Gill et al v. Department of Justice et al

Filing 134

ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT. Signed by Judge Richard Seeborg on 3/27/17. (cl, COURT STAFF) (Filed on 3/27/2017)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 11 WILEY GILL, et al., Case No. 14-cv-03120-RS United States District Court Northern District of California Plaintiffs, 12 v. ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 13 14 DEPARTMENT OF JUSTICE, et al., Defendants. 15 16 17 18 I. INTRODUCTION This is a challenge brought under the Administrative Procedures Act (“APA”), to certain 19 aspects of the National Suspicious Activity Reporting Initiative (“NSI”), a nationwide program 20 that collects, vets, and disseminates intelligence with a possible nexus to terrorism. Plaintiffs 21 contend defendant Program Manager-Information Sharing Environment (“PM-ISE”) has adopted a 22 so-called “Functional Standard” that utilizes overly broad criteria to define the types of activities 23 deemed as having a potential nexus to terrorism. As a result, plaintiffs allege, state and local law 24 enforcement authorities submit “Suspicious Activity Reports” (“SARs”) to the federal government 25 even if unsupported by reasonable suspicion of criminal activity, and innocent Americans are 26 “wrongly branded as potential terrorists.” 27 28 Plaintiffs contend the Functional Standard conflicts with a duly-promulgated DOJ regulation, 28 C.F.R. Part 23 (hereafter “Part 23”), which they assert was adopted to protect 1 constitutional and privacy rights by prohibiting the collection of “criminal intelligence” unless 2 supported by “reasonable suspicion.” The Functional Standard, in contrast, calls for sharing of 3 SARs whenever they reflect “observed behavior” that is “reasonably indicative of pre-operational 4 planning associated with terrorism or other criminal activity.” The crux of the controversy, 5 therefore, lies in the distinction between the “reasonably indicative” standard, and the “reasonable 6 suspicion” standard. Both sides agree that “reasonably indicative” is a lesser standard which calls 7 for dissemination of SARs even in the absence of “reasonable suspicion.” The question is whether 8 defendants failed to comply with the APA in adopting the “reasonably indicative” standard. 9 Plaintiffs contend defendants violated the APA in two ways. First, plaintiffs insist the Functional Standard was adopted without complying with the APA’s requirement that the public 11 United States District Court Northern District of California 10 be provided a notice and comment period prior to adoption of “legislative rules.” While 12 defendants acknowledge no such notice and comment procedure was utilized, they argue that the 13 Functional Standard is not a “legislative rule” subject to the requirement, or that even if it were, 14 the violation was harmless because the Functional Standard was adopted through a collaborative 15 process that included public input. Second, plaintiffs contend adoption of the Functional Standard 16 was “arbitrary and capricious” because of the alleged conflict with Part 23. Defendants argue 17 there is no conflict that renders adoption of the Functional Standard improper. 18 The parties have brought cross-motions for summary judgment. Because defendants have 19 shown that adoption of the Functional Standard did not violate the APA, their motion will be 20 granted and plaintiffs’ motion will be denied. 21 22 II. BACKGROUND 23 As plaintiffs describe it, the NSI was created to facilitate the nationwide sharing of 24 information potentially related to terrorism. It is premised on the notion that while state, local, and 25 tribal law enforcement agents – so called “front line” personnel – are well situated to gather that 26 type of information, their reports should be vetted under uniform standards. DOJ and PM-ISE 27 have issued protocols relating to SAR reporting designed to provide such standards for evaluating ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT CASE NO. 14-cv-03120-RS 28 2 1 information collected by front line personnel before it is disseminated nationally. At the time of a 2 prior motion to dismiss in this action, the parties were disputing whether DOJ’s protocols and the 3 PM-ISE protocols were separate or not. Now, the parties appear to be in agreement that only the 4 one “Functional Standard” is at issue—and that it was first adopted in 2009, and revised in 2015. 5 The SAR process proceeds in three stages: collection of information by front line 6 personnel, vetting by trained analysts at “fusion centers,” and dissemination to law enforcement 7 nationwide. Front line personnel are allegedly trained in the Functional Standard, collect 8 information about people engaged in activities that purportedly have a potential nexus to terrorism, 9 and submit such information in the form of SARs, either directly to the Federal Bureau of 10 Investigation or to a fusion center. Fusion centers, which are federally funded, gather, receive, store, analyze, and share United States District Court Northern District of California 11 12 intelligence, including SARs, related to terrorism and other threats. Although the local collecting 13 agencies perform some vetting, the primary responsibility for doing so rests with fusion centers, 14 whose staff are trained in the Functional Standard and review SARs for compliance with that 15 standard. SARs meeting the standard are then disseminated both regionally through the fusion 16 center’s database, and nationally through a data base known as “eGuardian.”1 The FBI oversees 17 eGuardian, which allows law enforcement personnel across the country to access SARs that have 18 been uploaded to it. Plaintiffs allege that the federal government maintains SARs sent to 19 eGuardian for 30 years, even when the FBI has determined that a particular SAR has no nexus to 20 terrorism.2 21 22 23 24 1 25 2 26 27 There is some indication certain other databases may have been used in the past. From materials attached as exhibits to the complaint, however, it appears that where no nexus to potential terrorism can be validated, the SAR will not be made accessible through the ISE. Also, the protocols appear to include some measures to address removing unfounded information. See Complaint Exh. D, pp. 61-63; Exh. E, p. 93. ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT CASE NO. 14-cv-03120-RS 28 3 III. LEGAL STANDARD 1 2 Although the parties characterize their briefing as constituting cross-motions for “summary 3 judgment,” they recognize this is not an inquiry under Rule 56 of the Federal Rules of Civil 4 Procedure as to whether there are disputed factual issues for trial. Rather, this is the review on the 5 merits under the APA of the validity of the adoption of the Functional Standard. See, Klamath 6 Siskiyou Wildlands Ctr., 962 F. Supp. 2d at 1233; see also Sierra Club v. Mainella, 459 F. Supp. 7 2d 76, 89 (D.D.C. 2006) (“[T]he standard set forth in Rule 56(c) does not apply [in an APA case] 8 because of the limited role of a court in reviewing the administrative record.”); McCrary v. 9 Gutierrez, 495 F. Supp. 2d 1038, 1041 (N.D. Cal. 2007) (judicial review of agency action under 10 United States District Court Northern District of California 11 the APA limited to the administrative record). “Under the APA, it is the role of the agency to resolve factual issues to arrive at a decision 12 that is supported by the administrative record, whereas ‘the function of the district court is to 13 determine whether or not as a matter of law the evidence in the administrative record permitted the 14 agency to make the decision it did.’” Sierra Club, 459 F.Supp. 2d at 90 (quoting Occidental Eng’g 15 Co. v. INS, 753 F.2d 766, 769–70 (9th Cir. 1985)). In other words, “the district court acts like an 16 appellate court, and the ‘entire case’ is ‘a question of law.’” Nat’l Law Ctr. on Homelessness & 17 Poverty v. U.S. Dep’t of Veterans Affairs, 842 F. Supp. 2d 127, 130 (D.D.C. 2012) (quoting Amer. 18 Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001)). “Summary judgment thus 19 serves as the mechanism for deciding, as a matter of law, whether the agency action is supported 20 by the administrative record and otherwise consistent with the APA standard of review.” 21 Stuttering Found. of Am. v. Springer, 498 F. Supp. 2d 203, 207 (D.D.C. 2007). 22 IV. DISCUSSION 23 24 A. Notice and Comment 25 An agency may lawfully issue a so-called “legislative rule” only by using the notice and 26 comment procedure described in the APA, unless it publishes a specific finding of good cause 27 documenting why such procedures “are impracticable, unnecessary, or contrary to the public ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT CASE NO. 14-cv-03120-RS 28 4 1 interest.” 5 U.S.C. § 553(b), (b)(B). In contrast, an agency need not follow the notice and 2 comment procedure to issue an “interpretive rule.” § 553(b)(A). See Hemp Indus. Ass’n v. Drug 3 Enforcement Admin., 333 F.3d 1082, 1087 (9th Cir. 2003). Here, there is no dispute that the 4 Functional Standard was adopted without notice and comment, or a specific finding of good cause 5 that none was appropriate. 6 7 8 9 10 Courts have struggled with identifying the difference between legislative rules and interpretive rules. In general terms, interpretive rules merely explain, but do not add to, the substantive law that already exists in the form of a statute or legislative rule. Yesler Terrace Community Council v. Cisneros, 37 F.3d 442, 449 (9th Cir.1994). Legislative rules, on the other hand, create rights, impose obligations, or effect a change in existing law pursuant to authority delegated by Congress. Id. United States District Court Northern District of California 11 12 13 Hemp Indus., 333 F.3d at 1087. Plaintiffs argue the Functional Standard is “legislative” because, they contend, no statute 14 sets forth a self-executing substantive standard governing the type of information that can be 15 collected, maintained, or disseminated. Plaintiffs explain the statutes operate instead to delegate 16 the authority for the promulgation of such standards to defendants, and that they have done so in 17 the Functional Standard. Defendants, in turn, point to the voluntary nature of the system as a 18 whole to argue the standard is not legislative in nature. 19 The Functional Standard does not fit neatly into either side of the dichotomy described in 20 Hemp Industries, above. It is not inarguably merely an “explanation” of other substantive law that 21 already existed “in the form of a statute or legislative rule.” Nor, however, is it plainly a rule that 22 “create[s] rights, impose[s] obligations, or effect[s] a change in existing law pursuant to authority 23 delegated by Congress.” 24 Rather, as defendants argue, it primarily describes an operating procedure—a policy, a 25 plan, a strategy—allowing cooperation and communication among various governmental actors. 26 At the motion to dismiss stage, defendants argued this “guidance” aspect of the standard meant it 27 was not a “final agency action” subject to judicial review. See Bennett v. Spear, 520 U.S. 154 ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT CASE NO. 14-cv-03120-RS 28 5 1 (1997) (“First, the action must mark the ‘consummation’ of the agency’s decisionmaking 2 process—it must not be of a merely tentative or interlocutory nature. And second, the action must 3 be one by which ‘rights or obligations have been determined,’ or from which ‘legal consequences 4 will flow.’”) While there was and is no dispute that the Functional Standard was neither tentative 5 nor interlocutory, it far less clearly constitutes a rule determining legal rights and obligations. 6 Even though the order on the motion to dismiss called that question in plaintiff’s favor at the 7 pleading stage, there is good reason to treat the Functional Standard as not constituting a final 8 agency action within the meaning of Bennet v. Spear. Even assuming, however, there was “final agency action,” it was fundamentally a policy 9 10 guidance statement not subject to a notice-and-comment requirement. United States District Court Northern District of California 11 12 When a federal agency issues a directive concerning the future exercise of its discretionary power, for purposes of APA section 553, its directive will constitute either a substantive rule, for which notice-and-comment procedures are required, or a general statement of policy, for which they are not . . . . 13 14 15 To the extent that the directive merely provides guidance to agency officials in exercising their discretionary powers while preserving their flexibility and their opportunity to make “individualized determination [s],” it constitutes a general statement of policy. . . . 16 17 18 Mada-Luna v. Fitzpatrick, 813 F.2d 1006, 1013–14 (9th Cir. 1987). 19 Accordingly, defendants are entitled to summary judgment that adoption of the Functional 20 21 Standard without a notice-and-comment period did not violate the APA.3 22 23 24 25 26 27 3 As noted above, defendants also argue any failure to follow the notice and comment procedures of the APA was harmless in light of how the Functional Standard was adopted. Defendants insist it was a collaborative process that included public input. It is subject to question, however, whether an agency could avoid any statutory notice and comment process by undertaking a more informal procedure. ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT CASE NO. 14-cv-03120-RS 28 6 1 2 B. Arbitrary and capricious 3 Plaintiffs also seek to set aside the Functional Standard as arbitrary, capricious, an abuse of 4 discretion, or otherwise not in accordance with law. 5 The scope of review under the “arbitrary and capricious” standard is narrow and a court is not to substitute its judgment for that of the agency. Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made . . . . . In reviewing that explanation, [the court] must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment . . . . 6 7 8 9 10 United States District Court Northern District of California 11 Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (citations 12 omitted). As the Motor Vehicles court further explained: 13 14 Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. 15 16 17 18 Id. 19 Here, plaintiffs’ theory is that because the Functional Standard does not require SARs to be 20 based on a “reasonable suspicion,” it conflicts with Part 23’s requirement that criminal intelligence 21 not be collected or maintained unless supported by “reasonable suspicion.” The rules in Section 23 22 proceed from an “[o]perating principle[]” that a “project shall collect and maintain criminal 23 intelligence information concerning an individual only if there is reasonable suspicion that the 24 individual is involved in criminal conduct or activity and the information is relevant to that 25 criminal conduct or activity.” 28 C.F.R. § 23.20(a). There is no dispute that the Functional 26 Standard allows for collection and dissemination of SARs not meeting that test. 27 Defendants insist there is no conflict between the Functional Standard and Part 23 because, 28 ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT CASE NO. 14-cv-03120-RS 7 1 they contend, the NSI is not a system for collecting “criminal intelligence.” They argue that the 2 Functional Standard and 28 C.F.R. Part 23 were issued pursuant to distinct statutory authorities for 3 application to different information gathering programs. Compare 42 U.S.C. § 3789g(c) 4 (authorizing OJP to issue policy standards for criminal intelligence systems funded under the 5 Omnibus Crime Control and Safe Streets Act of 1968 Pub. L. 90-351, 82 Stat. 197, codified at 42 6 U.S.C. §3711 et seq. (“Omnibus Act”) with 6 U.S.C. § 485(f)(2)(A)(iii) (authorizing the Program 7 Manager to issue functional standards for the ISE). Defendants note that the operating principles 8 of Part 23 are expressly linked to federal funding of criminal intelligence systems under the 9 Omnibus Act. See 42 U.S.C. § 3789g(c); 28 C.F.R. § 23.1; 28 C.F.R. § 23.3; 28 C.F.R. § 23.30; 28 10 United States District Court Northern District of California 11 C.F.R. § 23.40. Plaintiffs correctly observe that the arguments defendants now make about the claimed 12 lack of Omnibus Act funding were not the basis on which the agency decided to adopt the 13 “reasonably indicative” standard in lieu of a “reasonable suspicion” standard. Plaintiffs also 14 rightly note that, generally, “an agency’s action must be upheld, if at all, on the basis articulated 15 by the agency itself,” Motor Vehicle, 463 U.S. at 50. 16 Nevertheless, plaintiffs have not shown that it was arbitrary and capricious for the 17 Functional Standard to depart from the “reasonable suspicion” standard of Part 23. The 18 administrative record includes the following description of why the “reasonably indicative” 19 standard was adopted: 20 21 22 23 24 25 26 27 The use of the “reasonably indicative” determination process allows supervisors at source agencies and trained analysts and investigators at fusion centers and other agencies to have a uniform process that will result in better quality SARs and the posting of more reliable ISE SARs to the ISE Shared Spaces, while at the same time enhancing privacy, civil rights, and civil liberties protections. Furthermore, this revision improves mission effectiveness and enables NSI participating agency personnel to identify and address, in a more efficient manner, potential criminal and terrorism threats by using more narrowly targeted language. Finally, better quality SARS should result in a sufficiently high quality of information enabling agencies and analysts to “connect the dots” while not producing so much information as to overwhelm agency analytical capacity. In addition, the “reasonably indicative” determination is an essential privacy, civil rights, and civil liberties protection because it ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT CASE NO. 14-cv-03120-RS 28 8 emphasizes a behavior focused approach to identifying suspicious activity and mitigates the risk of profiling based upon race, ethnicity, national origin, or religious affiliation or activity. 1 2 Plaintiffs insist the record also shows defendants were “aware of the need” to address Part 3 4 23, because it was raised during discussion of the Functional Standard. Plaintiffs’ argument, 5 however, presupposes that SARs are “criminal intelligence” governed under Part 23. Defendants 6 have shown that to the contrary, the Functional Standard was developed to address data collection 7 and dissemination issues not already within the scope of Part 23. While they certainly could have 8 adopted the same standard, the record reveals no “clear error of judgment” or “failure to consider 9 an important aspect of the problem” or such a counter-factual or implausible explanation as to permit the court to substitute its judgment of what a better rule might be.4 Accordingly, 11 United States District Court Northern District of California 10 defendants are entitled to summary judgment that adoption of the Functional Standard did not 12 violate the APA as arbitrary and capricious. 13 14 C. Motion to strike 15 In connection with their argument that Part 23 applies only to systems funded under the 16 Omnibus Act, defendants have offered a declaration of Marilynn B. Atsatt to show that the FBI 17 eGuardian and the “NSI SAR Data Repository” are not funded under the Omnibus Act. 18 Defendants also proffer a declaration from Basil N. Harris describing the adoption and amendment 19 of the Functional Standard, including the public input that allegedly was solicited and considered. 20 Defendants have consistently sought to enforce the principle that, with narrow exceptions, 21 APA actions are decided on the administrative record and nothing more. In extended proceedings 22 before the assigned magistrate judge, and in objections to her rulings, defendants resisted attempts 23 to expand that record. Defendants also successfully resisted plaintiffs’ requests to be allowed 24 discovery. In light of that discovery history, plaintiffs’ motion to strike these declarations is 25 26 27 4 Plaintiffs have offered policy arguments as to why, in their view, the “reasonably indicative” standard draws a poor balance between individual rights and public safety. In an action under the APA, however, something more must be shown. ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT CASE NO. 14-cv-03120-RS 28 9 1 granted. 5 2 V. CONCLUSION 3 Defendants’ motion is granted, and plaintiffs’ motion is denied. A separate judgment will 4 5 issue. 6 7 8 IT IS SO ORDERED. 9 10 Dated: March 27, 2017 ______________________________________ _________________________________ ____ __ _ _ ____ __ _ RICHARD SEEBORG United States District Judge United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 5 Plaintiffs’ motion to supplement the record under the exception for extra-record evidence related to standing is denied as moot. Defendants’ challenge to plaintiffs’ standing was rejected at the motion to dismiss stage, and was not renewed on summary judgment. ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT CASE NO. 14-cv-03120-RS 28 10

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