Darby v. Cisneros

Supreme Court of the United States · 1993 · Administrative Law

509 U.S. 137 (1993)

Updated August 1, 2026

Administrative Lawexhaustion under APAAPAexhaustion of administrative remediesfinal agency action5 U.S.C. § 704appeal to superior agency authorityagency rule

Facts

HUD sanctioned Darby and related companies through a limited denial of participation and a proposed debarment arising from a financing method that an ALJ later found improperly circumvented HUD's Rule of Seven. After a consolidated hearing, the ALJ issued an 'Initial Decision and Order' imposing an 18-month debarment. HUD regulations provided that the hearing officer's determination would be final unless the Secretary or designee, in discretion and within specified time limits, decided to review it upon a party's written request. Neither side sought that further administrative review, and petitioners instead filed suit under the APA challenging the sanctions as unlawful under HUD's own regulations.

Issue

When a party seeks judicial review under the APA of agency action that is otherwise final, may a federal court require exhaustion of an available intra-agency appeal if neither the governing statute nor agency rules expressly make that appeal a prerequisite to judicial review? More specifically, does 5 U.S.C. § 704 limit judicially imposed exhaustion requirements in APA cases?

Rule

Under the APA, an appeal to superior agency authority is a prerequisite to judicial review only when exhaustion is expressly required by statute or when an agency rule requires the appeal and makes the administrative action inoperative pending that appeal. Where agency action is already final under 5 U.S.C. § 704, courts may not impose additional exhaustion requirements as a matter of judicial discretion.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Phoenix, the Federal Building Materials Board fined Elena Ruiz after an agency hearing officer issued a written decision. The agency's regulations state that a party may request review by the Board Chair within 20 days, but the regulations do not require that request and do not say the hearing officer's decision is suspended during any such review.

Elena files suit in federal district court under the APA the next day, challenging the fine as contrary to the agency's regulations. Should the court dismiss for failure to exhaust administrative remedies?

Explanation. The majority held that under 5 U.S.C. § 704, once agency action is otherwise final, exhaustion is required only if a statute expressly requires it or an agency rule requires an appeal to superior agency authority and makes the action inoperative pending that appeal. Here, the appeal is merely optional, so the court cannot impose exhaustion as a prudential matter.