RICHARD E. LYNG, SECRETARY OF AGRICULTURE, ET AL., PETITIONERS V. RONALD E. PAYNE, ET AL. No. 84-1948 In the Supreme Court of the United States October Term, 1985 On Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit Reply Brief for the Petitioners The decision of the court of appeals requires the government to reopen an emergency loan program that was intended by Congress to provide short-term financial relief from crop and property losses suffered in 1973 and impermissibly estops the government from enforcing the legal deadline for filing emergency loan applications, which was April 2, 1974. Respondents defend this remarkable result by relying primarily on the Administrative Procedure Act and the associated doctrine that federal agencies must abide by their own regulations. Their arguments, however, virtually ignore the governing precedents and seriously distort the requirements of the APA. 1. Respondents' brief is premised almost entirely on two demonstrably erroneous contentions. First, respondents insist that the well-established doctrine precluding estoppel of the government is not at issue in this case. See, e.g., Resp. Br. i, 13-14, 15, 23. If that were true, there would have been no need for this Court to grant the government's initial petition for a writ of certiorari, vacate the court of appeals' decision, and remand for reconsideration in light of Heckler v. Community Health Services, No. 83-56 (May 21, 1984), or for the court of appeals (and respondents) to go to such lengths to attempt to distinguish cases such as Schweiker v. Hansen, 450 U.S. 785 (1981). In any event, as we explained in our opening brief (at 19-23), the court of appeals' decision undeniably forecloses the government from raising a valid legal defense to respondents' claims, i.e., that their emergency loan applications would now be more than a decade out of time. This is an estoppel, notwithstanding the court of appeals' and respondents' persistent refusal to recognize it as such. The strictures against estopping the government would have little force indeed if they could be circumvented merely by an exercise in semantics such as that engaged in by respondents and the court below. /1/ Respondents' second premise is equally flawed. Respondents repeatedly contend that they remain "objectively eligible" for emergency loan benefits related to the 1973 flooding. See, e.g., Resp. Br. 13, 15, 17, 22, 30. What respondents mean by this is unclear. Their failure to apply for loans before the deadline, of course, rendered them ineligible under the terms of the regulatory program. And as respondents concede (id. at 17 n.63), they have never been found to satisfy other applicable emergency loan eligibility requirements. In fact, the loan program was quite plainly intended as an emergency measure to provide interim benefits until farmers could recover from the 1973 flooding. As the regulations made clear, loan funds could not be used "to produce new crops during 1974," and, a fortiori, could not be used to produce new crops during subsequent years. 7 C.F.R. 1832.86(a)(1975). Respondents' selective quotation (Br. 17 n.65) of Section 1832.81 of the regulations (Pet. App. 53a) omits the key phrase (here emphasized) that places the emergency loan program in its proper context: "The basic objective of (emergency) loans is to indemnify eligible farmers * * * in order that they may continue their future farming or livestock operations with credit from other sources * * * ." See also 7 C.F.R. 1832.2 (1975) (objective of loan program is to allow farmers to "return to local sources of credit as soon as possible and in any event within a reasonable period"). Other features of the loan program -- such as the filing deadline itself -- also demonstrate that the loans were designed only to provide short-term relief from the disaster, not to grant windfalls ten or more years later. See, e.g., 7 C.F.R. 1832.82(e) (1975) (requiring visual inspection of property damage). While, as respondents state (Br. 15 n.60), "(t)he emergency loan program continues," it has remained in place to provide relief from current disasters, not as a continuing source of substantial benefits to persons who could not reasonably have unmet needs today caused by disasters that occurred many years ago. 2. Respondents argue (Br. 15-23) that the relief awarded in this case is authorized by the provisions of the APA that direct courts to "compel agency action unlawfully withheld" and to "set aside agency action * * * found to be * * * without observance of procedure required by law." 5 U.S.C. 706(1) and (2)(D). Their argument suffers from several fundamental flaws: this suit was not properly brought under the APA; the regulation establishing the loan deadline is, contrary to respondents' contention, indisputably valid; the APA, construed in light of this Court's precedents, does not authorize judicial invalidation of the deadline regulation as a remedy for violation of the publicity regulation; and, in any event, the Secretary would be acting well within his discretion in enforcing the filing deadline against respondents. a. At the outset, we note that respondents have not offered any effective response to our argument (Gov't Br. 31-32) that, never having even applied for loans, respondents have not been subjected to any agency action reviewable under the APA. See 5 U.S.C. 551(13), 702, 704. This is not a facial challenge to regulations that govern ongoing conduct and might therefore warrant pre-enforcement review. Cf. Abbott Laboratories v. Gardner, 387 U.S. 136 (1967). To the contrary, respondents challenge only the application of the filing deadline to their particular circumstances, and they have not demonstrated any cognizable hardship that would be entailed by postponing review until after the Secretary has had an opportunity to assess their individual claims. /2/ The fact that respondents claim relief in part from an alleged unlawful failure to act does not, as they contend (Br. 19-20), excuse them from making any request for action from the agency. See generally, e.g., Heckler v. Chaney, No. 83-1878 (Mar. 20, 1985), slip op. 1-3 (respondents sought review under APA after unsuccessfully requesting agency to take enforcement action); Costle v. Pacific Legal Foundation, 445 U.S. 198, 220 n.14 (1980) (5 U.S.C. 706(1) would authorize judicial review of agency's refusal to act on a filed application). Respondents have never been the object of or affected by any agency action, and they have never requested the agency to take or refrain from taking any action. Surely the APA does not provide a license for courts to issue orders to agencies in such circumstances. See generally, e.g., National Ornament & Elec. Light Christmas Ass'n, Inc. v. CPSC, 526 F.2d 1368, 1372-1373 (2d Cir. 1975). b. Respondents occasionally suggest that the regulation establishing the filing deadline is not valid. See, e.g., Resp. Br. 23 (emphasis in original) (court of appeals' decision "does not estop the government from applying any valid requirement for administration of the loan program"). But see id. at 21 (filing regulation is a "binding legislative provision()"). As we explained in our opening brief (at 17-19), however, this regulation was promulgated in accordance with the requirements of the APA pursuant to the Secretary's statutory substantive rulemaking authority. Nothing in the regulation conditioned its validity on compliance with the agency's publicity undertakings. Nor, contrary to respondents' apparent contention (Br. 22), did Pub. L. No. 93-237 impose such a condition. /3/ Indeed, the statute made no reference to publicity whatever. See Emergency Disaster Loan Ass'n, Inc. v. Block, 653 F.2d 1267, 1271 (9th Cir. 1981). There is simply no disputing the fact that the April 2, 1974 deadline is a valid, legally effective requirement for the disbursement of emergency loan funds in connection with the 1973 flooding. c. Respondents contend (Br. 21-23) that the APA establishes an ill-defined balancing test under which the court of appeals could bar enforcement of the deadline regulation as a remedy for the agency's failure to comply with the publicity regulation. Their argument flies in the face of the plain language of the APA and this Court's estoppel precedents, and it is not supported by the cases on which respondents rely. Respondents urge that the court of appeals' decision is supported by 5 U.S.C. 706(1), which authorizes courts to "compel agency action unlawfully withheld." They fail to respond to our opening brief, however, where we pointed out (at 32-33) that the only agency action the court of appeals determined to have been improperly withheld here was the dissemination of a sufficiently informative press release -- and respondents certainly did not bring this action to require the agency merely to comply with its publicity regulation. Respondents' reliance on 5 U.S.C. 706(2)(D), which authorizes courts to set aside agency action taken "without observance of procedure required by law," is equally misplaced. The deadline regulation, as we have just explained, was promulgated in full accordance with the procedures prescribed by the APA; compliance with the publicity regulation was not a procedural prerequisite to its binding force as a legislative rule. /4/ Section 706(2)(D) therefore has no application. See, e.g., St. James Hospital v. Heckler, 760 F.2d 1460, 1465 (7th Cir. 1985) (inquiry under Section 706(2)(D) is "whether the (r)ule complies with the procedural requirements of the APA"), cert. denied, No. 85-256 (Oct. 15, 1985); New England Coalition on Nuclear Pollution v. NRC, 727 F.2d 1127, 1131 (D.C. Cir. 1984). Respondents' argument is completely at odds with this Court's cases holding that the government may not be estopped from enforcing valid regulatory restrictions on the receipt of monetary benefits. Respondents apparently dismiss both FCIC v. Merrill, 332 U.S. 380 (1947), and Schweiker v. Hansen, supra, as involving statutory, rather than regulatory, limitations. See Resp. Br. 16 n.60, 17 n.64, 25 & n.80. As we explained in our opening brief (at 34), however, the Court held in each of these cases that the government could not be estopped from enforcing valid regulations such as the one at issue here. See also Utah Power & Light Co. v. United States, 243 U.S. 389 (1917) (refusing to estop government from enforcing regulatory and statutory provisions regarding use of public lands). In Merrill, it was not a statute, but the "Wheat Crop Insurance Regulations (that) barred recovery." 332 U.S. at 382. The Court's reasoning is especially instructive: it noted that if the governing statute had prohibited the insurance at issue, the plaintiff would plainly be barred from recovery (id. at 384), and the Court concluded that the same rule should govern with respect to regulatory restrictions. In short, legislative regulations issued under authority delegated by Congress "limit the liability of the Government as if they had been enacted by Congress directly." Id. at 385 (emphasis added). See also, e.g., Phelps v. FEMA, No. 85-1591 (1st Cir. Feb. 28, 1986) (refusing to estop government from enforcing flood insurance regulation); City of Oceanside v. FEMA, No. 83-5747 (9th Cir. June 19, 1984), cert. denied, No. 84-814 (Feb. 19, 1985) (same). Similarly, in Schweiker v. Hansen, supra, the question was whether the government could be estopped from enforcing a regulation requiring that applications for Social Security benefits be in writing. See 450 U.S. at 786, 790. The issue was not, as respondents contend (e.g., Br. 16 n.60), whether the government could be estopped from enforcing a statutory limitation on benefits to 12 months prior to the filing of an application, but whether the regulatory definition of what constitutes the filing of an application for this purpose would be enforced. Again, the Court refused to estop the government from enforcing its regulation, relying on Merrill. See 450 U.S. at 788. The Court has also made clear in suits seeking tax refunds that the government "may insist upon full compliance with (its) regulations" (Angelus Milling Co. v. Commissioner, 325 U.S. 293, 296 (1945)) and that the granting of an extension of time is "a legislative, or administrative, not a judicial, function" (Scaife Co. v. Commissioner, 314 U.S. 459, 462 (1941) (footnote omitted)). In Scaife Co., the taxpayer had made a ministerial error on its first tax return and had filed an amended return within the time allowed for filing where an extension of time has been granted. The Commissioner declined to accept the amended return, however, because the taxpayer had not filed a written request for an extension of time as required by regulation. The Court refused to bar enforcement of the regulation on equitable grounds, reasoning that "no extension of the due date may be had except pursuant to the procedure which has clear statutory sanction," i.e., through the written request required by the regulations. Ibid. Similarly, in Angelus Milling Co., the taxpayer had failed to file its administrative claim on the correct form. The Court held that it could not judicially impose a waiver even though the Commissioner could voluntarily waive "technical objections" for "considerations of fairness." 325 U.S. at 297. It would be inconsistent with the reasoning of these cases to hold that the government may be equitably estopped from enforcing the regulatory filing deadline at issue here. Respondents' reliance (e.g., Br. 20-21) on American Farm Lines v. Black Ball Freight Service, 397 U.S. 532 (1970), and similar cases from the courts of appeals is unavailing. /5/ These cases hold only that administrative agencies retain the discretion to waive rules "'adopted for the orderly transaction of business'" (American Farm Lines, 397 U.S. at 539 (citation omitted)) without running afoul of the requirement that agencies adhere to those rules that "confer important procedural benefits upon individuals" (id. at 538). This line of cases is simply irrelevant to the type of regulation at issue here, which is addressed not to the agency's "internal * * * housekeeping" (Un ted States v. Caceres, 440 U.S. 741, 760 (1979) (Marshall, J., dissenting)) but to the applicant's eligibility for government benefits. The deadline in this case was not imposed for reasons of mere administrative convenience but as an integral part of the emergency loan program, which was intended by Congress only to provide short-term relief. /6/ We are not aware of any case in which a court has relied on American Farm Lines as authority for estopping the government from enforcing such a valid regulatory condition on the receipt of public benefits. d. Even if respondents were correct in arguing that the APA authorizes courts to compel waivers of valid regulatory eligibility requirements in appropriate circumstances, the Secretary quite plainly would not abuse his discretion by applying the filing deadline in this case. This is made clear by a comparison with the very case on which respondents rely most heavily, Health Systems Agency of Oklahoma, Inc. v. Norman, 589 F.2d 486 (10th Cir. 1978). There, the court recognized that "a refusal to waive non-jurisdictional deadlines would generally not constitute an abuse of discretion." Id. at 491. In that case, the plaintiff's application to be designated as a "Health Systems Agency" by the Department of Health, Education, and Welfare was filed 55 minutes after expiration of the administrative deadline. Id. at 488-489. Such a brief delay cannot be likened to the situation here, where respondents did not even file this suit until more than two years after the deadline had passed and have, even now, failed to file loan applications with the agency. Moreover, the court in Norman held that the refusal to waive the deadline in the circumstances presented was an abuse of discretion because the agency's refusal was "flatly contrary to articulated agency policy" governing such waivers and waiving the deadline served "the legitimate governmental interest() in facilitating comparative analysis among applicants." 589 F.2d at 492. Here, by contrast, enforcement of the filing deadline would not violate any other administrative or statutory policy. Rather, enforcement of the filing deadline in this case serves the important purposes of assisting the agency in evaluating an applicant's eligibility and preventing use of emergency loan funds for improper expenditures. See Gov't Br. 21-22, 35. Cf. United States v. Boyle, No. 83-1266 (Jan. 9, 1985), slip op. 8 ("fixed dates * * * are often essential to accomplish necessary results"); United States v. Kubrick, 444 U.S. 111, 117 (1979) (citation omitted) ("(T)he plea of limitations (is) a 'meritorious defense, in itself serving a public interest.'"). 3. Finally, respondents argue (Br. 23-28) that estoppel is appropriate in this case. /7/ Their argument rests in large part on the erroneous premise that invalidation of the filing deadline would be consistent with Congress's intent in establishing the emergency loan program. As we have demonstrated, however, enforcement of the deadline is what would best further Congress's purposes, and failure to comply with the notice requirement does not change that conclusion because Congress did not intend notice to be a precondition to the validity of the deadline. See Gov't Br. 35-36; page 5 & note 3, supra. In arguing that FmHA engaged in misleading conduct, respondents apparently do not rely on the sole finding of misconduct made by the court of appeals, that the agency failed to comply with its regulation requiring that the media be informed "of the provisions of P.L. 93-237." Pet. App. 54a. /8/ For the reasons stated in our opening brief (at 29-31), which respondents have failed to dispute, the court of appeals' conclusion that FmHA violated this regulation is the entire basis for respondents' APA argument, it is surprising that they offer no defense of the court of appeals' conclusion. Nor do respondents explain how they could reasonably have relied on the publicity regulation when the filing deadline was published in the Federal Register (and, indeed, in the very same place as the publicity regulation). Respondents now rely (Br. 26-27 & n.87) on findings made by the district court (Pet. App. 37a-42a) concerning alleged isolated oral misstatements by agency officials. The court of appeals did not rely on these findings (see id. at 24a). Such alleged misstatements present, of course, precisely the "substantial danger of fraud" (Resp. Br. 24) that respondents inconsistently claim is not present in this case. See, e.g., Heckler v. Community Health Services, No. 83-56 (May 21, 1984), slip op. 13. Moreover, much of this purported misconduct relates to publicity given to the terms of the loan program before they were liberalized in January 1974 by Pub. L. No. 93-237. For example, the "Live Oak meeting" to which respondents refer (Br. 26) took place in June 1973. Pet. App. 37a. Any misstatements made at that time are simply irrelevant to whether FmHA adequately and accurately represented the terms of the superseding loan program, the benefits of which respondents are now seeking. Similarly irrelevant to whether respondents received legally adequate notice is whether various agency officials and private lenders were given notice. Compare Resp. Br. 26 with Pet. App. 24a. Finally, even respondents refrain from claiming that all class members (or even a substantial portion of them) actually received -- and therefore might actually have relied on -- misinformation from the agency. Accordingly, the classwide relief mandated by the court of appeals is wholly insupportable. /9/ For the foregoing reasons and those stated in our opening brief, the judgment of the court of appeals should be reversed. Respectfully submitted. CHARLES FRIED Solicitor General MARCH 1986 /1/ Respondents' absurd suggestion (Br. 23) that the court of appeals' decision does not estop the government because it "allows the enforcement of th(e) deadline, provided only that the agency first" complies with the publicity regulation, does not merit a response. /2/ Respondents boldly state (Br. 16 n.62) that their "failure to apply does not preclude judicial review under the (APA)." The only case they cite for this proposition, Health Systems Agency of Oklahoma, Inc. v. Norman, 589 F.2d 486 (10th Cir. 1978), however, does not support it. In that case, the plaintiff had in fact filed an application with the agency, and the agency rejected it as untimely. The plaintiff sought review under the APA of the agency's action in refusing to accept the application. See id. at 488-489. /3/ Respondents' reliance (Br. 22 & n.78) on the legislative history of Pub. L. No. 93-237 is unavailing. The report on which they rely, S. Rep. 93-363, 93d Cong., 1st Sess. 2 (1973), establishes only that Congress "expect(ed) that * * * the Farmers Home Administration (would extend for 90 days * * * the deadline for seeking relief from previously declared disasters." That, of course, is precisely what the agency did and what respondents now would invalidate. /4/ Indeed, the court of appeals (Pet. App. 18a) and even respondents, in referring to the deadline as a "binding legislative provision()" (Br. 21), implicitly concede this point. /5/ Respondents also rely (Br. 21, 23) on the Accardi line of cases, but they fail to respond to the discussion of those cases in our opening brief (at 36-38). Nor do they explain how ordering FmHA to ignore its regulation establishing the filing deadline for emergency loans can be characterized as requiring the agency to follow its own regulations. /6/ The regulations now governing the emergency loan program continue to specify loan application deadlines. See 7 C.F.R. 1945.161(a)(1) and (3). Consistent with the intent of the program to provide only interim relief, the regulations also specify that applications must be processed within 12 months. Ibid. /7/ Respondents' due process argument (Br. 29-31), which was not addressed by either court below, does not merit extended discussion. As we have explained here and in our opening brief, compliance with the publicity regulation was not a procedural prerequisite to application of the filing deadline. Thus, even if respondents may claim a protected property interest in emergency loan funds, which we dispute (see generally Walters v. National Ass'n of Radiation Survivors, No. 84-571 (June 28, 1985), slip op. 14 n.8), they received ample process by FmHA's publication of the filing deadline in the Federal Register. See Emergency Disaster Loan Ass'n, Inc., 653 F.2d at 1271. Moreover, as we have also explained, the agency complied with its own procedures by distributing to the news media the suggested press release that accompanied the original staff instruction establishing the publicity requirement. Finally, the mere violation by an agency of its own regulation does not rise to the level of a due process violation where, as here, the regulation itself is not constitutionally required. See United States v. Caceres, 440 U.S. 741 (1979). /8/ Indeed, respondents admit (Br. 9-10) that the sample press release accompanying the publicity directive was distributed (see Gov't Br. 30), although they complain that more was not done. The agency did not, however, obligate itself to do more. /9/ Even if estoppel of the government ever were appropriate, it is most difficult to see how it could be ordered on a classwide basis in view of the necessarily individualized proof of reliance that would have to be made by each class member.