The opinion of the court was delivered by: Sullivan, District Judge.
Plaintiffs John Fontana and Kevin Murphy filed motions for
preliminary and permanent injunction, seeking to prevent
enforcement of a decision of the Army Board for Correction of
Military Records ("ABCMR"), endorsing the Army's calculation of
their separation from service date. Defendants filed a motion
for summary judgment. After filing stipulations, the Magistrate
Judge treated the party's filings as cross-motions for summary
judgement, and found in favor of the plaintiffs. Before the
court is the Magistrate Judge's Report and Recommendation,
defendant's objections thereto, and plaintiffs' reply.
Defendants' motion for summary judgment is GRANTED;
plaintiffs' motion for preliminary injunction or summary
judgment is DENIED; plaintiff Fontana's motion for temporary
restraining order is DENIED.
Plaintiffs are lieutenant colonels currently serving on active
duty in the Army as medical doctors at Walter Reed Medical
Center ("WRMC"). They commenced their military careers at the
United States Military Academy at West Point ("West Point") in
1979, when they signed an agreement to complete an Active Duty
Service Obligation ("ADSO") in return for their undergraduate
education ("West Point Service Agreement"). After graduating in
1983, plaintiffs signed another agreement upon entering the
Uniform Services University of Health Sciences ("USUHS"),
incurring additional ADSOs, in exchange for medical training
that ultimately resulted in both obtaining medical degrees
("USUHS Service Agreement").
In May of 1999, plaintiffs submitted their resignations.
Though each plaintiffs commanding officer recommended approval,
the Department of Army Personnel Command refused to accept the
resignations. Plaintiffs filed applications for correction of
their personnel records with the Army Board for Correction of
Military Records in November 1999, and both applications were
denied in May and June of 2000.
Plaintiffs dispute the manner in which the Army has calculated
their ADSOs. The parties do not dispute the aggregate of ADSOs
incurred, but only when and if those ADSOs were fulfilled.
Plaintiffs contend that the West Point ADSOs were fulfilled
during their required active duty service at USUHS. Defendants
dispute this interpretation of the two service agreements and
related statutes and regulations, arguing that both preclude
concurrent service of the ADSO while plaintiffs attended USUHS.
Plaintiffs further contend that the service agreements they
signed at the inception of their internships, residencies, and
fellowships, barring the toll of ADSOs for the duration of each,
were in conflict with relevant statutes and cannot be enforced.
The defendants dispute this interpretation, and further argue
that the letters the plaintiffs sent regarding the
unenforceability of the service agreements are not relevant and
should not affect the court's holding. Plaintiffs contend they
had fulfilled their ADSOs on the date they submitted their
resignations. However, according to the Army, Lt. Fontana is not
due to be released from service until April 1, 2005, and Lt.
Murphy is not due for release until March 29, 2006.
After the case was referred to Magistrate Judge John Facciola,
pursuant to Federal Rule of Civil Procedure 72(b) and Local
Rule 72,3(a), the Magistrate Judge obtained stipulated facts from the
parties on critical issues and subsequently treated plaintiffs'
motion for preliminary injunction as a cross-motion for summary
judgment. The Magistrate Judge filed his Report and
Recommendations on May 14, 2001, defendants filed their
objections on May 29, 2001, and plaintiffs filed their reply on
June 11, 2001.
Plaintiff Fontana filed a motion for Temporary Restraining
Order on May 25, 2001, asking the court to restrain the Army
from executing a permanent change of duty station order,
removing him to Fort Bragg in North Carolina. Defendants agreed
to stay the execution of the order pending a decision by the
court on the merits of the pending issues.
1. Magistrate Judge's Report and Recommendation Must Be
Reviewed De Novo on All Dispositive Issues Raised by the
Opposing Party in Their Objections.
2. ABCMR's Determination is Based on Statutory and Regulatory
Interpretation to Which Considerable Deference Should be Given
Instead of the De Novo Standard of Review Applied in the
The Army Board for Correction of Military Records is composed
of civilians who evaluate service-members' claims of error or
injustice in their military records. See Dickson v. Secretary
of Defense, 68 F.3d 1396, 1399 (D.C.Cir. 1995). The ABCMR
derives its authority, as do similar boards in the other
military branches, from 10 U.S.C. § 1552(a)(1), which states:
The Secretary of a military department may correct
any military record of the Secretary's department
when the Secretary considers it necessary to correct
an error or remove an injustice . . . [S]uch
corrections shall be made by the Secretary acting
through boards of civilians of the executive part of
that military department.
10 U.S.C. § 1552(a)(1) (2000). Under the statute, the Secretary
has discretion to correct military records when he "considers it
necessary to correct an error," but is not automatically
required to correct a record when there is an error. Id.
Despite this grant of discretion, courts have held that a
decision by the ABCMR to correct or not to correct a military
record pursuant to this authority is a reviewable agency action
under the APA.*fn2 Frizelle v. Slater, 111 F.3d 172, 176
(D.C.Cir. 1997) (ABCMR decision that failed to respond to two of
plaintiff's arguments for rescission of Officer Effectiveness
Report is arbitrary capricious and contrary to law under the
APA); Dickson v. Secretary of Defense, 68 F.3d 1396, 1404
(D.C.Cir. 1995) (ABCMR decision not to grant waiver of three
year limitation on applications for review is arbitrary and
capricious under the APA); Kreis v. Secretary of Air Force,
866 F.2d 1508, 1514 (D.C.Cir. 1989).
Decisions of the ABCMR are reviewable under § 706 of the APA.
5 U.S.C. § 706(2)(A) (2000). Section 706 provides that a
reviewing court should overturn agency action it finds to be
"arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law." Id. The Supreme Court has explained
that this language does not require the same standard of review
to be applied to all types of agency decisions in all contexts.
Rather, in reviewing agency decisions under § 706, the standard
of review to be applied depends on whether the question decided
by the agency was one of fact, law, or the
application of law to facts and whether the agency was
interpreting a statute or rule. See, e.g., Christensen v.
Harris County, 529 U.S. 576, 120 S.Ct. 1655, 146 L.Ed.2d 621
(2000) (clarifying scope of Chevron); Auer v. Robbins,
519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997) (articulating
standard for rule interpretation); Chevron v. Natural Res. Def.
Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)
(explaining standard for statutory interpretation). Determining
the proper standard to be applied to the ABCMR's decision by
this Court requires a close analysis of exactly what issues are
in dispute here. The issues in dispute in this case are
questions of law, not fact. Plaintiffs and defendants have
stipulated to the basic facts of this case. See Joint
Stipulation and Statement of Material Facts and Issues. The
parties disagree as to the proper interpretation of the
applicable statutes, Army regulations, and the Service
Agreements between plaintiffs and the Army. Thus, this Court
must apply the appropriate standard of review for agency
interpretations of statutes and regulations that occur in a
decision-making process such as the one employed by the ABCMR.
a. Chevron applies to the ABCMR's Statutory
The Plaintiffs challenge the ABCMR's statutory interpretation
here, arguing that the ABCMR did not correctly interpret the
applicable statutes, 10 U.S.C. § 4348 and § 2114, in determining
that plaintiffs' West Point ADSOs were not satisfied during
their time at the USUHS. Because it appears that Congress
generally delegated to the ABCMR the power to make decisions
carrying the force of law, the appropriate standard of review
for the ABCMR's statutory interpretation is the Chevron
standard. Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778 (1984);
United States v. Mead, 533 U.S. 218, 121 S.Ct. 2164, 2171, 150
L.Ed.2d 292 (2001).
Despite several recent cases discussing the scope of the
Chevron doctrine, the Supreme Court has not directly decided
the issue of whether Chevron deference should apply per se to
informal as well as formal adjudication.*fn3 See Mead,
533 U.S. 218, 121 S.Ct. 2164, 2179, 2183, 150 L.Ed.2d 292 (Scalia,
J., dissenting) (pointing out that majority decision does not
clarify whether Chevron applies to informal adjudication).
While Chevron itself involved a formal rule-making process
under the APA, the Supreme Court has since held that courts
should apply Chevron to agency interpretations of law that
occur during the adjudication of claims as well. See De Bartolo
Corp. v. Florida Gulf Coast Bldg. & Const. Trades Council,
485 U.S. 568, 108 S.Ct. 1392, 99 L.Ed.2d 645 (1988) (Chevron
applies to questions of law in agency adjudications as well as
rule-making). The Supreme Court in Christensen v. Harris
County made clear that Chevron applies in the context of formal
adjudication under the APA. 120 S.Ct. at 1662 (holding that
Chevron applies to statutory constructions announced in formal
adjudication and notice-and-comment rule-making). The
Christensen Court held that Chevron deference is not
warranted for "opinion letters," "policy statements, agency
manuals, and enforcement guidelines, all of which lack the force
of law . . ." 120 S.Ct. at 1662. The majority in Christensen
left open the question of whether Chevron deference applies to
an agency's interpretation of law that occurs in an informal
adjudication. Lower courts have
applied Chevron to agency statutory interpretation that occurs
in informal adjudications. See, e.g., Mountain Side Mobile
Estates P'ship v. Secretary of HUD, 56 F.3d 1243, 1247 (10th
Cir. 1995) (holding that the Chevron standard is the same
regardless of whether the agency interpretation is performed
through rulemaking or informal adjudication); City of Kansas
City, Missouri v. Dep't of Hous. and Urban Dev., 923 F.2d 188,
192 (D.C.Cir. 1991) (recognizing in dicta that Chevron applies
to agency statutory interpretation in informal adjudication);
see also Kenneth C. Davis and Richard J. Pierce, Jr.,
Administrative Law Treatise, Cumulative Supplement § 3.5 (3d
ed. 2000). In addition, this Court has held that "an agency's
interpretation of a statute is entitled to deference, even in
the informal adjudicatory setting." Modern Muzzleloading, Inc.
v. Magaw, 18 F. Supp.2d 29, 34 (D.C. 1998); see also, e.g.,
Seafarers Int'l Union v. United States, 891 F. Supp. 641, 646
(D.C. 1995) (assuming the applicability of Chevron by applying
it to informal adjudication); Atochem North America, Inc. v.
EPA, 759 F. Supp. 861, 867-68 (D.C. 1991) (same).
However, in United States v. Mead, the Supreme Court
recently clarified the applicability of the Chevron doctrine
to informal agency decision-making processes. The Mead Court
held that the applicability of Chevron turns not on a category
of decision-making process such as informal adjudication, but
rather on the extent of the authority delegated by Congress in
the statute authorizing the agency decision:
We hold that administrative implementation of a
particular statutory provision qualifies for Chevron
deference when it appears that Congress delegated
authority to the agency generally to make rules
carrying the force of law, and that the agency
interpretation claiming deference was promulgated in
the exercise of that authority.
121 S.Ct. at 2171. According to the Mead Court, sufficient
delegation of authority will be clear where the adjudication or
rule-making occurs according to formal procedures, but in the
case of informal processes, the delegation may be shown "by some
other indication of a comparable congressional intent." 533 U.S.
at ___, 121 S.Ct. at 2171. While the Court did not elaborate
further on these other indications, the Court in Mead refused
to apply Chevron deference to a tariff classification ruling
by the United States Customs Service, when the authorizing
statute expressly provided for review of these decisions by the
Court of International Trade, the Customs Services did not treat
these rulings as binding on third parties, and other importers
were warned against assuming any right of reliance on these
decisions. 533 U.S. at ___, 121 S.Ct. at 2174.
Applying the same totality of the circumstances test to the
authorizing statute in this case, 10 U.S.C. § 1552, it is clear
that Congress intended for the ABCMR's decisions to have the
force of law. As discussed above, 10 U.S.C. § 1552(a)(1) grants
discretion to the Secretary of a military department to correct
any military record "when the Secretary considers it necessary
to correct an error or remove an injustice." § 1552(a)(1). These
corrections are to be made under procedures established by the
Secretary concerned. § 1552(a)(3). Most importantly, "[e]xcept
when procured by fraud, a correction under this section is final
and conclusive on all officers of the United States." §
1552(a)(4). Because unlike in Mead, Congress' intent here to
delegate conclusive decision-making authority to the departments
of the military is clear from Subsection (a)(4), this Court
Chevron deference to the ABCMR's statutory interpretation.
Under Chevron, in reviewing an agency interpretation of law,
a court applies a two-step analysis: first, if Congress has
directly spoken on the issue, a court must give effect to
unambiguously expressed intent of Congress; second, if statutory
gaps remain, a court must give effect to the agency's
interpretation unless it is arbitrary and capricious or
manifestly contrary to statute. Chevron, 467 U.S. at 842-43,
104 S.Ct. 2778; Nat'l Pub. Radio v. FCC, 254 F.3d 226, 228
(D.C.Cir. 2001). Thus, here, this Court must determine whether
or not the ABCMR's decision that plaintiffs' West Point ADSOs
did not toll during their USUHS medical education is contrary to
the express language of the applicable statutes. If there is no
such conflict, the Court must then decide whether the ABCMR's
interpretation is arbitrary and capricious.
In applying this second step of Chevron, an agency's
decision is arbitrary and capricious when it is contrary to law
or when the agency's process in rendering its decision was
irrational or unsupported by the record. See Wolfe v. Marsh,
835 F.2d 354, 358 (D.C.Cir. 1987); see e.g., Dickson,
68 F.3d 1396, 1403-04 (D.C.Cir. 1995) (failure to provide a rationale
for decision not to grant waiver is arbitrary and capricious);
Smith v. Dalton, 927 F. Supp. 1, 6-7 (D.C. 1996) (corrections
board decision finding an error but refusing to correct it
without explanation was arbitrary and capricious).
b. ABCMR's Interpretation of Regulations Should be Upheld
Absent Clear Conflict with ...