giving rise to the Policy Statement's presumption. However, virtually any agency action will inevitably have some impact on interested parties. Whether that impact is substantial enough to trigger the APA's notice and comment requirements depends in large measure on the extent to which subsequent agency discretion is curtailed by the action.
In the case at bar, the Policy Statement creates a rebuttable presumption. Although a UDAG applicant's proposed development project may trigger the presumption that the project is intended to facilitate a relocation, the applicant may overcome this presumption by demonstrating, to HUD's satisfaction, the proposed project is not likely to facilitate relocation from a distressed community. The determination about whether a project is intended to facilitate relocation, therefore, rests in the discretion of HUD officials reviewing UDAG applications, just as it did prior to enactment of the Policy Statement. Indeed, that HUD's discretion in the awarding of UDAG applications remains viable, even under the terms of the challenged Policy Statement, is demonstrated by evidence on the record that at least one New Jersey UDAG applicant has overcome the Policy Statement's presumption so as to obtain UDAG funds. (Finkle Decl., 2/6/85, paras. 22-24.)
Courts in analogous situations have ruled that agency actions which establish presumptions for use in exercising administrative duties are not substantive rules subject to the APA's notice and comment requirements. In Ryder Truck Lines, Inc. v. United States, 716 F.2d 1369 (11th Cir 1983), the Eleventh Circuit reviewed an action undertaken by the Interstate Commerce Commission ("ICC"), to determine whether the action amounted to a general statement of policy or a substantive APA rule. The ICC had changed a longstanding presumption used "in determining whether a particular leasing arrangement constitutes private or for-hire carriage," Id. at 1375, to create a rebuttable presumption arising when certain enumerated criteria were found to exist. In recognizing the ICC's action as a general statement of policy rather than a rule, the Eleventh Circuit stated: "The use of such presumptions generally serves to direct the analysis but not necessarily the answer. Therefore, the use of presumptions does not reasonably transform a statement of policy into a binding norm." Id. at 1377. See also Regular Common Carrier Conf. of the American Trucking Ass'ns, Inc. v. United States, 202 U.S. App. D.C. 248, 628 F.2d 248, 251 (D.C. Cir. 1980) (general statement of policy establishing presumptions not a rule).
Accordingly, I find the Policy Statement is "what it purports to be" and should not be invalidated for noncompliance with the notice and comment provisions of the APA.
2. Arbitrary Agency Action
As a general statement of policy, HUD's Policy Statement is subject to judicial review for a determination as to whether the policy is arbitrary, capricious, an abuse of discretion or otherwise contrary to law or in excess of HUD's statutory authority. See 5 U.S.C.A. § 706(2); Motor Vehicle Manufacturers Ass'n of the United States, Inc. v. State Farm Mutual Automobile Ins. Co., 463 U.S. 29, 44-45, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983); Ryder Truck Lines, Inc., 716 F.2d at 1378; Consolidated Rail Corp. v. United States, 619 F.2d 988, 993 (3d Cir. 1980). As I view the Policy Statement and the record before me, the Policy Statement is not arbitrary, capricious or otherwise contrary to law; rather, it represents a reasonable effort on the part of HUD to effectuate the Congressional anti-pirating provision when reviewing proposed UDAG projects expected to contain some amount of speculative space.
As an initial matter, agencies are clearly vested with authority to create certain evidentiary presumptions. See National Labor Relations Board v. Baptist Hospital, Inc., 442 U.S. 773, 787-90, 61 L. Ed. 2d 251, 99 S. Ct. 2598 (1979). In creating such presumptions, the agency's interpretation of its statutory authority need not be the only reasonable interpretation of such authority. "All that is needed to support [the agency's] interpretation is that it has 'warrant in the record' and a 'reasonable basis in law.'" State of New Jersey v. Department of Health and Human Services, 670 F.2d 1262, 1283 (3d Cir. 1981), quoting Unemployment Compensation Comm'n of Alsaka v. Aragon, 329 U.S. 143, 153-54, 91 L. Ed. 136, 67 S. Ct. 245 (1946). My review of the record indicates the basic facts underlying the Policy Statement "are rationally related to [the Policy Statement's] presumed facts and the latter may be fairly inferred from proof of the former." (Lacey Opinion at p. 21.)
The "basic facts" giving rise to the Policy Statement's presumptions are (1) that a proposed UDAG project is within 50 miles of "an area from which there has been a significant current pattern of movement . . . of jobs of the category for which [the project's speculative] space is appropriate;" (2) that there is a likelihood of continued such movement; and (3) that the area from which such movement has been occurring is "a distressed community." 50 Fed. Reg. 1505, 1506 (1985). Once these three basic facts are shown to exist, the Policy Statement provides that two additional facts may be presumed: (1) that the proposed UDAG project is "intended to facilitate the relocation of a facility from one area to another;" and (2) that the "relocation will significantly and adversely affect the level of unemployment and the economic base of the area from which the facility is presumed to be relocated." Id.
HUD's experience and expertise in administering and implementing the UDAG program prior to promulgation of the Policy Statement showed that proposed projects involving speculative space were resulting, or were close to resulting, in HUD-approved projects involving the facilitation of relocations. The before me record refers to two projects specifically, and refers to "other recent similar experiences" (Finkle Decl, 2/6/85, paras. 11-15), in which evidence surfaced to suggest that speculative space in proposed UDAG projects was offered to potential relocatees from nearby distressed communities. Given such experience, it is not unreasonable to presume the proximity of a proposed UDAG project to a distressed urban area from which there has been a migration of businesses and jobs suitable for relocation to the UDAG project's speculative space, will facilitate such relocation.
Moreover, HUD's defense of the Policy Statement's "reasonableness" is enhanced by the Policy Statement's explicit provision allowing for rebuttal of the presumption. 50 Fed. Reg. 1505, 1506-07 (1985). If implementation of the Policy Statement were to significantly impair HUD's discretion in administering the UDAG program, a reviewing court might well find the action capricious or an abuse of discretion. Where, as in this case, the agency action cannot be said to have created an irrebutable "binding norm," however, the action cannot fairly be said to be capricious or abusive. See Ryder Truck Lines, 716 F.2d at 1381-86.
Jersey City further suggests the Policy Statement impermissibly places an unreasonable burden on UDAG applicants geographically proximate to distressed areas and whose applications contain projects in which speculative space is anticipated. The record, however, does not support Jersey City's claim. The Congressional statute creating the UDAG program, even prior to HUD's issuance of the Policy Statement, specifically precluded HUD from funding UDAG projects "intended to facilitate the relocation of industrial or commercial plants or facilities from one area to another, unless the Secretary finds that the relocation does not significantly and adversely affect the unemployment or economic base of the area from which the industrial or commercial plant or facility is to be relocated." 42 U.S.C.A. § 5318(h). Nothing contained in the statute itself, nor, indeed, in the legislative history to the statute, indicates how the Secretary is to determine whether a proposed UDAG project is "intended to facilitate" relocations. Moreover, it seems safe to assume Congress did not anticipate the problems confronting HUD in effectuating this anti-pirating provision when UDAG applications containing speculative space began to be submitted.
To address these problems, HUD issued the Policy Statement so as to clarify how HUD intended to review UDAG applications, specifically in light of the anti-pirating provision, for proposed projects containing speculative space. As was the case prior to issuance of the Policy Statement, applicants assume some degree of responsibility to demonstrate an absence of factors giving rise to a reasonable HUD determination that a UDAG project is intended to facilitate relocations. However, the record also indicates distressed communities situated proximate to areas seeking UDAG funds also bear some responsibility for demonstrating a proposed project is likely to facilitate further migration from the distressed area. In the only example in the record of HUD's implementation of the Policy Statement's presumptions, HUD considered and rejected a distressed area's opposition to the proposed UDAG project. (Finkle Decl., 2/6/85, para. 23.) Accordingly, Jersey City's allegation that HUD has impermissibly burdened UDAG applicants is unfounded.
Finally, attention should be given to Jersey City's contention that "under the HUD scheme, [an applicant's] intention [to pirate] becomes irrelevant and even a forthright disavowal of intent to pirate is unavailing. The applicant becomes the helpless and unwitting victim of the geographic location of its project, even though the location itself admittedly qualifies in all respects for UDAG assistance." (Jersey City Brief, 4/7/87 at p. 24.) As an initial matter, the Policy Statement does not render intention irrelevant; rather, it proposes a means for determining intent in a given context -- the context of UDAG applications containing projects with speculative space -- in which an abstract notion of an "intention to facilitate relocation," would not otherwise be objectively determinable. Moreover, the characterization of Jersey City as an innocent victim of the Policy Statement's presumptions ignores the fact that absent the Policy Statement, HUD, other equally distressed areas and, ultimately, the public, are all likely to be "unwitting victims" to UDAG applicants or developers seeking to fill UDAG-financed speculative space.
The record before me indicates HUD's Policy Statement was not implemented in violation of the APA, and does not constitute an arbitrary or capricious agency action. Accordingly, HUD's motion for summary judgment is granted and Jersey City's motion for summary judgment is denied.
SO ORDERED, this 8th day of June, 1987.
© 1992-2004 VersusLaw Inc.