Judicial Federalism and the Administrative States

Abstract

Federal courts are reluctant to review the work of state and local administrative agencies. Despite the presence of diversity or federal question jurisdiction to challenge final agency action, federal courts have sometimes abstained from exercising their jurisdiction out of fear of disrupting a complex regulatory scheme and displacing state courts in the uniform development of state regulatory policy. At other times, federal courts have treated review of state administrative action as appellate in nature and therefore beyond the jurisdiction of the federal district courts, especially when review of agency action would be deferential under state law. And at still other times, federal courts have invoked preclusion principles to bar federal challenges to agency action that was judicial in nature. While recent decisions of the Supreme Court may have moved away from imposing a jurisdictional bar, the American Law Institute proposes to revive such a limit, arguing that such review of agency action is contrary to the historic role of the federal courts and would alter their essential function as courts of original jurisdiction. In this Article, the authors challenge these various practices preventing review of nonfederal administrative action, and they question the rationales behind them. They argue that, as a historical matter, federal courts once engaged in a robust review of state administrative action, even as to issues of state law. In addition, they suggest that concern for federal court interference with uniformity of state policymaking has been overstated, while traditional concerns of federal jurisdictional policy in providing a neutral forum for out of staters as well as those raising federal challenges to state and local action, have been slighted. They also attack the characterization of judicial review of administrative action as appellate, and suggest why it is both descriptively accurate and normatively desirable to see judicial review as an original proceeding distinct from agency action. And in many cases, they observe, according state agency decisionmaking the same level of deference that it would obtain in a state court would serve as a better measure of the respect owed such decisionmaking than formal preclusion. Although the Article takes the position that federal courts should not shy from entertaining diversity-based challenges to state administrative decisionmaking, or even most challenges grounded in federal law, it concludes that, absent diversity, due process reasonableness challenges to agency action should ordinarily be relegated to state courts.