[Federal Register Volume 80, Number 194 (Wednesday, October 7, 2015)]
[Notices]
[Pages 60611-60613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-25570]
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Notices
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains documents other than rules
or proposed rules that are applicable to the public. Notices of hearings
and investigations, committee meetings, agency decisions and rulings,
delegations of authority, filing of petitions and applications and agency
statements of organization and functions are examples of documents
appearing in this section.
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Federal Register / Vol. 80, No. 194 / Wednesday, October 7, 2015 /
Notices
[[Page 60611]]
ADMINISTRATIVE CONFERENCE OF THE UNITED STATES
Adoption of Statement
AGENCY: Administrative Conference of the United States.
ACTION: Notice.
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SUMMARY: The Administrative Conference of the United States adopted one
formal statement at its Sixty-Third Plenary Session. The appended
statement addresses ``Issue Exhaustion in Preenforcement Judicial
Review of Administrative Rulemaking.''
FOR FURTHER INFORMATION CONTACT: Gisselle Bourns, Administrative
Conference of the United States, Suite 706 South, 1120 20th Street NW.,
Washington, DC 20036; Telephone 202-480-2080.
SUPPLEMENTARY INFORMATION: The Administrative Conference Act, 5 U.S.C.
591-596, established the Administrative Conference of the United
States. The Conference studies the efficiency, adequacy, and fairness
of the administrative procedures used by Federal agencies and makes
recommendations for improvements to agencies, the President, Congress,
and the Judicial Conference of the United States (5 U.S.C. 594(1)). For
further information about the Conference and its activities, see
www.acus.gov.
The Conference's Sixty-Third Plenary Session was conducted, for the
first time, as a virtual meeting, held via the Internet, in accordance
with the Conference's earlier Recommendation, 2011-7, The Federal
Advisory Committee Act--Issues and Proposed Reforms. The plenary
session was open for participation by Conference members and the public
for the period of September 18 through September 25, 2015. The Assembly
of the Conference adopted one formal statement. Statement #19, ``Issue
Exhaustion in Preenforcement Judicial Review of Administrative
Rulemaking,'' examines judicial application of an issue exhaustion
requirement in preenforcement review of administrative rulemaking. It
invites courts to consider a series of factors when examining the
doctrine of issue exhaustion in the context of preenforcement review of
agency rules.
The Appendix below sets forth the full text of this statement. The
Conference will transmit the statement to federal agencies, relevant
committees of Congress, and the Judicial Conference of the United
States, as appropriate, for their consideration. The statement is not
binding, but it represents the collective views of the membership of
the Administrative Conference of the United States. The research report
prepared for the Conference on this subject is posted at: www.acus.gov/63rd.
Dated: October 2, 2015.
Shawne C. McGibbon,
General Counsel.
Appendix--Statement of the Administrative Conference of the United
States
Administrative Conference Statement #19
Issue Exhaustion in Preenforcement Judicial Review of Administrative
Rulemaking
Adopted September 25, 2015
The doctrine of issue exhaustion generally bars a litigant
challenging agency action from raising issues in court that were not
raised first with the agency. Although the doctrine originated in
the context of agency adjudication, it has been extended to judicial
review of challenges to agency rulemakings. Scholars have observed
that issue exhaustion cases ``conspicuously lack discussion of
whether, when, why, or how [the issue] exhaustion doctrine developed
in the context of adjudication should be applied to rulemaking.''
\1\ The Administrative Conference has studied the issue exhaustion
doctrine in an effort to bring greater clarity to its application in
the context of preenforcement review of agency rules. The Conference
believes that this Statement may be useful by setting forth a series
of factors that it invites courts to consider when examining issue
exhaustion in that context.\2\
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\1\ Jeffrey S. Lubbers, Fail to Comment at Your Own Risk: Does
Issue Exhaustion Have a Place in Judicial Review of Rules: 11 (May
5, 2015) (Report to the Administrative Conference of the U.S.)
[hereinafter Lubbers Report] (citing Peter L. Strauss, et al.
Gellhorn and Byse's Administrative Law 1246 (10th ed. 2003)); see
also Koretoff v. Vilsach, 707 F.3d 394, 399 (D.C. Cir. 2013)
(Williams, J., concurring) (joining a decision to preclude
preenforcement review of new issues but writing separately
``primarily to note that in the realm of judicial review of agency
rules, much of the language of our opinions on `waiver' has been a
good deal broader than the actual pattern of our holdings'').
\2\ This Statement does not address the application of the
doctrine in the context of a challenge to a rule in an agency
enforcement action, where the passage of time and new entrants may
complicate the inquiry. The Conference has previously identified
issues that Congress should not ordinarily preclude courts from
considering when rules are challenged in enforcement proceedings.
See Admin. Conf. of the U.S., Recommendation 82-7, Judicial Review
of Rules in Enforcement Proceedings (Dec. 17, 1982), http://www.acus.gov/82-7.
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Evolution of the Issue Exhaustion Doctrine
The requirement that parties exhaust their administrative
remedies (``remedy exhaustion'') is a familiar feature of U.S.
administrative law. This doctrine generally bars a party from
appealing a final agency action to a court unless the party exhausts
prescribed avenues for relief before the agency.\3\
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\3\Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51
(1958).
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The related but distinct concept of ``issue exhaustion''
prevents a party from raising issues in litigation that were not
first raised before the agency, even if the petitioner participated
in the administrative process.\4\ As with remedy exhaustion, the
issue exhaustion doctrine initially arose in the context of agency
adjudications.\5\
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\4\ See Fiber Tower Spectrum Holdings, LLC v. FCC, No. 14-1039,
slip. op. at 9 (D.C. Cir. Apr. 3, 2015), Issue exhaustion statutes
may not always be jurisdictional. E.g., EPA v. EME Homer City
Generation, L.P., 134 S. Ct. 1584, 1602-03 (2014) (``A rule may be
`jurisdictional,' we have explained. Section7607(d)(7)(B), we hold,
is of that character. It does not speak to a court's authority, but
only to a party's procedural obligations.'') (citations omitted);
see also Advocates for Highway and Auto Safety v. FMSCA, 429 F.3d
1136, 1148 (D.C. Cir. 2005) (``as a general matter, a party's
presentation of issues during a rulemaking proceeding is not a
jurisdicional matter'') (emphasis in original).
\5\ See Lubbers Report, supra note 1, at 2-3.
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As the Supreme Court has recognized, ``administrative issue-
exhaustion requirements are largely creatures of statute.'' \6\ In
several judicial review provisions adopted during the 1930s, prior
to the advent of the Administrative Procedure Act of 1946, Congress
expressly required parties to raise all their objections to agency
action before adjudicatory agencies. Since that time, Congress has
included issue exhaustion provisions in many statutes governing
review of agency orders.\7\ The typical statute contains an
exception for ``reasonable grounds'' or ``extraordinary
circumstances'' and permits the court to
[[Page 60612]]
require an agency to take new evidence under certain conditions.\8\
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\6\ Sims v. Apfel, 530 U.S. 103, 107 (2000) (plurality opinion).
\7\ See Lubbers Report, supra note 1, at 4-6.
\8\ E.g., 15 U.S.C. Sec. 77i(a); 29 U.S.C. Sec. 160(e); 42
U.S.C. Sec. 1320a-8(d)(1).
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Courts have also imposed issue exhaustion requirements in the
adjudication context in the absence of an underlying statute or
regulation requiring it. The Supreme Court early on characterized
the ``general rule that courts should not topple over administrative
decisions unless the administrative body not only has erred but has
erred against objection made at the time appropriate under its
practice'' as one of ``simple fairness,'' emphasizing that issue
exhaustion promotes orderly procedure and good administration by
offering the agency an opportunity to act on objections to its
proceedings.\9\ But questions about the common law application of
the doctrine were later raised in Sims v. Apfel, where the Court
held that a judicial issue exhaustion requirement was inappropriate
on review of the Social Security Administration's informal, non-
adversarial adjudicatory benefit determinations, reasoning that
``the desirability of a court imposing a requirement of issue
exhaustion depends on the degree to which the analogy to normal
adversarial litigation applies in a particular administrative
proceeding.'' \10\
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\9\ United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33,
37 (1952) (reviewing an adjudicative order issued by the Interstate
Commerce Commission after an adversarial hearing); see also
Advocates for Highway and Auto Safety v. FMSCA, 429 F.3d 1136, 1149
(D.C. Cir. 2005) (applying the same rationale to rulemaking).
\10\ Sims v. Apfel, 530 U.S. 103, 108-12 (2000) (plurality
opinion).
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Although the issue exhaustion doctrine originated in the
adjudication context, it has been extended to preenforcement review
of agency rulemakings. Two statutes have been identified by the
Conference as explicitly requiring issue exhaustion for review of
agency rules--the Clean Air Act and the Securities Exchange Act of
1934.\11\ Both statutes were amended to incorporate issue exhaustion
provisions in the 1970s, when Congress enacted numerous regulatory
statutes with significant rulemaking provisions. \12\
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\11\ 42 U.S.C. 7607(d)(7)(B); 15 U.S.C. 78y(c)(1). However,
provisions governing some agencies' ``orders'' have been held to
apply to judicial review of rules. See Citizens Awareness Network v.
U.S., 391 F.3d 338, 345-47 (1st Cir. 2004); see also Inv. Co. Inst.
v. Bd. of Govs., 551 F.2d 1270, 1276-77 (D.C. Cir. 1977); American
Public Gas Ass'n v. Fed. Power Comm'n, 546 F.2d 983, 986-88 (D.C.
Cir. 1976).
\12\ Lubbers Report, supra note 1, at 4, 11, 13.
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The doctrine has also been extended to the rulemaking context
through common law. Despite Sims' focus in the adjudication context
on the extent to which the underlying administrative proceeding
resembled adversarial litigation for purposes of determining whether
the doctrine applied, appellate courts have increasingly applied the
doctrine in the absence of a statute requiring it when reviewing
preenforcement challenges to agency rules enacted via notice-and-
comment proceedings.\13\ And at least two appellate courts have
applied the doctrine to review of administrative rulemaking after
specifically considering Sims,\14\ although Sims was recently cited
by the Ninth Circuit as militating against issue exhaustion in an
informal rulemaking issued without notice-and-comment
procedures.\15\
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\13\ E.g., Koretoff v. Vilsack, 707 F.3d 394, 401 (D.C. Cir.
2013) (Williams, J., concurring) (``[g]enerally speaking, then, the
price for a ticket to facial review is to raise objections in the
rulemaking''); City of Portland, Or. v. EPA, 507 F.3d 706, 710 (D.C.
Cir. 2007); Military Toxics Project v. EPA, 146 F.3d 948, 956-57
(D.C. Cir. 1998); see also Lubbers Report, supra note 1, at 27-30
(describing application of the doctrine as well as varied precedent
in appellate courts other than the U.S. Court of Appeals for the
D.C. Circuit). No cases were identified that applied the issue
exhaustion doctrine in the context of new issues raised during
enforcement challenges to rules.
\14\ Advocates for Highway and Auto Safety v. FMSCA, 429 F.3d
1136, 1148-49 (D.C. Cir. 2005); Universal Health Servs., Inc. v.
Thompson, 363 F.3d 1013, 1020 (9th Cir. 2004).
\15\ See Alaska Survival v. Surface Transp. Bd., 705 F.3d 1073,
1080 (9th Cir. 2013) (describing a Surface Transportation Board
(STB) exemption proceeding as a rulemaking but applying the Sims
rationale to it because the STB's procedures were informal and
public comments were not sought).
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Relying on their equitable authority, courts have also fashioned
exceptions to the issue exhaustion doctrine.\16\ The Conference
commissioned a consultant's report to identify and articulate the
scope of these exceptions in federal appellate case law, as well as
to examine the general arguments for or against the doctrine in the
rulemaking context.\17\ Without endorsing every conclusion expressed
therein, the Conference believes that the report of its consultant
can provide guidance to courts considering the application of the
doctrine as it pertains to preenforcement review of administrative
rulemaking.
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\16\ E.g., Washington Ass'n for Television and Children
(``WATCH'') v. FCC, 712 F.2d 677, 681-82 (D.C. Cir. 1983) (``[Our]
cases assume that Sec. 405 contains implied exceptions without
explaining why. We understand these cases, however, as implicitly
interpreting Sec. 405 to codify the judicially-created doctrine of
exhaustion of administrative remedies, which permits courts some
discretion to waive exhaustion.'') (footnotes omitted).
\17\ See generally Lubbers Report, supra note 1.
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Factors for Courts To Consider in Applying the Issue Exhaustion
Doctrine
The Administrative Conference believes that stakeholders,
agencies, and courts benefit when issues are raised during
rulemaking proceedings with sufficient specificity to give the
agency notice and a fair opportunity to address them prior to
judicial review.\18\ Many of the justifications for applying the
doctrine in judicial review of agency adjudicatory decisions apply
squarely to review of rulemakings. The doctrine promotes active
public participation, creates orderly processes for resolution of
important legal and policy issues raised in agency proceedings,
ensures fully informed decisionmaking by administrative agencies,
provides a robust record for judicial review, and lends certainty
and finality to agency decisionmaking. Issue exhaustion also avoids
the potential for significant disruption to extensive work by the
agency, which can result if an issue is raised only during judicial
review, after the rule has been developed. Application of the
doctrine spares courts from hearing objections that could have been
cured at the administrative level and reduces the need for agencies
to create post-hoc rationalizations.\19\
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\18\ Nat'l Ass'n of Mfrs. v. U.S. Dep't of the Interior, 134
F.3d 1095, 1111 (D.C. Cir. 1998); see also Ctr. for Sustainable
Econ. v. Jewell, 779 F.3d 588, 602 (D.C. Cir. 2015) (holding on
review of an agency adjudicatory decision that ``the question in
determining whether an issue was preserved, however, is not simply
whether it was raised in some fashion, but whether it was raised
with sufficient precision, clarity, and emphasis to give the agency
a fair opportunity to address it'').
\19\ The argument for judicial application of the doctrine may
be especially strong where the challenged issue concerns the factual
basis of a rule, the agency's evaluation of alternatives, or the
agency's failure to exercise its discretion in a particular manner.
Judicial evaluation of the reasonableness of an agency's action in
such cases under an arbitrary and capricious standard of review may
depend heavily on the administrative record and on the agency's
analysis of those issues. See generally Gage v. Atomic Energy
Comm'n, 479 F.2d 1214, 1217-19 (D.C. Cir. 1973).
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On the other hand, the Conference also recognizes some practical
and doctrinal concerns with uncritically applying issue exhaustion
principles developed in the context of formal adversarial agency
adjudications to the context of preenforcement rulemaking
review.\20\ Overbroad application of the doctrine to rulemaking
proceedings could serve as a barrier to judicial review for persons
or firms who reasonably did not engage in continuous monitoring of
the agency in question.\21\ Issue exhaustion requirements may also
contribute to the burdens of participating in a rulemaking
proceeding, by exerting pressure on commenters to raise at the
administrative level every issue that they might conceivably invoke
on judicial review.\22\ Also, an overbroad exhaustion requirement
may result in unnecessary uncertainty and inefficiencies by leaving
unaddressed fundamental legal questions--such as a rule's
constitutionality or validity under a substantive federal statute.
These and other concerns have led some observers to question the
value of the doctrine as applied to rulemaking, or at least to call
for limitations on its scope.
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\20\ See William Funk, Exhaustion of Administrative Remedies--
New Dimensions Since Darby, 18 Pace Envtl. L. Rev. 1, 17 (2000)
(``[u]nfortunately, some courts have ignored the specific statutory
origin for [issue exhaustion] and have applied a similar exhaustion
requirement in cases totally unrelated to that statute, while citing
cases involving application of that statute'').
\21\ The impact of such barriers can fall most heavily on
persons or entities whose interests are not in close alignment with
the interests that have been advanced most forcefully by other
participants in a given proceeding. See Koretoff v. Vilsack, 707
F.3d 394, 401 (D.C. Cir. 2013) (Williams, J., concurring).
\22\ See Wendy E. Wagner, Administrative Law, Filter Failure,
and Information Capture, 59 Duke L.J. 1321, 1363-64 (2010); Lubbers
Report, supra note 1, at 38-40.
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The Conference has compiled a list of factors--some of which may
be dispositive in particular cases--that it invites courts to
consider when deciding whether to preclude a litigant from raising
issues for the first time
[[Page 60613]]
during preenforcement review of an agency rule. The list should be
understood as a checklist of potentially relevant factors, not a
fixed doctrinal formula, and as inapplicable where a statute directs
otherwise. Specifically, the list includes consideration of whether:
The issue was raised by a participant in the rulemaking
other than the litigant.\23\
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\23\ See Portland Gen. Elec. Co. v. Bonneville Power Admin., 501
F.3d 1009, 1024 (9th Cir. 2007) (``In general, we will not invoke
the waiver rule in our review of a notice-and-comment proceeding if
an agency has had an opportunity to consider the issue. This is true
even if the issue was considered sua sponte by the agency or was
raised by someone other than the petitioning party.'').
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The issue was addressed by the agency on its own
initiative in the rulemaking.\24\
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\24\ Id.
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The agency failed to address an issue that was so
fundamental to the rulemaking proceeding or to the rule's basis and
purpose that the agency had an affirmative responsibility to address
it.\25\
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\25\ See NRDC v. EPA, 755 F.3d 1010, 1023 (D.C. Cir. 2014)
(``EPA retains a duty to examine key assumptions as part of its
affirmative burden of promulgating and explaining a nonarbitrary,
non-capricious rule . . .'') (internal quotation marks omitted).
This factor may include issues arising under the applicable
substantive statute or the APA.
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The issue involves an objection that the rule violates
the U.S. Constitution.\26\
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\26\ Cf., Noel Canning v. NLRB, 705 F.3d 490, 497 (D.C. Cir.
2013), aff'd NLRB v. Noel Canning, 134 S. Ct. 2550 (2014) (invoking
``extraordinary circumstances'' exception in statutory provision
requiring issue exhaustion to address constitutional issue not
raised with the NLRB because the issue went to the very power of the
agency to act and implicated fundamental separation of powers
concerns). It is worth emphasizing that regardless of whether the
issue exhaustion doctrine would apply, participants in a rulemaking
should raise constitutional issues during the rulemaking proceeding
to give the agency an opportunity to adjust its rule to eliminate
the constitutional objection or at least to explain in the
administrative record why its rule does not raise constitutional
concerns.
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It would have been futile to raise the issue during the
rulemaking proceeding because the agency clearly indicated that it
would not entertain comments on or objections regarding that
issue.\27\
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\27\ See Comite De Apoyo A Los Trabajadores Agricolas v. Solis,
No. 09-240, 2010 WL 3431761, at *18 (E.D. Pa. Aug. 31, 2010); cf.
WATCH v. FCC, 712 F.2d 677, 682 (D.C. Cir. 1983) (remarking that
``[a] reviewing court . . . may in some cases consider arguments
that it would have been futile to raise before the agency,'' but
cautioning that ``[f]utility should not lightly be presumed'').
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The issue could not reasonably be expected to have been
raised during the rulemaking proceeding because of the procedures
used by the agency.\28\
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\28\ See Alaska Survival v. Surface Transp. Bd., 705 F.3d 1073
(9th Cir. 2013) (declining to apply issue exhaustion because the
agency's procedures were informal and ``never provided direct notice
of or requested public comment'' on challenged issue).
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The basis for the objection did not exist at a time
when rulemaking participants could raise it in a timely comment.\29\
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\29\ Cf. CSX Transp., Inc., v. Surface Transp. Bd., 584 F.3d
1076, 1079-81 (D.C. Cir. 2009) (declining to apply issue exhaustion
to a litigant's argument that the final rule was not a logical
outgrowth of the noticed rule).
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If an issue exhaustion question arises in litigation, litigants
should be given an opportunity to demonstrate that some participant
adequately raised the issue during the rulemaking or that
circumstances exist to justify not requiring issue exhaustion. And
if a court declines to apply issue exhaustion principles to preclude
review of new issues, the agency should be given an opportunity to
respond to new objections on the merits.\30\ Where application of
the issue exhaustion doctrine forecloses judicial review, the
Administrative Procedure Act, 5 U.S.C. 553(e), can provide a
procedural mechanism for the public to raise new issues that were
not presented to the agency during a rulemaking proceeding: The
right to petition agencies for amendment or repeal of rules.
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\30\ Courts have a variety of options for soliciting the
agency's views that should vary depending on the circumstances.
These options include permitting the agency to brief the issue or
supplement the administrative record, or ordering a remand for the
limited purpose of soliciting the agency's views.
[FR Doc. 2015-25570 Filed 10-6-15; 8:45 am]
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