Exhaustion/Channeling

Suppose now that an agency has issued a final order against you. Are you free to waltz into court now? Not necessarily. In this subsection, we deal with two related ideas that can make you wait a little longer to get into Court.

The first is the exhaustion of administrative remedies. Where it applies (and it does not always apply), this simply means that you must try your hand at contesting decisions that affect you within the agency before going to court. Often, statutes will require this by spelling out agency appellate structures; other times, agencies will create their own appeal systems. See Christopher J. Walker & Matthew Lee Wiener, Final Report for the Administrative Conference of the United States: Agency Appellate Systems (Dec. 14, 2020). The Social Security Administration, for instance, has numerous opportunities to seek reconsideration of the initial decisions rendered by ALJs. Even though, for all intents and purposes, initial decisions are often deferred to (just as they are often deferred to in any judicial system), the exhaustion doctrine may require you to attempt to have the agency reconsider before you go to court.

Confusingly, there are two separate exhaustion requirements: common law and statutory. Both, either, or neither of these requirements may apply. For instance, statutory exhaustion only applies if a statute actually requires exhaustion of remedies before judicial review. Darby v. Cisneros speaks to common law exhaustion in cases brought under general statutory review (i.e., APA cases), and it effectively eliminates common law exhaustion in such cases. Outside of general statutory review contexts, common law doctrine might still apply. In a case called Mcarthy v. Madigan, the Supreme Court narrowly construed common law exhaustion, noting that it generally will not apply in three circumstances: 1) when there is undue prejudice to the challenger from having to exhaust; 2) when an agency lacks any authority to grant requested relief so that exhaustion would be futile; and 3) when the agency is biased, so that the same decision would be expected even were the challenger to exhaust remedies. The trickiest issues in exhaustion have to do with figuring out whether statutory and/or common law exhaustion apply. Otherwise, the doctrine just amounts to insisting that challengers follow the procedures statutes or regulations have laid out.

Very closely related to exhaustion is the channeling of certain claims that could be brought in standalone litigation exclusively through agency processes. For instance, suppose a rule has been promulgated by an agency but the rule has not been enforced yet. You might think Abbott Labs allows you to obtain pre-enforcement review without any ripeness problems, and you'd be right about that. But Congress might still decide that it wants to preclude pre-enforcement judicial reivew by channeling any complaints about the legality of the rule through the agency adjudication process, such that agencies would get the first crack at answering whether the rule could withstand whatever complaint you have about it. In effect, such a channeling statute takes away some of what would be the original subject matter jurisdiction of the federal courts under 28 U.S.C. § 1331, although, critically, courts could still review the final agency action under the APA and reach any questions about the validity of the rule then. Congress can create channeling schemes subject to the Thunder Basin test, which asks 1) whether exclusive agency review would "foreclose all meaningful judicial review" of the issue, 2) whether the claim at issue is "wholly collateral" to the statute's review provisions, and 3) whether the claim is within the agency's expertise to resolve.

In both cases--exhaustion and channeling--the result is the same: judicial review cannot be had (even assuming it is ripe and final) if there would still be a benefit from letting the agency try its hand at answering the question first.