Jack J. Bender v. William P. Clark, as Successor to James G. Watt

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Jack J. BENDER, Plaintiff-Appellee, v. William P. CLARK, as Successor to James G. Watt, et al., Defendants-Appellants.

No. 83-1306.

United States Court of Appeals, Tenth Circuit.

Sept. 28, 1984.

744 F.2d 1424

S. Kirk Ingebretsen, Denver, Colo. (David W. Furgason, Denver, Colo., with him on brief) of Welborn, Dufford & Brown, Denver, Colo., for plaintiff-appellee.

John A. Bryson, Atty., Dept. of Justice, Washington, D.C. (William Lutz, U.S. Atty. and Herbert A. Becker, Asst. U.S. Atty., Albuquerque, N.M., and Carol E. Dinkins, F. Henry Habicht, II, Asst. Attys. Gen., Raymond Zagone, Anne S. Almy, Martin Green, Attys., Dept. of Justice, Wash-ington, D.C., with him on briefs), for de-fendants-appellants.

Before HOLLOWAY and BARRETT, Circuit Judges, and SETH, Chief Judge.

BARRETT, Circuit Judge.

The government appeals from an order of the district court which remanded the action to an administrative law judge (ALJ) for a determination of whether the plain-tiff-appellee, Jack J. Bender, adequately showed by a preponderance of the evidence that the United States Geological Survey (USGS) erred in finding that a particular tract of federal land contained a known geologic structure (KGS). The district court had jurisdiction over this matter pur-suant to 5 U.S.C. §§ 702, 704 and 28 U.S.C. § 1331.

In February, 1977, Bender filed a non-competitive oil and gas lease offer for cer-tain public lands in New Mexico. At the public drawing held in March, 1977, at the New Mexico State Office of the Bureau of Land Management (BLM), Bender‘s offer was accorded priority number one. Before the lease was issued, however, the USGS determined that the land in question was within an undefined KGS. Because 30 U.S.C. § 226(b)(1) mandates that lands within a KGS be leased by competitive bid-ding only, the BLM rejected Bender‘s lease offer on July 13, 1977. Bender subse-quently appealed the BLM‘s decision to the Interior Board of Land Appeals (IBLA).

Although an individual applicant in Bend-er‘s position is not statutorily entitled to a hearing on this particular administrative decision, the IBLA referred the case for a recommended decision to the Hearings Di-vision, Office of Hearing and Appeals, pur-suant to 43 C.F.R. §§ 4.415 and 4.452-8(c) (1983). The IBLA specifically requested that a hearing examiner take evidence on the question of whether this land was prop-erly included within a KGS.

Jack J. Bend-er, 40 IBLA 26, 29 (1979). On August 15, 1979, a hearing was held before an ALJ after which the ALJ recommended that the BLM‘s decision be affirmed. After review-ing the evidence presented at the hearing, the IBLA concluded that (1) the govern-ment satisfied its burden of establishing a prima facie case of the existence of a KGS and (2) Bender failed to show by “clear and definite” evidence that the government erred in making this determination.

Jack J. Bender, 54 IBLA 375, 385 and 389 (1981) (Bender II).

Bender then sought judicial review of the IBLA‘s decision in federal district court, contending that the government failed to make a prima facie showing that the land was within a KGS and that the IBLA ap-plied an improper standard of proof for him to meet in overcoming the government‘s decision. The district court found that al-though the government had established a prima facie case that the land was within a KGS, the IBLA erred legally in holding that Bender could overcome this finding only by “clear and definite evidence“; Bender need only show by a “preponder-ance of the evidence” that the govern-ment‘s determination was erroneous. Hence, the district court remanded the case to the ALJ to determine whether Bender established by a preponderance of the evi-dence that the KGS decision was incorrect.

On appeal, we are presented with two issues: (1) whether the remand order of the district court is a “final decision” pursuant to 28 U.S.C. § 1291, vesting us with appel-late jurisdiction over this matter; (2) if so, whether the district court erred in finding that the proper standard of proof in this instance is a preponderance of the evi-dence.

Appealability

Although the parties did not raise the jurisdictional issue,¹ it is well estab-lished that we may raise such issues on our own motion. E.g.,

Treinies v. Sunshine Mining Co., 308 U.S. 66, 70, 60 S.Ct. 44, 47, 84 L.Ed. 85 (1939);

Citizens Concerned v. City & Cty of Denver, 628 F.2d 1289, 1297 (10th Cir.1980), cert. denied,

452 U.S. 963, 101 S.Ct. 3114, 69 L.Ed.2d 975 (1981). Un-der the circumstances of this case, we are faced with a unique jurisdictional question which, as far as we can determine, has not been addressed previously by any federal circuit court. We must decide whether a remand order by a federal district court to an administrative agency, in which the agency is directed to apply a legal standard contrary to its usual standard, is a “final decision” within the meaning of 28 U.S.C. § 1291.

The jurisdiction of United States Circuit Courts of Appeals is grounded in statute.

Century Laminating, Ltd. v. Montgomery, 595 F.2d 563, 565 (10th Cir. 1979), cert. dismissed,

444 U.S. 987, 100 S.Ct. 516, 62 L.Ed.2d 417 (1979). In the absence of a specific statutory grant of jurisdiction in a particular type of dispute, we nonetheless have jurisdiction over final decisions of the federal district courts pur-suant to § 1291.² The purpose of the final-ity requirement is to avoid piecemeal re-view.

Giordano v. Roudebush, 565 F.2d 1015, 1018 (8th Cir.1977). Generally, “[t]o be final and appealable, the district court‘s judgment must end the litigation and leave nothing to be done except execute the judg-ment.”

Matter of Glover, Inc., 697 F.2d 907, 909 (10th Cir.1983) (citing

Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)). The remand by a district court to an administrative agency for further proceedings is ordinari-ly not appealable because it is not a final decision.

Ringsby Truck Lines, Inc. v. United States, 490 F.2d 620, 624 (10th Cir. 1973) cert. denied,

419 U.S. 833, 95 S.Ct. 59, 42 L.Ed.2d 59 (1974);

Pauls v. Secre-tary of the Air Force, 457 F.2d 294, 297-98 (1st Cir.1972); 15 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdic-tion § 3914, at 550-53 (1976). We have recognized, however, that this general proposition is not to be applied if it would violate basic judicial principles. See

Rings-by Truck Lines, Inc. v. United States, supra at 624 (review is allowed where ef-fect of the district court‘s remand order to the Interstate Commerce Commission would be “death knell” of the action).

The United States Supreme Court has held similarly that the finality requirement of § 1291 must be applied practically rath-er than technically.

Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528 (1949). See also

Paluso v. Mathews, 573 F.2d 4, 8 (10th Cir.1978). Thus, the Court in Cohen established what is now termed the “collat-eral order” doctrine. 15 Wright, Miller and Cooper, supra § 3911, at 467. In Cohen, the Court held that a district court‘s refus-al to order the plaintiff in a stockholder‘s derivative suit to post security for costs, as required by state statute, was immediately appealable. The Court‘s reasoning is vital:

This decision appears to fall in that small class which finally determine claims of right separable from, and col-lateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudi-cated.

337 U.S. at 546, 69 S.Ct. at 1225.

The government maintains that the present dispute satisfies the Cohen ex-ception to applying § 1291 rigidly. We cannot hold, however, that the standard-of-proof issue decided by the district court is “separable from, and collateral to” the merits of the ultimate dispute. In Cohen, the Court stated that to be collateral, the matter raised on appeal must not be a step toward a final judgment in which it would “merge,” it must not affect, nor be affect-ed by, the decision of the merits, and it must be so independent of the action that appellate review need not await final dispo-sition of the merits.

Id. See also 15 Wright, Miller & Cooper, supra § 3911, at 470. We conclude that under this stan-dard, the issue decided by the district court is so intertwined with the ultimate factual determination to be made—the existence of a KGS—that it is not collateral to the mer-its of the dispute.

The practical application of § 1291, how-ever, must be viewed under the circum-stances of each case. We believe that the underlying concern of the Court in Cohen was whether the appellate court, under the circumstances, could not in fairness delay immediate review. Indeed, the First Cir-cuit has held that the underlying policy considerations in Cohen and the internal logic of the Supreme Court‘s criteria sug-gest that the dispositive concern in such a case is the need for urgent review. See

In re Continental Investment Corp., 637 F.2d 1, 6 (1st Cir.1980) (Chapter X Bank-ruptcy reorganization proceeding). In our view, the Cohen Court asserted the need for the practical application of § 1291 par-ticularly in situations where it is clearly urgent that an important issue—one that is serious and unsettled, and not within the trial court‘s discretion (see

337 U.S. at 547, 69 S.Ct. at 1226)—be decided. Thus, in the unique instance where the issue is not “col-lateral” but justice may require immediate review, a balancing approach should be fol-lowed to make this jurisdictional decision.

The circumstances of the instant case require the application of such a balancing test rather than the mechanical analysis of the collateral order exception. The critical inquiry is whether the danger of injustice by delaying appellate review outweighs the inconvenience and costs of piecemeal re-view.

Paluso v. Mathews, supra at 8. But see 15 Wright, Miller & Cooper, supra § 3911, at 476-77 (the authors assert that although the Supreme Court in

Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 70 S.Ct. 322, 94 L.Ed. 299 (1950), ap-parently approved this ad hoc analysis, it nonetheless required that the finality and separability criterions be satisfied). Our analysis of the competing considerations in this dispute convinces us that the need for immediate review clearly outweighs the concerns over piecemeal review. As admit-ted by both parties, the standard-of-proof issue is a serious and unsettled one in the federal oil and gas leasing area. This is no less true for individual applicants than for the government because it is of great sig-nificance to other cases currently and ulti-mately brought before the Department of Interior regarding the nature of the leasing scheme in a given area. Cf.

Paluso υ. Mathews, supra at 8 (important issue of federalism alone enough to tip scale in fa-vor of immediate review).

Further, and perhaps most important, be-cause the government in such a case has no avenue for obtaining judicial review of its own administrative decisions, it may well be foreclosed from again appealing the dis-trict court‘s determination at any later stage of this proceeding. It is of course possible that this case may again reach the judicial stage if Bender should again lose his ultimate claim on remand to the agency. It is possible, but speculative in our view, that the government could then raise this standard-of-proof issue on cross-appeal. This scenario of “possibilities” is too con-jectural to avoid reaching a more just re-sult. We therefore conclude that we have jurisdiction to consider the present appeal.³

Standard of Proof

The government maintains that the IBLA did not err in requiring Bender to make a clear and definite showing that the USGS erred in its KGS determination. This heightened standard is necessary, the government asserts, because the present “case involves merely the application, in an administrative hearing rather than a judi-cial review context, of the familiar and well settled principle that agency determina-tions involving technical questions are enti-tled to great weight and will be deferred to if supported by substantial evidence.” Brief for the Appellants at 7-8 (citing

FPC v. Florida Power & Light Co., 404 U.S. 453, 463-67, 92 S.Ct. 637, 643-46, 30 L.Ed.2d 600 (1972), reh‘g denied,

405 U.S. 948, 92 S.Ct. 929, 30 L.Ed.2d 819 (1972) and

Environmental Defense Fund v. Andrus, 619 F.2d 1368, 1382 (10th Cir.1980)). Fur-ther, the government contends that the “preponderance of the evidence” standard is applicable only to hearings subject to the provisions of the Administrative Procedure Act (APA), 5 U.S.C. §§ 551 et seq., 701 et seq. Thus, because the hearing conducted in this case was not one “required by stat-ute,” 5 U.S.C. § 554, the government rea-sons that the preponderance standard is not appropriate; “clear and definite evi- dence” is the proper standard. We disa-gree.

In applying the clear-and-definite-evidence standard in this proceeding, the IBLA followed a rule established solely by the Department of Interior for informal adjudicatory proceedings. See Bender II, supra (citing

Donnie R. Clouse, 51 IBLA 221 (1980) and

United States v. Alexander, 41 IBLA 1, 11 (1979)). Our research sub-stantiates the district court‘s finding that no statutory or judicial authority exists for this standard of proof in such a situation.⁴ See Jack J. Bender v. James G. Watt, No. 81-682-JB, at 4 (D.N.M. Dec. 28, 1982). It is well settled that where Congress has failed to establish the degree of proof re-quired in an administrative proceeding, the judiciary is the traditional, and the most appropriate, forum to prescribe the stan-dard.

Herman & MacLean v. Huddleston, 459 U.S. 375, 103 S.Ct. 683, 691, 74 L.Ed.2d 548 (1983);

Steadman v. SEC, 450 U.S. 91, 95, 101 S.Ct. 999, 1004, 67 L.Ed.2d 69 (1981), reh‘g denied,

451 U.S. 933, 101 S.Ct. 2008, 68 L.Ed.2d 318 (1981);

Woodby v. INS, 385 U.S. 276, 284, 87 S.Ct. 483, 487, 17 L.Ed.2d 362 (1966). Hence, we must deter-mine the appropriate standard of proof re-quired in an administrative proceeding con-ducted to decide whether a particular tract subject to federal oil and gas leasing is within a KGS.

The traditional standard required in a civil or administrative proceeding is proof by a preponderance of the evidence.

Sea Island Broadcasting Corp. v. FCC, 627 F.2d 240, 243 (D.C.Cir.1980), cert. de-nied,

449 U.S. 834, 101 S.Ct. 105, 66 L.Ed.2d 39 (1980);

Collins Securities Corp. v. SEC, 562 F.2d 820, 823 (D.C.Cir. 1977). The government‘s contention that such a standard is applicable only in APA hearings is without merit. If an adminis-trative hearing is not required by statute, it does not necessarily follow that the tradi-tional standard of proof—preponderance of the evidence—is inapplicable. Although the procedural safeguards elicited in § 556 of the APA do not apply to informal admin-istrative hearings,⁵ see

Wong Yang Sung v. McGrath, 339 U.S. 33, 50, 70 S.Ct. 445, 454, 94 L.Ed. 616 (1950), the agency‘s ulti-mate review of the evidence presented at any hearing must not controvert basic prin-ciples of fairness. If an agency elects to conduct an informal hearing, the proper standard of proof—one which considers all the interests concerned—must be invoked.

The traditional preponderance standard must be applied unless the type of case and the sanctions or hardship imposed require a higher standard. See

Woodby v. INS, supra 385 U.S. at 286, 87 S.Ct. at 488;

Collins Securities Corp. v. SEC, supra at 823-26. Indeed, the clear-and-definite stan-dard is ordinarily reserved for situations “where particularly important individual in-terests or rights are at stake,” such as the potential deprivation of individual liberty, citizenship, or parental rights.

Herman & MacLean v. Huddleston, supra 103 S.Ct. at 691. Cf.

United States v. F/V Repulse, 688 F.2d 1283, 1284 (9th Cir.1982) (prepon-derance standard properly applied in “civil penalty” case). The federal courts have not waivered from this analysis in the ad-ministrative setting. See, e.g.,

Woodby v. INS, supra (deportation requires clear and convincing evidence);

Decker v. SEC, 631 F.2d 1380, 1383-84 (10th Cir.1980) (because the interests at stake are not substantial enough, a civil violation of the Investment Company Act is provable by a preponder-ance of the evidence);

Sea Island Broad-casting Corp. v. FCC, supra at 244 (where license revocation tantamount to loss of livelihood, clear-and-convincing standard applicable; otherwise, preponderance stan-dard may be appropriate);

Collins Securi-ties Corp. v. SEC, supra at 823-26 (clear-and-convincing standard applicable in SEC proceeding to revoke broker-dealer regis-tration for violation of antifraud provisions of 1934 Securities Exchange Act where type of case (fraud) and possible heavy sanction (deprivation of livelihood) are present).

In the present case, the govern-ment‘s interest in implementing Congres-sional leasing policy on federal lands sim-ply falls short of requiring a heightened standard of proof. Further, the govern-ment does not present convincing reasons beyond its interest justifying application of the clear-and-definite standard in such a case. It argues merely that the fundamen-tal principle of judicial deference to an ad-ministrative agency‘s determination of a technical factual question should translate into a higher standard of proof required of private parties contesting agency decisions at an informal hearing. This argument, however, confuses the scope of judicial re-view of factual determinations by an agen-cy with the standard of proof applicable in administrative hearings conducted to deter-mine such matters. The deference given to an agency‘s decision on a matter requiring expertise should be made only in the judi-cial forum, after the final agency determi-nation is made following its review of all the evidence presented. See

FPC v. Flori-da Power & Light Co., supra 404 U.S. at 463, 92 S.Ct. at 643. Hence, the scope of judicial review of final agency action has no effect on the requisite standard of proof in the administrative hearing itself.

We therefore hold that when the Department of Interior elects to conduct an informal hearing to consider all the evi-dence in determining whether a KGS exists for purposes of oil and gas leasing, the opposing party may overcome the USGS‘s finding by a preponderance of the evidence. The district court‘s order is therefore af-firmed and the case is remanded to the Department of Interior for further proceed-ings in accordance with this opinion.

AFFIRMED.

SETH, Chief Judge, concurring:

I concur in the conclusion that the re-mand may be appealed, and in the standard of proof to be applied.

The remand here considered is not a re-mand for “further proceeding” or for “ad-ditional evidence” or in any way to com-plete or add to the record as are so many remands considered in the cited cases. This was a remand for the application to all the facts of a different rule of law. It is a final disposition of the entire case by the trial court on legal grounds. It is not a collateral order. It is an issue which the agency will not be able to otherwise appeal. See

Cohen v. Perales, 412 F.2d 44 (5th Cir.1969). I would hold that the remand may be appealed as a final disposition or final judgment. I would also set aside the order or decision here sought to be re-viewed.

Notes

1

At oral argument, counsel for Bender was not willing to concede jurisdiction in this court. Thus, we ordered the parties to submit supple-mental briefs addressing the appealability of the district court‘s remand order.

2

Congress, however, has not specifically provid-ed for appellate jurisdiction in the court of appeals over disputes such as that presently before us. Hence, we must rely on 28 U.S.C. § 1291 as the possible basis for jurisdiction over this action.

3

These “urgency” and “importance” factors dis-tinguish the present case from other circuit court cases holding that district court remand orders to administrative agencies are not final. See, e.g.,

Eluska v. Andrus, 587 F.2d 996 (9th Cir.1978) (remand order instructed appellant-applicant for Alaskan Native allotment to ex-haust administrative remedies through agency‘s further development of additional evidence; ur-gency of effective judicial review not a concern since later review clearly available);

Giordano v. Roudebush, 565 F.2d 1015 (8th Cir.1977) (pri-vate appellant contested remand order which merely ordered further administrative proceed-ings, a discretionary action by district court);

Barfield v. Weinberger, 485 F.2d 696 (5th Cir. 1973) (remand order instructed Secretary of HEW to determine if hearing previously con-ducted on claimant‘s petition to reopen social security benefits case was in accord with due process; such an order did not establish any serious legal precedent);

Pauls v. Secretary of the Air Force, 457 F.2d 294 (1st Cir.1972) (re-mand order instructed Secretary to produce documents and information, clearly within dis-trict court‘s discretion);

Dalto v. Richardson, 434 F.2d 1018 (2d Cir.1970), cert. denied,

401 U.S. 979, 91 S.Ct. 1211, 28 L.Ed.2d 330 (1971) (remand order instructed hearing examiner to take additional evidence, clearly within district court‘s discretion);

United Transportation Union v. Illinois Central R.R. Co., 433 F.2d 566 (7th Cir.1970), cert. denied,

402 U.S. 915, 91 S.Ct. 1374, 28 L.Ed.2d 661 (1971) (although remand order concerned important evidentiary ques-tion, government was not a party and thus ur-gency factor not a concern);

Mayersky v. Celebrezze, 353 F.2d 89 (3d Cir.1965) (remand order instructed Secretary to take additional evidence which is within district court‘s discretion).

4

The government cites

Burton/Hawks, Inc. v. United States, 553 F.Supp. 86 (D.Utah 1982), for the proposition that the clear-and-convincing-ev-idence standard is appropriate in informal agen-cy proceedings. The government‘s reliance on this case is misplaced for two reasons: (1) the parties in Burton/Hawks did not dispute the propriety of the standard of proof applied by the IBLA; and (2) the standard applied in Bur-ton/Hawks concerned only the appropriate amount of reliance by the BLM and the IBLA on a USGS determination absent a hearing. Id. at 92-93.

5

The regulations of the Department of Interior, however, provide for procedural protections for the parties involved in such informal hearings. See 43 C.F.R. §§ 4.415, 4.430-.439 (1983).

Case Details

Case Name: Jack J. Bender v. William P. Clark, as Successor to James G. Watt

Court Name: Court of Appeals for the Tenth Circuit

Date Published: Sep 28, 1984

Citation: 744 F.2d 1424

Docket Number: 83-1306

Court Abbreviation: 10th Cir.