The Resource Allocation Role of Reviewing Courts: Common Law Functions in a Regulatory Era
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Description
It has long been accepted that courts reviewing administrative decisions may not substitute their judgment for that of an administrative agency on policy choices, about which relevant statutes provide no guidance. Under traditional principles of administrative law, the courts’ basic function is to ensure that administrative official adhere to legislative directives. However, due to limited knowledge, changing conditions, or political constraints, legislators are typically unable to enact statutes that specify in consistent detail what choices administrators must make. Vague, general, or conflicting statutory provisions, together with the traditional limitations on the scope of judicial review, result in administrators exercising considerable discretion. While courts will review for abuse of discretion, inquiring whether an agency’s resolution of competing considerations in a particular case was patently unreasonable, in practice courts almost never overrule administrative decisions on this ground. We are concerned here with the resulting discretion enjoyed by administrative officials in the allocation of environmental resources. Agencies with environmental responsibilities are subject in full measure to the contemporary sense of disillusionment with the administrative process. Environmentalists assert that agencies with development missions in fields such as power, water resources, agriculture, and highways have been “captured” by regulated or client firms, and that they disregard or slight environmental concerns. On the other hand, industry representatives complain that regulatory agencies whose prime mission is protection of environmental quality are insensitive to the economic and social costs of control measures. Both groups have appealed to the courts to abandon traditional limitations on judicial review and to exercise tight control over agency policy choices. The courts have generally rejected such appeals. For example, in Scenic Hudson Preservation Conference v. FPC, the court refused to set aside the Federal Power Commission’s approval of a pumped storage-generating facility opposed by environmental groups, asserting that in the absence of controlling statutory directives, “this court could not and should not attempt to substitute its judgment for that of the commission.” Similarly, in Ethyl Corp. v. EPA, the court declined industry’s request that it invalidate an Environmental Protection Agency (EPA) order requiring removal of lead additives from gasoline, stating that the established standard of review “forbids the court’s substituting its judgment for that of the agency.” Nonetheless, courts have not been heedless of criticisms that bureaucratic administrators, not formally accountable through political or market mechanisms, exercise discretion in ways that may lead to serious resource misallocation or inequitable distributional consequences. The courts have responded, not by substituting their judgment concerning substantive outcomes for that of the agency, but by procedural innovations designed to permit all affected interests access to the process of agency decision and to improve the quality of agency deliberations. For example, courts have required that adjudicatory hearings for licensing power plants be extended to include not only regulated firms but environmental groups. Agencies in turn have reacted to the mounting procedural burdens of expanded trail-type adjudicatory hearing by developing policies through informal legislative-type rulemaking. The courts countered this shift by expanding the procedural formalities in rulemaking, requiring that the agency disclose the documentary basis for its proposals and respond in detail to criticisms and additional date submitted by regulated firms, environmental groups, and other private interests. Reviewing courts also began to scrutinize in considerable detail the reasoning advanced by agencies for discretionary policy choices, measuring the agency’s justifications against the documentary evidence of record. These requirements have been imposed upon environmental advocate agencies, such as EPA, as well as upon other agencies whose prime role is development. The courts’ response to the problem of agency discretion reflects judicial diffidence in dictating substantive outcomes in given cases, combined with faith that improved processes of decision based on participation by all affected interests, more complete development of data, and decisional rationality as reflected in written opinions will produce desirable and equitable policy choices. This response is fully consistent with jurisprudential assumptions that have been firmly entrenched ever since the New Deal: that the courts should confine themselves to maintaining the integrity of constitutive decision-making arrangements and protecting individual liberties, while decisions about resource allocation should be remitted to the political branches. This essay questions the conventional wisdom as applied to administrative decision making the in the realm of environmental resources. I accept that efforts by courts to improve the process of administrative decision making—particularly the added procedural requirements in rule making and more searching judicial scrutiny of the empirical and analytical basis for discretionary policy choices—have on balance been beneficial. However, these developments have produced costly side effects on substantive policies. Some of these costs might be avoided by more explicit judicial reexamination of the merits of agency policies. Moreover, in some cases judicial control of substantive choices may be essential to secure important interests in allocation of environmental resources.
Source Publication
Collective Decision Making: Applications from Public Choice Theory
Source Editors/Authors
Clifford S. Russell
Publication Date
1979
Recommended Citation
Stewart, Richard B., "The Resource Allocation Role of Reviewing Courts: Common Law Functions in a Regulatory Era" (1979). Faculty Chapters. 1712.
https://gretchen.law.nyu.edu/fac-chapt/1712
