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SUMMARY OF THE TESTIMONY OF THE U.S. DEPARTMENT OF JUSTICE
OPPOSING H.R. 992, THE "TUCKER ACT SHUFFLE RELIEF ACT OF 1997"
By radically changing the authority and jurisdiction of the U.S. Court of Federal Claims ("CFC") and federal district courts, H.R. 992 would lead to greater costs and delay in federal litigation, as well as uncertainty in the law. The Department strongly opposes the bill.
STATEMENT
OF
ELEANOR D. ACHESON
ASSISTANT ATTORNEY GENERAL
OFFICE OF POLICY DEVELOPMENT
BEFORE THE
SUBCOMMITTEE ON IMMIGRATION AND CLAIMS
COMMITTEE ON THE JUDICIARY
UNITED STATES HOUSE OF REPRESENTATIVES
CONCERNING
H.R. 992
THE "TUCKER ACT SHUFFLE RELIEF ACT OF 1997"
PRESENTED ON
SEPTEMBER 10, 1997
Mr. Chairman and Members of the Subcommittee: Thank you for the opportunity to provide the Department's views on H.R. 992, the "Tucker Act Shuffle Relief Act of 1997." We have serious constitutional and policy concerns with the bill, and we strongly oppose it.
Mr. Chairman, no one could disagree with the apparent motivation of this bill, which is to simplify and expedite the resolution of judicial challenges to federal regulatory actions, including challenges under the Administrative Procedure Act and the Just Compensation Clause of the Fifth Amendment. One of Attorney General Janet Reno's top priorities is to achieve a just resolution of federal court cases as quickly as possible. The Department has been very active in promoting the use of Alternative Dispute Resolution ("ADR") and other ways to streamline federal litigation, including cases involving property rights under the Fifth Amendment. In fact, the Department worked closely with the U.S. Court of Federal Claims ("CFC") to develop that court's ADR rule, referred to as General Order No. 13, which allows for the use of settlement judges, mini-trials, and other ADR techniques. We have also worked with the court to create an awareness of the special need for ADR in takings cases. For example, by agreement with the opposing parties and our client agencies, the Department has initiated an ADR process that we hope will resolve about 150 related land claims recently filed in the CFC (unless a settlement is achieved first). We have aggressively pursued ADR in other cases involving property interests, and we have been successful in resolving a number of these cases through ADR, thereby reducing litigation costs and delay and conserving judicial resources.
H.R. 992, however, would not promote these goals. In fact, the bill would have precisely the opposite effect, resulting in greater cost and delay in the resolution of cases, as well as uncertainty and instability in the law. The bill's potential adverse impacts include the following:
In short, we believe this bill is seriously misdirected and would undo the efforts made by the Congress, the Department, and others to reduce burdens associated with litigating in federal court. The Department stands ready to work with the Subcommittee to find additional ways to streamline and expedite federal court claims involving property rights. But we strongly oppose H.R. 992.
Summary of the Bill
H.R. 992 is similar to section 205 of S. 605, the "Omnibus Property Rights Act of 1995," introduced in the 104th Congress, as well as section 5(b) of S. 343, "The Comprehensive Regulatory Reform Act of 1995," also introduced in the 104th Congress. The Department expressed serious concerns with these proposals in previous testimony and correspondence.
H.R. 992 would greatly change the orderly division of responsibility between federal district courts and the CFC. Under existing law, the CFC has jurisdiction to hear takings claims and other civil claims against the United States founded upon the Constitution, a federal statute or regulation, or a contract with the United States, or for damages not sounding in tort. 28 U.S.C. § 1491. Since its creation in 1855, the CFC has primarily addressed money claims against the United States, and its authority to grant injunctive relief has been severely limited. Federal district courts have concurrent jurisdiction to hear, among other things, takings claims and other civil claims against the United States, but this jurisdiction is generally limited to claims up to $10,000. 28 U.S.C. § 1346. Federal district courts and courts of appeals also have primary responsibility for reviewing federal agency action under the Administrative Procedure Act.
The existing regime has allowed the CFC to develop experience in resolving and streamlining takings litigation and the other complex cases within its specialized docket. Existing law also ensures that the authority to invalidate federal statutes and regulations is generally exercised by Article III courts who are truly independent from the other branches of government by virtue of salary and tenure protections in the Constitution.
H.R. 992 would greatly alter this longstanding regime. Section 2(a) of the bill would give the CFC and federal district courts concurrent jurisdiction over "claims for monetary relief and claims seeking invalidation of any Act of Congress or any regulation of an agency as defined under this Act affecting property rights." Section 2(c)(1)(A) would authorize the CFC to invalidate "any Act of Congress or any regulation of an executive department that adversely affects private property rights in violation of the fifth amendment of the United States Constitution." Section 2(c)(1)(B) would further authorize the CFC "to grant injunctive and declaratory relief when appropriate." The bill also would give the CFC new powers to hear tort claims against the United States, and it would repeal 28 U.S.C. § 1500, which prevents the Government from being sued on the same claim in two different courts at the same time.
Serious Constitutional Concerns
H.R. 992 would dramatically expand the jurisdiction and remedial powers of the CFC by giving the CFC, among other things, broad authority to invalidate federal statutes and federal agency actions that affect property rights. The CFC is "established under Article I of the Constitution" (28 U.S.C. § 171(a)), and CFC judges do not enjoy the tenure and salary protections that the Constitution requires for Article III courts. The bill thus raises serious, fundamental issues under Article III. These concerns are set forth at greater length in the Department's recent letter to the Chairman on H.R. 992, and I will briefly summarized them here.
Several recent Supreme Court decisions have emphasized Article III's value in preserving the tripartite federal scheme. In Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), the Court invalidated a broad grant of jurisdiction to the Article I bankruptcy courts. The plurality found a danger of "'encroachment or aggrandizement' by Congress at the expense of the other branches of government." Id. at 83 (citation omitted). In Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568 (1985), and again in Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833, 847 (1986), the Court upheld grants of adjudicatory authority to administrative tribunals established under Congress's Article I powers. However, those decisions relied largely on the limited jurisdiction and powers that were accorded those tribunals. In each instance, the Court considered "the extent to which the 'essential attributes of judicial power' [were] reserved to Article III courts, and, conversely, the extent to which the non-Article III forum exercise[d] the range of jurisdiction and powers normally vested only in Article III courts." Schor, 478 U.S. at 851 (quoting Thomas, 473 U.S. at 585).
H.R. 992 would dramatically expand both the jurisdiction and remedial power of the Article I CFC far beyond its historical primary role as a tribunal for resolving specified money claims against the United States. The CFC would be empowered to decide statutory challenges to agency action affecting property rights and Fifth Amendment challenges to federal statutes and regulations affecting those rights. The remedial powers of the CFC, to be exercised across this broad range of cases, would be essentially identical to the remedial powers of the Article III district courts. Assignment of these broad powers to the Article I CFC would raise serious constitutional difficulties under Northern Pipeline and the Court's subsequent elaboration of the limits on non-Article III adjudications in Thomas and Schor.
In addition to these separation of powers concerns, H.R. 992 would raise serious concerns involving the constitutional rights of certain litigants to adjudications by Article III judges. The bill would allow most plaintiffs with potential CFC claims to choose between Article I and Article III tribunals. Plaintiffs who elect to proceed in the CFC rather than in district court would effectively waive any rights to have their claims heard by Article III trial judges. But the initial plaintiffs, in many cases, would not be the only non-federal parties with a cognizable stake in the choice of forum. Statutory provisions and rules governing CFC practice permit involuntary joinder of third parties, both as defendants and plaintiffs. But Article III limits the application of these provisions. Indeed, in Bank of America National Trust & Savings Association v. United States, 23 F.3d 380 (Fed. Cir. 1994), Judge Mayer argued that the CFC, in exercising its statutory power of involuntary joinder, had violated rights that Article III guaranteed to the involuntarily joined litigant (id. at 385-88). By sharply expanding the CFC's jurisdiction and remedial power, the bill would increase both the frequency with which involuntary joinder under these provisions could present Article III problems and the force of the constitutional objections that involuntarily joined parties would raise.
Inappropriate Injunctive Relief in Takings and Contract Cases
In addition to these constitutional difficulties, the bill's proposed expansion of the powers of the CFC to include broad injunctive relief is problematic on policy grounds. Traditionally, the relief available in suits before the CFC has been limited to money damages. That traditional limitation has been modified very sparingly. Specifically, the court's power extends beyond monetary relief in certain personnel actions, 28 U.S.C. § 1491(a)(2), and in cases involving the award of government contracts, 28 U.S.C. § 1491(b). Any further expansion of the court's authority to grant injunctive relief would effectively give the court power to alter government policy decisions, rather than simply providing full compensation for the consequences of governmental decisions.
Injunctive relief in response to a takings claim against the United States is generally inappropriate. Under longstanding constitutional doctrine, equitable relief is not available to enjoin an alleged taking where a suit for compensation can be brought against the sovereign subsequent to the taking. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1016 (1984) (citing cases). The Tucker Act generally provides a remedy of monetary relief where federal action takes private property. Id. The bill's broad grant of injunctive authority to the CFC could be read to authorize injunctive relief in all takings cases against the United States, thereby conflicting with these basic constitutional principles.
The bill also could have the practical effect of denying the government the rights that commercial parties routinely possess when they enter into contracts. In traditional contract law, a party who does not wish to perform a contract has the option of not performing, which might constitute a breach of the contract. In that circumstance, the breaching party will be expected to pay money damages to make the non-breaching party whole. However, the non-breaching party does not ordinarily have the right to demand contract performance. Instead, the law has customarily recognized that money damages are a sufficient remedy in the commercial world. If the CFC is given the power to grant a non-breaching party injunctive relief, the court will be empowered to deny the government the contractual options to which any other contracting party would be entitled.
To be sure, section 2(c)(1)(B) qualifies its grant of injunctive relief to the CFC to cases where such relief would be "appropriate." This vague qualifier, however, does not clarify whether H.R. 992 affords the CFC authority to grant injunctive relief against the United States in takings and contract cases. For this very practical reason, we oppose the provision that would expand the Court's power to grant injunctive relief as unnecessary and unwise.
Override of "Preclusive Review" Provisions
H.R. 992 appears to override provisions included in many federal statutes that vest exclusive jurisdiction in particular courts to review specified regulations. These provisions, sometimes referred to as "preclusive review" provisions, often specify a fixed time period within which such challenges must be brought. Preclusive review provisions allow the agency, the regulated community, other interested persons, and the general public to know that there is stability in the regulatory regime, so that they may plan their future actions accordingly. Once the specified court has spoken on the issue of a regulation's validity, affected industries can adopt compliance strategies, which might require substantial capital investments, secure in the knowledge that a competitor will not subsequently persuade another court to invalidate the rule, thereby rendering the investment worthless.
Section 2(a) of the bill provides that "[n]otwithstanding any other provision of law," all federal district courts and the CFC shall have jurisdiction over claims seeking invalidation of agency actions affecting property rights. While perhaps not intended by the bill's drafters, this language appears to wipe out, in one fell swoop, every preclusive review provision in the U.S. Code. Because this provision applies "[n]otwithstanding any other provision of law," it appears to trump every existing statutory provision that limits challenges to federal action to a particular court. Because it applies to any federal action "affecting property rights," its potential effect is extremely broad. For example, claimants could argue that any federal statute or rule that imposes compliance costs affects property rights. If read to override preclusive review provisions, H.R. 992 would lead to significant uncertainty and instability in the law caused by the possibility of multiple, inconsistent rulings. A ruling by a federal appeals court upholding the validity of a regulation, for example, could be contradicted by a future ruling by the CFC or any federal district court, most of which would not be bound by the original ruling.
Preclusive review provisions requiring direct review of agency action by a Court of Appeals also avoid duplication of judicial effort. As the Supreme Court explained in Florida Power & Light Co. v. Lorian, 470 U.S. 729 (1985), a court reviewing agency action generally is not authorized to conduct a de novo inquiry into the decision under challenge, and thus the factfinding capacity of a district court is typically unnecessary for the review. Id. at 744. Placing initial review of agency action in a district court has the detrimental effect of requiring both the district court and the court of appeals to duplicate efforts; both must decide, based on the record the agency provides, whether the action was proper. Id. "One crucial purpose of * * * jurisdictional provisions that place initial review in the courts of appeals is to avoid the waste attendant upon this duplication of effort." Id. H.R. 992 would appear to eviscerate this commonsensical approach to judicial review.
The Congress has seen fit to include preclusive review provisions in a host of federal statutes. Potentially affected provisions that limit review to the District of Columbia Circuit include 15 U.S.C. §766(c) (Federal Energy Administration rules of general and national applicability) and 49 U.S.C. § 32904(b)(7)(A) (certain calculations of average fuel economies). The following statutes contain other preclusive review provisions that might be affected by the bill: the Food Quality Protection Act of 1996 (21 U.S.C. § 333(f)(4)); the Consumer Product Safety Act (15 U.S.C. § 2060); the Controlled Substances Act (21 U.S.C. § 877); the National Labor Relations Act (29 U.S.C. § 160 (f)); the Federal Power Act (16 U.S.C. § 825l(b)); the Federal Mine Safety and Health Amendments Act of 1977 (30 U.S.C. § 816); the Hobbs Administrative Orders Review Act, which authorizes review of a broad range of final agency actions, including final actions by the Federal Communications Commission, the Department of Agriculture, the Department of Transportation, the Federal Maritime Commission, and the Nuclear Regulatory Commission (28 U.S.C. § 2342); as well as laws governing automobile bumper standards (49 U.S.C. § 32503(a)); air safety enforcement actions (49 U.S.C. § 46110(a)); and pipeline safety standards (49 U.S.C. § 60119).
Affected environmental provisions include those governing pesticides (7 U.S.C. § 136n(b)), toxic substances (15 U.S.C. § 2618), surface mining (30 U.S.C. § 1276), clean water (33 U.S.C. § 1369(b)), safe drinking water (42 U.S.C. § 300j-7), hazardous waste (42 U.S.C. § 6976), clean air (42 U.S.C. § 7607(b)), and Superfund cleanups (42 U.S.C. § 9613(a)).
Allowing each federal district court and the CFC to hear challenges to agency actions that allegedly affect property rights would nullify the benefits of these carefully crafted provisions. H.R. 992 might also allow claimants to sidestep administrative processes for reviewing agency action by going directly to federal court anytime the claimant alleges that agency action adversely affects its property rights.
Disregard of the Experience and Efficiency of the CFC
Existing law vests exclusive jurisdiction for all takings claims against the United States for more than $10,000 in the CFC. Over the years, the CFC has developed experience in resolving and streamlining cases under the Just Compensation Clause and other claims within its jurisdiction. Through "Bench-Bar" task forces and other initiatives, the CFC has worked closely with the Department and private sector litigators to develop issue-narrowing techniques and streamlining mechanisms for these complex cases. These efforts include the establishment of the Alternative Dispute Resolution program mentioned earlier. And because the CFC rules of practice allow CFC judges to hold trials in locations convenient to the parties and witnesses, the claimant can be spared the time and expense of traveling to the CFC for trial.
By authorizing federal district courts across the country to hear takings claims and other property-related claims against the United States, regardless of the amount in controversy, H.R. 992 would undermine the benefits and economies that have resulted from placing most of these cases within the exclusive jurisdiction of the CFC. Unlike claims brought under the Administrative Procedure Act, which are generally based on the record established by the agency, takings claims may involve extensive discovery and trial on significant issues with which a federal district court has little experience. By allowing for the resolution of these claims by courts with less experience than the CFC, the bill would cause additional delay in many cases, as well as a lack of uniformity in the law.
By providing concurrent jurisdiction, the bill would also encourage inappropriate forum shopping. Indeed, just last year the Congress enacted a sunset provision to eliminate federal district court jurisdiction (concurrent with the CFC) over bid protests. The sunset provision was enacted because "having multiple judicial bodies review bid protests of Federal contracts has resulted in forum shopping as litigants search for the most favorable forum," as well as lack of national uniformity in resolving these disputes. 142 Cong. Rec. S11848 (Sept. 30, 1996) (remarks of Senator Cohen) (discussing section 12 of the Administrative Dispute Resolution Act of 1996, Pub. L. No. 104-320). The same concerns apply all the more to H.R. 992's sweeping grant of concurrent jurisdiction over claims affecting property rights.
Waste of Judicial Resources
The Department also opposes the proposed repeal of 28 U.S.C. § 1500, which spares the Government the need to defend against the same claim in two different courts at the same time. Supporters of similar repeal proposals have argued that repeal is necessary because current law forces a property owner to bring consecutive claims for equitable relief in the district court and monetary relief in the CFC, and to exhaust all appeals in the district court action prior to seeking monetary relief. This contention is simply incorrect. In Loveladies Harbor, Inc. v. United States, 27 F.3d 1545 (Fed. Cir. 1994) (in banc), the Federal Circuit sitting in banc authoritatively determined that section 1500 does not preclude property owners from seeking equitable relief in the district court and monetary relief in the CFC at the same time. The Loveladies court held that section 1500 deprives the CFC of jurisdiction only where the claimant has a claim pending in another court that arises from the same operative facts and seeks the same relief.
Repeal of section 1500 would allow litigators to manipulate the courts and forum shop, thereby wasting scarce judicial and Government litigating resources. For example, if section 1500 were repealed, a plaintiff would be able to begin litigating aspects of a contract claim in district court and subsequently initiate a suit before the CFC in an effort to find the most sympathetic forum. Even if the bill made clear that the Government could transfer the cases and consolidate them in one forum, due to the minimal requirements of notice pleading, the Government might not learn until well into the litigation that a complaint filed in the district court involved the same dispute as a complaint filed in the CFC. The Government's ability to identify related actions would be further limited by the sheer volume of civil litigation involving the United States. The potential for abuse caused by repeal of section 1500 would further waste scarce judicial resources.
Unwise Grant of Jurisdiction over Tort Claims to the CFC
We also oppose section 2(c)(1)(C) of the bill, which would grant the CFC authority to entertain tort claims that currently may only be heard by the federal district courts. The provision would effectively repeal that portion of the Tucker Act that precludes the CFC from entertaining claims "sounding in tort." 28 U.S.C. § 1491.
We oppose this provision for two reasons. First, it is unnecessary. The CFC already exercises jurisdiction over claims based on tortious breach of a government contract. L'Enfant Plaza Properties, Inc. v. United States, 645 F.2d 886, 892 (Ct. Cl. 1981); Morris v. United States, 33 Fed. Cl. 733, 742 (1995). Thus, the Court may already hear all contract claims that a litigant may desire to assert, whether or not they allege the existence of tortious conduct. The only tort claims that the Court may not entertain are tort claims that, by definition, are independent of any contract, and thus truly "sound in tort."
Second, tort claims generally are unlike the types of claims that are at the heart of the CFC's mission and purpose. Historically, the CFC has addressed non-tort claims for money against the United States arising under the Constitution, a federal statute, a regulation, or a contract. The benefit of having such claims addressed in a specialized forum with a national, rather than a regional, jurisdiction, is that one court can promote uniformity in the resolution of these issues. Unlike the types of claims that the Court has traditionally entertained, tort claims have their source in state common law, which is subject to modification state-by-state by various state courts and legislatures. As such, governing principles in tort law can vary from state to state. As a single court, located in Washington, D.C., the Court of Federal Claims is not a proper forum to administer the varied law emanating from 50 states.
The variations in state law are already accommodated by the United States district courts in their handling of tort claims against the United States. The existence of the potential for redress of tort claims against the United States in the district courts insures that citizens may have a forum in which to pursue these claims. The extension of such jurisdiction to the CFC would place before the CFC a set of claims that, by their nature, are different from the claims that the Court was established to address, and has addressed for more than 100 years.
Potential New Cause of Action that Could Bust the Budget
The bill's title and other provisions suggest that the bill is designed to effect only jurisdictional and procedural changes, not to create a new cause of action. Section 2(a) of the bill, however, could be misread to create new federal liability. This section provides: "A property owner may file a civil action under this Act to challenge the validity of any agency action that adversely affects the owner's interest in private property in either the United States District Court or the United States Court of Federal Claims."
While this language might be intended merely to define jurisdiction, it could be misconstrued by a court to create a new cause of action and federal liability any time agency action "adversely affects" private property. This risk is exacerbated by the bill's definition of "private property," which refers to "property protected under * * * this Act," and the definition of "State agency," which refers to "taking[s] of private property seeking to be vindicated under this Act." If read to create federal liability for any government action that adversely affects property rights, the bill would establish a compensation requirement that extends far beyond that currently imposed by the Fifth Amendment. As recognized in the seminal regulatory takings case of Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413 (1922), "[g]overnment hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law." The Department strongly opposes statutory compensation mandates that would alter the longstanding balance between property rights and public protections that has developed under the Constitution. As we have explained at length in previous testimony and correspondence, such statutory compensation mandates could bust the budget, create huge new bureaucracies, result in a litigation explosion, and undermine our ability to provide vital protections for the American people. Because H.R. 992 would confer broad invalidation authority, the bill also creates the risk of being read to allow for invalidation of any federal action that adversely affects property rights, which could mean the end of any federal protection that involves a restriction on the use of private property.
Other Flaws
The bill contains a number of other troublesome provisions and drafting flaws that are sure to result in more, not less, litigation.
For example, section 2(c)(1)(A) of the bill would give the CFC jurisdiction over claims "for invalidation of any Act of Congress or any regulation of an executive department that adversely affects private property rights in violation of the fifth amendment of the United States Constitution" [emphasis added]. The meaning of this provision is not at all clear. The Fifth Amendment does not prohibit takings, but merely conditions a taking on the payment of just compensation. There is no constitutional "violation" (under the language of the bill) where a money remedy for the taking exists. As previously noted, the Tucker Act generally provides a remedy of monetary relief where federal action takes private property. The best reading of the bill language in question would be to give it no effect where a Tucker Act remedy of monetary relief is available because in these cases the federal action would not constitute a "violation of the fifth amendment." To avoid rendering this language a nullity, however, a court might misconstrue it to allow for invalidation of federal action even where a monetary remedy is available, a result that would contravene fundamental precepts of takings jurisprudence.
Another example of problematic drafting that might well spawn new litigation appears in the bill's definition of "State agency." This term does not appear anywhere in the operative portion of the bill, but its appearance in the definition section might lead a court to conclude that the bill applies not only to federal actions, but to myriad State actions as well.
The extensive definition of "private property" -- a lengthy list of interests, including any interest understood to be property based on "mutually reinforcing understandings sufficiently well grounded in law to back a claim of interest" -- is convoluted, vague, and likely to result in additional litigation.
Section 2(b) of the bill grants standing to persons adversely affected by "an agency action taken under this Act," but there is no agency action authorized or required to be taken under the bill.
These and other ambiguous provisions would likely result in additional delay, expense, and litigation as the courts and parties struggle to discern their meaning.
Conclusion
The Department would like to work closely with the Subcommittee and others to expedite the just resolution of claims against the United States. Alternative Dispute Resolution and other ways of streamlining litigation hold much promise.
H.R. 992, however, would undermine these efforts, and we strongly oppose it.