Memo Addendum - PREP by cuiliqing


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TO:          Thomas R. Hebert

FROM:        Steve Quarles
             Donald Kochan

DATE:        September 24, 2001

RE:         Strength of Nonacquiescence Principles When Agency is Not a Party to
            First Litigation

      Per your request, this memorandum addresses whether the nonacquiescence

doctrine – which permits a federal agency to apply a statutory interpretation of one

court only within the jurisdiction of that court and apply a contrary statutory

interpretation that has not otherwise been invalidated outside of that jurisdiction –

is stronger or weaker when the agency was not a party to the first litigation where

the disfavored interpretation was adopted. This memorandum constitutes an

addendum to the August 22, 2001 Memorandum prepared on the nonacquiescence

doctrine. See Memorandum from Donald Kochan to Steve Quarles re EPA Ability to

Apply Statutory Interpretation of One Circuit Court Only Within That Circuit’s

Jurisdiction, dated Aug. 22, 2001 (“August 22, 2001 Memorandum”).

      Using any normal tools, researching to uncover empirical examples of specific

agency action in this area is a difficult task, and although our initial research has

not revealed a dispositive empirical example from which the Environmental

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Protection Agency (“EPA”) could be guided, we believe that there are even greater

justifications for agency nonacquiescence in a judicial interpretation that was made

without the benefit of, and deference to, an agency as a party providing its own view

on all aspects of the initial litigation.1 Indeed, the agency’s absence from the initial

litigation is a leading justification supporting nonacquiescence – it has not had an

opportunity for its own views to be tested and the courts have not had an

opportunity to evaluate those views.

      Typical cases of nonacquiescence occur when the agency is a party to

litigation. In those instances, whether and to what extent the agency follows a

court ruling from that litigation in other cases is complicated by the doctrines of res

judicata and collateral estoppel – a litigant cannot typically relitigate the same

issues with the same parties once they are actually decided. Moreover, once the

Court obtains jurisdiction over a party to litigation, it has the power to take action

to enforce its judicial decrees against that party. Where an agency is not a party to

litigation, the complications of res judicata and collateral estoppel are absent and

the agency is not threatened with the potential violation of a court order.

1      We recognize that EPA, through the Department of Justice, did file an
amicus brief in the Ninth Circuit appeal in Headwaters, Inc. v. Talent Irrigation
District, 243 F.3d 526 (9th Cir. 2001), but that brief was addressed only to a narrow
question and not to the merits of whether the use of aquatic pesticides are
discharges of pollutants requiring NPDES permits.

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       Where the agency is not a party to the initial litigation, the only real effect on

the agency is one of stare decisis.2 Importantly, stare decisis binds courts within

the jurisdiction controlled by the circuit in the initial litigation to follow an

interpretation in later cases, not parties. The Federal Circuit has recently

explained the distinction:

                     But stare decisis is a doctrine that binds courts to
              follow their own earlier decisions or the decisions of a
              superior tribunal. As we have previously noted, stare
              decisis “in essence makes each judgment a statement of
              the law, or precedent, binding in future cases before the
              same court or another court owing obedience to its
              decision.” It does not bind parties not to challenge those
              decisions, at least where the issue remains unresolved at
              the highest level. Thus, under Bankers Trust we are
              bound to follow earlier decisions of this court that directly
              construe a statute, but that does not mean that the
              parties are bound to do so, at least if they plan to seek
              review of that issue to the Supreme Court, which is not
              bound by our earlier decision. . . . Moreover, it is even
              appropriate for a party to seek to re-litigate an issue of
              statutory interpretation in the same court that rendered
              its earlier decision, at least if the original decision was
              based on deference to the agency’s interpretation of the
              statute under Chevron U.S.A., Inc. v. Natural Resources
              Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778,
              81 L.Ed.2d 694 (1984), and the agency has changed its
              interpretation. See Bankers Trust, 225 F.3d at 1376
              (noting that in such a situation, “we might well consider
              the agency’s change of heart as a significant factor”). . . .
              Thus, it was perfectly appropriate for the Department of
              Veterans Affairs to attempt to re-litigate the Court of
              Appeals for Veterans Claims’ construction of 38 U.S.C. §

2     Of course, as explained in the August 22, 2001 Memorandum, there may be
some other indirect effects – for example, an agency’s failure to follow the
interpretation of a court, in extraordinary circumstances or after that interpretation
becomes settled, could be deemed arbitrary and capricious.

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             1318 in this court. It could do so either by raising the
             issue in a new case at the Board of Veterans’ Appeals or
             by proceeding through rulemaking. Here it chose the
             latter course.

National Organization of Veterans’ Advocates, Inc. v. Secretary of Veterans Affairs,

260 F.3d 1365, 1373-74 (Fed. Cir. 2001). Thus, when an agency chooses to adopt

“nonacquiescence” in a court decision resulting from litigation in which it did not

participate, its decision implicates no direct, binding obligations on the agency.

      Moreover, it is a clear rule of law that there is no intercircuit stare decisis in

the federal court system. So, neither EPA nor other courts in front of whom EPA

might advance a statutory interpretation contrary to the disfavored one are bound

to accept a ruling of a foreign circuit. See, e.g., Taylor v. Charter Medical Corp., 162

F.3d 827, 832 (5th Cir. 1998). See also, e.g., Brizendine v. Cotter & Co., 4 F.3d 457,

462 (7th Cir. 1993) (“[b]ecause there is no rule of intercircuit stare decisis, the

[Interstate Commerce Commission] is not bound by the decision of the District of

Columbia Circuit in litigation arising in other circuits”), vacated on other grounds,

511 U.S. 1103 (1994). As explained by Professors Estreicher and Revesz and quoted

in the August 22, 2001 Memorandum, “the acceptance of intercircuit

nonacquiescence should properly be seen as a corollary to the rejection of

intercircuit stare decisis.” Samuel Estreicher & Richard L. Revesz,

Nonacquiescence by Federal Administrative Agencies, 98 YALE L.J. 679, 740 (1989).

      If an agency were to acquiesce in an interpretation arising from litigation in

which it did not participate, the issue could not percolate through the circuits and

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ultimately, if necessary, be resolved by the Supreme Court. Indeed, if an agency

acquiesces in all circuits to a statutory interpretation with which it disagrees, that

acquiescence would allow the issue to be finally decided before even a single court

heard and considered the view of the agency on the issue.

      This would thwart the policies behind the substantial deference given to

agencies and the principle that an agency is uniquely situated to apply its

particular expertise in the area of the statutes it administers. See, e.g., American

Federation of Gov’t Employees v. FLRA, 204 F.3d 1272, 1274-75 (9th Cir. 2000) (a

federal agency’s interpretation of a statutory provision it is charged with

administering is entitled to deference).

      As one scholar has explained, the government plays a critically different role

in litigation from that of a private party. He concludes that, even within the same

circuit, the government’s position on an issue of statutory interpretation generally

should not be constrained by the results of citizen suits:

                     Although these standards [of precedent] are
             applicable in the general case, different standards should
             apply when precedent is raised against the Government.
             This is not to suggest, as the Executive sometimes has,
             that the Executive should be able to avoid the
             precedential effect of a judgment simply by expressing its
             nonacquiescence in the decision [in the same circuit]. In
             general, if the Government has litigated a position and
             lost, it should be bound by the precedent created, unless it
             can convince the circuit court en banc that the decision
             should be overturned. At times, however, the special
             nature of the Executive’s role in statutory interpretation
             and the need to preserve the Executive’s flexibility in
             marshalling its litigation resources argue for exceptions to

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             the strict application of stare decisis. An exception is
             particularly necessary if the precedent was established in
             an action in which the Government was not a party or if
             the agency charged with interpreting a statute as to
             which a precedent is established changes its view of the
             correct interpretation of the statute and wishes to present
             its current interpretation to the court. . . .

                    If an agency charged with interpreting a statute has
             not participated in an action involving that statute’s
             interpretation, giving the decision precedential effect
             against the Government would allow private parties and
             the court to strip the Executive of its rightful role in
             interpreting the law. If the Government’s position was not
             presented and would now be barred, the usurpation is
             clear. But even if the Government’s position in such a
             case were presented by a private party, the decision
             should not necessarily retain precedential authority in
             future litigation involving the Government. One could
             argue that the Government should be bound by such a
             decision because the court should not be required to
             expend its resources reconsidering a position already
             advanced, and because, for practical purposes, the
             Executive’s role has been preserved. On the other hand, if
             the court were not aware that the position advanced was
             the Government’s, it may not have accorded that position
             the deference it deserved. Further, the Government may
             be able to add arguments in favor of its interpretation to
             those already presented. In either case, the Government
             should not be bound.

Arthur F. Greenbaum, Government Participation in Private Litigation, 21 ARIZ. ST.

L.J. 853, 957-59 (1990) (emphasis added).

      Professor Greenbaum summarizes some of the substantial policy reasons

favoring a flexible application of stare decisis to the government, especially when

the initial interpretation was made in the government’s absence:

                    The argument for a more flexible application of
             stare decisis when the Government challenges precedent

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              also implicates the Government’s need for resource and
              strategic flexibility. If the Government’s interests will be
              severely affected by the results of suits in which it is not a
              party, the Government must intervene in such actions to
              avoid curtailment of its options in later litigation. This
              pressure to intervene would reduce the Government’s
              litigation flexibility, which the Supreme Court has found
              important in other contexts. Increased governmental
              intervention also would burden judicial resources and
              complicate private suits by adding another party and by
              changing the balance of power among the primary parties.

                     One could argue that allowing the Government to
              relitigate issues already decided in cases in which it was
              not a party would burden the courts with unnecessary
              proceedings, undercut stability of the law by raising the
              spectre [sic] of easy challenges to existing decisions, and
              create the possibility of conflicting decisions within the
              circuit. Requiring en banc consideration to change
              precedent allows the courts to weigh the value of securing
              a possibly better resolution of an issue against the costs of
              undermining established law. These concerns are
              important, but they are outweighed by the need to protect
              the Executive’s role. The Executive may refrain from
              challenging precedent decided in its absence precisely
              because these overall costs to the system are too high, but
              the Executive should be free to make that decision.

Id. at 960.

      For these reasons, we believe that EPA’s ability to choose not to follow the

statutory interpretation announced in Talent Irrigation outside of the Ninth Circuit

is strengthened by the fact that it was not a party in that litigation and its amicus

appearance was limited. Indeed, it is questionable whether EPA would be required

to follow the interpretation in Talent Irrigation even within the Ninth Circuit,

understanding, however, that political constraints and concerns that the ideology of

the Ninth Circuit bench may hinder a successful defense of such a policy might

preclude such a strategy.

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