In a per curiam opinion issued in Calcutt v. Federal Deposit Insurance Corporation, the Court has reversed the U.S. Court of Appeals for the Sixth Circuit and remanded to it an enforcement action that had been brought against a bank executive charged with mismanaging a loan relationship. After agency proceedings were completed and sanctions ordered, the Sixth Circuit held that the FDIC had made two fundamental legal errors in adjudicating the case against the bank CEO who had appealed. However, instead of remanding the case to the FDIC, the Sixth Circuit conducted its own review and concluded that the FDIC had, on the evidence presented, made a supportable decision to ban and fine the executive.
There is nothing novel or otherwise remarkable about the decision itself. Indeed, it is essentially a reiteration of “a simple but fundamental rule of administrative law” that reviewing courts “must judge the propriety of [agency] action solely by the grounds invoked by the agency.” See the war-horse administrative law cases of SEC v. Chenery Corp., 332 U. S. 194, 196 (1947), and Burlington Truck Lines, Inc. v. United States, 371 U. S. 156, 169 (1962). By affirming the FDIC’s sanctions against the petitioner based on a legal rationale different from the one adopted by the FDIC as reflected in the administrative record to which the court’s attention must be confined, the Sixth Circuit violated these commands.
What is notable about this decision is that, albeit on its narrow, apodictic grounds, it is another instance of the Court’s keeping tight reins on deference to administrative agency action. This one hardly presents any issue comparable, for example, to the “major question” resolved in West Virginia v. EPA, which we’ve discussed at length previously. But with the question of Chevron deference now on the Court’s docket, it provides another useful point of reference.
Blog Editors
Authors
Member of the Firm
