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					                                 ADMINISTRATIVE LAW
                                          Professor John Devlin
                                              Summer 2005
                                               Erin Marino


I . INTRODUCTION
    A. Generally:
       i.    Administrative Law is a course about how agencies do what they do.
       ii. Administrative scheme is very pervasive.
    B. Agencies:
       i.    Independent Agencies
           a.      Commissions, Agencies, Secretaries, Chairmen, independent of the President
               1)      usually have fixed terms and cannot be removed except for malfeasance or good
                       cause
               2)      ―Pros‖ of Independence
                     isolates the agency from politics
                     helps to promote the ―public good‖
    C. Purpose of Agencies:
       i.    agencies grow out of real world problems and attempt to address and resolve them
    D. What Do Agencies Do?
       i.    Information Gathering
           a.      Is this a problem? Where? When?
           b.      What are the risks?
       ii. Formulate rules and regulations
       iii. Decide disputed cases
    E. Control of Administrative Agencies:
       i.    Political branches
       ii. Courts: the APA is law
    F. History of Administrative Law
       i.    Early Days:
           a.      not much law and not really a subtopic of legal study; the main agencies were the
                   Department of War and the Post Office
       ii. Progressive Era (late 1800‘s- early 1900‘s)
           a.      independent agencies created in response to the perception that business interests were
                   gaining power and using it in ways that harmed the public
               1)      i.e. the ICC established to regulate monopolistic practices in the railroad industry.
                       the FTC to regulate monopolistic practices in other industries
       iii. New Deal Era (1930‘s-1950‘s)
           a.      Generally:
               1)      growth of administrative agencies added to that of the progressive era
               2)      i.e., SEC, NLRB, FCC, FDA, FAA
               3)      grants of power were broad, the regulations not only sought to promote the public
                       good, but to encourage growth in industry. (i.e. in addition to policing the airlines,
                       the FAA encouraged the building of airports and the like)
           b.      Problems:
               1)      No legal check (the political check of voting the President and Congress out of
                       office, though possible, probably was not viable.)

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                       the political check might not be enough in light of the fact that the agencies gather
                        information, policy, develop policy, prosecute and decide cases, due process
                        requires more then a ―political check‖
         iv. The Administrative Procedure Act (1946)
             a.    What is It?
                1)    the APA is an institutional authority promulgated to set forth the procedure that all
                      agencies are required to follow
             b.    Drafted By:
                1)    written primarily by lawyers (―the APA is in essence, a highly conventional
                      lawyer‘s view of how to tame potentially unruly administrators.‖ P. Strauss)
             c.    Focus:
                1)    the APA focuses on the procedure in adjudicatory and rule making functions, NOT
                      as much on information gathering and the procedure that must be followed.
             d.    What it Does:
                1)    divides administrative action into two general decision-making categories:
                     rule making
                     adjudication
                2)    addresses ―formal‖ administrative agency activities, with little focus on ―informal‖
                      activities.
         v. 1960’s – 1970’s
             a.    Generally:
                1)    Growth of agencies focusing on technical issues (i.e. OSHA and EPA)
             b.    Structure: the structure of administrative agencies established during this period
                   follow a different structure:
                1)    individual heads instead of boards and commissions
                2)    firmly rooted in the executive branch (meaning they are subject to being fired by the
                      President)
                3)    return to notion of political control and accountability
                4)    less reliance on the expertise of the head of the agency, rather those below him hire
                      the experts
         vi. Contemporary (1980’s to Present)
             a.    Generally:
                1)    focus on deregulation and dismantling of agencies
                2)    new agencies created in light of current needs (i.e. Homeland Security and Veteran‘s
                      Affairs)
         vii. Conclusion:
             a.    because administrative agencies have formed in different eras under different theories,
                   the multiple sources of jurisprudential law, combined with the APA converge on the
                   messy subject of ―Administrative Law‖

II.      THE ADMINISTRATIVE PROCESS IN THE CONSTITUTIONAL CONTEXT
      A. Introduction and Basic Perspectives
         i.   How are Agencies Created?
            a.    The Power to Create:
               1)    The Constitution makes reference to ―Departments‖, but the basis for the power to
                     create agencies stems from the ―Necessary and Proper‖ clause.
                    Congress has the power to do all things necessary and proper to carry out its
                       delegated powers, not anything that is ―good‖ for the nation.



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                       i.e. Homeland Security necessary and proper to carry out the delegated
                        power over immigration, border control, etc.; the Commerce Department
                        has power over interstate commerce.
       b.    Creation
            1)  Congress creates administrative agencies by statute, known as the ―Organic Statute‖
            2)  ―Organic Statute‖
               creates the agency
               provides structure for the agency
               defines and limits the powers of the agency
               sets forth what the agency is to accomplish
   ii. Are Agencies Constitutional?
       a.    Typically, agencies combine functions
          1)    i.e. the IRS exercises executive an executive function in enforcing and prosecuting
                tax laws; legislative in making regulations and judicial in its dispute resolution
                functions.
   iii. Separation of Powers
       a.    Pure Separation: to preserve freedom, the powers of government must be wholly
             separate; different types of power in different hands. (Montesquieuian)
       b.    Checks and Balances: mixed government; powers intentionally overlap
       c.    United States Constitution: combines notions of Pure Separation and Checks and
             Balances
          1)    Structure of the Constitution is Montesquieuian
               Vesting Clauses of Articles 1-3
               Separate powers vested in separate branches
          2)    Specific Constitutional Provisions are Mixed
               Executive: veto and propose legislation
               Legislative: gives advice and consent for officers; decides who appoints inferior
                  officers; determines how ―other‖ officers are appointed by law; power to impeach
                  executive officers and judiciary; power to tax, power to override executive veto
               Judicial: appointed by executive, may be impeached by the legislative
   iv. Louisiana Constitution
       a.    Separation of Powers:
          1)    Article 2, § 2: ―Except as otherwise provided by this constitution, no one of these
                branches, nor any person holding office in one of them, shall exercise power
                belonging to either of the others.‖
       b.    Mixed Power
          1)    Article 3: Legislative Branch
          2)    Article 4: Executive Branch
               no vesting of ―all executive power‖
          3)    Article 5: Judicial Branch
B. Delegation of Quasi-Legislative Functions (Policy)
   i.    Delegation Doctrine:
       a.    Legislative power is vested in Congress and they have a duty to exercise that power.
          1)    the Constitution doesn‘t say ―or anyone else it chooses‖, but as a practical matter,
                Congress can‘t make all the rules
       b.    The Delegation Doctrine permits Congress to delegate broad regulatory authority to
             administrative agencies and officials as long as Congress articulates and ―intelligible
             principle‖ for the agency or official to follow.
   ii. Cases:
       a.    Brig Aurora
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     1)      FACTS:
              Congress has the authority to decide issues of trade.
              Congress, by statute, authorized the President to lift a statutory trade embargo
               against France and England when the President determined that those countries
               had stopped violating the ―neutral commerce‖ of the United States.
                     essentially gave the President the power to decide what those conditions
                      were
     2)      HELD: This delegation of legislative power is not unconstitutional because the
             President is acting as Congress‘ agent.
b.        Field v. Clark
     1)      FACTS: similar to Brig Aurora
     2)      HELD: Congress can enact legislation the effect of which depends on the President‘s
             determination that a ―named contingency exists.‖
     3)      RULE: upheld executive action that had a legislative effect
c.        United States v. Grimaud (1911)
     1)      FACTS:
            Defendants were convicted for grazing sheep in a national forest without getting
               the permits required under a regulation promulgated by the Secretary of
               Agriculture.
     2)      HELD: Delegation of authority is constitutional
     3)      REASONING:
            Congress articulated the general principle, that the Secretary make rules to ―serve
               the purpose of preserving national forests.‖
            the delegated power was only to fill in the details, essentially making law within
               certain parameters
            to a certain extent the executive branch, in its enforcement role, has some sort of
               discretion, like prosecutorial discretion
            the Secretary was just exercising a power to fill in the details
            this went further then just ―named contingency‖ where that triggered rules
               Congress had enacted by allowing the executive to make the rules
d.        J.W. Hampton v. United States (1928)
     1)      FACTS:
            Congress set tariffs, and a federal statute authorized the President to increase
               statutorily prescribed duties on certain foreign goods
            the statute allowed him to increase the duties on a certain type of goods when he
               determined that an increase was necessary to equalize the costs of production
               between the US and the foreign country that produced the goods (changing prices)
     2)      HELD: Congress‘ delegation is constitutional
     3)      RULE: ―If Congress shall lay down by legislative act an intelligible principle to
             which the person or body authorized to exercise delegated authority is directed to
             conform, such legislative action is not a forbidden delegation of legislative power.‖
e.        Panama Refining (1935)
     1)      FACTS:
            NIRA (National Industrial Recovery Act) authorized the President to ban
               interstate shipments of oil produced in violation of state law.
     2)      HELD: Delegation is unconstitutional
     3)      REASONING:
            no principles or standards provided by Congress to guide the President in
               determining when to ban interstate shipment of ―hot oil‖.

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             Court: ―As to the transportation of oil production in excess of state permission, the
              Congress has declared no policy, has established no standard, has laid down no
              rule. There is no requirement, no definition of circumstances and conditions in
              which the transportation is to be allowed or prohibited.‖
     4)      KEY POINT: established a limit on congressional delegation
f.        A.L.A. Schecter Poultry v. United States (1935)
     1)      FACTS:
            Provision of the NIRA authorized the President to approve ―codes of fair
              competition‖ for the poultry industry ad other industries.
            trade groups established the industry standards and the President was permitted
              to adopt those standards
     2)      HELD: Delegation is unconstitutional
     3)      REASONING:
            the Act did not prescribe adequate administrative procedures for approval of the
              codes
            Congress delegated law making power outside the government
            there was no meaningful standard for the President to follow
     4)      KEY POINT: the court has never disavowed its delegation rulings in Panama and
             Schecter, but since the 1930‘s, no court has found congressional delegation to be too
             broad.
g.        Yakus v. United States (1944)
     1)      FACTS:
            Congress has the power to set maximum prices during wartime
            Congress passed a statute that authorized a federal Price Administrator to set
              prices that ―in his judgment will be generally fair and equitable and will stabilize
              prices, etc.‖
     2)      HELD: Congress‘ delegation of power to the PA is constitutional
     3)      RULE: As long as Congress gives the administrator an ―intelligible principle‖, the
             Non-Delegation doctrine is satisfied.
            Intelligible Principle:
                    Congress had Made Law:
                  1. Congress has made the fundamental policy choices
                  2. Congress has a mandate and duty to make laws, this includes balancing
                       and making the policy choices
                    Agency Guidance
                  1. sufficient guidance so that the agency knows what they are supposed to
                       do
                    Judicial Review
                  1. sufficient guidance so that a reviewing court can later determine whether
                       the agency has fulfilled what the court wanted it to do
     4)      KEY POINT: the Court has upheld many federal statutes review under the
             delegation doctrine, despite that fact that many of those statutes delegated
             rulemaking authority to federal agencies under quite broad standards.
            In Yakus, it was during war time, so this external factor might make a difference on
              the breadth permitted
h.        Fahey v. Malloney (1947)
     1)      FACTS:
            Congress, by statute, gave administrative officials the power to take over banks
              that were in ―financial difficulty‖
            Congress did not define ―financial difficulty.
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     2)      HELD: The statute gave an intelligible principle; looking outside the statute to
             industry practices to find limiting principles does not make the statue deficient.
     3)      KEY POINT:
            Illustrates the ripple effect of the Non-Delegation Doctrine.
            The Court can limit an agencies power without declaring the statute
               unconstitutional, by finding the statute to be in violation of the Non-Delegation
               Doctrine
     4)      RULE: A broad statutory standard can be informed by practices in the regulated
             industry.
i.        Industrial Union Department, AFL-CIO v. American Petroleum Institute – ―Benzene Case‖
          (1980)
     1)      KEY POINT: The court has not used the Non-Delegation Doctrine to invalidate a
             federal statute since 1936, but it has used it to justify interpreting a federal statute
             narrowly.
     2)      FACTS:
            Congress passed a statute authorizing OSHA to regulate benzene and other toxic
               chemicals in the workplace
            the ―standards‖ in place included: ―reasonably necessary and appropriate‖ and
               ―to extent feasible‖
            OSHA broadly interpreted their power under these statutes
     3)      HELD: the court refused to interpret the statute broadly, because doing so might
             violate the Non-Delegation Doctrine
     4)      CONCURRENCE:
            Rehnquist thinks the statute violates the Non-Delegation Doctrine because
               Congress is giving OSHA the power to make policy judgments that Congress
               should be making.
            Here it is a trade off between human life and money.
     5)      RULE:
j.        Whitman v. American Trucking Assns. (2001)
     1)      KEY POINT: reaffirms that the Delegation Doctrine will seldom invalidate a statute
             delegation quasi-legislative power to a federal agency.
     2)      FACTS:
            a provision in the Clean Water Act authorized the EPA to promulgate regulations
               establishing ―national ambient air quality standards‖ (NAAQS) for certain air
               pollutants
            the act stated that each standard should be set at a level ―requisite to protect the
               public health‖ and with an ―adequate margin of safety‖
     3)      HELD:
            this provision in the act did not violate the Delegation Doctrine because it contains
               an ―intelligible principle‖
     4)      REASONING:
            the discretion granted to the EPA was ―well within the outer limits of our non-
               delegation precedents‖
            the degree of agency discretion that is acceptable varies according to the scope of
               the power congressionally conferred
                    where the agency power is extremely limited, such as when Congress
                     empowers the EPA to define ―country elevators‖ which are exempt from
                     certain Clean Air Act provisions, the Act need not provide an intelligible
                     principle

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                         where the EPA‘s regulations may affect the entire national economy,
                          substantial legislative guidance may be necessary
               in Toubey, the Court held, even indeterminate words such as ―imminent‖,
                  ―necessary‖ and ―hazardous‖ provide sufficient guidance to agencies; there is no
                  requirement that congress specify how imminent, how necessary, or how
                  hazardous something must be
          5)    RULES:
               The lower court had remanded for the agency to create limiting principles for
                  itself, the agency cannot set limits, Congress must set limits.
               even fairly broad delegations of power will be permitted, in this case, ―requisite to
                  protect the public health‖ basically means ―to do the best you can‖
   iii. Why Interpret Broadly?
       a.    the court‘s primary rationale for upholding broad delegations is pragmatic
             (―functional‖)
       b.    ―in an increasingly complex society, replete with ever changing and more technical
             problems, Congress simply cannot do its job absent an ability to delegate power under
             broad general directives.‖ (Mistretta)
          1)    this reasoning emphasizes that for Congress to fulfill its legislative function
                effectively, it must be able to leave details to the agencies
   iv. Rationale for Non-Delegation Doctrine
       a.    Prevent arbitrary use of delegated authority
       b.    Make judicial review feasible
       c.    Ensure Congress is doing its job (―ensure consistent with orderly governmental
             administration that important choices of social policy are made by Congress, the
             branch most responsive to the popular will.‖ – Whitman)
   v. Problems with Delegation
       a.    Lack of Political Accountability: if Congress isn‘t making a law, who gets voted out?
       b.    Democracy: administrators are not elected.
       c.    Abdication: Congress might give away too much power
       d.    Executive Encroachment:
C. Delegation of Quasi-Judicial Functions
   i.    Generally:
       a.    Art. 1, § 8 gives Congress the power to establish lower courts, the issue of delegation of
             quasi-judicial functions focuses on whether Congress can give dispute resolution
             power to non-Article III entities.
       b.    Characteristics of Article 3 Judges
          1)    life time tenure
          2)    staffed by special group of judges
          3)    appointed by the President and confirmed by the Senate
       c.    Standard: The court‘s primary concern about adjudicative delegation to an agency or
             other non-Article III entity is that the delegation not undermine the Article III branch.
   ii. Cases
       a.    Crowell v. Benson (1932)
          1)    FACTS: As part of a Worker‘s Compensation scheme, the awards granted to injured
                workers were based on findings of the ALJ.
          2)    HELD: Congress can give ALJ‘s the power to determine a factual dispute
          3)    REASONING:
               there is a distinction between determinations dealing with common law rights and
                  statutory entitlements that did not exist at common law.
                         Article III judges must decide common law rights
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                     Congress can grant adjudicatory power to agencies for statutory
                      entitlements because but for the statute the right would not exist at all.
           in the instant case, worker‘s compensation is a statutory entitlement because if the
              worker is injured he gets something, this is not a remedy for fault.
     4)     PUBLIC RIGHTS/PRIVATE RIGHTS DISTINCTION:
           PUBLIC RIGHTS:
                     rights people had against the government such as tax disputes, government
                      licenses and contracts and government benefits
                     Since Congress did not have to allow many public-rights claims to be
                      adjudicated at all because of sovereign immunity, Congress had the lesser
                      power to allow them to be adjudicated only by a non-Article III entity
                     public rights had been historically decided by the executive and legislative
                      branches
           PRIVATE RIGHTS:
                     administrative agencies can work as ―adjuncts‖ to Article III judges with
                      respect to fact finding in private rights cases, as long as the legal significance
                      of those factual determinations is subject to determination by an Article III
                      court
b.        Northern Pipeline v. Marathon Oil (1982)
     1)     KEY POINT:
           Court moved away from Public Rights/Private Rights distinction
     2)     FACTS:
           part of the Bankruptcy Act of 1978 authorized federal bankruptcy judges (non-Art.
              III) to decide certain state law contract claims between private parties without
              their consent
                     Contract dispute between Debtor and a Third Party (non-creditor); if the
                      debtor prevailed, on the K claim, he had more money to satisfy his debts.
           the judges decisions was subject to limited review by Art. III courts
           bankruptcy is a new statutory entitlement, so there is nothing wrong with
              assigning resolution of those issues to non-Art. III judges
     3)     HELD: this provision of the Bankruptcy Act was an excessive delegation of
            adjudicatory powers
     4)     REASONING: the Court could not agree on a rationale for striking down the
            provisions.
     5)     RULE: ―Congress may not vest in a non-Article III court the power to adjudicate,
            render final judgment and issue binding orders in a traditional contract action
            arising under state law, without consent of the litigants, and subject only to
            ordinary appellate review.‖ (clarification of Northern in Thomas v. Union Carbide)
           CURRENT LAW: Bankruptcy judges can rule on bankruptcy issues and make
              determinations/recommendations like a Magistrate on ancillary issues.

c.      Thomas v. Union Carbide (1985)
     1)   TARGET ISSUE: The Court rejected the public rights/private rights distinction in
          favor of what is called a more practical approach. The new approach focuses on the
          purposes served by a statutory delegation of adjudicatory power and the impact of
          that delegation on ―the independent role of the Judiciary in our constitutional
          scheme.‖
     2)   FACTS:
          case involved FIFRA, specifically permitting the EPA to approve chemicals used in
            insecticides
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              if one company had a chemical approved, FIFRA permitted a second (or any
               other) company to have their chemical approved making use of the data submitted
               by the first company
              because the successive companies are given a competitive advantage, the statute
               required them to pay the FMV of the data
     3)       HELD: upheld statute requiring binding arbitration of disputes over entitlement to
              value of data submitted to the government.
     4)       REASONING:
              despite rejecting the public rights/private rights distinction, the Court emphasized
               that the manufacturer‘s rights to the reimbursement resembled public rights
               because they were created by a federal statute, not common law
              there is a strong need for the arbitration scheme
                     NOTE: arbitration awards were subject to limited judicial review
              Purposes and Concerns
                     don‘t want to abrogate the traditional function of Art. III courts
                     does it make sense?
                     does it harm the balance?
                     is it useful?
                     is one branch being empowered at the expense of another?

d.        Commodity Futures Trading Commission v. Schor (1986)
     1)     TARGET ISSUE: the public rights/private rights distinction is still viable, but here
            the court takes a more purposive approach.
     2)     FACTS:
           The CFTC regulates the sale of commodity futures, tangible items brought or sold,
              usually through brokers, for future acceptance or delivery.
           Schor was a customer of one broker
           Schor filed an administrative complaint with the Commission, alleging that his
              broker had violated the commodity futures trading law and owed Schor
              reparations
           the broker filed a compulsory counterclaim to recover from Schor the balance of
              his account with the broker
                   this claim arose under State contract law
     3)     HELD: Congress could give the Commission the power to adjudicate compulsory
            counterclaims by brokers without violating Article III
     4)     REASONING:
           Article III serves two separate functions:
                   Structural Interest: ―to protect the role of the independent judiciary within
                    the constitutional scheme of tripartite government;‖
                   Personal Interest: ―to safeguard litigants‘ right to have claims decided before
                    judges who are free from potential domination by other branches of
                    government.
                  1. in the instant case, by asserting the counterclaim and demanding it be
                      adjudicated by the Commission, Schor waived the ―personal‖ interest
                      protected by Article III.
     5)     RULE: Does the delegation impair either an individual‘s interest in having a claim
            adjudicated by an impartial Article III judge or the structural interest in having an
            independent judicial branch decide matters that have traditionally fallen within the
            core of Article III business.

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                 Factors to Determine whether Delegation causes Structural Impairment:
                       the extent to which the ‗essential attributes of judicial power‘ are reserved to
                        Article III courts
                       the extent to which the non-Article III forum exercises the range of
                        jurisdiction and powers normally vested only in Article III courts
                       the origins and importance of the right to be adjudicated; and
                       the concerns that drove the Congress to depart from the requirements of
                        Article III
       e.     Granfinanciera, S.A.
D. Controlling Agency Power: Appointment and Removal of Administrative Officials
   i.    Generally: Having different functions within one agency is reconciled by each of the three
         branches having some degree of control over what the agencies do.
       a.     These controls are manifested informally and formally as set forth in the Constitution
   ii. Informal Mechanisms for Controlling Agency Power
       a.     Generally: Most control over agencies is political and informal
       b.     Congress:
           1)   creates the agency
           2)   has the power to amend the organic statute
           3)   provides funding and budgeting
           4)   oversight hearings for supervision of agencies
       c.     Executive
           1)   executive orders require certain procedures and approvals
           2)   budget proposals
           3)   designate chairman
           4)   political clout (i.e. a phone call and invite to the White House)
           5)   public pressure (i.e. speeches, press conferences and releases, etc.)

   iii.     Legal Controls over Agency Power/Roles of the Branches
          a.     Defining Kind of Officer (on Exam argue all of these!):
              1)   Officer:
                  ―anyone who exercises significant discretionary authority under the laws of the
                     United States‖ – Buckley v. Valeo
              2)   Inferior Officer:
                  Morrison Factors:
                          subject to removal by a higher executive branch official
                          limited duties
                          limited power/narrow jurisdiction
                          office limited in tenure; once task is completed the office ends (Morrison v.
                           Olson)
                  ―Inferior officers are officers whose work is directed and supervised at some level
                     by others who were appointed by presidential nomination with the advice and
                     consent of the Senate.‖ (Edmond v. US)
              3)   Other:
          b.     Congress:
              1)   Generally: As Congress gives away power, it is giving the agency discretion
                  to compensate for loss of power, Congress wants to have some control and
                     oversight ability
              2)   Congressional Appointment
                  Congress can create administrative agencies, but generally cannot appoint the
                     officials who fill those agencies.
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               the Framers did not want Congress to have both the power to create offices
                and the power to fill them
               Buckley v. Valeo, 1976, (the FEC was charged with overseeing conduct of
                Congressional elections. Statute authorized members of Congress to appoint
                officials to serve on the Commission. HELD: because the members of the
                Commission are ―Officers‖, they must be appointed by the President and
                confirmed by the Senate)
                        Constitution separates powers to avoid tyranny
         Congress can appoint officials to help it exercise its legislative powers, as an
          ―incident‖ of its legislative powers under Article I. (Buckley)
               those officials can gather information for Congress, etc.
         Congress can limit the power to appoint, i.e. in Bowsher it limited the Comptroller
          appointee to three names, limit by listing credentials in the Organic Statute
         Congress can make the decision to vest the power to appoint inferior officers in
          ―the President, Head of Departments or Courts,‖ but cannot reserve it for itself.
          (Morrison v. Olson, a federal statute authorized ―independent counsels‖ to
          investigate and prosecute crimes by high-level federal officials. Under the statute,
          the independent counsel was appointed by a paenl of three federal judges. Held,
          the special prosecutor is an inferior officers, see factors above.)
         Under the ―Necessary and Proper‖ clause, ―other‖ officers are appointed by
          statute (i.e. Civil Service)
3)       Legislative Membership on Administrative Bodies
4)       Congressional Removal of Officers
         Congress can remove officers by impeachment (Art. II, § 4), but: (PRINCIPLE
          AND INFERIOR???)
               it is cumbersome
               limited to ―treason, bribery, or other high crimes or misdemeanors
         ―Congress cannot reserve for itself the power of removal of an officer charged with
          the execution of the laws except by impeachment.‖ (Bowsher v. Synar, A federal
          statute gave budget-cutting authority to the Comptroller General, who heads the
          General Accounting Office, and also gave Congress the power to remove. The
          court determined that the budget-cutting authority conferred under law was
          executive because he was applying the law and telling the President what to do.)
               if Congress had the power to remove Administrative and/or executive
                officials, the administrators ability to exercise executive functions would be
                greatly limited
         Congress can restrict the President‘s power to remove certain officers
         Congress can remove officials who exclusively serve the legislative function
5)       Legislative Veto
         Defined: A ―legislative veto‖ is a statutory provision in the organic statute that
          requires the agency to ―check‖ with Congress before making certain decisions
          and/or retains Congress‘ ability to overrule the agency decision.
         INS v. Chadha (1983)
               FACTS:
              1. Under a federal statute, Congress had given the Attorney General the
                   power to decide whether, for humanitarian reasons, to suspend
                   deportation of aliens overstaying their visa. The AG had sub-delegated the
                   power to the INS, who decided to permit the D to stay.
              2. Practically speaking, the alien could seek judicial review if he didn‘t like
                   the decision to deport, but no one would contest the decision to suspend
                                                                                           11
                       deportation, so Congress had a provision that required the Agency to
                       report suspensions
                  3. either house of Congress had a certain amount of time to pass a resolution
                       to invalidate the suspension, in the instant case the house passed the
                       resolution
                   HELD: the legislative veto violates the bicameralism and Present
                    requirements of the Constitution.
                   REASONING:
                  1. Majority said the Resolution was legislative in purpose in effect because it
                       had the purpose and effect of altering the legal rights, duties and relations
                       of persons…outside the legislative branch
                            Powell: argued that it was judicial
                   DISSENT: Justice White believed that Congress needed the legislative veto
                    to control federal agencies exercise of their delegated powers. His concern
                    was that without the legislative veto, Congress must either refrain from
                    delegating the necessary authority, forcing them to write laws with great
                    specificity, or abdicate its law-making function to the executive branch and
                    independent agencies.
                  1. this creates a checks and balance problem because once Congress
                       delegates its power, its gone. Likewise when the executive signs off on
                       judicial or legislative actions, its check is gone.
                   KEY POINT: Eliminated a popular and effective means for Congress to
                    control agencies and shows that it can be hard to tell whether a power is
                    legislative, executive or judicial.
                   QUESTION: Had this been executive, Congress couldn‘t have done it??
     6)     Legislative Review and Oversight
c.        The President
     1)     Generally:
           Article II, § 1: ―The executive Power shall be vested in a President of the United
              States of America‖
           :The President shall take care..
     2)     Appointment:
           Officers are appointed by the President with the ―advice and consent of the
              Senate‖ (Art. II)
                   if the Framers wanted the Senate to be a rubber stamp only, they could have
                    excluded ―with advice and consent of Senate‖ language
     3)     Removal:
           Rationale and Arguments
                   Duty Clause: because the President has a duty to see that the laws are
                    faithfully executed, limiting his removal powers impedes his constitutional
                    duty.
                   Impeachment: because the Constitution vests removal in the Legislature, one
                    could argue the President has no authority to remove
           Congress could not restrict the President‘s power to remove an officer whom the
              President had appointed with the advice and consent of the Senate, if that officer
              exercised ―purely executive‖ powers. (Myers v. United States, federal statute
              requiring the President to get Senate approval to remove a postmaster was struck
              down because the ―duty to take care‖ implies the power to remove)
                   the officer might be inefficient; President probably better informed to
                    determine if the officer is carrying out his duty.
                                                                                                 12
    Congress could restrict the President‘s power to remove a presidential appointee
     who exercised quasi-legislative or quasi-judicial powers. (Humphrey’s Executor v.
     United States, the Court upheld a federal statute restricting the President‘s ability
     to remove a member of the Federal Trade Commission who had been appointed
     by the President with the Senate‘s advice and consent. It limited the term of the
     officer and only permitted removal for cause; also, Weiner v. United States, based
     on the function of the office (a multi-function executive officer) there is an implicit
     congressional intent to prevent arbitrary firing.
    Modification of Humphrey Rule: Congress may limit the removal of executive
     officers (even purely executive) if it the restrictions on removal do not ―impede the
     President‘s ability to perform his constitutional duty.‖ (Morrison v. Olson, statute
     limited the Attorney General‘s power to remove by imposing a ―good cause‖
     restriction.)
           As long as it doesn‘t take too much power from the Executive, nor
            aggrandize Congress; functionalist approach
         1. does it unbalance the balance?
         2. is it harmful?
         3. is it useful?
           Morrison seems to have the effect of expanding Congress‘ power to restrict
            executive removal power.
    Removal of Non-Executive Officers
           If the President appointed the officer, he can also remove them. (Mistretta v.
            United States, the court upheld a statute authorizing the President, for cause,
            to remove the US Sentencing Commission Art. III judges whom the
            President had appointed to the Commission. The Commission was not part
            of the executive branch, rather it was and ―independent commission of the
            judicial branch. The court reasoned functionally that this limited removal
            power does not compromise the judicial branch‘s ability to exercise its
            constitutional function or encroach on judicial power.
4)  Line Item Veto:
    Clinton v. New York (1998)
           FACTS:
         1. The Line Item Veto Act authorized the President, after signing an
               appropriation bill into law, to ―cancel‖ certain, discrete spending
               provisions in the law.
           HELD: the Act is unconstitutional
           REASONING:
         1. this provision permits the President to in effect change the law, since this
               is law making, it is legislative, therefore it needs to be passed in
               accordance with the Constitutional provision for the passage of bills.
         2. the Constitution contemplates the Executive veto will be complete, not
               ―line by line‖
                    argue pragmatically that veto is no longer effective because of the
                     addition of so many ―extra‖ provisions
         3. the law violated the constitution by allowing laws to be made without
               following these bicameralism and presentment procedures
           KEY POINT:
         1. The Court explained that statutes delegating lawmaking authority differ
               from the Line Item Veto Act because when Congress delegates lawmaking

                                                                                         13
                               authority to the President, it must prescribe a policy (―intelligible
                               principle‖) for the President to follow.
                                   The Act gave the President unfettered discretion
                                   Court attempting to avoid casting doubt on statutes in which
                                    Congress delegates broad rulemaking authority to federal agencies

I I I . How Agencies Make Law: Adjudication and Rule Making
     A. The Administrative Procedure Act
        i.    come back to add-in at the end to summarize my knowledge
        ii. History
            a.     prior to the adoption of the APA in 1946, the governing law of Federal administrative
                   procedure was Article 5; State administrative procedure, Article 14.
        iii. Addresses the kind of procedures required before the government acts in a way that may
              harm people
        iv. Balancing of Policy Goals
            a.     Efficiency: the need for quick procedures which are streamlined and effective for
                   running the government
            b.     Fairness: to affected individuals
     B. Procedural Categories of Administrative Law Making
        i.    Generally:
            a.     there is a distinction adjudication and rulemaking, but where the line falls is unclear
        ii. Cases: Londoner and Bi-Metallic identify two types of government action, one subject to due
              process (adjudication), and the other not (rulemaking).

           a.      Londoner v. Denver (1908)
                1)    FACTS:
                     Plaintiff protested an assessment by a local agency to improve a road where a tax
                       would be assessed on those people living on the road
                     this was a special assessment, not a general assessment affecting the entire city
                2)    HELD:
                     if a hearing is held, P must be given an opportunity to speak and/or offer
                       evidence
                         The publication of the proposed assessment in a newspaper of general
                          delivery satisfied the notice requirement
                         the taxpayers were not given an opportunity to be heard because the
                          assessment was fixed at a special city council meeting of which the time and
                          date were not published and at which the taxpayers were not present to give
                          argument.
                3)  REASONING:
                    The Due Process Clause requires that, before an assessment was fixed, the
                     taxpayers must have had notice and an opportunity to be heard.
                4)  RULE:
                    Due process is required when the proceeding is functionally an adjudication, as
                     opposed to rulemaking
                    Due process does not require full judicial type procedures in all cases:
                         ―due process of law requires that, at some stage of the proceedings, the
                          [person] shall have an opportunity to be heard, of which he must have
                          notice, either personal or by publication, or by a law fixing the time and
                          place of the hearing… Many requirements essential in strictly judicial
                          proceedings may be dispensed with in proceedings of this nature. But even
                                                                                                         14
                             here a hearing, in its very essence, demands that he who is entitled to it shall
                             have the right to support his allegations by argument, however brief, and, if
                             need be by proof, however informal.‖
           b.    Bi-Metallic Investment Co. v. State Board of Equalization (1915)
              1)    FACTS:
                   property owner objected to an increased tax
                   he had no notice, procedure, nor opportunity to be heard
              2)    HELD:
                   property owner not entitled to due process
              3)    REASONING:
                   government action that is legislative in nature does not require due process
                      procedures
                   due process is required only when ―a relatively small number of persons was
                      concerned, who were exceptionally affected, in each case upon individual
                      grounds.‖
              4)    RULE: due process does not apply to general law making; the procedural safeguard
                    of liberty and property in general lawmaking is the political process
       iii. Legislative v. Adjudicative Action
           a.    Number of People Affected:
              1)    adjudication usually affects a small number of people
              2)    rulemaking tends to affect a large group of people
           b.    Timing of Affect:
              1)    adjudicative action addresses actions that took place in the past
              2)    legislative action (rulemaking) tends to address things that will happen in the future
           c.    Nature of the Facts:
              1)    in adjudicative action inquiry is made into the facts about the parties before them
              2)    in legislative action facts are looked at hypothetically
I V . Administrative Adjudication
    A. Basic Requirements of Due Process
       i.    Generally:
           a.    no person may be deprived of life, liberty or property without due process of law
              1)    by the federal government under the 5th Amendment
              2)    by the state government under the 14th Amendment
           b.    due process is the minimum procedural requirement that must be followed when
                 individuals‘ rights may be affected
       ii. Does Due Process Apply: Protectable “Liberty” and “Property” Interests
           a.    Historical Approach: Rights/Privileges
              1)    property was the traditional common-law concept of property and liberty was
                    freedom from government restrictions on traditional common law rights
              2)    if all the government did was deprive a person of a ―privilege‖ or benefit, it did not
                    need to provide due process.
                   McAuliffe v. New Bedford, Police officer dismissed for engaging in political activities
                      did not require due process because he ―has no constitutional right to be a
                      policeman.‖
                   Bailey v. Richardson, Long time civil service employee accused of being a
                      Communist was required to go before the ―Loyalty Board‖ which decided to
                      dismiss her. She wanted the names of those that testified against her so they could
                      be confronted. Since she did not lose any right or privilege (―government
                      employee is not a contract‖), not entitled to due process.


                                                                                                          15
   3)   Cafeteria & Restaurant Workers Union v. McElroy, Employee denied access to her
        work site on the grounds that she had failed to meet the security requirements of
        the installation. The court held that she was not entitled to an opportunity to be
        heard because government employee is not a ―right‖.
b.    Contemporary Approach: Legal Entitlements
   1)   Goldberg v. Kelly (1970)
       FACTS:
                NY had terminated welfare assistance to Mrs. Kelly.
                NY provided a two step administrative procedure for the termination of
                 welfare benefits
               1. First, an informal hearing procedure in which the welfare recipient could
                    tell her side of the story. If the state determined that the person no longer
                    qualified for welfare as a result of the evidence after that hearing, the state
                    would immediately terminate welfare.
               2. Second, the recipient could seek a de novo, formal administrative hearing,
                    with retroactive payments if the person was found to have been
                    erroneously terminated.
       HELD: A recipient must be allowed to state his position orally. Informal
          procedures will suffice, no particular order of proof or mode of offering evidence
          is required.
       RULE:
                the loss of government entitlement such as a welfare benefit has the same
                 impact as when government deprives someone of traditional property. BUT,
                 the court did not make clear how to determine when a personal interest one
                 has in a government benefit or privilege would rise to the level of becoming
                 a right protected by the Due Process Clause.
               1. the welfare recipient had a statutory right to continued benefits as long as
                    she remained eligible; this constituted a legitimate claim of entitlement
c.    What is “Property”?
   1)   Board of Regents v. Roth
       FACTS:
                A person hired as an Assistant Professor for a year at a state university was
                 informed that he would not be rehired the next year.
                Professor claimed that he was fired for criticizing the Board
                he was not afforded a hearing to challenge the cause and basis for the failure
                 to rehire
                Roth had no tenure, only the unilateral expectation of being rehired (because
                 that is what normally occurred to teachers in his position)
       HELD: No projectile property interest under the due process clause
       RULE: ―To have a property interest in a benefit, a person clearly must have:
                more than an abstract need or desire for it
                more than a unilateral expectation of it
                must have a legitimate claim of entitlement to it.‖
               1. Entitlement must be found some place else, such as a contract or statute
   2)   Perry v. Sindermann
       FACTS:
                Teacher was a full professor who had taught at a state junior college for ten
                 years


                                                                                                16
                the college did not have an explicit tenure system and the professor was
                 hired each year on a one-year contract, but the handbook stated that ―The
                 Administration of the College wishes the faculty to fell he has permanent
                 tenure as long as his teaching services are satisfactory and as long as he
                 displays a cooperative attitude toward his co-workers and is happy in his
                 work.‖
                he was not rehired for allegedly speaking on political issues
                not afforded a hearing to challenge the cause and basis for the failure to
                 rehire
        HELD: Remanded to determine if the informal tenure system was enough for a
          legal claim of continued employment, a legitimate entitlement to ―property‖
          protected by due process.
        RULE: Property denotes a broad range of interests that are secured by ‗existing
          rules or understandings.‘ A person‘s interest in a benefit is a ‗property‘ interest for
          due process purposes if there are such rules or mutually explicit understandings
          that support his claim of entitlement to the benefit and that he may invoke at a
          hearing.‖
                this has the practical effect of encouraging administrative agencies not to set
                 standards because it creates an expectation
                there needs to be an extrinsic source (from the Constitution) of entitlement,
                 the Constitution protects property rights, but does not define them
                entitlement might be found in an unwritten ―course of dealing‖
d.    Liberty
   1)    Traditional Definition:
        freedom from physical restraint/personal injury
        freedom to practice one‘s profession
   2)    Cases:
        Meachum v. Fano (1976)
                FACTS:
              1. state prisoner transferred to a less favorable prison claims that as a
                    consequence of being transferred his liberty has been impaired
              2. he was given a hearing, but not told the evidence against him (probably
                    good practice for revenge purposes)
                HELD: No deprivation of liberty interest
                REASONING:
              1. whatever expectation the prisoner had of staying at the first facility is too
                    insubstantial to trigger procedural due process
                RULE: Narrowed the definition of liberty to those things written down.
        Paul v. Davis
                FACTS:
              1. Chief of Police, in an effort to reduce the incidence of shoplifting, decided
                    to alert local merchants to persons who might be possible shoplifters.
              2. He distributed a flyer with the names and photos of persons identified as
                    ―active shoplifters‖
              3. Davis had once been arrested for shoplifting, but had pleaded no guilty
                    and the case had never been brought forward by prosecutors
                HELD: ―the proposition that reputation alone, apart from some more
                 tangible interests such as employment, is neither ―liberty‖ or ―property‖ by
                 itself sufficient to invoke the procedural protection of the Due Process
                 Clause.
                                                                                               17
                        RULE:
                       1. Good reputation is not a ―liberty‖ interest because it is not written down.
                 Vitek v. Jones
                        FACTS:
                       1. Prisoner was transferred to a mental facility
                        HELD: the prisoner‘s liberty interest is at stake, therefore due process
                         applies
                        REASONING:
                       1. specific statutes govern the circumstances in which the inmate can be
                            transferred to a mental institution; these regulations create the entitlement
                       2. even if the prison has discretion, the established criteria create an
                            expectation
                 Sandin v. Connor
                        FACTS: Prison adjustment team ordered plaintiff to serve 30 days of solitary
                         confinement for using foul language during a rectal search
                        HELD: due process does not apply in this case because the action did not
                         present a ―dramatic departure from the basic conditions of his sentence.‖
                        RULE: need to find both a grievous loss and a regulatory protection
                       1. finding the liberty entitlement in the regulations alone discourages setting
                            up regulations
                 Board of Pardons v. Allen
                        FACTS:
                 Kentucky Department of Corrections v. Thompson
                 If the state creates a ―good time credit‖ system, in which persons may earn early
                  release from prison if they comply with certain requirements, the state may not
                  deprive them of the early release by alleging they have failed to comply with the
                  requirements without affording them due process. (Wolff v. McDonnell, 1974)
                 There is no liberty deprivation in transferring a prisoner from Hawaii to California
                  because there are no regulations granting the entitlement. (Owen Case)

iii.     What Process is Due?
       a.    Generally:
          1)    In Federal and State adjudications where the APA does not apply, due process
                applies, but the due process is always the minimum!
       b.    Cases:
          1)    Historical Approach:
               ―due process can be satisfied by the most simple procedures‖ (Londoner v. Denver)
               shortly after the passage of the APA, the Supreme Court suggested that whenever
                  due process required a hearing before a federal agency, an adjudication under the
                  APA would be required (essentially saying that due process required the formal
                  procedures of the APA). (Wong Yang Sung v. McGrath)
               a fairly formal adjudication would is required (Goldberg v. Kelly)
          2)    Matthews v. Eldridge
               FACTS:
                      Mr. Eldridge had been receiving social security disability payments
                      in the course of routine monitoring, the Department sent him a
                       questionnaire about his medical condition
                      after review of his response and receiving reports from his physician and
                       psychiatric consultant

                                                                                                      18
                the agency preliminarily determined that his physical condition had
                 improved to the point where he no longer qualified for disability benefits
                he received a writing of the proposed termination and the reasons for it
                Eldridge responded, but the agency still concluded that he was no longer
                 disabled and notified him that his benefits would terminate at the end of the
                 month
                Eldridge could seek reconsideration which would be a full evidentiary
                 hearing, and if disability was determined he would be paid benefits
                 retroactively
         HELD:
                Due process applies because his property entitlement comes from the
                 specifics of the regulations of disability benefits.
                His due process rights were not violated under the current procedure
         REASONING:
                Private Interest: Eldridge has a strong interest in maintaining his disability
                 benefits, although in the instant case, his other sources of income are not
                 disclosed.
                Utility: The agency is likely to get what they need from the written medical
                 files.
                Government‘s Interest: The government has an interest in the quick
                 resolution of benefit disputes; they also have a budgetary interest in making
                 sure the disputes are quickly resolved
         RULE: What process is due is determined by applying a Balancing Test to the
          procedure used :
              1. Private Interest:
                         the private interest of the people of this type that will be affected by
                          the action
              2. Utility/Usefulness for Avoiding Error:
                         the risk of an erroneous deprivation of that private interest
                         likely reduction of that risk by requiring more or different
                          procedures
                         is more procedure needed to make the results more accurate
              3. Government‘s Interest
                         in using the required procedures as opposed to more or different
                          procedures
3)       Goss v. Lopez
         FACTS:
                a high school student was given a ten-day suspension without a prior
                 hearing
                the rule providing for the suspension provided no procedures for students
                 facing suspensions of up to ten days
                this invaded a protected due process liberty interest because Ohio law
                 provided for a free education and compulsory school attendance of
                 youngsters.
         HELD: minimal procedures of ―oral or written notice of the charges against him,
          and if he denies them, an explanation of the evidence the authorities have and an
          opportunity to present his side of the story‖ were required to ensure fairness in
          disciplinary truth-seeking determinations
         REASONING:

                                                                                                19
                the students had a protected liberty interest in a public education that could
                 not be taken away by suspension without the minimal procedural
                 safeguards of notice and an opportunity to be heard
                14th Amendment forbids arbitrary deprivation of liberty such as unilateral
                 suspensions of up to 10 days without notice and hearing
                BALANCING TEST:
              1. Private Interest: student has an interest in not wanting to miss two weeks
                    of class
              2. Utility for Avoiding Error: a hearing would give witnesses a chance to
                    testify as to what he saw and give the accused an opportunity to hear the
                    evidence against him
              3. Government Interest: cost of time great, not high monetary cost; lack of
                    resources; lose immediacy of sanctions
4)       Walters v. National Association of Radiation Survivors
         FACTS:
                detailed system was established by statute for determining a Veteran‘s
                 entitlement; final authority rested with the Board of Veteran‘s Appeal
                Veteran‘s association claimed that the statute limiting the amount of
                 attorney‘s fees that could be paid to $10 violated their due process rights by
                 limiting their access to counsel
                the procedure afforded was not a full evidentiary hearing; the claimant was
                 entitled ―to a hearing at any time on any issue involved in a claim.‖
         HELD: The limitation on attorney‘s fees does no violate the veteran‘s procedural
          due process
         REASONING:
                BALANCING TEST:
              1. Personal Interest: the Veteran has a property interest in the continued
                    receipt of government benefits.
              2. Utility for Avoiding Error: no evidence was produced to prove those
                    represented by counsel had a higher success rate in adjudicating appeals.
                         the statistics presented fail to show the complexity of some cases
                         also doesn‘t take into account that no lawyer ―specializes‖ in this
                          area because of the fee limitation
              3. Government Interest: keep the procedures simple; legislative goal of
                    wanting veteran‘s to receive the entirety of their award, free from
                    payment to attorneys
         DISSENT: this outcome is questionable; what was meant to prevent charging
          unscrupulous attorney‘s fees in 1862 has the effect today of preventing even
          ―reasonable‖ fees from being charged
5)       Gray Panthers v. Schweiker
         FACTS:
                Disputes involving Medicare benefits for less than $100 were decided on the
                 basis of written appeal
         HELD: due process requires a hearing; in the instant case, a teleconference was
          sufficient.
                how much does the procedure need to be tailored to the class involved?
         REASONING:
                BALANCING TEST


                                                                                             20
                  1. Private Interest: objectively, $100 is not a lot of money, but maybe to
                     elderly person facing high medical bills it is significant
                 2. Utility for Avoiding Error: Objective analysis is good, but letting the
                     agency decide subjectively, with the influence of the insurance company,
                     could be bad.
                 3. Government Interest: An oral hearing for individuals would be costly
      6)   Brock v. Roadway Express
          FACTS:
                  an employee was discharged for allegedly disabling the lights on his truck
                  the statute prevented retaliatory discharge of employees
                  the Secretary of the Agency ordered the employee‘s preliminary
                   reinstatement
                  the Company asserted that this was a deprivation of property rights in the
                   form of obstructing the contractual right to discharge the employee for cause
                  an informal procedure where an investigator listens to all sides was held,
                   but the employer was not given the names of the interviewed employees,
                   nor the substance of their statements
          HELD: the failure of the Act to provide for an evidentiary hearing before
             temporarily reinstating the employee did deprived the employer of procedural
             due process.
          REASONING:
                  an employer‘s interest may be adequately protected without the right to
                   confrontation and cross-examination, as long as he was provided an
                   opportunity to respond at a meaningful time and in a meaningful manner,
                   BUT:
                  in the instant case the process due the employer required notice of the
                   employee‘s allegations, notice of the substance of the relevant supporting
                   evidence, and an opportunity to submit a written response and rebuttal
                   witnesses.
                 1. the procedure provided in this case did not protect against the risk of
                     erroneous deprivation, even if only temporary
                  BALANCING TEST:
                 1. Private Interest: The employer is concerned about money, but presumably
                     he is getting work out of the wages he must pay the reinstated employee.
                 2. Utility: Cross examination is a useful tool
                 3. Government Interest: Highway safety; encouraging employee‘s to report
                     violations by their employer without the worry of payback by the
                     employer
   c.    Matthews 3-Step Balancing Test
      1)   Generally: Even though it is hard to predict in advance the outcome of what
           process is due, what weight is given to each factor, and outcomes are widely
           variant, the Balancing Test is flexible; a rigid procedural format may prove
           inefficient or unfair for large numbers of individuals.
      2)   The Analysis: See Rule in Matthews
iv. Relevancy of Statutory Terms
   a.    Generally:
      1)   often the statute with the property and/or liberty entitlement sets forth the
           procedure for how, if, it is taken away
   b.    Cases

                                                                                             21
       1)  the statute creating the entitlement can also determine the extent of the procedures
           necessary to protect a person‘s due process interest, aka, the ―bitter with the sweet‖.
           (Rehnquist for a plurality in Arnett v. Kennedy, 1974, where a federal civil service
           employee was fired after being accused of offering a bribe. He was given notice of
           the charges and evidence against him and allowed to respond orally and in writing,
           but was not afforded an evidentiary hearing before an impartial agency official
           before he was fired (he got it afterwards).)
      2)   Cleveland Board of Education v. Loudermill
          KEY POINT: dispelled the ―bitter with the sweet‖ notion
          FACTS:
                  classified civil service employee dismissed from employment without a
                   hearing
                  the statute provided for immediate termination and later hearing
                  the employee was given a pre-termination opportunity to respond
                  the statute was the entitlement granting the employee a property interest
          HELD:
                  All the process due was provided by a pre-termination opportunity to
                   respond because there was a provision for post-termination administrative
                   proceedings.
                 1. a tenured employee is entitled to oral/written notice of charges against
                      him, an explanation of the evidence, and an opportunity to present his
                      side of the story—any thing more prior to termination would intrude on
                      the government interest
          RULE:
                  Where a due process interest exists, the Court must determine whether the
                   agency‘s procedures adequately protect that interest even if the statute upon
                   which the entitlement is based prescribes procedures
                           the function of the statute is to grant the entitlement, BUT to
                            determine the procedure due look to the due process clause.
                           if the legislature grants an entitlement, process is due
                  flexible, informal pre-termination proceedings are sufficient under due
                   process when followed by a full, formal post-termination proceeding.
                           ―sparse‖ pre-termination requirements are permitted here because
                            there is an opportunity for a full post-termination hearing
                           the Court suggests that in the absence of exigent circumstances, some
                            pre-termination proceeding must be given. (see below)
      3)   If the government, by choice, in the entitlement statute provides procedural rights
           beyond the Matthews balancing test, that procedure is binding, unless and until the
           regulation is changed. (Logan v. Zimmerman Brush, 1982)
v. When is Process Due?
   a.    North American Cold Storage, Co. v. Chicago
      1)   FACTS:
          Illinois statute provided for the seizure and destruction of food without notice or
             hearing if it was ―unwholesome and unfit‖ for use.
          Plaintiff claims that the seizure and destruction of its poultry without any judicial
             determination violated its right to Due Process
      2)   HELD: A hearing before seizure, condemnation and destruction of food which was
           unwholesome and unfit for use was not necessary.
      3)   REASONING:

                                                                                               22
                     it is within the legislature‘s discretion to enact laws relating to public health
                     the Constitution does not say a person can‘t be deprived BEFORE due process, it
                      just says without
                   in circumstances where the person deprived can get full recovery after the fact, it
                      is okay to wait to give process
                            but then the information needed to prove is gone
                            probably need exigent circumstances like these
           b.    Pre-deprivation procedure necessary where property purchased with proceeds from
                 criminal activity was seized with no prior notice. Different from exigent circumstances
                 present in North American. (United States v. James Daniel Good Real Property)
           c.    Ingraham v. Wright (1975)
              1)    FACTS:
                   junior high students subjected to corporeal punishment claimed their due process
                      rights had been violated because there was no pre-punishment procedure
              2)    HELD: No pre-punishment procedure is required
              3)    REASONING:
                   after-the fact tort action is available for the abuse
                   BALANCING TEST:
                            any requirement for a pre-paddling proceeding would interfere with the
                             swift, sure exercise of school discipline (government interest)
              4)    NOTE: Court‘s seem unwilling to impose due process in the school setting
V . Formal Decision Making Mechanisms: Administrative Adjudication under the APA
    A. Introduction
       i.    Adjudication Defined:
           a.    agency process for issuing an order ( § 551 (7))
           b.    an order is a final disposition of an agency in a matter other then rulemaking,
                 including licensing
              1)    Licensing includes any agency permit, certificate, approval, registration, charter,
                    exemption, or other form of permission.
              2)    § 551 (6), (7), and (8)
           c.    the process by which agencies make final decisions on matters except for rulemaking
       ii. When is Formal Adjudication Triggered?
           a.    Generally:
              1)    adjudications ―required by statute to be determined on the record after opportunity
                    for an agency hearing.‖ (§ 554 (a))
                   Except:
                            554 (a)(1-6)
           b.    Cases
              1)    Seacoast Anti-Pollution League v. Costle (1st Circuit Court of Appeal, 1978)
                   FACTS:
                            Anti-Pollution group opposed a decision by the EPA granting a corporation
                             permission to discharge heated water from a nuclear generating station into
                             an estuary (= a contested licensing)
                            the underlying statute (Federal Water Pollution Control Act) provided that
                             its permits are issued ―after opportunity for a public hearing‖, but did not
                             specify whether that hearing had to be on the record
                            the group contends that the proceedings by which the EPA decided the issue
                             contravened certain APA provisions for formal adjudication
                           1. the EPA relied on information provided by a technical review panel
                           2. the data was not made public (not ―on the record‖)
                                                                                                      23
                       3. no opportunity for cross-examination
                  HELD: the APA is applicable to the FWCPA, therefore the EPA erred in not
                   following § 556 and § 557 procedures.
                RULE: Even when a statute simply requires a hearing, if the nature of the
                   proceeding is one for determining facts and applying law to them, the language in
                   Section 554 is triggered and a formal adjudication is required.
                         presumption in favor of trial-like procedures unless Congress makes it clear
                          they intend otherwise
                KEY POINT:
                         this is a broad interpretation of APA § 554 (a)
                         A good counter to Seacoast is that the Act was passed after the APA,
                          Congress knew the language and didn‘t put it in the statute
                         Rationale for the broad interpretation is that it creates a record for purposes
                          of judicial review
           2)    Chemical Waste Management v. EPA (D.C. Circuit, 1989)
                FACTS:
                         the Resource Conservation and Recovery Act required the EPA to hold a
                          ―public hearing‖ before issuing certain orders
                         the nature of the hearing was required was ambiguous
                HELD: The EPA‘s interpretation that a formal proceeding was not required is
                   reasonable.
                REASONING: rather then trying to determine what the statutory language means,
                   the Court deferred to the agency‘s interpretation
                RULE:
                         Where the nature of the hearing required is ambiguous, the court will defer
                          to the agency interpretation if it is ―reasonable in light of the issues likely to
                          be considered in such proceedings.‖
                         Formal adjudication should be employed when it is useful or necessary
   iii. What Process is Required Generally?
       a.     All information has to made on the record with the opportunity to dispute
       b.     Specifics follow below
       c.     § 556
           1)    Hearings
           2)    Presiding Employees
           3)    Powers and Duties
           4)    Burden of Proof
           5)    Evidence
           6)    Record as Basis of Decision
       d.     § 557
           1)    Initial Decisions
           2)    Conclusiveness
           3)    Review by Agency
           4)    Submissions by Parties
           5)    Contents of Decisions
           6)    Record
B. Issues of Participation and Intervention
   i.    Generally: the case law distinguishes between an interested person appearing before an
         agency in a proceeding and a person intervening in an agency proceeding.


                                                                                                         24
   a.     Appear: almost solely at the discretion of the agency because of its almost
          unchallengeable discretion to determine what the ―orderly conduct of the agency‘s
          public business permits.‖ (§ 555 (b))
    b.    Intervention:
       1)     case law unclear, but seems to suggest that intervention in an agency proceeding
              should be allowed whenever the person seeking intervention would satisfy the
              constitutional requirements for standing. (Office of Communication of United Church of
              Christ v. FCC)
ii. Why Intervene:
    a.    a person has a greater role in shaping the proceedings
    b.    access to witnesses and the record
    c.    input/participation in settlement (no blocking)
    d.    notice of what is going on
    e.    involvement with the discussions rather then waiting for appeal
    f.    since the agency ―embodies‖ the public interest and for purposes of judicial review, it
          is prudent to make sure they are confronted with everything they need to know.
iii. Cases:
    a.    Office of Communication of the United Church of Christ v. Federal Communications
          Commission (1966)
       1)     FACTS:
            church sought to intervene before the FCC in the renewal of the broadcast
                company‘s license
            intervention was denied
       2)     HELD: someone should have been allowed to intervene; the church had standing to
              intervene in the renewal, but it cannot block settlement between the FCC and the
              television station
       3)     REASONING:
            ―intervention on behalf of the public was allowed only to vindicate the public
                interest relating to a licensee‘s performance of the public trust inherent in every
                license‖
            The APA does not state when the agency has to permit someone to intervene
                     when the APA and Organic Statute are silent, the agency has discretion
                     ―party‖ includes a person or agency named or admitted as a party, or
                      properly seeking and entitled as of right to be admitted as a party, in an
                      agency proceeding, and a person or agency admitted by an agency as a party
                      for limited purposes.‖ § 551 (3)
       4)     RULE:
            the court required the agency to permit intervention despite the fact the APA gave
                the agency discretion
            Right to Complain without Intervention:
                     ―So far as the orderly conduct of public business permits, an interested
                      person may appear before an agency or its responsible employees for the
                      presentation, adjustment, or determination of an issue, request, or
                      controversy in a proceeding, whether interlocutory, summary, or otherwise,
                      or in connection with an agency function.‖ § 555 (b)
            Intervention gives Broader Procedural Rights
                     ―The agency shall give all interested parties opportunity for-
                    1. the submission and consideration of facts, arguments, offers of settlement,
                         or proposals of adjustment when time, the nature of the proceeding, and
                         the public interest permit; and
                                                                                                 25
                         2.    to the extent that the parties are unable so to determine a controversy by
                               consent, hearing and decision on notice and in accordance with sections
                               556 and 557 of this title.‖ § 554 (c)
       b.        Envirocare of Utah, Inc. v. Nuclear Regulatory Commission (1999)
            1)      FACTS:
                   Envirocare, a nuclear waste disposal company, sought to intervene to oppose the
                      licensing of two competing companies
                   the request to intervene was denied
                   the organic statute (Atomic Energy Act) provided that the Commission shall
                      ―grant a hearing upon the request of any person whose interest may be affected by
                      the proceeding and shall admit any such person as a party to such proceeding.‖
            2)      REASONING:
                   the Commission is not an Article III court and thus is not bound to follow the law
                      of standing derived from the ―case or controversy‖ requirement
                   the statute is ambiguous (what is an affected interest?), therefore the
                      Commission‘s interpretation must be sustained if it is reasonable. (citing Chevron)
                   excluding the intervention of competitors alleging an economic interest is
                      consistent with the Atomic Energy Act which sought to strengthen competition; to
                      permit intervention of competitors would have the opposite effect
            3)      RULE:
                   If the agency‘s interpretation of the statutory provision is reasonable, it is given
                      deference, despite the fact that reviewing courts have de novo power to interpret
                      and determine the law.
                           as a practical matter, the agency has knowledge of the purposes of the Act
            4)      KEY POINTS:
                   ―Agencies, of course, are not constrained by Article III of the Constitution; nor are
                      they governed by judicially created standing doctrines restricting access to the
                      federal courts.‖ Therefore, the criteria for establishing ―administrative standing‖
                      may permissibly be less demanding then the criteria for ―judicial standing‖
                   where the Organic Statute provides more than the APA, that is followed
       c.        Although no statute expressly provided for intervention, the court found
                 ―congressional silence‖ not controlling and permitted welfare organizations to
                 intervene in the Health, Education and Welfare Department hearings on states
                 compliance with the Act. (Welfare Rights Organization v. Finch, D.C. Cir. 1970)
C. Evidence
   i.    Generally:
       a.    Normal rules of evidence need not apply in formal administrative adjudications the
             way they do in court cases.
          1)    ―any oral or documentary evidence may be received‖ § 556 (d)
          2)    ―but the agency as a matter of policy shall provide for the exclusion of irrelevant,
                immaterial, or unduly repetitious evidence.‖ § 556 (d)
          3)    there is no 403 ―unfairly prejudicial‖ objection
       b.    Some agencies (i.e. the Department of Labor) have published rules of evidence
             governing its formal adjudications
       c.    Limit:
          1)    Due process is the baseline of procedure, if the admission of evidence would violate
                a person‘s due process rights, it should not be admissible.
          2)    Does due process require cross-examination?
   ii. Hearsay

                                                                                                      26
   a.     the APA does not preclude the admission of hearsay, and generally it is admitted in
          formal adjudications, BUT
       1)    no order in a formal adjudication may be issued that is not supported by ―reliable,
             probative and substantial evidence‖. § 556 (d), supporting the proposition that the
             decision to issue an order may not rely solely on hearsay that is not reliable,
             probative and/or substantial.
    b.    Richardson v. Perales (1971)
       1)    FACTS:
            hearing to determine whether the individual was disabled
            individual‘s treating physician gave live testimony at the hearing
            the agency‘s evidence was 5 written evaluations (hearsay) from physicians that
               had reviewed the individual‘s file
            cross examination was conditional
            the agency determined that the individual was not disabled
       2)    HELD: the written medical evaluations were reliable and substantial evidence, the
             decision was upheld.
       3)    RULE: decisions must be supported by ―reliable, probative and substantial
             evidence‖. (§ 556 (d))
       4)    KEY POINT: Rejected the ―Residuum Rule‖, which provided that while hearsay
             was admissible evidence, the decision in an administrative adjudication could not
             rely solely on hearsay evidence, there had to be at least a residuum of non-hearsay
             evidence supporting the decision.
iii. Administrative Notice
    a.    Generally:
       1)    Similar to judicial notice, where the court relies on a fact that does not have to be
             determined on the record because ―everyone knows it is true‖ or it can be
             determined from some outside source
       2)    Administrative Notice makes administrative proceedings more efficient, but it may
             not take into account individuality, specifically a fact might not undisputable to the
             parties before the agency.
       3)    The ALJ‘s probably have more knowledge of outside facts pertinent to the
             adjudication because they deal with these issues on a regular basis
       4)    Adjudicative Facts:
            facts at issue between the parties
       5)    Legislative Facts:
            not necessary to allow a person to rebut legislative facts, but still must provide
               notice
    b.    APA:
       1)    ―When an agency decision rests on official notice of a material fact not appearing in
             the evidence in the record, a party is entitled, on timely request, to an opportunity
             to show the contrary.‖ (§ 556 (e))
            when a decision rests on facts not in the record, party is entitled to notice o the
               fact the agency is going to rely on that fact and be given a chance to rebut
    c.    Cases:
       1)    Castillo-Villagra v. INS (1992)
            FACTS:
                     aliens unsuccessfully sought asylum based on there claim that they had a
                      well-founded fear of persecution (not actual persecution) by the Sandinistas
                      in Nicaragua

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                      while their appeal was pending, an anti-Sandinista coalition obtained
                       control of the government
                      the Board took administrative notice of the change in government without
                       permitting the aliens to supplement the record
                      the Board upheld deportability
                      the INA provided that ―the procedure so prescribed shall be the sole and
                       exclusive procedure for determining the deportability of an alien under this
                       section.‖
              HELD: the Board erred in taking administrative notice of the change in
                 government without providing the aliens an opportunity to be heard.
              REASONING:
                      analyzed under the Immigration and Naturalization Act because it displaced
                       the APA (see above)
                     1. the APA applies unless it is expressly displaced by the organic statute on a
                          particular point. (§ 559)
                      the aliens were denied due process
              RULE:
                      regardless of what the statute says, in the context of adjudication, due
                       process is the minimum
         2)    Gramatikov v. INS (7th Circuit, 1997)
              FACTS:
                      citizens of Bulgaria fighting deportation for fear because of communist
                       opposition
                      the INS took administrative notice that Bulgaria was no longer a controlled
                       by Communist, therefore anti-Communist are no longer in danger
              HELD: the taking of administrative notice in this case is proper
              REASONING:
                      the INS took the advice of the State Department on the likelihood of further
                       persecution, but it is rebuttable
                      rebuttal with evidence of ―unsubstantiated, uncorroborated evidence about
                       current political conditions in a country they left years ago‖ will not
                       convince the INS
                      the contrary evidence needs to be stronger
      d.    Analysis:
         1)    Can Administrative Notice be taken?
         2)    Is warning needed?
         3)    Is opportunity for rebuttal required?
D. Requirement of Findings
   i.   Generally:
      a.    Judicial Proceedings: in most cases, must give reasons for decision. (except small
            claims)
      b.    Administrative Proceedings:
         1)    ―All decisions are a part of the record and shall include a statement of –
              findings and conclusions, and the reasons or basis therefore, on all the material
                 issues of fact, law or discretion presented on the record; and
              the appropriate rule, order, sanction, relief, or denial thereof.‖ (§ 557 (c)(A),(B))
                      the purpose of the ―Statement of Basis and Purpose‖ is for judicial review
      c.    Arbitration: No reasons need, unless the parties agreed prior to the arbitration that an
            explanation of the decision would be given.

                                                                                                 28
   ii.  Cases:
      a.     Armstrong v. Commodity Futures Trading Commission ( 3rd Circuit, 1993)
          1)   FACTS:
              an entrepreneur formed three corporations that provided commodity services
              the Commodity Futures Trading Commission filed administrative complaints
                 against him
              The Commission affirmed a complaint by the ALJ that found the entrepreneur
                 individually liable as a controlling person under the Commodities Exchange Act
              the decision was affirmed as being ―substantially correct‖
              the Commission did not, though it could have, adopt the record and reasons of the
                 ALJ
          2)   HELD: The Commissions decision was not adequately supported by specific
               findings
              since that decision was necessary for the entrepreneur‘s liability, he was not held
                 liable
          3)   REASONING:
              the Commission‘s decision failed to provide specific findings and conclusions as
                 required by APA § 557 (c)
              the Commission failed to make a conclusion that the entrepreneur was a
                 ―controlling person‖ under the Act
          4)   RULE:
              the statement must be detailed enough so that a reviewing court understands
                 what evidence was used, why the decision was reached, and what inferences were
                 made (see Judicial Review)
              the agency must adhere to previous policy decisions, if it changes, it must make it
                 clear and give an explanation
E. Presiding Officer
   i.   Generally:

         a.        Who May Preside? ( § 556 (b))
              1)     the agency – ―each authority of the Government of the United States…‖ ( § 551 (1))
              2)     one or more members of the body which comprises the agency; or
              3)     an administrative law judge

         b.      The ALJ is part of the agency, like the rule makers and prosecutors.
              1)   separation of powers problems because one agency is exercising legislative,
                   executive and judicial functions
              2)   due process concerns
              3)   it is valuable, however because it leads to consistency

         c.      Hiring, Salary and Retention
              1)   ALJ‘s are hired by the Office of Personnel Management, a separate executive agency
              2)   the APA retained ALJ‘s as part of the agency
              3)   ALJ pay and is subject to the Civil Service Commission; the agency cannot reward
                   or punish ALJs.
              4)   ALJ‘s are exempt from annual performance ratings other employees are subject to
              5)   ALJs have a right to formal adjudication before the Merits Protection Board before
                   they can be fired
                  they are somewhat insulated from pressures within because of this

                                                                                                      29
d.        Role of the Agency
     1)     the decision the ALJ makes, including findings of fact, conclusions of law, and the
            reasons, may be either an initial decision or a recommended decision. (§ 557 (b))
           whether a case before an ALJ will result in an initial or recommended decision is
              up to the agency on either a general or particular basis
           Initial decisions automatically becomes the decision of the agency, unless there is
              an appeal to the agency or the agency decides on its own motion to review the
              decision
           Recommended decisions go to the agency for final determination

e.      Issues for Internal ALJ‘s
     1)    Impartial Hearer:         Bias
          the ALJ may not have ex parte contact with a party or non-ALJ members of the
            agency (§ 554 (d)
          Central Platte Natural Resources District v. Wyoming (1994)
                  FACTS:
                 1. CPNRD filed applications for permits to appropriate water for in stream
                      flows in the river
                 2. the ALJ wasn‘t a ―water expert‖ so he called upon an expert to explain
                      and help him evaluate the record (normally ok), BUT
                 3. ∆ claim the expert had a bias because she has a policy position, as an
                      advocate for higher levels in the Platte River and she had authored a
                      report that was submitted into evidence by one of the parties
                 4. the agency denied the permits
                  HELD: the contact with the expert did not disqualify the ALJ
                  REASONING:
                 1. there is a difference between a factual bias and a policy viewpoint
                 2. as long as the facts are there to back it up, the mere fact that a person has a
                      policy view doesn‘t automatically disqualify the ALJ
                  DISSENT: the expert had a commitment to fact and exposure to information
                   not in the record
          Grolier, Inc. v. FTC (1980)
                  FACTS:
                 1. an ALJ of the FTC issued an order for Grolier to cease and desist from
                      violating anti-trust laws
                 2. the ALJ had been an attorney-advisor to a former FTC Commissioner who
                      investigated the corporation
                 3. the corporation requested the ALJ disqualify himself, but he refused
                 4. the ALJ stated that he did not remember working on matters involving the
                      present issue
                  HELD: the ALJ‘s refusal to disqualify himself did not violate § 554 (d)‘s
                   prohibition against agency employees investigating and adjudicating
                   factually related cases.
                 1. ―An employee or agent engaged in the performance of investigative or
                      prosecuting functions for an agency in a case may no, in that or a factually
                      related case, participate or advise in the decision, recommended decision
                      or agency review pursuant to section 557 pf this title, except as witness or
                      counsel in public proceedings. (§ 554 (d))
                  REASONING:

                                                                                                30
           1. his current inability to recall the information is irrelevant, once an
              attorney-advisor is shown to have been ‗engaged in the performance of
              investigative or prosecuting functions‘ through prior acquaintance with
              ex parte information he may not participate or advise in the decision.‖ (§
              554 (d))
         2. here it was determined on remand that the ALJ was not factually involved
              in the facts of this particular case
          KEY POINTS:
         1. an ALJ can have an opinion without being disqualified
         2. ―Congress intended to preclude from decision-making in a particular
              case…all persons who had, in that or a factually related case, been
              involved with ex parte information or who had developed, by prior
              involvement with the case, a ―will to win‖
                   the language says involvement this case says ―will to win‖ which is
                    it?
    Nash v. Bowen (1989)
          FACTS:
         1. to alleviate a backlog, Secretary of the Social Security Administration
              instituted new policies for ALJ‘s requiring them to average a 50% reversal
              rate
          HELD:
         1. the policy does not infringe upon the quasi-judicial status of the ALJ‘s; it
              does not impair their right to decisional independence under the APA.
          REASONING:
         1. it was within the Secretary‘s discretion to adopt reasonable administrative
              measures in order to improve the decision-making process
         2. there court found no pressure on the ALJ‘s to maintain a fixed percentage
              of reversals
          CLASS DISCUSSION:
         1. should the agency impose uniformity on judges?
         2. require methodological consistency?
         3. How independent should ALJ‘s be?
                   a regime about how to conduct trials  probably okay
                   the rate of giving versus withholding benefits
         4. Does justice mean consistency or individualized consideration? A
              combination?
2)  Ex Parte Contact Inside the Agency
    the ALJ is barred from consulting a person on a ―fact issue‖ unless notice to and
     with an opportunity for all parties to participate
          § 554 (d)(1): ―The employee who presides…may not consult a person or
           party on a fact in issue, unless notice and opportunity for all parties to
           participate;‖
          extends to all persons, but only issues of fact
    anyone involved in the investigating or prosecuting function in the agency is
     barred from engaging in ex parte communications relevant to an agency
     proceeding
          may not participate or advise in either the ALJ‘s decision or its review by the
           agency, except as counsel or witness in a public proceeding
          ―The employee who presides…may not be responsible to or subject to the
           supervision or direction of an employee or agent engaged in the
                                                                                       31
                         performance of investigative or prosecuting functions for an agency.‖ (§ 554
                         (d)(2))
                   Exceptions:
                        If the adjudication involves the validity or application of rates, facilities, or
                         practices of public utilities or carriers, this prohibition does not apply and
                         the ALJ can consult off the record on a fact at issue with a person. (§ 554
                         (d)(2)(B))
                        the ALJ may report to the agency or a member of the body comprising the
                         agency, despite the fact he is engaged in investigatory and/or prosecutorial
                         functions. (§ 554 (d)(2)(C))

ii.     Bias Concerns and Influence arising from Multiple Roles of Agency Heads
      a.     Role of Agency Head
          1)   Multiple Roles
               the agency head is not only in charge of adjudication, but investigatory and
                 enforcement functions.
               Agency head is excepted from the provision prohibiting the ALJ from
                 communications with those engaged in investigatory and/or prosecutorial
                 functions. (§ 554 (d)(2)(C))
               Morgan v. US (
                      Agency head as adjudicator
                      FACTS:
                     1. acting Secretary presided over the taking of evidence
                     2. findings prepared by staff members who came up with a series of
                         proposed findings of fact (outside the presence of the parties)
                     3. when reviewing the case the Secretary read the briefs and conferred w/
                         subordinates who analyzed the evidence
                      HELD: a full hearing (a fair and open hearing) requires more than that
                      REASONING:
                     1. ―the one who decides must hear‖
                     2. the decision maker needs to be ―sufficiently familiar‖
                      LIMIT: the Court cannot inquire into how the decision-maker made his
                       decision and thought processes
                      RULE: The initial decisional authority is in the hands of the ALJ who hears
                       the evidence and arguments and states his decision in a written opinion. The
                       written opinion includes findings of fact, conclusion of law, and statement of
                       basis and reason. This opinion is subject to appellate review within the
                       agency.

      b.        Bias/Policy Commitment
           1)      FTC v. Cement Institute (1948)
                 FACTS:
                         this was an anti-trust action against the D allegedly standardized prices so
                          that bids were the same
                         unifying pricing and restricting price competition
                         in its reports to Congress, the FTC made it clear they thought this was anti
                          trust; and Commissioner publicly stated the practices were wrong
                 HELD: the previous statement of policy is not sufficient to create a bias.
                 REASONING:
                         having an opinion is not the same thing as having a closed mind
                                                                                                         32
              ct found that it was not required ―to hold that it would be a violation of
               procedural due process for a judge to sit on a case after he had expressed an
               opinion as to whether certain types of conduct were prohibited by law‖
       KEY POINT:
              Policy commitment is not inconsistent with fair decision making.
              A statement of policy is not the same thing as a decision on the facts,
               however, in this case, the policy was in the manuals of the concrete
               companies and the facts were stipulated, so what the Commission said
               before Congress is more like a ―decision‖.
   2)   Texaco v. FTC (1964)
       FACTS:
              Texaco, among others, tried to pressure independent stores to buy other
               things from them or those with whom they had working agreements
              they were using their power in the gas market to induce people to act a
               certain way in other markets and this tended to restrict competition
              the Chairman of the FTC made a speech in which he specifically named
               Texaco as an offender
              the proceedings against Texaco were still open at the time of the speech
              FTC later found that Texaco had engaged in illegal practices
       HELD: the Chairman‘s participation amounted to a denial of due process
       REASONING:
              the speech indicated the Chairman had already decided Texaco violated the
               Act in some manner
c.    Combination of Functions:
   1)   Withrow v. Larkin (1975)
       FACTS:
              the state medical board was authorized to investigate and decide complaints
               of misconduct by physicians
              medical board decided to bring a professional misconduct proceeding
               against a doctor and began to adjudicate the violation itself
              the proceedings were relatively formal
              based on the ex parte investigation, the board decided the doctor had done
               ―bad things‖
              the adjudicatory phase was an opportunity to rebut the things established
               during the investigation.
       HELD: this combination of functions was not a violation of the doctor‘s due
         process rights
       REASONING:
              this combination of functions was not enough to overcome the
               ―presumption of honesty and integrity‖ and demonstrate a sufficient risk of
               actual bias or prejudgment
              there was no foundation presented for suspecting that the Board had been
               prejudiced by their investigation, nor that it would have been disabled from
               hearing and deciding the issue of suspension based upon evidence
               presented at that hearing
              the Court compared this to Art. III judges making decisions in preliminary
               hearings and then presiding over the trial
       RULE: a combination of functions without more does not equal bias
       KEY POINTS:

                                                                                          33
                       the problem with putting the adjudicatory function in the hands of a third
                        party is that the policy goals of the agency may not be satisfied; in such a
                        small agency like this the financial resources are not present to totally
                        separate the investigatory and adjudicatory functions
                       the person convicting has control of the policy

iii.     Bias Concerns and Influence arising from Ex Parte Contacts and Relationships Outside
         the Agency
       a.     Ex Parte Communication Defined:
           1)    ―oral or written communication not on the public record with respect to which
                 reasonable prior notice to all parties is not given.‖
                ex parte communications limited to requests for a status report of a proceeding are
                   exempted from the definition ((§ 551 (14))
           2)    applies to ex parte communication ―relevant to the merits of the proceeding.‖ (§ 557
                 (d)(1))
       b.     Governing Rules:
           1)    ―No interested person outside the agency shall make or knowingly cause to be
                 made to any member of the body comprising the agency, administrative law judge,
                 or other employee who is or may reasonably be expected to be involve din the
                 decisional process of the proceeding, an ex parte communication relevant to the
                 merits of the proceeding.‖ ( § 557 (d)(1)(A))
                no interested person outside the agency, including but not limited to a ―party‖,
                   may communicate with:
                        a member of the body comprising the agency
                        the ALJ
                        other employee who is or may reasonably be expected to be involved in the
                         decision making.
           2)    ―No member of the body comprising the agency, administrative law judge, or other
                 employee who is or may reasonably be expected to be involved in the decisional
                 process of the proceeding, shall make or knowingly cause to be made to any
                 interested person outside the agency an ex parte communication relevant to the
                 merits of the proceeding.‖ (§ 557 (d)(1)(B))
                vice versa from the rule established above
       c.     Pre-Decision Remedy:
           1)    If communication takes place, the following must be placed on the public record of
                 the proceeding:
                all written communications;
                memoranda stating the substance of all oral communications
                all written responses and memoranda stating the substance of all oral responses to
                   the communications.
                       1. ―a member of the body comprising the agency, administrative law judge,
                            or other employee who is or may reasonably be expected to be involved in
                            the decisional process of such proceeding who receives, or who makes or
                            knowingly causes to be made, a communication prohibited by this
                            subsection shall place on the public record of the proceeding:
                                all such written communications;
                                memoranda stating the substance of all such oral communications;
                                 and
                                all written responses, memoranda stating the substance of all oral
                                 responses to the materials described above.‖ § 557 (d)(1)(C)
                                                                                                       34
     2)     If the communication is not discovered until after the decision, there is a remedy
            available if a party made the communication.
d.        Communication by a Party:
     1)     ―Upon receipt of a communication knowingly made or knowingly caused to be
            made by a party in violation of this subsection, the agency administrative law judge,
            or other employee presiding at the hearing may, to the extent consistent with the
            interests of justice and the policy of the underlying statutes, require the party to
            show cause why his claim or interest in the proceeding should not be dismissed,
            denied, disregarded, or otherwise adversely affected on account of such violation.‖
            § 557 (d)(1)(D)
     2)     Requirements:
           made or caused to be made by a party
           knowingly (knew or should have known ex parte communication is prohibited)
           consistent with the interest of justice and the policy of the underlying statute
           the claim may be dismissed, denied, disregarded or adversely affected
     3)     Generally: Very high threshold for application of this remedy
e.        Cases:
     1)     Professional Air Traffic Controller Organization v. FLRA (D.C. Circuit, 1982)
           FACTS:
                   the alleged ex parte communication took place during a proceeding before
                    the FLRA
                   the FLRA revoked PATCO‘s certification as a union because of its strike
                   PATCO challenges the decision claiming that improper ex parte
                    communications took place
                   Communications:
                  1. General Counsel of the FLRA and the ALJ in same office were issues of the
                       case were discussed between the General Counsel and his assistant
                      
                  2. Phone call from the Secretary of Transportation to one of the ALJ‘s
                       requesting an expedited hearing
                            In the nature of the status report, but additionally he hints that the
                             White House would like the case resolved quickly
                            ALJ communicating with a person outside the agency, therefore §557
                             applies and prohibits communication ―relevant to the merits of the
                             proceeding‖
                  3. Meeting between an ALJ and an AFL-CIO leader
                            the leader was privately expressing the views he had already
                             publicly expressed
                            the leader is an ―interested person outside the agency‖, therefore
                             §557 applies
           HELD: The ex parte communications did not void the decision
           REASONING:
                   ex parte communications do not void a decision unless a prejudicial effect
                    can be shown
                   the purpose of the APA statute prohibiting ex parte communications only
                    applies if the ex parte communications taint the decision
                   no evidence of tainting in the instant case
           RULE: The APA statute prohibiting ex parte communications only applies if the ex
              parte communications taint the decision.

                                                                                                35
            2)       American Telephone & Telegraph (1976)
                      FACTS:
                             Ratemaking hearing
                             a member of the Common Carrier Bureau represented the FCC before the
                              ALJ
                             After the proceeding, the same staff member of the CCB advised the FCC ex
                              parte as to the merits of the case and participated in the drafting of the final
                              decision
                             AT & T challenged the process during their rate making hearing
                      HELD: Separation of functions is not required in a rulemaking proceeding (recent
                       rule change separating the functions is not retroactive and does not apply to this
                       case.)
            3)       Portland Audubon Society v. The Endangered Species Commission (1993)
                      FACTS:
                             the ESC exempted certain animals from the Endangered Species Act
                             the President and White House Staff had let a few of the Committee
                              members know that a favorable decision would be politically useful
                             PAS challenges the exemptions on the grounds that the ex parte
                              communications were improper
                      HELD: the ex parte communication was improper
                      RULE: ex parte communications between any member of the agency involved in
                       the decision making process and an interested person outside the agency about the
                       merits of an agency proceeding is prohibited
                             the President‘s position as the head of the executive branch makes him an
                              ―interested person‖ in every agency proceeding
                             communication from the President or his staff is likely to influence an
                              agency
                           1. it would seem to go against the ―on the record‖ requirement of formal
                                 adjudication if this back door pressure was permitted
            4)       Pillsbury v. FTC (1966)
                      FACTS:
                             FTC brought monopoly allegations against Pillsbury
                             leaders of the FTC testified before a Senate Committee and were told of the
                              Senate‘s displeasure at their failure to go after Pillsbury
                             the detailed questioning required the FTC chairman to recuse himself from
                              further involvement in the case
                      HELD: the Congressional investigation influenced and pressured the Commission
                       such that it was an improper ex parte contact
                      RULE: an administrative order or decision must be vacated if it has been issued by
                       individuals whose thought processes have been subjected to influence and
                       pressure.
            5)       Idaho Historic Preservation Council, Inc. v. City Council of the City of Boise
                      FACTS:
                             the adjudicatory group was elected
                             it received letters from concerned citizens
                      HELD:
                      RULE:

VI.   Informal Decision Making Mechanisms

                                                                                                           36
A. Sources of Procedural Entitlement: One or more may apply – be aware of this on the exam!
     a. Statutory Provisions: provisions found in the substantive statute
     b. Agency Regulations: internal procedural rules
     c. Due Process
              i. highly relevant and salient when you don‘t have statutory entitlement to
                 procedural rights
             ii. see above notes
     d. APA § 555 (b) and (e)
              i. Section 555 applies broadly to any agency proceeding:
                     1. ―an agency function‖ § 555 (b)
                     2. ―any agency proceeding‖ § 555 (e)
             ii. Protections
                     1. Right to be represented by attorney or some other person where it is
                         ―convenient and appropriate‖ § 555 (b)
                              a. does not provide a person with an attorney
                              b. this does not grant or deny a person who is not a lawyer the right to
                                 appear for or represent others before an agency or in an agency
                                 proceeding
                     2. ―each agency shall proceed to conclude a matter presented to it within a
                         reasonable time‖ § 555 (b)
                              a. applies to all ―matters‖ presented to the agency (Friends of the Bow v.
                                 Thompson)
                     3. Subpoenas: ―agency subpoenas authorized by law shall be issued to a
                         party on request and when required by rules of procedure, on a statement
                         or showing of general relevance and reasonable scope of the evidence
                         sought.‖ § 555 (d)
                     4. Notice: ―prompt notice of denial in whole or part or a written application,
                         petition, or other request of an interested person made in connection with
                         any agency proceeding.‖ § 555 (e)
                     5. Statement of Grounds: ―except in affirming a prior denial or when the
                         denial is self-explanatory, the notice shall be accompanied by a brief
                         statement of the grounds for denial.‖ § 555 (e)
     e. What is the value of the APA protections?
              i. Acceptability
                     1. if the government acts and gives notice it is more acceptable to people
                     2. the explanation makes judicial review possible
                              a. if the reviewing court doesn‘t know why the agency did what it did
                                 its hard to know if they acted ―arbitrarily and capriciously‖
     f. Cases
              i. Friends of the Bow v. Thompson (10th Circuit 1997)
                     1. FACTS:
                              a. Letter requesting the agency to update the Environmental
                                 Assessment on which the sale of timber from a national park was
                                 based
                              b. the agencies response was deemed to be an ―agency proceeding‖
                                 (―Friends‘ letter, which is an explicit and colorably valid request for
                                 the Service to take action arguably required of it by law to prepare a
                                 supplemental EA‖)
                              c. the letter actually got the agency to act, they came up with a 21
                                 page report

                                                                                                     37
        2. HELD: the agency‘s report met the brief statement requirement and the
             agency acted within a reasonable time
        3. REASONING: ―in light of the lengthy, detailed nature of Friends‘ request
             for action and the thoroughness of the agency‘s eventual response.‖
        4. KEY POINTS: § 555 is broadly applied.
 ii. Roelofs v. Secretary of the Air Force (D.C. Circuit, 1980)
        1. FACTS:
                  a. Roelofs petitioned the Air Force to have his General Discharge
                      upgraded to an Honorable Discharge
                  b. his application was denied without a hearing and without any
                      statement of the grounds for the decision
        2. HELD:
                  a. he was entitled to a statement of reasons under § 555 (e)
        3. REASONING:
                  a. this is an agency proceeding
iii. Pension Benefit Guaranty Corporation v. LTV Corporation (US Supreme Court, 1990)
        1. FACTS:
                  a. PBGC acts as an insurer for obligations of bankrupt private pension
                      plans
                  b. LTV went bankrupt and was unable to fund its pension plans
                  c. LTV negotiated a new pension plan and PBGC wanted to
                      disapprove it
        2. HELD: ―the determination in this case, was lawfully made by informal
             adjudication, the minimal requirements for which are set forth in § 555 of
             the APA…‖
        3. ISSUE: The LTV wanted the agency to disclose the material the PBGC was
             relying on and the opportunity to present evidence to the contrary; they
             wanted a clear statement of standards
                  a. ANALYSIS
                           i. Agency Proceeding?
                                   1. Yes, this is a decision PBGC has to make about
                                       whether to approve.
                          ii. Procedure?
                                   1. Yes, no witness, no evidence, but they had informal
                                       meetings
                         iii. Is this governed by due process?
                                   1. LTV didn‘t even assert DP b/c there is no clear
                                       deprivation of life, liberty and property
                         iv. Specific statute or agency regulations provide for
                               procedures?
                                   1. No
                          v. Is 555 the basis for their claim?
                                   1. LTV argued that agencies have to do more then the
                                       APA because unless they do it, the courts can‘t do
                                       their job in judicial review
                                   2. No
        4. RULE: Congress gets to decide what procedures the agency must follow
             (i.e. exceptions and special rights) Courts cannot require additional
             procedure on the grounds that it ―aids judicial review.‖
                  a. if the court did this, then there would be little consistency

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V I I . Procedures Applicable to All Proceedings: See § 555 above
VIII.           Alternative Dispute Resolution
    A. Generally:
        i.    Agencies and the parties have the option to engage in ADR
        ii. Governed by APA § 571 – 584
    B. Defined:
        i.    means of arbitration, compromise, and/or mediation
        ii. in the general context, ADR is an alternative to courts, here it means alternative to agencies
              adjudicatory process, whether formal or informal
    C. Statutory Interpretation:
        i.    Definitions (§ 571)
            a.     the definitions of agency, administrative program and ―alternative means of dispute
                   resolution are broad
            b.     ―agency‖ has the same meaning as in section 551 (1) of this title;
            c.     ―administrative program‖ includes a federal function which involves protection of the
                   public interest and the determination of rights, privileges, and obligations of private
                   persons through rulemaking, adjudication, licensing, or investigation.
            d.     ―alternative means of dispute resolution‖ means any procedure that is used to resolve
                   issues in controversy, including, but not limited to conciliation, facilitation, mediation,
                   fact finding, mini-trials, arbitration, and use of ombuds, or any combination thereof.
        ii. General Authority (§ 572)
            a.     ―An agency may use a dispute resolution proceeding for the resolution of an issue in
                   controversy that relates to an administrative program, if the parties agree to such
                   proceeding.
                1)    identifiable parties; likelihood of good faith; continuing relationship
            b.     ―An agency shall consider not using a dispute resolution proceeding if—―
                1)    the decision is needed for presidential value
                2)    the decision is needed to establish policy and the proceeding would not likely serve
                      to develop a recommended policy for the agency
                3)    maintaining established policies is of special importance and the ADR would not
                      likely reach consistent results among individual decisions
                4)    the matter significantly affects persons or organizations who are not parties to the
                      proceeding
                5)    a full public record of the proceeding is important and a dispute resolution cannot
                      provide such a record; and
                6)    if the agency must maintain continuing jurisdiction over the matter with the
                      authority to alter the disposition in the matter in the light of changed circumstances
                      and ADR would interfere with this requirement
        iii. Neutrals ( § 573)
            a.     neutrals that facilitate the process and serve at the will of the parties
        iv. Confidentiality ( § 574)
        v. Authorization of Arbitration (§ 575)
            a.     follows arbitration under Private Arbitration Act
        vi. Enforcement of Arbitration Agreements ( § 576)
            a.     Art. 9 of United States Code
        vii. Arbitrators (§ 577)
        viii. Authority of the Arbitrator (§ 578)
        ix. Arbitration Proceedings (§ 579)
        x.    Arbitration Awards ( § 580)

                                                                                                            39
       xi.  Judicial Review ( § 581)
          a.     ―notwithstanding any other provision of law, any person adversely affected or
                 aggrieved by an award made in an arbitration proceeding conducted under this
                 subchapter may bring an action for review of such award only pursuant to the
                 provisions of section 9 through 13 of title 9.‖
          b.     ―a decision by an agency to use or not to use a dispute resolution proceeding shall be
                 committed to the discretion of the agency and shall not be subject to judicial review‖
   D. Advantage of ADR
      i.    the advantage of negotiated resolutions is that it limits or reduces judicial review
      ii. efficient/quick/speedy
      iii. inexpensive


I X . Administrative Rulemaking under the Federal APA
    A. Defined: ―rule‖ means the whole or a part of an agency statement of general or particular
        applicability and future effect designed to implement, interpret, or prescribe law or policy or
        describing the organization, procedure, or practice requirements of an agency and includes the
        approval or prescription for the future of rates, wages, corporate or financial structures or
        reorganizations thereof, prices, facilities, appliances, services or allowances therefore or of
        valuation, costs or accounting, or practices bearing on the foregoing. (§ 551(4))
           a.     a statement of general applicability
               1)    a rule can have specific application if it affects relatively few individuals (Londoner)
           b.     future effect
           c.     tends to be broader in scope
               1)    rules do not name particular persons or entities at whom the rule is directed, rather
                     it contains provisions identifying the types of person or entity subject o the rule or
                     who would qualify for the benefits of the rule
    B. Generally:
       i.    due process does not apply to rulemaking
    C. Cases:
           a.     Sugar Cane Growers Corp. of Florida v. Veneman (2002)
               1)    FACTS:
                    in 2000, the Department of Agriculture subsidized for ―plowing under‖
                    the bids were based on percentage of what was destroyed
                    this ―rule‖ was more economically feasible for sugar beet farmers then sugar cane
                       farmers
                    the rule was implemented through a series of informal meetings, but no 553
                       proceedings were conducted
                            the government argued this was a contract, not a rule
               2)    HELD: this is a rule as defined in § 551(4)
                    but the Court remands for the agency to fill in with § 553 procedures because
                       people had already relied on the program
               3)    REASONING:
                    the rule has general application
                    it has future applicability
                    it was intended to implement policy (stabilize sugar prices and limit production)
                    had the consequence of changing peoples conduct in the future
               4)    RULE: A rule has general and future applicability and affects people‘s primary
                     conduct.
               5)    KEY POINT: this is a very broad definition of rulemaking
                                                                                                          40
D. Information Gathering
       a.     want input from a lot of people versus adjudication where detailed information from a
              small group of people is needed
E. Formal Rulemaking:
   i.    Generally:
       a.     rulemaking done by judicial type procedures
       b.     Ratemaking:
           1)    rate making is rulemaking (― ‗rule‘ means…for the future rates..‖ § 551 (4))
           2)    it has future impact and affects a lot of people
   ii. Standard: ―When rules are required by statute to be on the record after opportunity for an
         agency hearing, sections 556 and 557 of this title apply…‖ (§ 553 (c))
   iii. Cases:
       a.     United States v. Florida East Coast Railway (1973)
           1)    FACTS:
                rate-making required rent to be paid on railroad cars kept in possession as an
                   incentive to give them back
                the company holding the car has to pay a per diem rate for failure to promptly
                   return the car
                the agency submitted a report w/ a preliminary rule, asked for comments, then
                   submitted final rule and notice according to the procedures required for informal
                   rulemaking
                the underlying statute directed the agency to act ―after hearing‖
           2)    HELD: the procedures followed were adequate because the statute was ambiguous
                Devlin: is this really ambiguous? It is supposed to be Congress‘ intent and since
                   this was before the APA, they probably intended ―hearing‖
           3)     RULE: in the absence of clear language, there is a presumption that something
                 other then formal judicial-like procedures are intended.
                court suggests that formal rulemaking is not favored
                informal rulemaking is favored for efficiency reasons
       b.     Formal Rulemaking compared with Formal Adjudication
           1)    Despite the fact that the language used to distinguish formal and informal
                 rulemaking is the same as that used to distinguish formal and informal
                 adjudications, the language is interpreted very differently.
                where the statutory language is ambiguous, the court is willing to require formal
                   procedures for adjudication, but not so much for rulemaking.

F.  Bases of Informal Rulemaking Per § 553
   i.    Background:
       a.     prior to the APA, there was no generally applicable law for rulemaking mechanisms
       b.     APA § 553 governs the ―public steps‖ of rulemaking
   ii. Policy
       a.     in informal rulemaking, the parties do not get an oral appearance, the right to examine
              other comments, the opportunity to respond to other comments, no right to counsel,
              cross-examinations or to present witnesses
       b.     Benefits: the agency gets input from the people who are going to be affected by the rule
              and the people affected have an opportunity to present a good argument with
              information to back it up.
G. APA Requirements
   i.    The Decision to Initiate Rulemaking: Leading up to Initial Proposal
       a.     Generally:
                                                                                                   41
     1)     many meaningful choices are made before any information becomes public and
            before § 553 is triggered
     2)     no law governing formulation and drafting of the initial proposal
b.        Public Initiation:
     1)     Adjudication:
            Dunlop v. Berchosky
                    FACTS:
                   1. union employee sought to set aside a union election
                   2. the LMRD Act provides that if there is a complaint, the Secretary of Labor
                        ―shall investigate and if he finds cause, he shall initiate adjudicatory
                        proceedings‖ to determine if the election should be overturned
                    HELD: the agency was obligated to act
                    RULE: Where there is mandatory statutory language, the agency is obligated
                     to act, but as a general rule, the public cannot force the agency to act.
            Heckler v. Chaney
                    presumption against reviewability of agency decisions not to act; compared
                     with the un-reviewability of exercise of prosecutorial discretion.
                    the agency has strong prosecutorial discretion.
                    in the absence of strong language to the contrary, the agency does not have
                     to act
     2)     Rulemaking:
            General Rule: § 553 (e) requires ―each agency [to] give an interested person the
              right to petition for the issuance, amendment or repeal of a rule.‖
                    When the agency declines to make a rule, the Courts may review
            Professional Pilots Federation v. FAA
                    FACTS:
                   1. FAA promulgated a rule providing that pilots will not be able to fly past
                        the age of 60
                   2. the PPA petitioned to repeal or modify the rule
                   3. the Agency refused to act on the petition
                    HELD: A refusal to act can be judicially reviewed, but only on an
                     exceedingly deferential standard.
                    REASONING:
                   1. the agency refused to act because they believed there rule was good
                        (basically a decision on the merits)
                             proper showing on the record that alternatives are considered
                             rational basis in the materials to reach the conclusion they did
                             agency needs to show they considered alternatives
                    RULE: A decision not to respond to a petition may be on the merits or a
                     refusal to act.
                   1. WHICH ONE GETS DEFERENCE???
c.        Role of Congress
     1)     Congress may set a deadline by which the agency is required to act by, or requiring
            it to adopt rules in certain circumstances or to meet certain needs.
            sometimes this is counterintuitive because it forces the agency to misallocate
              resources and/or lead to regulatory action that is hasty, without evidentiary
              support and therefore unable to withstand judicial review.
     2)     Congress can inhibit the agency‘s ability to act:
            by amending their Organic Statute, but this takes a long time

                                                                                             42
         establishing procedural ―hoops‖ requiring the agency to follow certain steps
          before taking action
               i.e. a rule requiring an agency to give an EIS (Environmental Impact
                Statement) before taking action.
d.    Role of the President
   1)   the President has an interest in requiring and inhibiting rulemaking
   2)   Executive Orders
       almost every President since Nixon has issued an Executive Order to reform the
          rulemaking process and take control of the bureaucratic rulemaking role of
          administrative agencies
       these Orders are significant in carrying out the President‘s responsibility to take
          care that the laws are faithfully executed
       all executive orders have a provision which states that they are not intended to
          create any right in any person and shall not be subject to judicial review.
               the sole means of enforcing the executive orders is political, i.e. firing of
                agency head
               this also means that while some executive orders are taken very seriously by
                the President and therefore the agency to avoid backlash, other EO orders
                get little more than ―lip service‖ to please certain constituencies
       After § 553 requirements are met, the Agency must go through the 12866 Process
       Executive Order 12291
               requires agencies to perform cost/benefit analysis‘s and coordinates certain
                types of rulemaking with officials in the Executive Office of the President
               make ultimate costs and benefits known to the people
       Executive Order 12866 – See Outline of Executive Order 12866
               Engage in Regulatory Planning Process
              1. includes a review mechanism of the agency‘s already existing rules
              2. annual publishing of a regulatory agenda listing all the existing rules they
                   expect to review and all the new rules they expect to adopt in the coming
                   year
               Conduct Cost/Benefit Analyses on Major Rules
              1. major rules are ―significant regulatory action‖
                        generally those that have an effect on the economy of at least $100
                         million or have a material adverse effect on a particular sector of the
                         economy, competition, jobs, the environment, public health or safety,
                         or state or local governments
              2. analysis must identify and quantify to the extent feasible, the costs and
                   benefits of the proposal and of reasonably feasible alternatives
                        quantitative and qualitative measures of cost and benefit
               Submit Proposed Rules to the Office of Information and Regulatory
                Affairs
              1. must submit to OIRA information about significant rules expected to be
                   adopted in the coming year
              2. the information is then reviewed by OIRA and other high-level executive
                   advisors to determine if the planned actions are consistent with the
                   President‘s policies
              3. agencies must send to IRA major rules and some other rules that raise
                   novel legal or policy issues for pre-publication review
                        OIRA can require any other particular rule to be submitted

                                                                                             43
                  4.    the agency is not allowed to publish the proposed or final rule until OIRA
                        has completed its review
                             maximum of 90 days, subject to a one time 30-day extension
                             all drafts and communications between agency and OIRA are
                              available to the public
ii. “Notice and Comment”
    a.    Notice:
       1)    Statutory Requirements:
            must be ―published in the Federal Register, unless persons subject thereto are
               named and either personally served or otherwise have actual notice thereof in
               accordance with law.‖ (§ 553 (b))
            the notice shall include:
                    a statement of the time, place and nature of public rule making proceedings;
                    reference to the legal authority under which the rule is proposed; and
                    the terms or substance of the proposed rule or a description of the subjects
                     and issues involved. (§ 553 (b)(1)-(3))
                  1. Preamble: the agency explains what it is trying to do in the rulemaking
                        and why, and explains the provisions of the rule
       2)    Cases:
            NRDC v. EPA – ―Wood Chips Case‖ (2002)
                    FACTS:
                  1. the shipment of logs causes bark to chip off and the deposits created
                        problems for marine life
                  2. the EPA granted licenses and the general license incorporated Alaska law
                        which set standards for how much of a deposit would be tolerated
                  3. the EPA offered a proposed rule to modify the permit standards, again
                        incorporating Alaska law
                  4. between the time of notice and adoption, Alaska law had changed to
                        permit more deposit, so the rule proposed and the adopted rule were
                        different
                  5. NRDC says the notice was inadequate
                    HELD: the rulemaking procedure was not adequate
                    REASONING:
                  1. the change between the proposed rule and the final rule did not come
                        from the comments
                  2. the final rule was something no one could have anticipated, therefore
                        there comments were not properly directed
                    RULE: the final rule must be a logical outgrowth of the proposed rule and
                     comments.
                  1. legitimately derived from the proposal and comments
                  2. the interested parties could have reasonably anticipated
                  3. Logic:
                             the final rule can‘t be the same as the proposed or there would be no
                              point in the comments
                             people rely on what is present or absent from the proposed rule in
                              determining whether to comment or refrain from commenting
iii. Participation/ Comment
    a.    Statutory Provision



                                                                                                 44
     1)     ―After notice required by this section, the agency shall give interested persons an
            opportunity to participate in the rule making through submissions of written data,
            views or arguments with or without opportunity for oral presentation.‖ (§ 553 (c))
b.        Cases:
     1)     United States v. Nova Scotia Food Products, Corp. – ―Fish Case‖ (1974)
           FACTS:
                   the FDA came up with a procedure, a single standard for time, temperature
                    and salinity
                  1. the regulation failed to distinguish between species and there was actually
                        little evidence of the occurrence of botulism in white fish
                              had this been in the record, Nova Scotia could have directed the
                               agency‘s attention to that and possibly carved out an exception based
                               on these discrepancies
                   comments were solicited
           HELD: the agency record failed to disclose the basis of its regulation, and as a
              result, the appellants were unable to respond to the evidence upon which the
              agency relied in the promulgation of the regulation.
           REASONING:
                   Nova Scotia is entitled to receive info on the agency‘s study
                   Court says it needs an adequate record for review
                  1. Reconcile with Vermont Yankee? Vermont probably undid this case,
                        unless you argue that the court is just enforcing the ―comment‖ part of the
                        statute.
                   the regulation was promulgated in an arbitrary and capricious fashion
           RULE: Suppression of meaningful comment by failure to disclose the basic data
              relied upon is akin to rejecting comment altogether
                   comment isn‘t effective if all the information isn‘t there
           LIMITS:
                   don‘t want the
     2)     Additional material in response to comments made during a public-comment
            period, added after the public review and comment period had ended is not a
            violation of a person‘s right to comment on the record. (Rybachek v. EPA, stating that
            the Rybachek‘s right to comment on the proposed regulations was not a violation;
            they had no right to comment in a never ending way to the EPA‘s response to their
            comments.)
     3)     Acceptance of an additional 300 pages of information, requested by the EPA of the
            State of Arizona, after the deadline for public comment, without offering others a
            chance to comment on it violated the APA. (Ober v. EPA)
           Different from Rybachek where the additional materials were from an internal
              assessment of the comments from the public, here the EPA solicited the new
              information.
c.        Time for Comment:
     1)     The APA does not specify the time period an agency must provide for persons to
            submit comments in writing. Presumably, if the agency did not provide adequate
            time for the person to receive the Register, read the notice of proposed rulemaking
            and then write a comment, this would be inconsistent with the APA.
d.        Record in Rulemaking:
     1)     What record does a reviewing court look to?
           it relies exclusively on the record made before the agency
           don‘t we want the agency, to some extent, to rely on its own knowledge?
                                                                                                 45
                           there is no overt requirement in § 553 requiring the agent to disclose all that
                            they rely on
                           if this were a requirement it would inhibit the agency‘s ability to effectively
                            use its expertise
                  ultimately, the record is the record for the basis of the decision
             2)    Types of Records:
                  Record for Publicity: the material available to be used by the public as the basis for
                     commenting upon a proposed rule during the proceeding.
                  Record for Decision-Making: the materials that inform the agency‘s own decision
                     making processes generally and in that particular rulemaking
                  Record for Judicial Review: the documentary collection presented to a court as the
                     basis for deciding whether the rule has sufficient basis to satisfy the applicable
                     standard of judicial review.
             3)    How the record is compiled is not as important as the fact that the data the agency
                   relies on needs to be disclosed.
       iv. Statement of Basis and Purpose
          a.    Generally:
             1)    must respond to relevant comments, both those accepted and rejected
          b.    Statutory Provisions:
             1)    ―After consideration of the relevant matter presented, the agency shall incorporate
                   in the rules adopted a concise general statement of their basis and purpose.‖ (§ 553
                   (c))
          c.    Cases:
             1)    Independent US Tanker Owner‘s Committee v. Dole (1987)
                  FACTS:
                           Secretary promulgated a rule that permitted international vessels to pay
                            unamortized amount and permit them to ship domestically, particularly the
                            Alaskan Pipeline
                  HELD: The Secretary failed to fulfill her obligation to set out an adequate
                     statement of basis and purpose for the rule.
                  REASONING:
                           the statement did not adequately respond to comments
                           the statement failed to link the rule to the statutory objectives in the organic
                            statute
                  RULE: Statement of basis and purpose needs to:
                           explain how the rule adopted serves Congress‘ purposes set out in the
                            governing statute and why the alternatives were rejected.
       v. The Status of VERMONT YANKEE:
          a.    This Court goes beyond the language of § 553, but Vermont Yankee doesn‘t touch on
                this. WHY???
          b.    § 553 has been expanded and is more elaborate despite Vermont Yankee

X . Hybrid Rulemaking
    A. Issue: Are the procedures required under § 553, deemed sufficient to give interested persons
        input, also sufficient to generate an adequate record for purposes of judicial review? If not, can
        the courts impose additional requirements on the agency to facilitate judicial review?
       i.    Congress:
           a.     if Congress thinks permitting responses and/or any other procedures above and
                  beyond § 553, they can do so
           b.     start with the procedures set out in § 553;
                                                                                                         46
            c.     additional procedural rights defined by the underlying organic statute
        ii.   President:
            a.     the President can require additional procedural requirements by executive order (see
                   below)
        iii. Agency:
            a.     the Agency may also grant additional procedural rights through internal rules
            b.     once the Agency grants the right, they have to ―follow through‖
            c.     the rule is what it is unless and until it is changed
                1)    an internal rule is changed using the same procedure with which it was made
        iv. Courts:
            a.     General Rule:
            b.     Case:
                1)    Vermont Yankee Nuclear Power Corp. v. Nuclear Resources Defense Council (1978)
                     FACTS:
                              agency concerned with environmental impact and safety
                              NRDC, through rulemaking, made a general statement of the consequences
                               for the purposes of safety and environment for this aspect of the fuel cycle
                              petitioner wanted an opportunity to see and respond to the other comments
                               made, which is not granted in informal rulemaking
                              the DC Circuit had held that the NRDC should use a trial type hearing to
                               determine the facts
                     HELD: the courts may not impose requirements above what the APA requires
                     REASONING: except to the extent that the Constitution or other statute required
                        otherwise, generally, the APA was intended to occupy the field with respect to
                        required administrative procedures
                     RULE: courts may not impose requirements above what the APA requires; the
                        APA is not a minimum procedure upon which a Court can build, but the full
                        procedure intended by Congress.

   B.   Executive Orders:
       i.    After § 553 and any hybrid requirements are satisfied, the Agency must go through EO
             12866 process, OMB and OIRA approval
       ii. impacts not just whether there will be a rule, but what the contents of the rule will be
X I . Non-APA Issues
    A. Choosing Between Rulemaking and Adjudication as a Means of Developing Policy
       i.    Generally: the agency can bring an enforcement proceeding against a perceived wrong doer
             or it can engage in quasi-legislative power to make a rule.
           a.       some agencies only have the authority to do one or the other, but most of them have a
                    choice
       ii. Cases:
           a.       Securities & Exchange Commission v. Chenery Corp. (1947)
               1)      FACTS:
                      stockholders of corporation sought approval of an amendment to a reorganization
                        plan to provide for issuance of new common stock
               2)      HELD: the court refused to require the agency to define agency law through
                       rulemaking before it undertook law enforcement adjudication even where congress
                       seemed to have intended that the agency proceed in that sequence
               3)      RULE: agency has discretion in choosing between rulemaking and adjudication to
                       establish policy


                                                                                                         47
                  the court raises the possibility that there might be instances where case by case is
                   better
                RATIONALE:
                         it is good to proceed with rules, but novel circumstances may arise and the
                          agency needs to be able to deal with those.
                         this is not ex post facto laws, it is ex post facto interpretation
        b.    Bell Aerospace v. NLRB (1973)
           1)    FACTS:
                NLRB does not use rulemaking; only adjudication
                a company refused to permit the buyers to unionize on the grounds that they were
                 managerial
                in the unfair labor practices proceeding, the NLRB found the failure to recognize
                 the union was an unfair labor practice
                this decision was contrary to a long line of cases finding the opposite
            2)  HELD: the agency is not required to use rulemaking to change such a long line of
                cases
            3)  RULE: Chenery reaffirmed, but Devlin says this may be a situation where a case by
                case decision would be better – buyer for one company may be different than that of
                another

B.    Rulemaking Considerations
     i.   Retroactivity
        a.     Article III Courts: assuming that a court comes up with a new interpretation of a law,
               it applies to parties before the court, future cases and pending cases.
            1)     ―Gray Area‖ pending cases where the acts took place before the interpretation, the
                   new law still applies.
        b.     Congress: Legislative acts are generally prospective, but Congress can make the new
               law apply to pending cases, even if the underlying activity took place before it was
               passed.
        c.     Agencies:
            1)     Epilepsy Foundation v. NLRB (2001)
                 FACTS:
                          unionized workers have the right to be accompanied by another employee
                           when meeting with employer (Weingarten Rule)
                          the NLRB has vacillated on the issue of whether an un-unionized employee
                           has the same rights
                          an employee refused to meet with employer unless he was permitted to
                           bring a co-worker with him
                          the agency said the Weingarten Rule applied, failure to permit the co-worker
                           was an unfair labor practice and the employer was subject to economic
                           sanctions
                          basically, the agency changed its mind and said it the rule applied to that
                           prior act
                 HELD: the agency can change the rule (as long as it is a reasonable interpretation-
                    Chevron case), but cannot impose a fine on the employer who relied on the
                    previous rule
                 REASONING: ―notions of fairness and equity‖ say because of reliance, agency
                    can‘t retroactively apply this adjudication


                                                                                                      48
             RULE: distinguished from Bell, there was a sanction imposed here; if the
              consequences of adjudication are going to be negative, only the rule can be
              applied, the sanctions cannot.
       2)    Bowen v. Georgetown University Hospital (1988)
            FACTS:
                    DHH adopted a rule changing the costs for certain procedures for which it
                     would reimburse hospitals under the Medicare program.
                    the change applied not just to costs incurred after the rule was adopted, but
                     retroactively to costs that had been incurred during the two year period
                     before the rule was adopted
                   1. there was an attempt to change the rule two years prior (Notice, maybe?)
            HELD: the rule cannot apply retrospectively because the governing statute does
              not permit it
            RULE: a rule cannot be retroactive unless the statute authorizing the rule explicitly
              empowers the agency to adopt a retroactive rule.
                    if something can‘t be applied prospectively then it must be decided by
                     adjudication
    d.    Fairness: The notion of fairness plays a role in the question of choice of agency mode.
ii. Right to an Individualized Hearing: Circumventing the Requirement of Adjudication
    a.    Determining Facts by Rule
       1)    Heckler v. Campbell (1983)
            FACTS:
                    the statute defines disability
                    disability requires two issues of fact to be resolved:
                   1. How physically impaired are you?
                   2. What job are you physically capable of?
                            agency moved to use rulemaking to create a grid trying to make a
                             generalized determination according to age, work experience, etc.
                    the underlying statute required an individualized hearing
            HELD: The agency is permitted to determine certain issues of fact by rulemaking;
              predetermination is okay
            REASONING:
                    the applicant still gets a hearing, just not on all the issues
                    the agency is determining some repetitive issues of fact
            RULE: It is okay to provide a rule for certain findings of fact, but those that don‘t
              fit within the rule have a due process right to show that.
            NOTE: the more individualized issue of disability is still determined on an
              individual basis
                    this approach is good and bad because it is efficient, yet it doesn‘t take into
                     account personality traits that might factor in.
       2)    Yetman v. Garvey (2001)
            FACTS:
                    the agency, by rule, determined that pilots over 60 years old cannot get a
                     license to pilot commercial airliners
                    the agency said that unless the pilots came up with a mechanism to show
                     who is safe, by rule we determine that over 60 is not safe
                    the pilots came up with a mechanism using a panel of seven doctors
            HELD: agency was not acting arbitrarily and capriciously


                                                                                                 49
                 REASONING: they were given the opportunity to show they didn‘t fit under the
                  rule like Heckler required.
C. Evaluating Comments and Formulating the Rule
   i.   Ex Parte Contact
      a.     Private
          1)    Home Box Office, Inc. v. FCC (1977)
               FACTS:
                        the FCC promulgated regulations limiting the content of programs
                        the Agency gave a Notice and Comment period
                        after the Notice and Comment period ended, FCC personnel met with
                         broadcast representatives and Congressmen
               HELD: Agencies cannot engage in ex parte contacts with interested persons after
                  the Notice and Comment period.
               REASONING:
                        the ―record‖ on appeal, to the extent there is a record in rulemaking would
                         be a ―sham‖ because it would not reflect what actually happened because
                         the closed door meetings would not be included
                        there was nothing in the Statute, nor the Constitution prohibiting ex parte
                         contacts, but the Court cites Sangamon Valley, (holding that ex parte
                         communications are prohibited when there are conflicting claims to a
                         valuable privilege.) which was an adjudication, when it mentioned the due
                         process clause, but the decision did not rest on Due Process
                      1. Due Process might apply when a rule:
                                 only affects a few persons in an exceptional way
                                 needs some other element of fundamental fairness to apply
                        ex parte contacts ―frustrate judicial review and raise serious questions of
                         fairness‖; evaluation of the record needs to be fair and open
                        ex parte contacts often suggest some form of corruption, even when it does
                         not exist, making the agency look bad
                        if the rule is challenged in court, the Agency will need to defend the rule on
                         the basis of information on the public record
               RULE: Agencies cannot engage in ex parte contacts with interested persons after
                  the publication of notice of proposed rulemaking; if they do the agency must place
                  them on the public record (―docketing‖) and allow interested persons an
                  opportunity to respond to them.
          2)    ―we do think…that ex parte contacts do not per se vitiate agency informal
                rulemaking action, but only do so if it appears from the administrative record under
                review that they may have materially influenced the action ultimately taken…‖
                (Action for Children’s Television v. FCC, 1977)
      b.     Participation of Agency Staff
          1)    United Steelworker’s of America, AFL-CIO-CLC v. Marshall (D.C. Circuit, 1980)
               FACTS:
                        Agency staff used as a ―standards lawyer‖, an advocate for the agencies
                         proposed rule
                        during the process leading up to the rule he helped the agency‘s side
                        after Notice and Comment period, the staffer advised the agency on how to
                         formulate the rule and record
                        the Agency used ―consultants‖, people outside the agency who had testified
                         in the proceeding to evaluate the record

                                                                                                    50
            HELD:
                  use of the attorney in dual roles, as advocate for the agency and evaluator, is
                   not prohibited
                  use of people outside the agency who had testified and were hired evaluate
                   is prohibited
           REASONING:
                  the APA § 553 nor the Statute precluded dual roles
                  the Staffer, arguably, has an overriding concern for the public interest while
                   the hired consultants do not
           RULE: Use of Agency staffer in dual roles is not prohibited, but could probably
             make an argument by analogizing the prohibition in adjudications (see, e.g. Allen
             and Withrow) contrary to the holding here.
c.        Other Government Officials: The President and Congress
     1)     Generally:
           in adjudications, it is understood that it is improper to bring political pressure or
             influence on a decision maker to affect an outcome
     2)     Presidential Influence:
           the President has some constitutional authority to influence, if not direct, agency
             actions involving discretionary decisions as to proper policy, what constitutes the
             public interest, or what is faithful execution of the laws.
     3)     Congressional Influence
           Congressional influence does not have any particular Constitutional basis
           under the Constitution, Congress makes law, but once law is made, Congress has
             no role in their execution, but does have at least the implied Constitutional power
             to gather information and investigate how the laws it passes are being carried out
     4)     Cases:
           Sierra Club v. Costle (DC Circuit, 1981)
                  FACTS:
                 1. allegedly, the President, through his staff had discussed with EPA officials
                      how an important Clean Air Act rulemaking should be resolved
                 2. the majority leader communicated his strong views concerning the Clean
                      Air Act regulation the EPA was considering, a view supporting a rule that
                      would have less impact on the hard coal industry
                 3. the final rule adopted was consistent with the majority leader‘s view
                  HELD:
                 1. in the absence of explicit statutory prohibition, such discussions with the
                      President and/or his staff are entirely appropriate;
                          Due Process might require that any communications relevant to an
                           adjudication be recorded and docketed as part of the adjudication
                           record
                 2. the communications by the majority leader were not prohibited because
                      the EPA adequately explained on the merits the basis for its rule and there
                      was no reason to think that the fact it coincided with the Senator‘s views
                      was the result of Congressional influence. (Congress has the ―power of the
                      purse‖ which might influence an agency to follow it‘s view.)
                  RULE:
                 1. Presidential Communications: in the absence of explicit statutory
                      prohibition, there is no requirement in rulemaking that communications
                      with the President and/or his staff be recorded and docketed

                                                                                               51
                                      the ―check‖ on this is that any rule must be supported on its own
                                       record
                            2. Congressional Communications: Communications are prohibited upon a
                                 showing that:
                                      the content of the pressure is irrelevant or extraneous to the issues
                                       the agency is considering; and
                                      the agency must actually be affected by that pressure
                            3. As long as the agency offers an adequate and independent basis for its
                                 rule, courts are likely to excuse attempts at Congressional pressure
        ii. Bias of the Agency
            a.     Generally:
                1)    to the extent that rulemaking mimics legislation by legislators, it would seem that
                      there is not due process requirement to be neutral because there is no such
                      requirement for legislators
            b.     Cases:
            c.     CW Fish v. Fox (1991)
                1)    FACTS:
                     there was an article published after the Secretary was elected that gillnets should
                        be eliminated
                2)    HELD: the Secretary was not biased
                3)    REASONING:
                     often Agency heads are appointed because of their views and opinions, this is part
                        of the ―political responsiveness‖
                4)    RULE: an individual should be disqualified from rulemaking ―only when there has
                      been a clear and convincing showing that the Department member has an
                      unalterably closed mind on matters critical to the disposition of the proceeding.‖
                     this standards is that no matter what the Record and Comments show, the
                        individual had his mind made up before and nothing is going to change it.
                     there is a difference between policy views and an ―unalterably closed mind‖
            d.     PMLRS Narrowband Corp. v. FCC (D.C. Circuit, 1999)
                1)    FACTS:
                     the Agency wanted to change the allocation of potentially valuable franchises from
                        lottery to auction
                     prior to announcing the rulemaking, the FCC Chairman announced the date the
                        auction would being
                2)    HELD: this is not an unalterably closed mind
                3)    RULE: more tolerant of ―close mindedness‖ in rulemaking then adjudication, which
                      permits ―strong opinions‖ (see, e.g. Cement Institute)
X I I . Rules Promulgated without § 553 Notice and Comment Procedures
    A. Procedure
        i.    Before any agency product is effective on people outside the agency, it must be published
              according the Publication Rules set forth in § 552 (a):
            a.     ―Each agency shall make available to the public information as follows: Each agency
                   shall separately state and currently publish in the Federal Register for the guidance of
                   the public--… Except to the extent that a person has actual and timely notice of the
                   terms thereof, a person may not in any manner be required to resort to, or be adversely
                   affected by, a matter required to be published in the Federal Register and no so
                   published…‖ (§ 552 (a))
            b.     Other


                                                                                                         52
             1)    typically internal agency manuals and directives are not published in the Federal
                   Register, primarily resting on the ―Except…‖ provision stated above.
             2)    ―Adverse Effect‖ is interpreted narrowly
B.    Exceptions
     i.    Excepted by the Language of § 553
         a.     ―This section applies…except to the extent that there is involved –
             1)     a military or foreign affairs function of the United States; or
             2)     a matter relating to agency management or personnel or to public property, loans,
                    grants, benefits, or contracts (§ 553 (a))
     ii. Good Cause
         a.     Statutory Interpretation:
             1)     The requirements set forth in § 553 (b) do not apply…‖when the agency for good
                    cause finds (and incorporates the finding and a brief statement of reasons therefore in the
                    rules issued) that notice and public procedure thereon are impracticable,
                    unnecessary, or contrary to the public interests.‖ § 553 (b)(B)
                  if the agency fails to put the finding and reasons for Good Cause in the rule, the
                      rule will not qualify for this exception
             2)     If there is a good reason not to have public participation in the formulation of a rule,
                    then the rule should be exempt from such participation
         b.     Cases
             1) Utility Solid Waste Activities Group v. EPA (
                  FACTS:
                           the EPA promulgated a rule forbidding use of post clean up in terms of
                            concentration
                           the original rule phrased the limits in terms of ―original concentration‖,
                            instead of ―post concentration‖
                           the technical error affected many people, so without any procedures, the
                            EPA put a rule out fixing the error
                  HELD: the EPA cannot correct the technical error without § 553 procedures
                  REASONING:
                           Congress has to fix errors by writing a statute, rulemaking is more like
                            legislation, therefore the agency needs to pass a new rule
                           this does not fall under the ―Good Cause Exception‖
                  RULE: Good Cause Exception:
                           Impracticable: ―a situation is ‗impracticable‘ when an agency finds that due
                            and timely execution of its functions would be impeded by the notice
                            otherwise required in § 553‖
                          1. i.e. when a safety investigation shows that a new safety rule must be put
                               in place immediately
                          2. an emergency is required; waiting to meet a deadline imposed by
                               Congress is not an ―emergency‖
                           Unnecessary: ―confined to those situations in which the administrative rule
                            is a routine determination, insignificant in nature and impact, and
                            inconsequential to the industry and to the public.‖
                          1. i.e. issuance of a minor rule in which he public is not particularly
                               interested
                           Contrary to Public Interest: ―connotes a situation in which the interest of the
                            public would be defeated by any requirement of advance notice‖
                          1. i.e. when announcement of a proposed rule would enable the sort of
                               financial manipulation the rule sought to prevent; if everyone knows
                                                                                                            53
                        something is going to become illegal they will rush out and do it
                        beforehand
iii. Interpretative Rules
    a.    Purpose:
       1)    to guide the public; these statements say how the agency is going to interpret a
             statute, what it thinks the statute means and how it is going to apply the statute.
       2)    to prevent ―differential‖ enforcement problems within the agency; a manual for the
             agency staff making clear what ambiguous terms mean
    b.    Statutory Interpretation:
       1)    The requirements set forth in § 553 (b) do not apply…‖to interpretative rules,
             general statements of policy, or rules of agency organization, procedure, or
             practice;‖ § 553 (b)(A)
       2)    this exception is justified on the basis that these rules do not have binding legal
             effect on the primary conduct of the public; they are not ―legislative rules‖
            the agency cannot bring an action for violating a Guidance Document, it has to
               show violation of the underlying statute
            want to encourage agencies to create guidelines and if they are required to go
               through procedures it would be difficult, time consuming and expensive
       3)    Problems with Interpretative Rules:
            they influence people‘s conduct and behavior
            the Agency loses knowledge and input from going through the procedures
            the Agency‘s interpretation gets deference, despite the fact that it was not
               informed by the public and through procedures.
       4)    Substantive Rule:
            a substantive rule is an interpretation which carries the force and effect of law
    c.    Cases:
       1)    Air Transport Association of America v. FAA (2002)
            FACTS:
                    Statute requires the FAA to establish regulations for safety in the air
                    the regulations governing rest time were ambiguous
                    the FAA sent a letter characterizing an interpretation that the time mean
                     actual flight time, not scheduled (―theoretical‖) flight time
            HELD:
                    the letter is interpretative
            RULE: An interpretative rule ―spells out a duty fairly encompassed within the
               regulation that the interpretation purports to construe.‖
       2)    Alaska Professional Hunters Assn. v. FAA (DC Circuit, 1999)
            Once persons have been notified of an agency‘s interpretation and have come to
               rely upon it, then only notice and comment rulemaking may change that
               interpretation
            If an interpretation interprets a statute which has already been ―interpreted‖, it
               should go through Notice and Comment
       3)    General Electric v. EPA (
            FACTS:
                    a Guidance Document gave the scientific methodology that must be
                     followed in determining levels of toxicity risk for variance from normal PCB
            HELD: the Guidance Document was substantive
            REASONING:


                                                                                               54
                        the consequence of the Guidance document is that it has binding effect
                         because it made people change their behavior
               RULE: If a guidance document or other ―interpretation‖ changes behavior,
                  influences conduct of people and/or agency, it is substantive.
      d.     Factors
          1)    In the absence of the rule there would not be an adequate basis for enforcement
                action or other agency action to confer benefits or ensure the performance of duties;
               If the agency can enforce duties or confer benefit sin the absence of the questioned
                  rule, then the rule would be interpretative, if not, the rule would be an invalid
                  legislative rule because it did not go through notice and comment
          2)    Whether the rule interprets a legal standard or whether it makes policy;
               does the agency use interpretative tools, legislative history, statutory construction
                  or does it explain the rule in terms of how it will serve the general purpose or
                  underlying regulation?
          3)    If the claimed interpretive rule is consistent with the legislative rule it is supposedly
                interpreting
          4)    Whether the interpretative rule is inconsistent with a prior interpretative rule
   iv. General Statements of Policy
      a.     Generally:
          1)    general statements of policy are rules, but rules that do not have binding legal
                power and therefore do not require notice and comment procedures
          2)    Examples:
               indicating when the agency will take investigative or enforcement action
               indicating how the agency intends to act under certain circumstances in an agency
                  adjudication
      b.     Purpose:
          1)    to guide the public; these statements say how the agency is going to interpret a
                statute, what it thinks the statute means and how it is going to apply the statute.
          2)    to prevent ―differential‖ enforcement problems within the agency; a manual for the
                agency staff making clear what ambiguous terms mean
   v. Rules of Agency Organization, Procedure or Practice
      a.     Generally:
          1)    procedural rules are legally binding, but they typically do not govern the primary
                conduct of the regulated public, therefore are not subject to Notice and Comment
                procedures
          2)    Examples:
               a procedural rule saying a permit application has to be filed in duplicate
C. Negotiated Rulemaking (Alternative)
   i.   Statutory Provisions:
      a.     §§ 561- 570
          1)    Purpose (§ 561)
               ―to establish a framework for the conduct of negotiated rulemaking, consistent
                  with § 553, to encourage agencies to use the process when it enhances the informal
                  rulemaking process.
          2)    Definitions (§ 562)
               Convenor: convenes staffers and others into a committee by putting a notice in the
                  Federal Register
               Consensus: unanimous concurrence; anybody has veto power
          3)    Determination of the Need for Negotiated Rulemaking Committee (§ 563)
               there is a need for a rule
                                                                                                      55
              there are a limited number of identifiable interests that will be significantly
               affected by the rule
            there is a reasonable likelihood that a committee can be convened with a balanced
               representation of persons who can:
                      adequately represent the interests identified
                      are willing to negotiate in good faith to reach a consensus on the proposed
                       rule
            there is a reasonable likelihood that a committee will reach a consensus on the
               proposed rule within a fixed period of time
            the negotiated rulemaking procedure will not unreasonably delay the notice of
               proposed rulemaking and the issuance of the final rule
            the agency has adequate resources and is willing to commit such resources to the
               committee
            the agency, to the extent consistent with legal obligations, will use the consensus
               with respect to the proposed rule as the basis for the rule proposed by the agency
               for notice and comment
       4)    Publication of Notice; Applications for Membership on Committees (§ 564)
       5)    Establishment of Committee (§ 565)
       6)    Conduct of Committee Activity (§ 566)
       7)    Termination of Committee (§ 567)
       8)    Services, Facilities, and Payment of Committee Member Expenses (§ 568)
       9)    Encouraging Negotiated Rulemaking (§ 569)
       10) Judicial Review (§ 570)
            ―An agency action relating to establishing, assisting, or terminating a negotiated
               rulemaking committee … shall not be subject to judicial review.‖
            Judicial review of a rule is not barred if judicial review is otherwise provided by
               law
            a rule which is a product of negotiated rulemaking and shall not be accorded any
               greater deference by a court on judicial review than a rule which is the product of
               other rulemaking procedures
       11) Authorization of Appropriations (§ 570)
ii. Background:
    a.    Negotiated rulemaking is really ―Pre-553 Rulemaking‖
       1)    nothing precludes negotiated rulemaking from taking place prior to Formal
             Rulemaking procedures, but the nature of formal rulemaking doesn‘t lend itself to
             negotiated rulemaking
    b.    Benefits:
       1)    probably streamlines the § 553 process by cutting down on the Comments
       2)    if all relevant interests are ―on board‖ less litigation is likely to ensue
    c.    Problems:
       1)    the agency is in charge because they have a duty to protect the public interest, when
             everyone is sitting around the ―negotiating table‖ the agency only has one seat; they
             become merely a participant in rulemaking rather then the leader.
            USA Group Loan v. Riley and US Department of Education (7th Circuit, 1996), The
               Secretary of the Department of Education didn‘t like the negotiated rule the
               consensus had reached. Held, the agency is not bound by the consensus reached.
               Reasoning that binding the agency to the consensus would make the notice and
               comment process pointless and the agency has a non-delegable duty to protect the
               public interest.

                                                                                               56
               2)    those at the ―negotiating table‖ have privileged access, but the theory is that those
                     on the Committee represent every interest
               3)    Delay, but in the long run is probably worth the tradeoff

       iii. Purpose:
          a.     Negotiated rulemaking gives agencies contact with affected people prior to the
                 proposal of a rule
      iv. Procedure:
          a.     Negotiated Rulemaking
              1)    When Negotiated Rulemaking is Used
                   a rule is needed
                   there are a limited number of identified interests
                   the interests are balanced
                   think a negotiated proposal can be reached
          b.     § 553 Notice and Comment Procedures
XIII.         Judicial Review of Administrative Action
  A. Purpose of Judicial Review
      i.
  B. Preliminary Issues
      i.    Mechanisms of Review
          a.     Special:
              1)    ―The form of proceeding for judicial review is the special statutory review
                    proceeding relevant to the subject matter in a court specified by statute…‖ § 703
              2)    In the underlying statute, Congress specifies what court review may be sought in
                   usually specifies the Court of Appeals because the Agency is the initial finder of
                      fact, review is the kind of action the Court of Appeals does
          b.     General
              1)    ―… If no special statutory review proceeding is applicable, the action for judicial
                    review may be brought against the United States, the agency by its official title, or
                    the appropriate officer.‖ § 703
              2)    If Congress does not specify, the fallback provision is for the action of first instance
                    to brought against the Agency in District Court
      ii. Kinds of Review:
          a.     Direct Review
          b.     Improper Enactment
          c.     Tort: Actions for injunctive or declaratory relief
      iii. Who May Seek Review
          a.     “Person Aggrieved”
              1)    ―A person suffering legal wrong because of agency action, or adversely affected or
                    aggrieved by agency action within the meaning of a relevant statute, is entitled to
                    judicial review thereof.‖ (§ 702)
                   very broad notion of who has the right to review, basically any person unhappy is
                      ―aggrieved‖
          b.     Constitutional Standing Requirements
              1)    Injury for Standing
                   Recreational, Aesthetic, or Environmental Injury
                   Risk as Injury
                   Procedural Injury
                   Informational Injury
              2)    Causation for Standing

                                                                                                             57
            Procedural Violations ad Causation
            Third-Party Actions and Causation
      3)    Redressability for Standing
           Third-Party Actions and Redressability
           Procedural Violations and Redessability
      4)    Representational Standing
      5)    Prudential Standing
      6)    Statutory Standing or the Zone of Interests
iv. What Agency Decisions May be Reviewed
   a.    Preclusion
      1)    Generally:
           ―… except to the extent that – statutes preclude judicial review;‖ (§ 701)
           Congress has the power to preclude judicial review because the APA says ―unless
             Congress precludes‖, which seems to imply that Congress can preclude.
                  the language of Article III implies that Congress can abolish ―inferior
                   courts‖, the lower federal courts, therefore it is assumed they have the lesser
                   included authority to create and limit their power.
                  EXCEPT: if preclusion would violate some other Constitutional provision
                   (see, e.g. Webster v. Doe)
           Abbot Laboratories v. Gardner (US Supreme Court, 1967)
                  FACTS:
                 1. the FDA adopted a rule under Amendments to the FFDC Act requiring
                      manufacturers of prescription drugs to include the generic name of the
                      drug each time the trade name was used on any labels or promotional
                      materials
                 2. the rule was challenged by drug manufacturers and their trade association
                 3. neither the Act (nor the Amendment) by its terms precluded judicial
                      review of this kind of rule
                 4. the government contended that because the Act provided specific
                      procedures for judicial review of certain other types of rules, the Acts lack
                      of any specific procedures for the rules in question suggested that no
                      review should be available
                  HELD: the statute does not preclude judicial review; the special procedures
                   were aimed to preclude review elsewhere.
                  REASONING:
                 1. the APA ―embodies a presumption of judicial review.‖
                 2. the burden is on the government to show ―a persuasive reason to believe‖
                      that Congress intended to cut off review
                  RULE: A statute should be read to preclude review, ―only upon clear and
                   convincing evidence of such legislative intent.‖
                 1. the Court has backed off the need for ―clear and convincing evidence‖
      2)    Express:
           Generally:
                  the language of express preclusion statutes are read narrowly and tracked
                   closely to the technical language
           Cases:
                  Lindahl v. Office of Personnel Management (US Supreme Court, 1985)
                 1. FACTS:
                           Civil Service Retirement Act provided that the OPM ―shall determine
                            questions of disability and dependence… The decisions of the Office
                                                                                                58
                  concerning these matters are final and conclusive and are not subject
                  to review.‖
                 Lindahal, a security guard at a naval shipyard was retired on
                  disability because acute and chronic bronchitis rendered him unable
                  to perform the full range of duties required
                 he sought review when he was denied retirement annuity
        2. HELD: the statute precludes review of only OPM‘s factual determinations
             regarding disability, review is available to determine whether there has
             been a substantial departure from important procedural rights…‖
         Veteran’s Benefits Cases
        1. FACTS:
                 statutory language expressly precluded judicial review of decisions
                  to award or not award benefits to veterans
                 ―The decisions of Administrator on any question of law or fact under
                  any law administered by the Veteran‘s Administration providing
                  benefits for veterans and their dependents or survivors shall be final
                  and conclusive and no other official or any court of the United States
                  shall have power or jurisdiction to review any such decision by an
                  action in the nature of mandamus or otherwise.‖
        2. HELD: the language was construed narrowly to preclude only review of
             claims, not terminations.
         Johnson v. Robison (US Supreme Court, 1974)
        1. FACTS:
                 conscientious objector claimed that 1st and 5th A rights were violated
                  by a statutory provision denying generally available veteran‘s
                  educational benefits to conscientious objectors who had completed
                  alternative service
                 under the same statute as the Veteran‘s Benefits, but the language
                  had been amended to preclude decisions about claims, benefits and
                  terminations
        2. HELD: Review of Constitutionality is not precluded by the statute
        3. RULE: Review of decisions rendered under the statute are different then
             challenges OF the statute.
3)  Implied
    Generally:
         Congress may preclude judicial review by implication
    Cases:
         Block v. Community Nutrition Institute (US Supreme Court, 1984)
        1. FACTS:
                 Consumers challenged milk marketing orders to come up with a
                  cheaper source of milk for the less wealthy.
                 Congress tried to set up a system that was efficient for farmers and
                  handlers and suits by Consumers would be disruptive of this scheme
        2. HELD: the intent to preclude judicial review of suits by consumers is
             manifested in the structure of the Act, therefore the milk order is not
             subject to judicial review.
                 here, handlers and producers could challenge and get judicial
                  review, but not consumers
        3. REASONING: the Court backed off the need for ―clear and convincing
             evidence‖ saying that standard ―is not a rigid evidentiary test, but a useful
                                                                                       59
                   reminder to courts that where substantial doubt about the congressional
                   intent exists, the general presumption favoring judicial review of
                   administrative action is controlling.‖
             4. RULE: Congressional intent to preclude judicial review ―fairly discernible
                   in the statutory scheme‖ suffices to establish preclusion.
                        Would judicial review disrupt the statutory scheme?
               Bowen v. Michigan Academy of Family Physicians (
             1. FACTS:
                        an association of physicians and individual doctors filed suit to
                         challenge the validity of an agency rule authorizing payment of
                         benefits in different amounts for similar physician services (certified
                         v. non-certified)
                        the statute limited the claimants right to review
             2. HELD: Congress intended to foreclose review only of ―amount
                   determinations‖ remitted exclusively to adjudication by private insurance
                   carriers in a ―fair hearing‖. Those matters Congress did not leave to be
                   determined in a fair hearing were not impliedly insulated from judicial
                   review by the statute
             3. REASONING:
                        claims by this group of claimants would not extrapolate to the extent
                         that it would disrupt the system
             4. RULE:
                        the Courts will interpret implied preclusion narrowly
                        strong presumption favoring judicial review of agency action
b.    Committed to Agency Discretion
   1)   Statutory Language: ―… except to the extent that – agency action is committed to
        agency discretion by law.‖ (§ 701)
   2)   Heckler v. Chaney (US Supreme Court, 1985)
       FACTS:
               challenge to the FDA‘s alleged failure to enforce the requirement that
                approved drugs only be used for the purposes approved
       HELD: no law applied to the exercise of the FDA‘s prosecutorial discretion,
         therefore the decision whether or not to take enforcement action in a given case
         was committed to the FDA‘s discretion by law.
       RULE: Absent some specific statutory limitation on an agency‘s prosecutorial
         discretion, the decision whether or not to enforce a particular law or rule is
         committed to agency discretion by law and therefore unreviewable
               in most cases there is no statute that says the agency must act, only that it
                may.
   3)   Webster v. Doe (US Supreme Court, 1988)
       FACTS:
               the CIA had fired an employee when it discovered the employee was
                homosexual
               the employee sued alleging the firing was unlawful under the National
                Security Act of 1947
               the Act stated that the Direct of the CIA ―may in his discretion terminate the
                employment of any…employee of the Agency whenever he shall deem such
                termination necessary or advisable in the interests of the United States.‖
               there was no evidence in the facts that the employee was a security risk

                                                                                              60
                        1. CIA says it is security risk because it subjects them to potential blackmail
                   HELD: the termination decision was committed to the agency‘s discretion by law,
                    therefore, judicial review of the employee‘s claim of unlawful termination is not
                    allowed
                 REASONING:
                         the statute expressly allows termination when the Director ―deems‖ it
                          necessary or advisable, not when it is necessary or advisable
                        1. the problem here is that there are Constitutional issues that can be heard
                 RULE: the agency gets deference
C. Timing of Judicial Review
   i.    The Doctrines of Finality, Exhaustion and Ripeness overlap and are hard to separate and
         distinguish. (See, e.g. Ticor Title)
   ii. Finality:
       a.      Statutory Provision: ―Agency action made reviewable by statute and final agency
               action for which there is no other adequate remedy in a court are subject to judicial
               review.‖
           1)     ―A preliminary procedural or intermediate agency action or ruling not directly
                  reviewable is subject to review on the review of the final agency action.‖ (§ 704.
                  ―Actions Reviewable‖)
       b.      Generally: the Doctrine of Finality focuses on when the agency has completed an
               action, so as not to have courts interfere with ongoing agency activities. Only final
               agency actions are subject to judicial review.
       c.      Cases:
           1)     FTC v. Standard Oil (US Supreme Court, 1980)
                 FACTS:
                         The Agency filed a complaint, an interlocutory agency action
                 HELD: the Complaint is not final agency action; final agency action will come if
                    and when the agency makes its decision.
                 REASONING:
                         the Company has no more recourse with respect to whether to issue a
                          complaint, but with respect to whether the complaint is valid it has a lot of
                          recourse
                         Interlocutory Review is not permitted because:
                        1. causes delay
                        2. the Agency‘s mistake may be corrected
                        3. the Complainant might ultimately win the final decision, so the
                             intermediate motions wouldn‘t matter anyway
                 RULE: Final agency action are those that actions that give a right and/or impose a
                    legal obligation. Interlocutory review is not permitted, EXCEPT:
                         Appeals on issues that are outcome determinative (see, e.g. PepsiCo)
                         Waiting would cause irreparable harm
           2)     Pepsi Co. v. FTC
                 FACTS:
                         Pepsi Co. filed a motion to dismiss for failure to join necessary parties
                         the motion was denied and Pepsi sought judicial review
                 HELD: failure to join necessary parties is an exception to the rule that only final
                    agency action is reviewable.
                 RULE: the prohibition on appeals of anything other then final agency does not
                    apply to appeals on issues that are outcome determinative.
           3)     National Automatic Laundry Cleaning Council v Schultz
                                                                                                     61
              FACTS:
                     Petitioners requested a letter ruling from the Administrator of the
                      Department of Labor to ―confirm‖ that Laundromat employees were not
                      affected by recent amendments to the FLS Act.
                     the Administrator responded in a lengthy letter explaining his interpretation
                      of the effect of the amendments
            HELD: the letter was authoritative agency action, but it had not been adopted
               (finality)
            REASONING:
                     a letter from the Head of the agency responsible for a matter is
                      presumptively the agency‘s decision
                     it makes no difference that his decision could be changed, it matters whether
                      there has been any indication that his view is only tentative or preliminary
            RULE: Two Prong Test:
                     Authoritativeness: Is it binding on the agency? In some sense all letter
                      rulings are binding because they are given deference on review.
                   1. Is this the considered position of the agency or some underling giving
                         advice?
                   2. Who issued the letter ruling?
                     Finality: Is the Agency keeping this issue under active consideration or is
                      this the position they are going to follow for a while?
            KEY POINT:
                     The Court created this test so as not to create a disincentive to agencies
                      issuing guidance.
       4)    Appalachian Power Co. v. EPA (DC Circuit, 2000)
            FACTS:
                     EPA ―guidance‖ document allegedly imposed unauthorized requirements
                      on states administering operating permit programs under the Clean Air Act
            HELD: the Guidance is final agency action reflecting a settled agency position
               which has legal consequences both for State agencies administering permit
               programs and companies who must obtain permits to continue operating.
            RULE: Two conditions must be satisfied for agency action to be ―final‖:
                     the action must mark the consummation of the agency‘s decision-making
                      process, it must not be of a merely tentative or interlocutory nature
                     the action must be one by which rights or obligations have been determined,
                      or from which legal consequences will flow.
iii. Exhaustion:
    a.    Statutory Provision:
       1)    ―Except as otherwise expressly required by statute, agency action otherwise final is
             final for purposes of this section whether or not there has been reasoned or
             determined an application for a declaratory order, for any form of reconsideration,
             or, unless the agency otherwise requires by rule and provides that the action
             meanwhile is inoperative, for an appeal to superior agency authority.‖ (§ 704)
            Administrative remedies must be exhausted when:
                     expressly required by statute
                     an agency requires it by rule and provides for an automatic stay of the
                      agency action pending appeal
            Unless the statute or agency regulations require an appeal, the decision of the ALJ
               if not appealed can be final agency action

                                                                                                62
b.        Generally:
     1)     Exhaustion focuses on the claimant and the idea that the courts should not review
            agency action until after a person has exhausted his possible remedies from the
            agency itself
     2)     The Agency has expertise and the Court cannot get the benefit of that expertise if it
            cannot complete its process and apply that expertise.
c.        Background:
     1)     the initial decision of an ALJ usually becomes the agency‘s final decision unless the
            losing party appeals that decision to the agency
     2)     because the losing party has the opportunity to appeal the decision to the agency,
            the losing party has an administrative remedy available
d.        Cases:
     1)     Myers v. Bethlehem Shipbuilding
           FACTS:
                   complaint to NLRB alleging unfair labor practices
                   rather then litigate, Bethlehem sought an injunction alleging that the NLRB
                    had no jurisdiction because Bethlehem was not engaged in interstate
                    commerce.
           HELD: Bethlehem had to go through the agency proceeding before seeking
              judicial review
           REASONING:
                   the court saw this as a mechanism for getting around exhaustion
                    requirement
                   Bethlehem might win, then the Constitutional issue would be moot
           RULE: Claimant‘s must go through agency proceedings if there is on set up,
              EXCEPT:
                   if the action is clearly outside the statutory authority of the agency. (Leedom
                    v. Kleins)
     2)     McKart v. United States (US Supreme Court, 1969)
           FACTS:
                   criminal prosecution for willful failure to report for induction in the army
                   he had been protected from the draft by a statutory exemption, but when he
                    no longer qualified, he failed to report or challenge his reclassification
                   McKart tried to defend the prosecution on grounds that he remained entitled
                    to the statutory exemption
                   Lower Court: defense not valid because he failed to exhaust his
                    administrative remedies
           HELD: the statutory claim may be raised
           REASONING:
                   invoking exhaustion in criminal cases can have ‗exceedingly harsh‖ results
                   the issue was a purely legal question of statutory interpretation; and
                   the high stakes of a criminal prosecution make it unlikely that failure to
                    require exhaustion in this case would encourage draftees to bypass available
                    administrative remedies
           RULE: An exception to the exhaustion requirement is in the context of criminal
              case.
     3)     McCarthy v. Madigan (US Supreme Court, 1992)
           A claimant is required to exhaust agency remedies if they are available, but
              exhaustion might no be required if:

                                                                                                63
                      requiring resort to the administrative remedy may undermine the ability of
                       subsequent judicial review to provide effective relief (irreparable harm)
                     1. i.e. from an unreasonable or indefinite timeframe for administrative action
                      doubt as to whether the agency was empowered to grant effective relief
                      where the administrative body is shown to be biased or has otherwise
                       predetermined the issue before it.
iv.     Ripeness
      a.     Statutory Provision:
          1)    Unlike the doctrines of Finality and Exhaustion, ripeness doctrine has not been
                recognized as codified in the APA
      b.     Generally:
          1)    stems from the Article III requirement of a ―case or controversy‖
          2)    a case is only ripe if there is an ongoing dispute between the parties that is
                sufficiently concrete.
          3)    the facts need to be specific; adequate facts
      c.     Cases:
          1)    Abbot Labs v. Gardener:
               Two Part Test for Ripeness:
                        Is the issue fit for judicial decision?
                      1. nature of the claim
                        Will withholding consideration by the court impose hardship to the parties?
                      1. i.e. in Abbot, there was significant harm because of ―the very real
                            dilemma‖ the companies found themselves in—either comply with the
                            regulation and forgo review or willfully violate the rule and risk criminal
                            and/or civil penalties
               this case was ripe because the issue being addressed by the claim does not depend
                  on the precise form of any label AND there will be severe consequences if the case
                  is not heard (i.e. some manufacturers will redesign and manufacture new labels)
          2)    Lujan v. National Wildlife Federation (US Supreme Court, 1990)
               FACTS:
                        environmentalists challenged what they claimed was an unlawful Bureau of
                         Land Management ―program‖ of opening previously protected public lands
                         to private development
               HELD: the environmentalists did not identify a final agency action ripe for review
               REASONING:
                        the term ―land withdrawal review program‖ does not refer to a single BLM
                         order or regulation or a group of orders or regulations
               RULE: The doctrine of ripeness requires respondent direct its attack against some
                  particular ―agency action‖ that causes it harm
          3)    Reno v. Catholic Social Services, Inc. (US Supreme Court, 1993)
               FACTS:
                        the IRC Act established a special amnesty process permitting certain aliens
                         illegally in this country to apply for regularization of their status and
                         permanent residence
                        INS issued regulations narrowly interpreting two of the four statutory
                         criteria for eligibility
               HELD: the challenges were not ripe until an immigrant had applied for benefits
                  and been denied.
               REASONING:

                                                                                                     64
                      If it is ―inevitable‖ that the challenged rule will operate to the plaintiffs
                       disadvantage—if the court can make a firm prediction that the plaintiff will
                       apply for the benefit, and that the agency will deny the application by virtue
                       of the rule—then there may well be a justiciable controversy that the court
                       may find prudent to resolve [Broadening of Scalia‘s narrow interpretation of
                       the Doctrine of Ripeness in Lujan]
       d.    Exam Analysis:
          1)   Is there more the agency can do? [Finality]
          2)   Is there more the Claimant can do? [Exhaustion]
          3)   Are the facts sufficiently developed? [Ripeness]

D. Substantive Judicial Review
   i.    The Text of the APA
   ii. The Requirement of Consistency
       a.     Generally:
           1)   Agencies have to convince the courts they are acting in a consistent manner
       b.     Cases:
       c.     Shaw‘s Supermarket
           1)   FACTS:
                the NLRB determined that a certain statement made by a vice-president working
                  for an employer to employees prior to a union election constituted a threat of
                  reprisal against collective organizing
                the NLRB issued an order finding that the employer violated the NLR Act and
                  called for a new election
                the employer petitioned for review, the NLRB sought enforcement
                        the NLRB argued that this was not a break from precedent and that the
                         difference in application stem from the fact that all facts are different
           2)   HELD: The statement in question was lawful, the NLRB determination was
                inconsistent with its prior discussions and since it failed to adequately explain the
                significant departure, the order is not enforced.
           3)   RULE: Agency MAY modify adjudicatory precedent and/or policies or prior
                decisions but when policy is changed, refined or exceptions made, need explain
                what it is doing and why.
                Rule of Consistency applies to statutes, interpretations of statutes, and internal
                  agency rules and procedures (free to change the regs, but unless and until they do,
                  the Agency is bound)
                Problems:
                        The agency‘s opinion about whether the cases are different is who‘s opinion
                         we want.
                        If there was reliance by the parties on the previous decisions, there may be
                         issues of retroactivity
       d.     Butz v. Glover Livestock Commission, Co.
           1)   FACTS:
                Officer of the Department of Agriculture warned Glover, under the Packers and
                  Stockyards Act, several times to correct its under weighing of consigned livestock
                when Butz failed to heed the warning, the Officer formally found it in violation of
                  the Act for under weighing livestock and making false entries of their weights in
                  its records
                the sanction was suspension of Butz as a registrant


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                        usually suspension was imposed for intent to violate the Act, here the
                         evidence showed carelessness, not intent
           2)    HELD: The suspension was upheld.
           3)    RULE:
                Review of agency action regarding sanctions should be deferential
                Agency gets discretion in determining penalties and sanctions; they can be tailored
                   to the facts of individual cases because how sanctions are applied is in a sense
                   implementing policy.
                Less concern about consistency in penalties and sanctions
       e.     To get deference in application of penalties, the Agency must actually be exercising
              discretion. (Corder v. United States, finding that blindly applying the max penalty for
              every offender without exception may be arbitrary and capricious.
iii.     Acquiescence
       a.     Generally:
           1)    If the Supreme Court rules, the agency must acquiesce
           2)    If a court rules in a particular case, the Agency acquiesces in that case
           3)    If lower courts or Courts of Appeal make a decision, is the agency required to
                 acquiesce in similar cases?
                Determination in the 2nd Circuit will be different from the 5th which leads to
                   inconsistency, BUT if the Agency does not acquiesce there will be inconsistency
                   within the Circuit, with those able to afford review appealing and those that
                   cannot get a different rule of law.
       b.     Stieberger v. Heckler (US District Court for Southern District of NY, 1985)
           1)    FACTS:
                Secretary of HHS instructed ALJ‘s to disregard the decisions of federal courts
                   within the circuit in which they sat when decisions conflicted with the Secretary‘s
                   own policies.
                The 2nd Circuit Court of Appeal gave ―special weight‖ to a treating physician
                the Agency policy was to give all physicians the same deference
           2)    HELD: the Agency must acquiesce to the 2nd Circuits ruling
           3)    RULE: An agency must acquiesce to the Court where that Court has jurisdiction
iv.      Judicial Review Background:
       a.     What is the court being asked to review?
           1)    Question of Fact
           2)    Question of Law
           3)    Error in Application of Law
           4)    Procedure, wrong or inadequate procedure used
           5)    Discretion, the agency erred in its discretion
v.       Standards of Review:
       a.     Substantial Evidence
       b.     Arbitrary and Capricious
vi.      Judicial Review of Agency Findings of Fact
       a.     Standards of Review:
           1)    Substantial Evidence:
                When does it apply?
                        Agency Action is Formal Rulemaking or Adjudication under § 556 and 557
                        When a statute specifies substantial evidence review although the agency
                         action is not formal rulemaking or adjudication
                       1. ―The reviewing court shall-- … hold unlawful and set aside agency action,
                            findings, and conclusions found to be… unsupported by substantial
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            evidence in a case subject to sections 556 and 557 or otherwise reviewed
            on the record of an agency hearing provided by statute.‖ (§ 706(E))
   What does it mean?
        Courts should not examine the agency‘s factual findings further than to
         determine whether they were supported by substantial evidence.‖ ICC v.
         Union Pacific (US Supreme court, 1912)
        Adopted in the APA in 1946 and was the accepted standard for governing
         judicial review of agency factual findings in trial-type adjudication
        Universal Camera v. NLRB (US Supreme Court, 1951)
      1. FACTS:
                 The NLRB found that an employee was fired because he was a drunk
                  (finding of fact, but other considerations probably go into it)
      2. HELD: The court will consider the Board‘s decision.
      3. RULE: The agency‘s ―findings are entitled to respect, but they must
            nonetheless be set aside when the record before a court clearly precludes
            the agency‘s decision from being justified by a fair estimate of the worth of
            the testimony of witnesses or its informed judgment on matters within its
            special competence or both…‖
                 ―substantial evidence‖ review is fairly deferential, a reviewing court
                  does not simply substitute its judgment as to the weight of the
                  evidence
                 Would a reasonable person viewing all the relevant evidence in the
                  record find that a preponderance of the evidence supports the agency
                  decision?
                 Substantiality is determined in light of the totality of the evidence.
   What weight does the reviewing court give to the ALJ?
        Generally:
      1. the ALJ may decide one way on the fact issue and the Agency another
                 the fact the ALJ ruled differently becomes part of the record
      2. the court reviews and is supposed to give deference to the ―final agency
            action‖, not necessarily the intermediate decisions of the ALJ‘s because the
            Agency has the expertise.
        Penasquitos Village, Inc. v. NLRB(9th Circuit, 1977)
      1. FACTS:
                 the issue before the Board was whether a challenged discharge
                  reflected employee misbehavior or employer anti-union animus
                 a supervisor testified that he had observed two discharged
                  employees loafing on the job
                 one had a few months earlier been suspended for similar misconduct
                  and after verifying he had the authority to fire them, he did
                 the ALJ resolved questions of credibility, but the Board said that
                  under the circumstances (abrupt firing after union organizing) this
                  was signs of anti-union animus and the discharge was improper
      2. HELD: the Board‘s ―derivative inferences based on general experience and
            labor policy‖ were not enough to constitute ―substantial evidence‖
            because the only issue in dispute is credibility.
      3. RULE: On issues of credibility, ALJ‘s determination deserves tremendous
            deference from reviewing board/Agency and from Cts.
        Allentown Mack Sales and Service, Inc. v. NLRB (US Supreme Court, 1998)

                                                                                      67
            1.  FACTS:
                    The Board has always held it to be unfair for an employer to refuse to
                     bargain with an established union unless he has a good faith reason
                     to doubt the union has the majority support of employees
                    good faith must be based on objective reasons
                    the factory closed and was reopened as a successor corporation,
                     when this happens the company must continue to recognize the
                     union
                    during interviews with employees, 6 or 7 indicated they were not
                     supporters of the union
                    the Board found that the company did not have good faith reason to
                     doubt the support, because, based on past experiences, the
                     employees probably made those statements because they wanted to
                     keep their jobs and knew the employer was anti-union
                    the Board decided this was an unfair labor practice
            2. HELD: There is no substantial evidence in the record to support the
                Board‘s decision.
            3. REASONING:
                    the Board did not give much weight to the testimony, instead they
                     used their ―expertise‖
            4. RULE: Agency must use evidence to justify its result, and must
                specifically outline what facts it used in its determination when giving
                reasons. (‗Sufficient evidence‘ to support statutory interp.)

2)    Arbitrary and Capricious:
      When Does it Apply?
            Informal adjudications
      What is It?
            ADAPSO v. Board of Governors (DC Circuit, 1984) – Statutory Requirement
           1. FACTS:
                    licensing is a formal adjudication, but the agency decided to engage
                     in informal rulemaking
           2. HELD:
           3. RULE: substantial evidence review and ―arbitrary and capricious‖ review
                involve the same level of scrutiny
                    ―We have noted on several occasions that the distinction between the
                     substantial evidence test and the arbitrary or capricious test is
                     ‗largely semantic‘ ‖
                    If ―substantial evidence‖ is interpreted like Universal, it is hard to see
                     the difference, but if interpreted under Allentown, there are
                     significant differences
                    pushes the agency to include more of a record for judicial review; the
                     record is simply the information that was before the decision-maker
                     at the time of the decision, however compiled
            Not all circuits agree that arbitrary and capricious = substantial evidence;
             most agree there are differences, but how different is hard to articulate.
             (Corrosion Proof Fittings v. EPA, 5th Circuit, 1991)
            Court used to make distinctions between Constitutional and ordinary facts,
             but no longer do. (Crowell v. Benson)

                                                                                            68
E.    Judicial Review of Agency Determinations “Beyond the Facts”
     i.    Application of Law to Facts:
         a.     Cases:
            1)    NLRB v. Hearst (
                 FACTS:
                          Formal adjudication, a proceeding against Hearst Corp. with full procedural
                           protections
                          Newspaper publishers refused to bargain w/ newsboys
                        1. they had fixed spots, little turnover, supervision, like employees, but also
                             provisions to the contrary
                          NLRB holds that the newsboys are employees, within the meaning of the
                           statute
                 HELD: The agency‘s application of law to facts is to be given deference
                 RULE: When an agency applies law to facts, it is given deference if there is
                    ―warrant in the record‖ and a ―reasonable basis in law.‖
            2)    Skidmore v. Swift
                 FACTS:
                          Informal agency action
                          the FLSA is a small agency with no rulemaking or adjudicatory powers
                          instead the agency sends out ―informal advisories‖
                          Employees acted as firemen on watch for fires at a plant; they worked 40
                           hours a week and were also required to stay at the plant or live near by for
                           the sole purpose of responding in an emergency; the employees got
                           compensation when they had to respond
                          the Administrator sent a Bulletin taking the position that some of the extra
                           time the employees sent on or nearby required compensation.
                          application of law to facts, what is a ―workable‖ hour?
                 HELD: The agency‘s decision is not controlling on the courts, but it did ―consider
                    that the rulings, interpretations and opinions of the Administrator under this Act,
                    while not controlling upon the courts by reason of their authority, do constitute a
                    body of experience and informed judgment to which courts and litigants may
                    properly resort for guidance. The weight of such a judgment in a particular case
                    will depend upon the thoroughness evident in its consideration, the validity of its
                    reasoning, its consistency with earlier and later pronouncements and all those
                    factors which give it power to persuade, if lacking power to control.
                 RULE: ―the rulings, interpretations and opinions of the agency, while not
                    controlling upon the courts by reason of their authority, do constitute a body of
                    experience and informed judgment to which courts and litigants may properly
                    resort for guidance‖
     ii. Abuse of Discretion
         a.     What is Abuse of Discretion?
            1)    Ultra Vires: acting outside the scope of its authority. (§ 706(2)(C) and (D)
                 ―The reviewing court shall hold unlawful and set aside agency action, findings,
                    and conclusions found to be:
                          in excess of statutory jurisdiction, authority, or limitations or short of
                           statutory right
                          without observance of procedure required by law.‖
            2)    Failure to Consider all Relevant Factors
            3)    Clear Error of Judgment
                 no reasonable person would have come to this conclusion
                                                                                                     69
b.        Citizens to Preserve Overton Park v. Volpe (US Supreme Court, 1971)
     1)      FACTS:
           Informal adjudication
           Statute provided that: ―Secretary shall not approve any program or project which
               requires the use of any publicly owned land from a public park…unless there is no
               feasible and prudent alternative and includes all possible planning to minimize
               harm to such park.‖
           Secretary approved building the highway through the park
           the statement of approval was not accompanied with an explanation
     2)      HELD: the record lacked factual support to determine if there is a clear error of
             judgment
     3)      RULE:
           The standard of review for an agency‘s discretionary decision is ―arbitrary and
               capricious‖
                     Did Agency consider all relevant factors?
                     Did Agency commit clear error in judgment?
           A record is needed to answer both questions and ‗post hoc‘ rationale is
               insufficient.
c.        Record Required
     1)      after Overton Park, there is the notion that the agency has to create a ―quasi-record‖
             even in informal proceedings (consistent with Vermont Yankee? Probably not, but it
             came after and this is good law)
     2)      if an agency doesn‘t take a ―hard look‖ at alternatives, the action will be arbitrary
             and capricious; Court looks to record to determine if the Agency made a reasonable
             choice. (Greater Boston Television Corp. v. FCC)
           need to show factual basis and that the Agency has exercised reasoned discretion
           Why are the alternatives rejected? National Lime
d.        Motor Vehicle Manufacturer’s Association v. State Farm
     1)      FACTS:
           informal rulemaking
           the agency came up with a rule that would require passive restraints, but when
               the administration changed, the agency rescinded the rule
     2)      HELD: once a rule has been enacted, the decision to rescind is the equivalent of a
             change of the law and gets judged and reviewed the same as rulemaking
           the rule was arbitrary and capricious because the agency failed to consider the
               alternative of requiring airbags instead of allowing manufacturers the notion of
               providing passive belts
     3)      RULE: To avoid being overruled on the grounds that the decision is ―arbitrary and
             capricious‖, the agency must consider:
           all relevant factors
           rational connection between evidence and the rule or decision
           alternatives
           no implausible conclusions
           contrary evidence with explanation of why it rejected the comments or evidence of
               the opponents
           State Farm: the SC stated that the scope of review was the ―arbitrary and
               capricious standard even though the statute involved the Motor Vehicle Safety
               Act, stated that the agency‘s determination was to be supported by ―substantial
               evidence on the record considered as a whole.‖

                                                                                                70
            To avoid Arb/Capr overrule, Agency must consider -
       -   Consider all relevant factors
       -   Rational connection b/t evidence and rule/decision
       -   Not Implausible Conclusions
       -   Consider Alternatives
            Deal w/ contrary evidence
iii. Interpretation of Law:
    a.    Generally:
       1)    interpreting the meaning of statutory or regulatory provision
       2)    Examples:
            a rule or order is unconstitutional (§ 706 (2)(B))
            a rule or order that is ultra vires (§ 706 (2)(C))
            interpretation of law found in a rule or order is wrong (§ 706 (2)(A))
            procedures not followed and the agency argues those procedures are not required
               by law (§ 706 (2)(D))
       3)    Which provision is used to raise the question of law is not determinative of how
             courts analyze the question
       4)    Constitutional Questions Courts interpret, but cours often avoid the Constitutional
             question
    b.    Interpretation of Statutes:
       1)    When an agency adopts a rule, it must interpret at least the statute that authorizes
             or requires it to make the rule
       2)    Theory of Chevron: if a statute directly addresses an issue, then Congress has made
             law on the issue that the court enforces without regard to what the agency thinks,
             BUT if Congress has not addressed an issue, then Congress is deemed to have
             delegated the power to make the law on that issu to the administering agency,
             leaving it t o the gency‘s expertise the assessment of the wisdom of different policy
             choices and the resolution of competing views of the public interest
    c.    Chevron v. Natural Resources Defense Council
       1)    FACTS:
            Under the Federal Clean Air Act owners of ―major stationary sources‖ of air
               pollution in areas of the country not meeting the NAAQS are required to meet
               stringent requirements when they modify a major stationary source so that it
               increases pollution
            the EPA adopted a rule under the Clean Air Act that interpreted the term
               ―stationary source‖ in the act to mean a collection of smokestacks within a
               contiguous facility, the ―bubble concept‖
       2)    HELD: the EPA‘s rule was upheld because the term was ambiguous and the
             interpretation of the term was reasonable
       3)    RULE:
            Is Congress‘ intent clear?
                    if so, no need to interpret
                    look to statutory language, legislative intent and history, policy, the
                     problems it intended to correct; exhaust tools of statutory interpretation
                   1. ―We are not persuaded that parsing of general terms in the text of the
                        statute will reveal an actual intent of Congress…‖
            If unclear, is the agency‘s interpretation permissible?
                    yes, give it deference
                    permissible = within the range of ambiguity

                                                                                                71
                     If the agency is vacillating on its position, Chevron does not get as much
                      deference. (Good Samaritan Hospital v. Shalala, ―the consistency of an agency‘s
                      position is a factor in assessing the weight that position is due.‖)
        d.        MCI v. AT & T
             1)     FACTS:
                   FCC Act set up the FCC and gave it power to regulate the telephone industry
                   AT&T had a monopoly and the administrative structure was set up to regulate
                      monopolies
                   the statute at issue permitted the FCC, in its discretion, to modify certain aspects
                      of the regulatory scheme
                   the FCC made a rule that exempted ―non-dominant‖ carriers from filing
                      requirements
             2)     HELD: the statute is unambiguous therefore it cannot be interpreted by the agency.
                    Modify means make small changes, t hi sis a wholesale change and falls outside the
                    agency‘s authority.
             3)     RULE: Partial modification of Chevron, in terms of how step one is analyzed. Don‘t
                    need to look at so many facets in determining whether the language of the statute is
                    clear.
        e.        United States v. Mead
             1)     FACTS:
                   prior to 1993, three ring day planners were treated as ―other‖ and not subject to
                      tariff
                   4% tariff imposed b/c Mead Corp asked for interpretive rule on 3-ring diary
             2)     HELD: No deference to the agency‘s meaning of diary and bound because they have
                    a clear meaning so no need to interpret.
             3)     REASONING:
                   this doesn‘t get Chevron deference because the gency didn‘t use its delegated
                      authoirtiy to make the standards
             4)     RULE: Ct uses sub-§553 analysis and concludes that this is an interpretive rule. Ct
                    gives deference where there is expertise, implementation of expertise, limited
                    precedent, and central issuing authority. Similar analysis but distinct from Skidmore
                    (IRS interp rule)
                   the amount of procedures used goes to the weight of the deference
                   In order to get Chevron deference:
                            Congress must have delegated authority; and
                            the agency is acting in a way that they are making use of that authority
                           1. if Chevron does not apply, the agency action gets some deference
                               (Skidmore)
        f.        Rucker

X I V . DISCUSSION QUESTION




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Exam Techniques

   1.    See both sides
   2.    Points live after the word “Because…”!!!!!
   3.    Come to a conclusion
   4.    Chevron WILL be on EXAM!!!!
   5.    Skidmore Deference v. Chevron Deference
   6.    Ex parte contacts
   7.    EO 12866
   8.    To compare and contrast on the facts, the note cases are relevant
   9.    Be aware of what court and when!!!!
   10.   LAPA




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