Judicial Review of Good Cause Determinations Under the Administrative Procedure Act.

AuthorSchneider, Kyle

Table of Contents Introduction I. Agency Assertions of Good Cause and Judicial Review A. Prevalent Use of the Exception. 1. Statutory framework. 2. Contemporary agency practice B. What Constitutes Good Cause? Inconsistency in the Courts C. Deference to Good Cause Determinations 1. Arbitrary-and-capricious review 2. De novo review 3. No clear standard II. Ensuring Compliance with Rulemaking Procedures A. Obstacles to Amending the Exception 1. Amendment is not realistic 2. Amendment is not desirable B. Limits on Oversight by the Political Branches 1. Obstacles to congressional monitoring 2. Executive inattention C. Judicial Review of Rulemaking Procedures III. Improving Judicial Review of Good Cause Determinations A. No Deference to Agency Assertions of Good Cause B. Why the Standard of Review? C. Applying the Standard Conclusion Introduction

The conventional account of administrative rulemaking is nearly as ubiquitous as the Schoolhouse Rock! version of the legislative process. The familiar notice-and-comment rulemaking process requires administrative agencies to comply with procedures designed to enhance public participation. (1) Today, it is widely accepted that the textbook depiction of the legislative process is an outdated caricature. (2) But while the paradigmatic account of administrative rulemaking is subject to far less political and academic scrutiny, it is equally incomplete. Agencies skip public comment for close to half of all nonmajor rules and over one-third of all major rules. (3) And in the majority of those rulemakings, agencies justify bypassing public participation by invoking the "good cause" exception of the Administrative Procedure Act (APA). (4)

Under the good cause exception, an agency may forgo ordinary notice-and-comment procedures when it "for good cause finds" that "notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest." (5) The drafters of the APA intended the exception to be reserved for rare instances when considerations such as exigency outweighed otherwise-strong interests in public participation and agency deliberation. (6) Today, many agencies invoke the exception for a wide range of agency actions. How did use of the exception expand from what the drafters intended to today's pervasive practices? What is the appropriate remedy to address this new rulemaking terrain? Is any remedy necessary? And what implications does this new norm have for broader conversations regarding the competing interests of participation, legitimacy, accountability, and efficiency in administrative rulemaking?

This Note addresses those questions by homing in on judicial review of agency assertions of good cause. Courts inconsistently interpret both what constitutes good cause (7) and what deference to give agency assertions of good cause. (8) Yet overly deferential judicial review emboldens agencies with political and resource constraints to routinely claim the good cause exception without fear of consequences. This Note examines structural theories of agency oversight and empirical findings to conclude that meaningful enforcement of rulemaking procedures by Congress or the White House is unlikely. Moreover, repeated attempts to amend the statutory text of the good cause exception have been unsuccessful and are likely to continue to fail. (9) Despite many scholars' continued calls for amendment, these proposals are not only unrealistic but also undesirable.

That leaves the courts. This Note argues that courts are institutionally best situated to enforce agency compliance with rulemaking procedures generally, and with the good cause exception specifically. Quantitative and qualitative studies suggest that the specter of litigation is the best way to influence agency decisions regarding compliance with procedural requirements. (10)

This Note proposes a framework for improving courts' review of good cause determinations. Courts should give no deference to agency assertions that good cause exists. By consistently and rigorously applying a de novo standard, courts will address much of the uncertainty surrounding the exception. That solution will curtail the worst abuses of an oft-used procedural bypass while preserving the necessary flexibility of a provision that applies to many agencies in a variety of circumstances. Applying de novo review does not require results-oriented reasoning or judicial acrobatics. To the contrary, the APA's text, structure, and objectives, as well as principles of administrative deference, mandate this standard of review.

Careful examination of judicial review of good cause assertions has important practical implications. For agencies claiming good cause, litigants challenging those assertions, and courts adjudicating the resulting disputes, adoption of a de novo standard will promote clarity and predictability in a domain sorely wanting for both. Litigation exposure will inform agency decisions regarding assertions of good cause. The standard will help eliminate the worst elements of some courts' current "ad hoc" review, (11) which causes substantial uncertainty. In turn, the increased judicial clarity will enable regulated entities and beneficiaries to better understand the contours of the exception and when litigation is an appropriate tool.

Agency practice and judicial review surrounding the exception also have important implications for scholars. Titans of administrative law have long debated the merits and costs of requiring agencies to comply with the APA's complex bevy of procedural requirements before promulgating rules. (12) Some scholars have argued that those procedures are important safeguards of public participation and accountability. (13) Others have argued that those procedures place unjustified burdens on agency resources, which can push agencies to use other methods of policymaking. (14) But the rates at which agencies invoke the good cause exception to promulgate rules without engaging in notice-and-comment procedures suggest that the focus of both camps may be at least somewhat misplaced. Each side of the ossification literature is premised on the archetypal account of rulemaking. (15) Yet pervasive avoidance of notice-and-comment procedures suggests that any conversation about public participation in rulemaking is incomplete without accounting for the substantial portion of rules where agencies have circumvented those participatory requirements. Understanding why agencies turn to the good cause exception, when it is most prevalent, and what the prospects are for addressing this new administrative reality is an important precondition for more fully grounding conversations about the costs and benefits of informal rulemaking.

This Note proceeds in three parts. Part I draws on the APA's legislative history and examines contemporary agency use and judicial review of the good cause exception. This Part canvasses empirical studies documenting increased agency use of the exception and catalogs the multiple axes of inconsistency in judicial review. Courts diverge with respect to what constitutes good cause and how much deference to afford an agency's good cause determination. Part II evaluates which branch of government is best positioned to oversee proper use of the statutory exceptions from procedural rulemaking requirements. This Part rejects the numerous scholarly proposals to amend the exception, arguing that amendment is neither realistic nor desirable. It ultimately concludes that courts are best situated to review agency use of rulemaking exceptions and ensure that they are not abused. Part III argues that improving judicial enforcement would be best achieved through uniform adoption of a de novo standard for reviewing agency invocations of good cause. This Part first explains why that standard of review is legally required. It then illustrates why the standard provides a better solution to the confusion surrounding judicial review of good cause than competing proposals that overlook the standard of review. Finally, this Part demonstrates how the standard would operate in practice.

  1. Agency Assertions of Good Cause and Judicial Review

    The need for public participation in administrative rulemaking is "axiomatic." (16) The drafters of the APA recognized that need by requiring agencies that promulgate rules to follow certain procedures aimed at encouraging participation. At the same time, it is "equally axiomatic" that not every rulemaking can or should accommodate public participation. (17) The APA's drafters codified that complementary understanding in the various exceptions that allow agencies to forgo notice-and-comment requirements in certain circumstances. Under the good cause exception, agencies can skip notice and comment when "the agency for good cause finds" that "notice and public procedure ... are impracticable, unnecessary, or contrary to the public interest." (18) It is widely accepted that the APA's generally desirable procedural requirements must at times give way to necessity. But the precise contours of when that line is crossed, who ought to make that determination, and what criteria and remedy should govern that decision are subjects of extensive debate. (19)

    In recent years, frequent agency use of the good cause exception has further muddled those questions. (20) The continued prevalence of the exception as a means for avoiding procedural requirements highlights the challenges and importance of addressing these issues. This Part starts with the exception's statutory origins and then analyzes its contemporary usage by agencies and treatment by courts. Part I.A synthesizes empirical studies documenting the frequent use of the exception. Part I.B surveys courts' varied approaches to evaluating what constitutes good cause. Finally, Part I.C examines a less studied divergence in courts' treatment of the exception--the level of deference given to an agency's assertion of good...

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