The modern administrative state is largely based on the rules promulgated by administrative agencies pursuant to their statutory authority. Theoretically, these rules are intended to serve both private parties and the public interest as a whole. However, for effective rules to be promulgated, a diverse, pluralistic array of private parties must participate in the rulemaking process. Unfortunately, studies have shown that such participation is lacking in many rulemakings and that regulated industries often dominate the process. This Note argues that "issue exhaustion" exacerbates this trend of insufficient participation by serving as an unjustifiable procedural barrier to judicial review. Issue exhaustion, part of the larger doctrine of exhaustion of remedies, is the traditional procedural doctrine that requires parties to submit detailed comments on a proposed rule as a prerequisite to challenging that rule in court. Because many poorly financed groups-particularly public interest organizations and small businesses-are unable to bear the expense of submitting meaningful comments on most proposed rules, issue exhaustion serves to bar these groups from later challenging those rules in court. This not only precludes court challenges, but it also removes the leverage that the threat of judicial review provides in rulemaking settlement negotiations. Notably, issue exhaustion's negative effects may be largely invisible. The vast majority of those whose petitions would be barred by the doctrine likely recognize the futility of seeking judicial review and thus refrain from filing suit in the first place, removing themselves from the rulemaking process without ever appearing in the case law.
This Note proposes that the doctrine be modified by changing the way it is applied. Issue exhaustion is currently a blanket rule: if sufficient comments have not been submitted, the party may not seek judicial review. This Note proposes applying the doctrine according to a participation-based standard. Courts would only apply issue exhaustion to bar judicial review in those cases where participation in the rulemaking for the challenged rule had been sufficiently diverse and pluralistic. This standard would reduce the negative effects of issue exhaustion by allowing more participation in the rulemaking process but would still allow the doctrine to be applied in order to bar frivolous litigation in cases with sufficient participation.
This Note proceeds in five parts. Part I discusses the pluralistic basis of administrative law and summarizes the empirical literature on rulemaking. Part II describes the exhaustion requirement, its historical development, and its current application. Part III seeks to add practical context to the doctrinal analysis by conducting a survey of cases from the United States Court of Appeals for the District of Columbia Circuit wherein issue exhaustion was raised as a defense to parties seeking review of Clean Air Act rulemakings. Part IV discusses the results of this survey and states this Note's thesis: issue exhaustion serves as an unjustifiable barrier to participation in certain administrative rulemakings. Part IV by notes the doctrinal flaws in applying issue exhaustion to rulemakings. Part V concludes by proposing a modest yet significant change to the doctrine, one intended to reduce its negative effects without eliminating it completely.
I. Pluralism in Rulemaking
If federal administrative law were a building, its foundation would be pluralism. The Administrative Procedure Act (APA), and the administrative state more broadly, operates on the assumption that a diverse array of interested private parties will participate in agency proceedings.1 Even prior to the APA's enactment, the United States Attorney General's Report on the then-proposed legislation stated that "[p]articipation by these [economic and other community] groups in the rule-making process is essential in order to permit administrative agencies to inform themselves and to afford adequate safeguards to private interests. …