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The Administrative Procedure Act, specifically 5 U.S.C.S. § 702, provides that a person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. The United States Supreme Court has read the APA as embodying a basic presumption of judicial review. This is "just" a presumption, however, and under 5 U.S.C.S. § 701(a)(2), agency action is not subject to judicial review to the extent that such action is committed to agency discretion by law. Section 701(a)(2) makes it clear that review is not to be had in those rare circumstances where the relevant statute is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion. In such a case, the statute can be taken to have committed the decision-making to the agency's judgment absolutely.
The Indian Health Service receives yearly lump-sum appropriations from Congress, and expends the funds under authority of the Snyder Act and the Indian Health Care Improvement Act to provide health care for American Indian and Alaska Native people. Out of these appropriations the Service funded, from 1978 to 1985, the Indian Children's Program (Program), which provided clinical services to handicapped Indian children in the Southwest. Congress never expressly authorized or appropriated funds for the Program but was apprised of its continuing operation. In 1985, the Service announced that it was discontinuing direct clinical services under the Program in order to establish a nationwide treatment program. Respondents, Indian children eligible to receive services under the Program, filed this action against petitioners (collectively, the Service), alleging, inter alia, that the decision to discontinue services violated the federal trust responsibility to Indians, the Snyder Act, the Improvement Act, the Administrative Procedure Act (APA), and the Fifth Amendment's Due Process Clause. In granting summary judgment for respondents, the District Court held that the Service's decision was subject to judicial review, rejecting the argument that the decision was "committed to agency discretion by law" under the APA, 5 U.S.C. § 701(a)(2). The court declined to address the merits of the Service's action, however, holding that the decision to discontinue the Program amounted to a "legislative rule" subject to the APA's notice-and-comment requirements, § 553, which the Service had not fulfilled. The Court of Appeals affirmed, holding that, even though no statute or regulation mentioned the Program, the repeated references to it in the legislative history of the annual appropriations Acts, in combination with the special relationship between Indian people and the Federal Government, provided a basis for judicial review. The court also reasoned that this Court's decision in Morton v. Ruiz, 415 U.S. 199, 39 L. Ed. 2d 270, 94 S. Ct. 1055, required the Service to abide by the APA's notice-and-comment procedures before cutting back on a congressionally created and funded program for Indians.
Was the federal agency's discontinuance of clinical program for Indian children with handicaps subject to judicial review or to notice-and-comment requirements under Administrative Procedure Act?
The Court held that the agency's decision was not subject to judicial review under § 701 of the APA, specifically 5 U.S.C.S. § 701(a)(2), because the agency's decision to discontinue the program was "committed to agency discretion by law." The agency's decision was discretionary because it pertained to the allocation of funds from a lump-sum appropriation, and the allocation of funds met permissible statutory objectives.