its general authority to issue rules and regulations.
The APA establishes a presumption that the decisions of federal agencies will be judicially reviewable. The Supreme Court has stated that the "committed to agency discretion" exception of § 10 is to be narrowly construed and employed in those situations where there is "no law to apply". Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410, 91 S. Ct. 814, 820, 28 L. Ed. 2d 136 (1971). The exception also applies when "a fair appraisal of the entire legislative scheme, including a weighing of the practical and policy implications of reviewability, persuasively indicates that judicial review should be circumscribed." Local 2855, AFGE, supra; accord, Bullard v. Webster, 623 F.2d 1042, 1046 (5th Cir. 1980); Kletschka v. Driver, 411 F.2d 436, 443 (2d Cir. 1969).
The provisions of the Act disclose a legislative framework which grants SBA discretionary authority over a wide range of economic and managerial decisions. For example, SBA's loan granting powers, which are central to the Act, necessarily involve a host of administrative judgments as to the availability of alternative financing from the private sector on reasonable terms, the soundness of the business purpose toward which the requested federal funds will be applied, the underlying stability of the applicant's business, the value of the properties offered as security, and the allocation of specific amounts to successful applicants. Diverse other provisions of the Act also require SBA, in exercising its loan granting powers, to balance such factors as urban/rural allocations, 15 U.S.C. § 636(i)(3), the general income level of the area in which the applicant's business is located, 15 U.S.C. § 636(i)(1), effects on local employment, 15 U.S.C. § 636(i)(7), and economic dislocation due to other federally funded projects, 15 U.S.C. § 636(b). The language of the Act throughout is generally permissive rather than mandatory. See Ferry v. Udall, 336 F.2d 706, 712-13 (9th Cir.), cert. denied, 381 U.S. 904, 85 S. Ct. 1449, 14 L. Ed. 2d 286 (1965). SBA decisions on the granting of a loan or an extension have been found to be nonreviewable by the courts. See Gifford v. SBA, 626 F.2d 85 (9th Cir. 1980); United States v. Capital Assistance Corp., 460 F.2d 256 (9th Cir. 1972), cert. denied, 409 U.S. 941, 93 S. Ct. 233, 34 L. Ed. 2d 193: Copake Lake Development Corp., 490 F. Supp. 386 (E.D.N.Y. 1980); Raitport v. SBA, 380 F. Supp. 1059 (E.D.Pa. 1974); Peoples Brewing Company v. Kleppe, 360 F. Supp. 729, 730 (E.D.Wis. 1973).
Thus, the legislative scheme clearly contemplates a broad exercise of discretionary power by SBA. The granting of broad discretionary powers to an administrative agency is not a per se commitment of the area to agency discretion so as to preclude judicial review. Such a result would render the traditional standard of review, "abuse of discretion", a nullity.
The existence of such a scheme, however, "often suggests that the challenged decision is the product of political, military, economic or managerial choices that are not really susceptible to judicial review." Local 2855, AFGE, supra, at 579.
Practical considerations reinforce the conclusion that SBA decisions of what constitutes reasonable fees for loan application packaging services should not be "susceptible to judicial review."
Although the scope and potential quantity of cases should not affect a determination of subject matter jurisdiction, the court may consider such factors in determining the intent of Congress. Neither the language nor the history of the subject statute suggests that Congress intended that the federal courts be involved in determining the amount and reasonableness of fees being charged by packagers. Allowing judicial review would necessarily burden and interfere with normal agency procedures: the agency would have to formalize its fee review procedures in order to produce a record for review and time and resources would have to be allocated to defend SBA decisions with respect to parties not intended to be the direct beneficiaries of the Act. Thus, SBA attention and energy would be directed away from its prime administrative responsibilities under the Act. Cf. Chernock v. Gardner, 360 F.2d 257, 259 (3d Cir. 1966). (Social Security Act intended for the economic benefit of eligible claimants, not for benefit of attorneys claiming fees for assisting in Social Security claims).
Permitting judicial review would be equally impractical from the perspective of the efficient allocation of judicial resources. Granting review in the present case would leave every loan packager who disagreed with SBA as to the valuation of his services free to pursue his disagreement in federal court. The loan applicant might also wish to challenge the agency determination if he felt that the approved fee was too high. See Hahn v. Gottlieb, 430 F.2d 1243, 1250 (1st Cir. 1970). Moreover, reasonableness of fees is not an essentially legal question in connection with which the learning of judges and lawyers affords special competence. Local 2855, AFGE, supra, at 579; Kendler v. Wirtz, 388 F.2d 381, 383 (3d Cir. 1968). Rather, SBA is more likely to be familiar with the information required in order to comply with its application procedures and the current value of the accounting and legal services that may be necessary to provide the information. In fact, the decision on fees appears to call for that blend of knowledge and experience that is within the special expertise of an administrative agency. Courts frequently refuse to review administrative decisions relating to the setting of fees or rates. See, e.g., Panama Canal Co. v. Grace Line, Inc., 356 U.S. 309, 78 S. Ct. 752, 2 L. Ed. 2d 788 (1958) (refusal to review toll for Panama Canal set by Panama Canal Co., an instrumentality of the executive branch); Ayrshire Collieries Corporation v. United States, 335 U.S. 573, 69 S. Ct. 278, 93 L. Ed. 243 (1949) (refusal to review rates for bituminous coal carriers); Chernock v. Gardner, supra (refusal to review attorney's fees in case involving Social Security fees); Langevin v. Chenango Court, Inc., 447 F.2d 296 (2d Cir. 1971); Feldman v. HUD, 430 F. Supp. 1324 (E.D.Pa. 1977); People's Rights Organization v. Bethlehem Association, 356 F. Supp. 407 (E.D.Pa. 1973), aff'd without opinion, 487 F.2d 1395 (3d Cir.); Hahn v. Gottlieb, supra (refusals to review HUD approvals of rent increases in federally funded public housing).
Policy considerations also support nonreviewability. The declared policy of the Act is to strengthen and protect the nation's small businesses. 15 U.S.C. § 631. At the same time, the Act charges SBA with a duty to guard against the dissipation of the public funds that have been set aside to promote the goals of the Act. Regulating the fees that applicants pay for services rendered in connection with the loan applications is consistent with that duty.
Against these considerations, there must be balanced the plaintiff's interests in obtaining review. Hahn v. Gottlieb, supra, at 1249. Assuredly, plaintiff has substantial economic interests at stake. Plaintiff claims that each fee reduction has reduced its compensation below the cost to it of the services provided. Moreover, plaintiff alleges that SBA has interfered with its working relationship with area banks. SBA Form 159 provides, however, that all fees are subject to SBA review and approval. Plaintiff does not seriously question SBA's authority to so condition its ability to do business with SBA and has signed several agreements to abide by SBA decisions on fees. However, the court recognizes the unequal bargaining positions of the parties and the practical necessity of plaintiff's acceptance of any and all conditions imposed by the SBA in order to do business with it. Finally, we reiterate that the statute does not have as its primary intent the protection of plaintiff's economic interests. In view of the greater interests of the plaintiffs in those cases where SBA denials of loans and loan extensions have been deemed nonreviewable, it would be anomalous to grant review of a decision that is peripheral to SBA's primary discretionary powers.
Plaintiff acknowledges the line of cases that suggest judicial reluctance to supervise fees set by an administrative agency, but argues that in each of the cited cases, the agency's fee-setting authority was granted by a specific statutory provision. Thus, in Chernock v. Gardner, supra, 42 U.S.C. § 406 gave the administrator the right to set maximum fees for attorneys appearing on behalf of those claiming Social Security benefits. Plaintiff contends that the deference shown in those cases to agency discretion is inapplicable here, where the organic statute grants no such power. Rather, plaintiff urges that SBA has arrogated the fee-setting authority to itself by means of regulations promulgated under the certification requirements of § 2(13) and its general authority to issue rules and regulations. Although plaintiff does not challenge the validity of this assumption of authority by SBA, plaintiff does contend that SBA cannot bring itself within the "committed to agency discretion by law" exception of § 10 of the APA when the "law" is so entirely self-created.
A study of the relevant cases, however, reveals that, although courts have apparently not focused on the issues raised by plaintiff, the "committed by law" exception has been found applicable in circumstances where the agency decision was based on regulations issued pursuant to statutory provisions only slightly less broad than those here involved. For example, in Local 2855, AFGE, supra, the 3d Circuit found unreviewable under § 10(a)(2), an Army decision to employ a private contractor to perform stevedoring services at a military ocean terminal that had previously been performed by a local unit of government employees. The Army's action was taken after a comparative cost analysis undertaken pursuant to directives from the Office of Management and Budget (OMB) and various Army and Department of Defense regulations. The regulations limited government reliance on government units to provide commercial services to instances where obtaining the service from a private vendor would result in a significantly higher cost. Id. at 577. Statutory authority for these regulations was derived from the government organization provisions of Title 5, which give the heads of executive and military departments general authority to prescribe regulations for the conduct of its business and management of its employees, 5 U.S.C. §§ 301-302
and which also mandate periodic review of the economic efficiency of agency operations and procedures. 5 U.S.C. § 305.
Accord, Bullard v. Webster, supra; Kletschka v. Driver, supra. In the present case, § 2(13) of the Act expressly gives SBA authority to condition the loans on the applicants' providing the names of those who assisted in the application process and the fees charged by such persons for their services. It is difficult to envision a purpose for this provision other than an inferred congressional intent for the agency to use the information to regulate the fees and thereby ensure that the public funds of the loan will be largely directed toward the business purpose for which they were allocated. Thus, the step from statute to regulation is not as bold as plaintiff contends; certainly it is a step proportionate to those taken by other agencies in other cases where courts have found that a particular decision has been "committed to agency discretion by law". The agency decision having otherwise met the criteria for this exception, therefore, the court sees no reason to disqualify it simply because the discretionary authority whose exercise is at issue was not directly granted by an Act of Congress.
The concept of reposing unfettered and unreviewable discretion in a bureaucracy should not be adopted without some trepidation. A judicial pronouncement that such actions by a governmental agency are not reviewable even in the face of an abuse of discretion may beget such abuses. However, there are those areas which are properly submitted to agency discretion and that determination is for Congress and not the courts to make. It should be noted here that this conclusion does not give administrative agencies untrammeled authority to insulate themselves from judicial review by regulatory fiat. In the first place, the question of whether the area of decision has in fact been "committed to agency discretion by law" is always reviewable. Furthermore, even if it is found that the decision does come within the § 10(a)(2) exception, review will be still available on the question of whether the action contravenes an independent constitutional or statutory provision. Local 2855, AFGE, supra at 580; Kletschka v. Driver, supra at 444. No such violation is found here. Plaintiff's motion for reconsideration is denied, and defendants' motion for summary judgment is granted.