Fail to Comment at Your Own Risk:
Does Issue Exhaustion Have a Place in Judicial Review of Rules?
Jeffrey S. Lubbers*
The requirement that parties seeking judicial review of agency action first “exhaust” their
administrative remedies initially developed as a prudential judicial construct1 and now is also
sometimes reflected in statutes.2 The classic version of the exhaustion requirement generally
requires a party to go through all the stages of an administrative adjudication before going to court.
This ensures that the agency action being challenged is the final agency position and that the
agency has had the opportunity to bring its expertise to bear and to correct any errors it may have
made at an earlier stage. It also allows for the resolution of disputes before they come to court,
thus avoiding potentially unnecessary additions to court dockets. I will refer to this as “remedy
exhaustion.”
The orthodox application of the remedy exhaustion requirement involves cases where the
petitioner for judicial review has eschewed available administrative appeal opportunities. In some
cases, a court’s refusal to accept review will simply clear the way for the further administrative
proceedings to take place;3 but in other situations, the foreclosure of judicial relief occurs after
“the opportunity to invoke the relevant administrative processes had passed.”4

*

Professor of Practice in Administrative Law, Washington College of Law, American University; Research Director
of the Administrative Conference of the United States (“ACUS”) from 1982–1995, Special Counsel to ACUS 2011–
present, J.D., University of Chicago. I thank my research assistant Cooper Spinelli (Class of 2014) and ACUS staff
(Stephanie Tatham, Connie Vogelmann, and Seth Nadler), for very helpful research assistance. Professor Ronald
Levin, Chairman of ACUS’s Committee on Judicial Review, provided some invaluable comments and insights on an
earlier draft of this article. This report represents the views of the author and not necessarily those of the
Administrative Conference of the U.S, or its members and committees.
In 1938 the Supreme Court referred to it as “the long-settled rule of judicial administration that no one is entitled to
judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.”
Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50–51 (1938) (employers challenging NLRB’s jurisdiction must
complete administrative proceedings before seeking judicial intervention). Later the Supreme Court explained that:
1

[T]he exhaustion doctrine recognizes the notion, grounded in deference to Congress’ delegation of
authority to coordinate branches of Government, that agencies, not the courts, ought to have primary
responsibility for the programs that Congress has charged them to administer. Exhaustion concerns
apply with particular force when the action under review involves exercise of the agency’s
discretionary power or when the agency proceedings in question allow the agency to apply its special
expertise.
McCarthy v. Madigan, 503 U.S. 140, 145 (1992).
2

See pages 4 – 7, infra.

3

As in Myers, 303 U.S. 41, 50–51 (1938).

PETER L. STRAUSS, ET AL, GELLHORN AND BYSE’S ADMINISTRATIVE LAW 1241 (10th ed. 2003) [hereinafter
GELLHORN & BYSE CASEBOOK] (discussing McGee v. United States, 402 U.S. 479 (1971) (Selective Service inductee
denied opportunity to raise conscientious objector defense to criminal conviction because he had not sought personal
appearance before the local board and did not take administrative appeal to contest the denial)).
4

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,5 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.
Development of the Issue Exhaustion Doctrine: It Began with a Statutory Provision Applying to
Agency Adjudications—L.A. Tucker Truck Lines.
It is common for appeals courts to rule that they will not review issues not brought up first in the
lower court. This principle was first analogized to judicial review of agency adjudication by the
U.S. Supreme Court in the pre-Administrative Procedure Act (“APA”) case of Hormel v.
Helvering.6 Six decades later, in Sims v. Apfel,7 involving review of a Social Security
Administration disability decision, the Court hearkened back to Hormel, quoting this passage from
the earlier case:
Ordinarily an appellate court does not give consideration to issues not raised below.
For our procedural scheme contemplates that parties shall come to issue in the trial
forum vested with authority to determine questions of fact. This is essential in order
that parties may have the opportunity to offer all the evidence they believe relevant
to the issues which the trial tribunal is alone competent to decide; it is equally
essential in order that litigants may not be surprised on appeal by final decision
there of issues upon which they have had no opportunity to introduce evidence.
And the basic reasons which support this general principle applicable to trial courts
make it equally desirable that parties should have an opportunity to offer evidence
on the general issues involved in the less formal proceedings before administrative
agencies entrusted with the responsibility of fact finding.8

5

See William Funk, Exhaustion of Administrative Remedies—New Dimensions Since Darby, 18 PACE ENVTL. L. REV.
1, 11 (2000) (“‘Issue exhaustion’ is a term that refers to the need to raise an issue with an administrative agency before
raising it on judicial review.”). Recently, some courts have used the term “waiver” to describe the action of the
challenger who had failed to raise the issue during the agency proceeding. See text at notes 124-31, infra. I prefer the
term “issue exhaustion” because “waiver” has another common meaning in administrative law more generally
(referring to agencies granting a waiver from a generally applicable requirement), because it makes it sound like more
of an strategic action on the part of the petitioner in court, and because the term would imply that a non-complying
challenger would be barred even if another commenter had raised the issue (which is not the case).
6

312 U.S. 552 (1941).

7

530 U.S. 103 (2000).

8

Id. at 109 (quoting Hormel, 312 U.S. at 556). See discussion of Sims, text at notes 25–35, infra.

2

The Supreme Court went on to apply the issue exhaustion doctrine to review of an agency
adjudicative action in 1952 in United States v. L.A. Tucker Truck Lines, Inc.,9 in the context of
review of an Interstate Commerce Commission order:
[O]rderly procedure and good administration require that objections to the
proceedings of an administrative agency be made while it has opportunity for
correction in order to raise issues reviewable by the courts . . . . Simple fairness to
those who are engaged in the tasks of administration, and to litigants, requires as a
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.10
In that case a trucker petitioned the ICC for an extension of his route certificate. After a hearing
by a hearing examiner, the petition was denied and the Commission affirmed. The trucker
requested reconsideration by the full Commission, and then “extraordinary relief,” both of which
were denied. The trucker appealed to the three-judge court provided for by statute and raised for
the first time the contention that the hearing examiner had been improperly appointed. The lower
court allowed this, but the ICC appealed to the Supreme Court.
In reversing, the Supreme Court noted that:
[T]he Appellee did not offer nor did the court require any excuse for its failure to
raise the objection upon at least one of its many opportunities during the
administrative proceeding. Appellee does not claim to have been misled or in any
way hampered in ascertaining the facts about the examiner’s appointment. It did
not bestir itself to learn the facts until long after the administrative proceeding was
closed and months after the case was at issue in the District Court, at which time
the Commission promptly supplied the facts upon which the contention was based
and sustained.11
It added that “The issue is clearly an afterthought, brought forward at the last possible moment to
undo the administrative proceedings without consideration of the merits and can prevail only from
technical compulsion irrespective of considerations of practical justice.”12

9

344 U.S. 33, 37 (1952).

A few years later, the Court made clear that the Administrative Procedure Act (APA) does “not require a different
result. That Act purports to strengthen, rather than to weaken, the principle requiring the exhaustion of administrative
remedies before permitting court review.” Fed. Power Comm’n v. Colorado Interstate Gas Co., 348 U.S. 492, 499–
500 (1955). But see Darby v. Cisneros, 509 U.S. 137 (1993), discussed below, in which the Court read section 704 of
the APA, (5 U.S.C. § 704) to mean that federal courts do not have authority to require plaintiffs to exhaust available
administrative remedies before seeking judicial review under the APA, where neither relevant statutes nor agency
rules specifically mandate exhaustion as prerequisite to judicial review.
10

11

344 U.S. at 35.

12

Id. at 36.

3

While the appeal in that court was done under a statute that did not contain an issue exhaustion
provision,13 the Court noted that “more than a few statutes” did contain such provisions.14 Indeed,
as the Supreme Court noted almost 50 years later in Sims, “requirements of administrative issue
exhaustion are largely creatures of statute.”15 Recently the Court clarified that even when a litigant
failed to meet a statutory issue exhaustion provision, “we do not regard that lapse as
‘jurisdictional.’”16
There are numerous statutes that contain either generic issue exhaustion provisions or those
directed at objections to agency orders. See the statutes for the following agencies (arranged by
U.S. Code provisions):


Federal Labor Relations Authority, Unfair Labor Practices, 5 U.S.C. § 7123 (“No objection
that has not been urged before the Authority, or its designee, shall be considered by the
court, unless the failure or neglect to urge the objection is excused because of extraordinary
circumstances.”). This exhaustion provision was first adopted in the Civil Service Reform
Act of 1978, Pub. L. No. 95–454 § 7123(c), 92 Stat. 1213 (1978).



Department of Justice, Executive Office of Immigration Review, Removal Orders, 8
U.S.C. § 1252(d) (“A court may review a final order of removal only if—(1) the alien has
exhausted all administrative remedies available to the alien as of right. . . .”) This
exhaustion provision was first adopted in the Immigration and Nationality Act, Pub. L. No.
82-414, 66 Stat. 208 (1952).



Securities and Exchange Commission (“SEC”), Securities Act of 1933, 15 U.S.C. § 77i(a)
(“No objection to the order of the Commission shall be considered by the court unless such
objection shall have been urged before the Commission.”). This exhaustion provision was
first adopted in the Securities Exchange Act of 1934 § 9(a), Pub. L. No. 73-22, 48 Stat. 80
(1934).



SEC, Securities Act of 1934, 15 U.S.C. § 78y(c)(1) (“No objection to an order or rule of
the Commission, for which review is sought under this section, may be considered by the
court unless it was urged before the Commission or there was reasonable ground for failure
to do so.”). This exhaustion provision was first adopted in the Securities Exchange Act of

See U.S. v. L.A. Tucker Truck Lines, Statement of Jurisdiction (filed Jan. 28, 1952) (“While most of the cases
invoking this doctrine have arisen under statutes which specifically provide that the court can consider on review only
matters raised before the agency—a limitation not contained in the Urgent Deficiencies Act, under which this action
was brought—the settled policy against unduly protracting litigation requires application of the principle to review of
Interstate Commerce Commission orders by statutory three-judge district courts.”)
13

14

344 U.S. at 36.

Sims, 530 U.S. at 107. The Court cited Marine Mammal Conservancy, Inc. v. Dep’t of Agric., 134 F.3d 409, 412
(D.C. Cir. 1998). Its statement was a bit more expansive: “The requirement that objections must first be presented to
the agency, although sometimes treated as part of the judicially-created exhaustion doctrine, is largely derived from
statute.”
15

16

EPA v. EME Homer City Generation, L.P., 134 S. Ct 1584, 1602 (2014).

4

1934, Pub. L. No. 73-291 § 25(a), 48 Stat. 902 (1934); but the words “or rule” were added
in Pub. L. No. 94-29 § 20, 89 Stat. 159 (1975).17


SEC, Public Utility Holding Company Act of 1935, 15 U.S.C. § 79x(a) (“No objection to
the order of the Commission shall be considered by the court unless such objection shall
have been urged before the Commission or unless there were reasonable grounds for failure
so to do.). This exhaustion provision was first adopted in the Public Utility Holding
Company Act of 1935, Pub. L. No. 74-333 § 24(a), 49 Stat. 835 (1935).



SEC, Investment Companies, 15 U.S.C. § 80a–42(a) (same). This exhaustion provision
was first adopted in the Investment Company Act of 1940, Pub. L. No. 76-768 § 43(a), 54
Stat. 844 (1940).



SEC, Investment Advisers, 15 U.S.C. § 80b–13 (same). This exhaustion provision was
first adopted in the Investment Advisors Act of 1940, Pub. L. No. 76-768 § 213(a), 54 Stat.
856 (1940).



Small Business Administration, 15 U.S.C. § 687a(e) (“No objection to an order of the
Administration shall be considered by the court unless such objection was urged before the
Administration or, if it was not so urged, unless there were reasonable grounds for failure
to do so.”). This exhaustion provision was first adopted in the Small Business Act, Pub.
L. No. 87–341, 75 Stat. 753 (1961).



Federal Energy Regulatory Commission (“FERC”), Natural Gas, 15 U.S.C. § 717r(b) (“No
objection to the order of the Commission shall be considered by the court unless such
objection shall have been urged before the Commission in the application for rehearing
unless there is reasonable ground for failure so to do.”). This exhaustion provision was
first adopted in the Natural Gas Act, Pub. L. No. 75-688 § 19(b), 52 Stat. 831-32 (1938).



FERC, Natural Gas Policy, 15 U.S.C. § 3416(a)(4) (“No objection to such order of the
Commission shall be considered by the court if such objection was not urged before the
Commission in the application for rehearing unless there was reasonable ground for the
failure to do so.”). This exhaustion provision was first adopted in the Natural Gas Policy
Act of 1978, Pub. L. No. 95-62 § 506(a)(4), 92 Stat. 3405 (1978).18



FERC, Electric Utilities, 16 U.S.C. § 825l(b) (“No objection to the order of the
Commission shall be considered by the court unless such objection shall have been urged
before the Commission in the application for rehearing unless there is reasonable ground
for failure so to do.”). This exhaustion provision was first adopted in the Public Utility
Holding Company Act of 1935, Pub. L. No. 74-333 § 313(b), 49 Stat. 860 (1935).

17

As noted in notes 44–45, infra, this is one of only two provisions that I have found that specifically apply issue
exhaustion to rulemaking.
Note that the word “order” in this statute was interpreted to include rules, ECEE, Inc. v. FERC, 611 F.2d 554, 55966 (5th Cir. 1980).
18

5



Department of the Treasury, Alcohol, 27 U.S.C. § 204(h) (“No objection to the order of
the Secretary shall be considered by the court unless such objection shall have been urged
before the Secretary or unless there were reasonable grounds for failure so to do.”). This
exhaustion provision was first adopted in the Federal Alcohol Administration Act, Pub. L.
No. 74-401 § 4(g), 49 Stat. 980 (1935) (there have been minor subsequent amendments).



National Labor Relations Board, Unfair Labor Practices, 29 U.S.C. § 160(e) (“No objection
that has not been urged before the Board, its member, agent, or agency, shall be considered
by the court, unless the failure or neglect to urge such objection shall be excused because
of extraordinary circumstances.”). This exhaustion provision was first adopted in the
National Labor Relations Act, Pub. L. No. 74-198 § 10(e), 49 Stat. 454 (1935).



Department of Labor, Fair Labor Standards Act, 29 U.S.C. § 210(a) (“No objection to the
order of the Secretary shall be considered by the court unless such objection shall have
been urged before such industry committee or unless there were reasonable grounds for
failure so to do.”). This exhaustion provision was first adopted in the Fair Labor Standards
Act 1938, Pub. L. No. 75-718 §10 (a), 52 Stat. 1065-66 (1938).



Social Security Administration, Civil Money Penalties, 42 U.S.C. § 1320a–8(d)(1) (“No
objection that has not been urged before the Commissioner of Social Security shall be
considered by the court, unless the failure or neglect to urge such objection shall be excused
because of extraordinary circumstances.”). This exhaustion provision was first adopted in
the Social Security Act, Pub. L. No. 103–296 § 1129(d)(1), 108 Stat. 1511 (1994).



Department of the Interior, Outer Continental Shelf Leasing Act, 43 U.S.C. § 1349(c)(5)
(“Specific objections to the action of the Secretary shall be considered by the court only if
the issues upon which such objections are based have been submitted to the Secretary
during the administrative proceedings related to the actions involved.”). This exhaustion
provision was first adopted in the Outer Continental Shelf Lands Act Amendments of 1978,
Pub. L. No. 95–372 § 23(c)(5), 92Stat. 657 (1978).



Federal Communications Commission, General, 47 U.S.C. § 405(a) (“The filing of a
petition for reconsideration shall not be a condition precedent to judicial review of any such
order, decision, report, or action, except where the party seeking such review (1) was not a
party to the proceedings resulting in such order, decision, report, or action, or (2) relies on
questions of fact or law upon which the Commission, or designated authority within the
Commission, has been afforded no opportunity to pass.”). This exhaustion provision was
first adopted in an Act to further amend the Communications Act of 1934, Pub. L. No. 82554 § 405, 66 Stat. 720 (1952).



National Transportation Safety Board, Aviation Matters, 49 U.S.C. § 1153(b)(4) (“In
reviewing an order under this subsection, the court may consider an objection to an order
of the Board only if the objection was made in the proceeding conducted by the Board or
if there was a reasonable ground for not making the objection in the proceeding.”). This
exhaustion provision was first adopted in the Independent Safety Board Act of 1974, Pub.
L. No. 103–272 § 1153(b)(4), 108 Stat. 757 (1994).

6

In addition, there are agency regulations that require issue exhaustion within the agency’s appeals
system—in other words an appellant cannot raise an issue before the agency head that was not
raised before the ALJ.19 Some agencies have successfully argued that these regulations should
also be respected by courts on judicial review. The Supreme Court noted this in Sims, when it
said:
[I]t is common for an agency’s regulations to require issue exhaustion in
administrative appeals. See, e.g., 20 CFR § 802.211(a) (1999) (petition for review
to Benefits Review Board must “lis[t] the specific issues to be considered on
appeal”). And when regulations do so, courts reviewing agency action regularly
ensure against the bypassing of that requirement by refusing to consider
unexhausted issues. See, e.g., South Carolina v. United States Dept. of Labor, 795
F.2d 375, 378 (C.A.4 1986); Sears, Roebuck and Co. v. FTC, 676 F.2d 385, 398, n.
26 (C.A.9 1982). Yet, SSA regulations do not require issue exhaustion. (Although
the question is not before us, we think it likely that the Commissioner could adopt
a regulation that did require issue exhaustion.)20
While it might seem odd to think that an agency regulation could influence what arguments can
be made in court, cases like the ones cited in the above passage have migrated the administrative
adjudication rule into the judicial review process. Such rules, not surprisingly, appear to be limited
to agency adjudications, where issue exhaustion can be more readily tied to remedy exhaustion.
And no such regulation purporting to limit issues raised in judicial review of rules has been found.
Application of Issue Exhaustion in a Ratemaking Case—Colorado Interstate
Three years after the L.A. Tucker case, the above FERC natural gas statutory provision (formerly
administered by the Federal Power Commission) was applied by the Supreme Court in Federal
Power Commission v. Colorado Interstate Gas Co.21 This case involved a ratemaking (within the
APA’s definition of rulemaking”) of particular applicability in that the order in the case only
applied to one company. The Commission’s order had been reversed and remanded by the Tenth
Circuit on a ground that that court had raised sua sponte, but one that had not been before the
Commission at the time of the ratemaking. The Supreme Court, citing the statute (and L.A. Tucker
Truck Lines) reversed, brushing aside the argument that the statute, on its face, only precluded a
party from raising an issue in court that had not been presented for rehearing, and did not preclude
a court from taking up a new issue sua sponte: “To allow a Court of Appeals to intervene here on
its own motion would seriously undermine the purpose of the explicit requirements of § 19(b) that
objections must first come before the Commission.”22 More importantly, the Court, found support
19

See e.g., Department of Labor: 20 C.F.R. §§ 641.900(e), 645.800(c), 667.830(b); Department of Justice (Bureau of
Prisons) 28 C.F.R. § 542.15(b)(2); NLRB: 29 C.F.R. § 102.46(b)(2), and OSHA: 29 C.F.R. §§ 1979.110(a),
1981.110(a).
20

Sims, 530 U.S. at 108.

21

348 U.S. 492 (1955).

22

Id. at 499.

7

in the APA’s scope-of-judicial-review section (5 U.S.C. § 706(2)(a)), which states that in
conducting its review: “To the extent necessary to decision and when presented, the reviewing
court shall decide all relevant questions of law, interpret constitutional and statutory provisions,
and determine the meaning or applicability of the terms of an agency action.”23
The Colorado Interstate Court did not really examine this APA issue in any depth and I was unable
to find any other federal court decision focusing on this phrase, so its importance to this issue is
hard to judge. It is not immediately clear why “when presented” would necessarily imply that an
issue must have been first presented to an agency before a litigant can “present” it to a court. In
addition, even if read this way, the phrase’s application is ambiguous in that it seemingly only
applies to the questions of law enumerated in that sentence and not to all the matters covered by
Section 706(2).
A variation of the sua sponte issue decided in Colorado Interstate is presented when the court
petitioner has not raised the issue with the agency, but another party has. Because the issue
exhaustion doctrine was intended to be protective of the agency, courts have understandably often
ruled that it should not be applied to particular challengers in situations where other participants
in the administrative process had raised the issues, even if the litigant in court had not. For
example, the Third Circuit so ruled in an SEC case where the petitioner had not raised the challenge
at the administrative level, but other party-intervenors to the administrative adjudication had:
The principal purpose of the [exhaustion] doctrine . . . is to make sure that it is the
agency and not the courts which passes first on the contentions of the participants.
It was the intention of Congress as evidenced by the statutory plan to give to the
agency rather than to the courts the primary responsibility for enforcing and
elaborating the regulatory scheme as set up in the law. This purpose is advanced
so long as the contentions and exceptions raised on review have been in fact
effectively and meaningfully raised before the regulatory agency. This is true
regardless of whether the person who appeals the agency decision or some other
person aggrieved by the decision happens to have raised the points before the
agency.24
Rejection of Issue Exhaustion in a “Non-Adversary” Adjudication—Sims v. Apfel.
All of the cases discussed so far have involved challenges to orders issued in administrative
adjudications or ratemakings of particular applicability. But in one important case, the Supreme
Court declined to apply the issue exhaustion doctrine in the context of a review of an agency
adjudication. In Sims v. Apfel,25 in which the government argued that a social security claimant
should be barred from raising an issue that she had failed to raise at the Social Security Appeals
Council (the agency board that reviews denials of benefits by agency administrative law judges),
the Supreme Court declined to apply issue exhaustion. The government had argued “that an issue23

5 U.S.C. § 706 (emphasis added).

24

Hennesey v. SEC, 285 F.2d 511, 515 (3d Cir. 1961).

25

530 U.S. 103 (2000).

8

exhaustion requirement is ‘an important corollary’ of any requirement of exhaustion of
remedies.”26 But the Court concluded, “We think that this is not necessarily so and that the
corollary is particularly unwarranted in this case.”27
In reaching this decision, the Court began by noting “that requirements of administrative issue
exhaustion are largely creatures of statute.”28 It then read its precedents, including L.A. Tucker,29
as suggesting 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.” Finding SSA adjudication to be “informal”30 and “inquisitorial rather
than adversarial,”31 the Court held that “a judicially created issue-exhaustion requirement is
inappropriate. Claimants who exhaust administrative remedies need not also exhaust issues in a
request for review by the Appeals Council in order to preserve judicial review of those issues.”32
The Court that decided Sims was a divided Court. Four Justices dissented and Justice O’Connor
supplied the fifth vote by emphasizing SSA’s failure to notify claimants of the issue exhaustion
requirement.33
Shortly thereafter, Professor Funk wrote:
Outside the Social Security context, it is unlikely that [Sims] has any force. Not
only do the four dissenters indicate the view that issue exhaustion is the general
rule, subject to only the rarest of exceptions, but Justice O’Connor clearly viewed
the situation in [Sims] as unique. Even Justice Thomas’s opinion, by tying issue
exhaustion to an analogy with adversarial litigation in the judicial context, suggests
that in the vast range of formal and informal, but adversarial, administrative
adjudication, issue exhaustion would be required.34

26

Id. at 107.

27

Id.

28

Id.

29

Supra note 9.

30

530 U.S. at 111.

31

Id.

Id. at 112. Justice Thomas wrote for the five-Justice majority. Justice O’Connor concurred because the agency had
failed to warn claimants that issue preclusion might obtain. Justice Breyer (writing for Chief Justice Rehnquist and
Justice Scalia) dissented because he did “not see why the nonadversarial nature of the Social Security Administration
internal appellate process makes a difference,” at least for claimants represented by counsel. Id. at 117.
32

Id. at 113 (O’Connor, J. concurring in part and concurring in the judgment). She also suggested that “[r]equiring
issue exhaustion is particularly inappropriate here, where the regulation and procedures of the Social Security
Administration (SSA) affirmatively suggest that specific issues need not be raised before the Appeals Council.” Id.
33

34

Funk, supra note 5 at 15.

9

Nevertheless, lower courts applying issue exhaustion in judicial review of adjudications have
continued to accentuate the adversarial nature of the agency action below.35
With that in mind, query whether the issue exhaustion doctrine should have a place in rulemaking.
Exhaustion in Rulemaking
It should be apparent that the remedy exhaustion doctrine, involving the need to go through all the
available procedural steps and agency fora, while important in agency adjudication, has no real
application to notice-and-comment rulemaking where there is typically a single proceeding that
must be completed before there is a rule to challenge. The closely related, APA-based finality
requirement36 clearly rules out challenges to proposed rules. On the other hand, the APA’s
presumption of reviewability and the application of the prudential ripeness doctrine announced in
Abbott Laboratories v. Gardner in 1966 have served to allow pre-enforcement review of final rules
in many situations.37 Rules can also normally be challenged in court at the enforcement stage too,
absent a statutory preclusion,38 or unless some opportunity existed to challenge them first in an
agency adjudicatory forum.39

35

See e.g., Agha v. Holder, 743 F.3d 609, 616 (8th Cir. 2014):
“Where the parties are expected to develop the issues in an adversarial administrative proceeding, .
. . the rationale for requiring issue exhaustion is at its greatest.” [quoting Sims]. In other words,
“[t]he strongest case for imposing an exhaustion requirement exists where the administrative
proceedings closely resemble a trial.” (quoting Frango v. Gonzales, 437 F.3d 726, 728 (8th Cir.
2006)). Here, the administrative proceedings before both the Immigration Court and the BIA were
adversarial, and Agha was represented by counsel. Thus, a court-imposed exhaustion requirement
is proper, in addition to the statutory requirement.

For a case refusing to apply issue exhaustion to a non-adversarial adjudication, see Vaught v. Scottsdale Healthcare
Corp. Health Plan, 546 F.3d 620, 626 (9th Cir. 2008):
Because ERISA and its implementing regulations create an inquisitorial, rather than adversarial
process, and because the [plan’s explanation of benefits] does not notify a claimant that issue
exhaustion is required, Sims leads us to conclude that Vaught was not required to exhaust his issues
or theories in the context of this case. Accord Wolf v. Nat'l Shopmen Pension Fund, 728 F.2d 182,
186 (3d Cir.1984) (“Section 502(a) of ERISA does not require either issue or theory exhaustion; it
requires only claim exhaustion.”).
36

5 U.S.C. § 704.

387 U.S. 136 (1967). But see the companion case of Toilet Goods Ass’n v. Gardner, 387 U.S. 167 (1966), where
the Court found a pre-enforcement challenge to another FDA rule to be unripe for review because it could be
challenged at the enforcement stage without any potential harm to the challenger in the interim.
37

38

See generally Paul R. Verkuil, Congressional Limitations on Judicial Review of Rules, 57 TUL. L. REV. 733 (1983).
See also, Ronald Levin, Statutory Time Limits on Judicial Review of Rules: Verkuil Revisited, 32 CARDOZO L. REV.
2203 (2011).
39

See Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994) (mine safety regulation may not be challenged in advance
of an administrative enforcement action by the Labor Department because of the opportunity to defend in the
comprehensive administrative adjudication system presided over by the Federal Mine Safety and Health Review
Commission).

10

In pre-enforcement challenges to rules, where the ripeness hurdle must be surmounted, it is
certainly possible to envision the government raising issue exhaustion concerns. An excellent
student note in 1986 by Douglas David Spencer was critical of an emerging trend in this
direction.40 Professor Funk raised the question of issue exhaustion in rulemaking in his 2000
survey of “new dimensions” of the exhaustion doctrine, and found that “courts are hopelessly
confused” on the subject.41 The Gellhorn & Byse Casebook in 2003 devoted a thoughtful note to
this issue, suggesting that, while issue exhaustion might make sense in some rulemaking
challenges, the “cases conspicuously lack discussion of whether, when, why, or how exhaustion
doctrine developed in the context of adjudication should be applied to rulemaking.”42 Gabriel
Markoff’s recent useful survey of Clean Air Act rulemaking challenges found that, at least under
that Act, which appears to contain one of only two explicit statutory issue exhaustion requirements
for rulemaking challenges, the D.C. Circuit has applied it in 80% of the cases in which the
government raised it as a defense.43
As noted above, there are numerous statutes containing more generic issue exhaustion
requirements, or ones applying to agency orders. But there are few statutes that contain explicit
statutory issue exhaustion requirement for rulemaking challenges—I have found only two—the
Clean Air Act44 and Securities Act of 1934.45 And, of course, there are many other agency statutes
that lack any such provision. Courts have not done a good job of sorting through these distinctions.
As Professor Funk notes, “Unfortunately, some courts have ignored the specific statutory origin
40

David Douglas Spencer, Note, The Duty to Participate in Agency Rulemaking, 54 GEO. WASH. L. REV. 628 (1986).
He wrote after another commentator had extolled the virtues of exhaustion generally and had supported denying the
right of judicial review to a party who had failed to participate in rulemaking, suggesting that such parties could
petition the agency to institute a new rulemaking proceeding and thereby obtain review. See Marcia R. Gelpe,
Exhaustion of Administrative Remedies: Lessons from Environmental Cases, 53 GEO. WASH. L. REV. 1, 14–15, 34
(1984).
41

Funk, supra note 5 at 18.

42

GELLHORN AND BYSE’S CASEBOOK, supra note 4, at 1246.

43

Gabriel H. Markoff, Note, The Invisible Barrier: Issue Exhaustion as a Threat to Pluralism in Administrative
Rulemaking, 90 TEX. L. REV. 1065, 1079–83 (2012).
42 U.S.C. § 7607(d)(7)(B) (“Only an objection to a rule or procedure which was raised with reasonable specificity
during the period for public comment (including any public hearing) may be raised during judicial review.”). This
provision was adopted in the 1977 Clean Air Act Amendments, Pub. L. No. 95-95 § 305(a), 49 Stat. 885, 775 (1977).
44

15 U.S.C. § 78y(c)(1) (“No objection to an order or rule of the Commission, for which review is sought under this
section, may be considered by the court unless it was urged before the Commission or there was reasonable ground
for failure to do so.”). More generally, the word “order” in some statutory review statutes has been construed to cover
rules with respect to certain judicial review requirements. See e.g., Investment Co. Inst. v. Bd. of Govs., 551 F.2d
1270( D.C. Cir. 1977) (treating a rule as an “order” for purposes of permitting direct review in the court of appeals).
In one case involving a rulemaking, a court did the same for the purpose of enforcing the mandatory rehearing aspect
of the Natural Gas Policy Act, 15 U.S.C. § 3416(a)(4), which can be considered a form of issue exhaustion. ECEE,
Inc. v. FERC, 611 F.2d 554, 559-66 (5th Cir. 1980). Also, while not a statute specifically addressing issue exhaustion,
the Atomic Energy Act, 42 U.S.C. § 2239, (covering both licensing and issuance of rules governing licensing) in
combination with the Hobbs Act, 28 U.S.C. § 2344, has been read to limit judicial review to “parties” in the underlying
proceeding, even when that proceeding was a rulemaking. See Gage v. AEC, 479 F.2d 1214, 1217–19 (D.C. Cir.
1973), discussed text at notes 54–60, infra. In a sense, this is closer to remedy exhaustion because court litigant must
first be a party in the agency proceeding.
45

11

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.”46
The upshot is that, as explained below, courts seem to be increasingly applying issue exhaustion
principles to the judicial review of informal rulemaking, even though the doctrine was born in the
adjudication context, and even though the Supreme Court has eschewed it in the informal
adjudication context of social security disability claims.
As the American Bar Association Administrative Law Section’s “Blackletter Statement” states:
Courts enforce such issue exhaustion more stringently where the parties are
expected to develop the issue in an adversarial proceeding than in circumstances in
which they review the results of nonadversarial, informal hearings
Some courts have also applied the issue-exhaustion doctrine to the notice-andcomment rulemaking process. Under this approach, a party that fails to raise an
objection to a rule during notice and comment may not press that objection on direct
judicial review of the rule unless (1) another party made the objection or (2) the
agency’s decision [sic] indicates that it did in fact consider the issue.47
The Relevance of Darby v. Cisneros
Does the APA have anything to say about this issue? Section 704, as construed by the Supreme
Court in Darby v. Cisneros,48 seems to preclude the application of common law exhaustion
principles to agency rulemaking “unless either a statute requires it or an agency has required it by
rule and provided that the rule would be inoperative pending its reconsideration.”49 In Darby, in
the context of a review of an adjudicative order by the Department of Housing and Urban
Development, the Supreme Court held that § 704 of the APA superseded the common law
prudential (or equitable) doctrine of exhaustion of administrative remedies—at least in the context
of APA cases. It found that section precludes exhaustion unless either another statute requires it
or the agency has required some form of administrative appeal or reconsideration by rule and
provided that meanwhile the agency action would be inoperative pending its reconsideration.
As Professor Funk has commented, “If one applies Section 704 faithfully with the Supreme Court’s
guidance in Darby, there could be no exhaustion required as a precondition of judicial review of
rulemaking unless either a statute requires it (as in Section 405(a) of the Communications Act of

46

Funk, supra note 5 at 17.

AM. BAR ASS’N, SECTION OF ADMIN. L. & REG. PRACTICE, A BLACKLETTER STATEMENT OF FEDERAL
ADMINISTRATIVE LAW 53–54 (2d ed.) (2013).
47

48

509 U.S. 237 (1993).

49

Funk, supra note 5, at 18 (quoting 5 U.S.C. § 704).

12

1934) or an agency has required it by rule and provided that the rule would be inoperative pending
its reconsideration.”50
But if § 704, as construed by Darby, applies to rulemaking, what would that mean? That case
involved remedy exhaustion, and after Darby most agencies made sure they had issued a
procedural rule that required parties to file an administrative appeal in agency adjudications before
seeking judicial review. To meet the § 704 requirements, that rule also had to provide that the
agency action “meanwhile is inoperative.” That does not pose a problem in the adjudication
context because agency heads typically want a chance to review first-level decisions before they
might be appealed to court. But in the rulemaking context, it is doubtful, even nonsensical, that
agencies would want to issue such a procedural rule. Agencies would not want to delay the
effectiveness of their hard-earned rule while opponents crafted a petition for reconsideration,
potentially with new arguments.
After raising the question, Professor Funk, in describing Darby as a remedy exhaustion case arising
in the context of administrative adjudication, notes that, “Darby, of course, did not address issue
exhaustion, and because the question of issue exhaustion only arises when exhaustion of
administrative remedies is required and satisfied, it is doubtful that Darby changes the legal
landscape of issue exhaustion.”51
I agree that Darby should not be read as bearing on issue exhaustion in rulemaking, but no court
has really analyzed this question in any detail.52
The Early Application of Issue Exhaustion in Rulemaking Cases by the D.C. Circuit.
Not surprisingly, because issue exhaustion is an outgrowth of remedy exhaustion, which originated
in the context of review of administrative adjudications, there appear to be few applications of it
in the context of review of agency rulemakings until the 1970s. In that decade, the passage of
numerous regulatory statutes with important rulemaking provisions led to an upsurge of rules and
challenges to such rules in court, especially in the D.C. Circuit which hears most such cases.53
The D.C. Circuit began to raise issue exhaustion in the context of rulemaking in 1973 with two
cases, (1) Gage v. AEC, involving an Atomic Energy Act rulemaking that was conducted under a

Id. See also John F. Duffy, Administrative Common Law in Judicial Review, 77 Tex. L. Rev. 113, 162 (1998). (“the
reasoning of Darby—focusing on the APA’s text and statutory structure—indicates that the [common-law exhaustion
doctrine] has no proper place” in APA cases).
50

51

Id. at 12. Professor Levin also points out that the APA provision being construed in Darby was § 704, which is a
finality provision, and that issue exhaustion “has no equivalency whatsoever with the ‘final agency action’ principle.”
Letter from Ron Levin to author (Feb. 6, 2015) at 2.
52

See the brief treatment by the court in National Mining Ass’n v. Department of Labor, infra note 128.

For an illuminating history of rulemaking’s “collision” “with vigorous judicial review” in the D.C. Circuit, see
Reuel Schiller, Rulemaking’s Promise: Administrative Law and Legal Culture in the 1960s and 1970s, 53 ADMIN. L.
REV. 1139, 1141 (2001).
53

13

quasi-adjudicative procedural statute,54 and (2) some overlooked dicta in its famous Portland
Cement opinion involving a challenge to a rule issued by the Environmental Protection Agency
(“EPA”) under the Clean Air Act.55
Gage involved a rulemaking to implement the newly enacted National Environmental Policy Act
(“NEPA”)56 that was conducted under the Atomic Energy Act’s provisions (originally designed
for adjudications) that entitled interested persons to become “parties” and have a “hearing” on their
objections,57 and also that allowed direct judicial review (under the Hobbs Act) only by such
“parties.”58 In denying a party who had declined to participate in the rulemaking the right to invoke
the court’s jurisdiction, Judge Wilkey recognized that there was some incongruity in using these
party designation procedures in rulemaking, but found that it made sense in cases involving direct
review of rules to limit judicial review to persons who had participated in the rulemaking, if only
to ensure a better record for judicial review:
Unlike requests for review of adjudicative orders, petitions for “direct” review of
rule-promulgating orders demand judicial scrutiny of regulations which may well
not have been applied in a concrete case. Unlike adjudication, rule-making may
proceed in the absence of those who may ultimately have a right to complain of the
application of the regulations which result. Unlike those subject to adjudicative
orders, persons who may ultimately be affected by regulations may have legitimate
grounds for deciding not to join in the formulation of the rules. For example, the
ultimate impact, or even the likelihood of enforcement, of proposed rules may be
far from clear. Standing aside may not foreclose all opportunity to propose new
regulations or to challenge the validity of the promulgated regulations when they
are applied to such a person’s detriment in a concrete case; but such abstinence will
probably preclude the compilation of a record adequate for judicial review of the
specific claims he has reserved. That is what happened in this case—and the effect
of this void in the record on our ability to analyze petitioners’ major claim
highlights the flaw in their petition for relief from this court.59
Thus, Judge Wilkey also recognized that some interested persons may not choose to, or be able to,
participate in rulemakings, but nevertheless he was concerned that such non-participation could
lead to a record that would be inadequate for judicial review of claims made for the first time in
court. Notwithstanding this conclusion, Gage is rarely cited in later cases applying issue
exhaustion to notice-and-comment rulemaking, probably because the rulemaking procedures used
by the AEC were quasi-adjudicative and different from the normal notice-and-comment
rulemaking process. Moreover, Judge Wilkey’s concern about the adequacy of the rulemaking
54

479 F.2d 1214, 1217–19 (D.C. Cir. 1973).

55

Portland Cement Ass’n v. Ruckelshaus, 486 F.2d 375 (D.C. Cir 1973).

56

Pub. L. No. 91–190, § 2, Jan. 1, 1970, 83 Stat. 852, codified at 42 U.S.C. §§ 4321–4347d.

57

Gage, 479 F.2d at 1217 (citing 42 U.S.C. § 2239).

58

Id. at 1218 (citing 28 U.S.C. § 2344).

59

Id. at 1218–19.

14

record would have little application where the challenge was based on constitutional or procedural
arguments or to purely legal statutory challenges.60 And there is an implication in the passage
quoted above that non-participants could raise any issue in challenging a rule at the enforcement
stage.
Portland Cement, on the other hand, is still one of the most oft-cited rulemaking cases—most
famous for Judge Leventhal’s groundbreaking pronouncement that agencies must disclose
significant related studies or other relevant information in their possession at the time of the notice
of proposed rulemaking.61 But what is often forgotten is that he followed this principle with a
corollary: “Conversely, challenges to standards must be limited to points made by petitioners in
agency proceedings. To entertain comments made for the first time before this court would be
destructive of a meaningful administrative process.”62 This principle was not enforced against the
particular challengers in that case because EPA’s disclosure failings had necessitated a remand
anyway, and the court directed EPA to “consider the contentions presented in briefs to this court,
though not previously raised, unless EPA explains why they are not material.”63 Shortly after that
case, the Congress amended the Clean Air Act to specifically require persons to raise issues in the
agency rulemaking before they can seek judicial review of those issues.64
A Contemporaneous Development—Issue Exhaustion in NEPA Cases
The issue exhaustion doctrine has also frequently arisen in the context of litigation over the
adequacy of an agency environmental impact statement (“EIS”) prepared under NEPA. The origin
dates back to the language from Portland Cement which was quoted approvingly by the Supreme
Court in connection with the NEPA aspect of Vermont Yankee,65 which was in turn invoked by the
Court in Dep’t of Transportation v. Public Citizen,66 in ruling that a challenger forfeited particular
objections to the EIS by failing to raise them in the available public comment process. The issue
The challengers’ arguments in Gage were that the agency’s NEPA regulations did not go far enough in failing to
bar all land acquisitions prior to the granting of a permit to construct a nuclear power plant. The court commented
that, “[a]n extensive factual record would clearly be required in order to judge whether or not the present regulations
implement the policies of NEPA ‘to the fullest extent possible.’” Id. at 1219.
60

Id. at 394 (“In order that rule-making proceedings to determine standards be conducted in orderly fashion,
information should generally be disclosed as to the basis of a proposed rule at the time of issuance.”).
61

62

Id.

63

Id. at 394–95.

64

See Clean Air Act Amendments of 1977, Pub. L. No. 95–95, 91 Stat 685, 775, § 305(a) (adding subsection (d)),
codified at 42 U.S.C. § 7607(d)(7)(B); for text of provision see supra note 44. The SEC provision, covering both
orders and rules, also quoted in note 45, supra, was enacted in 1975, Pub. L. No. 94–29, § 20, 89 Stat 97, 159, but I
have found no cases involving rulemaking under this provision.
Vt. Yankee Nuclear Power Corp. v. Nat. Res. Def. Council, 435 U.S. 519, 553–554 (“Indeed, administrative
proceedings should not be a game or a forum to engage in unjustified obstructionism by making cryptic and obscure
reference to matters that ‘ought to be’ considered and then, after failing to do more to bring the matter to the agency’s
attention, seeking to have that agency determination vacated on the ground that the agency failed to consider matters
‘forcefully presented.’) (citing Portland Cement, 486 F.2d at 394).
65

66

541 U.S. 752 (2004).

15

in Public Citizen was whether NEPA and the Clean Air Act required the Department to evaluate
the environmental effects of cross-border operations of Mexican-domiciled motor carriers, when
promulgating regulations that would allow such operations. The Court disallowed certain
challenges to the preliminary EIS [environmental assessment or “EA”] based on issue exhaustion:
What is not properly before us, despite respondents’ argument to the contrary, [. .
.] is any challenge to the EA due to its failure properly to consider possible
alternatives to the proposed order[. . . .] Persons challenging an agency’s
compliance with NEPA must “structure their participation so that it . . . alerts the
agency to the [parties’] position and contentions,” in order to allow the agency to
give the issue meaningful consideration. [Citing Vermont Yankee, 435 U.S. at 553].
None of the respondents identified in their comments any rulemaking alternatives
beyond those evaluated in the EA and none urged [the Department] to consider
alternatives. Because respondents did not raise these particular objections to the
EA, [the Department] was not given the opportunity to examine any proposed
alternatives to determine if they were reasonably available. Respondents have
therefore forfeited any objection to the EA on the ground that it failed adequately
to discuss potential alternatives to the proposed action.67
The Court did acknowledge that “Admittedly, the agency bears the primary responsibility to ensure
that it complies with NEPA, . . . and an EA’s or an EIS’ flaws might be so obvious that there is no
need for a commentator to point them out specifically in order to preserve its ability to challenge
a proposed action.”68 The Ninth Circuit has since defined the “so obvious standard” as a variant
of the “futility exception” where the agency has “independent knowledge of issues that concern
NEPA plaintiffs.”69 In a more recent NEPA case, that circuit cited its “general rule” that “we will
not consider issues not presented before an administrative proceeding at the appropriate time.”70
But then it went on to add:
However, we have repeatedly held that the exhaustion requirement should be
interpreted broadly. Plaintiffs fulfill the requirement if their appeal “provided
67

Dep’t of Transportation v. Public Citizen, 541 U.S. 752, 764–65 (2004).

68

Id. at 765.

’Ilio’ulaokalani Coal. v. Rumsfeld, 464 F.3d 1083, 1093 (9th Cir. 2006) (quoting Public Citizen, 541 U.S. 752, 765
(2004). In distinguishing Public Citizen and allowing the procedural challenge to the EIS in ’Ilio’ulaokalani Coalition,
the court characterized the rationale of Vermont Yankee and Public Citizen as applying “in those instances in which
an interested party suggests that certain factors be included in the agency analysis but later refuses the agency’s request
for assistance in exploring that party’s contentions.” Id. at 1092 (quoting Kunaknana v. Clark, 742 F.2d 1145, 1148
(9th Cir.1984)). But see Forest Guardians v. U.S. Forest Serv., 495 F.3d 1162, 1171 (10th Cir. 2007) (although “a
close question,” finding a comment challenging a U.S. Forest Service EIS insufficient to put the agency on notice of
a substantial evidence soil standard claim, because the challenger’s placement of its comment relating to soil erosion
in a section of its comment titled “Impacts to Water Quality” and not the section titled “Unstable Soils”); Silverton
Snowmobile Club v. U.S. Forest Serv., 433 F.3d 772, 783 (10th Cir. 2006) (indicating that arguments not raised before
the agency during its compliance with NEPA’s procedural requirements are waived).
69

Nat’l Parks & Conservation Ass’n v. BLM, 606 F.3d 1058, 1065 (9th Cir.2010) (citing Marathon Oil Co. v. United
States, 807 F.2d 759, 767–68 (9th Cir.1986)). I note that Marathon and the cases it relied on were all cases of agency
adjudication.
70

16

sufficient notice to the [agency] to afford it the opportunity to rectify the violations
that the plaintiffs alleged.” Plaintiffs need not state their claims in precise legal
terms, and need only raise an issue “with sufficient clarity to allow the decision
maker to understand and rule on the issue raised, but there is no bright-line standard
as to when this requirement has been met.”71
While it is true that NEPA procedures do call for notice to the public and solicitation of information
from the public,72 the analogy to notice-and-comment rulemaking is somewhat limited, because
the comment process is less regularized and the substantive adequacy of agency compliance with
NEPA is subject to a more limited scope of review.73 Nevertheless, because Public Citizen was
decided after Sims, some courts have viewed it as removing Sims as an obstacle to applying the
issue exhaustion doctrine in the context of EIS challenges.74
General Issue Exhaustion Statutes and Judicially Developed Exceptions—the WATCH Case
As mentioned above, when the D.C. Circuit decided Gage and Portland Cement, there were
already some statutes on the books, such as section 405(a) of the amended Communications Act,
that generally required challengers to agency actions to first raise the issue with the agency in the
form of a petition for rehearing.75 In 1983, Judge Wald thoroughly examined the application of
this provision to a licensing challenge in Washington Ass’n for Television and Children
(“WATCH”) v. FCC.76 In this case a watchdog group challenged the Federal Communications
Commission’s (“FCC”) renewal of licenses of three television stations in Washington, D.C. on the
grounds that the stations had failed to provide any regularly scheduled weekday children’s
programs, claiming that this was in contravention of the Commission’s policy. More specifically,
71

Id. (citations omitted)

72

Council of Envtl. Quality regulations, 40 C.F.R. § 1506.6. Note that issue exhaustion issues can readily come up
in other natural resources planning contexts, such as approvals of timber sales on national forest land, see Native
Ecosystems Council v. Dombeck, 304 F.3d 886 (9th Cir. 2002); approval of mines, Idaho Sporting Cong. v.
Rittenhouse, 305 F.3d 957, 965 (9th Cir. 2002), and review of cancellation of grazing permits, Buckingham v. Sec’y
of the USDA, 603 F.3d 1073, 1080–81 (9th Cir. 2010). These Ninth Circuit cases are collected in a very thoughtful
NEPA issue exhaustion opinion in Oregon Natural Desert Ass’n v. McDaniel, 751 F. Supp. 2d 1151 (D. Or. 2011).
See also Ctr. for Sustainable Econ. v. Jewell, 779 F.3d 588 (D.C. Cir. 2015) (applying issue exhaustion to a challenge
to Interior Department approval of proposed leases for resource exploration and development on the Outer Continental
Shelf).
See, e.g., High Sierra Hikers Ass’n, 436 F. Supp. 2d 1117, 1149 (E.D. Cal. 2006) (“Judicial review of an agency’s
EIS under NEPA is extremely limited.”).
73

74

See id. at 1147 (specifically disagreeing with the pre-Public Citizen NEPA review case of Vermont Public Interest
Research Group v. U.S. Fish & Wildlife Service, 247 F. Supp. 2d 495, 515–17 (D. Vt. 2002), which relied on Sims in
finding issue exhaustion inapplicable to the non-adversary context of NEPA proceedings. But see the post-Public
Citizen case of Sierra Club v. Bosworth, 352 F. Supp. 2d 909, 926 (D. Minn. 2005), which agreed with Vermont Public
Interest Group, albeit without citing Public Citizen.
75

See 47 U.S.C. § 405(a), quoted at page 7 supra. This provision continues to be regularly enforced, see FiberTower
Spectrum Holdings, LLC v. FCC, No. 14–1039 slip. op. at 9 (D.C. Cir. Apr. 3, 2015) (applying issue exhaustion to a
statutory argument that a license applicant sought to make in court after failing to make it to the Commission in its
application for review of the license denial).
76

712 F.2d 677 (D.C. Cir. 1983).

17

WATCH raised two issues in its petition to the D.C. Circuit. The first was the agency’s approval
of the license renewals without holding a hearing on the stations’ failure to carry regularly
scheduled children’s programming, as demanded by the group in its petition to deny. This issue
was properly raised with the agency, but the FCC had explained in denying the hearing “that
although licensees had a duty to provide weekday children’s programming, they had no duty to
provide it on a regularly scheduled basis.”77 The FCC relied on the fact that its policy statement
on children’s programming did not require such regular programming (a determination ultimately
upheld by the D.C. Circuit).78 However, the petition for judicial review also asked the court to
review a second issue—the “general inadequacy” of the stations’ children’s programming—an
argument that had not been presented to the Commission first.79
A major issue in this case was whether, although the statutory language admitted of no exceptions,
the provision should be treated like other exhaustion cases—subject to exceptions in extenuating
circumstances. Judge Wald concluded that it should be, although she went on to hold that none of
these circumstances were present in this case.
What was especially interesting about her opinion in this case is that she analyzed how section
405(a) had been applied in prior D.C. Circuit cases. In addressing the blanket provision in the
amended Communications Act, the court stated:
[Our] cases assume that § 405 contains implied exceptions without explaining why.
We understand these cases, however, as implicitly interpreting § 405 to codify the
judicially-created doctrine of exhaustion of administrative remedies, which permits
courts some discretion to waive exhaustion. There is no useful legislative history
to confirm or refute this interpretation, but it has the merit of requiring the same
degree of exhaustion for the FCC as for other agencies. We adopt that interpretation
here and thus construe § 405 to incorporate the traditionally recognized exceptions
to the exhaustion doctrine.80
Judge Wald cited similar general issue exhaustion statutes that also lacked specific exceptions such
as the Securities Act of 1933 (15 U.S.C. § 77i(a)), along with others that did allow some
exceptions, e.g., Securities Exchange Act of 1934, 15 U.S.C. § 78y(c)(1) (“reasonable ground for
failure to do so.”), Fair Labor Standards Act, 29 U.S.C. § 210(a) (same), Public Utility Holding

77

Id. at 679 (emphasis in original).

78

Id. at 684–85.

79

Id. at 681.

80

712 F.2d at 681–82 (footnotes omitted). Indeed as to the legislative history, she says,
The main thrust of the provision may have been to ensure that in the mine run of cases, where issues
had been raised before the agency, a party could obtain judicial review without first petitioning the
Commission for rehearing. Early case law had suggested that a petition for rehearing was sometimes
a prerequisite to judicial review.

Id. at 681 n.5 (emphasis in original).

18

Company Act, 15 U.S.C. § 79x(a) (same), National Labor Relations Act, 29 U.S.C. § 160(e)
(“extraordinary circumstances”),81 and then commented:
The very senselessness of these differences in language suggests that Congress
meant, in all these statutes, merely to codify the judicial doctrine of exhaustion of
administrative remedies. That would explain Congress’ failure to give careful
attention to the nuances of language that might, in another context, connote
differences in intended meaning.82
She then discussed some of the judicially recognized exceptions to the exhaustion requirement,
although ultimately the court found that none of these exceptions applied in this case.83 Among
them are:
(1) issues, that “by their nature could not have been raised before the agency (e.g., a material
change in circumstances or a serious impropriety in the administrative process),”84
(2) where the challenged action is “patently in excess of [the agency’s] authority,”85
(3) where it would have been futile to raise before the agency,86
(4) where the agency has in fact considered the issue,87
(5) where “the obvious result would be a plain miscarriage of justice.”88
WATCH’s issue exhaustion analysis was applied in the context of a challenge to a licensing order,
not to a challenge of the underlying rule, much less of a pre-enforcement challenge to a rule.
Indeed most of the dozen cases construing section 405(a) cited by Judge Wald89 also involved
individual licensing or application cases. But there was a sprinkling of FCC rulemaking cases.
For example, in Gross v. FCC,90 the court reviewed the constitutionality of a rule banning the
transmission of commercial messages by amateur radio stations, but barred petitioners from raising
81

Id. at 682 n.6. All of these statutes remain on the books.

82

Id.

83

Id.

84

Id. at 682 (citing Greater Boston Television Corp. v. FCC, 463 F.2d 268, 283-84 (D.C. Cir. 1971) (reviewing cases)).

85

Id. (quoting Detroit Edison Co. v. NLRB, 440 U.S. 301, 312 n.10 (1979). The court also noted a disagreement
among the commentators as to whether a party should be required to raise a jurisdictional challenge with the agency
first. Id. at 682 n.8.
86

Id. at 682. But the court cautioned that “Futility should not lightly be presumed, however.” Id. at 682 n.9.

Id. at 682 (citing cases where the issue was raised by dissenting commissioners (Office of Commc’n of the United
Church of Christ v. FCC, 465 F.2d 519, 523–24 (D.C. Cir. 1972)) or by another party (Buckeye Cablevision, Inc. v.
United States, 438 F.2d 948, 951 (6th Cir. 1971)); N.Y. State Broadcasters Ass’n v. United States, 414 F.2d 990, 994
(2d Cir. 1969)). The court then comments: “This exception can be seen as a variant of the futility exception, since it
would almost surely be futile for a party to raise an objection already made by someone else.” Id. at 682 n.10.
87

88

Id. at 682 (quoting Hormel v. Helvering, 312 U.S. 552, 558 (1941)). These factors are similar to those later
propounded by the Supreme Court in McCarthy v. Madigan, 503 U.S. 144–148.
89

See id. at 681 n.3 and accompanying text.

90

480 F.2d 1288 (2d Cir. 1973).

19

“the sundry other grounds upon which petitioners seek for the first time on the instant petition to
review to challenge.”91 In American Radio Relay League, Inc. v. FCC,92 the court, in reviewing a
substantive challenge to a rule limiting the manufacture and sale of certain amplifiers used by
citizens band operators, brushed aside in a footnote the challenger’s contention that the
Commission did not comply with the APA’s rulemaking procedures because that argument had
not been made before the Commission.93 And finally, United States v. FCC94 involved a challenge
to an FCC ratemaking involving AT&T (technically a rulemaking under the APA) brought by
other federal agencies who argued in court that the rate of return granted to the company was
unsupported. The court upheld the rate, pointing out, after citing section 405(a), that the FCC had
sought comments on the rate, and the
executive agencies did comment in response to that invitation, but they did not in
their response raise any argument even resembling the one made here. Had the
government brought what it now contends to be a failure to provide a full
explanation to the Commission’s attention, the Commission could easily have
elaborated to cure any defect.95
In another case cited in WATCH, where the FCC’s failure to issue a rule had been challenged by a
petition for rehearing, which had been denied, the D.C. Circuit had allowed petitioners to argue
for the first time that the FCC had improperly accepted and considered ex parte communications
in the rulemaking proceedings.96 The court first chided the petitioner [ACT] for
offer[ing] no justification for its failure to raise the issue of “closed door
bargaining” in its petition for rehearing beyond unsupported conclusory assertions
that it is “most unlikely” that the Commission would have attempted to cure its
“error” had ACT in fact raised the issue in time for the Commission to do so. . . .
Such an assertion would be uncompelling in the absence of any concrete indication
that reconsideration would have been futile, and, in other circumstances, we would
be constrained from entertaining the objection.97
Nevertheless, the court allowed the objection to be made:
That objection, however, essentially alleging a denial of administrative due process,
raises neither a novel factual issue for which an initial Commission determination
is quite clearly both necessary and appropriate, nor a legal issue on which the
Commission, and even this court has not already made known its general views to
91

Id. at 1290 n.5.

92

617 F.2d 875 (D.C. Cir. 1980).

93

Id. at 879 n.8.

94

707 F.2d 610, 619 (D.C. Cir. 1983).

95

Id.

96

Action for Children’s Television v. FCC, 564 F.2d 458 (D.C. Cir. 1977).

97

Id. at 469.

20

the contrary. Thus, we believe that a thorough airing of the merits of ACT’s
procedural challenge would not be inappropriate in this case, especially in light of
the agency’s tentative conclusion of these informal rulemaking proceedings shortly
after ex parte discussions with regulatee representatives.98
This examination of the section 405(a) cases leading up to the D.C. Circuit’s decision in WATCH
shows how the issue exhaustion doctrine had been applied sporadically, but not uniformly—and
not as a jurisdictional matter—in rulemaking review cases in the context of an explicit, generally
applicable statutory exhaustion provision.
The Increasing Application to Rulemaking Cases
In recent years the issue exhaustion doctrine has grown to cover more and more rulemakings, even
where there is no such statutory provision, albeit with some inconsistently applied exceptions. My
concern is, while the doctrine has an appropriate place in some rulemaking challenges, that if it
becomes as fully entrenched as it appears to be becoming, it could serve as a significant barrier to
judicial review of rules, or at least a trap for the unwary. In addition, it may lead the “wary” to
feel the need to file “shotgun” comments on rules to preserve their right to seek judicial review.
It is difficult to know how often courts have, without commenting, allowed issues raised in review
petitions to be decided even where the challenger had not raised the same issues in rulemaking
comments. To some extent, this may depend on whether the government raises this issue as a
defense. But as the government succeeds more often in disposing of issues by raising issue
exhaustion questions in rulemaking cases, one can expect the government to be more vigilant about
raising it. And there are numerous examples of successful defenses on this ground. As Markoff
documents, the EPA has succeeded 80% of the time since 1993 in raising the Clean Air Act issue
exhaustion provision as a defense in rulemaking cases.99
While the post-1977 Clean Air Act cases are unique because they involve the only litigated
statutory provision that explicitly covers rulemaking challenges, the D.C. Circuit also decides
numerous other rulemaking-review cases involving rules issued by other agencies (or by the EPA)
under other statutes that lack the type of provision found in the Clean Air Act. In one case
involving a notice-and-comment proceeding (technically a rulemaking of particular applicability)
to add hazardous waste sites to the Superfund National Priorities List under the Comprehensive
Environmental Response, Compensation, and Liability Act (“CERCLA”), one of the challengers
sought to contend in court for the first time that EPA lacked authority to aggregate sites for NPL
listing purposes.100 The court, per Judge Mikva, disallowed that argument, citing WATCH.101
98

Id. The court rejected that procedural challenge, thereby limiting the scope of its earlier decision prohibiting ex
parte communications in informal rulemaking, Home Box Office, Inc. v. FCC, 567 F.2d 9 (D.C. Cir. 1977). It is likely
that the court bent over backwards to allow this challenge so as to have an opportunity to limit the scope of Home Box
Office.
99

See Markoff, supra note 43.

100

Linemaster Switch Corp. v. EPA, 938 F.2d 1299 (D.C. Cir. 1991).

101

Id. at 1308.

21

Two years later, in Ohio v. EPA,102 the court examined, and mostly upheld, a broader-based EPA
rulemaking to amend the National Contingency Plan [NCP] to conform it with CERCLA. A group
of states made a number of arguments that the rule was contrary to language in CERCLA, one of
which was disallowed because they had not first made the argument to the agency. But in this
case, the court made clear that it was so ruling because “[n]either the States nor any other party
raised” the issue.103
This “any other party” codicil was recognized a year later in Natural Resources Defense Council
v. EPA,104 when the court’s description of the Ohio case contained this blurb: “(court may excuse
one party’s failure to raise an issue in administrative forum where another party pressed and agency
in fact considered identical issue).”105 In that case, NRDC challenged an EPA rule issued under
the Resource Conservation and Recovery Act (“RCRA”), in which the agency did not include used
oils on its listing of covered hazardous wastes, instead explaining that it relied on other federal
regulations to prevent any harm from used oil disposal. In court, NRDC wanted to argue that
EPA’s reliance on other federal regulations was forbidden by the statutory and regulatory
command that EPA list substances that pose a substantial threat when “improperly managed.”106
The court noted that, “Petitioners do not deny that they failed to raise their ‘improper management’
argument before the agency. Instead, they contend that their raising ‘various technical, policy, and
legal’ objections to the EPA’s proposed non-listing was sufficient to preserve their right to press
their statutory construction argument in court.”107
Rejecting that argument, Judge Sentelle, writing for the court, concluded that if it were sufficient
for parties to argue that they had made other “technical, policy, or legal” arguments before the
agency,
a party could never waive a legal claim as long as the party in fact appeared and
argued something before the agency. While there are surely limits on the level of
congruity required between a party’s arguments before an administrative agency
and the court, respect for agencies’ proper role in the Chevron framework requires

102

997 F.2d 1520 (D.C. Cir. 1993).

103

Id. at 1529 (emphasis supplied). For similar conclusions, see City of Portland, Or. v. EPA, 507 F.3d 706, 710 (D.C.
Cir. 2007) (“Because neither [amicus] Walla Walla nor any other party raised this argument before the Agency during
the rulemaking process, however, it is waived, and we will not consider it.’) and Military Toxics Project v. EPA, 146
F.3d 948, 956–57 (D.C. Cir. 1998) (“We need not reach this challenge on the merits, however, because as the EPA
also points out neither the MTP nor anyone else commented during the rulemaking process that the Rule as drafted
would permit the DOD unilaterally to free itself from the strictures imposed by the RCRA. The MTP has thus waived
the argument and may not raise it for the first time upon appeal.”).
104

25 F.3d 1063 (D.C. Cir. 1994).

105

Id. at 1074.

106

Id. at 1075 (italics in original).

107

Id. at 1074.

22

that the court be particularly careful to ensure that challenges to an agency’s
interpretation of its governing statute are first raised in the administrative forum.108
This case also illustrates how difficult it can be for a reviewing court to determine if the petitioner
had in fact made a similar argument in the rulemaking proceeding. As the court noted:
At oral argument, counsel suggested that petitioners’ comments had at least implied
that EPA’s proposal to rely on other federal regulations would be inconsistent with
the agency’s duty to consider the “improper management” of used oil. We asked
counsel to supply the court with the full text of petitioners’ comments. After
examining these comments, however, we are still unable to discern any place in
which petitioners could fairly be said to have raised this issue of statutory and
regulatory construction.109
As the D.C. Circuit recently phrased the test in a case challenging an Interior Department offshore
leasing decision that was subject to notice and comment, “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.”110 In that case the court acknowledged that it did,
see a connection between the comment and the current objection, [but that] Interior
did not have anything close to the kind of explanation we do now, however, nor the
same opportunity to parse the record and decipher the claims arguably latent in only
a few sentences. . . . Interior received 280,189 comments on the 2012–2017
Program, some of them dense and lengthy. We cannot conclude on this record that
CSE fairly raised the objection it now presses to Interior's method of assessing OCS
drilling's coastal and onshore effects.111
It went on to explain: “When the government argues an issue is forfeited because it was not fairly
raised, petitioners must explain why the issue was raised in a fashion sufficient to preserve it.
Whether an objection is fairly raised depends on, among other things, the size of the record, the
technical complexity of the subject, and the clarity of the objection.”112
In a non-EPA environmental case, National Ass’n of Manufacturers v. U.S. Department of the
Interior,113 NAM also was tripped up by this doctrine. It attempted to argue that models within
the Department’s CERCLA natural resource damage [NRD] rule were arbitrary and capricious
because they failed to evaluate restoration alternatives in terms of the effect they might have on
108

Id.

109

Id. at 1074 n.7.

110

Cntr. for Sustainable Econ. v. Jewell, 779 F.3d 588, 602 (D.C. Cir. 2015).

111

Id.

112

Id.

113

134 F.3d 1095 (D.C. Cir. 1998).

23

natural resource “services.” But the court rejected this line of argument because “NAM failed to
raise this argument in the rulemaking proceedings below, and we find no reason to excuse NAM’s
failure to exhaust its administrative remedies.”114
In response, NAM made a number of points, including that “the relationship between services and
restoration was ‘a general point applicable to any NRD assessment,’ it ‘had been emphasized
repeatedly in prior rulemakings,’ . . . ‘other documents in the record highlighted the services
concept,” [and therefore] DOI was given a ‘fair opportunity’ to consider the issue below.”115
Taking a hard line, Judge Henderson rejected that argument, “The fact that, buried in hundreds of
pages of technical comments NAM submitted, some mention is made of the resource services
concept and its relation to compensable values (rather than restoration alternatives) is insufficient
to preserve the issue for review on appeal.”116
These environmental cases demonstrate the potency of the issue exhaustion doctrine (sometimes
referred to as a “waiver” rule) and also provide some basis for the judicial attitude that gives rise
to it. As the court stated in Ohio v. EPA:
[T]he waiver doctrine is also concerned with notions of agency autonomy and
judicial efficiency. The doctrine promotes agency autonomy by according the
agency an opportunity to discover and correct its own errors before judicial review
occurs. Judicial efficiency is served because issues that are raised before the agency
might be resolved without the need for judicial intervention. The efficiency
concern is especially germane to this challenge to the NCP, involving an extremely
complex rulemaking in which a multitude of issues might be raised for the first time
before this court in the absence of the waiver doctrine.117
The doctrine has also been justified as sparing the agency from the burden of having to respond to
vague comments. As Judge Randolph wrote in a Clean Air Act case:
A citation to the section of the rule or a description of it may be all that is needed. If a
comment lacking even that low level of specificity sufficed, the agency would be
subjected to verbal traps. Whenever the agency failed to detect an obscure criticism of
one aspect of its proposal, the petitioner could claim not only that it had complied with
Section 307 but also that the agency acted arbitrarily because it never responded to the
comment. Rulemaking proceedings and the legal doctrines that have grown up around
them are intricate and cumbersome enough. Agency officials should not have to wade
through reams of documents searching for “‘implied’ challenges.”118
114

Id. at 1111.

115

Id.

116

Id.

117

997 F.2d 1520, 1528–29 (D.C. Cir. 1991).

118

Natural Res. Def. Council v. EPA, 559 F.3d 561, 564 (D.C. Cir. 2009).

24

This argument has some appeal, especially in complex rulemakings such as those involved in
CERCLA cases, where expedition is of particular concern and the overall program to prioritize the
clean-up of particular toxic waste sites should not be hamstrung by challenges at every decision
point.119 On the other hand, while the doctrine might spare the courts from new arguments and
the agencies from vague comments, it might also stimulate more specific “shotgun” comments to
the agency as a defense mechanism.120 Nor does the doctrine seem well suited for certain
challenges. It seems less necessary or even useful for challenging parties to raise constitutional,
procedural, or statutory authority questions to the agency before raising them in court. A
rulemaking record is less necessary in such cases and it is more likely that it would be futile to
make such arguments to the agency. Finally, even in fact-based challenges, the doctrine should
not be applied in cases where the agency has adequate notice or knowledge of the factual issues
raised by the challenger.
What about Sims v. Apfel?
Policy arguments aside, one might have thought that the Supreme Court’s refusal to apply the
doctrine to Social Security “informal” adjudication in the 2000 decision of Sims v. Apfel, might
have arrested this trend of applying it to the more informal and non-adversarial rulemaking context.
In 2004, the Ninth Circuit addressed this issue saying, “[t]he Court’s decision [in Sims] turned on
the unique nature of Social Security benefit proceedings and offers no guidance relevant to
rulemaking.”121 It then went on to apply issue exhaustion in a rulemaking context. However more
recently it did apply the Sims rationale to a Surface Transportation Board (“STB”) exemption
proceeding (which it denominated a rulemaking), on the grounds that “the STB’s procedures were
informal and provided no notice to interested parties that to later challenge the STB’s decision one
must submit comments during the exemption process. In other cases, the STB, or its predecessor
the ICC, explicitly requested public comment on exemptions.”122
The D.C. Circuit was presented with this argument in 2005 in the case of Advocates for Highway
and Auto Safety v. Federal Motor Carrier Safety Administration involving a challenge to a safety
rule applying to trucking and bus companies.123 The petitioner in the case raised several issues
that it had not made in its comments to the agency in support of its claim that the agency had acted
arbitrarily and capriciously. The government maintained that the petitioner had “waived” these
119

See generally, Lucia Ann Silecchia, Note, Judicial Review of CERCLA Cleanup Procedures: Striking a Balance to
Prevent Irreparable Harm, 20 HARV. ENVTL. L. REV. 339 (1996)
Markoff also argues that doctrine might result in a less “diverse, pluralistic array of parties represented” in postrulemaking settlement discussions taking place in the judicial review phase because less well-financed interests are
less able to participate in rulemakings. Markoff, supra note 43, at 1083–85. But without gainsaying that such
settlement discussions are a key aspect of ultimate rule implementation, wouldn’t this concern more give such groups
a greater incentive to file extensive comments more proactively in order not to lose their seat at the negotiating table?
120

121

Universal Health Servs., Inc. v. Thompson, 363 F.3d 1013, 1020 (9th Cir. 2004).

122

Alaska Survival v. Surface Transp. Bd., 705 F.3d 1073, (9th Cir. 2013).

123

429 F.3d 1136 (D.C. Cir. 2005).

25

arguments, but petitioner cited Sims for the proposition that in this kind of informal rulemaking
proceeding, “there can be no ‘waiver.’”124
Judge Edwards for the unanimous panel agreed that “Sims indicates that this administrative-waiver
doctrine does not represent an ironclad rule. And, as a general matter, a party’s presentation of
issues during a rulemaking proceeding is not a jurisdictional prerequisite to judicial review.”125
He acknowledged that petitioner’s argument that “Rulemakings are classic examples of nonadversarial administrative proceedings” was “not unreasonable, because there appears to be no
statute or regulation compelling exhaustion in advance of judicial review, and no argument has
been made analogizing the agency’s rulemaking to adjudication.”126
However, he pointed to three D.C. Circuit cases, post-dating Sims, that had continued to apply the
rule in rulemaking-review cases. In two of those cases the court failed to address Sims.127 But in
the third case, National Mining Ass’n v. Department of Labor,128 involving a challenge to the
Department of Labor’s regulations under the Black Lung Benefits Act, the court, in a one-line
dismissive conclusion, found Sims “inapplicable, for it addresses issue exhaustion, not issue
waiver.”129 That case also dealt summarily, dismissing its impact on the issue exhaustion doctrine
as “wholly inapposite” because it “addresses exhaustion of remedies, not waiver of claims.”130
To his credit, Judge Edwards blanched at this distinction: “The distinction between ‘issue
exhaustion’ and ‘issue waiver’ is illusive, to say the least. Indeed, both terms appear in the case
law without apparent distinction, and they are sometimes treated as if synonymous.”131
In the end, Judge Edwards accepted National Mining Association’s conclusion anyway, for two
reasons:
First, the courts are not authorized to second-guess agency rulemaking decisions;
rather, the role of the court is to determine whether the agency’s decision is arbitrary
and capricious for want of reasoned decisionmaking . . . . Therefore, it is
unsurprising that parties rarely are allowed to seek “review” of a substantive claim
that has never even been presented to the agency for its consideration. Second, as
noted above, “[s]imple fairness . . . requires as a general rule that courts should not
topple over administrative decisions unless the administrative body . . . has erred
124

Id. at 1148.

125

Id. (emphasis in original).

126

Id. at 1149.

Id. (citing Appalachian Power Co. v. EPA, 251 F.3d 1026 (D.C. Cir. 2001) and Nat’l Wildlife Fed’n v. EPA, 286
F.3d 554 (D.C. Cir. 2002)). However, both cases cited only pre-Sims precedent.
127

128

292 F.3d 849 (D.C. Cir. 2002).

Id. at 874. It similarly found Darby “wholly inapposite” because it “addresses exhaustion of remedies, not waiver
of claims.” Id. (citing Nat’l Wildlife Fed’n, 286 F.3d at 562).
129

130

Id. at 874 (citing Nat’l Wildlife Fed’n v. EPA, 286 F.3d 554, 562 (D.C. Cir. 2002).

131

429 F.3d 1149 (footnote omitted).

26

against objection made at the time appropriate under its practice.” L.A. Tucker
Truck Lines.132
The court’s reference to “simple fairness” makes a legitimate point, but does not go very far in
identifying the specific circumstances when issue exhaustion is most appropriate, especially in a
challenge to a rulemaking. However, Judge Edwards’ first argument that arbitrary-and-capricious
challenges should implicate application of doctrine is helpful, and points to the possibility of
applying the issue exhaustion doctrine differently in rulemaking cases depending upon the type of
challenge being made in court. This idea is discussed further below.
Other Circuits
Several other circuits have now joined the D.C. Circuit in applying the issue exhaustion doctrine
in rulemaking cases, most of them, but not all in environmental cases. Conspicuously, after
originally strongly rejecting the doctrine, the Fifth Circuit seems to be having second thoughts. In
its 1981 decision in City of Seabrook, Texas v. EPA,133 the court squarely rejected EPA’s claim
that a petitioner’s failure to object to a conditional State Implementation Plan (“SIP”) approval
during the notice-and-comment procedure prevented it from challenging the action in court:
The rule urged by EPA would require everyone who wishes to protect himself from
arbitrary agency action not only to become a faithful reader of the notices of
proposed rulemaking published each day in the Federal Register, but a psychic able
to predict the possible changes that could be made in the proposal when the rule is
finally promulgated. This is a fate this court will impose on no one.134
Moreover, the court drew a strong distinction between applying the issue exhaustion doctrine in
rulemaking and doing so in cases such as L.A. Tucker Truck Lines, which involved appeals by a
party to an essentially adversarial administrative proceeding, where a hearing was held and
evidence was received.135
The Fifth Circuit explicitly reaffirmed the Seabrook decision in 1988, in American Forest & Paper
Ass’n v. EPA,136 but in a 1998 case the court went the other way. In Texas Oil & Gas Ass’n v.
United States EPA,137 a challenge to EPA new source performance standards under the Clean
Water Act, in a footnote, and without even acknowledging the circuit precedents, the court applied
issue exhaustion to several challenges, invoking only the same L.A. Tucker Truck Lines case that
had been explicitly disavowed in the Seabrook case.138 Then in 2003, in BCCA Appeal Group v.
132

Id. at 1149 (second ellipsis in original; citations omitted).

133

659 F.2d 1349 (5th Cir.1981).

134

Id. at 1360–61 (footnote omitted).

135

Id. at 1361 n.17.

136

Am. Forest & Paper Ass’n v. EPA, 137 F.3d 291, 295 (5th Cir. 1998).

137

161 F.3d 923 (5th Cir. 1998).

138

161 F.3d at 933 n. 7.

27

EPA,139 another panel with an unusual make-up140 distinguished Seabrook and American Forest
& Paper Ass’n and followed Texas Oil and Gas. In so doing, this panel recognized the conflict,
but after citing a number of other cases, none of which involved rulemaking, it said only, “Because
the present case is distinguishable from Seabrook on the law and the facts, the court need not
resolve the conflict in the circuit at this time. Rather, the court finds Texas Oil & Gas controlling
here.”141 The Fifth Circuit’s departure from its earlier view, thus, is quite unsatisfying.
The Ninth Circuit has applied issue exhaustion in the context of an HHS Medicare reimbursement
ratemaking proceeding142 and an EPA rulemaking approving fuel standards set by a revised
Nevada SIP.143 However, more definitively, in a case considering challenges to a Bonneville
Power Administration (“BPA”) settlement with investor-owned utilities, the court noted:
As a general rule, we will not review challenges to agency action raised for the first
time on appeal. [However,] we will [generally] 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 . . . . We have
also recognized that, so long as a statute does not require exhaustion, we may
excuse waiver in exceptional circumstances.144
It explained:
BPA sought broad public participation and invited comments in these proceedings.
If we required each participant in a notice-and-comment proceeding to raise every
issue or be barred from seeking judicial review of the agency’s action, we would
be sanctioning the unnecessary multiplication of comments and proceedings before
the administrative agency. That would serve neither the agency nor the parties.145
The Third Circuit, in an opinion by then-Judge Alito, applied the issue exhaustion doctrine to a
challenge to an EPA rule that denied Pennsylvania’s request to re-designate part of the state from
139

355 F.3d 817 (5th Cir. 2003).

140

Apparently this was a panel of two, consisting of Judge Davis and a Court of International Trade Judge sitting by
designation.
141

355 F.3d at 829 n.10. Judge Stephen Williams has recently recounted this set of Fifth Circuit cases in an interesting
concurring opinion. Koretoff v. Vilsack, 707 F.3d 394, 399 n.1 (D.C. Cir. 2013) (Williams, J., concurring) (describing
the conflict as “apparently not resolved,” while acknowledging that “Seabrook’s . . . fate has wobbled”). Judge
Williams’ views on the doctrine’s application to rulemaking cases, expressed in that concurrence, are discussed text
at notes 184–203, infra.
142

Universal Health Servs., Inc. v. Thompson, 363 F.3d 1013, 1020 n.3 (9th Cir. 2004).

143

Exxon Mobil Corp. v. EPA, 217 F.3d 1246 (9th Cir. 2000). Note that the only circuit precedent cited in this case
involved the review of a Department of Labor formal adjudication. Id. at 1249 (citing Johnson v. Director, Office of
Workers’ Comp. Programs, 183 F.3d 1169, 1171 (9th Cir.1999)).
144

Portland General Elec. Co. v. Bonneville Power Admin., 501 F.3d 1009, 1023-24 (9th Cir. 2007).

145

Id. at 1024 n.13.

28

a nonattainment area to attainment status for ozone, pursuant to the Clean Air Act. Although this
was technically a rulemaking, it primarily involved the Commonwealth of Pennsylvania as the
principal “party.” After first stating that “generally, federal appellate courts do not consider an
issue that has not been passed on by the agency . . . whose action is being reviewed,”146 the court
engaged in a long analysis to determine that Pennsylvania had insufficiently raised the question in
its comments of whether EPA had acted in a timely manner on its re-designation submittal.147 The
court’s basis for the application of this doctrine was surprisingly thin. It quoted from a footnote
in a case that concerned a state seeking review of a final decision by the Secretary of Education
that made an argument for the first time in its brief.148
Even so, Judge Alito allowed the argument to be made:
This is a rule of discretion, rather than jurisdiction, however, and our practice has
been to hear issues not raised in earlier proceedings when special circumstances
warrant an exception to the general rule. . . . Since New Jersey raises an issue of
national importance, which is singularly within the competence of appellate courts
and is not predicated on complex factual determinations, we will consider the
State’s argument as to the retroactivity of the 1978 ESEA amendments.149
The Fourth Circuit, has not specifically applied the issue exhaustion doctrine in a rulemaking
review case, but has recognized the principle.150 The Sixth Circuit has applied it in the context of
Sw. Pa. Growth Alliance v. Browner, 121 F.3d 106, 112 (3d Cir. 1997) (quoting State of N.J., Dep’t of Educ. v.
Hufstedler, 724 F.2d 34, 36 n.1 (3d Cir. 1983) rev'd on other grounds sub nom. Bennett v. New Jersey, 470 U.S. 632
(1985)).
146

147

See Sw. Pa. Growth Alliance, 121 F.3d 111–112.

Hufstedler at 724 F.2d 34, 36 n.1, states: “New Jersey raises this argument for the first time in its brief upon remand.
Generally, federal appellate courts do not consider issues that have not been passed on by the agency or district court
whose action is being reviewed.” It cites Singleton v. Wulff, 428 U.S. 106, 120 (1976), but Singleton merely states,
“it is the general rule, of course, that a federal appellate court does not consider an issue not passed upon below.”
Moreover, no agency action was at issue in Singleton.
148

149

Hufstedler, 724 F.2d 34, 36 n.1 (citations omitted).

150

1000 Friends of Md. v. Browner, 265 F.3d 216, 228 (4th Cir. 2001). This case involved an EPA approval of a
revised motor vehicle emissions budget (“MVEB”) for the Baltimore area submitted by Maryland to meet the
attainment criteria applying to its State Implementation Plan under the Clean Air Act. The environmental group
challenged the approval on the ground that additional modeling was needed. EPA raised the issue exhaustion defense.
The court, after ruling that, for jurisdictional purposes, the case did not involve a rulemaking challenge, id. at 224,
said that the issue exhaustion rule (which it characterizes as the “waiver rule”) has been rather routinely applied in
cases similar to this one. Id. at 228 n.7 (citing Mich. Dep’t of Envtl. Quality v. Browner, 230 F.3d 181, 183 n.1 (6th
Cir. 1996); Military Toxics Project v. EPA, 146 F.3d 948, 956–57 (D.C. Cir. 1998); Natural Res. Def. Council v. EPA,
25 F.3d 1063, 1073–74 (D.C. Cir. 1994)). But then the court concluded that “the comments made by the Petitioner
sufficiently raised the question of whether additional modeling was required.”
While the Petitioner’s comments do not include a separately delineated section devoted to a claim
that the revised MVEB cannot be approved without additional modeling and perhaps are phrased
somewhat generally, the comments nonetheless refer (at least implicitly) to photochemical grid
modeling three times, twice mentioning the process by name. Although the Petitioner stated in its
comments that the modeling question would be “addressed more comprehensively” in other
comments directed to another EPA action, this statement does not, as the EPA contends, suggest

29

an EPA rulemaking to disapprove Michigan’s revisions to its SIP under the Clean Air Act—
technically a rulemaking proceeding, but not one covered by the Act’s issue exhaustion
provision.151 However, in a later case, it indicated it was not prepared to apply this rule broadly to
all rulemaking cases:
There are cases involving environmental law determinations that fall on the
rulemaking side of the rulemaking/adjudication dichotomy for certain purposes
holding that a party challenging a rule can waive an issue by not making a comment
on point during the comment period [citing the Michigan case among others].
However, all of these cases nonetheless contain some characteristics of
adjudications, and should not be applied broadly.152
In two recent cases, involving the EPA Clean Air Act provision and the FCC provision involved
in the WATCH case, discussed above, the Tenth Circuit has applied issue exhaustion in rulemaking.
In In re FCC 11-161,153 challengers to an FCC rulemaking were deemed to have waived challenges
to aspects of the rule that were not raised with sufficient specificity in their petition for
reconsideration.154 And in Oklahoma v. United States EPA,155 the court reached the same result
in an action challenging EPA’s rejection of the state’s SIP and the issuance of a Federal
Implementation Plan to limit the emissions of sulfur dioxide. The court rejected three of the
petitioners’ arbitrary-and-capricious arguments because they were not raised with “reasonable
specificity” during the public comment period.156
Possible Limits to Applying the Doctrine in Rulemaking Cases
Despite this increasing acceptance of the doctrine among the circuits, there have been some limits.

that the Petitioner was expressly declining to raise the issue in this action. Instead, the statement
merely placed the EPA on notice that the issue would also be raised in connection with the other
action. We therefore conclude that the Petitioner’s comments sufficiently raised the question of
whether additional modeling was required before the revised MVEB could be deemed adequate,
and we now proceed to address the merits of this question.
Id. at 228.
Mich. Dep’t of Envtl. Quality, 230 F.3d at 183 n.1 (“Petitioners also argued that the EPA approved similar rules in
other states and the EPA’s rulemaking violates the Regulatory Flexibility Act, 5 U.S.C. §§ 601–612 (2000). However,
petitioners failed to sufficiently raise these issues during the comment period and thus have waived them for purposes
of appellate review.).
151

152

Citizens Coal Council v. EPA, 447 F.3d 879, 904 n.25 (6th Cir. 2006) (en banc).

153

753 F.3d 1015 (10th Cir. 2014).

154

Id. at 1063–64.

155

723 F.3d 1201 (10th Cir. 2013).

156

Id. at 1214–15, 1220–22.

30

Futility Exception
At least one district court has recognized and applied a futility exception. In Comite De Apoyo A
Los Trabajadores Agricolas v. Solis,157 the court held that the agency cannot complain that
challenger had failed to comment on an issue when the agency rejected similar comments from
others as outside the scope of the rulemaking. And even in a Clean Air Act case, the D.C. Circuit
allowed challenges by petitioners who failed to raise a particular issue in the rulemaking when the
application of the rule to the challengers was not clear and the agency had denied a petition for
reconsideration.158 In that case, the per curiam court wrote:
While we certainly require some degree of foresight on the part of commenters, we
do not require telepathy. We should be especially reluctant to require advocates for
affected industries and groups to anticipate every contingency. To hold otherwise
would encourage strategic vagueness on the part of agencies and overly defensive,
excessive commentary on the part of interested parties seeking to preserve all
possible options for appeal. Neither response well serves the administrative
process.159
The “Agency is Already on Notice” Exception
In the long-running litigation over EPA’s authority to curtail air pollution in upwind states, the
D.C. Circuit twice overturned EPA rules. In 2008 the court overturned (but did not vacate) the
EPA’s Clean Air Interstate Rule (“CAIR”) in North Carolina v. EPA.160 One of the key bases for
its overturning of the rule was that “EPA may not use cost to increase an upwind State’s obligation
under the good neighbor provision—that is, to force an upwind State to ‘exceed the mark.’”161
After remand, the EPA produced its Cross-State Air Pollution Rule which used modeling to
produce annual emission budgets for each upwind state. Industry and state petitioners challenged
the rule, suggesting that the agency had improperly determined which states would “contribute
significantly” to downwind states’ non-attainment of air quality standards, and the court agreed.162
More specifically the court found that EPA lacked the statutory authority for its conclusion that
“an upwind State that exceeded the significance threshold at even one downwind State’s receptor
was drawn wholesale into the Rule’s second stage—cost-based emissions reductions.”163 Judge
Rogers dissented arguing, among other things, that the petitioners had not made that argument in

157

No. 09–240, 2010 WL 3431761, at *18 (E.D. Pa. 2010).

158

Portland Cement Ass’n v. EPA, 665 F.3d 177, 186 (D.C. Cir. 2011).

159

Id.

531 F.3d 896 (D.C. Cir. 2008) (per curiam). The court later issued a ruling that it would not vacate the rule “for
EPA to conduct further proceedings consistent with our prior opinion” 550 F.3d 1176, 1178.
160

161

531 F.3d at 390–91.

EME Homer City Generation LLP v. EPA, 696 F.3d 7 (D.C. Cir 2012), rev’d EPA v. EME Homer City Generation
LLP, 134 S. Ct. 1584 (2014).
162

163

696 F.3d at 23.

31

the underlying rulemaking, in violation of the Clean Air Act’s issue exhaustion provision.164 For
the majority, Judge Kavanaugh explained that EPA was on notice due to the court’s earlier North
Carolina opinion: “In sum, EPA knew from the beginning that it was required to comply with
North Carolina, including that part of the Court’s holding on which petitioners rely here.”165 He
added the additional ground that “EPA considered—and rejected—precisely the same argument
in [the] CAIR [rulemaking].”166
The Supreme Court reversed the D.C. Circuit and upheld the rule on the merits, but only briefly
addressed the issue exhaustion claim.167 First the court held that the Clean Air Act provision,
although “mandatory” was not “jurisdictional.”168 It then shrugged off the need to decide this issue
because EPA had not “pursued [this] argument vigorously before the D.C. Circuit.”169 It did this,
despite an unacknowledged amicus brief by a group of law professors devoted entirely to urging
the Court to invoke the issue exhaustion argument against the respondents in the case.170
The Agency’s Response to a Comment Showed Awareness of the Issue
In NRDC v. EPA,171 a challenge to an EPA rule under the RCRA, which has no statutory
exhaustion provision, the court found that the petitioners comments did not properly raise the
question of EPA’s statutory authority to adopt a “comparable fuel exclusion” from coverage by
the Act, but “[n]onetheless, EPA’s response to [a commenter’s] comment suggests that EPA
understood [that comment] to challenge EPA’s statutory authority to exclude comparable fuels in
the first place and affirms its authority to do so. . . . Thus, the issue was expressly addressed by
EPA and is properly before the court.”172
Agency Has Duty to Examine Key Assumptions as Part of Its Affirmative Burden of Promulgating
and Explaining a Non-Arbitrary, Non-Capricious Rule
In NRDC v. EPA, the court applied an alternative ground for not applying issue exhaustion to
petitioners. It stated, “Moreover, even if a party may be deemed not to have raised a particular
argument before the agency, EPA retains a duty to examine key assumptions as part of its
affirmative burden of promulgating and explaining a nonarbitrary, non-capricious rule and
164

Id. at 52–54 (Rogers, J., dissenting).

165

Id. at 24 n.18.

166

Id.

167

EPA v. EME Homer City Generation LLP, 134 S. Ct. 1584, 1602–03 (2014).

168

Id. at 1602.

Id. at 1603. The Court acknowledged that “Had EPA pursued the “reasonable specificity” argument vigorously
before the D.C. Circuit, we would be obligated to address the merits of the argument.” Id. It should be noted that the
two dissenting Justices specifically “agree[d] with the majority’s analysis turning aside EPA’s threshold objections to
judicial review.” Id. at 1610 n.1 (Scalia J. dissenting).
169

170

Amicus Curiae Brief of Law Professors on Issue Exhaustion in Support of Petitioners, 2013 WL 4875111.

171

755 F.3d 1010 (D.C. Cir. 2014).

172

Id. at 1022.

32

therefore EPA must justify that assumption even if no one objects to it during the comment
period.”173
Lack of Notice to Commenter that Issue Needed to be Raised in the Comments—Logical Outgrowth
Challenges
In the Fifth Circuit’s City of Seabrook case, the court made the oft-quoted statement that a strict
application of issue exhaustion in rulemaking might require a prospective litigant to be a “psychic
able to predict the possible changes that could be made in the proposal when the rule is finally
promulgated.”174 This relates to the requirement that agencies give adequate notice to the public
about its proposed rule, and to the corollary that if an agency final rule deviates too far from the
terms of the proposed rule, the agency should re-propose the rule. The test that courts use to
determine this procedural challenge is the “logical outgrowth test”—whether the final rule is a
logical outgrowth of the proposed rule such that commenters should have fairly anticipated that an
agency might go there.175
The relevance to the issue exhaustion doctrine should be apparent. If there is a true logical
outgrowth problem, it would be illogical to require a challenger raising this procedural failure to
have made this argument before the agency, and I have not found any cases where the government
raised such a defense. However, it is possible that in some circumstances, a litigant may make the
similar claim that there was no reason to suspect that such an issue was going to be presented by
the agency’s rule until it was too late to comment. This argument did prevail in a review of an
STB adjudication in Riffin v. Surface Transportation Board.176 Riffin petitioned for review of a
decision by the STB after the Board rejected his application for a certificate authorizing the
acquisition and operation of a length of railroad track. In the proceeding below, Riffin had
included in his application a reservation about shipping certain hazardous materials. The Board
sought comment, and a commenter objected, raising the argument that the application was
incomplete and defective. The Board noted that comment but rejected the application because the
application’s reservation violated the statutory duty of common carriers to transport hazardous
material where appropriate agencies have promulgated comprehensive regulations. Riffin sought
review on the ground that he had a common-law right to not carry hazardous materials, but the
government sought to prevent him from making the argument because he hadn’t made it before
the STB. The D.C. Circuit rejected that position, ruling that because “the Board sua sponte raised
the hazardous materials issue in its Decision without first providing Riffin an opportunity to
address the issue,” “Riffin had no reason to think he had to make his common-law arguments part
of his application to the Board.”177

173

Id. at 1023 (internal quotations and citations omitted).

174

659 F.2d at 1361. The case is discussed, text at notes 133–41 supra.

175

See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 174 (2007). See generally, JEFFREY S. LUBBERS, A
GUIDE TO FEDERAL AGENCY RULEMAKING 258–68 (5th ed. 2012)
176

733 F.3d 340 (D.C. Cir 2013).

177

Id. at 343–44.

33

Constitutional Issues and Other Cases Where the Court Doesn’t Need the Agency’s View
Because agencies cannot determine constitutional questions, courts normally feel that they can
decide such issues without requiring the petitioner to have presented the issue to the agency first.
In some sense this thinking relates to the futility exemption. A recent high profile case involving
the National Labor Relations Act’s strong issue exhaustion provision178 illustrates this. The Noel
Canning Company had been found by the Board to have committed an unfair labor practice. Only
at the court level did it make the argument that the Board was improperly constituted due to a lack
of a quorum because several members had not been properly appointed under the Recess
Appointment Clause of the Constitution. The D.C. Circuit, before addressing the constitutional
issue raised sua sponte the issue exhaustion provision and decided that “the objections before us
concerning lack of a quorum raise questions that go to the very power of the Board to act and
implicate fundamental separation of powers concerns. We hold that they are governed by the
‘extraordinary circumstances’ exception to the 29 U.S.C. § 160(e) requirement and therefore are
properly before us for review.”179
A similar example is presented by Kuretski v. Commissioner180 where a taxpayer was allowed to
raise a new constitutional argument in a motion for reconsideration to the Tax Court. The
contention was that the statutory provision allowing the President to remove Tax Court judges
violated separation-of-powers principles. The D.C. Circuit allowed this, citing Freytag v.
Commissioner181: “Just as the Supreme Court in Freytag elected to consider a belated
constitutional challenge to the validity of a Tax Court proceeding, . . . we do so here. In Freytag,
as here, the petitioners raised a nonfrivolous constitutional challenge to the validity of a Tax Court
proceeding after the Tax Court’s initial decision, and the petitioners’ claim implicated the federal
judiciary’s strong interest in maintaining the separation of powers.”182
Another example of a case where the court felt it was not necessary to require issue exhaustion on
a purely legal, quasi-constitutional issue is Action for Children’s Television v. FCC, discussed
earlier, where the court said, “That objection, however, essentially alleging a denial of
administrative due process, raises neither a novel factual issue for which an initial Commission
determination is quite clearly both necessary and appropriate, nor a legal issue on which the
Commission, and even this court has not already made known its general views to the contrary.”183

178

See page 6, supra, for the statutory text.

Noel Canning v. NLRB, 705 F.3d 490, 497 (D.C. Cir. 2013), aff’d NLRB v. Noel Canning, 134 S. Ct 2550 (2014).
The Supreme Court did not address the issue-exhaustion issue.
179

180

755 F.3d 929, 943 (D.C.Cir.2014).

181

501 U.S. 868 (1991).

182

Kuretski, 755 F.3d at 937.

183

Action for Children’s Television v. FCC, 564 F.2d 458, 469 (D.C. Cir. 1977).

34

The Koretoff Case and Judge Williams’ Qualms
Judge Stephen Williams has also recently sounded some alarm bills on the extension of this
doctrine to rulemaking in Koretoff v. Vilsack,184 a pre-enforcement challenge to a Department of
Agriculture rule issued under the authority of an almond marketing order.185 The challengers made
a series of arguments to the district court “that the rule exceeded the Secretary’s authority under
both the [statute] and the Almond Order,”186 and also that the Secretary had failed to make one of
the statutorily required findings. The district court allowed the ultra vires argument to be made,
but ruled against the challenge on the merits; that court also found that the challengers had
“waived” their other argument by failing make it in its comments to the agency. On appeal, the
government argued that under Advocates for Highway and Auto Safety,187 all the arguments should
be disallowed, and the D.C. Circuit, after closely examining whether the challengers had actually
made these arguments before the agency, agreed. However, it did throw the challengers a lifeline
by concluding at the end of the opinion, “We emphasize that nothing in this opinion affects the
producers’ ability to raise their statutory arguments if and when the Secretary applies the rule.188
In carving out this exception for an as-applied challenge, the court cited Murphy Exploration &
Production Co. v. U.S. Department of Interior.189 In Murphy, the court had held that a failure to
challenge a rule while participating in rulemaking proceedings did not estop a challenger from
challenging the rule in a separate proceeding in which the rule was being applied. In that case, the
court recognized that “because administrative rules and regulations are capable of continuing
application, were we to limit review to the adoption of the rule without further judicial relief at the
time of its application, we would effectively deny many parties ultimately affected by a rule an
opportunity to question its validity.”190
Judge Williams concurred in Koretoff, but in a separate opinion expressed some doubts about the
developing doctrine:

184

707 F.3d 394 (D.C. Cir. 2013).

185

Petitioners had claimed in district court that the formal rulemaking procedures required to issue or amend a
marketing order were required. See 7 U.S.C. § 608c(15)(A)&(B) (providing that any handler subject to an order may
file a petition with USDA alleging a violation of law, seeking a modification or exemption, and requesting a hearing;
rulings on such petitions are reviewable in federal district court). The D.C. Circuit had earlier held that this rule was
not an amendment to the order, but instead constituted minimum quality and inspection requirements. Koretoff v.
Vilsack, 614 F.3d 532, 539 n.3 (D.C. Cir. 2010). Therefore this was an informal rulemaking and the statutory
exhaustion requirement did not apply.
186

Koretoff, 707 F.3d at 397.

187

See note 123, supra.

188

Id. at 399.

270 F.3d 957, 958 (D.C. Cir. 2001) (“Nothing . . . prevents [plaintiff] from pursuing its claim in a second forum,
i.e., apart from the original rulemaking, if such a forum is otherwise available. As we have held before, such a forum
is available to a party when a rule is brought before this court for review of further agency action applying it.” (internal
quotation marks omitted in original)).
189

190

Id. at 958–59 (internal quotations omitted).

35

I write 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, and that that pattern itself may
unfairly disadvantage parties that generally are not well represented by interest
groups.191
He first recognized the different view proffered by the Fifth Circuit in the Seabrook case, and
chastised the government for, in its brief in this case, “stretch[ing] the principle still further,
throwing into the hopper a case involving an adjudication rather than a rulemaking, even though
parties to a litigation obviously have a far clearer burden to speak up to protect their interests than
do all of the potentially millions of persons that may be affected by a rulemaking.”192
Then, focusing on the court’s recognition that an “application challenge” would be allowed, he
pointed out that in the Murphy case cited for that exception the court had
[drawn] an analogy to our cases holding that a party’s missing a statutory deadline
for facial review of a regulation would not bar its challenge on “review of further
[agency] action applying it.” Of course where a statute specifically precludes even
an application challenge if the claim was not timely raised before the agency, we
necessarily honor the statute unless the challenger poses a valid constitutional
objection.193
He concluded:
Generally speaking, then, the price for a ticket to facial review is to raise objections
in the rulemaking. This system probably operates quite well for large industry
associations and consumer or environmental groups (and the firms and individuals
thus represented). But for some the impact is more severe. Firms filling niche
markets, for example, as appellants appear to be, may be ill-represented by broad
industry groups and unlikely to be adequately lawyered-up at the rulemaking stage.
As the Fifth Circuit observed, we presumably do not want to “require everyone who
wishes to protect himself from arbitrary agency action not only to become a faithful
reader of the notices of proposed rulemaking published each day in the Federal
Register, but a psychic able to predict the possible changes that could be made in
the proposal when the rule is finally promulgated.”194
Then he proposed a solution:

191

707 F.3d at 399 (Williams, J., concurring).

192

Id. at 399–400 (citing Orion Reserves Ltd. P’ship v. Salazar, 553 F.3d 697 (D.C. Cir. 2009)).

193

707 F. 3d at 400 (citing Murphy Exploration, 270 F.3d at 958).

194

Id. at 401 (quoting City of Seabrook, Tex. v. EPA, 659 F.2d 1349, 1360–61 (5th Cir.1981).

36

A decision of our court has suggested a principle that would open the door to facial
challenges by such mavericks. In an [earlier vacated decision195] we said that where
a party had participated in the rulemaking, “it made sense to speak of [the party’s]
failure to raise [its argument] below.” But that could not rightly be said where there
was no indication that the plaintiff had participated in the rulemaking in any way.
Thus we found no waiver.
Such a principle would provide facial review for parties who don’t bother to
participate in the rulemaking—probably a group largely coincident with parties
who fail to anticipate its inflicting serious costs on their interests. . . . The argument
for allowing facial review under these circumstances is of course at its strongest
where the issue posed cannot require a remand to the agency (e.g., a claim under
Chevron’s “first step”) and the hardship to the plaintiff from delay is especially
acute.196
This idea of limiting the issue exhaustion rule to parties who actually participated in the rulemaking
is worth considering. It has the advantage of being easy to apply,197 but there is a real risk that
some participants might game the system. In a parenthetical, Judge Williams acknowledges “there
would be some risk that the rule might induce strategic behavior expanding that group: nonparticipation in order to get facial review without disclosing one’s position to the agency.”198 But
“It’s not clear that such a strategy presents many advantages.”199
One problem with Judge Williams’ approach is that numerous courts (including the D.C. Circuit)
have completely precluded certain petitioners from obtaining judicial review of rules where they
found that that the petitioner had been aware of the rulemaking but had chosen not to participate.200
To reconcile this line of cases with Judge Williams’ suggestion would require courts to engage in
examination of the intentions or bad faith of such petitioners.
195

The case is an earlier round of the Murphy Exploration litigation, Murphy Exploration & Production Co. v. U.S.
Department of Interior, 252 F.3d 473 (D.C. Cir. 2001) (vacated). In Koretoff, Judge Williams explained the vacation
thusly:
After the opinion was issued, the government submitted evidence that the challenger had, in fact,
participated in the rulemaking proceeding, and the panel—in the Murphy decision cited earlier—
vacated the relevant part of the opinion. See Murphy, 270 F.3d at 958. The panel’s reasoning, of
course, remains available to future panels.”
707 F.3d 401.
196

Id. (citations omitted).

197

This would be much simpler for the court to determine than the proposal suggested by Gabriel Markoff, which
would limit issue exhaustion to rulemakings “where participation had been sufficiently pluralistic, Markoff, supra
note 43 at 1086, which would require courts to “examine the substance of the comments themselves in order to
determine whether competing viewpoints on the proposed rule had been offered.” Id. at 1087.
198

707 F.3d 401.

199

Id.

200

Gage v. AEC is one of those cases, see text at notes 54–60, supra. See also Spencer, supra note 40, at 657 and
cases cited in his article at n. 197.

37

Professor Levin also blanches at the idea of giving preference to non-participants over participants:
To me, it is counterintuitive to give a person who diligently participated in a
rulemaking proceeding fewer rights than a person who sat on the sidelines. The
former would rightly regard this situation as unfair. We should seek to encourage
potentially affected persons to file comments – thus, courts would be sending the
wrong message if they were to adopt an exhaustion rule that made commenters
worse off than non-commenters.201
He also elaborates on another type of “strategic behavior” that could be encouraged by such a
differentiation:
The practical implications of the proposal are also troubling. Do we want to give a
disgruntled commenter an incentive to recruit a non-commenter straw plaintiff to
bring a judicial review proceeding to litigate contentions that the commenter is not
permitted to litigate directly? If appeals by a commenter and a noncommenter are
consolidated, should there be issues that only the latter is permitted to brief?202
I agree with the concerns that led Judge Williams to propose making the doctrine inapplicable to
parties who did not participate in the rulemaking, but agree with Professor Levin’s view that a
better goal is “to make the non-commenter no worse off than the person who commented—not to
make him better off.”203 The guiding principles that close this paper seek to advance that goal.
I believe that the issue exhaustion doctrine, while perfectly appropriate as applied to adjudication
raises problems in the rulemaking context if it is applied across the board. As Markoff has argued:
Rulemakings do not involve the rights of a few parties; the rules ultimately
promulgated affect the physical and economic health and well-being of the entire
United States and may have international effects as well. Thus, when a meritorious
argument is procedurally barred, it is society at large who suffers for it—not only
the individual petitioner. Further, unlike in adjudicatory proceedings, where the
parties are contesting their specific interests, there is no guarantee that the parties
that participate in rulemakings will be representative of the general interests at
stake—a possibility supported by the empirical evidence of imbalanced
participation.204

201

Letter from Ron Levin, supra note 51, at 5.

202

Id. at 5–6

203

Id. at 6.

204

Markoff, supra note 43, at 1086.

38

Ossification Effects and Other Policy Arguments
As one who has been a consistent worrywart about increasing ossification of rulemaking,205 while
also generally favoring broader access to judicial review, I should address whether how issue
exhaustion affects those two, sometimes conflicting, values.
As discussed above, several judges have suggested the doctrine potentially has a “force-feeding
effect” of inducing people to comment on every possible issue they might potentially want to raise
in court, which could make the agency’s rulemaking task (and the courts’ task on judicial review)
that much harder.206 While I support the notice-and-comment process, I would not want
commenters to feel they have to file “shotgun” comments in an effort to inoculate themselves from
later issue-exhaustion defenses.
Professor Wagner, who has cautioned about information overload in agency proceedings,207
believes that issue exhaustion in rulemaking is a contributing factor:
The courts’ demand that parties exhaust their administrative remedies was
originally conceived of as a way to save agency resources, both by avoiding
“premature interruption” of the rulemaking process and by bringing the courts into
the picture only as a last resort. But when viewed from the perspective of
information, this requirement actually increases the burden on agencies. In order
to preserve their claims, rational parties will react by erring on the side of providing
too much rather than too little information. Indeed, the rule suggests not only that
a party must file a comment before it can litigate but also that it must file that same,
specific comment before raising it in court. If a party neglects to raise an argument
during the comment period, however preliminarily, it is generally foreclosed from
raising the issue later. Because the threat of litigation may be the only, or at least
the best, way for stakeholders to get the agency's attention during the rulemaking
process, they have strong incentives to lay the groundwork for future legal action
by including every plausible argument in their comments.
Additionally, and more worrisome from the standpoint of information excess, the
courts have held that more general comments from affected parties--even if lodged
in writing and on time—are usually not material enough to matter legally. To
preserve issues for litigation, affected parties are thus best-advised to provide
comments that are specific, detailed, and well documented. This seemingly
205

See e.g., Jeffrey S. Lubbers, The Transformation of the U.S. Rulemaking Process—For Better or Worse, 34 OHIO
NORTHERN. L. REV. 469 (2008).
See Portland Cement Ass’n v. EPA, 665 F.3d 177,186 (D.C. Cir. 2011); Portland General Elec. Co. v. Bonneville
Power Admin, 501 F.3d 1009, 1024 n. 13 (9th Cir. 2007).
206

207

Wendy E. Wagner, Administrative Law, Filter Failure, and Information Capture, 59 DUKE L.J. 1321, 1322–23
(2010) (“Rather than filtering information, the incentives tilt in the opposite direction and encourage participants to
err on the side of providing too much rather than too little information. Evidence is then offered to show how this
uncontrolled and excessive information is taking a toll on the basic objectives of administrative governance.”

39

reasonable requirement for specificity again encourages interested parties to
provide too much documentation, too many specifics, and too much detail, rather
than too little.208
Another concern is that issue exhaustion seems to exacerbate the already existing tendency for
commenters to submit comments at the last possible time in the comment period.209 This strategy
apparently has taken root in NEPA proceedings already.210
On the other hand, as Professor Levin argues, the agencies (and, one would have to add, the
Department of Justice) support the issue exhaustion doctrine and would prefer to be able to pass
on issues rather than be confronted with them for the first time in court. As he pithily put it, “I
think they would prefer the shotgun to the sandbag any day.”211
This paper cannot resolve that question, but I think the competing views argue for a middle ground
approach. In some contexts, issue exhaustion makes sense and serves the administrative process
and in others it may work too much unfairness or needless formality. The guiding principles at
the end seek to help draw this line.
A related issue is that issue exhaustion may benefit well-resourced commenters at the expense of
groups that cannot afford to monitor every rulemaking that might affect them. Although some
statutes and cases allow for extraordinary circumstances or reasonable grounds for failure to
exhaust, these safety valves will likely not be of much use for the low-resourced commenter who
simply cannot afford to participate.
While my concern for such participants was fueled by my reading of Judge Williams’ concurrence
in Koretoff, he explained to me that that “lack of resources is only a part of it,” and that he was
“thinking of firms that have interests that are not well aligned with the weight of industry
208

Id. at 1363–64 (footnotes omitted).

209

See Steven J. Balla, Public Commenting on Federal Agency Regulations: Research on Current Practices and
Recommendations to the Administrative Conference of the United States, Admin. Conference of the U.S., 31 n.(Mar.
15, 2011) pdf (finding that one third of comments in a sample of rulemakings were filed in the last three days of the
comment period and “analytically informative” comments were even more likely to be filed at the end), available at
https://www.acus.gov/sites/default/files/documents/Consolidated-Reports-%2B-Memoranda.
210

E-mail to author from Elizabeth Lewis, former Oceana law clerk (Mar. 17, 2015) (describing the commonly held
view that in order to best position itself for potential issue-exhaustion battles in court it was strategically beneficial to
submit factual comments in NEPA proceedings at the end of the comment period to avoid tipping off opposing
participants about issues that might later be litigated). However, this raises the question of whether, in the absence of
the issue-exhaustion doctrine, the strategy would be to submit such comments earlier (or not at all).
Letter from Ron Levin, supra note 51 at 4. The Supreme Court has expressed its concerns about “sandbagging”
by lawyers appealing lower court losses. It first used the term in Wainwright v. Sykes, 433 U.S. 72, 89 (1977), to refer
to actions “on the part of defense lawyers, who may take their chances on a verdict of not guilty in a state trial court
with the intent to raise their constitutional claims in a federal habeas court if their initial gamble does not pay off.” In
Pickett v. U.S., 556 U.S. 129, 134 (2009), the Court, citing Wainwright, referred to it in the context of “the
contemporaneous-objection rule,” which the Court said “prevents a litigant from ‘sandbagging’ the court—remaining
silent about his objection and belatedly raising the error only if the case does not conclude in his favor. See also Stern
v. Marshall, 131 S. Ct .2594, 2608 (2011) (applying doctrine to failure to raise an issue in the Bankruptcy Court).
211

40

viewpoints, which is likely to be true in any industry with a heterogeneous distribution of firms.”212
Thus, he suggested that the concern in the ACUS recommendation be “for persons or firms whose
interests are not in close alignment with those persons or firms dominating the associations
representing group viewpoints and who reasonably do not find it worthwhile to engage in
continuous monitoring of the agency in question.”213
In any event, the upshot is that it is likely that some unwary potential petitioners are going to be
thwarted by the issue exhaustion doctrine, and the litigated cases are probably the tip of the iceberg.
As Markoff speculates, “the most important direct effect of issue exhaustion is not in those few
dozen cases that are actually adjudicated and barred by the doctrine; it is in the hundreds of cases
that are likely never filed because the parties know that they would be barred by the doctrine
because they were unable to file comments earlier in the rulemaking process.”214
Obviously there are even stronger fairness concerns in applying the doctrine to a court challenger
that did not know about the rulemaking until it was over or didn’t even exist at the time. Perhaps
a looser application of the doctrine when a rule is challenged in the enforcement context, as the
Koretoff court suggested, would help here.215 I could not, however, find any reported enforcement
cases where the issue exhaustion issue had been raised. Indeed, Professor Levin noted216 that he
had seen only two opinions in which issue exhaustion has been discussed in a rulemaking case that
did not arise on direct review: Murphy Exploration, discussed above in connection with Koretoff,
and Dobbs v. Train,217 But as he pointed out:
Neither of these was an enforcement case. In each, litigation was initiated by the
challenger. The government pleaded the rule defensively, and the challenger
responded by claiming the rule was invalid. And in each case it turned out that the
challenger had not only known about the rule all along, but had actually participated
in the rulemaking proceeding. Surprise, whether fair or unfair, wasn’t involved at
all.218

212

Letter to author from Judge Stephen Williams (April 27, 2015) in connection with the ACUS Committee on Judicial
Review consideration of recommendations derived from this report.
213

Id.

214

Markoff, supra note 43, at 1083.

215

Parties subject to an agency enforcement action based on a rule may challenge the rule, although sometimes
Congress seeks to bar such challenges if a party fails to meet a statutory deadline for a pre-enforcement review. But
even where a deadline was missed, courts will allow certain types of challenges to be heard in an enforcement
challenge, see e.g., Adamo Wrecking Co. v. U.S., 434 U.S. 275 (1978) (allowing challenge to rule in criminal
prosecution notwithstanding 30-day limitation on judicial review imposed by the Clean Air Act). See also ACUS
Recommendation 82-7, Judicial Review of Rules in Enforcement Proceedings, 47 Fed Reg. 58,208 (Dec. 30, 1982),
and Ronald M. Levin, Statutory Time Limits on Judicial Review of Rules: Verkuil Revisited, 32 CARDOZO L. REV.
2203 (2011).
216

E-mail from Professor Levin to author and to ACUS staff attorney Stephanie Tatham, April 4, 2015.

217

409 F. Supp. 432, 434-35 (N.D. Ga. 1975), aff’d sub nom. Dobbs v. Costle, 559 F.2d 94 (5th Cir. 1977).

218

E-mail from Professor Levin to author and to ACUS staff attorney Stephanie Tatham, April 4, 2015.

41

One should also think about the effect on the courts. On the one hand, a strict application of the
doctrine can keep cases or issues out of court entirely. In that sense it may relieve the burden on
courts—but that argument surely proves too much because it could be used to severely limit other
access-to-review doctrines such as reviewability, standing, ripeness and finality as well.
Moreover, the doctrine clearly forces courts to make tough calls on whether the disputed issue had
been adequately presented to or known by the agency. I found numerous cases where courts felt
compelled to spend a lot of time and effort examining the record and making fine distinctions
about whether challenger had raised the issue with sufficient specificity in the rulemaking.
Does the Type of Challenge Matter?
Of course there are many different types of court challenges to rulemaking. Under the APA,
petitioners for review can challenge agency rules as (1) unconstitutional, (2) ultra vires, (3) the
product of a procedurally defective rulemaking, or (4) arbitrary and capricious. Such challenges
can typically be made either pre-enforcement or as a defense to an enforcement action. The
GELLHORN & BYSE CASEBOOK usefully breaks down the possible types of rulemaking challenges
into five:
(1) facial constitutional and statutory authority for the rule (which usually can be
determined without any need for an administrative record); (2) procedural
compliance in the rulemaking; (3) factual support for and judgment reasonability
of the rulemaking; (4) as-applied constitutional and statutory for the rulemaking;
(5) other issues unique in the particular enforcement context.219
It then concludes that challenges 4 and 5 would rarely if ever be ripe for review until the
enforcement stage, at which point the rule would be challengeable in court unless there were
available opportunities to do so in an agency adjudication.220 It concludes that type 1 would be
“most unlikely to implicate exhaustion concerns,”221 leaving types 2 and 3, and asks rhetorically
“isn’t it sensible to insist that someone in the rulemaking must prominently have raised them?”222
I would suggest that many procedural challenges need not be subject to the issue exhaustion
doctrine, since the APA requirement that the challenger show “prejudicial error”223 along with the
presumption that agencies should know the procedural requirements in their own statutes and
regulations should provide sufficient bounds and grounds for such challenges. This is not to
dispute that it is often beneficial for rulemaking participants to raise procedural issues in their
comments, so that agencies can address the problem. On the other hand, some procedural
requirements found in the APA or other government-wide procedural statutes are or should be
clearly held in mind by the agencies in all rulemakings. Moreover, some procedural challenges
219

GELLHORN & BYSE CASEBOOK, supra note 4, at 1245.

220

Id. at 1245–46. See note 39 supra. But see the discussion supra, text at notes 215–18.

221

Id. at 1246.

222

Id. at 1247.

223

5 U.S.C. § 706(2).

42

cannot logically be raised during the comments. For example, a “logical outgrowth” challenge,224
based on a lack of fair notice in the notice of proposed rulemaking that the agency was considering
an issue that was later added in the final rule, could not by its nature have been raised until the
final rule was issued.225
However, I agree that arbitrary-and-capricious challenges should perhaps be viewed differently.
In such cases there may be a basis for concern that an overly permissive policy might defeat the
twin purposes of the general exhaustion doctrine, namely to ensure that the agency has had the
opportunity to bring its expertise to bear on the issue before it comes to court, and that courts are
spared from having to hear issues that could have been resolved at the agency. On the other hand,
we must also remember that rulemaking is a process designed for broad participation, including
by those who are unrepresented by counsel, and who may frame their comments “in non-legal
terms rather than precise legal formulations.”226
Conclusion
Since 2000 when Professor Funk wrote that “courts are hopelessly confused” on the subject of
issue exhaustion in rulemaking, I don’t things have improved much. The Supreme Court has yet
to opine on the appropriateness of issue exhaustion in rulemaking. The doctrine has garnered
increasing acceptance in the D.C. Circuit and spotty acceptance in other circuits. But a close
review of the cases shows that that many of them either involve the Clean Air Act, in which the
doctrine is statutory, or involve either rulemakings of particular applicability or rulemakings
conducted under quasi-adjudicative procedures, or are based on precedents that stem from the
application of issue exhaustion in agency adjudications or in challenges to NEPA assessments.
And the D.C. Circuit’s recent Koretoff case has raised the possibility of limiting the doctrine to
pre-enforcement review cases—thus preserving the right for parties to raise previously
unpresented issues in a defense to rule-enforcement. In short, for the most part, the issue
exhaustion doctrine is a prudential doctrine originally designed to apply to court challenges to
agency adjudications, and it does not comfortably fit most challenges to agency rulemakings
Courts still do not devote enough attention to the fact that most of the statutes and judicial
precedents derive from remedy exhaustion statutes or at least statutes governing agency
adjudication. Courts are inconsistent on the subject of whether the formal/informal distinction
raised in Sims should be dispositive. They are also inconsistent on whether the type of legal
challenge to the rulemaking matters. Given all this, it is perhaps not surprising that it is possible
224

See e.g., Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 174 (2007) (recognizing the logical outgrowth test
and citing court of appeals cases that have applied it).
But see Utility Air Regulatory Group v. EPA, 744 F.3d 741 (D.C. Cir. 2014) (under Clean Air Act’s rulemaking
exhaustion provision, even a procedural challenge such as a logical outgrowth claim must first be presented to EPA
in petition for reconsideration). In this case the challengers did present this issue in a petition for reconsideration in
2012; however the agency had already signaled its opposition to this argument in court and had not ruled on the
petition by May 2014. Meanwhile the challenged rule had gone into effect after the court and agency denied stay
requests. See Richard G. Stoll, Protection of Judicial Review Watered Down in D.C. Circuit, Daily Environment
Report (BNA) (May 16, 2014).
225

226

Paraphrasing the court in Native Ecosystems Council v. Dombeck, 304 F.3d 886, 900 (9th Cir. 2002).

43

to distill a fairly long list of ad hoc exceptions to application of the doctrine has grown, and that
courts apply them rather inconsistently. And Congress has only twice waded into the area of issue
exhaustion in rulemaking.
Congress does of course, retain the power to require issue exhaustion, and there may be some
rulemaking contexts where that would make sense, such as that presented by the Clean Air Act,
where judicial review is concentrated in the D.C. Circuit and the parties are sophisticated repeat
players, or by CERCLA, for the reasons mentioned above.227 There may also be situations in the
context of challenges to agency delay or inaction where the failure to file a petition for rulemaking
would appropriately prevent consideration of the challenge on the basis of failure to exhaust
administrative remedies.
But clearer lines need to be drawn—for the courts and for Congress to consider in individual
statutes. The case for issue exhaustion is strongest in those types of rulemakings that are closest
to adjudications. If the rulemaking statute is a formal or hybrid one, offering opportunities to
request hearings, or if the rulemaking is one of particular applicability, issue exhaustion would
normally be appropriate, unless the party had a good excuse for not participating in the hearing.
Issue exhaustion also makes more sense as well when the court challenge is based on factual
disputes with the agency (or complaints that the agency should have chosen an alternative
approach to the rule), couched as an arbitrary-and-capricious challenge. These are the types of
arguments that can most beneficially be brought to the agency’s attention first.
But constitutional or other purely legal arguments, or procedural challenges, would normally not
benefit as much and might even be fruitless if not futile to bring to the agency’s attention. Not
only are these the type of questions that courts can decide without agency’s help (some legal issues
may be exceptions), but agencies should be intrinsically aware of their own jurisdiction, statutory
authority, and applicable procedures anyway.
Guiding Principles228
Congress in enacting judicial review statutes, and the courts in interpreting such statutes and in
making prudential decisions about what issues may be raised in challenges to rules, should
consider the following principles:
1. The “issue exhaustion doctrine,” which requires that issues raised in court challenges to agency
action should first be raised with the agency, applies less squarely to rulemaking cases than it does
to cases involving administrative adjudication. It also applies more comfortably to preenforcement review cases than to as-applied cases such as cases where rules are challenged in the
context of an enforcement proceeding.
2. The issue exhaustion doctrine is most appropriately applied to certain types of rulemaking:
227

See text at note 119, supra.

228

This report seeks to present some guiding principles for the Committee on Judicial Review to consider in its
deliberations. Further development of recommendations is expected.

44



Where statutorily required;



To rulemakings of particular applicability;



To rulemakings that are conducted using procedures that include a right to a hearing, unless
the litigating party had a good excuse for not participating in such hearings;

3. The issue exhaustion doctrine is most appropriately applied in rulemaking cases to certain types
of issues and is less appropriately applied to others.
A. Most appropriately applied to challenges to:


Agency fact-finding, reasoning, choice of alternatives and other similar issues that are
incorporated in the arbitrary and capricious test.



Agency failures to exercise their discretion;

B. May be appropriately applied to challenges to (depending on the circumstances):


Agency interpretations of their own statute;



Agency failures to follow a statutory requirement found in a law that is not the APA or its
own organic statute;

C. Ordinarily not appropriately applied to challenges to:


Agency violations of the Constitution;



Agency actions that raise purely legal questions that would not be aided by the agency’s
view;



Agency violations of basic procedural requirements contained in the APA, their own
statutes, or their own regulations.

4. Even when the issue exhaustion doctrine is applicable in the rulemaking context, courts should
allow parties who did not raise the issue in the comment process to raise it in court if:


Another commenter raised the issue sufficiently;



The agency raised the issue sua sponte;



Other circumstances make clear that the agency was aware of the issue;



The issue was so fundamental that the agency can be presumed to have been aware of it;



They are challenging the rule in the context of an as-applied challenge, such as a defense
to an enforcement action;

45

5. In addition, even when the issue exhaustion doctrine is applicable in the rulemaking context,
courts should apply the standard exceptions to the exhaustion of remedies doctrine, such as:


issues, that by their nature could not have been raised before the agency (e.g., a material
change in circumstances or a serious impropriety in the administrative process);



where the challenged action is patently in excess of the agency’s authority;



where it would have been futile to raise before the agency;



where the agency has in fact considered the issue;



where the obvious result would be a plain miscarriage of justice.229

6. Reviewing courts should allow litigants challenging rules to have a full opportunity to
demonstrate that they did in fact raise the issue first with the agency or that any of the above
circumstances—indicating that application of the doctrine would be inappropriate—are present.

229

See WATCH, 712 F.2d at 682.

46