Opinion for the Court filed by Circuit Judge Garland.
GARLAND, Circuit Judge:
Petitioner Tourus Records, Inc. seeks review of the Drug Enforcement Administration's (DEA's) denial of its application to proceed in forma pauperis in a forfeiture proceeding. We find the DEA's decision to be reasonable and supported by
In October 1999, an officer of the Richmond Hill, Georgia police department stopped a van occupied by three men. The men told the officer that they were traveling to local colleges, selling music recorded on compact discs. After searching the van, the officer confiscated more than $50,000 in cash, as well as a quantity of compact discs.
Beyond these core facts, the parties dispute the circumstances of the search and seizure. According to the officer's report, he stopped the van because it had swerved onto the highway's shoulder several times, and he searched the van because his dog alerted to the rear of the vehicle. The officer reported that he discovered burnt marijuana residue and stems in the van's rear ashtray, a bag containing $50,860 in cash bundled in increments of $1000, and 50 compact discs.
According to Tourus, the officer stopped the van without cause, found no contraband, and seized $50,860 in cash plus additional money taken from the pockets of the occupants that was not reported to the DEA. Tourus also states that the officer seized 700, rather than 50, discs. It asserts that the three men were distributing compact discs for the company, and that the $50,860 in cash were the proceeds of disc sales.
The Richmond Hill police transferred the $50,860 to the DEA, which in December 1999 initiated administrative forfeiture proceedings pursuant to 21 U.S.C. § 881(d).
On March 7, 2000, the DEA sent Dowe a letter, informing him that it had denied the application to waive the bond and proceed in forma pauperis. The letter stated, in relevant part:
Both Tourus and the government agree that we have jurisdiction to consider Tourus' petition pursuant to 21 U.S.C. § 877. We agree as well. Section 877 grants this court jurisdiction to review "[a]ll final determinations, findings, and conclusions of the Attorney General under this subchapter." Because the provision under which the DEA initiated administrative forfeiture proceedings, 21 U.S.C. § 881(d), is part of the same subchapter of the United States Code as § 877,
Although the parties agree about our jurisdiction, they disagree about the applicable standard of review. Tourus contends that we should review the denial of its petition under the familiar standard of the Administrative Procedure Act (APA), and overturn the DEA's decision if we find it to be arbitrary or capricious. See 5 U.S.C. § 706(2)(A). The government contends that our review is "strictly limited to consideration of whether the appropriate procedural safeguards were made available to Petitioner," Gov't Br. at 5, and that we lack authority to review the merits of the DEA's decision, even under the APA's deferential standard.
Tourus' view is the correct one. The cases the government cites as supporting extraordinarily limited review do not involve denials of in forma pauperis status. Rather, those cases involve review of a quite different kind of denial: the denial of a request for the mitigation or remission of an administrative forfeiture. See Yskamp, 163 F.3d at 770; Scarabin v. DEA, 919 F.2d 337, 339 (5th Cir.1990), reh'g denied,
Section 881 makes the provisions of the United States Code that govern forfeitures for violations of the customs laws applicable to forfeitures for violations of the drug laws. 21 U.S.C. § 881(d); see Small v. United States, 136 F.3d 1334, 1335 (D.C.Cir.1998). Under those provisions and the applicable regulations, the DEA is authorized to subject seized property to administrative forfeiture by sending written notice of its intent to forfeit to each party who appears to have an interest in the property, and by publishing such notice in a newspaper of general circulation once a week for three successive weeks.
If a claimant fails to submit a claim and post bond (or successfully obtain a waiver), however, the property is administratively forfeited by default.
But whatever the appropriate standard may be for reviewing denials of petitions to mitigate or remit, the denial of an application for in forma pauperis status is a fundamentally different kind of decision — one that plainly is not committed to the DEA's unreviewable discretion. The applicable regulation states: "Upon satisfactory proof of financial inability to post the bond, [the deciding official] shall waive the bond requirement for any person who
The DEA's proposed standard of review is also inconsistent with the statute the agency concedes grants us jurisdiction to review this case, 21 U.S.C. § 877. Under that statute, "[f]indings of fact by the Attorney General" are conclusive upon the court, but only "if supported by substantial evidence." That provision necessarily requires the reviewing court to determine whether the agency's findings have factual support, and hence eliminates any claim to nonreviewability. And while § 877 does not specify a standard for reviewing the Attorney General's reasoning as distinguished from his factfinding, the APA provides the appropriate default standard: A court must set aside agency action it finds to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," 5 U.S.C. § 706(2)(A).
Tourus contends that the DEA's denial of its application for in forma pauperis treatment, as embodied in the agency's March 7, 2000 letter, was arbitrary and capricious, and that the DEA's decision must therefore be vacated. Were that letter the only record evidence of the agency's decisionmaking process, we would agree. A "fundamental" requirement of administrative law is that an agency "set forth its reasons" for decision; an agency's failure to do so constitutes arbitrary and capricious agency action. Roelofs v. Secretary of the Air Force, 628 F.2d 594, 599 (D.C.Cir.1980); see State Farm, 463 U.S. at 43, 103 S.Ct. 2856. That fundamental requirement is codified in section 6(d) of the APA, 5 U.S.C. § 555(e). Section 6(d) mandates that whenever an agency denies "a written application, petition, or other request of an interested person made in connection with any agency proceeding," the agency must provide "a brief statement of the grounds for denial," unless the denial is "self-explanatory." This requirement not only ensures the agency's careful consideration of such requests, but also gives parties the opportunity to apprise the agency of any errors it may have made and, if the agency persists in its decision, facilitates judicial review.
The DEA's letter denying Tourus' petition to proceed in forma pauperis does not meet the APA standard. The letter says nothing other than that the "Affidavit of Indigency you submitted in lieu of a cost bond is not adequately supported." Resp't App. at 18. That is not a statement of reasoning, but of conclusion. It does not "articulate a satisfactory explanation" for the agency's action, State Farm, 463 U.S. at 43, 103 S.Ct. 2856, because it does not explain "why" the DEA regarded Tourus' affidavit as unsupported, Friendly, supra, at 222.
Ordinarily, the discovery of this kind of error would end appellate consideration. When an agency provides a statement of reasons insufficient to permit a court to discern its rationale, or states no reasons at all, the usual remedy is a "remand to the agency for additional investigation or explanation." Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985).
The first memorandum submitted by the government, dated February 2, 2000, is from the DEA to the Justice Department's Asset Forfeiture and Money Laundering Section, and explains the DEA's decision to deny Tourus' application to proceed in forma pauperis. Resp't App. at 16. The memorandum states that "it appears that Tourus Records, Inc. is a mere shell corporation," because the corporation's affidavit discloses that it has "no assets, no expenses, no liabilities, and no income." The "true claimant," the memorandum continues, "appears to be its President, Paul Dowe, Jr., who appears to have sufficient assets to post the required bond of $5,000." The memorandum notes that "[i]n his affidavit, Mr. Dowe states that he and his spouse have an average income of $4,855.00 per month and have $950.00 in a savings account," and that Dowe also has "two (2) vehicles worth a total of $30,400.00, a computer worth $5,000.00, and recording gear worth $3,000.00." Id.
The second memorandum is the Justice Department's February 28, 2000 reply, concurring in the DEA's view. Resp't App. at 17. That memorandum states the Department's agreement that Dowe is the true claimant. In assessing Dowe's ability to post the bond, the memorandum reviews the data cited by the DEA, and further notes that the Dowes own real property valued at $157,000, that they have two dependents, and that their combined monthly expenses total $3670. The memorandum then compares the Dowes' overall financial situation with the "year 2000 Department of Health and Human Services Poverty Guidelines[, which] set the poverty threshold for a family of four at $1,421 per month," and concludes that the "petitioner ... has sufficient assets with which to post the required $5,000 bond without adversely affecting his ability to provide the necessities of life for himself and his dependents." Id.
Unlike the DEA's March 2000 letter, the two February memoranda adequately explain the government's rationale for regarding Tourus Records as unqualified for in forma pauperis treatment. That rationale is neither arbitrary nor capricious. The government found that Tourus is not itself the true claimant, and that the true claimant — Mr. Dowe — is not indigent. Rather, the agency found that Dowe has the financial wherewithal to post the required bond, and hence that waiver of the bond requirement is not justified. Cf. Unification Church v. INS, 762 F.2d 1077, 1081-82 (D.C.Cir.1985) (denying attorney's fees to otherwise eligible applicants because
We also conclude that there is substantial evidence to support the factual findings upon which the DEA's reasoning is based. First, although Tourus represents itself as a company that produces and markets music recorded on compact discs, its financial affidavit states that Tourus has no income, no expenses, and no assets of any kind. The personal affidavit of Tourus' president, by contrast, states that Dowe does have income, expenses, and assets, including the recording gear that one might ordinarily expect a recording company to have. While this might not require the conclusion the DEA reached, it does adequately support the agency's determination that Tourus Records is merely a shell corporation, and that Dowe is the real party in interest whose financial capacity should be evaluated in deciding whether to waive the bond requirement.
Second, the evidence supports the DEA's conclusion that Dowe himself does not qualify for in forma pauperis status. That evidence includes family income of almost $60,000 per year, well in excess of the family's annual expenses, plus assets of approximately $200,000. This financial information provides substantial evidence to support the DEA's finding that Dowe is able to post the required $5000 bond — particularly in light of the fact that the DEA permits a claimant to post bond with either cash or sureties. See 21 C.F.R. § 1316.76(a) (2000); Resp't App. at 2 (DEA notice form).
Although the notice by which the DEA denied Tourus' application to proceed in forma pauperis was insufficient to satisfy the requirements of the APA, the internal memoranda upon which it was based are sufficient. Those memoranda make clear that the DEA's rationale for denying the application is reasonable, and that its findings are based on substantial evidence. Indeed, a remand to correct the initial notice would serve no purpose, as the agency could and no doubt would simply retransmit its internal memoranda to petitioner. See Envirocare of Utah, Inc. v. Nuclear Regulatory Comm'n, 194 F.3d 72, 79 (D.C.Cir.1999) (noting that "reversal and remand is `necessary only when the reviewing court concludes that there is a significant chance that but for the error the agency might have reached a different result'" (quoting Friendly, supra, at 211)). Accordingly, the DEA's denial of Tourus