On September 28, the Supreme Court granted certiorari in Thacker v. Tennessee Valley Authority (“Thacker v. TVA”).  Order, Dkt. 17-1201, 2018 WL 4650382.  (The docket sheet is available here.)  The case raises the question of whether an implied discretionary function exception, akin to that in the Federal Tort Claims Act (“FTCA”), 28 U.S.C. §2680(a), bars a negligence claim against the TVA.  Many readers of this blog probably spend little mental energy on the FTCA, or the interaction between tort liability and Administrative Procedure Act (“APA”) judicial review.  (And you probably expend even less contemplating the TVA or any other government corporation.)  This series of two posts previews Thacker and discusses the complementary relationship between ex post tort liability and ex ante judicial review .

Thacker v. TVA

Gary Thacker suffered severe injury when his powerboat struck a power transmission line that had accidentally plummeted into the Tennessee River while TVA personnel were performing routine maintenance work on the line.  Brief for the Tennessee Valley Authority in Opposition, Thacker v. TVA, Dkt No. 17-1201, at 3, 2018 WL 3239346 (June 29, 2018) (“TVA Br.”).  Thacker collided with the line while TVA personnel were raising the transmission line out of the River. Thacker v. TVA, 868 F.3d 979, 980 (11th Cir. 2017).

Thacker sued for damages, alleging that the TVA had negligently failed both to warn boaters of the hazard and “to exercise reasonable care in the assembly and installation of the power lines.”  Id. at 982; TVA Br. at 4 (quoting the Complaint).  The TVA had advised the Coast Guard of the hazard, and the Coast Guard announced its closure of the area to boaters over marine radio.  Id. at 3.  The TVA deployed two vessels to warn boaters approaching the area.  Id.  But, allegedly, Thacker’s high rate of speed prevented the warning boats from interdicting him to provide warning of the impending danger.  Id. at 3-4.

As is typical for government corporations, the TVA has the power to “sue and be sued” in its own name.  16 U.S.C. §831c(b).  Thacker argued that he could assert a negligence claim against the TVA because “sue and be sued” clauses must be liberally construed.  Petition For Writ Of Certiorari, Thacker v. TVA, Dkt No. 17-1201, at 7-14, 2018 WL 1419882 (Feb. 26, 2018) (citing FHA v. Burr, 309 U.S. 242, 245 (1940), Loeffler v. Frank, 486 U.S. 549, 556 (1988), and FDIC v. Meyer, 510 U.S. 471, 475 (1994)).  As the Supreme Court explained in Loeffler, by “launching ‘[a federal instrumentality] into the commercial world,’ and including a sue-and-be-sued clause in its charter, Congress ‘cast[s] off [the instrumentality’s] “cloak of sovereignty” and gives it the “status of a private commercial enterprise.”’” 486 U.S. at 556 (quoting Library of Congress v. Shaw, 478 U.S. 310, 317 n.5 (1986)).

Despite an explicit FTCA provision specifying that its waiver of sovereign immunity does not encompass “[a]ny claim arising from the activities of the Tennessee Valley Authority,” 28 U.S.C. §2680(l), the TVA successfully argued that the court should apply the FTCA’s discretionary function exception to bar the Thacker’s claim.  Thacker v. TVA, 868 F.3d at 981; TVA Br. at 8-16.  It argued that courts recognize implied exceptions to the general waiver of immunity effected by “sue and be sued” clauses when: (1) a category of suits is inconsistent with the statutory on constitutional scheme, (2) necessary to avoid grave interference with the performance of a governmental function, or (3) any other reasons make it plain that Congress intended to use the “sue and be sued” clause in a narrow sense.  Id. at 9 (citing FHA v. Burr, 309 U.S. at 245).  The TVA argued that judicial imposition of tort liability for TVA’s exercise of discretion in carrying out “governmental functions” violated separation of powers principles.  TVA Br. at 9.  The Court granted certiorari to determine whether an implicit discretionary function exception for exists for “sue and be sued” entities.  Order, Dkt. 17-1201, 2018 WL 4650382.

Perhaps the Court will take a textualist approach to the case.  Tort suits against the TVA are authorized by the TVA’s “sue and be sued” provision, which is silent regarding any reservation of immunity to protect the TVA’s exercise of discretion in carrying out its “governmental functions.”  The FTCA categorically excludes all TVA activities from its coverage in the same section that contains a separate and distinct exemption protecting government discretionary functions.  28 U.S.C. §2680.  Arguably, Congress did not intend to apply to the TVA any FTCA exceptions outlined in section 2680, other than the one that explicitly and completely removed the TVA’s activities from the FTCA’s scope.

The “separation of powers” might well be offended by torts suits seeking damages for actions federal statutes or presidential directives require federal entities to take.  However, any such doctrine would be far more circumscribed than the FTCA’s discretionary function doctrine as currently applied.  In any event, as we shall see, the TVA’s “separation of powers” argument rests on a misunderstanding of the purpose the discretionary function exception serves.

If the Court does not reject the applicability of the discretionary function exception on textualist grounds, Thacker may provide an occasion to examine the relationship between tort damages actions and judicial review of agency action.  Let me set forth my take on the case up front — the government should be accountable for its actions in tort because typical APA-type procedures and judicial review are either impractical or inappropriate and nothing suggests that a federal entity, particularly a government corporation, must be free from any form of legal accountability for decisions of the sort complained of in this case.  This is not to say that plaintiff will succeed on his negligent claim; he may well fail to establish either a breach of duty, particularly on the failure to warn claim, or his own lack of comparative fault.

The Complementary Nature of the FTCA and the APA and the Role of the Discretionary Function Exception

Congress enacted both the FTCA and the APA during the summer of 1946.  Legislative Reorganization Act of 1946, Pub. L. 79-601, ch. 753, Title IV, 60 Stat. 812, 842 (Aug. 2, 1946)(FTCA); Administrative Procedure Act, Pub. L. 79-404, ch. 324, 60 Stat. 237 (June 11, 1946).  Though the timing may merely have been coincidental, the statutes should be considered complementary.  The FTCA essentially provided a claim for monetary damages for certain government actions, namely “ordinary common law” torts, most notably negligent operation of vehicles.  Dalehite v. United States, 346 U.S. 15, 28 (1953).  It essentially converted tortious conduct from being reviewable solely in the political process, by way of private bill, to being cognizable by the courts.  See, Indian Towing Co. v. U.S., 350 U.S. 61, 68-69 (1955); Feres v. United States, 340 U.S. 135, 139–140 (1950).  The APA provided non-monetary remedies designed to interdict potential government actions before they take effect.  It ensures a process of public participation and judicial review before the government takes invalid actions that may produce irreparable harms.  The FTCA’s discretionary function exception is one means by which the statutes mesh so that each operates within its appropriate sphere.

The discretionary function exception is the first in the list of 13 exceptions from the FTCA’s waiver of immunity.  In general, the exceptions “relate to certain governmental activities which should be free from the threat of damage suits, or for which adequate remedies are already available.”  H.R. REP. 1287, 79TH CONG. 1ST SESS. 6 (Nov. 26, 1945); H.R. REP. 2285, 77TH CONG., 2D SESS. 10 (June 16, 1942).  The discretionary function exception, in particular, reserves the federal government’s immunity with respect to:

Any claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.

The exception might appear to make all allegedly-tortious government conduct falling within its bounds entirely unreviewable.  However, the exemption’s goal is more limited.  It merely channels challenges to agency conduct away from post-hoc monetary damages remedies to more appropriate remedies, namely APA, and other nonstatutory review, that tests the validity of a government action before it goes into effect and produces harm.  Potentially unlawful government action can then be assessed pursuant to the procedures for judicial review for agency action, rather than becoming the basis for damages actions sounding in tort.

The exemption thus remits individuals to the standard mechanisms for contesting the validity of agency actions, namely participating in the administrative process leading to the final agency decision and, if aggrieved by the result, seeking a judicial order invalidating the administrative action.  This is the APA’s realm.  The APA specified procedures to allow interested parties’ participation in agency adjudication and, in addition, codified a notice-and-comment informal rulemaking approach that allowed broad participation in the formation of “informal” rules.  5 U.S.C. §553; U.S. Dept. of Justice, Attorney General’s Manual on the Administrative Procedure Act (hereinafter “AG Manual”) at 9, 26, 31-32 (1947).  The APA did not provide a damages remedy, see, 5 U.S.C. §703, unlike the FTCA.  But the APA ensured that judicial review was generally available; by reaffirming the presumption of reviewability, 5 U.S.C. §§701(a), 702, 704, and provided for various forms of non-monetary relief, including declaratory and injunctive remedies, 5 U.S.C. §703.

The APA routinized standards of review, establishing a deferential standard for most administrative determinations, see, 5 U.S.C. §706(2), unlike the de novo standard applicable to the “breach” element in most negligence causes of action, RESTATEMENT (THIRD) OF TORTS: PHYSICAL & EMOTIONAL HARM §§3, 16(a) (2010).  Indeed, agencies’ resolution of policy questions, precisely the sort of questions at the heart of the discretionary function exception’s reservation of the federal governments’ immunity, would be upheld under the APA unless “arbitrary and capricious,” 5 U.S.C. §706(2)(A), so long as the agency’s action was neither unconstitutional nor in violation of constitutional or statutory right.

The APA also specifies the limited circumstances in which agency action is entirely unreviewable, 5 U.S.C. §701(a), and for which the Government is thus answerable only in the political process.  Only if the agency action is “committed to agency discretion by law” or review is statutorily barred, is it immune from both ex ante judicial review and ex post common law actions for monetary damages.

Since the APA’s adoption, administrative law has developed in ways that have expanded both participatory rights in agency proceedings and the availability of judicial review.  See, Richard B. Stewart, The Transformation of American Law, 88 Harv. L. Rev. 1669, 1716 (1975).  Three developments merit note.  First, the courts, and subsequently Congress, have imposed hybrid-rulemaking requirements upon agencies, see, e.g., Ethyl Corp. v. EPA, 541 F.2d 1, 66-69 (D.C. Cir. 1976)(Bazelon, J., concurring); U.S. v. Nova Scotia Food Products Corp., 568 F.2d 240, 251-52, 252-53 (2d Cir. 1977); JEFFREY S. LUBBERS, A GUIDE TO AGENCY RULEMAKING 282 (5th ed. 2012).  (Of course, judicial efforts on this score largely ended after Vermont Yankee Nuclear Power Corp v. Natural Resources Defense Council, 435 U.S. 519 (1978).  Second, the courts expanded the concept of standing, both in terms of standing to participate in agency proceedings and standing to challenge adverse decisions in court. See, e.g., Office of Communications of United Church of Christ v. FCC, 359 F.2d 994, 1001-1005 (D.C. Cir. 1966)(Burger, C.J.)(standing to participate in agency proceedings); Stewart, supra, at 1735-1756 (discussing standing to participate in agency proceeding and standing to seek judicial review).  Granted there was some later retrenchment on this score. Third, the Supreme Court expanded the right to pre-enforcement review of agency regulations, see, e.g., Abbott Laboratories v. Gardner, 387 U.S. 136, 142-46, 148-49 (1967).

The committee reports accompanying various drafts of the FTCA reveal the discretionary function exception’s limited channeling role.  E.g., H.R. REP. 1287, 79TH CONG. 1ST SESS. 5-6 (Nov. 26, 1945); H.R. REP. 2285, 77TH CONG., 2D SESS. 10 (June 16, 1942); see generally, Ronald A. Cass, The Discretionary Function Exception to the Federal Tort Claims Act, 2 ACUS Recommendations and Reports 1505-06 (1987)(accessible to subscribers at Hein-on-Line, in U.S. Congressional Documents, Administrative Conference of the United States library).

The exception excluded from the FTCA’s purview “suit[s] for damages . . . growing out of an authorized activity, such as a flood-control or irrigation project, where . . . the ground for suit is that the statute or regulation authorizing the project was invalid.”  H.R. REP. 1287, supra, at 5.  It was also “designed to preclude application of the [FTCA] to a claim against a regulatory agency, such as the Federal Trade Commission or the Securities and Exchange Commission, based upon an alleged abuse of discretionary authority.”  Id. at 5-6.  In other words, Congress included the discretionary function exception because “[t]he [FTCA] [wa]s not intended to authorize a suit for damages to test the validity of or provide a remedy on account of such discretionary acts even though negligently performed and involving an abuse of discretion.”  Id. at 6.  Nor, in Congress’ view, was it “desirable or intended that the constitutionality of legislation, or the legality of a rule or regulation should be tested through the medium of a damages suit for tort.”  Id. at 6 (emphasis added).

The discretionary function exception along with the other administrative law developments described above have largely succeeded in shifting the mode of challenging the validity of agency action from tort litigation to deferential review under the APA and analogous statutes.  As one treatise writer has observed: “Suits for damages as a means for securing judicial review of agency actions has withered over time, because the provisions of the Administrative Procedure Act and other specialized forms of review provide generous rules for setting aside agency rules and orders, declaratory relief, and injunctive relief.”  ALFRED C. AMAN, JR. & WILLIAM T. MAYTON, ADMINISTRATIVE LAW 538 (2d ed. 2008).

Discretionary Function Exception Caselaw

The Supreme Court has encountered difficulty in defining the discretionary function exception’s scope.  As Ronald Cass observed in his 1987 study of the discretionary function exception, “the use of numerous, incompatible tests for application of this exception plainly signals a problem with current law.” See, Cass, supra, at 1548; accord, Harold J. Krent, Preserving Discretion Without Sacrificing Deterrence: Federal Governmental Liability In Tort, 38 UCLA L. REV. 871, 871-72 (1991).  Nevertheless, since its decision in U.S. v. S.A. Empresa de Viacao Aerea Rio Grandense, 467 U.S. 797 (1984)(“Varig Airlines”), the Court has consistently noted that the exception is intended to cover any discretionary decision “grounded in social, economic, and political policy,” thus ensuring that such decisions are not second-guessed in the context of a tort action.  E.g., id. at 814, 820; U.S. v. Gaubert, 499 U.S. 315, 323 (1991).  In other words, when properly construed, the exception “protects only governmental actions and decisions based on considerations of public policy.”  Gaubert, 499 U.S. at 323 (quoting Berkovitz v. U.S., 486 U.S. 531, 536-37 (1988)).

The discretionary function exception’s focuses its protection on regulatory and planning decisions made by high ranking government officials.  Cass, supra, at 1528-29, 130-31.  The very first case interpreting the exception, Dalehite v. U.S., 346 U.S. 15 (1953), referenced such concerns.  Dalehite involved the explosion of a ship filled with Fertilizer Grade Ammonium Nitrate (“FGAN”).  The FGAN was to be shipped abroad to help produce food to feed starving foreign populations in the aftermath of World War II. In finding that the alleged negligence in initiating the program, failing to fully assess FGAN’s explosive potential, and making related decisions implementing the program fell within the discretionary function exception, the Court prominently discussed the rank of officials who made the decision to initiate the program and crafted the implementation plan.  Id. at 20, 37 (noting that the decision to initiate the fertilizer program was a Cabinet-level decision); id. at 39-40 (noting that  the allegedly negligent acts were “performed under the direction of a plan developed at a high level under a direct delegation of plan-making authority from the apex of the Executive Department”).  The Court also noted that “[t]he decisions held culpable were all responsibly made at a planning rather than operational level.”  Id. at 42 (emphasis added).

In its second discretionary function exception case, Indian Towing Co. v. U.S., 350 U.S. 61 (1955), the Court reaffirmed the significance of the planning/operational distinction.  Id. at 67-68.  In Indian Towing, the plaintiff’s tugboat had run aground because the lights in a Coast Guard lighthouse were not visible.  Id. at 61.  The Court explained that the Coast Guard Chief Petty Officer’s deficient inspection of the lighthouse, which resulted in him failing to notice the problem, involved an operational rather than a planning decision.

The discretionary function exception extends beyond high-ranking officers, regulatory choices, and planning decisions, because it must to vindicate its core concerns.  But see, Varig Airlines, 467 U.S. at 813 (suggesting that the rank of the decision-maker is irrelevant).  High-ranking officials’ regulatory and planning decisions generally must be implemented by lower-level employees.  As the Court suggested in Dalehite and Gaubert, protecting lower-level employee’s implementation decisions ensures that high-ranking officers’ planning and regulatory decisions are not frustrated by imposition of tort liability on lower level employees’ exercise of discretion in implementing those decisions. Dalehite, 346 U.S. at 36 (“[i]t necessarily follows that acts of subordinates in carrying out the operations of government in accordance with official directions cannot be actionable”); see, Gaubert, 499 U.S. at 324-25.

Justice Scalia’s Gaubert concurrence sought to explain the relevance of a decisionmaker’s rank.  In his view, the discretionary function exception shielded choices that (1) “ought to be informed by considerations of social, economic, or political policy” and (2) are “made by an officer whose official responsibilities include assessment of those considerations.”  Gaubert, 499 U.S. at 335 (Scalia, J., dissenting).  “Ordinarily, an employee working at the operational level has no responsibility for policy decisions,” such a balancing government objectives and risk.  Id.  To Justice Scalia, “a decisionmaker’s close identification with policymaking,” as indicated by his rank and responsibilities, provided “strong evidence that . . . the subject matter of the decision is one that ought to be informed by policy considerations.”  Id. at 336.  Referencing Dalehite, he noted that concluding that “the manner of storing fertilizer raises economic policy concerns” would be more reasonable “if th[at] decision [had] been reserved to the Secretary of Agriculture himself.”  Id. Indeed, he proposed enshrining a rebuttable presumption that “decisions reserved to policymaking levels involve such judgments—and the higher the policymaking level, the stronger the presumption.”  Id.

I conclude my analysis in Part II of this series.