OCTOBER TERM, 1992
Syllabus
DARBY ET AL.
v. CISNEROS, SECRETARY OF HOUSING AND URBAN
DEVELOPMENT, ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH
CIRCUIT
No. 91-2045. Argued March 22, 1993-Decided June 21, 1993
In a consolidated appeal from decisions by the Department of
Housing and Urban Development (HUD) to initiate administrative
sanctions against petitioners, an Administrative Law Judge (ALJ)
concluded that petitioners should be debarred from participating in
federal programs for 18 months. Under HUD regulations, an ALJ's
determination "shall be final unless ... the Secretary ... within
30 days of receipt of a request decides as a matter of discretion
to review the [ALJ's] finding .... " 24 CFR §24.314(c). Neither
party sought further administrative review, but petitioners filed
suit in the District Court, seeking an injunction and declaration
that the sanctions were not in accordance with law within the
meaning of the Administrative Procedure Act (APA). Respondents
moved to dismiss the complaint on the ground that petitioners, by
forgoing the option to seek review by the Secretary, had failed to
exhaust their administrative remedies. The court denied the motion
and granted summary judgment to petitioners on the merits of the
case. The Court of Appeals reversed, holding that the District
Court had erred in denying the motion to dismiss.
Held: Federal courts do not have the authority to require
a plaintiff to exhaust available administrative remedies before
seeking judicial review under the APA, where neither the relevant
statute nor agency rules specifically mandate exhaustion as a
prerequisite to judicial review. The language of § 10(c) of the APA
is explicit that an appeal to "superior agency authority" is a
prerequisite to judicial review only when "expressly required by
statute" or when the agency requires an appeal "by rule and
provides that the [administrative] action is ... inoperative"
pending that review. Since neither the National Housing Act nor
applicable HUD regulations mandate further administrative appeals,
the ALJ's decision was a "final" agency action subject to judicial
review under § 10(c). The lower courts were not free to require
further exhaustion of administrative remedies, although the
exhaustion doctrine continues to apply as a matter of judicial
discretion in cases not gov-
138
erned by the APA. Nothing in § 10(c)'s legislative history
supports a contrary reading. Pp. 143-154.
957 F.2d
145, reversed and remanded.
BLACKMUN, J., delivered the opinion for a unanimous Court with
respect to Parts I, II, and IV, and the opinion of the Court with
respect to Part III, in which WHITE, STEVENS, O'CONNOR, KENNEDY,
and SOUTER, JJ., joined.
Steven D. Gordon argued the cause for petitioners. With
him on the briefs was
Michael H. Ditton.
James A. Feldman argued the cause for respondents.
With him on the brief were Acting Solicitor General Bryson,
Assistant Attorney General Gerson, Deputy Solicitor General
Mahoney, and Anthony
J. Steinmeyer.
JUSTICE BLACKMUN delivered the opinion of the Court.* This case
presents the question whether federal courts have the authority to
require that a plaintiff exhaust available administrative remedies
before seeking judicial review under the Administrative Procedure
Act (APA), 5 U. s. C. § 701
et seq., where neither the
statute nor agency rules specifically mandate exhaustion as a
prerequisite to judicial review. At issue is the relationship
between the judicially created doctrine of exhaustion of
administrative remedies and the statutory requirements of § 10(c)
of the APA.l
*THE CHIEF JUSTICE, JUSTICE SCALIA, and JUSTICE THOMAS join all
but Part III of this opinion.
1 Section
W(c), 80 Stat. 392-393, 5 U. S. C. § 704,
provides:
"Agency action made reviewable by statute and final agency
action for which there is no other adequate remedy in a court are
subject to judicial review. A preliminary, procedural, or
intermediate agency action or ruling not directly reviewable is
subject to review on the review of the final agency action. Except
as otherwise expressly required by statute, agency action otherwise
final is final for the purposes of this section whether or not
there has been presented or determined an application for a
declaratory order, for any form of reconsideration, or, unless the
agency otherwise requires by rule and provides that the action
meanwhile is inoperative, for an appeal to superior agency
authority."
We note that the statute as codified in the United States Code
refers to "any form of reconsiderations," with the last word being
in the plu-
139
I
Petitioner R. Gordon Darby2 is a self-employed South Carolina
real estate developer who specializes in the development and
management of multifamily rental projects. In the early 1980's, he
began working with Lonnie Garvin, Jr., a mortgage banker, who had
developed a plan to enable multifamily developers to obtain
single-family mortgage insurance from respondent Department of
Housing and Urban Development (HUD). Respondent Secretary of HUD
(Secretary) is authorized to provide single-family mortgage
insurance under §203(b) of the National Housing Act, 48 Stat. 1249,
as amended, 12 U. S. C. § 1709(b).3 Although HUD also provides
mortgage insurance for multifamily projects under § 207 of the
National Housing Act, 12 U. S. C. § 1713, the greater degree of
oversight and control over such projects makes it less attractive
for investors than the singlefamily mortgage insurance option.
The principal advantage of Garvin's plan was that it promised to
avoid HUD's "Rule of Seven." This rule prevented rental properties
from receiving single-family mortgage insurance if the mortgagor
already had financial interests in seven or more similar rental
properties in the same project
ral. The version of § 10(c) as currently enacted, however, uses
the singular "reconsideration." See this note,
supra, at
138. We quote the text as enacted in the Statutes at Large. See
Stephan v.
United States, 319 U. S. 423, 426 (1943)
("[T]he Code cannot prevail over the Statutes at Large when the two
are inconsistent").
2 Petitioners include R. Gordon Darby and his affiliate
companies: Darby Development Company; Darby Realty Company; Darby
Management Company, Inc.; MD Investment; Parkbrook Acres
Associates; and Parkbrook Developers.
3 Although the primary purpose of the § 203(b) insurance program
was to facilitate home ownership by owner-occupants, investors were
permitted in the early 1980's to obtain single-family insurance
under certain conditions. Private investor-owners are no longer
eligible for single-family mortgage insurance. See Department of
Housing and Urban Development Reform Act of 1989, § 143(b), 103
Stat. 2036.
140
or subdivision. See 24 CFR § 203.42(a) (1992).4 Under Garvin's
plan, a person seeking financing would use straw purchasers as
mortgage insurance applicants. Once the loans were closed, the
straw purchasers would transfer title back to the development
company. Because no single purchaser at the time of purchase would
own more than seven rental properties within the same project, the
Rule of Seven appeared not to be violated. HUD employees in South
Carolina apparently assured Garvin that his plan was lawful and
that he thereby would avoid the limitation of the Rule of
Seven.
Darby obtained financing for three separate multiunit projects,
and, through Garvin's plan, Darby obtained singlefamily mortgage
insurance from HUD. Although Darby successfully rented the units, a
combination of low rents, falling interest rates, and a generally
depressed rental market forced him into default in 1988. HUD became
responsible for the payment of over $6.6 million in insurance
claims.
HUD had become suspicious of Garvin's financing plan as far back
as 1983. In 1986, HUD initiated an audit but concluded that neither
Darby nor Garvin had done anything wrong or misled HUD personnel.
Nevertheless, in June 1989, HUD issued a limited denial of
participation (LDP) that prohibited petitioners for one year from
participating in any program in South Carolina administered by
respondent Assistant Secretary of Housing.5 Two months later, the
Assistant Secretary notified petitioners that HUD was also
proposing to debar them from further participation in all HUD
4 Prior to August 31, 1955, the Rule of Seven apparently had
been the Rule of Eleven. See 24 CFR § 203.42 (1982) and 56 Fed.
Reg. 27692 (1991).
5 An LDP precludes its recipient from participating in any HUD
"program," which includes "receipt of any benefit or financial
assistance through grants or contractual arrangements; benefits or
assistance in the form of loan guarantees or insurance; and awards
of procurement contracts, notwithstanding any
quid pro quo
given and whether [HUD] gives anything in return." 24 CFR
§24.710(a)(2) (1992).
141
procurement contracts and in any nonprocurement transaction with
any federal agency. See 24 CFR § 24.200 (1992).
Petitioners' appeals of the LDP and of the proposed debarment
were consolidated, and an Administrative Law Judge (ALJ) conducted
a hearing on the consolidated appeals in December 1989. The judge
issued an "Initial Decision and Order" in April 1990, finding that
the financing method used by petitioners was "a sham which
improperly circumvented the Rule of Seven." App. to Pet. for Cert.
69a. The ALJ concluded, however, that most of the relevant facts
had been disclosed to local HUD employees, that petitioners lacked
criminal intent, and that Darby himself "genuinely cooperated with
HUD to try [to] work out his financial dilemma and avoid
foreclosure."
Id., at 88a. In light of these mitigating
factors, the ALJ concluded that an indefinite debarment would be
punitive and that it would serve no legitimate purpose; 6 good
cause existed, however, to debar petitioners for a period of 18
months.7
Id., at 90a.
Under HUD regulations,
"The hearing officer's determination shall be final unless,
pursuant to 24 CFR part 26, the Secretary or the Secretary's
designee, within 30 days of receipt of a request decides as a
matter of discretion to review the finding of the hearing officer.
The 30 day period for deciding whether to review a determination
may be extended upon written notice of such extension by the
Secretary or his designee. Any party may request such a review in
writing within 15 days of receipt of the hearing officer's
determination." 24 CFR § 24.314(c) (1992).
6 According to HUD regulations, "[d]ebarment and suspension are
serious actions which shall be used only in the public interest and
for the Federal Government's protection and not for purposes of
punishment." 24 CFR § 24. 115(b) (1992).
7 The ALJ calculated the 18-month debarment period from June 19,
1989, the date on which the LDP was imposed. The debarment would
last until December 19, 1990.
142
N either petitioners nor respondents sought further
administrative review of the ALJ's "Initial Decision and
Order."
On May 31, 1990, petitioners filed suit in the United States
District Court for the District of South Carolina. They sought an
injunction and a declaration that the administrative sanctions were
imposed for purposes of punishment, in violation of HUD's own
debarment regulations, and therefore were "not in accordance with
law" within the meaning of § 10(e)(B)(1) of the APA, 5 U. S. C. §
706(2)(A).
Respondents moved to dismiss the complaint on the ground that
petitioners, by forgoing the option to seek review by the
Secretary, had failed to exhaust administrative remedies. The
District Court denied respondents' motion to dismiss, reasoning
that the administrative remedy was inadequate and that resort to
that remedy would have been futile. App. to Pet. for Cert. 29a. In
a subsequent opinion, the District Court granted petitioners'
motion for summary judgment, concluding that the "imposition of
debarment in this case encroached too heavily on the punitive side
of the line, and for those reasons was an abuse of discretion and
not in accordance with the law."
Id., at 19a.
The Court of Appeals for the Fourth Circuit reversed.
Darby v.
Kemp, 957 F.2d
145 (1992). It recognized that neither the National Housing Act
nor HUD regulations expressly mandate exhaustion of administrative
remedies prior to filing suit. The court concluded, however, that
the District Court had erred in denying respondents' motion to
dismiss, because there was no evidence to suggest that further
review would have been futile or that the Secretary would have
abused his discretion by indefinitely extending the time
limitations for review.
The court denied petitioners' petition for rehearing with
suggestion for rehearing en bane. See App. to Pet. for Cert. 93a.
In order to resolve the tension between this and the APA, as well
as to settle a perceived conflict among the
143
Courts of Appeals,s we granted certiorari. 506 U. S. 952
(1992).
II
Section 10(c) of the APA bears the caption "Actions reviewable."
It provides in its first two sentences that judicial review is
available for "final agency action for which there is no other
adequate remedy in a court," and that "preliminary, procedural, or
intermediate agency action ... is subject to review on the review
of the final agency action." The last sentence of § 10(c)
reads:
"Except as otherwise expressly required by statute, agency
action otherwise final is final for the purposes of this section
whether or not there has been presented or determined an
application for a declaratory order, for any form of
reconsideration [see n. 1, supra], or, unless the agency
otherwise requires by rule and provides that the action meanwhile
is inoperative, for an appeal to superior agency authority." 80
Stat. 392-393, 5 U. S. C. §704.
Petitioners argue that this provision means that a litigant
seeking judicial review of a final agency action under the APA need
not exhaust available administrative remedies unless such
exhaustion is expressly required by statute or agency rule.
According to petitioners, since § 10(c) contains an explicit
exhaustion provision, federal courts are not free to require
further exhaustion as a matter of judicial discretion.
8 The Fourth Circuit's ruling in this case appears to be
consistent with
Montgomery v.
Rumsfeld, 572 F.2d
250, 253-254
(CA9 1978), and
Missouri v.
Bowen, 813 F.2d
864 (CA8 1987), but is in considerable tension with
United States v.
Consolidated Mines &
Smelting
Co., 455 F.2d
432,
439-440 (CA9 1971);
New England Coalition on
Nuclear Pollution v.
United States Nuclear Regulatory
Comm'n, 582 F.2d
87, 99
(CA1 1978); and
Gulf Oil Corp. v.
United States Dept. of Energy, 214 U. S. App. D. C. 119,
131, and n. 73,
663 F.2d
296, 308, and n. 73 (1981).
144
Respondents contend that § 10(c) is concerned solely with
timing, that is, when agency actions become "final," and that
Congress had no intention to interfere with the courts' ability to
impose conditions on the timing of their exercise of jurisdiction
to review final agency actions. Respondents concede that
petitioners' claim is "final" under § 10(c), for neither the
National Housing Act nor applicable HUD regulations require that a
litigant pursue further administrative appeals prior to seeking
judicial review. However, even though nothing in § 10(c) precludes
judicial review of petitioners' claim, respondents argue that
federal courts remain free under the AP A to impose appropriate
exhaustion requirements.9
We have recognized that the judicial doctrine of exhaustion of
administrative remedies is conceptually distinct from the doctrine
of finality:
"[T]he finality requirement is concerned with whether the
initial decisionmaker has arrived at a definitive position on the
issue that inflicts an actual, concrete injury; the exhaustion
requirement generally refers to administrative and judicial
procedures by which an injured party may seek review of an adverse
decision and obtain a remedy if the decision is found to be
unlawful or otherwise inappropriate." Williamson County Regional
Planning Comm'n v. Hamilton Bank of Johnson City,
473 U. S. 172,
193 (1985).
Whether courts are free to impose an exhaustion requirement as a
matter of judicial discretion depends, at least in part, on whether
Congress has provided otherwise, for "[o]f
9 Respondents also have argued that under HUD regulations,
petitioners' debarment remains "inoperative" pending review by the
Secretary. See 48 Fed. Reg. 43304 (1983). But this fact alone is
insufficient under § 10(c) to mandate exhaustion prior to judicial
review, for the agency also must require such exhaustion by rule.
Respondents concede that HUD imposes no such exhaustion
requirement. Brief for Respondents 31.
145
'paramount importance' to any exhaustion inquiry is
congressional intent,"
McCarthy v.
Madigan, 503 U. S. 140, 144
(1992), quoting
Patsy v.
Board of Regents of Florida,
457 U. S. 496,
501 (1982). We therefore must consider whether § 10(c), by
providing the conditions under which agency action becomes "final
for the purposes of" judicial review, limits the authority of
courts to impose additional exhaustion requirements as a
prerequisite to judicial review.
It perhaps is surprising that it has taken over 45 years since
the passage of the AP A for this Court definitively to address this
question. Professor Davis noted in 1958 that § 10(c) had been
almost completely ignored in judicial opinions, see 3 K. Davis,
Administrative Law Treatise § 20.08, p. 101 (1958); he reiterated
that observation 25 years later, noting that the "provision is
relevant in hundreds of cases and is customarily overlooked." 4 K.
Davis, Administrative Law Treatise § 26.12, pp. 468-469 (2d ed.
1983). Only a handful of opinions in the Courts of Appeals have
considered the effect of § 10(c) on the general exhaustion
doctrine. See
This Court has had occasion, however, to consider § 10(c) in
other contexts. For example, in
ICC v.
Locomotive
Engineers, 482 U.
S. 270 (1987), we recognized that the plain language of §
10(c), which provides that an agency action is final "whether or
not there has been presented or determined an application" for any
form of reconsideration, could be read to suggest that the agency
action is final regardless whether a motion for reconsideration has
been filed. We noted, however, that § 10(c) "has long been
construed by this and other courts merely to relieve parties from
the
requirement of petitioning for rehearing before seeking
judicial review (unless, of course, specifically required to do so
by statute-see,
e. g., 15 U. S. C. §§ 717r, 3416(a)),
but not to prevent petitions for reconsideration that are actually
filed from rendering the orders under reconsideration nonfinal"
(emphasis in original).
Id., at 284-285.
146
In
Bowen v.
Massachusetts, 487 U. S. 879 (1988), we
were concerned with whether relief available in the Claims Court
was an "adequate remedy in a court" so as to preclude review in
Federal District Court of a final agency action under the first
sentence of § 10(c). We concluded that "although the primary thrust
of [§ 10(c)] was to codify the exhaustion requirement,"
id.,
at 903, Congress intended by that provision simply to avoid
duplicating previously established special statutory procedures for
review of agency actions.
While some dicta in these cases might be claimed to lend support
to respondents' interpretation of § 10(c), the text of the APA
leaves little doubt that petitioners are correct. Under § 10(a) of
the APA, "[a] person suffering legal wrong because of agency
action, or adversely affected or aggrieved by agency action within
the meaning of a relevant statute,
is entitled to judicial
review thereof" 5 U. S. C. § 702 (emphasis added). Although §
10(a) provides the general right to judicial review of agency
actions under the APA, § 10(c) establishes when such review is
available. When an aggrieved party has exhausted all administrative
remedies expressly prescribed by statute or agency rule, the agency
action is "final for the purposes of this section" and therefore
"subject to judicial review" under the first sentence. While
federal courts may be free to apply, where appropriate, other
prudential doctrines of judicial administration to limit the scope
and timing of judicial review, § 10(c), by its very terms, has
limited the availability of the doctrine of exhaustion of
administrative remedies to that which the statute or rule clearly
mandates.
The last sentence of § 10(c) refers explicitly to "any form of
reconsideration" and "an appeal to superior agency authority."
Congress clearly was concerned with making the exhaustion
requirement unambiguous so that aggrieved parties would know
precisely what administrative steps were required before judicial
review would be available. If courts were able to impose additional
exhaustion requirements be-
147
yond those provided by Congress or the agency, the last sentence
of § 10(c) would make no sense. To adopt respondents' reading would
transform § 10(c) from a provision designed to "'remove obstacles
to judicial review of agency action,'"
Bowen v.
Massachusetts, 487 U. S., at 904, quoting
Shaughnessy
v.
Pedreiro, 349 U. S. 48, 51 (1955),
into a trap for unwary litigants. Section 10(c) explicitly requires
exhaustion of all intra-agency appeals mandated either by statute
or by agency rule; it would be inconsistent with the plain language
of § 10(c) for courts to require litigants to exhaust optional
appeals as well.
III
Recourse to the legislative history of § 10(c) is unnecessary in
light of the plain meaning of the statutory text. Nevertheless, we
consider that history briefly because both sides have spent much of
their time arguing about its implications. In its report on the
APA, the Senate Judiciary Committee explained that the last
sentence of § 10(c) was "designed to implement the provisions of
section 8(a)." Section 8(a), now codified, as amended, as 5 U. S.
C. § 557(b), provides, unless the agency requires otherwise, that
an initial decision made by a hearing officer "becomes the decision
of the agency without further proceedings unless there is an appeal
to, or review on motion of, the agency within time provided by
rule." The Judiciary Committee explained:
"[A]n agency may permit an examiner to make the initial decision
in a case, which becomes the agency's decision in the absence of an
appeal to or review by the agency. If there is such review or
appeal, the examiner's initial decision becomes inoperative until
the agency determines the matter. For that reason this subsection
[§ 10(c)] permits an agency also to require by rule that, if any
party is not satisfied with the initial decision of a subordinate
hearing officer, the party must first appeal to the agency (the
decision meanwhile being inopera-
148
tive) before resorting to the courts. In no case may appeal to
'superior agency authority' be required by rule unless the
administrative decision meanwhile is inoperative, because otherwise
the effect of such a requirement would be to subject the party to
the agency action and to repetitious administrative process without
recourse. There is a fundamental inconsistency in requiring a
person to continue 'exhausting' administrative processes after
administrative action has become, and while it remains, effective."
S. Rep. No. 752, 79th Cong., 1st Sess., 27 (1945); Administrative
Procedure Act: Legislative History 1944-1946, S. Doc. No. 248, 79th
Cong., 2d Sess., 213 (1946) (hereinafter Leg. Hist.).
In a statement appended to a letter dated October 19, 1945, to
the Judiciary Committee, Attorney General Tom C. Clark set forth
his understanding of the effect of § 10(c):
"This subsection states (subject to the provisions of section
10(a)) the acts which are reviewable under section 10. It is
intended to state existing law. The last sentence makes it clear
that the doctrine of exhaustion of administrative remedies with
respect to finality of agency action is intended to be applied only
(1) where expressly required by statute ... or (2) where the
agency's rules require that decisions by subordinate officers must
be appealed to superior agency authority before the decision may be
regarded as final for purposes of judicial review." Id., at
44, Leg. Hist. 230.10
10 In his manual on the APA, prepared in 1947, to which we have
given some deference, see,
e. g., Steadman v.
SEC,
450 U. S. 91, 103,
n. 22 (1981);
Vermont Yankee Nuclear Power Corp. v.
Natural Resources Defense Council, Inc., 435 U. S. 519, 546
(1978), Attorney General Clark reiterated the Department of
Justice's view that § 10(c) "embodies the doctrine of exhaustion of
administrative remedies .... Agency action which is finally
operative and decisive is reviewable." Attorney General's Manual on
the Administrative Procedure Act 103 (1947). See also R. R. Rep.
No. 1980, 79th Cong., 2d Sess., 55, n. 21 (1946); Leg. Rist. 289,
n. 21 (describing
149
Respondents place great weight on the Attorney General's
statement that § 10(c) "is intended to state existing law." That
law, according to respondents, "plainly permitted federal courts to
require exhaustion of adequate administrative remedies." Brief for
Respondents 19-20. We cannot agree with this categorical
pronouncement. With respect to the exhaustion of motions for
administrative reconsideration or rehearing, the trend in pre- AP A
cases was in the opposite direction. In
Vandalia R. Co. v.
Public Servo Comm'n of Ind., 242 U. S. 255 (1916), for
example, this Court invoked the "general rule" that "one aggrieved
by the rulings of such an administrative tribunal may not complain
that the Constitution of the United States has been violated if he
has not availed himself of the remedies prescribed by the state law
for a rectification of such rulings."
Id., at 261. The state
law provided only that the Railroad Commission had the authority to
grant a rehearing; it did not require that a rehearing be sought.
Nevertheless, "since the record shows that plaintiff in error and
its associates were accorded a rehearing upon the very question of
modification, but abandoned it, nothing more need be said upon that
point."
Ibid.
Seven years later, in
Prendergast v.
New York
Telephone Co., 262
U. S. 43, 48 (1923), without even mentioning the
Vandalia case, the Court stated:
"It was not necessary that the Company should apply to the
Commission for a rehearing before resorting to the court. While
under the Public Service Commission Law any person interested in an
order of the Commission has the right to apply for a rehearing, the
Commission is not required to grant such rehearing unless in its
judgment sufficient reasons therefor appear .... As the law does
not require an application for a rehearing
agency's authority to adopt rules requiring a party to take a
timely appeal to the agency prior to seeking judicial review as "an
application of the time-honored doctrine of exhaustion of
administrative remedies").
150
to be made and its granting is entirely within the discretion of
the Commission, we see no reason for requiring it to be made as a
condition precedent to the bringing of a suit to enjoin the
enforcement of the order."
Accord,
Banton v.
Belt Line R. Corp., 268 U. S. 413, 416-417
(1925) ("No application to the commission for relief was required
by the state law. None was necessary as a condition precedent to
the suit").
Shortly before Congress adopted the AP A, the Court, in
Levers v.
Anderson, 326 U. S. 219 (1945),
held that where a federal statute provides that a district
supervisor of the Alcohol Tax Unit of the Bureau of Internal
Revenue
"may hear the application" for a rehearing of an
order denying certain liquor permits, such an application was not a
prerequisite to judicial review. Nothing "persuades us that the
'may' means must, or that the Supervisors were required to hear
oral argument."
Id., at 223 (emphasis added). Despite the
fact that the regulations permitted a stay pending the motion for
reconsideration, the Court concluded that "the motion is in its
effect so much like the normal, formal type of motion for rehearing
that we cannot read into the Act an intention to make it a
prerequisite to the judicial review specifically provided by
Congress."
Id., at 224.
Respondents in effect concede that the trend in the law prior to
the enactment of the AP A was to require exhaustion of motions for
administrative reconsideration or rehearing only when explicitly
mandated by statute. Respondents argue, however, that the law
governing the exhaustion of administrative
appeals prior to
the AP A was significantly different from § 10(c) as petitioners
would have us interpret it. Brief for Respondents 23. Respondents
rely on
United States v.
Sing Tuck, 194 U. S. 161 (1904), in
which the Court considered whether, under the relevant statute, an
aggrieved party had to appeal an adverse decision by the Inspector
of Immigration to the Secretary of Commerce and Labor before
151
judicial review would be availableY It recognized that the
relevant statute "points out a mode of procedure which must be
followed before there can be a resort to the courts,"
id.,
at 167, and that a party must go through "the preliminary sifting
process provided by the statutes,"
id., at 170. Accord,
Chicago, M., St. P. &
P. R. Co. v.
Risty,
276 U. S. 567,
574-575 (1928).12
Nothing in this pre-APA history, however, supports respondents'
argument that initial decisions that were "final" for purposes of
judicial review were nonetheless unreviewable unless and until an
administrative appeal was taken. The pre- AP A cases concerning
judicial review of federal agency action stand for the simple
proposition that, until an administrative appeal was taken, the
agency action was unreviewable because it was not yet "final." This
is hardly surprising, given the fact that few, if any,
administrative agencies authorized hearing officers to make final
agency decisions prior to the enactment of the AP A. See Federal
Administrative Law Developments-1971, 1972 Duke L. J. 115, 295, n.
22 ("[P]rior to the passage of the APA, the existing agencies
ordinarily lacked the authority to make binding de-
11 The Act of August 18, 1894, 28 Stat. 390, provided: "In every
case where an alien is excluded from admission into the United
States under any law or treaty now existing or hereafter made, the
decision of the appropriate immigration or customs officers, if
adverse to the admission of such alien, shall be final, unless
reversed on appeal to the Secretary of [Commerce and Labor]."
12 In an address to the American Bar Association in 1940, Dean
Stason of the University of Michigan Law School summarized the law
on exhaustion of administrative appeals: "In the event that a
statute setting up an administrative tribunal also creates one or
more appellate administrative tribunals, it is almost invariably
held that a party who is aggrieved by action of the initial agency
must first seek relief by recourse to the appellate agency or
agencies." Stason, Timing of Judicial Redress from Erroneous
Administrative Action, 25 Minn. L. Rev. 560, 570 (1941). See also 4
K. Davis, Administrative Law Treatise §26.12, p. 469 (2d ed. 1983)
("The pre-1946 law was established that an appeal to higher
administrative authorities was a prerequisite to judicial
review").
152
terminations at a level below that of the agency board or
commission, so that section 10(c) would be expected to affect the
exhaustion doctrine in only a very limited number of
instances").
The purpose of § 10(c) was to permit agencies to require an
appeal to "superior agency authority" before an examiner's initial
decision became final. This was necessary because, under § Sea),
initial decisions could become final agency decisions in the
absence of an agency appeal. See 5 U. S. C. § 557(b). Agencies may
avoid the finality of an initial decision, first, by adopting a
rule that an agency appeal be taken before judicial review is
available, and, second, by providing that the initial decision
would be "inoperative" pending appeal. Otherwise, the initial
decision becomes final and the aggrieved party is entitled to
judicial review.
Respondents also purport to find support for their view in the
text and legislative history of the 1976 amendments of the APA.
After eliminating the defense of sovereign immunity in APA cases,
Congress provided: "Nothing herein ... affects other limitations on
judicial review or the power or duty of the court to dismiss any
action or deny relief on any other appropriate legal or equitable
ground," Pub. L. 94-574, § 1, 90 Stat. 2721 (codified as 5 U. S. C.
§ 702). According to respondents, Congress intended by this proviso
to ensure that the judicial doctrine of exhaustion of
administrative remedies would continue to apply under the AP A to
permit federal courts to refuse to review agency actions that were
nonetheless final under § 10(c). See S. Rep. No. 94-996, p. 11
(1976) (among the limitations on judicial review that remained
unaffected by the 1976 amendments was the "failure to exhaust
administrative remedies").13
13 Respondents also rely on then-Assistant Attorney General
Scalia's letter to the Chairman of the Senate Subcommittee on
Administrative Practice and Procedure where he wrote that the
Department of Justice supported the amendment in large part because
it expected that many (or most) of the cases disposed of on the
basis of sovereign immunity could
153
Putting to one side the obvious problems with relying on
postenactment legislative history, see,
e. g., United States
v.
Texas, 507
U. S. 529, 535, n. 4 (1993);
Pension Benefit Guaranty
Corporation v.
LTV Corp., 496 U. S. 633, 650
(1990), the proviso was added in 1976 simply to make clear that
"[a]ll other than the law of sovereign immunity remain unchanged,"
S. Rep. No. 94-996, at 11. The elimination of the defense of
sovereign immunity did not affect any other limitation on judicial
review that would otherwise apply under the AP A. As already
discussed, the exhaustion doctrine continues to exist under the AP
A to the extent that it is required by statute or by agency rule as
a prerequisite to judicial review. Therefore, there is nothing
inconsistent between the 1976 amendments to the AP A and our
reading of § 10(c).
IV
We noted just last Term in a non-APA case that "appropriate
deference to Congress' power to prescribe the basic procedural
scheme under which a claim may be heard in a federal court requires
fashioning of exhaustion principles in a manner consistent with
congressional intent and any applicable statutory scheme."
McCarthy v. Madigan, 503 U. S., at 144.
Appropriate deference in this case requires the recognition
that, with respect to actions brought under the AP A, Congress
effectively codified the doctrine of exhaustion of administrative
remedies in § 10(c). Of course, the exhaustion
have been decided the same way on other legal grounds such as
the failure to exhaust administrative remedies. S. Rep. No. 94-996,
pp. 25-26 (1976). See also 1 Recommendations and Reports of the
Administrative Conference of the United States 222 (1968-1970)
(urging Congress to adopt the very language that was eventually
incorporated verbatim into the 1976 amendment so that "the
abolition of sovereign immunity will not result in undue judicial
interference with governmental operations or a flood of burdensome
litigation").
154
doctrine continues to apply as a matter of judicial discretion
in cases not governed by the AP A. But where the AP A applies, an
appeal to "superior agency authority" is a prerequisite to judicial
review
only when expressly required by statute or when an
agency rule requires appeal before review and the administrative
action is made inoperative pending that review. Courts are not free
to impose an exhaustion requirement as a rule of judicial
administration where the agency action has already become "final"
under § lO(c).
The judgment of the Court of Appeals is reversed, and the case
is remanded for further proceedings consistent with this
opinion.
It is so ordered.
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