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
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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.
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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.
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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.
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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
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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:
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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
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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‖)
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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.
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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
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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:
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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
38
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)
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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
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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:
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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
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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
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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
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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?
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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;
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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
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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
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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
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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
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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
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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
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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
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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:
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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
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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.
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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
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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
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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
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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
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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
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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
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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:
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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:
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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)
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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)
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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
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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.‖
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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
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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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