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Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 1 of 39 ADMINISTRATIVE LAW OUTLINE Professor Fitts Spring 2000 I. THE NATURE AND FUNCTION OF ADMINISTRATIVE AGENCIES A. THE ORIGIN AND MANDATE OF ADMINISTRATIVE AGENCIES 1700s world was ruled by Congress [L] or the Courts [C]. World was a simple place. Congress could write statutes about everything, then the Courts could step in and fill in the gaps. President did not have to do much. World changed through series of interventions: (1) Monopoly regulations private market did not work o.k. on its own. There grew a need to establish administrative agencies to get involved and correct the situation. Ex. ICC, FCC, CABC. (2) Externality Regulations Regulatory effects which have external effects rather than just private activity. Ex. EPA, FTC (3) Paternalistic/Morality-based Regulation Need to intervene to right the wrongs. Ex. EOC (4) Redistributive Regulation Redistribute sources in private market. Ex. Social Security Commission. Government had to do a lot more quickly!! Administrative agencies developed to take the place of the traditional model of law-making. Paradigmatic split of government did not work in modern times. Administrative Law Procedures that all these administrative agencies follow. B. THE FUNCTIONS OF ADMINISTRATIVE AGENCIES (1) They act like mini-legislatures promulgate regulations; decide how to act; given power to make decisions on what the law should be. (2) Enforce the Standards watchdog functions (3) Adjudicate act like mini-courts; bring transgressors into administrative agency court and adjudicate within the agency. C. RISE OF ADMINISTRATIVE AGENCIES At first, Congress delegated most administrative functions to “departments” headed by officials who served at the President’s pleasure -i.e. ICC is originally assigned to the Dept. of the Interior and made accountable to the Secretary of the Interior (executive branch agency) Pattern changes in 1889 when the ties between the ICC and the Dept. of the Interior are severed-ICC becomes first independent agency Independent agencies are made possible by the appointment power of the President-the agencies circumvent the nondelegation doctrine because the agencies aren’t purely legislative (see section on executive appointment power) President maintains control over removal, but only for cause, which insulates the agency from presidential control Agency heads are usually appointed for terms (usually staggered) Two main reasons for creating independent agencies: (1) agencies should be free of presidential control because they perform a legislative function (2) need for expertise and insulation from political influence Many of the best known independent agencies were born in the New Deal Era (FCC, SEC, and NLRB) After the New Deal, observers began to criticize the independent agencies: lack of political accountability fragmentary policies inflexibility administrative inefficiency In recent decades, Congress has generally preferred to assign major new regulatory functions to existing executive departments or new executive branch agencies held directly accountable to the President Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 2 of 39 D. AGENCY ORGANIZATION Legislative model Congress has a lot of control or input by being very clear about the agency’s job Give a legislative veto to Congress so that it can override the administrative agency Internal workings of the agency should look like a mini-legislature (informal rulemaking) Judicial model Judiciary has control or oversight through the availability of judicial review-make it easy to get into court to resolve issues Internal workings of the agency should look like a mini-court-neutral decisionmaking, on record etc. (formal rulemaking) Managerial (presidential) model Bureaucracy Insulated administrative agencies with President on top Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 3 of 39 II. CONGRESSIONAL INTERACTION WITH ADMINISTRATIVE AGENCIES A. NON-DELEGATION DOCTRINE: OSHA AND THE BENZENE CASE In theory, the Legislature cannot delegate its legislative power. Yet, legislatures constantly do so, by conferring broad rulemaking authority on administrative agencies. All Legislative Authority derives from Congress. Art. I § I. Yet, some areas have been found to be legitimate for delegation: (1) ascertainment of fact an agency could exercise legislative power if such power was limited to ascertaining whether a fact had occurred. Ex. Field v. Clark (2) Filling in the details Delegation of legislative power to make rules to implement a vague statute was upheld on the ground that the agency was merely filling in the details. (3) fixing a principle or standard When Congress establishes such a principle or standard, at least it has made the fundamental policy decision which the agency need only implement. New Deal Era Broad delegations of legislative power to agencies in an attempt to recover from Depression. Court struck down 2 delegations: (1) Panama Refining and (2) Schecter Poultry. Since the 1930s, all SC cases involving the delegation issue have been uniformly upheld. Even those with vague or no standards. Delegation doctrine appears to be Dead. Yet, there is some support for reviving: Scalia and Rehnquist. Since courts are hesitant to strike delegation doctrines, they use other methods to constrict the authority— invoke the non-delegation doctrine occasionally to justify narrowly interpreting broad or ambiguous delegations. Construe delegation narrow to invalidate part of it without striking all of it. Arguments for Nondelegation doctrine (Congress regulates) Democratic theory: bureaucrats aren’t elected Special interests: delegation leads to biased decisions because agencies are dominated by special interests groups/captured by the interests or industries they regulate Big Government is bad: agencies make regulations to give the agencies something to do and keep them around P.30 – 3 functions served by non-delegation theory. Arguments against Nondelegation doctrine (Congress delegates) Democratic theory: elected leaders are elected to delegate Procedural similarity: agencies have hearings, commentary etc. Time constraints: too much for Congress to do Executive oversight is more diligent Executive oversight will lead to more democratic accountability Special interests: dominate Congress more than agencies so agencies are less biased than congressmen People like to see government action-creation of agencies Line drawing: because Congress cannot do all the regulating, it must delegate some. If we don’t allow all delegations, it becomes impossible to craft judicial standards separating permissible delegations from impermissible ones. 1. Limitation Congress must make the initial policy decision, leaving the agencies only the detailed implementation of the statute Industrial Union Dept v. American Petroleum (Benzene Case) 1980: After determining that there is a causal connection between benzene and leukemia, the Secretary of Labor, pursuant to the OSHA, set an exposure limit on airborne concentrations of benzene, and imposed complex monitoring and medical testing requirements on employers whose workplaces contain .5ppm or more of benzene. Court held that the OSHA had exceeded its standard setting authority because it had not shown that the new benzene exposure limit was “reasonably necessary or appropriate to provide safe or healthful employment” as required by §3(8) and because §6(b)(5) does not give OSHA the unbridled discretion to adopt standards designed to create “absolutely risk-free” work environments regardless of cost. Ct affirmed holding that before promulgating any standard, the Secretary must initially find that a place of employment was unsafe. All Congress said was intervene as to the extent feasible Congress failed to determine if it’s a CBA or just maximization of benefits test. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 4 of 39 Majority holds that the threshold jurisdiction for OSHA is a materially significant risk, not per se cost benefit analysis. Dissent wants OSHA to intervene for any risk in the workplace. NO CBA REHNQUIST (Concurring in judgment) The nondelegation doctrine ensures that important choices of social policy are made by Congress and that authority that is delegated is accompanied by an intelligible principle to guide the exercise of discretion and to make JR possible. OSHA Act has none of these principles. Response (1) He views power as originating from Congress and forgets that President is democratically elected. When OSHA makes decisions, they are accountable to the President. (2) He wants an intelligible standard from Congress which is almost impossible. B. LEGISLATIVE VETO: INS v. CHADA Attempt of Congress to reassert it’s control in administrative agencies. In first executive reorganization statute of 1932, congress granted the President authority to reorganize executive departments and agencies subject to some form of congressional veto. Since then, became common, despite some president’s objection (vetos). Legislative Veto arose with the emergence of administrative agencies. It was created because Congress doesn’t have time to oversee all. Proliferated up until the early 80s. LV device by which Congress could keep its eye on what admin agencies were doing without going through all the bicameralism procedures. LV = misnomer. It’s any action taken by legislative subunit that serves to have purpose/effect on any person/agency outside the legislative branch. What is legislation? Any action taken that has the purpose and effect of altering legal rights, duties and relations of persons all outside the legislative branch. Legislation is subject to bicameralism and presentment Article I, §7 cls. 2, 3. 1. Challenge to the Legislative Veto INS v. Chada: , East Indian, was admitted to the U.S. on a student visa. He remained longer than a year and his visa expired. INS ordered to show cause why he should not be deported. Chada submitted application for suspension of the deportation under the INA. The Attorney General suspended the deportation proceedings under the hardship exemption. Yet, the House of Representatives vetoed the decision granting Chada permanent residence. Chada challenges the constitutionality of the legislative veto. Ct held that a legislative veto by one house of the legislature violates the separation of powers principles of Art. I of the Constitution. Any action of the legislative branch which has the purpose and effect of altering legal rights, duties and regulations of persons outside legislative branch is subject to bicameralism (Art I, §§1,7) & presentment (to President) (Art I, §§2,3). – The action here was legislative and had to be passed by both houses and presented to the President. Congress granted AG lot of discretion but was nervous so retained the L.V. As a result, the SC struck down the one-house legislative veto in every possible scenario. (Chada struck down more federal statutes than any other SC case.) Now, Congress now can only veto agency rules by passing a new statute which must be signed by the President. Congress must be more precise in setting standards when it delegates legislative power. Burger’s argument Whenever the framers wanted any body to act alone, they specified it. There is no mention of the House acting alone here. Also in vetoing Chada’s decision, it is legislation because if they didn’t do so, the only way to veto would be through legislation [Supplantation theory]. You are what your replacement is. problems admin agencies alter legal rights, duties and relations all the time and it’s not considered legislation. [Response other controls: terms of the legislation that authorized it, judicial review, power of Congress to modify or revoke authority entirely] Powell’s Concurrence in judg: this was adjudicatory action. Not all veto is unconstitutional. White’s dissent Legislation has satisfied bicameralism presentment. It’s not only that the underlying piece of legislation has satisfied bicameralism/presentment, but also Chada can only be Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 5 of 39 removed with concurrence of all 3 branches of government. This is the equivalence of legislation. AG [Exec] has to agree, H/S [Leg] cannot veto = B/P problem assumes inaction is the equivalent of action. Assumes that by not vetoing you are affirming. However, to force one to veto is an important act. Improper to equate ALJ with the AG and then the AG with the President. 2. AFTER CHADHA: · Congress can still delegate authority to FCC, but must do it through bi-cameralism and presentment. Anything that comes up before the FCC won’t go into effect for 30 days so that Congress has a chance to enact new legislation to counter-act the FCC if so wish. · Legislation held up for 30 days to allow Congress to pass new legislation is constitutional - gives Congress an opportunity to invalidate through bicameralism presentment - fast track procedure. · There is no legal authority for a Chairman of a Committee to delay legislation after Chadha. Chairmen can no longer invalidate legislation. Ex. Chair of Comm. held up date of signing for 30 days costing billions—Constitutional? NO. Any exercise of authority of legal significance must pass bicameralism/presentment. (BUT, If a statute allowed the Chairman to delay certain legislation, then it might be constitutional.) · A statute which give authority to FCC to promulgate rules, but says that regulations will only go into effect after 30 continuous days of Congress being in session is a form of legislative veto and unconstitutional. (Newt could recess the House, thereby effecting someone’s rights without presentment or bicameralism) informal veto. · Congress delegates authority to FCC to regulate Cable TC but recognizes the impact on foreign countries. Therefore, the date of regulation will be held up if the Chairman of County X wants time to pass its own legislation—Constitutional? YES. Not a legislative veto. Chada applies to Legislative actions. · Presidential proposes reorganization of departments. Presented to Congress and then goes through Bi-Cameralism. Only problem is that the process is reversed (Bi-Cameralism first and then Presentment) so probably unconstitutional. Must send back to President. · Chairman of House Telecommunications Committee fires the Chief of Staff. This does not undergo bi-cameralism or presentment, but constitutional, because Chadha only applies outside Legislative Branch, not purely internal staff. C. OTHER LEGISLATIVE CONTROLS 1. Traditional means · Rewriting agencies’ governing law to confine the exercise of delegated powers within narrower statutory limits. 2. Appropriations Each agency needs annual appropriations Some have suggested that budgetary control is the most effective means of congressional oversight. 3. Ex poste regulations 4. Informal Control Quid Pro Quo (Problem: The Case of the Keating Five) Invisible Hand of Congress – appropriations budgetary rewards, manipulating selection process Phone calls 4. Sunset review Limit the lifetime of each agency, renewable. proposed by President Carter. No such measures have been enacted by Congress. Or just abolish all together – Congress has been able to do so. 5. Hearings and Investigations – tools for imposing sanctions on errant agencies. “Police Patrol” v. “fire alarm” model of congressional oversight – “Fire alarm” seems dominant. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 6 of 39 D. THE CASE OF THE KEATING FIVE · Budget Control is only a background for the most common form of congressional interaction with administrative agencies, large number of low visibility contacts between agency officials and members of Congress (or more often congressional staff) · Question of proper limits of implicit Quid pro quo. · Intervention of five senators in decisions of the Federal Home Loan Bank Board on behalf of Keating, owner of a savings and loan company who adamantly opposed adoption of a Rule by this independent agency, so enlisted support of five senators. Problems: (1) senators received substantial contributions from Keating. (2) These senators’ actions on Keating’s behalf went well beyond the usual indications of interest. This was done in the past, but the extent and the obviousness caused objections. · Only one senator was formally reprimanded – But, even the Senate Select Committee on Ethics, although recommending this reprimand, declared “that, in and of themselves, none of the… actions of Senator Cranston violated any law or Senate Rule.” His actions did, however, constitute “an impermissible pattern of conduct in which fund raising and official activities were substantially linked in connection with Keating and Lincoln.” Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 7 of 39 III. EXECUTIVE CONTROL OVER ADMINISTRATIVE AGENCIES Article II §1 provides that the Executive power shall be vested in a President of the United States. Domestic powers: Article II §3, which requires the President to “take Care that the Laws be faithfully executed.” A. APPOINTMENTS CLAUSE Article II §2, cl.2 President shall nominate, and by and with the A/C of the Senate, shall appoint… Officers of the United States. Congress feared during the New Deal that the president would have the power over all the new administrative agencies if he had the power to appoint and remove. Therefore, congress created independent administrations and agencies where president can only remove for cause. Officers in the executive branch, however, the president can remove for any reason. (Can remove AG for any reason, but not a member of the NLRB) Incompatibility Clause: Art I, §6. Members of Congress cannot hold Civil Office. Congress can never (not even by statute) appoint officers of the U.S., it must be the President. President’s Appointment power is dependent upon Congress: (1) Advice and Consent of the Senate (2) President’s exclusive constitutional power of appointment extends only to some undefined class of superior officers. (3) Congress must first establish the office to which the President may make an appointment. President appoints all officers of the U.S. [Superior need advice and consent of Senate; inferior need no consent]. Congress has some legitimate interests in setting the parameters to presidential appointments. As positions get lower, restrictions are more accepted but still must be related to a legitimate interest of Congress. 1. Independent Agencies Buckley v. Valeo 1975: Federal Election Commission is governed by 6 members appointed by Congress. 2 appointed by the President; 2 by the Speaker of the House; 2 by President Pro Temp of the Senate. All appointees are subject to A/C of the Senate and House. Challenged in Court. SC struck down the Act because the procedure was so contrary to the Appointments Clause. Ct held that anyone exercising significant authority pursuant to the laws of the U.S. is an officer of the U.S. and must be appointed in the manner prescribed in the appointments clause. To the extent that these officers are promulgating regulations, adjudicating, they are exercising considerable authority and must be appointed by the President. The commission’s enforcement power, exemplified by its discretionary power to seek judicial relief, is executory power, which can only be discharged by “Officer of US”. If the agency is solely advisory, Congress may appoint alone. Yet, if the agency promulgates rules and adjudicates, then this is significant authority and must be appointed under Appointments Clause. Principal officers are selected by the President with the A/C of the Senate. Inferior officers Congress may allow to be appointed by the President alone, by the heads of departments, or by the Judiciary. 2. Inferior v. Superior Officers It is appropriate for Congress to set qualifications for lower positions. It is unconstitutional for Congress to impose any limitations for appointment to a superior office. A list is unconstitutional for any higher office. Ask: (1) Does the authority/position change the checks and balances of the government? (2) Does the authority/position have a lot or a little power? 3. HYPOS · Can Bill appoint Newt as AG? NO. Incompatibility Clause. Must keep executive within executive and legislative within legislative. · Congress passes statute which says “FJ will be AG”. Passes bicameralism/presentment. Constitutional? NO. It is an appointment that violates the Appointment clause. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 8 of 39 · Congress passes statute that AG is appointed by President from a list of names and President can choose among them. Constitutional? Probably NO. Committee is taking executive action within legislative branch. (Chadha Problem???) · Congress passes statute that SG must be a doctor / Secretary of Defense must have fought in a war. Constitutional? Not addressed yet. Anyone can get on the list. Not everyone can become FJ. · Body investigating executive branch for compliance with civil rights laws [Civil Rights Commission]. Governing body is appointed by House, Senate and President. Constitutional? YES. It is an advisory body. It exercises no coercive authority. · Congress decides to grant Oliver North immunity for his testimony. Constitutional? NO. It is unconstitutional for Congress to exercise prosecutorial function. Prosecution, Adjudication and Enforcement is for the Executive Branch. They could give him either Use Testimony or Transactional Immunity. · Officials for Smithsonian (museum) is appointed by House, Senate, and President. Constitutional? Probably not. It’s like NASA, or NIH. (Court said in dicta in 1920s) B. REMOVAL CLAUSE Constitution is silent as to power to remove officials. James Madison found authority for the President to unilaterally remove officers whom he appointed with the advice and consent of the Senate in sweeping mandate of Article II § 1. “The executive power shall be vested in a POTUS. Marbury v. Madison 1803 SC adopted a narrower interpretation—President generally has the power to remove such officers, but Congress can restrict the President’s authority. Myers v. U.S. 1926 SC held unconstitutional a statute that required the advice and consent of the Senate before the President could remove a local postmaster of Post Office. Humphrey’s executor 1935 SC rejected the President’s claim of inherent authority to remove FTC members. Statute provided that members of the FTC could be removed only for certain stated causes. Congress deprived the President of removal power so that the agency could be free of presidential control to investigate and adjudicate. The statute was upheld. Case upheld limitations of President’s Art. II. power. If the position involves enumerated Presidential power, there is no interference with Pres. power. If the position involves leg or jud powers, then you can restrict the President’s power of removal. Distinguishing Postmaster whose functions are executory and not at all related to legislative or judicial power, from a commissioner of FTC who must perform as a legislative or judicial aid. Since such position cannot be characterized as an arm or an eye of the executive, in contemplation of the statute, must be free from executive control. President’s power to remove will threaten independence of a commission, which is not only wholly disconnected from the executive department, but which, as already fully appears, was created by Congress to perform legislative and judicial powers, and as an agency of these departments. 1. Legislative Removal: Bowsher v. Synar 1986: Comptroller General was authorized by the Act to prepare a report explaining whether the budget approved by Congress meets budget deficit targets based on the Comptroller General’s evaluation of projected revenues and expenditures and specifying further reductions necessary to reach these targets. Conditions were binding and not reviewable. Comptroller General is appointed by the President, but out of a list of 3 names supplied by Congress. The term is 15 years and can’t be fired or removed by President. He is answerable only to Congress and is removable only through legislation. Ct held that appointment is unconstitutional. There was an asymmetrical relationship. Burger: This poweris key to executive officer of US Falls under the Appoint Clause Unconstitutional. To permit the execution of laws to be vested in an officer answerable only to Congress would reserve in Congress control over the execution of the laws. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 9 of 39 Structure of the Constitution does not permit the Congress to act as executive and execute the laws. Congress cannot grant to an officer under its control what it does not possess. Problem Congress need not fire the officer. It can just get rid of the office and then recreate it in another form by passing a law. Functionally it is the same as firing the person. Just as Chadha required Congress to withdraw from any formal role in application and interpretation of the laws except through legislation and Buckley required Congress to forgo any direct role in appointment of officers of the US except for Senate advice and consent, Bowsher required Congress to eschew direct control over officers performing executive functions that is implicit in the power of removal (only be impeachment by House, and conviction by Senate). 2. HYPO: Congress does not like Janet Reno and wants to get rid of her. Congress decides since it cannot remove her to change the structure of the Justice Department by eliminating the AG office and then creates Office of Federal D.A. with all the same powers where President nominates with A/C of Senate. Unconstitutional. The AG is only removable by the President. – WHY?!?!??! C. LINE ITEM VETO Different from other oversight cases. It’s purpose is not to reintroduce Congress. It is an attempt to control legislative overreaching. It’s an attempt for the President to introduce himself in legislative power. Line Item Veto was a response to appropriation statutes of the 80s. Congress was undermining President’s veto power. Congress would set it up in an omnibus bill and he would have to approve it all or veto it all. Line Item Veto was a chance to return power to the President. (1) Constitutional Amendment—line item veto. This would make it possible to excise parts of the bill. Would define each item as a bill and therefore veto-able. (2) Pass statute that states Congress’ view of what a bill means. Bill could be each clause within a bill. This looks facially unconstitutional. The Congress defining what Constitution means by bill. (3) Give President impoundment authority When appropriations are passed by Congress, the President can veto or sign the bill but also can veto certain sections. After he signs, he would have number of days in which to impound sections. Constitutional problems with Line Item Veto? Traditional impoundment power has been limited to managerial positions. Challenge = non-delegation. This would turn legislative function into executive function. D. SPECIAL PROSECUTOR STATUTE 1. Morrison v. Olson 1988: Challenge to the Ehtics in Government Act creating the office of the Independent Counsel (special prosecutor) because (1) Members of the congress may request that an IC be appointed (but it’s still AG’s decision, based on AG’s mandatory preliminary investigation and on a finding that “there’s reasonable grounds to believe that further investigation is warranted”. This finding is not subject to review.) and (2) AG is required to apply to a special court (“Special Division”) for the appointment of an IC. IC may be terminated in two ways: (1) Upon completion of the counsel’s work, Special Division can terminate IC’s position if IC doesn’t voluntarily cease work. (2) AG may remove IC anytime, only for “good cause”. (1) The SP is an inferior office: subject to removal by higher executive branch official; limited duties; limited in jurisdiction; limited in tenure (single task). (2) The duties of the SP are of a ministerial nature and do not trespass on the authority of the Executive. (3) The SP does report to Congress, but is answerable to the AG. This does not unduly interfere with the power of the President in enforcing the laws. This sort of “Interbranch appointments” of even inferior officer might be improper if there was some “incongruity” between the functions normally performed by the courts and the performance of their duty to appoint. Here, there was some concern of congress of the conflicts of interest that could Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 10 of 39 arise when executive branch is called upon to investigate its own high-ranking officers. Thus, putting the appointing authority to Judicial Branch was most logical. Separation of Powers Issue: (1) Good Cause requirement of termination by AG is ok, since ct can’t see how the President’s need to control IC is so central to the functioning of the Executive Branch as to require that the IC be terminable at will by the President. Nor, does this requirement impermissibly burden the President’s power to control or supervise IC. Not unduly interfering with the role of the Executive Branch – does not pose a “danger of congressional usurpation of Executive Branch functions” (see Chadha), nor judicial usurpation – since federal court’s power to review the AG’s decision to remove an IC is within the traditional power of the judiciary. Scalia’s dissent: some control through the AG is not enough, because the President is vested with Executive Power and clearly IC is executive, and is not an inferior office since it is necessary condition for inferior officer status that the officer be subordinate to another officer. Fitt’s Take Not an inferior office. There is no political accountability. One target, unlimited budget . The response is over-investigating. Difficult to ever say enough. Always the possibility of finding new evidence. Symbolic importance. 2. Rise of SP today: $$$ is appropriated by Congress. Represents 10% of Justice Department Budget. SP was set up originally because Congress was controlled by democrats and Executive was controlled by Republicans. SP can be more democratic outside control of Rep. executive. E. SUPERVISORY FUNCTIONS President’s inherent authority to direct the ways in which officers of the U.S. exercise their authority was originally thought to be minimal. Yet, it has grown over time. 1. EXECUTIVE ORDER NO. 12,291: (a) President directs all heads of Executive Agencies that anytime they are going to promulgate major regulations, they must undertake a Cost Benefit Analysis; (b) Secretary must send proposals to the OMB [White House] and get their views; (c) There must be a dialogue between the agency and the OMB; (d) Agency shall not go forward with the regulation unless the benefit outweighs the costs; Final decision is vested in the Secretary, but the President directs the Secretary not to go forth unless the benefits outweigh the costs. Authority Art. II §1, cl. 1 President has total executive power; Art. II §2, cl.2 Opinions in writing is allowed/required; Art. II §3 Pres. has the authority to see that all laws are faithfully executed. Act was amended by Clinton and CBA requirement was eliminated. Fitts Analysis Executive order probably could have been applied to indep. agencies; but it was not because Pres. has less constitutional power over indep. agencies 2. HYPO: The Secretary may regulate safety at nuclear power plants: (a) CBA (b) Share CBA Constitutional, opinion in writing. (c) Follow CBA tricky constitutionally. (d) Act not based upon CBA President can’t override Secretary’s decision. (e) No discussion constitutional concerns? (f) Secretary may regulate, but decision whether or not to follow the CBA shall be the Secretary’s unconstitutional. (g) If Congress passes law prohibiting any agency from basing its decision on any direction by the President regarding the CBA, Unconstitutional. Removes too much power from the President to control his subordinates. May also be a separation of powers problem because it is Congress preventing the President from exercising control over the head of an executive branch agency. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 11 of 39 IV. JUDICIAL REVIEW OF ADMINISTRATIVE DECISIONS A. STANDARDS OF JUDICIAL REVIEW UNDER THE ADMINISTRATIVE PROCEDURES ACT Alternative to Presidential or Congressional review. §701 creates a presumption of judicial review (i.e. there will be judicial review except in 2 circumstances): “CH 7 – JUDICIAL REVIEW. §701 – APPLICATION; DEFINITIONS. This chapter applies…except to the extent that – (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law.” Judicial review might not be appropriate for all: It is expensive and some things are better settled in agencies. Not subject to judicial review: (a) CIA decisions (b) Budgetary allocations (c) VA benefits – Gott v. Walters DC p253 (d) Dept of State re: foreign affairs decisions B. APA STANDARDS OF REVIEW §706 System envisions four levels of review (but cts really don’t’ follow them): (1) Court reviewing application of law by administrative agencies (2) De novo review (F) When agency’s decision was “unwarranted by the facts”. When ct is overseeing factual decisions by agency, no factual deference. (3) Substantial Evidence test (E) When there are records that agency action is based on. Relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Does not permit a court to substitute its judgment for that of the agency. Even if the court disagrees with the agency’s finding it must affirm them if they are reasonable. (4) Arbitrary and Capricious test (A) no hearing/record below. One and Two show no deference to agency at all. Ct treats agency like 2 year old. 3 = if facts were put on the record, agency will overturn if no evidence on the record. Some deference. 4 applies to everything else. When agency makes a decision. Lot of deference. Fitts question of law and arbitrary and capricious standards collapse on each other. 1. Presumption of JR Citizens to Preserve Overton Parke v. Volpe 1971: 1st time for cts to interpret APA. Concerned locals and conservation organizations brought suit in DC to enjoin the release of federal funds for a project to build a highway through a park on the ground allege that failed to explain why he believed, as required by statute, that no feasible alternative location was available and that all possible steps had been taken to minimize harm to the park.. DC granted Secretary’s motion for SJ, affirmed. Should there be review? Look at the Act does it give judicial review? NO. Does the APA? Section 701 holds that there shall be judicial review unless (1) the statute says no or (2) decision is committed to agency discretion by law. (When there is law to apply, the exemption for action “committed to agency discretion” is inapplicable) What should the standard of review be? Ct held that when reviewing administrative decisions which are not supported by formal fact findings, the courts shall determine the scope of the appropriate official’s authority, whether that authority was abused, and whether all applicable procedural requisites have been observed. Court is reading its language its own interpretation of the debate and choosing in favor of judicial review. We are suspicious of DOT making these decisions. They build roads! Court may direct the Secretary to reveal the thought processes by which they arrived at their conclusion!! The Citizens are entitled to a review of the Secretary’s deliberative processes which took account of more evidence than that which was contained in the affidavits. The provisions of the APA cannot be implemented in the absence of a record. When no record, must order its completion or de novo review. Hard to require mental processes in the decisionmaking record hard to know what will be challenged and might force all A/C into subst. evidence standard. Transforms agencies into lower courts. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 12 of 39 C. JUDICIAL REVIEW OF QUESTIONS OF LAW APA §706 To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law and interpret constitutional and statutory provisions. §706(2)(c)-(d) The reviewing court shall hold unlawful and set aside agency action, finding and conclusions found to be (C) in excess of statutory jurisdiction, authority or limitations or short of statutory right; (D) without observance of procedure required by law. 1. Chevron v. NRDC 1984: The issue in this case was a statutory interpretation of the Clean Air Act Amendments of 1977, and whether a “bubble source” was a reasonable construction of the statute. While the Legislation was unclear as to what the term stationary source meant (did not mention “bubble”), the court determines that it was reasonable policy choice. Ct held that where Congress has left an open question in its legislation, judicial review of an agency’s interpretation of that question must be limited to whether the agency’s construction was legitimate. CHEVRON STEP ONE: Has Congress spoke to this issue (i.e. Is Congressional Intent clear)? If YES, then defer to Congress, not agency (follow law). If NO (i.e. If the law is unclear, ambiguous, or silent), then to Step two CHEVRON STEP TWO: Is the agency’s construction legitimate (i.e. Is the agency’s answer is based on a permissible construction of the statute)? If congress has explicitly left a gap for the agency to fill, there’s an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such regulation is given controlling weight UNLESS Arbitrary/ Capricious/ or manifestly contrary to the statute. There was no Congressional history as to what was meant. Thus, interpretation was legitimate. Impact of Chevron fewer challenges to admin. decisions. Deference to the agency to decide. Carter and Reagan differed as to what they wanted “bubble” to mean. HYPO: Now Clinton wants to return to the Carter interpretation. Legal? YES. As long as the present evidence can show that the construction was legitimate. Why would the courts allow the EPA to make the law? (1) highly technical decision—expertise (2) political decision—agencies are accountable to President who’s accountable to the people (3) managerial aspects—this is like a multi-level problem and there are difficulties in estimating the impact (4) allows experimentation—interpretations can change as agency compositions change. OVERTON PARK CHEVRON STRUCTURE & Courts willing to look at underlying Court will not look at how Congress UNDERLYING purpose of the statute to look at would have resolved if it had PURPOSE what’s prudent and feasible, must considered definition of stationary mean in light of other congressional source (An agency is deciding on a policy Q of Law?!?!) AGENCY HEAD Don’t trust to make CBA Trust to make CBA Why different? In Overton Park, did not need technical knowledge. Overton statute was taken up to limit the agency’s power. 2. Babbitt v. Sweet Home 1995: Endangered Species Act of 1973 directs Secretary of Interior to designate and protect endangered species against “tak[ing]” defined as kill, harm, etc.… Secretary issued a regulation which prohibited “significant habitat modification” which harms such species. Loggers bought action saying this was inconsistent with Act. SC held that it was valid because it is supported by (1) ordinary understanding of word “harm” (2) purpose of the ESA (3) Congress’ past actions. Congress did not unambiguously manifest its intent to adopt the view otherwise, and the Secretary’s interpretation is reasonable. Thus, ok. SCALIA (Rehnquist, Thomas) Dissent: The meaning of “take” was interpreted. A word used for the meaning should not be used to interpret. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 13 of 39 D. JUDICIAL REVIEW OF QUESTIONS OF FACT OR POLICY 1. DE NOVO TRIAL Agency determinations of fact or policy are rarely subject to de novo review. De novo review is appropriate where: (a) when the action is adjudicatory in nature and the agency factfindings procedures are inadequate (b) when issues that were not before the agency are raised in a proceeding to enforce nonadjudicatory agency action. Sometimes Congress might explicitly provide for de novo review. Ex. EEOC Act. Courts would much rather remand to the agency to augment the administrative record than engage in fact-finding at the judicial level. 2. SUBSTANTIAL EVIDENCE §706(2)(E) “The reviewing court shall—hold unlawful and set aside agency action, findings, and conclusions found to be (E) unsupported by substantial evidence in a case subject to §§556,557 of this title or otherwise reviewed on the record of an agency hearing provided by statute...” a) Formal Adjudication APA §706(E) provides for substantial evidence review of fact findings made by agencies in formal proceedings. [§556-7]. Substantial evidence test is the administrative law counterpart of the clearly erroneous test applied by appellate courts. Court of Appeals will almost never reverse on clearly erroneous grounds value in seeing the witnesses and reduces the amount of litigation. i) In the Matter of Universal Camera Corp. 1948: , Chairman was employee of . was active in union. NLRB for says was fired because he testified at a union hearing, and not because of some other legitimate reason. TE found that the employer’s story was plausible and dismissed the action. (1) On appeal, NLRB reversed saying evidence clearly supports ’s theory. (2) Then on Appeal to 2nd Ct, Learned Hand held that court is barred from considering the TE’s report of fact insofar as the report was rejected by the NLRB. – Learned Hand applied the substantial evidence test and finds that the Board’s decision when taken as a whole is supported by the weight of the evidence. (3) Then on Appeal to SC, Ct held that a reviewing court may set aside factual findings of the NLRB when such findings are found not to be supported by substantial evidence in the record as viewed as a whole. Some deference is given to the trial examiner (although Board has more control). Board does not get total deference. (i.e. Can’t ignore TE’s findings – part of the record.) Cts must now assume more responsibility for the reasonableness and fairness of the Board decisions than in past. Ct of Appeals must take a look at the whole record which includes the TE’s finding (although the TE’s finding was rejected by the Board). (4) Remand from the SC to 2nd circuit to consider the examiner’s report in its determination. Hand direct NLRB that it should have dismissed the case. Ct held that a court of appeals is not to completely disregard an examiner’s report that has been rejected by the NLRB in its finding of facts; but must make reasonable inquiries into whether the report was overruled based on a very substantial preponderance of the evidence in the record. Think of NLRB as Ct of Appeals and Special E as TC (although not as much deference) Why should ct. give deference to the fact-findings of the trial court (unless clearly erroneous)? Efficiency TC see witnesses and evidence first hand There is a record produced at the trial level. Why isn’t relationship between Board and ALJ the same as between Ct. of Appeals and TC? ALJ and Article III life tenure are very distinct positions ALJ has no real decisionmaking authority, but trial judge does. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 14 of 39 b) Informal Rulemaking Although the APA limits the substantial evidence test to formal rulemaking, it has been applied to informal rulemaking contexts. i) Benzene 1980: OSHA Act stated that any standard promulgated by OSHA shall be upheld by a reviewing court if supported by substantial evidence on the record considered as a whole. Ct held that OSHA must demonstrate a significant risk of harm as a predicates for issuing a new or revised standard. The burden of proof in an admin hearing is on the agency in promulgating the rule. Unless Congress has shifted this burden (not here), an agency must prove the validity of its decisions. Different than Chevron where Ct. is willing to accept the agency’s interpretation of the statute: Maybe SC thought that OSHA wouldn’t be sensitive to the industry. Can’t tell when ct will apply Chevron deference or Benzene hard look. Hard look review courts take a hard look at the factual record. Tell the agency to prove that they are doing the right thing – factual justification for policy. Courts can construe ambiguous statutory language to narrow the scope of agency discretion. Advantages: Courts are good at determining the type of evidence needed to reach a particular decision; courts can force agencies to make rational, nonpolitical decisions. Disadvantages: Courts know very little about scientific policy making, courts rely too much on burden shifting. Yet, in reality, court is often substituting its judgment for that of the agency (Deferential/Hard Look doesn’t really matter) Criticism of Benzene: (1) no record ct tries to apply the substantial evidence rule where there is nothing to apply it to—only a collection of studies. (2) Ct develops its own interpretation of statute [material risk] but didn’t allow the agency to give an explanation for the changed benzene standard under that interpretation. (3) burden shifting [hard look doctrine]—burden is on agency to provide solid evidence to justify new standard. 3. ARBITRARY AND CAPRICIOUS §706(2)(A) The reviewing ct shall—hold unlawful and set aside agency action, findings, and conclusions found to be (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. May be applied to any agency action [unlike subst. evidence test]. Has been applied almost exclusively to determinations not subject to substantial evidence review, such as informal rulemakings and informal adjudication. a) Motor Vehicle Manufacturers Ass. v. State Farm Mutual Auto 1983: National Highway Traffic Safety Administration appealed from a decision of the court of Appeals finding that the revocation of the requirement that new motor vehicles produced after Sept. 1982 be equipped with passive restraints to protect occupants in the event of collision was arbitrary and capricious. Affirmed. Ct held that when an agency modifies or rescinds a previously promulgated rule, it is requires to supply a satisfactory, rational analysis supporting its decision. A change is akin to a promulgation and subject to the same A/C standard. Agency must show a rational connection between the facts found and the decision rendered. If an agency relies on improper facts or fails to consider important aspects of the problem or renders a decision that runs contrary to the evidence, its decision may be arbitrary and capricious. Given the effectiveness of airbags, a decision to rescind raises a red flag. A rational rescission cannot be made without the consideration of technologically feasible alternatives of proven value. By failing to consider feasible, logical alternatives and dismissing the safety benefits associated with passive restraints, the has failed to present an adequate basis for rescinding. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 15 of 39 Argument in favor of decision: Agency was relying on impermissible factors by looking at the economy/car industry instead of automobile safety. Agency was not looking at other options. Argument against decision: Line drawing—hard to draw a line where agency must stop looking at other options before rescinding a regulation. Politics may be a legitimate reason in CBA Ct may not get it right all the time—and at least not more than the market or agency would. When is decision arbitrary and capricious? Agency relied on factors that Congress did not intend for agency to consider Agency failed to consider an important aspect of the problem Agency offered an explanation for its decision that runs counter to the evidence before it Justification is so implausible that it cannot be ascribed to a difference in view or the product of agency expertise. Why is rescinding a rule under the same standard as adopting one? Rescission is an affirmative act—changing the status quo—people’s legal rights and responsibilities are changed. Rescission of a rule has a record [as opposed to failure to adopt which has no record] Transportation Act explicitly mandates judicial review for acts of rescission—this is what Congress wants. APA makes no distinction between promulgating and rescinding laws. Why review repeal and not promulgation? (1) people rely on the rule. There are real world costs; (2) there is a record when revoking, there is no record when promulgating. Much more difficult to tell an agency to promulgate there is no record; must determine that they had a duty to promulgate the rule. Why require airbags in the first place? (1) people aren’t good at evaluating low probability events; (2) oligopoly situation—businesses didn’t operate as well as they should; (3) don’t trust the market. Problem: Court is substituting its judgment for the agency’s. There are an infinity of other things that the agency could have done. To require them to investigate them all is an overwhelming burden. As a result, agencies will stop promulgating rules. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 16 of 39 V. AVAILABILITY OF JUDICIAL REVIEW APA §§ 701-706 allow people to obtain judicial review of agency action, so long as the decision challenged represents a “final agency action for which there is no adequate remedy in a court”. APA §702 presumption of judicial review for all decisions, yet there are two exceptions (§701(a)): (1) when Congress preempts for no judicial review. (2) when committed to agency discretion by law. What is the policy behind judicial review (4 functions)? Courts must have authority to resolve controversy Ensures that some duty has been violated—not frivolous complaints Ensures standing—that is appropriate person to prosecute claim Ensures redressability by order Jurisdiction p.248 Why do we want to preclude judicial review? Other branches might make decision to retain control or don’t want the courts involved. Affected groups might be better serves by the agency itself or by Congress Some decisions are so technical that courts can’t understand it Very comprehensive/multi-level decisions are difficult for courts to analyze Costly to litigate A. STATUTORY PRECLUSION OF REVIEW 1. Even where no judicial review is possible, collateral issues may be challenged McNary v. Haitian Refugee Center 1991: Immigration Reform & Control Act established an amnesty program whereby alien farm workers could have their immigration status reviewed by a local review board. The statute prohibited judicial review of the administrative board’s findings. , on behalf of 17 aliens denied residency and other refugee agencies, brought this action against INS claiming that the INS’s procedures denied the applicants due process of law. The procedures did not allow aliens to challenge evidence, bring their own evidence, or access qualified interpreters. The DC and the Court of Appeals found the INS procedures unconstitutional. INS appealed arguing that §210(e) of the Immigration and Nationality Act prohibited judicial review of its final administrative determinations (except on deportation hearing). Given the absence of clearer broader congressional language mandating preclusion of federal jurisdiction, Ct held that a statutory bar of judicial review of individual case determinations does not prevent a court from reviewing collateral constitutional challenges. Only other way they could vindicate their rights is by agreeing to be deported and then challenging, so practically is a total denial of judicial review of generic constitutional and statutory claims. The strong presumption in favor of judicial review is not overcome either by the language or the purpose of the relevant provisions of the Reform Act. Why did Congress prohibit J.R? (1) So many challenges that it would clog the courts; (2) Illegal immigrants occupy a status that Congress is not concerned about. Why is this different from VA? (1) VA is about benefits [$$$], McNary is about rights; (2) Statutory language—VA said NO decision, McNary said no j.r. here; B. COMMITTED TO AGENCY DISCRETION BY LAW Areas committed to agency discretion by law: decisions to enforce or prosecute military decisions rate suspensions admission of aliens refusal to reconsider economic decisions [applicant for a rural home is worthy?] Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 17 of 39 1. Employment Decisions of NSC Webster v. Doe 1988: Doe, employee of CIA, received excellent progress reports. Doe was put on leave after revealing to the CIA that he was a homosexual. Doe submitted to a polygraph test and was found to be telling the truth [That he never had sex with foreign officials and never revealed secrets]. Director, deemed it necessary and advisable in the interest of the US to terminate his employment. Doe filed suit in DC asserting statutory (APA A/C abuse of discretion) and constitutional (fired because he’s gay) claims against Webster. Webster asserted claim that NSA §102(c) prohibited judicial review of its determination under the APA §§ 701, 702, and 706. Ct held that under §102(c) of the National Security Act, employee termination decisions made by the Director of the CIA are not judicially reviewable. Decision does not fall under A/C standard, since the decision falls within the committed to agency discretion standard. The language and the structure of §102(c) indicate that Congress meant to commit individual employee discharges to the director’s discretion and that §701(a)(2) precludes judicial review of those decisions. Nothing in §102(c) demonstrates that Congress meant to preclude consideration of colorable constitutional claims arising out of the actions of the director pursuant to that section. If you want to preclude constitutional claims as well, you must do so clearly. There was no law to apply here since: (1) the decision was under the discretion of the Director [when he deems it necessary]; (2) interest of the U.S. Why commit to agency discretion? Don’t want anyone looking into the CIA; slippery slope; agency is the expert here, they know what’s in the interest of the national government and security. Committed to agency discretion does not just involve the broad language used, it also involves the relative competency of the court to decide [extends holding in Overton Park]. O’CONNOR’s dissent: President’s constitutional authority cannot be infringed upon, so can’t review constitutional issue either. SCALIA’s dissent: How can a decision be unreviewable and yet reviewable for constitutional defect? Commitment to agency discretion includes, but is not limited to, situations in which there is “no law to apply”. There are many more situations where review is precluded. Also, (1) there doesn’t have to be a judicial remedy for every constitutional violation – ie. Sovereign immunity. And (2) that limitation should be set by Congress. Scalia is worried about judicial meddling in affairs that should be entrusted to the discretion of the Executive branch, ultimately to the President. OVERTON PARK WEBSTER RESULT Not committed to agency Committed to agency discretion by discretion by law law LANGUAGE OF Feasible and prudent—not As he deems necessary or advisable STATUTE subjective at all. There is a and in the interests of the U.S.—very substantial standard subjective standard, because it doesn’t Agency is suppose to say what is necessary (no meaningful follow. standard to base judgment) SUBJECT OF Building a highway National security STATUTE 2. Resource Allocation and AppropriationsLincoln v. Vigil 1993: Indian Health Service  received an annual lump-sum appropriation from Congress for caring for the health of the Indian population. For 7 years ran a regional Indian Children’s Program to care for handicapped Indian children. then reallocated its funds and employees of the regional program to a national Indian health program. , representing children treated under this program, brought suit claiming that this decision violated the APA. Ct holds that a lump sum allocation of funds traditionally commits the matter to agency discretion and is not reviewable under the APA. 2 different types of acts being contested: Authorization Act Synder Act and Improvement Act Appropriation Act Congress giving money to agency Neither is subject to judicial review. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 18 of 39 The fact that a sum is given to an agency by Congress without specific direction necessarily implies that the agency has discretion to determine how it should disburse the money (defer to expertise). When Congress has determined that an agency is the best judge of how money should be spent, the courts may not second guess that decision. Can we look at the legislative history of the statute to see what Congress envisioned the agency to do with the $$$? NO. Lump sum means no restriction on funds Give deference in these areas to the agency because the agency can best weigh how much money is allocated to different programs. Legislative history is only persuasive and not binding. Legislative history does not serve as substitute for the statute. Oral commitment does not translate into legally binding obligations. Court does not look at legislative history of appropriate statute. It looks only at the language itself. If weight was given to oral commitment, then you would rewrite the federal government each year. Why preclude judicial review? (1) Courts are not good at making allocative decisions [synoptic judgments]; (2) Challenges to decision not to take action are always more difficult to make. Decision whether to put out decision for notice and comment was judicially reviewable. Less control is given to the agency to determine procedural obligations. HYPO: (1) What if the allegation concerns the agency’s decision whether or not to put the termination of a program out for notice and comment? Could still get review since this decision is not procedural and subject to the provisions of other statutes [APA, CR laws, Const.] (2) What if the allegation was that funds were being allocated in a racially discriminatory way, but not on constitutional grounds? Could still get review under another statute like Civil Rights Act. 3. Prosecutorial Discretion Dunlop v. Bachowshi 1975: was defeated in an election of the United Steelworkers of America. , along with other candidates, filed a complaint with the Secretary of Labor. After an investigation, the Secretary of Labor  decided not to set aside the challenged election. filed suit in District Court claiming that the Secretary’s decision was arbitrary. Ct held that where Congress has relied on the expertise of an administrator, a reviewing court must examine the administrator’s decision based upon that administrator’s stated reasoning. Cannot substitute the Secretary’s decision not to bring suit, but to see if determination was not so irrational as to be arbitrary and Capricious. SC held that: (1) no statutory preclusion of J.R. [The decision is subject to JR as an act of Congress regulating commerce; (2) Decision is not committed to agency discretion by law; (3) Secretary must supply a more extensive statement of the reasons for his decision, then the court will review based upon those statements alone. Rehnquist’s Dissent There is no dispute as to the matter resolved by majority: ie. Whether court can demand that Secretary provide statement of reasons. But, it is committed to agency discretion. What would the remedy be? Set aside the election? No need to address here – hopefully Secretary will proceed on own. Here J.R. would take too long. Statute’s goal: resolve post-election disputes quickly. What are the advantages of judicial review here? Procedural protection—workers cannot bring individual federal suits themselves. Number of factors going into Sec’y of Labor’s decision is smaller than in usual prosecutorial discretion-type cases Statute has a lot of “shall”—not typical language in committed to agency discretion. What are the disadvantages of judicial review here? Speed—Congress wants disputes as to who has title to an election position resolved quickly so that union moves on—give power to Sec’y of Labor to act as trigger—yes or no to going forward. Resources—when talking about enforcement, there is a potentially infinite number of things to investigate and it is difficult for courts to get at these balancing questions. Language of the statute—gives exclusive power to Secretary Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 19 of 39 Four distinct issues raised by Bachowski: (1) Is the Secretary of Labor’s action reviewable at all? (2) What is the standard of review? (3) How deeply may a reviewing court probe the basis for the Secretary’s decision? (4) What remedial powers may the courts exercise if Secretary’s action is found to be unlawful? Following Bachowski, the federal courts almost invariably have accepted the Secretary’s reason as sufficient to withstand A/C standard of scrutiny. 4. Regulating Drug Use Heckler v. Chaney 1985: Respondents are several prison inmates convicted of capital offenses and sentenced to death by lethal injection of drugs. Respondents petitioned the FDA alleging that under the circumstances the use of these drugs for capital punishment violated the Food Drug and Cosmetic Act which prohibits the use of approved drugs for unauthorized and dangerous purposes. FDA refused the request. Rehnquist: Ct held that a decision by the FDA to refrain from enforcement proceedings is not subject to judicial review under §702(a)(2). 3 Questions: (1) Whether the FDA had jurisdiction to undertake the enforcement (2) If it did, whether its refusal to take actions was subject to judicial review (3) If reviewable, whether its refusal was arbitrary, capricious, or an abuse of discretion. Presumption discretionary decision not to undertake an enforcement action is not reviewable. What about nonenforcement is unreviewable? (1) $$$. Only have a limited budget; (2) Easier for court to review something they’ve done then what they haven’t. No record.; (3) Not an exercise of coercive power, no overcoming fundamental liberties when the agency decides not to act (v. Overton, where affirmative act). BUT, only presumptively unreviewable. May be rebutted where the substantive statute has provided guidelines for the agency to follow in exercising its enforcement powes – Bachowski. If the agency does not act because they think they lack jurisdiction, then the decision is reviewable. If the agency continually does not act, then it’s an abdication of its statutory responsibilities and also reviewable. §701(a)(2) makes it clear that “review is not to be had” in those rare circumstances where the relevant statute “is drawn so that a court would have no meaningful standard against which to judge the agency’s exercise of discretion.” In such a case, the statute (‘law’) can be taken to have ‘committed’ the decision making to the agency’s judgment absolutely.” MARSHALL’s concurrence: (1) Refusals to enforce, like other agency actions, are reviewable in the absence of “clear and convincing” congressional intent to the contrary. (2) The presence of discretion should not bar a court from considering a claim of illegal or arbitrary use of discretion. How do you reconcile§701’s “committed to discretion” exception to judicial review with §706’s “abuse of discretion” standard of review? BACHOWSKI CHANEY RESULT Subject to review Not subject to review STATUTORY “Sec’y shall” “Sec. is authorized to...” LANGUAGE POSITION OF Sec. of Labor doesn’t have as FDA Sec’y has unique AGENCY HEAD much unique expertise— expertise courts can understand issues Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 20 of 39 VI. POLICY FORMATION: Internal Processes of Administrative Agencies A. POLICY MAKING INSTRUMENTS APA sets forth the default, individual statutes can modify the procedure. APA is silent as to when each must be used. 1. ADJUDICATION quasi-judicial § 554 APA provides the baseline Notice to the parties of the time, place and nature of the hearing and the matters of fact or law asserted the opportunity to interested parties for the submission and consideration of facts arguments, offers of settlement, or proposals of adjustment. A formal hearing under §§556 and 557 of the APA if settlement efforts fail and An independent decision maker who may not communicate outside the hearing with the parties or be under the supervision of agency prosecutorial personnel. Features: (1) case by case problem solving/policy formation—flexible; (2) retroactive power; (3) precedent has role—written opinions; (4) not an aggressive approach to policy formation—changes policy in small increments and not forward looking; (5) judicial process—adversarial nature Advantages: (1) truthfinding by the adversarial process; (2) flexibility/experimentation—easier to backtrack because its piecemeal; (3) easier to reverse. 2. RULEMAKING quasi-legislative 2 levels of formality [formal and informal rulemaking] (a) Informal Rulemaking: §553 APA Notice of the legal authority under which the rule is proposed Notice of the terms or substance of the proposed rule or a description of the subjects and issues involved A comment period Production, after consideration of the relevant matter presented of a concise general statement of the rules’ basis and purpose. (b) Formal Rulemaking: §§553, 556, 557 oral presentation of evidence cross examination of opposing witnesses and decision supported by reliable, probative, and substantial evidence on the record. Features: (1) prospectively, not retroactive; (2) public participation. Advantages: (1) ease of enforcement—unnecessary to relitigate every time; (2) tactical increases compliance; (3) decisions are made prior to enforcement; (4) clarity—can announce more detailed regulations; (5) decision making process invites people into rulemaking through notice and comment and legitimizes the process; (6) saves resources for those regulated because people organized their activities to comply with the rules ahead of time. RULEMAKING ADJUDICATION DEFINITION §554 –  §551 –  PROCEDURE Informal—553(b) – (d) Formal—554 – 557 REQUIRED Formal—553, 556, 557 Informal—none EXCEPTIONS 553(a), 553(b)(3) 554(a) JUDICIAL REVIEW 706 706 EXCEPTIONS 701(a) 701(a) Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 21 of 39 VII. RULEMAKING APA doesn’t say much about how agency should choose between rulemaking and adjudication. §553 applies when an agency chooses to proceed by rulemaking, but does not, authorize or command such a choice. §554 applies “in every case of adjudication required by statute to be determined on the record after an opportunity for an agency hearing.” – applicable when agency might be required to adjudicate. A. AGENCY DISCRETION TO MAKE POLICY BY RULE 1. Presumption in favor of rulemaking National Petroleum Refiners v. FTC DC 1973: FTC is authorized by the FTC Act to go after deceptive or unfair practices. FTC issued a promulgating that gas stations must display in a clear manner the octane level of the gas. Failure to do so was unfair method of competition and an unfair or deceptive act or practice. Refiners [Petitioners] brought suit against the FTC alleging that the FTC has no authority under its governing rules to promulgate substantive rules of business conduct. Ct held that there is a presumption in favor of rulemaking in §553 APA Ct says that the Trade Commission Act includes a provision that specifically provides for rulemaking by the Federal Trade Commission to implement its adjudicating functions. Why did FTC want to engage in rulemaking and not adjudication? (1) policy reason—efficient decided once and for all; (2) quicker compliance; (3) value of precedental authority; (4) better evidence (only need proof violated the rule). Why would industry prefer adjudication? (1) would bring in their own experts; (2) more expensive for FTC to adjudicate each one, so they will prosecute less and less; (3) fact specific—chance to win everytime you litigate; (4) will take longer. B. AGENCY DISCRETION TO MAKE POLICY BY ORDER AFTER ADJUDICATION Can an agency be forced to engage in rulemaking? 1. Excelsior Underwear NLRB 1966: , Amalgamated union, sought certification as the bargaining representative of Excelsior’s employee. During the campaign, mailed an 8 page letter to its employees that allegedly contained material misrepresentations regarding . asked for a list of its employees so that could respond to the letter. refused. When the secret ballot was tallied, only got 35 out of 246 votes. challenge the results of the vote. Board establishes a requirement that will be applied in all election cases that within 7 days after the NLRB’s Regional Director has approved a consent-election agreement entered into by the parties the employer must file with the Regional Director an election eligibility list. Prospective decision looks rule-like, exercised quasi-legislative power. 2. NLRB v. Wyman-Gordon 1969: Union petitioned the NLRB, the NLRB ordered an election among the production and maintenance employees of to choose one of 2 labor unions as their exclusive bargaining representatives. ordered to furnish a list of names and addresses of employees, pursuant to Excelsior. refused to comply and election was held without the list. upheld the union’s objections to the elections because there was no list provided and ordered a new election. When refused again to supply the list, filed an action seeking to have its subpoena enforced or to have a mandatory injunction to supply the list. asserted that the Excelsior rule was defective due to board’s failure to engage in rulemaking. Ct held that the rulemaking provisions of the APA may not be avoided by making rules in the course of adjudicatory procedures. Therefore, the Excelsior rule is suspect. It will be enforced here because the company was specifically told to supply the names; but it was wrong to apply it prospectively without going through rulemaking. Adjudication may serve as precedents by taking on the role of stare decisis, but not rules that must be obeyed by the effected public. Prospectivity is the benchmark of rulemaking. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 22 of 39 Why would the NLRB not want to engage in rulemaking? (1) Might limit their discretion; (2) labor is the least rule-bound area of law; (3) want to move quickly and make on the spot decisions; (4) rules change direction under different administrations; (5) easier to defend position during adjudication What’s the problem with prospectively? Agency can get around it too easily: Make a rule prospective at T1 and apply it at T2. Don’t make it prospective at T1—just apply it to case at hand; Put it in dicta at T1 (not legally prospective, but functionally it is) CONCURRENCE: If agency decision reached under the adjudicatory power becomes a precedent, it guides future conduct just like a new rule promulgated under rule-making. DISSENT1: agency is not adjudicating when it is making a rule to fit future cases. This rule was far- reaching and should have been put down for public hearing proscribed by APA. 3. NLRB v. Bell AeroSpace 1974: Bell opposed a representation election on the grounds that its buyers were managerial employees and were thus not covered by the NLRB Act or entitled to elect union representatives. Ct held that the NLRB is not precluded from announcing a new principle in an adjudicative proceeding and the choice between rulemaking and adjudication lies in the first instance within the NLRB’s discretion (definition of the word depended on matter of degree – cases precedents). APA provides no guidance. Deference to the agency to decide between rulemaking and adjudication. Court will not intervene across the board. Court will rarely strike down agency action for using adjudication rather than rulemaking. If people have detrimentally relied on a previous rule, then the court might direct legislative rulemaking. Wyman-Gordon puts limits—if agency adopts a prospective rule through adjudication, then the court will at least engage in higher scrutiny. 4. Following their own internal procedures Morton v. Ruiz 1974: Problem of inconsistency between instruction manuals with the broad policy pronouncements of top ranking decisionmakers. The Ruizs were denied general assistance benefits from the Bureau of Indian Affairs because they were not on the reservation and the BIA only gave assistance to those on the reservation. This provision, which was in their manual, was not put out for notice and publication in the Federal Register, even though the manual says it should be. Nor was it in the enabling statute of Snyder Act. Issue is whether the “on the reservation” limitation placed on benefit eligibility by the BIA is consistent with congressional intent and the meaning of the applicable statutes. In practice, benefit had not been limited to reservation Indians. So, congressional appropriation was intended to cover at least those “on or near” the reservation. Although the Secretary can create requirements, no matter how rational or consistent with congressional intent, the determination cannot be made on an unpublished ad hoc basis. Court held that before BIA may extinguish the entitlement of potential beneficiaries, agencies must comply, at the minimum, with its own internal procedures. Want agencies to be consistent and that’s why require notice and publication. It has, through its past actions, led Congress to believe that the benefits covered Indians “on or near”, and it is too late to argue that the words “on reservation” in the Manual mean something different from that. Agency has to engage in rulemaking if it wants to change that. Contradicts Wyman-Gordon and Bell Aerospace? YES Agency has to do what it says it’s going to do People rely on what the agency says Reduces arbitrariness—if agency decided to treat people a certain way, it should be held accountable for that procedure down the line Due process—what is really going on is increased procedural requirements for politically powerless groups. Problems: People don’t really read the agency’s internal Manual anyway. Informally adopted internal rules: Schweiker v. Hansen 1981: Lower courts seem to hold that Hansen stands against holding agencies to their informally promulgated rules, even when members of the public are prejudiced (by detrimental reliance), as long as the agency “rule” appears to have been intended for internal use only. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 23 of 39 C. NOTICE AND COMMENT REQUIREMENTS OF RULEMAKING 1. Rulemaking and Due Process When an administrative agency makes a decision that impacts you personally [i.e. as an individual— tax on property], there must be due process [Londoner] When an agency makes a rule-like decision that affects a lot of people there is no requirement of due process [Bimetallic]. Rationale: When rule affects a lot of people, there is significant political mobilization and they have power. Individuals have no real clout therefore there is a need for political due process. Congress may require procedures above and beyond those mandated by the Constitution. 2nd =APA. Relatively few statutes explicitly require use of APA’s formal rulemaking procedures. Policymaking will be presumed to be appropriately (though not compulsorily) the province of informal rulemaking absent clear direction to the contrary. 2. APA Requirements for Rulemaking Due Process Clause does not constrain administrative agencies, only the APA constrains agencies. 3 Models of Rulemaking: (a) Informal §553 (b) Formal §556, §557 (c) Hybrid Established by statute, parts of informal and formal [ex. FTC] Most agencies use informal or hybrid model. 3. Notice and Comment Requirements NOTICE: §553(b) requires that general notice of proposed rule making shall be published in the Federal Register...Notice shall include (1) a statement of the time, place and nature of the public rulemaking proceeding; (2) reference to the legal authority under which the rule is proposed; and (3) either the terms or substance of the proposed rule or a description of the subjects or issues involved. COMMENT: §553(c) after notice requires by this section, the agency shall give interested persons an opportunity to participate in the rulemaking through submission of written date, views or arguments with or without the opportunity for oral presentation. After consideration of the relevant material presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose. When rules are required by statute to be made on the record after opportunity for an agency hearing, §§556 and 557 of this title apply instead of this subsection. The adequacy of the agency’s notice depends on “how well the notice that the agency gave serves the policies underlying the notice requirement.” The court identified 3 purposes: (1) Allowing the rule proposed to be “tested by exposure to diverse public comment”, (2) Affording fairness to affected parties by giving them opportunity to express their views, and (3) Allowing more effective judicial review of the final rule by enabling the critics to “develop evidence in the record to support their objections.” Although widely accepted, using this statement to rule on adequacy of notice is tricky. 4. Proper Notice Chocolate Manufacturer’s Ass v. Block : WIC Program was established in 1972. It was extended in 1978 through FY 1982. Congress wanted to redefine the term supplemental foods. Department published for comment the proposed rule. The comment contained information regarding the Departmental directive to design food packages containing the requisite levels of fat, sugar and salt. The preamble discussed cereal, juice. Yet, neither the preamble nor the rule discussed milk flavoring. During the comment period the Department received over 1,000 letters asking the agency to delete flavored milk from the list of supplemental foods. In the final rule, the Department deleted flavored milk. Ct held that the notice in the Federal Register that an agency must give of a proposed rulemaking must contain either the terms or substance of the proposed rule or a description of the subjects and issues involved Test for adequate notice: Notice is adequate if: (1) change in the original plan are in character with the original scheme and (2) final rule is a logical outgrowth of the notice and comment already given. There is no doubt that it was the outgrowth, but it was not LOGICAL. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 24 of 39 Court is trying to graft on additional requirements for notice and comment rulemaking. VERY LIBERAL Response: If you are the agency head, you don’t use specific terms. You become overbroad. Ex. FDA is investigating sugar. Problem: Creates incentive to put out broad notices, what’s logical to one is not logical to another; creates tension in trying to respond –more changes made, the more likely it will be struck down. 5. Notice for scientific information Nova Scotia: Ct held that the basis for a proposed rule in a scientific decision, the scientific material which is believed to support the rule must be exposed so that the interested parties can comment. Information gained from agency’s own expertise and information gained through comment period need not have attention drawn to them specifically. All other material must be brought to the attention of the public. Adequacy of the “concise general statement”: enable us to see what major issues of policy were ventilated by the informal proceedings and why the agency reacted tothem as it did. D. THE REGULARITY OF THE ADMINISTRATIVE RECORD: Ex Parte Contacts, The Sanctity of the Comment Period, and Impartial Decisionmakers. These are COURT’S INTERPRETATION OF APA RULEMAKING. Court has put a judicial gloss on §553 by attempting to make it more specific—graft on additional requirements. 2 Paradigms of decisionmaking—Court and Legislature Courts have transformed a quasi-legislative model of rulemaking into a quasi-adjudicative model of rulemaking. 1. Complete and Exclusive Record HBO v. FTC DC 1977: Ex parte communications were received in connection with an informal rulemaking proceeding dealing with subscription television. Geller filed a Petition calling the Court’s attention to violations of the ex parte communications doctrine of Sangamon Valley (the only one previous case where court struck down an agency rule because it was based on off- the record contacts - 1959). FCC took no action and Geller sought judicial review of the FCC’s order promulgating four amendments regulating subscription television. Court of Appeals, sua sponte, ordered the FCC to disclose the ex parte communications. FCC did so and showed that the competing industry representatives had a great voice in the outcome of the proceedings. Ct held that the public record must reflect what representations were made to an agency so that relevant information supporting or refuting those representations may be brought to the attention of the reviewing courts by persons participating in the agency proceedings. Court recognizes that informal contacts are “bread and butter” of process of administration and they are appropriate so long as they do not frustrate judicial review or raise serious questions of fairness. Therefore: If any information contained in a communication forms the basis for agency action, then the information must be disclosed to the public in some form. In addition, communications… (1) Prior to issuance of a formal notice – generally do not have to be put in public file. (2) After notice issued – any involved agency member should “refuse to discuss matters relating to rulemaking with any interested party, prior to the agency’s decision.” If ex parte contacts do occur, then any written document must be placed in the public file immediately afterwards. No legal support in the APA. [§554 says no ex parte in adjudications; §557 says no ex parte for formal rulemaking]. Maybe §706 under scope of review requires whole record review so the court must have access to ex parte information in order to have the whole record. Court is likely to impute an adjudicatory model in situations where private presentations would give one party a valuable privilege over another. Not consistent with Bimetallic or Londoner since those cases suggest groups do not need procedural protections. This approach is like imparting the Hard Look Doctrine on to procedural issues in the administrative process. Height of requiring additional requirements Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 25 of 39 Why exclude ex parte communications? COURT—need to give opposition chance to rebut the ex parte communication. Other side should get the opportunity to attack the veracity of the information. Need to be on the record for an appeal proceeding. LEGISLATIVE—ex parte is the name of the game. Too many people because each can call up and voice opinion. No limitation on what they can legislate on. Where does rulemaking fall—adjudicatory or legislative? If rulemaking looks more adjudicatory-like, conflicting private claims to valuable privileges, then adjudicatory procedures apply. If it looks more legislative, then adjud. procedures do not apply. Rulemaking which involves lot of people is Public and more legislative. Why do the courts find it more adjudicatory? They are worried about lobby groups. Court say since we have to review the record, the agency has to create a whole record for us to review [problem doesn’t require agency to record everything as basis of decision. Lot of bootstrapping. Hard to say that you cannot talk to anyone about anything that might become the subject of a rule. REASONS TO PROHIBIT EX PARTE REASONS TO ALLOW EX PARTE CONTACTS CONTACTS Doesn’t allow the other side to respond with hard to know in advance what is relevant and what their perspective; is not; Need information on record for JR; everyone’s perspective still gets heard because Puts check on bad evidence in court not all everyone is allowed to be involved—public evidence can come out; interest still comes out on top; Limited number of parties There are so many parties involved, a legislative model works better; In order to promulgate a broad policy [rather than adjudicative facts], a legislative model works better Prejudging does not matter much as in rulemaking not adversarial, rather democratic 2. Move back towards legislative model Sierra Club v. Costle DC 1981: EPA is engaged in rulemaking about omissions from coalstacks and levels of scrubbing. Initially, the EPA was considering a stringent requirement but at the last minute pulled back. There is a complaint that that agency pulled back because of ex parte contacts after the comment period. Ex parte contacts were with members of Congress, White House staff and other agencies. The statutory rulemaking procedure that the EPA followed requires a record. Also, EPA is not an independent agency. Ct held that the Clean Air Amendments of 1977 provide that all documents that become available after a proposed rule has been published and which the Administrator determines are of central relevance to the rulemaking shall be placed in the docket as soon as possible after their availability. Records are only necessary to enable the reviewing courts to fully evaluate the stated justification given by the agency for its final rule. All the intra-governmental contracts were ok whether it happened before or after the notice period was over. But, if the contacts become the basis for the final decision/rule, it has to go on the record. Congressional representatives putting pressure was ok too. Administrative agencies are expected to balance Congressional pressure with the pressures from all other sources. What is the concern with government ex parte contacts? Decisions will become too political and will be made on the basis of the wrong criteria—election returns, campaign contributions. Other government officials might not be the best people to make the decision—the EPA is the best person. What if Congress passed a statute disallowing any contact within the government after notice and comment period? With respect to President, it’s unconstitutional. As you get further away, it is less of an issue. With respect to Congress, there might be problems. Sierra Club might overrule HBO. [Distinction: Sierra deals only with intragovernmental ex parte communications; Sierra deals with a larger policy issue—legislative like; leaves open the possibility if the ex parte contact involves the President himself. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 26 of 39 3. Impartiality Standard Ass. of Nat. Advertisers v. FTC DC 1979: s brought an action to prohibit Chairman of the FTC from participating in pending rulemaking proceedings concerning children’s advertising. As precedent, the s cited Cinderella. Here, the rule issued under 18 of the FTC Act prohibited all television advertising specifically aimed at children under the age of 8. s claim that Chairman, prior to the promulgation of the rule, made negative statements about this type of advertising. Association asked Chair to remove himself. Chair refused. s sued the FTC. In Cinderella, the standard for disqualifying an administrator in an adjudicatory proceeding because of prejudgment is whether “a disinterested observer may conclude that the decision maker has in some measure adjudged the facts as well as the law of a particular case in advance of hearing it.” Here, the proceeding is not even quasi-adjudication. It is clear exercise of rulemaking authority. The usage of facts in adjudication and legislation is different. Legislative facts combine empirical observation with application of administrative expertise to reach generalized conclusions – In rulemaking, the decisionmaker can prejudge, but must be receptive to change. Ct held that a commissioner should only be disqualified where three has been a clear and convincing showing that he has an unalterably closed mind in matters critical to the disposition of the proceeding. What is evidence of an UCM? The evidence is so great, but the decisionmaker goes the other way anyway. Where does it come from? Thin Air. There is nothing in the APA that requires the decisionmaker to be impartial. There is authority for impartiality in adjudication §556. CONCURRENCE: The rulemaking/adjudication dichotomy is unreliable. The UCM standard is impossible to determine. Criticism: (1) Fact-value distinction problem when people have UCM because they have certain deep rooted moral values; (2) Court is looking for an easy out—court will be deferential in rulemaking, yet if someone gets way out of control, they can now remove. Why not adopt adjudication with Judge for agencies? Agencies have viewpoints. They move from facts to standard, not vice versa. Why not apply UCM to Congress? There are other procedural safeguards. Allowed to legislate on any matter. E. FORMAL RULEMAKING APA §§556, 557 looks more trial like. All the same requirements of informal rulemaking [notice/comment], plus: stricter hearings cross examination evidence on the record When do you use formal v. informal rulemaking? If a statute requires rulemaking on the record use formal If a statute just says rulemaking notice and comment/informal is the default. F. HYBRID RULEMAKING: Judicial Power to require more than §553 procedures in Informal Rulemaking. Mixture of formal and informal procedures. History: Reviewing courts were forced to conduct “on the record” review of “off the record” rulemaking proceedings, or of informal decisions with little of any record. So, Lower Courts began requiring agencies to utilize trial-like procedural devices, such as oral hearings, cross-exam, written interrogatories/rebuttals etc. to improve the quality of the rulemaking “record”. – DC led the way to these “hybrid” rulemaking. Not all were result of judicial innovation. Occasionally Congress statutorily imposed procedural requirements that go beyond informal processes yet are shy of full trial-type procedures. (example: Magnuson-Moss Act) Now: If the statute or the agency itself does not mandate further proceedings above §553, the court will not engraft extra procedures. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 27 of 39 1. NRDC (Natural Resources Defense Council) v. NRC (Nuclear Regulatory Commission) DC 1976: The commission heard hearings about a proposed nuclear facility but refused to allow discovery or cross- examination of any witnesses at the hearing. NRDC challenged this reduction in scope of the hearing and the DC Circuit agreed that the Commission’s action was arbitrary and capricious. The court required that the record generated, no matter what method employed, had to include a full development of the factual issues. Pittman’s testimony had no real basis for his beliefs that we would be able to somehow handle the waste in the future. The record required more and the DC Circuit gave guidance for what procedures would be good. 2. Limitation of Judicial power to require more than §553 requires of informal rulemaking Vermont Yankee v. NRDC 1978: End of the creative interpretation of the APA. Vermont Yankee wants to set up a nuclear power plant and needed to get an operating license. Concern with the byproducts and disposal of nuclear waste material. Expert testifies at public hearing that it takes a really long time for nuclear waste to decay and that it is very difficult to make commitments so far down the road about safeguarding the nuclear waste. Vermont Yankee complains that it did not have a chance to cross examine the expert before a rule was adopted. Ct. of App. holds that cross examination is required because the system “must provide genuine opportunities to participate in a meaningful way” and a factual record would be produced. Ct held that in general, the courts cannot review and overturn a rulemaking proceeding on the basis of the procedural devices that the agency involved employed or did not employ as long as it employed the minima stated in the APA or other applicable statute. End of creative judicial interpretation of rulemaking. There is nothing in the APA which requires these procedures. HBO cannot be the norm anymore. This case changed everything, can’t make agency more adjudicatory unless APA says you can. Why did challengers not like rulemaking? (1) didn’t like broad standard to evaluate the cases; (2) only happens once—one chance to litigate; (3) no cross examination. Without adjudication, no cross examination of Pittman. Why would agencies hate the standard adopted by Court of Appeals? It is an impossible standard. Must adopt procedures which the court looks at ex post to decide if they were proper or not. Agency would be strictly liable for the record produced and procedures applied when the agency might not know what is procedurally adequate until the record develops. Differences between Vermont Yankee and HBO HBO VERMONT YANKEE APA Tries to expand the requirements of court will not engraft rulemaking additional procedures onto rulemaking MODEL FOR Adjudicative Legislative RULEMAKING CROSS EXAM Concern about lack of cross with ex Existing contacts are not parte communications subject to cross examination G. EXCEPTIONS TO NOTICE AND COMMENT RULEMAKING REQUIREMENT OF APA §553 (a) military or foreign affairs function, or matters of agency management of personnel or public property, loans, grants, benefits, or contracts. (b) (except when notice is required by statute) interpretive rules [Sullivan] general statements of policy rules of agency organization, procedure and practice [Lincoln] when agency finds “good cause” [Clinton in Sullivan] Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 28 of 39 1. National Family Planning v. Sullivan DC 1992: 1988 HHS promulgated by notice and comment rulemaking new regulations that provides that a Title X project may not provide counseling concerning the use of abortion as a method of family planning. Lot of controversy surrounded the gag rule and President Bush revoked it, by directing the HHS not to apply the regulation in a way that interfered with the doctor/patient relationship. Therefore, a woman could get complete information about her condition from a physician. Sullivan complied by issuing a memo ordering physicians to apply the regulations in accordance with Bush’s regulation. Association filed suit challenging the process by which they did not adopt notice and comment provisions of the APA. Ct held that when an agency promulgates a legislative regulation by notice and comment directly affecting the conduct of both agency personnel and members of the public, it may not substitute for it a totally different meaning without proceeding through the notice and comment rulemaking provisions normally required for amendment of a rule. Interpretive rules, statements of policy, procedure and practice are not subject to N/C procedures. §553(b)(3)(A) Ct holds that the Bush proposal was a rule and should have gone out for notice and comment. It was 180 from the Reagan Rule. Why not subject interpretative rules to notice and comment? (1) what’s the point—it’s something that’s within the complete discretion of agency authority; (2) way too many things would have to go out for notice and comment; (3) not legally significant if you’re just giving an interpretation. 2. Hoctor v. US Department of Agriculture 7th 1996: Hoctor is in violation of housing regulation failing to have an eight-foot perimeter fence. He is a small dealer and has a 6 foot fence. The statute only provided authorization to promulgate standards for secure containment of animals. When Congress authorizes an agency to create standards, it is delegating legislative authority, rather than itself setting forth a standard which the agency might then particularize through interpretation. Rule is consistent with the statute under which the rule is promulgated, but not derived from it, because they represent an arbitrary choice among methods of implementation. When agencies base rules on arbitrary choices they are legislating, and so these rules are legislative or substantive and require N/C rulemaking. ` We are not saying that an interpretive rule can never have a numerical component. A rule that translates a general norm into a number may be justifiable as interpretation. How do you know what’s an interpretive rule? Most use the Legal Effects Test: Legislative rules directly alter the legal rights of the public, whereas interpretations and policy statements merely describe how the agency intends to act in the future in interpreting and applying existing norms.(consistent with the rule’s language and original purpose? Then Interpretive. Binding effect? Then amendment) CENTRAL INQUIRY: may be whether the agency is creating new law or merely restating, clarifying, or explaining existing statutory norms. 3. Internal Agency Organization Lincoln v. Vigil USSC 1993: When the IHS and Lincoln decided to close a clinic that provided certain health services for mentally, educationally, physically, and emotionally handicapped Indian children in New Mexico, brought suit claiming that before the clinic could be closed, the IHS were required to abide by the notice and comment rulemaking provisions of the APA. The Court of Appeals agreed with Vigil and the IHS appealed. Ct held that rules of agency organization are exempt from the notice and comment requirements of the APA. §533 has no application to a matter relating to agency management or personnel. §553(a)(2) Only applies to legislative or substantive rules. (not to procedural rules. Ask whether the agency action also encodes a value judgment or puts a stamp or approval or disapproval on a given type of behavior) Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 29 of 39 4. §553(b)(3)(B): No notice or comment is required when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. Of the 3 conditions, impracticability is most often invoked. Test: whether the execution of the agency’s function would be unavoidably prevented by its (a) Attempt by Clinton to go back further than Bush and allow abortion counseling. Claimed no notice and comment because of good cause exception. It was contrary to the public good to wait until notice and comment. Problem: Good cause cannot mean that sooner is better than later. Otherwise it would apply to all rules. (b) Reagan and baby Doe: Reagan read the Baby Doe case and called up Secretary of HHS and told him to do something. They adopted §504 not to discriminate against handicapped infants. Held that March 22 would be the day the rule would take effect, but invited submission of comments at anytime before May 6. Doesn’t fall within good cause exception for the same reasons as Sullivan. Also, is not an interpretive rule. Therefore, should have gone out for notice and comment. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 30 of 39 VIII. ADJUDICATION A. APA §554 B. Requirements of Adjudication 1. Due Process of Law Procedural DP is invoked when one’s Const. or statutory property/liberty interest is taken away. Application to agencies giving out benefits: OLD VIEW: Procedural dues process does not apply when the government gave you a benefit. It is a gratuity. There is no property interest in it. (right – privilege) NEW VIEW: established by Goldberg. There is a property/liberty interest in governmental benefits. There is no difference between common law protected liberty property interest and statutory created liberty/property interest. All get procedural due process. (balance of interests) a) Unlike rulemaking, courts will 2nd guess procedures that agencies use when giving out benefits Goldberg v. Kelly USSC 1970: s say that for termination of Welfare benefits, there’s no prior notice and hearings thereby it denies them due process of law. Only post-termination hearings are available. Ct held that welfare benefits may be terminated only after a hearing at which the recipient is afforded at least minimal procedural safeguards, including the opportunity to be heard on his own behalf. Court developed 2 prong test: (1) Is this thing a property/liberty interest? and (2) If yet, what procedures must the government follow before taking it away? (must be allowed to state his position orally. Informal procedures will suffice.) Why does procedural due process apply before deprivation? There has been a prior factual determination that you are eligible. Therefore, welfare benefits are a legal entitlement-statute says that an individual has a property right in benefits. Must have possession-for DP to be triggered, there has to have been a prior determination to put the individual within the eligibility of welfare benefits. Under Common law, possession was everything. For Ms. Kelly, possession is prior receipt of benefits. statutorily created expectation of due process How does the court decide what type of process is required? Depends on how bad the loss is-welfare loss is big Balance individual’s interest in avoiding a false positive (getting cut off when he is still eligible) with government interest in granting a false negative (paying individuals who are not really eligible) Court decides that the government’s interest is outweighed by Kelly’s interest. What is required to satisfy procedural due process? Due process requires that the individual be heard-courts usually just trigger all the procedures familiar to the court notice opportunity to cross examine adversarial nature presentation of evidence opportunity for counsel decisionmaker must be neutral/impartial and state reasons for his decision Court develops a Court-like procedure [judicial model]. How does the government compensate itself for all the extra procedure? Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 31 of 39 lower the amount of benefits people can get narrow the eligibility requirements so that less people receive benefits make procedural process to get benefits harder Government can always take away the substantive right. Yet, once they create the right, they must also have the procedure. GOLDBERG HYPOS: (a) What if Ms. Kelly was applying? NO, no procedural due process required. There was no prior determination of eligibility. (b) What if statute says she can only receive benefits for 2 years? NO, no procedural due process required. There was no expectation for continued benefits. Under Roth, no, you can’t point to the statute. (c) What is Ms. Kelly is receiving welfare and while she is the statute is amended changing the qualifications. Does she get hearing? YES: There is a presumption of eligibility. NO: Old system had stopped. Congress has the right to terminate. It’s like she is applying anew. b)When is procedural due process triggered Board of Regents v. Roth : Roth was hired as assistant professor for a fixed term of one academic year, but was not rehired for next year. Roth claims that the failure of the University to give him notice of any reason for nonretention and an opportunity for a hearing violated his right to procedural DP of law. To determine whether DP requirement applies in the first place, we must look not to the “weight” but to the nature of the interest at stake. Here, Ct found that there is no 14th Amendment or statutorily derived liberty/property interest denied a nontenured teacher when he is dismissed, therefore no due process rights accrue. No liberty interest He can still get employment elsewhere. No damage to reputation. To have property interest in a benefit, need more than an abstract need or desire, or unilateral expectation of it. Must have a legitimate claim of entitlement to it. (i.e. statute from Goldberg v. Kelly) Here, terms of his appointment. Liberty/Property Interest defined by Legislature Procedures defined by Court. Although they differ on what should control, Marshall’s dissent in Roth (courts control) and Rehnquist’s opinion in Arnett (statutes control) both agree that the substantive and procedural parts of due process are tied together. DISSENT Marshall thinks all government employees should get procedure. Government cannot act arbitrarily. He is arguing for subst. Const. rt. to employment. Distinctions (in notes) (1) Perry v. Sinderman: Court will find an implied contract. This professor had a legitimate claim of entitlement to his job because there were policies and practices that gave him the reasonable belief that his contract would be renewed-“de facto” tenure system practices include statements from persons of authority that form an informal contract/promise of renewal this informal contract may have induced the person to take the job in the first place (2) Arnett v. Kennedy: A civil service employee is fired. Statute says he cannot be removed unless removal promotes the efficiency of the service. He is entitled to a post- termination adjudicatory hearing, but only to notice and an opportunity to be file a written protest prior to termination. Kennedy claimed he was entitled to a pretermination hearing. Ct holds that he is not entitled to a pre-termination hearing before his job is taken away. An expectation is created, but the procedure provided is O.K. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 32 of 39 Rehnquist-the same sentence in the statute that creates the expectation also states that the expectation does not include any pretermination hearing-can’t bifurcate sentence. Statutes, not courts should define the procedure and the substance. “take the bitter and the sweet”—When the right you got is conditioned on the statute. Problem: (1) It is always the case that the statute has made the condition. All the cases would come out differently. (2) If you adopt this, have to overrule Goldberg. Policy reasons why Sup. Ct. doesn’t give liberty interest: generally don’t give procedural due process to large groups of people (like Londoner and Bi-Metallic) indirect nature of the effects-so many people would be able to challenge Pre-Roth cases (Goldberg) engaged only in one-step DP analysis: given all the circumstances, has the petitioner been treated fairly? In Roth, the SC decreed that the text of the DP clauses commanded a two-step inquiry. (1) Whether the petitioner has been deprived of an interest that falls within the categories of “life, liberty, or property.” If yes, (2) what process is “due”. d) Requirements once due process is invoked Mathews v. Eldridge USSC 1976: State determined from written exchanges and doctor letters that Eldridge was no longer disabled and terminated his disability benefits. Ct held that the due process clause does not require an evidentiary hearing prior to termination of disability benefits. Hearing is not really necessary here—nature of factual determination is different. More amenable to writing. Court introduces a 3-part balancing test used to determine if procedures are adequate: (1) individual’s interest-avoid false negatives-don’t want benefits terminated if you’re still eligible. majority: people on social security disability can have other money and can get other government benefits. criticism: these aren’t a rich group of people-they probably rely very heavily on the disability payments. Court only assumes that they can get other benefits. (2) government interest-false positives-costs associated with being forced to keep people on the roles until a pretermination hearing can be conducted (some of those people will be determined ineligible) majority: A lot of cost involved in continuing to pay out benefits while waiting for pretermination hearing. criticism: No real evidence/data to prove this (3) Public interest-nature of processes/reliability of procedures-value of additional or substitute procedural safeguards? majority: Determination to terminate benefits is mainly based on a doctor’s report and a hearing won’t add much to this information. criticism: court assumes all doctors are “good.” Also, the ability to cross- examine doctors to understand the basis for their decision may be very helpful in improving the accuracy of this process. Also possible conflict b/w doctors? majority: There’s not a lot of reversals even when procedures are granted so the procedures must be O.K. criticism: assumes that cases that wasn’t appealed got it right. criticism of criticism: Can’t assume that the right outcome is procedure/reversal either. Matthews test is very difficult for the court to apply hard for the court to get all the numbers asking a court to do the job of an administrator difficult to second guess the government Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 33 of 39 e) Hearing in the academic context Bd. of Curators of the University of Missouri v. Horowitz : A Med school student was dismissed during her final year of study for failure to meet academic standards. Her grades and performance was evaluated several times and found to be subpar. In final evaluation, only 2 of the 7 physicians recommended that she be graduated on schedule. Issue: Sufficiency of Procedural due process prior to that dismissal. Even assuming the existence of a liberty interest, she has been awarded at least as much DP as the 14th Amendment requires. Ct held that a formal hearing is not required where a decision to dismiss a student for unsatisfactory performance rests on the academic judgment of school officials. No Mathews type analysis. Academic type decisions are not amenable to an adjudicative type hearing because they not very factual [like Vermont Yankee where cross examination wouldn’t add to understanding of the situation.] Court compares with Goss v. Lopez (which held that a pre-suspension hearing was necessary when dealing with school disciplinary problem. But, required only an “informal give-and-take” between student and school. “Consultative” model of due process, which stood in sharp contrast to the adjudicative model endorsed in Goldberg.) Differences between Goss and Horowitz GOSS HOROWITZ Result Pre-suspension hearing No pre-suspension hearing Nature of Disciplinary—very factual Academic—more subjective, suspension and amendable to not as amendable to adjudicatory setting adjudication Nature of Adversarial Not adversarial. relationship between parties Yet, some subjective judgments might need cross-examination. To hold otherwise would create perverse incentives (1) pass everyone or (2) move to objective tests. To a certain extent, this is a slippery slope problem if the court were to recognize due process for Horowitz, it would be difficult to say where it does or does not apply. Sup. Ct. is really trying to carve out an exception Goldberg, Eldridge, Goss, and Horowitz all involve the constitutional adequacy of administrative hearing procedures. But, question remains, if a particular deprivation of “life,liberty, or property” is actionable in tort, may the state dispense with an administrative hearing altogether? f) Adequacy of common law remedies Ingraham v. Wright USSC 1977: Ingraham and Andrews were students in public school subjected to paddling by teachers. Petitioners sued claiming that the imposition of corporal punishment without a prior hearing denied them of due process of law. Ct holds that the common law civil and criminal remedies for abuse are sufficient to guarantee due process of law to school children subject to corporal punishment. There is a liberty interest in not being paddled. Yet, there is also adequate procedure—the common law suit. Problem: How do you make him whole? Is money really sufficient compensation for having been hit? Can’t ever take away physical pain. Even with common law claim, the teacher can defend himself with subjective good faith belief defense. DISSENT: every reason to requires, as in Goss, a few minutes of “informal give-and-take between student and disciplinarian” as a meaningful hedge against the erroneous infliction of irreparable injury. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 34 of 39 What is the source of the liberty interest? Constitution-substantive due process Florida statute-“in no case shall such punishment be degrading or unduly severe in its nature.”-creates substantive interest. common law claim-tort action-can sue for damages Ingraham v. Goss: state’s interest in summary action in Ingraham is greater than in Goss- don’t want to have to wait for a hearing to hit a kid. If that was required, then it would significantly burden the use of corporal punishment as a disciplinary measure. With suspension (Goss)-procedure before action is fine 2. Right to a Neutral Decisionmaker (“essential” element of procedural DP: Goldberg) a) 2 general types of issue arise: SELF INTEREST & PREJUDGMENT (1) Has the individual making the decision prejudged? Much higher standard than rulemaking. Rulemaking UCM Adjudication prejudgment (2) Is the agency structured in such a way that creates perverse incentives for a decision to come out a certain way? Tumey v. Ohio: Ct struck down statute which allowed a mayor to judge criminal cases where the fines went towards his salary. Ward v. Village of Monroeville: Ct struck down a statute that allowed the mayor to sit as judge where the fines went into the general town treasury, indirectly benefiting the mayor. HYPO Could the Mayor promulgate speeding levels where the fines still goes to his salary? YES. Mayor has incentive to reduce speeding to low level. If this is unconstitutional, then everyone else must also be. b) HYPO: SSI Head is concerned about high level of benefits. Thinks standard is o.k. Hard to say no to recipients. Decides to set an overall estimated projected levels for SSI recipients—each Judge can only give out a certain amount. Forces each judge to track over 2-3 year period the levels they ought to be giving out. Unconstitutional: Not fair. If all are eligible, they won’t receive. Not looking at the particular person, not neutral decisionmaker. Would never be allowed in Article III court. Constitutional: Conserving resources for long term good. Prevents bias in first place. ALJs give out too many benefits, force them to track their spending. This creates greater neutrality. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 35 of 39 IX. ENFORCEMENT A. PROSECUTION AND PRIVATE ENFORCEMENT (WHY DO AGENCIES HAVE SO MUCH DISCRETION AND DO THEY USE IT EFFECTIVELY) 1. Amount of Discretion Agency can maintain a consistent strategy and coordinate a variety of programs. Don’t want to go against everyone because it is too costly Difficult for Congress to foresee all the things that could violate the law expertise. Want a situation where parties think there is a possibility that they will be prosecuted Depoliticize enforcement decisions 2. Do they use their discretion properly? Nader Study alleged deficiencies of FTC: (1) Enforcement is too passive (they wait until complaints come to them), (2) spends too much time of the trivial, easy cases, (3) too lenient when they bring an action. Agencies become captured by the groups they regulate. Overly sensitive to these industries. Overly sensitive to Congress. Too solicitous of business. Alternative explanation Not enough $$ to go after the big cases. Easier cases are easier to win and quicker, They set a precedent and enforce harsher cases in the future. Maximize limited resources. 3. Proper role for court in preventing abuse of discretion? Ct must on some level oversee what is going on with admin. agencies but they are more recently pulling back. Cts are not good at managing enforcement actions—that’s why agencies were given the power in the first place. Renewed view that the executive branch is better able to oversee agency action. C. JUDICIAL REVIEW OF AGENCY ENFORCEMENT FOR ABUSE OF DISCRETION (Legal remedies for failure to prosecute) 1. Discriminatory enforcement violator says I am guilty, but it is not fair to go after me and not to go after the other violators as well. Moog (Differential treatment accorded some) 2. Right of Initiation Victim tries to force the agency to go after the violator. (failure of an enforcement agency to prosecute alleged violations) 3. Private Right of Action Agency can proceed against a violator but the victim wants to go after the violator directly. D. DISCRIMINATORY ENFORCEMENT a) Moog Industries v. FTC USSC 1958: Company complains that a cease and desist order should be stayed until all the competitors have been ordered to cease and desist. Ct disagrees and holds that it is not within the scope of the reviewing authority of a court of appeals to postpone the operations of a valid cease and desist order of the FTC against a single firm until similar orders have been entered against that firm’s competitors. If there is a patent abuse of discretion court will get all involved. Special competence of the agencies. Fact bound decisions Very high standard for the courts to meet to overturn an agency decision not to enforce. b) Agency does not have unbridled power to decide whom to investigate FTC v. Universal Rundle USSC 1967: China company was ordered by the FTC to cease and desist truckload discount practice. Company claims that the FTC could not enforce the cease and desist order against it alone Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 36 of 39 because price discrimination was an industry wide practice and the enforcement of just him would put him out of business. Ct held that the commission’s evaluation of the evidence and its refusal to grant a stay of its cease and desist order should be overturned only where such refusal constituted a patent abuse of discretion. But, agency does not have unbridled discretion in deciding whom to go after. Can’t arbitrarily destroy one of the may violators in an industry. Why is it o.k. for the agency to go after just one? (1) Cost effective—make example out of him; (2) can confirm that the others violators exist. c) Complete Deference Wayte v. U.S. : Man who was not going to register for the draft sends his card to the govt and tells them that he is not going to register. HE and 12 others were prosecuted out of the possible 674,000 draft dodgers. Ct held that the Justice Dept’s passive enforcement policy which prosecutes only those who identify themselves was o.k. Purely managerial type decision. Cheaper when violators identify themselves. E. RIGHT OF INITIATION SUITS Dunlop and Heckler are examples. Presumption of non-enforcement and therefore not subject to JR. Difficulty lies in persuading the courts that a statutorily imposed duty is “nondiscretionary”. 1. Scott v. City of Hammond, Indiana 7th 1984: Chicago closed Lake Michigan in the summer of 1980 due to pollution. Petitioner, under the authority of the CWA, brought a citizen suit against various s including the EPA. Complaint charged that the City of Hammond was discharging human fecal material into Lake Michigan from the area along the shoreline. Scott challenged the EPA’s failure to prescribe a total maximum daily load for discharge of pollutants into the Lake and the EPA’s failure to disapprove state water quality standards that were inadequate to protect the public health. Dismissed on both accounts. Ct held that a citizen’s suit may be brought to compel agency action only where the act or duty required by the statue is nondiscretionary. Therefore, his claim was valid as against agency’s failure to promulgate TMLD when state failed to submit proposed TMLD for a long period of time. His claim that the standard should have included bacteria count was not valid, and rightly dismissed. Private citizens cannot sue the agency on the basis of water quality standards substantive regulations. Citizens can force agency to adopt a standard if it is nondiscretionary duty of agency to do so. Cannot force agency to alter a regulation which the citizen feels is inadequate. Other avenue JR for arbitrary and capricious decision. When they have promulgated a standard they have exercised their expertise and therefore Scott can only challenge their exercise of discretion and not the standard itself. Narrow exception Heckler is the norm. F. PRIVATE RIGHTS OF ACTION Private citizen is suing violator. Victim says since the agency has the right to go forward, so do I as a victim in my own private suit. Arguing that the regulatory statute directly creates an “implied private right of action” for judicial redress. Private rights of action v. Standing If you have a private right of action, you have passed the standing test. Yet, you might have standing but no private right of action. Or cause of action, but no standing [Scalia—Lujan] Advantages: difficult for SEC to figure out what is false and misleading actual victims are in a better position to decide and to go after violator. victims have greater incentive to go after violators. Victims will internalize the cost of litigating and will make an informed decision about proceeding. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 37 of 39 Disadvantages: When courts create private rights of action [in the absence of express Congressional intent], we allow the courts to engage in legislation—this is not an appropriate role for the courts SEC controlling interpretation of statute may be better SEC can control for frivolous litigation. 1. Broad Interpretation J.I. Case v. Borak USSC 1964: Borak is a stockholder of Petitioner and charges Petitioner of depriving him of the pre-emptive right by reason of a merger between Case and American Tractor. Merger was effected through the circulation of a false and misleading proxy statement by those proposing the merger. Borak sued alleging a violation of §14(a) of the SEC Act of 1934. TC dismissed the complaint. REVERSED--Ct held that where legal rights have been invaded, and a federal statute provides for a general right to sue for such invasion, federal courts may use any available remedy to make good the wrong done. Private right of action is means to effectuate Congress’ goal. When an admin. agency is set up to protect a right, it is the court’s job to fashion a remedy. Very liberal standard of statutory construction no real statutory authority. Benefits SEC has limited resources [anyone who has the time and money can do the job for them]; Stockholders are in better position to litigate—they know the costs and benefits [more efficient] Criticisms Strike suits; cost of litigation; Congress wanted the SEC to have regulatory control over substantive standard; Agencies have other goals, Ct is assuming that there is only one goal/purpose— make sure all have remedy; Congress never expressly intended to provide a private right of action. 2. 4 Part Test Cort v. Ash USSC 1975: During the 1972 presidential contest between Nixon and McGovern, Cort, Chairman of Beth Steel Corp, publicly criticized statements made by McGovern. The statements were reprinted in newspapers, magazines and pamphlets. The advertisements and pamphlets were paid for and distributed by Beth. Steel Corp. Ash, stockholder of Beth. Steel, sued to stop the expenditure of corporate funds allegedly in aid of the Nixon campaign and to secure the return to the treasury of funds already spent. Ct held that a private right of action against corporate directors for authorizing corporate Presidential election contributions does not exist. Borak test was to look at underlying “purpose” and do all to effectuate it. Cort TEST With respect to implying a cause of action for damages, certain factors must be considered: (1) Was the one of the class for whose especial benefit the statute was enacted? NO (2) Does anything in the legisl. history suggest an intent to imply a cause of action? NO (3) Is such a right consistent with the purpose of the statue? NO (4) Is the area one traditionally left to state law? YES Under Borak, there would have been a private action suit. The purpose of the act was not to help stockholders, but to help voters and preserve integrity of elections. Remedy sought would not aid the company goal. SC after: strong presumption against implying a private right of action w/o rather clear legislative statement of intent. 3. Modern view Karahalios v. Nat’l Fed. of Fed. Employees: claimed unfair labor practices and wanted to go against union directly. Ct finds no private right of action. Ct looks only at whether Congress intended to create a private remedy: legislative intent. Very STRICT standard of statutory construction. Unless congressional intent can be inferred from the language of the statute, from the statutory structure, or from some other source, no private cause of action exists. Where statute provides a remedy, the court should be especially reluctant to provide add. remedies. Complete reversal from Borak suggests there is nothing left of the private right of action. Cort is center of the spectrum. Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 38 of 39 G. PREEMPTION EXISTING ALTERNATIVE CAUSES OF ACTION To what extent does a regulatory program/provision preempt an existing cause of action? To what extend does federal regulatory program preempt a state program? 1. Black letter law: Irreconcilable!! When 2 programs [state common law cause and federal program] are irreconcilable and fundamentally inconsistent, the federal program will pre-empt the state program. If federal government says “pre-empt,” then it does. If there is no language, then it turns on degree of irreconciability. Problems arise when they are not irreconcilable, but are cross purposes – are in tension. Primary Jurisdiction of agency: Either (1) agency has exclusive authority, ie.courts are ousted of jurisdiction altogether, or (2) judicial consideration must be postponed until an agency has an opportunity to pass on one or more questions whose resolution is important to, but not dispositive of, the judicial action. 2. When not immune from common law action on an issue (when no need expertise) Nader v. Allegheny Airlines USSC 1976: Nader sued Airlines after they intentionally overbooked a flight resulting in Nader being bumped to a alter flight. Nader refused to accept denied boarding compensation and sued for fraudulent misrepresentation. Court of Appeals held that the Civil Aeronautics Act provided that the CAB must determine whether a particular airline’s practice is unfair and deceptive and therefore Nader’s suit should be suspended pending a determination of this issue by CAB. Nader appeals. Ct holds that state common law private right is not extinguished due to administrative scheme. Given an existing private cause of action, regulatory scheme does not preempt without legislative intent to the contrary. NO specific intent by Congress to extinguish the right of action maybe evidence to the contrary: “nothing in this chapter shall in any way abridge or alter the remedies now existing at common law or by statute but the provisions in this chapter are in addition to such remedies.” The regulatory program and common law actions are not inconsistent. SC requires high levels of irreconciability between state and federal actions to extinguish an existing action. Problem: If airline had to disclose overbooking practices, it actually is inconsistent with federal pricing regulations—people will overbook flights like crazy and the actual occupancy of each flight will be harder to predict—thus causing an increase in cost of each airline ticket. Can he sue under federal law? No indication. The statute provides for liquidated damages or state common law rights of action. Why is this not inconsistent? CAB may find that it is not deceptive under our standard, but maybe state standard is higher. We set the floor, but the state can go beyond that and prescribe a higher level of care. Therefore, it is not inconsistent with state cause of action. Why would CAB be upset or disagree? (1) they want predictability they want a heavy load to fill the flight. If everyone knows, they will overbook and cause wide variation in load factors; (2) state cause of action goes forward and airline will have to give out info and raise prices. Distinguishable from Cort v. Ash? YES. Cort is creating a cause of action, ct is saying there needs to be a right of action here. Here, right already exists and the question is should the courts extinguish it. Does this meet the Karahalios standard to create rt. of action under federal law? NO. Not much does. The statute provides for liquidated damages. CORT/KARAHALIOS NADER RESULT Don’t look to find private Allow private right of action right of action even though there may be serious tension SOVEREIGNTY Fed. private action v. fed. state pr. Action v. fed. reg. ISSUES reg. action Action PRIVATE RIGHTS Would involve creating new Private rights of action already OF ACTION private rights of action exist—just maintaining them Admin 4c017141-ff7e-4081-9a7b-0c7145faf105.doc Page 39 of 39 3. Silkwood v. Kerr-McGee USSC 1984: Karen Silkwood was contaminated by plutonium from a nuclear power plant owned by while working as an employee there. Karen died in car accident, and father brings suit against under theories of strict liability and negligence. Jury found for Silkwood and awarded actual damages of $505,000 and punitive of $10million. Court of Appeals held that the award of punitives, as a state law remedy, were preempted by the Atomic Energy Act and its amendments. Ct held that the Court erred in denying punitives. Rule: Traditional principles of state tort law apply with full force unless expressly supplanted by Congress. It is the burden of to show that Congress intended to preclude such awards. TEST: State law can be preempted in 2 ways: (1) if Congress evidences an intent to occupy a given field and state law in that field is pre-empted and (2) when Congress has not completely displaced state law, state law is still pre-empted to the extent that it conflicts with federal law or where the state law stands as an obstacle to the accomplishment of the full purpose and objectives of Congress. Neither apply here. It’s true that a primary purpose of the act was to promote nuclear power. But, not at all costs! HYPO: Opening a nuclear power plant. Subject to many regimes: (1) State compensatory damages: Have to think of likelihood of suit for compensatory damages under state tort law. Make a CBA/economic analysis like a balancing test to determine what’s economical. (2) State punitive damages: Must go into the calculus. Could be huge!! (3) State injunctive relief: Likelihood that they will catch you. Once caught, it’s hard to ignore. (4) Federal regulatory program: NRC sets standard and you have to comply. Fines if you don’t. In what sense could one argue that the state compensatory and federal regulatory are in conflict? Standards of care might be different. St could be a lot higher. Therefore, you might not build. This is contrary to the purpose of the NRC to promote nuclear energy. What is the standards are the same—inconsistent? Probability of getting caught increases Fed you pay fines—state you must pay damages—amount of $$ goes up. Yet, the punitives might be so high they could shut you down. What goal does the state compensatory damage further that is different from federal government? State compensates the victim. [different purpose—federal government did not provide for this]
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