (1998). "[W]here
substantial doubt about the congressional intent exists, the general
presumption favoring judicial review of administrative action is
controlling."5 Block, 467 U.S. at 351.
The case before us does involve, however, the Corporation's exer-
cise of its discretion not to bring an enforcement action.6 As such, it
_________________________________________________________________
3 The Supreme Court in Block v. Community Nutrition Institute, 467
U.S. 340 (1984), noted that the "clear and convincing evidence" standard
is not intended in the strict evidentiary sense. Rather, "the Court has
found the standard met, and the presumption favoring judicial review
overcome, whenever the congressional intent to preclude judicial review
is `fairly discernible in the statutory scheme.'" 467 U.S. at 350-51.
4 The presumption of reviewability does not apply to an agency's dis-
cretionary refusal to initiate enforcement proceedings. See Heckler v.
Chaney, 470 U.S. 821, 837-38 (1985).
5 The presumption of reviewability "may be overcome by specific lan-
guage or specific legislative history that is a reliable indicator of congres-
sional intent." Block, 467 U.S. at 349; see also Bowen v. Michigan
Academy of Family Physicians, 476 U.S. 667, 670-73 (1986) (noting that
presumption can be defeated by "`specific language or specific legisla-
tive history that is a reliable indicator of congressional intent,' or a spe-
cific congressional intent to preclude judicial review that is `fairly
discernible' in the detail of the legislative scheme"). As stated above, no
such language exists in the text of the statute, and there exists no reliable
legislative history evidencing an intent by Congress to preclude judicial
review.
6 Regional maintains that the Corporation did not merely exercise its
prosecutorial discretion but made an adjudicative decision, including
17
is a matter exclusively within the Corporation's discretion and beyond
the power of judicial review. Congress gave the Corporation the sole
authority "to insure the compliance of recipients and their employees
with the provisions of the [Act] and the rules, regulations, and guide-
lines promulgated pursuant to [the Act] ...." 42 U.S.C.A.
§ 2996e(b)(1)(A). The available methods of enforcing the Act include
the possible suspension of funding and/or suspension of the employ-
ees found to have violated the Act and, after proper notice and hear-
ing, the termination of funding or the termination of the employees
found to have violated the Act, "as deemed appropriate for the viola-
tion in question." 42 U.S.C.A. § 2996e(b)(5). By their terms, the stat-
utory enforcement provisions permit, but do not compel, the
Corporation to sanction violations of the Act or of the Corporation's
regulations. See 42 U.S.C.A. § 2996e(b)(5); see also 45 C.F.R.
§ 1618.5(a) (requiring Corporation to investigate allegations of non-
compliance "promptly and attempt to resolve [them] through informal
consultation with the recipient"); 45 C.F.R.§ 1618.5(b) (giving Cor-
poration discretion to suspend or terminate funding after "attempts at
informal resolution have been unsuccessful"). Congress has commit-
ted the enforcement power to the Corporation's discretion, and it is
therefore not within the court's power to review. 7 Chaney, 470 U.S.
_________________________________________________________________
findings of fact and conclusions of law. I do not believe that the Corpora-
tion "adjudicated" the allegations at issue. Instead, it conducted a prelim-
inary investigation to determine if the facts alleged in the complaint
warranted initiation of an adjudicative process, i.e., the defunding pro-
cess. The Corporation did not hold a hearing or employ any of the proce-
dures set forth in 45 C.F.R. Parts 1606 and 1625 for defunding
proceedings because it made a decision, after the preliminary investiga-
tion, that no violation of the Act had occurred. Courts must defer to the
agency's decision when the agency has conducted a preliminary "pre-
adjudicatory" investigation and has decided to take no further action. See
generally Sierra Club v. Larson, 882 F.2d 128 (4th Cir. 1989) ("The
judiciary is ill-equipped to oversee executive enforcement decisions,
whereas the agency is equipped to decide where to focus scarce
resources, how to handle delicate federal-state relations and how to eval-
uate the strengths and weaknesses of particular cases.").
7 The presumption of unreviewability can be overcome by a showing
that the statute in question provides "guidelines for the agency to follow
in exercising its enforcement powers." Chaney, 470 U.S. at 833. Also,
courts can "`review allegations that an agency exceeded its legal author-
ity, acted unconstitutionally, or failed to follow its own regulations' but
they `may not review agency action where the challenge is only to the
decision itself.'" Electricities of North Carolina, 774 F.2d at 1267.
18
at 831 ("[A]n agency's decision not to prosecute or enforce ... is a
decision generally committed to an agency's absolute discretion.").
I, therefore, concur in the result reached in the lead opinion but
believe judicial review is improper in the case at bar because the Cor-
poration is within its prosecutorial discretion. I submit that the district
court's decision should be vacated on that basis.
19