United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 11, 2000 Decided February 2, 2001
No. 99-5145
Leon Sloan and Jimmie Lee Furby,
Appellants,
v.
United States
Department of Housing and Urban Development,
Appellee.
Appeal from the United States District Court
for the District of Columbia
(No. 98cv1201)
James K. Kearney argued the cause for appellants. With
him on the briefs were James P. Gallatin, Jr., David T.
Hickey, and Andrew J. Hungerman IV.
Scott S. Harris, Assistant United States Attorney, argued
the cause for appellee. With him on the brief were Wilma A.
Lewis, United States Attorney, and R. Craig Lawrence, As-
sistant United States Attorney.
Before: Edwards, Chief Judge, Henderson and Garland,
Circuit Judges.
Opinion for the court filed by Circuit Judge Garland.
Garland, Circuit Judge: Plaintiffs Leon Sloan and Jimmie
Lee Furby appeal from the dismissal of their Federal Tort
Claims Act (FTCA) complaint against the United States
Department of Housing and Urban Development (HUD).
We find that, in light of the discretionary function exception
to the FTCA, the district court properly concluded that it
lacked jurisdiction to entertain plaintiffs' complaint.
I
Sloan and Furby were partners in a contracting business,
J&L Renovation Company (J&L). In 1993, J&L won a
subcontract for interior demolition as part of the rehabilita-
tion of Burns Heights, a public housing project located in
Duquesne, Pennsylvania, and owned by the Allegheny County
Housing Authority (ACHA). HUD provided ACHA with
funds for the project.
HUD's Office of Inspector General (OIG) began to investi-
gate the Burns Heights project in late 1994, after another
contractor alleged that J&L was not complying with lead-
based paint abatement requirements. OIG auditor Mark
Chandler was assigned to conduct a performance audit of the
project. In November 1994, Chandler and HUD attorney
Dane Narode visited Burns Heights and observed demolition
techniques that would have been unacceptable in a project
involving lead-based paint--including the failure to contain
dirt, dust, and paint chips. Chandler and Narode also visited
a landfill, situated about 300 feet from the Monongahela
River, where J&L had been taking plaster debris from Burns
Heights. The landfill was not approved for the dumping of
plaster, as then-applicable Pennsylvania regulations required;
moreover, had the plaster been contaminated with lead paint,
its dumping would have created a health hazard. When the
operator of the landfill discovered the investigators, he chased
them off the site and allegedly threatened to "blow [Narode's]
head off." During a subsequent visit to the site, the investi-
gators observed the operator burying the debris.
Chandler then interviewed David McLean, Director of
Maintenance and Development for ACHA, who told Chandler
that Burns Heights was a lead-based paint abatement project.
ACHA's records, however, indicate that McLean was mistak-
en. Those records reflect that in 1992-93, several tests had
been performed to determine the lead content of debris and
air at Burns Heights; the tests indicated the absence of
hazardous lead levels. The records further reflect that after
receiving those test results in 1993, ACHA agreed that there
was no need for its contractors and subcontractors to follow
hazardous lead-based paint protocols at Burns Heights or to
dispose of demolition debris as contaminated waste.
Although ACHA provided Chandler with copies of the lead
tests, Chandler was not qualified to interpret the results.
Nor did he further inquire as to their meaning or speak with
J&L regarding the scope of work under the demolition sub-
contract. Chandler's final audit report, which was issued by
the OIG in October 1995, found that ACHA had not ensured
compliance with lead-based paint abatement requirements
during the interior demolition of the Burns Heights buildings.
The report did not mention any contractors or subcontractors
by name. OIG, HUD, Report No. 96-AO-209-1804, Review of
Contracted Lead-Based Paint Activities: ACHA, Pittsburgh,
PA (1995) [hereinafter Audit Report].
On August 18, 1995, before completing the audit, HUD
notified Sloan, Furby, and J&L that it was suspending them
from all HUD-related government contracting work, pending
further proceedings that might debar them from such work
for five years. The notice, issued by HUD's Assistant Secre-
tary for Public and Indian Housing, based the suspension and
proposed debarment on three "serious irregularities in
[J&L's] business dealings with the government":
1. Improper cleanup of waste from the lead-based paint
abatement process;
2. Improper disposal of construction debris from the
demolition work; [and]
3. Failure to adhere to contract requirements or HUD
guidelines with respect to ... hazardous waste....
Letter from Asst. Sec'y Joseph Shuldiner to Leon Sloan, Sr.
(Aug. 18, 1995).
Sloan and Furby invoked their right to an administrative
hearing to contest these charges. During the proceeding, the
government withdrew the third charge as unsupported by the
evidence, and the Administrative Law Judge (ALJ) dismissed
the first for the same reason. In re Sloan, HUDBCA No.
96-C-106-D3, at 11-12 (Aug. 30, 1996), 1996 WL 506267.
The ALJ upheld the second charge, although she did so only
because J&L had dumped the debris in an unapproved site,
and not because it posed an environmental hazard. Because
she found no environmental hazard, the ALJ rejected HUD's
request for debarment and terminated the suspensions. Id.
at 12-13. She declined, however, to grant plaintiffs' request
to void the suspensions ab initio. Id. at 14. The Secretary
of HUD affirmed the ALJ's decision. In re Sloan, HUDBCA
No. 96-C-106-D3 (Dec. 18, 1996).
Thereafter, Sloan and Furby filed complaints in the district
court, seeking injunctive and declaratory relief under the
Administrative Procedure Act (APA), 5 U.S.C. ss 702-03, and
damages for constitutional torts under Bivens v. Six Un-
known Named Agents of the Federal Bureau of Narcotics,
403 U.S. 388 (1971). Those actions were consolidated and
subsequently dismissed by the district court. On appeal, this
court affirmed the dismissal of the Bivens claim (on grounds
other than those relied upon by the district judge), but
reversed HUD's refusal to void the suspensions ab initio as
arbitrary and capricious under the APA. Sloan v. Dep't of
Hous. & Urban Dev., 231 F.3d 10, 12 (D.C. Cir. 2000).
On May 13, 1998, Sloan and Furby filed a separate action
for money damages under the FTCA, 28 U.S.C. ss 1346(b),
2671 et seq., alleging that HUD had negligently conducted the
audit of Burns Heights. According to the complaint, HUD's
investigation was conducted in a manner that violated the
laws and professional standards governing auditors, and that
amounted to negligence and professional malpractice under
District of Columbia law. HUD moved to dismiss, asserting
that the discretionary function exception to the FTCA, 28
U.S.C. s 2680(a), deprived the court of subject matter juris-
diction. The district court agreed and granted the motion.
II
On appeal, we review the dismissal of the plaintiffs' FTCA
complaint de novo, Moore v. Valder, 65 F.3d 189, 196 (D.C.
Cir. 1995), and "accept all of the factual allegations in [the]
complaint as true," United States v. Gaubert, 499 U.S. 315,
327 (1991) (quoting Berkovitz v. United States, 486 U.S. 531,
540 (1988)). The FTCA grants federal district courts juris-
diction over claims arising from certain torts committed by
federal employees in the scope of their employment, and
waives the government's sovereign immunity from such
claims. 28 U.S.C. ss 1346(b), 2674. The grant of jurisdiction
and waiver of immunity are subject to a number of express
exceptions. See 28 U.S.C. s 2680. The exception at issue
here, the discretionary function exception, is for "any claim
... based upon the exercise or performance or the failure to
exercise or perform a discretionary function or duty on the
part of a federal agency or an employee of the Government,
whether or not the discretion involved be abused." 28 U.S.C.
s 2680(a). If the discretionary function exception applies, the
district court lacks subject matter jurisdiction over the case.
See Cope v. Scott, 45 F.3d 445, 448 (D.C. Cir. 1995).
In United States v. Gaubert, the Supreme Court set forth a
two-part test for determining whether a challenged govern-
ment action is protected as a discretionary function. First,
the exception "covers only acts that are discretionary in
nature, acts that 'involv[e] an element of judgment or
choice.' " Gaubert, 499 U.S. at 322 (quoting Berkovitz, 486
U.S. at 536). This "requirement of judgment or choice is not
satisfied if a 'federal statute, regulation or policy specifically
prescribes a course of action for an employee to follow.' "
Gaubert, 499 U.S. at 322 (quoting Berkovitz, 486 U.S. at 536).
Second, even if "the challenged conduct involves an element
of judgment," that judgment must be "of the kind that the
discretionary function exception was designed to shield."
Gaubert, 499 U.S. at 322-23 (quoting Berkovitz, 486 U.S. at
536). Because the exception was designed to " 'prevent judi-
cial "second guessing" of legislative and administrative deci-
sions grounded in social, economic and political policy through
the medium of an action in tort,' " the Court concluded that
"the exception 'protects only governmental actions and deci-
sions based on considerations of public policy.' " Gaubert,
499 U.S. at 323 (quoting Berkovitz, 486 U.S. at 537).
III
In the district court, Sloan and Furby argued that neither
HUD's investigation, nor its decision to suspend plaintiffs
from government contract work, is a discretionary act exempt
from challenge under the FTCA. On appeal, plaintiffs no
longer press the latter argument, apparently conceding that
the decision to suspend is covered by the discretionary func-
tion exception. Appellants' Br. at 28. We have no doubt that
it is, but discuss the suspension in some detail because it is
relevant to our analysis of the status of HUD's investigation,
set forth in Part IV below.
The decision to initiate a prosecution has long been regard-
ed as a classic discretionary function. See, e.g., Moore, 65
F.3d at 197 ("[A]ctions that require the prosecutor to exercise
his professional judgment ... are ... quintessentially discre-
tionary."); Gray v. Bell, 712 F.2d 490, 513 (D.C. Cir. 1983)
("Prosecutorial decisions as to whether, when and against
whom to initiate prosecution are quintessential examples of
government discretion ...."); General Dynamics Corp. v.
United States, 139 F.3d 1280, 1283 (9th Cir. 1998). In Butz v.
Economou, 438 U.S. 478 (1978), the Supreme Court held that
"agency officials performing certain functions analogous to
those of a prosecutor should," like prosecutors, "be able to
claim absolute immunity" from suits brought under the Con-
stitution. Id. at 515. In language equally applicable to suits
brought under the FTCA, the Court said:
The decision to initiate administrative proceedings
against an individual or corporation is very much like the
prosecutor's decision to initiate or move forward with a
criminal prosecution. An agency official, like a prosecu-
tor, may have broad discretion in deciding whether a
proceeding should be brought and what sanctions should
be sought.
Id. HUD's decision to suspend plaintiffs, which began a
course of administrative proceedings regarding possible de-
barment, see 24 C.F.R. s 24.411(e), falls well within this
rubric.
That HUD's suspension of plaintiffs is protected by the
discretionary function exception is confirmed by application of
Gaubert's two-part test. First, the decision to suspend is
plainly discretionary in nature, involving "an element of judg-
ment or choice." Gaubert, 499 U.S. at 322. Indeed, the
applicable regulation expressly so states. See 24 C.F.R.
s 24.115 ("Debarment and suspension are discretionary ac-
tions ...."). Although HUD rules require that certain condi-
tions be met before a suspension may issue, see 24 C.F.R.
s 24.400(b) (stating that suspension may be imposed only
when there is "adequate evidence" of specified wrongdoing
and when "[i]mmediate action is necessary to protect the
public interest"), that requirement does not convert the deci-
sion into a nondiscretionary act. Determining whether those
broadly stated conditions exist involves substantial elements
of judgment. See 24 C.F.R. s 24.400(c) ("In assessing the
adequacy of the evidence, the agency should consider how
much information is available, how credible it is given the
circumstances, whether or not important allegations are cor-
roborated, and what inferences can reasonably be drawn as a
result."); cf. Gaubert, 499 U.S. at 329 (holding that Federal
Home Loan Bank Board had discretion regarding appoint-
ment of receiver notwithstanding that governing statute "enu-
merated specific grounds warranting an appointment," be-
cause "the determination of whether any of these grounds
existed depended upon the opinion of the Board" (internal
quotation omitted)).
The HUD regulation's express delegation of discretion to
the suspending official may also, alone, satisfy Gaubert's
second requirement--that the challenged action be based on
considerations of public policy. "When established govern-
mental policy, as expressed or implied by statute, regulation,
or agency guidelines, allows a Government agent to exercise
discretion," Gaubert held, "it must be presumed that the
agent's acts are grounded in policy when exercising that
discretion." 499 U.S. at 324. But it is hardly necessary to
rely on such a presumption here. HUD's regulations place
public policy at the forefront of the decision of the suspending
official. The official must determine, for example, whether
the contractor's violations are "so serious as to affect the
integrity of an agency program," 24 C.F.R. s 24.305(b), and
whether "[i]mmediate action is necessary to protect the public
interest," 24 C.F.R. s 24.400. See also 24 C.F.R. s 24.115
(stating that "[i]n order to protect the public interest, it is the
policy of the Federal Government to conduct business only
with responsible persons," and that debarment and suspen-
sion "are appropriate means to implement this policy"). As
the decision to suspend a contractor is therefore "grounded in
the policy of the regulatory regime," Gaubert, 499 U.S. at 325,
it is protected by the discretionary function exception.
IV
Apparently recognizing that suspension itself is a discre-
tionary function, plaintiffs focus their primary attention not
on the suspension but on the investigation and audit that
preceded it. Although suspension may be discretionary, they
argue, standards of professional practice constrain HUD's
auditors during the investigatory phase and preclude applica-
tion of the discretionary function exception.
This argument fails for two reasons. First, it is impossible
to sever HUD's investigation from the subsequent suspension
in the way plaintiffs urge. Second, even if the investigation
could be severed, it, too, constitutes a discretionary function
under Gaubert.
A
In Gray v. Bell, we held that where the "allegation of
improper investigatory conduct is inextricably tied to the
decision to prosecute and the presentation of evidence," the
discretionary function exception applies and preserves gov-
ernmental immunity. 712 F.2d 490, 516 (D.C. Cir. 1983); see
Moore, 65 F.3d at 196-97; Ernst v. Child & Youth Servs. of
Chester County, 108 F.3d 486, 488-89 (3d Cir. 1997). Gray
involved a suit brought by Acting FBI Director L. Patrick
Gray III. Gray had been investigated and then indicted for
allegedly authorizing warrantless searches of the homes of
friends and relatives of Weatherman Underground fugitives.
After the government agreed to dismiss the indictment, Gray
sued the prosecutors for the "improper, tortious, and consti-
tutionally defective manner in which [the] investigation was
carried out." 712 F.2d at 515. In particular, he contended
that the Justice Department had conducted a grossly negli-
gent pre-indictment investigation, and, as a result, failed to
present exculpatory evidence and instead presented false and
misleading evidence to the grand jury. Id. at 495, 516.
On appeal, this court concluded that Gray's suit was barred
by the FTCA's discretionary function exception, because
there was "no meaningful way in which the allegedly negli-
gent investigatory acts could be considered apart from the
totality of the prosecution." Id. at 516. The "gist of Gray's
complaint," we said, focused "on alleged causal links between
the negligent investigation, the presentation of false and
misleading evidence, and the ultimate prosecution." Id. Un-
der those circumstances, "[s]eparating allegations in the com-
plaint that focus on the investigation from the ultimate prose-
cution merely would elevate the form of Gray's complaint
over its essence." Id.
In this case, as in Gray, the challenged investigation is
inextricably tied to the discretionary, quasi-prosecutorial deci-
sion to suspend plaintiffs from governmental contracting.
The complaint does not allege any damages arising from the
investigation itself, but only harm caused by the suspension to
which it assertedly led. See First Am. Compl. p 200 (reciting
that plaintiffs were damaged by having to challenge wrongful
suspension, defend in debarment proceeding, and appeal
HUD decision); id. p 201 ("Sloan and Furby were further
actually damaged because during the period of their wrongful
suspension they were prevented from obtaining any contract
work from HUD, were prevented from obtaining other con-
tract work as a result of the wrongful suspension and suf-
fered in standing and professional reputation." (emphasis
added)). At oral argument, plaintiffs were given a further
opportunity to disentangle the investigation and suspension
by proffering an amendment to the complaint that would
allege some harm arising from the investigation that was
separate from the suspension itself; they were unable to do
so. Because the allegedly improper investigation thus caused
no injury "distinct from the harm caused by the ultimate
prosecution itself," the former is not "sufficiently separable
from [the] protected discretionary decision[ ]" and "cannot by
itself support suit under the FTCA." Gray, 712 F.2d at 515;
see General Dynamics, 139 F.3d at 1285-86 (holding discre-
tionary function exception protected Defense Department
audit where harm to plaintiff arose from subsequent criminal
prosecution).
B
Even if HUD's investigation of the Burns Heights project
were not inextricably linked to the plaintiffs' suspension, that
investigation would nonetheless constitute a discretionary
function under the Gaubert test. We consider the two ele-
ments of that test below.
1
First, the sifting of evidence, the weighing of its signifi-
cance, and the myriad other decisions made during investiga-
tions plainly involve elements of judgment and choice.1 That
__________
1 See Sabow v. United States, 93 F.3d 1445, 1452-53 (9th Cir.
1996); Black Hills Aviation, Inc. v. United States, 34 F.3d 968,
the conduct at issue here was undertaken by investigators
and auditors rather than by Assistant Secretaries is irrele-
vant. In United States v. Varig Airlines, 467 U.S. 797 (1984),
for example, the Federal Aviation Administration (FAA) had
established a regulatory regime of "spot checking" airplanes
for compliance with safety standards. As the Supreme Court
later explained in Gaubert, Varig "held that not only was this
act discretionary but so too were the acts of agency employ-
ees in executing the program since they had a range of
discretion to exercise in deciding how to carry out the spot-
check activity." Gaubert, 499 U.S. at 325 (citing Varig, 467
U.S. at 820). The discretionary function exception, the Court
held, does not apply "exclusively to policymaking or planning
functions," but rather extends as well to decisions made at
the operational level. 499 U.S. at 325.
Plaintiffs insist that the Burns Heights investigation differs
from others because it took the form of an "audit." "[T]he
actions of government auditors are not discretionary," plain-
tiffs argue, "because compliance with federal audit guidelines
is mandatory." Appellants' Br. at 14.2 It is true that the
Inspector General Act of 1978 commands OIG auditors to
"comply with standards established by the Comptroller Gen-
eral of the United States for audits of Federal ... programs,
activities, and functions." 5 U.S.C. app. 3, s 4(b)(1)(A). But
it is also clear that the auditing standards that plaintiffs
contend HUD transgressed leave ample room for the exercise
of professional judgment. See Gen. Accounting Office, Gov't
__________
973-74 (10th Cir. 1994); Blakey v. U.S.S. Iowa, 991 F.2d 148, 153-
54 (4th Cir. 1993); Pooler v. United States, 787 F.2d 868, 870-71 (3d
Cir. 1986).
2 Although termed an "audit," HUD's investigation was not a
"financial statement audit" designed to determine conformity with
generally accepted accounting principles, but rather a "program
audit"--a variety of "performance audit" intended to assess the
performance of a government program. Compare Gen. Accounting
Office, Gov't Auditing Standards s 2.4 (June 1994), with id.
s 2.7(b). See O'Reilly et al., Montgomery's Auditing 23 (11th ed.
1994) (noting that program audits are often not stated "in terms of
Auditing Standards, at chs. 3, 6 (June 1994) [hereinafter Gov't
Auditing Standards]; cf. Thor Power Tool Co. v. Comm'r of
Internal Revenue, 439 U.S. 522, 544 (1979) ("Accountants
long have recognized that 'generally accepted accounting
principles' are far from being a canonical set of rules that will
ensure identical accounting treatment of identical transac-
tions. 'Generally accepted accounting principles,' rather, toler-
ate a range of 'reasonable' treatments, leaving the choice
among alternatives to management." (citation omitted)).3 In-
deed, those standards expressly state that "[a]uditors should
use sound professional judgment in determining the stan-
dards that apply to the work to be conducted." Gov't Audit-
ing Standards s 3.29.4
__________
economic actions or events" and "may at times stretch the definition
of auditing").
3 The principal standards that plaintiffs contend HUD violated
are: Gov't Auditing Standards s 3.3 ("The staff assigned to con-
duct the audit should collectively possess adequate professional
proficiency for the tasks required."); s 3.11 ("[T]he audit organiza-
tion and the individual auditors ... should maintain an independent
attitude and appearance."); s 3.31 ("Each audit organization ...
should have an appropriate internal quality control system....");
s 6.2 ("Work is to be adequately planned."); s 6.5(g) ("[A]uditors
should ... [i]dentify potential sources of data that could be used as
audit evidence and consider the validity and reliability of these
data."); s 6.22 ("Staff are to be properly supervised."); and s 6.46
("Sufficient, competent, and relevant evidence is to be obtained to
afford a reasonable basis for the auditors' findings and conclu-
sions."). See generally Moore, 65 F.3d at 197 n.15 (holding that
deciding what is required by regulation directing prosecutors to
disclose "substantial" evidence "directly" negating the guilt of a
suspect "is itself a discretionary act").
4 See also OIG, HUD, Consolidated Audit Guide for Audits of
HUD Programs s 1-1 (Aug. 1997) ("This guide is not ... intended
to supplant the auditor's judgment of audit work required."); OMB
Circular A-133, Audits of Institutions of Higher Education and
Other Nonprofit Organizations, 55 Fed. Reg. 10,019, 10,021 (Mar.
16, 1990) ("These principles, to the extent permitted by law, consti-
tute guidance to be applied by agencies consistent with and within
the discretion, conferred by the statutes governing agency action.");
Am. Inst. of Certified Pub. Accountants, Codification of State-
ments on Auditing Standards, AU s 110.04 (1995) ("In the observ-
Plaintiffs' argument here parallels that made by the plain-
tiff in Gaubert, who sought damages for the alleged negli-
gence of Federal Home Loan Bank Board (FHLBB) officials
in the day-to-day management of a failing financial institution.
Gaubert argued that the FHLBB's actions fell outside the
discretionary function exception "because they involved the
mere application of technical skills and business expertise."
499 U.S. at 331. The Court rejected that argument, stating
that while "[i]t may be that certain decisions resting on
mathematical calculations, for example, involve no choice or
judgment in carrying out the calculations," the FHLBB's
actions "involved the exercise of choice and judgment" and
hence fell within the exception. Id. The same is true here.5
As plaintiffs themselves point out, the heart of the auditing
standards is the exhortation that "[d]ue professional care
should be used in conducting [an] audit and in preparing
related reports." Gov't Auditing Standards s 3.26; see id.
s 3.28 ("[E]xercising due professional care means using
sound judgment in establishing the scope, selecting the meth-
odology, and choosing tests and procedures for the audit.").
Plaintiffs endeavor to turn this point on its head, arguing that
because the use of sound professional judgment by auditors is
mandatory, no discretion is left to them. The flaw in this
argument is that the Supreme Court has defined a "discre-
__________
ance of generally accepted auditing standards, the independent
auditor must exercise his judgment in determining which auditing
procedures are necessary in the circumstances to afford a reason-
able basis for his opinion.").
5 This case is readily distinguishable from Appley Brothers v.
United States, 164 F.3d 1164 (8th Cir. 1999), upon which plaintiffs
heavily rely, in which the Eighth Circuit held the discretionary
function exception inapplicable to an Agriculture Department in-
spector's failure to investigate grain shortages at a warehouse. The
court noted that "although the inspector had discretion in selecting
how he would investigate," under express regulations "he had no
discretion not to undertake some investigation." Id. at 1172 (em-
phasis added). Plaintiffs' challenge here, by contrast, is to how
HUD investigated at Burns Heights.
tionary act" as "one that involves choice or judgment." Gau-
bert, 499 U.S. at 325 (emphasis added); see Moore, 65 F.3d at
197 (stating that "actions that require the prosecutor to
exercise his professional judgment ... are ... quintessential-
ly discretionary"). Hence, plaintiffs' argument reduces to
nothing more than the untenable contention that auditors lack
discretion because they must exercise it.
2
Plaintiffs contend that even if the auditors' conduct does
involve an element of discretion, it "does not implicate consid-
erations of public policy or involve the exercise of political,
social, or economic judgment." Appellants' Br. at 22. There-
fore, they argue, the audit fails Gaubert's second prong.
Again, we disagree.
HUD's audit of Burns Heights was part of a national audit
of lead-based paint contracting activities. See Audit Report
at 2, 4. Its objective was to determine whether lead-based
paint abatement at the facility was in compliance with the
demolition contract. Id. at 2. Pursuant to the same auditing
standards cited by plaintiffs, one of HUD's responsibilities
was to determine "the extent to which the desired results or
benefits established by the legislature or other authorizing
body are being achieved." Gov't Auditing Standards s 2.7(b).
The audit concluded that the housing authority had "not
protected tenants or community residents from potential
health problems from improper lead-based paint removal and
disposal." Audit Report at 3. Whether that conclusion is
correct or not, it unquestionably implicates considerations of
public policy.
As was true of the first part of the discretionary function
test, satisfaction of the second is not limited to actions taken
at the policy-planning level. Thus, in Gaubert, the Court held
that the conduct of FHLBB employees "involved the kind of
policy judgment that the discretionary function exception was
designed to shield," notwithstanding that it consisted of day-
to-day decisions regarding the operations of a savings and
loan. Id. at 332. "[T]hose day-to-day 'operational' decisions
were undertaken for policy reasons of primary concern to the
regulatory agencies," the Court said, including preservation
of the assets of the institution "for the benefit of depositors
and shareholders." Id. (citation omitted). See also Varig,
467 U.S. at 815-820. The same is true in this case: the
auditors' decisions were undertaken for policy reasons of
significant concern to HUD, including the protection of ten-
ants living in HUD-funded housing "from potential health
problems from improper lead-based paint removal and dispos-
al." Audit Report at 3.6 Accordingly, the audit falls under
the aegis of the discretionary function exception to the FTCA.
IV
Because the discretionary function exception applies to the
agency actions challenged by plaintiffs, the district court
lacked jurisdiction over their FTCA complaint. The court's
dismissal of the complaint is therefore
Affirmed.
__________
6 This distinguishes the HUD audit from the placement of road
signs by the National Park Service, which we found to involve
engineering rather than policy judgment in Cope, 45 F.3d at 451-52.
See Berkovitz, 486 U.S. at 545 (indicating that determinations
involving the "application of objective scientific standards" do not
involve policy judgment and are not covered by the discretionary
function exception); see also Black Hills Aviation, 34 F.3d at 976
(holding that quick handling of crash investigation to facilitate
Army activities involves policy judgment); Blakey, 991 F.2d at 153
(holding that course of military investigation "implicates policy
considerations").