Fail to Comment at Your Own Risk: Does Issue Exhaustion Have a Place in Judicial Review of Rules?

Abstract

The classic version of the exhaustion-of-remedies requirement generally requires a party to go through all the stages of an administrative adjudication before going to court. However, the doctrine has developed a new permutation, covering situations where a petitioner for judicial review did follow all the steps of the administrative appeals process, but had failed to raise in that process the issues now sought to be litigated in court. In those cases, which have been called “issue exhaustion” cases, the thwarted petitioner will likely be out of luck since normally there is no further opportunity to raise the issue at the agency. In that sense, issue exhaustion bears some resemblance to standing-to-sue cases — a particular litigant is deemed unfit to challenge the agency’s action in court. Unlike remedy exhaustion, however, which only applies to agency adjudication, issue exhaustion can theoretically be applied to agency rulemaking. As this article will show, this has started to become a reality — to the potential detriment of the rulemaking process, if applied in an overbroad fashion.Although only two federal statutes explicitly require issue exhaustion in judicial review of rulemaking, there are many more generic exhaustion statutes that courts have begun to apply to rulemaking challenges. Some of the policy reasons for apply exhaustion principles to review of agency adjudications also apply to reviews of rulemaking, but not all. And there are some drawbacks to applying it to rulemaking challenges in certain types of cases. This paper, prepared for the Administrative Conference of the United States, reviews the relevant statutes, the developing caselaw, and suggests the need for certain limitations to applying issue exhaustion in judicial reviews of rules. The paper provided the foundation for Administrative Conference Statement #19, Issue Exhaustion in Preenforcement Judicial Review of Administrative Rulemaking, Adopted September 25, 2015