Meet Me in the Middle: The Search for the Appropriate Standard of Review for the APA's Good Cause Exception

Meet Me in the Middle: The Search for the Appropriate Standard of Review for the APA’s Good Cause Exception Kelli M. Golinghorst * ABSTRACT: Section 553 of the Administrative Procedure Act (“APA”) governs informal agency rulemaking and requires agencies to proceed through what is known as “notice-and-comment” rulemaking. The good cause exception to these proceedings allows agencies to bypass notice-and-comment rulemaking and immediately promulgate a rule if the agency has good cause to do so. The appropriate standard of review for an agency’s use of the good cause exception is ambiguous. Some courts review the action de novo, while others apply a lesser, more deferential “arbitrary and capricious” standard. This Note advocates that the appropriate standard of review is yet a third standard that strikes a middle ground between de novo review and deferential review. In doing so, this Note examines the inadequacies of applying either standard on their own in order to highlight the strength of a mixed or blended standard. This standard satisfies the purpose of the APA and would serve as a clear guide to agencies for future use of the good cause exception. I. INTRODUCTION ........................................................................... 1278 II. BACKGROUND ............................................................................. 1280 A. T HE A DMINISTRATIVE P ROCEDURE A CT ................................. 1280 B. M EANT TO B E B ROKEN : R ULEMAKING U NDER THE APA AND THE G OOD C AUSE E XCEPTION ................................................ 1282 C. T HE E XCEPTION IN A CTION : SORNA AND THE G OOD C AUSE E XCEPTION ........................................................................... 1285 D. A T ALE OF T WO S TANDARDS OF R EVIEW ................................. 1287 III. NO GOOD STANDARD FOR THE GOOD CAUSE EXCEPTION ......... 1289 * J.D. Candidate, The University of Iowa College of Law, 2018; B.A., Political Science and Economics, Luther College, 2014. I would like to thank my family, fiancé and the members of the Iowa Law Review for their hard work during the editing process. 1278 IOWA LAW REVIEW [Vol. 103:1277 A. T HE C OMMON F ACTS ............................................................ 1290 B. D E N OVO R EVIEW .................................................................. 1291 C. “A RBITRARY AND C APRICIOUS ” R EVIEW .................................. 1294 IV. THE BEST STANDARD OF REVIEW FOR AGENCY USE OF THE GOOD CAUSE EXCEPTION ........................................................... 1297 A. S TRIKING A M IDDLE G ROUND ................................................ 1297 B. S ERVING THE P URPOSE OF THE APA ....................................... 1299 C. G UIDING A GENCIES ’ F UTURE U SE OF THE G OOD C AUSE E XCEPTION ........................................................................... 1299 V. CONCLUSION .............................................................................. 1300 I. INTRODUCTION In response to the ever-growing network of federal administrative agencies in the United States, Congress passed the Administrative Procedure Act (“APA”) in 1946. 1 The Act was meant to govern the agency functions of rulemaking, adjudication, and licensing. Most importantly, the Act provided for agency accountability by requiring agencies to notify the public of proposed rules and to allow the public to participate in the rulemaking process. 2 Today, more than 70 years after the passage of the Act, the network of federal administrative agencies has grown significantly. 3 There are “2,840,000 federal workers in 15 departments, 69 agencies and 383 nonmilitary sub-agencies.” 4 As a result of such growth, many scholars worry that the rise of a fourth branch challenges America’s constitutionally 1. Administrative Procedure Act, Pub. L. No. 79-404, 60 Stat. 237 (1946) (codified at 5 U.S.C. §§ 551–59 (2012)). 2 . See U.S. DEP’T OF JUSTICE, ATTORNEY GENERAL’S MANUAL ON THE ADMINISTRATIVE PROCEDURE ACT 6 (1947) (noting that soon after the passage of the APA in 1946, government agencies began calling on the Department of Justice for guidance and “advice on the meaning of the various provisions of the Act,” the Manual being a culmination of the work stemming from those requests); see also Robert S. Shwarts, Delineation in the Exceptions to the Notice and Comment Provisions of the Administrative Procedure Act , 57 GEO. WASH. L. REV. 1069, 1072 n.25 (1989) (“ The Manual was prepared primarily as a guide for the agencies themselves but was made available to the general public due to heavy demand (undoubtedly due to the lack of legislative history).”). 3. Jonathan Turley, The Rise of the Fourth Branch of Government , WASH. POST: OPINIONS (May 24, 2013), https://www.washingtonpost.com/opinions/the-rise-of-the -fourth-branch-of-government/ 2013/05/24/c7faaad0-c2ed-11e2-9fe2-6ee52d0eb7c1_story.html (“For much of our nation’s history, the federal government was quite small. In 1790, it had just 1,000 nonmilitary workers. In 1962, there were 2,515,000 federal employees. Today, we have 2,840,000 federal workers . . . .”); see also Jared Meyer, How to Fight the Fourth Branch of Government , FORBES: OPINION (July 12, 2016, 8:31 AM), http:// www.forbes.com/sites/jaredmeyer/2016/07/12/how-to-fight-the-fourth-branch-of-government/#65 373e7363eb (“Today’s administrative state is truly an unaccountable fourth branch of government, with control over how regulations are issued, enforced, and litigated.”). 4. Turley, supra note 3. 2018] MEET ME IN THE MIDDLE 1279 mandated system of checks and balances. This fourth branch has been described as an “administrative state of sprawling departments and agencies that govern with increasing autonomy and decreasing transparency.” 5 This network of federal administrative agencies has more “impact on the lives of citizens” than the legislative, executive, and judicial branches combined. 6 In fact, most of the country’s federal “laws” are actually rules and regulations that federal agencies have promulgated and subsequently adopted without significant oversight or accountability. 7 One study found that in 2007, Congress passed only 138 public laws, while federal agencies enacted nearly 3,000 rules and over 60 significant regulations. 8 Of course, Congress has the power to create federal agencies, delegate legal authority, and control the purse strings, but any attempt to rein in the vast network of federal administrative agencies by cutting their funding would be futile and akin to “running a locomotive with an on/off switch.” 9 Although federal agencies are also subject to judicial review, the judiciary grants broad deference to agencies, especially when agencies are interpreting laws and determining the scope of their jurisdiction. 10 One area of agency action where the level of judicial deference is not clear is when agencies invoke the good cause exception to the informal rulemaking process. When agencies invoke the good cause exception, there are two main standards of review, de novo and “arbitrary and capricious”—circuit courts have not consistently applied either. For example, consider challenges to the Attorney General’s use of the good cause exception in promulgating a rule that retroactively applies the Sex Offender Registration and Notification Act (“SORNA”). 11 The Fourth and Sixth Circuits review these cases using a de novo standard of review, while the Fifth and Eleventh circuits apply the more deferential “arbitrary and capricious” standard of review. 12 The circuit split on 5 . Id. 6 . Id. 7 . Id. 8 . Id. 9 . Id. 10 . See City of Arlington v. FCC, 569 U.S. 290, 307 (2013) (holding that agencies are afforded Chevron deference, which means an examination of whether the agency decision was made on a “permissible construction” of the statute in question, even when determining the reach of their jurisdiction); Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 866 (1984) (creating broad deference for agency decision-making in holding that “[w ]hen a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency’s policy, rather than whether it is a reasonable choice within a gap left open by Congress, the challenge must fail”) . 11. Sex Offender Registration and Notification Act, Pub. L. No. 109-248, tit. 1, 120 Stat. 590 (2006) (codified as amended at 34 U.S.C.A. §§ 20911–32 (West 2017)). 12. For the cases in which the court examined the Attorney General’s good cause invocation under the de novo standard of review, see United States v. Cain, 583 F.3d 408, 434 n.4 (6th Cir. 2009) (Griffin, J., dissenting) (applying de novo review although not explicitly indicating use of that standard); and see generally United States v. Gould, 568 F.3d 459 (4th Cir. 2009) (same). 1280 IOWA LAW REVIEW [Vol. 103:1277 this issue has created an ambiguity that frustrates the legislative purpose of the APA and fails to provide federal agencies with clear guidance on how to properly invoke the good cause exception in the future. This Note argues that both the de novo standard and the “arbitrary and capricious” standard are inadequate. It then proposes the Supreme Court adopt a mixed standard that fulfills the purpose of the APA and serves as a clear guide to agencies for future use of the good cause exception. To begin, Part II will provide a summary of the history and legislative purpose of the APA, outline the informal rulemaking process and its exceptions under the APA, and detail the use of the good cause exception through the example of SORNA. Part III examines the two competing standards of review, de novo and “arbitrary and capricious,” that the circuit courts employ when reviewing the Attorney General’s use of the good cause exception; it also highlights the relative weaknesses and inadequacies of each standard. Part IV argues that the Supreme Court should grant certiorari to...