Revisiting the impact of judicial review on agency rulemakings: an empirical investigation.

AuthorWagner, Wendy

ABSTRACT

It is generally believed that the judicial review of agency rulemakings helps protect the public interest against industry capture. Yet very little empirical research has been done to assess the accuracy of this conventional wisdom. This Study examines the entire set of air toxic emission regulations promulgated by the Environmental Protection Agency (EPA), with particular attention to those rules appealed to judgment in the court of appeals, and discovers significant disconnects between popular understanding of judicial review and rulemaking reality. Of these air toxic rules (N=90), the courts were summoned to review only a small fraction (8%), despite evidence that many air toxic rules may have problems, at least from the public interest perspective. Moreover, although virtually all of the litigation brought by public interest groups against the EPA's air toxic rules was successful, the resulting victories have not yet had much impact in practice. For most of its vacated regulations, the EPA has either ignored or limited the courts' opinions and has not repromulgated revised rules. Thus, while the tenor of the opinions seems to reaffirm the courts' role as guardian of the public interest the actual impact of these opinions on agency practice may be less influential than one might expect. A concluding section takes the analysis one step further and explores the possibility that the net effect of judicial review may actually be more perverse. The ability of the dominant parties (which in the case of the EPA's air toxic rules are regulated industries) to threaten the agency with expensive and time-consuming litigation could provide these groups with legal leverage that, in the aggregate, serves to further undermine the agency's ability to act on behalf of the public interest.

TABLE OF CONTENTS INTRODUCTION I. JUDICIAL REVIEW OF AGENCY RULEMAKINGS: THEORY AND PRACTICE A. Basics of Judicial Review B. Unreviewed Assumptions II. THE STUDY III. FINDINGS A. The Role of the Courts in Advancing the Public Interest 1. The Court Opinions 2. The Denominator Factor: Comparing the Appeals Against the Larger Set of Air Toxic Emission Standards 3. Summary B. What Is the Impact of the Courts' Rulings on the EPA's Rulemaking Project? 1. Repairing Deficient Rules 2. Precedential Effects C. Some of the Unintended Costs to the Public Interest from Judicial Review IV. REVISITING THE IMPACT OF JUDICIAL REVIEW ON AGENCY RULEMAKINGS A. Interest Group Representation Model B. The Traditional Model, Revisited C. The Limits of the Courts CONCLUSION APPENDIX INTRODUCTION

The judicial expansion of standing in the 1970s radically altered administrative process. A legal system available only to regulated industries seeking to protect their narrow interests against agency abuse (1) was transformed into a process that allowed all affected parties, including public interest groups, to challenge agency rules in court. (2) The risk that the agency could now be sued by all affected parties, rather than just by regulated interests, was expected to cause agencies to be both more solicitous of and more receptive to the views of all stakeholders. (3) Equally beneficial, when an agency did ignore stakeholder input, the agency could be forced to explain its decision to the courts. (4) This new, broader form of judicial review was expected to play a particularly important institutional check against capture by regulated parties. (5)

Although there is vigorous debate about whether this pluralistic model--initially dubbed the "interest group representation model"--is the best one for administrative process, (6) there seems to be tacit agreement among commentators that this model generally describes what occurs on the ground. (7) Yet central features of the pluralistic model remain unsubstantiated as an empirical matter. (8) In order for the model to provide an even partly accurate description of rule-making processes, for example, a diverse set of interests must regularly engage with the agency in ways that can be backed by an appeal if the agency ignores those interests. When a court reviews an agency's rule at the behest of stakeholders, moreover, the court's opinion should have some impact on the agency's future decision making. If these assumptions do not pan out in administrative reality, then the current model of administrative process may need some reexamination.

Growing evidence suggests, in fact, that administrative practice may be quite different from what conventional wisdom supposes. Several different empirical studies that examined regulations over the last five years have identified a distinct "bias towards business" running through rules promulgated by several different regulatory agencies. This bias should not exist if pluralistic engines are running effectively. (9) One of the leading explanatory factors for this tilt in influence is the fact of judicial review itself. To the extent that each comment serves as a placeholder for litigation, influence corresponds to the number of forceful commenters: badly imbalanced stakeholder input into rules may lead to imbalanced outputs because of, not in spite of, judicial review. (10) Additionally, evidence of agency nonacquiescence--an action by an agency that simply rejects or ignores adverse court precedent--calls into question whether the courts' direct interventions really do change the agencies' decision making. If agencies are not terribly worried about adverse court rulings, then this fact also alters how one understands the impact of judicial review on the rulemaking process. (11)

Given this preliminary evidence that calls into question whether the pluralistic model accurately describes what is going on in practice, there is reason to want to learn more. This Study begins the effort by examining the agency-court-interest group interactions in an entire set of air toxic emission standards promulgated under the Clean Air Act by the Environmental Protection Agency (EPA). (12) These standards affect public health directly, but data show that the rules receive far greater input from industry than from public interest groups. (13) In such a skewed participatory regime, the courts' role as guardian of the public interest becomes particularly important. In an effort to study judicial review's capacity to protect the public interest, the Study examines the litigated air toxic rules and sets these rules against the interest group-agency interactions occurring in the larger set of ninety air toxic standards promulgated by the EPA. (14)

The findings reveal that interactions between interest groups, agencies, and the courts do not always operate as expected. In a small number of rules, public interest appeals powerfully highlight ways that the agency violated basic statutory terms in its development of air toxic emission standards, just as the interest group representation model predicted. (15) Surprisingly, however, the courts' precedent and remands do not appear to exert much of an impact on agency decision making and in some cases seem to be effectively ignored. (16) The data also expose stark imbalances in interest group engagement across rules and, in turn, suggest that the courts are not always on hand to enforce the interests of all affected parties. (17) Although some of the EPA rules are subject to pluralistic bargaining that matches what seems to be imagined by the interest group representation model, the majority do not. (18) Instead, the bulk of the rules are hammered out between regulated interests and agency officials with no input from other groups--a type of regulatory oversight that seems more akin to the defunct, traditional model than to its more modern replacement. (19)

The possibility that judicial review inadvertently causes advantaged groups to enjoy even greater legal leverage in a large subset of rulemakings, while providing only limited oversight of agency decisions in a smaller subset of rules, is supported in four Parts. The first Part considers the basic literature surrounding judicial review and explores some of the basic empirical assumptions underlying the current pluralistic model of judicial review. The second Part provides an overview of the Study and explains the methods. The third Part discusses empirical findings from the research. Finally, the fourth Part considers what the findings suggest about conventional understandings of the impact of judicial review on agency rulemakings, particularly with respect to the courts' role in advancing the public interest.

  1. JUDICIAL REVIEW OF AGENCY RULEMAKINGS: THEORY AND PRACTICE

    Judicial review is considered a critical institutional mechanism for holding agencies accountable to all affected parties, including the broader public. In its most idealized form, judicial review serves as an institutional check to ensure that agencies provide information to interested parties, take parties' input seriously, and in the end, offer cogent and accessible explanations for their decisions, thus allowing the political process to engage in oversight of these otherwise obscure bureaucratic decisions. (20) Judicial review also ensures that the agencies stay within reasonable bounds in their interpretation of statutory directives; without the courts to police these statutory edges, lawlessness could result. (21) Liberalized standing rules, coupled with relatively accessible and low-cost access to the courts for stakeholders, allow interest groups of all sizes and resource levels to challenge unfair rules and raise them for public scrutiny. (22) This is particularly important for complex rules that otherwise might be badly skewed in favor of regulated parties. (23) Cases such as Citizens to Preserve Overton Park, Inc. v. Volpe stand as a testament to the ability of local community organizations and citizen activists to hold Washington bureaucrats accountable when they ignore the law. (24)

    Despite the vital institutional...

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