JOHN R. BLOCK, SECRETARY OF AGRICULTURE, ET AL., PETITIONERS V. RONALD E. PAYNE, ET AL. No. 83-1691 In the Supreme Court of the United States October Term, 1983 The Solicitor General, on behalf of the Secretary of Agriculture, the Administrator of the Farmers Home Administration (FmHA), and FmHA officials in Florida, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Eleventh Circuit in this case. Petition for a Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit PARTIES TO THE PROCEEDING In addition to the Secretary of Agriculture, the Administrator of the Farmers Home Administration, the State Director and Assistant State Director of the agency's Florida office, the FmHA County Supervisor for Madison County, Florida, and a District Supervisor of the FmHA were defendants below and are petitioners in this Court. /*/ In addition to Ronald E. Payne, Carbie Ellie was an individual plaintiff below and is a respondent in this Court. Payne and Ellie were certified as representatives of a class of farmers in a 13-county area of north Florida covered by presidential disaster declaration M-345 who suffered losses from floods or storms in early April 1973 and who were eligible to apply for emergency loans administered by the FmHA but were not so notified by the agency (App., infra, 43a). In the district court, James H. Collins attempted to intervene as a plaintiff representing a class of farmers in 27 states and Puerto Rico who had suffered losses as a result of natural disasters occurring between December 27, 1972, and April 19, 1973, and who had been eligible to apply for emergency loans. Collins appealed unsuccessfully from the denial of his motion to intervene (App., infra, 24a-26a). TABLE OF CONTENTS Opinions below Jurisdiction Statutes and regulations involved Statement Reasons for granting the petition Conclusion Appendix OPINIONS BELOW The opinion of the court of appeals (App., infra, 1a-26a) is reported at 714 F.2d 1510. The supplemental opinion of the court of appeals on petition for rehearing (App., infra, 27a-30a) is reported at 721 F.2d 741. The opinion of the district court (App., infra, 31a-42a) is not reported. JURISDICTION The judgment of the court of appeals (App., infra, 62a-63a) was entered on September 19, 1983. The court of appeals' opinion on rehearing was entered on December 19, 1983. On March 9, 1984, Justice Powell extended the time for filing a petition for a writ of certiorari through April 17, 1984. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTES ADN REGULATIONS INVOLVED Sections 4 and 10(c) of Pub. L. No. 93-237, 87 Stat. 1024-1025, Sections 1, 3, 4 and 8 of Pub. L. No. 93-24, 87 Stat. 24-25; and Section 5 of Pub. L. No. 92-385, 86 Stat. 557-559 are set forth at Appp., infra, 56a-61a. The applicable regulations, 7 C.F.R. 1832.81-1832.83 (1975), are set forth in pertinent part at App., infra, 49a-52a. QUESTION PRESENTED Whether the Secretary of Agriculture may be equitably estopped from enforcing a valid regulation establishing a deadline for filing of applications for Farmers Home Administration emergency loans on the ground that the agency's news release announcing the availability of loans did not specify the generous terms of the loan program. STATEMENT The decision of the court of appeals requires the Secretary of Agriculture and the Farmers Home Administration to reopen an emergency farm loan program that expired more than 10 years ago. 1. a. For many years the Farmers Home Administration (FmHA) of the Department of Agriculture has administered a program of emergency loans designed to make possible continuation of farming operations by farmers who have suffered crop losses or property damage as a result of natural disasters such as floods, storms, or drought. See Consolidated Farm and Rural Development Act, Sections 321-330, 7 U.S.C. 1961-1971. From time to time Congress has adjusted the interest rates, credit conditions and forgiveness of indebtedness provisions of the emergency loan program. Generally, however, if crop yields are substantially and adversely affected by a formally declared natural disaster and losses are not covered by insurance, an affected farmer may apply for an emergency loan. See generally 7 U.S.C. 1961; 7 C.F.R. Pt. 1945; 7 C.F.R. Pt. 1832 (1974). b. In early April 1973, heavy rains caused flooding, crop losses and property damage in a 13-county area of northern Florida. On May 26, 1973, the President declared this region to be a major disaster area. Pursuant to Section 321 of the Consolidated Farm and Rural Development Act, 7 U.S.C. 1961, the Secretary then was authorized to make emergency loans to farmers suffering losses in the affected area. Under the terms of the emergency loan program in effect at the time of the disaster designation, emergency loans bore an interest rate of 5%, and applicants were required to show inability to obtain credit from ordinary commercial sources. See Pub. L. No. 93-24, Sections 3, 4, 87 Stat. 24-25. No provision was made for cancellation of any portion of the principal amount of the loan. /1/ FmHA required applications for loans to cover crop losses to be filed within nine months of the formal disaster declaration. Thus, in the case of the north Florida floods of April 1973, applications were due no later than February 26, 1974. App., infra, 1a-3a. Apparently no loans were made in this area during this period (id. at 6a). On January 2, 1974, however, Congress liberalized the terms and conditions for FmHA emergency loans with respect to natural disasters occurring between December 27, 1972, and April 20, 1973. The new law made available emergency loans bearing a 1% interest rate to eligible farmers who had suffered losses in this interval, authorized cancellation of 50% of the principal amount of indebtedness, up to $5,000, and dispensed with the requirement that applicants show the unavailability of credit from other sources. Pub. L. No. 93-237, Section 4, 87 Stat. 1024. /2/ Congress directed that the Secretary of Agriculture "extend for ninety days after the date of (the new) enactment" the otherwise applicable deadline for seeking emergency loan assistance, if the administrative deadline based on the date of the disaster declaration would have expired at an earlier date. Pub. L. 93-237, Section 10(c), 87 Stat. 1025; see S. Conf. Rep. 93-363, 93d Cong., 1st Sess. 6 (1973). The effect of this provision was to extend the deadline for north Florida farmers to apply for emergency loans from February 26, 1974, through April 2, 1974, and to make available more favorable loan terms than previously had been offered. On February 15, 1974, FmHA issued instructions to its staff and rules to implement the special emergency loan program created by Pub. L. No. 93-237. Initially issued as staff Special Instruction 441.5 in unpublished form, the directive was published without material change in the Federal Register on February 27, 1974. 7 C.F.R. Pt. 1832, Subpt. E, at 39 Fed. Reg. 7569. /3/ The Federal Register publication included all pertinent details concerning the terms and conditions of the special emergency loan program, including the April 2, 1974 application deadline, the 1% interest rate, the forgiveness provision, and the absence of any requirement that unavailability of other credit be demonstrated. 7 C.F.R. 1832.82(a) and 1832.83(a), at 39 Fed. Reg. 7570-7571 (App., infra, 51a-52a). In addition, the agency's instructions stated: State Directors and County Supervisors will inform the news media including newspapers, radio, and television in the affected counties of the provisions of P.L. 93-237. A suggested news release for local use is attached as Exhibit C. App., infra, 46a, 51a. /4/ The "suggested news release" was transmitted by the state FmHA director to local agency offices on February 28, 1974, and was in turn "forwarded to the local media" (id. at 7a). /5/ The press release, which was carried in at least two newspapers in the north Florida disaster area (see Def. Exhs. 11A, 11B, C.A. App. 48a, 49a), advised farmers that they could apply for emergency loans from FmHA under Pub. L. No. 93-237 if they had suffered property or crop losses as a result of the April 1973 flooding, and that the application period would close on April 2, 1974. Only a handful of loan applications were received in this period (App., infra, 21a-22a). 2. Respondent Payne, a north Florida farmer, filed this action in the United Staets District Court for the Middle District of Florida on August 19, 1976. Although respondent Payne had received actual notice of the special 1974 emergency loan program, had applied for a loan, and had received one, he brought suit on behalf of a class of roughly 2500 farmers in the 13-county area covered by the May 26, 1973 disaster declaration who allegedly had been eligible for loans under the 1974 program. Contending that the class members had been denied property without due process by inadequacies in the publicity given to the special loan program and that the FmHA had violated its own regulations governing publicity, respondent sought entry of an injunction directing that the 1974 loan program be reopened. C.A. App. 56a-61a. /6/ The district court certified a class consisting of all farmers in the 13-county area covered by the May 26, 1973 disaster declaration who suffered damages as a result of the natural disaster, were eligible to apply for emergency loans, and were not so notified (App., infra, 41a). In an opinion issued on February 11, 1981, the court held that the publicity given to the emergency loan program in 1973-1974 by the responsible FmHA offices did not satisfy the requirements of general agency publicity regulations, including a directive to make "such public announcements as appear appropriate" (7 C.F.R. 1832.3(a)(1) (1973)). App., infra, 39a-40a. Accordingly, the court enjoined FmHA to reopen the 1974 emergency loan program in the 1973 north Florida disaster area, directed the agency to give notice of the reopened program, and required it to process applications under the eligibility requirements prevailing in 1974 and to make loans upon the terms that were applicable in 1974 (id. at 40a-42a). /7/ 3. On appeal, the government argued that by mandating reopening of the long closed 1974 emergency loan program, in disregard for the applicable deadline established by law, the district court had impermissibly estopped the United States from enforcing lawful conditions upon the receipt of public benefits, contrary to Schweiker v. Hansen, 450 U.S. 785 (1981), and FCIC v. Merrill, 332 U.S. 380 (1947). The government also argued that the publicity given to the 1973 and 1974 emergency loan programs in north Florida met any judicially enforceable legal requirements. /8/ The court of appeals affirmed (App., infra, 1a-26a). The court held that the publicity given to the special 1974 emergency loan program created by Pub. L. No. 93-237 in the north Florida disaster area was inadequate. The court reasoned that the press release disseminated by the state and local FmHA offices "failed to 'inform the news media . . . of the provisions of P.L. 93-237'" (App., infra, 22a (quoting 39 Fed. Reg. 7570; emphasis added by the court of appeals)) because it did not mention the reduced interest rate, the possibility of partial cancellation of the debt, or the waiver of any requirement that unavailability of alternative sources of credit be demonstrated. The court thus concluded that the agency had failed to comply with its own publicity regulations governing the special 1974 emergency loan program (App., infra, 22a, 24a n.35). /9/ The court of appeals also rejected the government's contention that the district court lacked authority to require reopening of the 1974 loan program (App., infra, 11a-19a). Initially, the court of appeals held that Section 10(c) of Pub. L. No. 93-237 (see pages 4-5, supra) did not establish a statutory deadline for the filing of applications under the special 1974 emergency loan program. The court of appeals held that the statute merely mandated a minimum extension of administratively set deadlines, to ensure that those deadlines did not expire before eligible farmers had an opportunity to apply for assistance. The court concluded that the Secretary had authority to prescribe filing deadlines and could extend, or could be ordered to extend, the deadline for the 1974 loan program beyond April 2, 1974. App., infra, 13a-16a. The court of appeals stated that it did not "condone the failure of potential loan applicants to follow legitimate time restrictions set as a prerequisite to applying for government benefits" (App., infra, 15a). In the court's view, however, FmHA's failure to give the special 1974 emergency loan program fuller publicity created "exigent circumstances beyond the farmers' control (that) precluded intended beneficiaries from applying for loans," and justified the district court's order that the agency "extend the loan period" (id. at 15a, 16a). Citing United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260 (1954), and Morton v. Ruiz, 415 U.S. 199 (1974), the court of appeals stated that reopening of the 1974 loan program was simply an application of the principle that agencies must abide by their own regulations (App., infra, at 16a, 18a-19a). The court of appeals held that Schweiker v. Hansen, supra, did not prohibit the reopening of the special 1974 emergency loan program (App., infra, 16a-19a). The court's primary ground for distinguishing Hansen was that reopening the emergency loan program would "not threaten the public fisc" because "(l)oans * * * presumably are repaid" (App., infra, 18a). The court also reasoned that this case involved "failure on the part of an entire agency to follow self-imposed regulations" (id. at 17a), rather than a negligent act of an individual government employee (id. at 16a-17a). 4. The court of appeals issued a brief supplemental opinion in response to the government's petition for rehearing (App., infra, 27a-30a). The court stated that "while any language (in its opinion) categorizing" the FmHA's publicity directive "as a regulation may have been overbroad," the result reached was correct because the courts are authorized to compel agencies to comply with their "internal administrative procedures" (id. at 29a). Upon application of petitioners, the court of appeals stayed issuance of its mandate pending final disposition of this petition. REASONS FOR GRANTING THE PETITION Overriding an explicit application deadline having the force and effect of law, the court of appeals has ordered the reopening of an emergency loan program designed to provide farmers with short-term financial relief from crop and property losses suffered more than a decade ago. The court of appeals' ruling conflicts with this Court's many decisions holding that, at least in the absence of serious affirmative misconduct, the government may not be equitably estopped from enforcing valid statutory or regulatory conditions of eligibility for receipt of public benefits. See, e.g., INS. v. Miranda, No. 82-29 (Nov. 8, 1982), slip op. 3-5; Schweiker v. Hansen, 450 U.S. 785, 788 (1981); INS v. Hibi, 414 U.S. 5, 8 (1973); Montana v. Kennedy, 366 U.S. 308, 314-315 (1961); FCIC v. Merrill, 332 U.S. 380, 384-385 (1947). Like Community Health Services v. Califano, 698 F.2d 615 (3d Cir. 1983), cert. granted, No. 83-56 (Oct. 3, 1983), the decision below disregards this Court's clear teaching that the courts may not invoke an equitable doctrine of estoppel to defeat conditions imposed on eligibility for payments from the federal fisc. See Schweiker v. Hansen, 450 U.S. at 788, 789 n.4; FCIC v. Merrill, 332 U.S. at 385. Here, as in Community Health Services, the court of appeals distinguished this Court's precedents on grounds that simply cannot withstand examination. In view of the pendency of Community Health Services, which is likely to provide substantial guidance to the lower courts as to the applicability of equitable estoppel against the United States in circumstances akin to those of this case, we believe that it would be appropriate to hold this case for disposition in light of Community Health Services. /10/ 1. a. The regulations that governed the special 1974 emergency loan program as it applied in north Florida unambiguously provided: "(T)he termination date for acceptance of applications based on both physical and production losses will be April 2, 1974" (7 C.F.R. 1832.82(a) (1975); see App., infra, 51a). Even assuming that Congress did not establish a statutory deadline for filing applications under the 1974 emergency loan program in Section 10(c) of Pub. L. No. 93-237 (see pages 4-5, supra), there can be no doubt that the deadline reflected in the regulation has the force and effect of law. Pursuant to Section 339 of the Consolidated Farm and Rural Development Act, 7 U.S.C. 1989, the Secretary of Agriculture is authorized "to make such rules and regulations (and to) prescribe the terms and conditions for making * * * loans * * * as he deems necessary" to carry out the agricultural loan programs under his supervision. Thus the Secretary was vested with authority to adopt a deadline for filing of loan applications having legislative effect. See Batterton v. Francis, 432 U.S. 416, 425 & n.9 (1977). The Secretary explicitly invoked this substantive rulemaking authority in promulgating the regulation that contains the April 2, 1974 deadline. See 7 C.F.R. Pt. 1832, Subpart E. (1975) (App., infra, 50a). And the deadline regulation was promulgated as a substantive rule in accordance with the requirements of the Administrative Procedure Act. /11/ The April 2, 1974 deadline for filing of emergency loan applications accordingly has "the substantive characteristics" and is the "product of (the) procedural requisites" that vest a regulation with the "force and effect of law" (Chrysler Corp. v. Brown, 441 U.S. 281, 301 (1979)). Indeed, the court of appeals seemed to acknowledge as much, describing the deadline as a "legitimate time restriction() set as a prerequisite to applying for governmental benefits" (App., infra, 15a). Yet the court of appeals unaccountably failed to recognize that Schweiker v. Hansen controls this situation. Here, as in Hansen, 450 U.S. at 790, "Congress * * * delegated to (the Secretary) the task of providing by regulation the requisite manner of application" for a government benefit. And here, just as there, a "court is no more authorized to overlook the valid regulation (governing) applications * * *than it is to overlook any other valid requirement for the receipt of benefits" (ibid.). See also FCIC v. Merrill, 332 U.S. at 384-385. b. The grounds on which the court of appeals distinguished Hansen are insubstantial. The primary distinction, in the court of appeals' view, was that, because a loan program is involved here, "the district court's remedy in the present case does not threaten the public fisc" (App., infra, 18a). This Court has previously rejected such reasoning, holding that the rule against estopping the government from insisting on compliance with valid conditions imposed on receipt of a public benefit does not depend upon a showing of impact on the federal treasury. See, e.g. INS v. Miranda, supra; INS v. Hibi, supra; Montana v. Kennedy, supra. In Miranda, the court of appeals had distinguished Schweiker v. Hansen on precisely the ground offered by the court below. See Miranda v. INS, 673 F.2d 1105, 1106 (9th Cir. 1982). This Court responded (slip op. 5): The * * * distinction drawn by the Court of Appeals between this case and Hansen is unpersuasive. It is true that Hansen relied upon a line of cases involving claims against the public treasury. But there was no indication that the Government would be estopped in the absence of the potential burden on the fisc. In any event, the court of appeals' suggestion that reopening the 1974 special emergency loan program will produce no drain upon the public treasury is factually incorrect. First, as indicated above, the terms of the loan program included forgiveness of 50% of the borrower's debt, up to $5,000. Accordingly, each loan issued under the reopened program is, in effect, a grant of $5,000. Extending such relief to the estimated 2500 members of the class certified in this case would cost the government $12.5 million dollars in direct outlays. See also pages 21-22, infra. Second, in light of prevailing interest rates, a substantial subsidy is reflected in the 1% interest rate applicable to loans under the 1974 program. The attractiveness of these "loan" terms assures that the reopening of the program will impose substantial costs upon federal taxpayers. Thus the court of appeals' decision disregards "the duty of all courts to observe the conditions defined by Congress for charging the public treasury" (FCIC v. Merrill, 332 U.S. at 385). The court of appeals also reasoned that the government could be estopped here because this case involves "failure on the part of an entire agency to follow self-imposed regulations" rather than negligence by a single employee (App., infra, 17a). But the rule against estoppel in government cases is not limited to situations in which an individual employee acts in a manner that adversely affects the interests of an applicant for a benefit. For instance, the delay in processing a petition for adjustment of immigration status at issue in INS v. Miranda was not attributed to any employee's conduct, but was assessed on the premise that it was the act of the Immigration and Naturalization Service as a whole. Slip op. 4 & n.3. Similarly, the suspension within the Philippines of a special overseas naturalization program in INS v. Hibi was ordered by the Attorney General, in consultation with the Commissioner of Immigration, and reflected the official uniformly applied policy of the United States. See 414 U.S. at 10-11 (Douglas, J., dissenting); see also United States v. Mendoza, No. 82-849 (Jan. 10, 1984), slip op. 2. Nonetheless, estoppel was rejected in these cases, and there is no justification for a different result here. /12/ Finally, the court of appeals distinguished Hansen on the ground that the erroneous advice of a Social Security Administration employee was "revocable," whereas respondents cannot now obtain loans under the 1974 emergency program because the application period has closed (App., infra, 17a-18a). The court of appeals misapprehended the thrust of the Court's statement in Hansen (450 U.S. at 789) that the SSA employee's conduct "did not cause the respondent to take action, cf. Federal Crop Insurance Corp. v. Merrill, supra, or fail to take action, cf. Montana v. Kennedy, supra, that respondent could not correct at any time." The Court could not have meant that the Social Security applicant's action in the wake of receiving erroneous advice had no irreversible impact upon her ability to receive benefits. In fact, although Hansen ultimately did apply for and receive Social Security benefits, because the Act limited the reach of the retroactive award of benefits to a 12-month period, she did not receive all of the benefits she might have received absent the erroneous advice. 450 U.S. at 786-787. Rather, the Court's observation indicated only that the conduct of the SSA employee did not prevent Hansen from filing an application for benefits that would have protected her rights to the extent permitted by the applicable time constraints established by law. In short, the rule reflected in Hansen is that the courts may not disregard lawfully established deadlines for applying for federal benefits. /13/ Because FmHA's failure to publicize fully the terms of loans available under the special 1974 program did not prevent respondents from applying for loans prior to the dealine, Hansen is controlling here. The FmHA's conduct "did not cause respondent(s) to take action" or "fail to take action" that respondents "could not correct at any time" permitted by law (450 U.S. at 789). In sum, this Court's decisions make clear that, at least in the absence of serious affirmative misconduct, the government may not be estopped from enforcing the requirements of public law. See INS v. Miranda, slip op. 3-4; Schweiker v. Hansen, 450 U.S. at 788-790; INS v. Hibi, 414 U.S. at 8-9; Montana v. Kennedy, 366 U.S. at 315. Yet the court of appeals expressly declined to rest its decision upon a finding of affirmative misconduct (App., infra, 18a n.29), correctly recognizing that the case at most involved a failure to act, or "neglect" (ibid.; id. at 16a). Plainly, a mere failure to follow "affirmatively required procedure" (id. at 16a) is not the kind of misconduct that would "raise a serious question whether petitioner is estopped from insisting upon compliance with (a) valid regulation" (Schweiker v. Hansen, 450 U.S. at 790). c. The court of appeals perceived the reopening of the 1974 special emergency loan program in the 1973 north Florida disaster area as a routine exercise of judicial authority under the Administrative Procedure Act to require an agency to abide by its own regulations (App., infra, 10a-11a n.20, 16a, 18a). Assuming that the APA is applicable here, the doctrine invoked by the court of appeals still does not support its decision. /14/ To be sure, the Court has held that "agencies (are) bound by their own regulations * * * in cases * * * brought under the APA" or in similar settings. United States v. Caceres, 440 U.S. 741, 751 n.14, 754 (1979) (footnote omitted). /15/ The question in this case, however, is not whether the Secretary could be directed by a court to carry out his own publicity directive (at a time when the program was still in effect), but whether the courts below had authority to reopen the loan program, which had, by its terms, expired. None of this Court's decisions requiring an agency to abide by its regulations suggests that relief of the latter kind is permissible -- i.e., that a court may disregard valid limitations upon eligibility for benefits because of agency violations of self-imposed regulations unrelated to the eligibility limitations. Rather, in each of these cases, the agency had sought to deny an individual a benefit to which he was entitled by law, or to deprive a person of a position lawfully occupied, in a procedurally irregular manner; the relief sought was simply the setting aside of that agency action. /16/ The relief awarded in this case by the district court simply does not resemble that made available in prior cases and is not authorized by the APA. To reopen a long expired emergency loan program, in the face of a valid regulation establishing a deadline for filing of applications, because of a finding of noncompliance with unrelated agency requirements covering the program is not to "compel agency action unlawfully withheld" (5 U.S.C. 706(1)). Under the cited grant of authority a court might well have enjoined the FmHA to comply with its own publicity directives. /17/ But the relief awarded here is not of that nature. Reopening the loan program also is not "invalidation of agency action that is arbitrary, capricious, an abuse of discretion, * * * not in accordance with law * * * or taken 'without observance of procedure required by law'" (United States v. Caceres, 440 U.S. at 753-754 (quoting 5 U.S.C. 706(2)). Indeed, there is no suggestion here that the agency's regulation establishing the April 2, 1974 deadline was deficient in any of these respects when adopted. Instead, the court of appeals appears to have concluded (App., infra, 15a-16a) that, in light of subsequent developments, it was unreasonable for the agency to fail to waive its own deadline, and that a court therefore could direct it to do so. /18/ This reasoning is fundamentally at odds with Schweiker v. Hansen and FCIC v. Merrill. Applying the reasoning of the decision below, this Court should have held in Hansen that the Social Security Administration acted unreasonably in refusing to waive the written application requirement established by agency rules, in light of its employee's violation of the SSA Claims Manual. And the Court should have held in Merrill that the Federal Crop Insurance Corporation was required to waive the provisions of its regulations precluding issuance of insurance upon crops planted on reseeded acreage, in light of its employee's failure to give correct advice. These were not the rulings of this Court. Accordingly, the authority available to a court under the APA to set aside agency action does not extend to preventing the government from enforcing a lawful condition upon the receipt of federal benefits. This Court's pronouncements regarding estoppel of the government may not be so easily circumvented. 2. a. The decision of the court of appeals predictably will trigger a flood of applications from farmers primarily interested in obtaining a $5,000 grant and/or a loan at interest rates far below those otherwise available. As we have noted, the result will be costly indeed for the United States. Furthermore, the cost will be greatly magnified if the unsuccessful intervenor in this case succeeds in extending the court of appeals' ruling to benefit a nationwide class in his separate action pending in district court in Georgia (see page II, supra; App., infra, 24a-26a & n.42). Reopening the 1974 special emergency loan program will also produce substantial administrative costs and burdens. It plainly will be difficult to determine at this late date whether any individual applicant suffered losses in 1973 and what the extent of those losses were. The filing deadline overridden by the court of appeals thus is, like the written application requirement that the Court vindicated in Hansen, 450 U.S. at 790, "essential to the honest and effective administration" of the program. Reopening the 1974 loan program a decade after its expiration will not even serve the objectives of that program. Those objectives were to tide farmers over from the immediate shock of losses from natural disasters, "in order that they may continue their future farming or livestock operations with credit from other sources" (7 C.F.R. 1832.81 (1975) (App., infra, 50a-51a)). The judgment of the district court, as affirmed by the court of appeals, however, requires that loans be made under the reopened program based upon the applicant's eligibility as of 1974, without regard to whether any current need exists. And any current need that might exist in a particular case cannot realistically be traced to the 1973 north Florida flooding. Accordingly, the remedy afforded by the court of appeals resembles nothing so much as an unauthorized award of damages against the United States. See United States v. Testan, 424 U.S. 392, 400 (1976). b. The court of appeals' ruling typifies the increasing tendency of the lower courts to disregard this Court's decisions establishing that the government may not be equitably estopped from enforcing a valid statute or regulation. In Heckler v. Community Health Services, No. 83-56 (argued Feb. 27, 1984), the Court is considering another example of this trend, a decision by the United States Court of Appeals for the Third Circuit estopping the Secretary of Health and Human Services from recovering excess payments made to a health services provider under the Medicare program. Because the decision in Community Health Services may well clarify the principles that govern this case, we believe it would be appropriate for the Court to hold this case pending the disposition of Community Health Services. CONCLUSION The petition for a writ of certiorari should be held pending a decision in Heckler v. Community Health Services, No. 83-56, and disposed of as appropriate in light of that decision. Respectfully submitted. REX E. LEE Solicitor General RICHARD K. WILLARD Acting Assistant Attorney General KENNETH S. GELLER Deputy Solicitor General JOSHUA I. SCHWARTZ Assistant to the Solicitor General ROBERT E. KOPP MICHAEL KIMMEL Attorneys APRIL 1984 /*/ The complaint named various incumbent and past occupants of these offices as defendants in their individual capacities and sought damages from these defendants. The district court dismissed the claim for damages and no appeal was taken from that ruling. See App., infra, 3a n.7. /1/ By contrast, a different set of loan terms, much more generous to the borrower, had been in effect in 1972, pursuant to Section 5 of Pub. L. No. 92-385, 86 Stat. 557-558. Under the 1972 statute, emergency loans carried a 1% interest rate; eligibility was not conditioned upon unavailability of alternative sources of credit; and borrowers could have 50% of the loan principal, up to $5,000 cancelled at will. Because the 1972 loan program triggered an unprecedented volume of loan applications, resulting in a severe drain on loan funds available to FmHA, the Secretary halted the making of emergency loans on December 27, 1972. In response, on April 20, 1973, Congress enacted Pub. L. No. 93-24, 87 Stat. 24. Section 1 of that Act repealed Section 5 of Pub. L. No. 92-385. Section 4 of Pub. L. No. 93-24 set an interest rate of 5% for new emergency loans. Section 3 imposed the requirement that credit be unavailable from alternative sources. A grandfather clause (Section 8, 87 Stat. 25) provided that loans to cover losses arising out of disasters declared prior to December 27, 1972, could still be sought under the 1972 loan program, if application was made within 18 days of the date of enactment -- i.e., by May 8, 1973. App., infra, 7a-9a, 14a n.24. /2/ Technically, Section 4 provided that notwithstanding the provisions of Pub. L. No. 93-24, which had phased out the more generous loan program that had been in effect in 1972 under Pub. L. No. 92-385, the 1972 loan program terms should remain available to farmers who suffered losses in natural disasters occurring between December 27, 1972, and April 20, 1973 (the date of enactment of Pub. L. No. 93-24). See page 3 note 1, supra. /3/ Pertinent portions of special Instruction 441.5 as originally issued are reproduced at App., infra, 45a-46a. Pertinent portions of the provisions published in the Federal Register are reproduced at App., infra, 49a-52a. /4/ The reference to the suggested news release was not included in the Federal Register version of the publicity directive. The suggested news release itself is reproduced at App., infra, 47a. See also Emergency Disaster Loan Ass'n, Inc. v. Block, 653 F.2d 1267, 1272 (9th Cir. 1981) Boochever, J., concurring, quoting Special Instruction 441.5). /5/ The press release actually employed in Florida is reproduced at App., infra, 54a-55a. It is identical to the release attached to Special Instruction 441.5. /6/ Respondent also sought damages for himself against the named defendants in their individual capacities (C.A. App. 61a-67a). The district court dismissed the damages claim. Respondent appealed, but his appeal was dismissed because no order had been entered under Fed. R. Civ. P. 54(b). Respondent did not cross-appeal when a final judgment was ultimately entered. The court of appeals accordingly did not pass on the damages claim. App., infra, 3a n.7. /7/ The court of appeals stayed the judgment of the district court pending appeal (App., infra, 10a). /8/ In addition, the government argued that respondent Payne, who had actual notice of the special 1974 loan program and had in fact applied for and received a loan, lacked standing to complain that the program publicity was inadequate and was not a proper representative of a class seeking reopening of the loan program. The court of appeals granted a limited remand requested by respondent. See App., infra, 10a n.19. On June 7, 1982, the district court entered an amended final judgment naming Carbie Ellie, a member of the class previously certified, as an additional representative plaintiff (id. at 43a-44a). The court of appeals concluded that these developments rendered the standing issue moot (id. at 10a n.19). /9/ Because of this holding, the court of appeals did not reach the question whether, as the district court had held, the publicity provided failed to satisfy other requirements of FmHA regulations, such as the requirement for "such public announcements as appear appropriate" (see page 7, supra). The court also declined to decide whether the latter requirement is too amorphous to be judicially enforceable. App., infra, 22a. /10/ See also Walters v. Home Savings & Loan Ass'n, petition for cert. pending, No. 83-277 (filed Aug. 19, 1983). We are providing counsel for respondents with copies of our brief in Community Health Services and our petition in Home Savings & Loan Ass'n. /11/ Pursuant to 5 U.S.C. 553(b)(B) and 553(d)(3), the agency dispensed with notice and comment and made the regulations immediately effective for good cause, explaining that such action was necessary to "implement() the provisions of Public Law 93-237, and because a delay in implementing the provisions of the public law by this regulation would be contrary to the public interest." 39 Fed. Reg. 7569 (1974) (App., infra, 49a). /12/ We note that the court of appeals' attempted distinction of Hansen is inconsistent with other aspects of its reasoning. If, as the court of appeals concluded, publicity measures in the 1973 north Florida disaster area were insufficient because they did not comport with the agency's self-imposed publicity requirements, the error cannot be attributed to the entire agency. In any event, a rule conditioning the availability of estoppel upon the level of the agency hierarchy at which the challenged agency action was authorized would be both inconsistent with Hibi and unworkable in practice. /13/ As the Court's citation (450 U.S. at 789) of FCIC v. Merrill and Montana v. Kennedy indicates, it is not a requirement of the rule prohibiting estoppel that private action taken in the wake of an agency error be even partially reversible. See also INS v. Hibi, supra. /14/ In fact, this suit cannot plausibly be described as one for judicial review of agency action pursuant to 5 U.S.C. 702. Respondent Payne sought and received a loan under the 1974 emergency loan program (see page 8 note 8, supra). With that single exception, there is no allegation that either the other representative plaintiff or any member of the class has ever applied -- even tardily -- to the FmHA for a loan under the program. Nor has any respondent otherwise requested that the agency waive the April 2, 1974 loan application deadline. This is not a mere failure to exhaust rights of administrative appeal. Respondents simply have not at any point been subjected to reviewable agency action. See Mathews v. Eldridge, 424 U.S. 319, 328 (1976). As a result, there is no record on which the court of appeals could have determined the reasonableness of agency action. /15/ See, e.g., Service v. Dulles, 354 U.S. 363, 388 (1957); Vitarelli v. Seaton, 359 U.S. 535, 539-540 (1959); see also Morton v. Ruiz, 415 U.S. 199, 235 (1974); United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 267 (1954); but see American Farm Lines v. Black Ball Freight Service, 397 U.S. 532, 538-539 (1970). /16/ In Morton v. Ruiz the agency had denied benefits to an applicant on the basis of a regulation that was defectively promulgated. The Court declined to accord legislative effect to the regulation because the Administrative Procedure Act itself specifies the sanction of unenforceability for such regulations. See 415 U.S. at 231-235. /17/ We do not concede, of course, that the publicity given to the 1974 special emergency loan program in the north Florida disaster area failed to comport with the agency's own publicity requirements. First, the court of appeals overlooked the fact that Pub. L. No. 93-237 covered a host of subjects unrelated to the 1974 loan program. The relevant provision, Section 4, simply revived, temporarily, a program that had previously been in effect in 1972. See page 4 & note 2, supra. Neither the interest rate applicable to that program nor the cancellation provisions are even mentioned in Pub. L. No. 93-237. In the circumstances, the press release, which mentioned the availability of a new loan program and the pertinent deadline and advised interested persons as to how to secure more information, was entirely consistent with the publicity directive requiring that the local media be advised of "the provisions of P.L. 93-237." Moreover, in determining whether an agency has violated its own regulations, substantial deference should be accorded to the agency's contemporaneous interpretation of the requirements in issue. Udall v. Tallman, 380 U.S. 1, 16 (1965). In this case it is demonstrable, virtually to a certainty, that the agency's publicity directive was not intended to require that the details of the loan terms be disseminated through the media. As indicated above (pages 5-6 & notes 3-5), this directive was originally accompanied by a suggested news release, which was the very release actually employed in north Florida. The suggested release obviously reflects the agency's understanding of the publicity requirement. The finding of agency noncompliance with its own regulations is thus untenable. Commenting on essentially identical facts in Emergency Disaster Loan Ass'n, Inc., v. Block, 653 F.2d 1267 (9th Cir. 1981), Judge Boochever stated (id. at 1272 (concurring opinion)): While that release did not set forth some of the material provisions of the new law, it is not disputed that the state officials sent out news releases embodying the provisions of the suggested one. There was thus substantial compliance with the directive. /18/ As noted earlier (see page 18 note 14, supra), the court of appeals overlooked the fact that none of the respondents had even asked the agency to waive or extend the application deadline. APPENDIX