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DRG FUNDING CORPORATION v. SECRETARY HOUSING AND URBAN DEVELOPMENT </h1> <p class="docCourt"> </p> <p> February 20, 1996 </p> <p class="case-parties"> <b>DRG FUNDING CORPORATION, APPELLANT<br><br>v.<br><br>SECRETARY OF HOUSING AND URBAN DEVELOPMENT, ET AL., APPELLEES</b><br><br> </p> <div class="caseCopy"> <div class="facLeaderBoard"> <script type="text/javascript"><!-- google_ad_client = "ca-pub-1233285632737842"; /* FACLeaderBoard */ google_ad_slot = "8524463142"; google_ad_width = 728; google_ad_height = 90; //--> </script> <script type="text/javascript" src=""> </script> </div class="facLeaderBoard"> <div class="numbered-paragraph"><p><br> Appeal from the United States District Court for the District of Columbia (92cv02868)</p></div> <div class="numbered-paragraph"><p> Before: Williams, Ginsburg, and Randolph, Circuit Judges.</p></div> <div class="numbered-paragraph"><p> Randolph, Circuit Judge</p></div> <div class="numbered-paragraph"><p> FOR PUBLICATION</p></div> <div class="numbered-paragraph"><p> FOR THE DISTRICT OF COLUMBIA CIRCUIT</p></div> <div class="numbered-paragraph"><p> Argued September 6, 1995</p></div> <div class="numbered-paragraph"><p> Opinion for the Court filed by Circuit Judge Randolph.</p></div> <div class="numbered-paragraph"><p> Concurring opinion filed by Circuit Judge Williams.</p></div> <div class="numbered-paragraph"><p> Concurring opinion filed by Circuit Judge Ginsburg.</p></div> <div class="facAdFloatLeft"> <script type="text/javascript"><!-- google_ad_client = "ca-pub-1233285632737842"; /* FACContentLeftSkyscraperWide */ google_ad_slot = "1266897617"; google_ad_width = 160; google_ad_height = 600; //--> </script> <script type="text/javascript" src=""></script> </div class="facLeaderBoard"> <div class="numbered-paragraph"><p> On July 3, 1990, the Department of Housing and Urban Development notified DRG Funding Corporation that it owed the government $3.7 million as a result of its default under a mortgage-backed securities program. A year later, having received no payment on the debt, HUD collected by withholding the $3.7 million from a judgment it was to pay the corporation.</p></div> <div class="numbered-paragraph"><p> HUD had warned the corporation that it would collect the debt through "administrative offset," and the corporation had responded by invoking HUD's administrative review procedures to demand that HUD dismiss the offset action. The corporation renewed that demand soon after HUD collected the debt, arguing before HUD's Chief Administrative Law Judge that the agency lacked authority to collect the debt by offset. An offset avoids "`the absurdity of making A pay B when B owes A.'" Citizens Bank of Maryland v. Strumpf, 116 S. Ct. 286, 289 (1995) (quoting Studley v. Boylston Nat'l Bank, <a>229 U.S. 523</a>, 528 (1913)). HUD regulations promulgated under the administrative offset provision of the Debt Collection Act of 1982, 31 U.S.C. Section(s) 3716, allow HUD to use offsets in certain situations. The corporation argued before HUD's Chief ALJ, however, that HUD lacked authority to effect an offset against a money judgment issued by a court against the United States. The ALJ denied the corporation's demand for dismissal, and its request for reconsideration, but granted the corporation's motion to certify the question of HUD's offset authority for review by the Secretary of HUD. <a href="#D*fn1" name="S*fn1">*fn1</a> On March 5, 1992, a designee of the Secretary issued a "determination" affirming the ALJ's decision that HUD had authority to effect the offsets and directing the ALJ "to proceed with the administrative process in accordance with [HUD's] regulations."</p></div> <div class="numbered-paragraph"><p> Rather than proceeding at the administrative level, the corporation filed suit in the district court challenging HUD's refusal to dismiss the offsets under the Administrative Procedure Act, 5 U.S.C. Section(s) 706, and asking the court to compel the Secretary of HUD to pay the judgment in full under the federal mandamus statute, 28 U.S.C. Section(s) 1361. The district court dismissed the suit on the ground that administrative review of the corporation's challenge was not yet final. We affirm.</p></div> <div class="numbered-paragraph"><p> The Administrative Procedure Act limits non-statutory judicial review to "final" agency actions. 5 U.S.C. Section(s) 704. This serves several functions. It allows the agency an opportunity to apply its expertise and correct its mistakes, it avoids disrupting the agency's processes, and it relieves the courts from having to engage in "piecemeal review which is at the least inefficient and upon completion of the agency process might prove to have been unnecessary." FTC v. Standard Oil Co. of California, <a>449 U.S. 232</a>, 242 (1980). The requirement of a final agency action has been considered jurisdictional. Public Citizen v. Office of the U.S. Trade Rep., 970 F.2d 916, 918 (D.C. Cir. 1992). If the agency action is not final, the court therefore cannot reach the merits of the dispute. <a href="#D*fn2" name="S*fn2">*fn2</a></p></div> <div class="numbered-paragraph"><p> Different verbal formulations have been used to determine whether agency action is "final" within Section(s) 704's meaning. Is the agency's action "sufficiently direct and immediate" and does it have a "direct effect ... on day-to-day business"? Abbott Laboratories v. Gardner, <a>387 U.S. 136</a>, 152 (1967). Has the agency "completed its decisionmaking process" and is "the result of that process [one that] will directly affect the parties"? Franklin v. Massachusetts, 112 S. Ct. 2767, 2773 (1992). Is the agency action "finally operative and decisive"? Attorney General's Manual on the Administrative Procedure Act 103 (1947), quoted in Darby v. Cisneros, 113 S. Ct. 2539, 2546 n.10 (1993). Has the agency decisionmaker "arrived at a definitive position on the issue that inflicts an actual, concrete injury"? Williamson County Regional Planning Comm'n v. Hamilton Bank, <a>473 U.S. 172</a>, 193 (1985), quoted in Darby, 113 S. Ct. at 2543. On the other hand, courts have defined a non-final agency order as one, for instance, that "does not itself adversely affect complainant but only affects his rights adversely on the contingency of future administrative action," Rochester Tel. Corp. v. United States, <a>307 U.S. 125</a>, 130 (1939), cited in the Attorney General's Manual at 101-02, as a judicial construction of "final" that will carry over to Section(s) 704. And Section(s) 704 itself indicates that a "preliminary, procedural, or intermediate agency action or ruling" will be subject to judicial review only after there has been final agency action. See Attorney General's Manual 101, suggesting that the meaning of "final may be gleaned" from this provision.</p></div> <div class="numbered-paragraph"> <p> No matter which of these formulations we apply, the result here is the same. The ruling of the Secretary's designee is not final agency action. That "determination," to use the agency's parlance, did not complete the administrative proceedings, nor was it meant to do so. The determination specifically directed HUD's ALJ "to proceed with the administrative process in accordance with [HUD's] regulations." Under those regulations, the administrative process reaches the stage of "final agency action" only when a deputy assistant secretary makes a "determination of indebtedness" in a "written decision which includes the supporting rationale for the decision." 24 C.F.R. Section(s) 17.110(a). 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