Opinion ID: 393162
Heading Depth: 1
Heading Rank: 3

Heading: the law in this circuit on the scope of review

Text: 52
53 The most comprehensive statement by this court as to the availability and scope of review of an agency's decision to deny a petition for rulemaking can be found in the thoughtful opinion by Judge McGowan in Natural Resources Defense Council, Inc. v. S.E.C., 606 F.2d 1031 (D.C.Cir.1979). Appellants in NRDC challenged the Commission's failure to promulgate rules requiring regulated corporations to make comprehensive disclosures of their environmental and equal employment policies. The court began its analysis of the reviewability of the Commission's action by noting the strong presumption of reviewability created by 5 U.S.C. § 701(a) of the APA, which is rebuttable only by a clear showing that judicial review would be inappropriate. 606 F.2d at 1043. The court also reiterated the mandate of Citizens to Preserve Overton Park, supra, that the section 701(a)(2) exemption should be limited to those rare instances where  'statutes are drawn in such broad terms that in a given case there is no law to apply.'  Id. at 1043. However, the court noted that this determination necessarily turns on pragmatic considerations as to whether the agency's determination is the proper subject of judicial review. Id. 54 In applying these pragmatic considerations to the claims before it, the court in NRDC separated out the aspects of appellees' claim that were essentially procedural from those addressed more to the policy determinations reflected in the Commission's action. 17 The substantive aspects of appellees' claim challenged the rationality of the SEC's ultimate decision not to adopt the environmental and equal employment rules proposed by appellees. In analyzing the reviewability of the decision to reject the proposed rules, the court noted that the Commission possessed broad discretionary powers to promulgate (or not promulgate) rules of disclosure, and that the NEPA did not go so far as to require agencies to promulgate specific rules. Id. at 1045. Nevertheless, even though the pragmatic calculus inclined against reviewability of the SEC's decision, the court concluded that, in light of the strong presumption of reviewability, 55 in a context like the present one, in which the agency has in fact held extensive rulemaking proceedings narrowly focused on the particular rules at issue, and has explained in detail its reasons for not adopting those rules, we believe that the questions posed will be amenable to at least a minimal level of judicial scrutiny. 56 Id. at 1047. 57 The court in NRDC also discussed the possibility of some minor interference with the agency's performance of its statutory mission. Specifically, the court referred to the diversion of scarce institutional resources to defend in court a decision not to adopt proposed rules that an agency had already determined, in its expert judgment, to be not even worth the effort already expended. Id. at 1045. However, this factor was considered less compelling in NRDC, where the SEC had evidenced its view that the proposed rules were sufficiently meritorious to warrant further investigation via the institution of rulemaking proceedings. In other words, the greater the agency's investment of resources in considering the issues raised by the petition, and the more complete the record compiled during the course of the agency's consideration, the more likely it is that the ultimate decision not to take action will be a proper subject of judicial review. Id. at 1047, n.19. Where, as in this case, the agency simply declines to initiate any rulemaking procedures, the court in NRDC intimated that the scope of judicial review should be extremely limited, if permitted at all. Id. at 1045-46. 58 Finally, with respect to an agency decision not to promulgate a certain rule, the court stated: 59 An agency's discretionary decision not to regulate a given activity is inevitably based, in large measure, on factors not inherently susceptible to judicial resolution e. g., internal management considerations as to budget and personnel; evaluations of its own competence; weighing of competing policies within a broad statutory framework. Further, even if an agency considers a particular problem worthy of regulation, it may determine for reasons lying within its special expertise that the time for action has not yet arrived. The area may be one of such rapid technological development that regulations would be outdated by the time they could become effective, or the scientific state of the art may be such that sufficient data are not yet available on which to premise adequate regulations. The circumstances in the regulated industry may be evolving in a way that could vitiate the need for regulation, or the agency may still be developing the expertise necessary for effective regulation. 60 Id. at 1046 (citations omitted). 61 Obviously, the case for reviewability of the order before us is even less compelling than that in NRDC. The agency in NRDC suggested the possibility that the proposed rules there were of some merit when it granted the petition and instituted rulemaking proceedings. In the case before us, however, the Commission, after some preliminary consideration of the proposed rule, concluded that further deliberations would be unwarranted. 62 While it is clear that the applicable scope of review of discretionary agency decisions not to promulgate certain rules can be found under section 10(e)(2) (A) of the APA, 5 U.S.C. § 706(2)(A), 18 the parameters of the arbitrary and capricious standard of review will vary with the context of the case. NRDC, 606 F.2d at 1049-50. In general, the arbitrary and capricious standard calls for a review that is  'searching and careful,' Citizens to Preserve Overton Park, supra, 401 U.S. 402, at 416, 91 S.Ct. 814, at 823-24, 28 L.Ed.2d 136, yet, in the last analysis, diffident and deferential. NRDC, 606 F.2d at 1049 (footnote omitted). The agency's decision that the public interest does not require the promulgation of specific rules for the time being must be sustained if it violates no law, is blessed with an articulated justification that makes a 'rational connection between the facts found and the choice made,' and follows upon a 'hard look' by the agency at the relevant issues. Action for Children's Television v. FCC, 564 F.2d 458, 479 (D.C.Cir.1977) (footnote omitted). The agency's determination is essentially a legislative one, and the reviewing court should do no more than assure itself that the agency acted in a manner calculated to negate the dangers of arbitrariness and irrationality .... Id. at 472, n.24. 63 In determining the scope of review in this case, we follow the lead of NRDC. In particular, we adhere to Judge McGowan's suggestion that, where the proposed rule pertains to a matter of policy within the agency's expertise and discretion, the scope of review should perforce be a narrow one, limited to ensuring that the Commission has adequately explained the facts and policy concerns it relied on and to satisfy ourselves that those facts have some basis in the record. 606 F.2d at 1053. We also recognize that where the agency decides not to proceed with rulemaking, the record for purposes of review need only include the petition for rulemaking, comments pro and con where deemed appropriate, and the agency's explanation of its decision to reject the petition. Obviously, the record in a case such as the one before us will not resemble the records compiled in cases like NRDC, and National Black Media Coalition v. FCC, 589 F.2d 578 (D.C.Cir.1978), where rulemaking procedures were actually initiated. 19
64 Because of the broad discretionary powers possessed by administrative agencies to promulgate (or not promulgate) rules, and the narrow scope of review to which the exercise of that discretion is subjected, there are very few cases in which courts have forced agencies to institute rulemaking proceedings on a particular issue after it has declined to do so. As was recognized in Action for Children's Television, supra : 65 As a corollary of (the agency's) broad general discretion, the Commission has considerable latitude in responding to requests to institute proceedings or to promulgate rules, even though it possesses the authority to do so should it see fit. Administrative rule making does not ordinarily comprehend any rights in private parties to compel an agency to institute such proceedings or promulgate rules. Rhode Island Television Corp. v. FCC, 116 U.S.App.D.C. 40, 44, 320 F.2d 762, 766 (1963). 66 564 F.2d at 479. See also Porter County Chapter v. United States Nuclear Regulatory Comm'n, 606 F.2d 1363, 1369 (D.C.Cir.1979). 20 It is only in the rarest and most compelling of circumstances that this court has acted to overturn an agency judgment not to institute rulemaking. 67 In Geller v. FCC, 610 F.2d 973 (D.C.Cir.1979), we ordered the Commission to make a fresh determination as to whether regulations promulgated pursuant to an agreement reached in 1972 continued to serve the public interest long after the predicate for the agreement had ceased to exist. The regulations in issue had been promulgated initially to reflect a consensus agreement reached by parties affected by the Commission's cable television policies in their efforts to facilitate the passage of new copyright legislation. After the new copyright legislation was passed in 1976, petitioner had requested the Commission to re-examine the regulations to determine their continuing validity. The Commission refused to conduct such a proceeding on the ground that petitioner had introduced no evidence to aid in its determination of whether the rules continued to serve the public interest. The court reversed the Commission's order, finding the Commission's exercise of discretion not to institute rulemaking proceedings to be plainly misguided. 610 F.2d at 979. The court in Geller ruled that an agency cannot sidestep a reexamination of particular regulations when abnormal circumstances make that course imperative. Id. (footnote omitted). The rule that emerges from Geller, then, is a limited one: that an agency may be forced by a reviewing court to institute rulemaking proceedings if a significant factual predicate of a prior decision on the subject (either to promulgate or not to promulgate specific rules) has been removed. 68 This court found equally compelling the circumstances in NAACP v. FPC, 520 F.2d 432 (D.C.Cir.1975), aff'd, 425 U.S. 662, 96 S.Ct. 1806, 48 L.Ed.2d 284 (1976), and in National Organization for Reform of Marijuana Laws v. Ingersoll, 497 F.2d 654 (D.C.Cir.1974). In NAACP, this court vacated the Commission's order dismissing petitioner's request for rulemaking on the ground that the Commission was mistaken in concluding that it lacked jurisdiction to promulgate regulations concerning employment discrimination by its regulatees. Similarly, in National Organization for Reform of Marijuana Laws, we remanded an order of the Bureau of Narcotics and Dangerous Drugs that rejected outright a rulemaking petition on the ground that the Bureau was not authorized to institute proceedings for a rule that would be inconsistent with United States treaty obligations under the Single Convention on Narcotic Drugs, 1961, 18 U.S.T. 1407 (1967). 497 F.2d at 656. The opinion noted that rejection of a party's filing is a peremptory action, soundly used only in cases where there is a procedural defect or failure to comply with a clear-cut requirement of law. Id. at 659. The court in NORML then stated that, if in fact the Bureau's assessment of the rule sought by petitioners was correct, the agency's determination should be reflected in a denial of the petition on the merits. Id. 69 It is significant that in neither NAACP nor NORML did the court compel the agency to actually institute rulemaking proceedings. Rather, each agency was required on remand to reconsider its denial of the petition, in light of the correct interpretation of the law as enunciated by the court. 21