Darby v. Cisneros
Headline: Court bars federal judges from imposing extra administrative appeals before APA review, making it easier for people to sue agencies when neither statute nor agency rules require additional appeals.
Holding: The Court held that under the APA, courts may not require exhaustion of administrative remedies as a prerequisite to judicial review unless a statute or agency rule expressly requires appeal and the agency makes the action inoperative during review.
- Allows plaintiffs to sue agencies without pursuing optional internal appeals.
- Limits courts’ power to impose extra exhaustion requirements.
- Preserves agency or statutory power to require appeals that suspend agency action.
Summary
Background
A South Carolina real estate developer worked with a mortgage banker on a plan to obtain single-family mortgage insurance from the Department of Housing and Urban Development (HUD) for rental projects. HUD later imposed a limited denial of participation and proposed debarment after large insurance claims. An Administrative Law Judge found misuse of the Rule of Seven but prescribed a limited debarment. The developer did not seek further review inside HUD and sued in federal court; lower courts disagreed about whether he had to exhaust administrative appeals first.
Reasoning
The central question was whether federal courts may require people to pursue extra administrative appeals before suing under the Administrative Procedure Act (APA) when neither statute nor agency rule mandates such appeals. The Court held that APA §10(c) controls: judicial exhaustion is required only if a statute or an agency rule expressly demands an appeal before court review and the agency makes the challenged action inoperative during that appeal. Courts may not impose extra exhaustion as a matter of their own discretion when an agency decision is already “final” under §10(c). The Supreme Court reversed the Fourth Circuit and sent the case back for further proceedings.
Real world impact
After this ruling, individuals and businesses can seek judicial review of final agency actions without taking optional internal appeals, unless Congress or the agency rule expressly requires such appeals and suspends the action during review. The decision changes how lawyers and agencies approach timing and strategy for APA lawsuits and clarifies when internal appeals are mandatory.
Dissents or concurrances
Three Justices joined all but Part III of the opinion, indicating limited disagreement over some aspects of the Court’s analysis.
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