Administrative Law -- Edley -- Spring 2002

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Administrative Law -- Edley -- Spring 2002 Powered By Docstoc
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                               ADMINISTRATIVE LAW OUTLINE


1.    INTRODUCTION
1.1   [omitted]
2.    THE EXERCISE OF ADMINISTRATIVE POWER
      Procedural categories: Rulemaking v. Adjudication
2.1   Londoner v. Denver 210 US 373 (1908) (Moody for Ct; Holmes and CJ dissenting). Case
      concerned the city council‟s assessment of tax for pavement of street, under city Charter. Levy
      on petitioners without opportunity for oral hearing. Challenged on the basis that it was an denial
      by the State of due process of law guaranteed by the 14th Amendment.
2.2   Holding:
                  “[W]here the legislature of a State, instead of fixing the tax itself, commits
                  to some subordinate body the duty of determining whether, in what amount,
                  and upon whom it shall be levied, and of making its assessment and
                  apportionment, due process of law requires that at some stage of the
                  proceedings before the tax becomes irrevocably fixed, the taxpayer shall
                  have an opportunity to be heard, of which he must have notice, either
                  personal, by publication, or by a law fixing the time and place of the
                  hearing.”
      A hearing means an opportunity to make actual oral representations. Required in the
      circumstances by the due process clause (14th amendment). This case addresses, as a ground of
      review, procedural due process (cf Glover v Kelly, Volkswagen case, International Shoe case) (as
      opposed to substantive due process cases). A full judicial hearing “may be dispensed with”
      (Holmes dissented on this point). The parties wished to make arguments, essentially, about their
      individual circumstances.
2.3   Need to distinguish Londoner v Denver from cases involving laws of general application. See
      below.
2.4   Bi-Metallic Investment Co v State Bd of Equalization of Colorado 239 US 441 (1915) (Holmes
      for Ct). State Board of Equalization (body in charge of state taxes) and Colorado Tax
      Commission sought to put into effect an across-the-board increase of 40% in valuation of taxable
      property in Denver. Held: Due process cannot require that every person have the right to be
      heard in relation to such a decision. People have the right to make their views known through
      the ordinary legislative processes. Londoner distinguished on the basis that it concerned only a
      relatively few number of people, exceptionally affected and in each case on individual grounds.
      Note that in Bi-Metallic there is an escape valve, the Board of Individualization, so that someone
      with a particular problem can use an adjunct adjudicatory process.
2.5   Due process does not require the opportunity to be heard in matters of general rule-making; it
      does in matters of applying those rules to individual circumstances.
2.6   Edley: These two cases illustrate the difference between quasi-legislative action (Bi-Metallic)
      and quasi-adjudicative action (Londoner). Before a government makes a legislative decision, we
      do not expect an individual to be able to make submissions, but we do for an adjudicative
      decision. Possible indicia of differences: (a) numerosity (but why should numbers matter when
      we think about fairness?); (b) whether politics would work effectively to curb an agency‟s
      discretion if an administrative hearing were denied; (c) commonality (but there can be differences
      in the effect on different parties) v. particularity.
2.7   Why should particular v. general matter? (1) efficiency; (2) the possibility of using political
      accountability to address a general shared concern. Note also that is the problem is particular, it
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      is more likely that the agency will make a mistake, but if it is general, it is less likely that it will
      make a mistake, because of its expertise.
2.8   Notes:
      (a)       Roger Cramton: A Comment on Trial-Type Hearings In Nuclear Power Plant Siting 58
                Va.L.Rev 585. We should evaluate decision-making procedures by reference to “the
                extent to which the procedure furthers the accurate selection and determination of
                relevant facts and issues, the efficient disposition of business, and, when viewed in the
                light of the statutory objectives, its acceptability to the agency, the participants, and the
                general public. Need to balance three competing goals: Accuracy / Efficiency /
                Acceptability.
      (b)       Minnesota State Board for Community Colleges v Knight 465 US 271 (1984)
                (O‟Connor J for Ct). Nothing in the Constitution guarantees the individual a right to
                be heard in the policy-making process. Endorses Holmes in Bi-Metallic – if such were
                the case government would grind to a halt. Nothing either to support the idea in the
                structure of the Constitution and the US‟ republican form of Govt (The Federalist No
                10, Madison). As Holmes said in Bi-Metallic, disagreement with policy and
                disapproval of officials‟ responsiveness is to be registered principally at the polls.
                “Absent statutory restrictions the state must be free to consult or not to consult whoever
                it pleases.”
      (c)       Strauss: Revisiting Overton Park UCLA L.Rev 1251 (1992) Holmes‟ identification of
                the law/policy divide is still apposite today. Cf Lon Fuller. Judges are best equipped
                to resolve bi-polar disputes. Politicians should be left to resolve poly-centric disputes
                that require the balancing of a multiplicity of interests.
      (d)       Some distinguishing factors:
                (i)        Prospectivity v Retrospectivity. Judging tends to be backwards looking,
                           whereas rule-making (legislating) is prospective: see Holmes in Prentis v
                           Atlantic Coast Line Co. How do we know that “the future” starts? (Fred
                           Schauer article: rules tend to be more open-ended in their timeframe, orders
                           are more immediate). Mandamus, for example, is future in its operation
                           (Dickinson article).
                (ii)       General v. Specific. Separating general rules from specific orders (Fuchs
                           article).
                (iii)      The Rule of Law. Freedom under the law requires that “laws” be of general
                           application and not directed to any individual or group of individuals: Hayek
                           in The Constitution of Liberty. Unger: need for “decisions under a rule” as
                           opposed to the arbitrary exercise of power.
                (iv)       Look to substance of the decision (not labels) and whether it lends itself to
                           judicial resolution: Posner J (7th cir) in Coniston Corp Village of Hoffman
                           Estates (1988).
                (v)        As Posner suggests, any of these factors can be deconstructed. Eg Brown v
                           Board of Education was polycentric, prospective, general etc.
                (vi)       Sometimes rules may affect very small number of people. Eg Richardson v
                           Eastover (4th Cir 1991).
                (vii)      Summary: Characteristics of a rule/legislative act: general facts, unknown
                           class, prospective, poly-centric, may involve politics. Characteristics of
                           adjudication: specific facts, small and known class, retrospective, bi-polar,
                           isolated. None of the foregoing are determinative. Impulse towards “the rule
                           of law” (Unger) causes us to seek a general rule that is then applied to the
                           individual circumstances (requirement of freedom/liberty – Hayek). And yet
                           these impulses live side by side with the common law, where judges make up




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                          rules and apply them at the same time [or do we believe in fiction that judges
                          are “finding” the common law, rather than making it].
       Background to the Administrative Procedure Act (APA)
2.9    Outlined by Justice Jackson in the Wong Yang Sung v McGrath case. Unease in the 1930s over
       the growth in power of administrative agencies. Matters investigated. Standardized procedures
       proposed in the Walter-Logan bill, but this was vetoed by FDR in 1940, on the basis that reform
       was complex and he preferred to await the outcome of enquiries on the subject. Hiatus during
       war years. McCarran-Sumners bill, which evolved into the present Act, was the result of
       exhaustive consultations. Passed through both houses without opposition and was signed by
       President Truman on June 11, 1946.
2.10   Sunstein article. Refers to case of Schechter Poultry Corp v US 295 US 495 (1935) as the most
       well-known example of the Supreme Court holding unconstitutional the creation of some new
       administrative agency. Eventually such judgments wilted in the face of popular support for
       regulatory administration. Sunstein refers to this development as akin to a constitutional
       amendment (for this mass of agencies lack the system of checks and balances put in place by the
       Constitution for national government).
2.11   Sections numbers used for the APA are commonly those found in the codification of the Act in
       Title 5 of the United States Code. The APA draws distinctions between adjudication and rule-
       making and between formal and informal versions of both. Rule-making is the making of a
       “rule”; adjudication is the making of an “order”.
2.12   Definitions (section 551):
       (a)      “Agency”: Does not include Congress and the Courts. The Supreme Court has also
                held that it does not include the President. Therefore does not include the main
                constitutional organs of Government. Agency includes the main agencies and every
                other authority of the Government – every piece of the Government that has statutory
                authority to do something. It does include other Cabinet Ministers. Does not include
                military in the field in wartime.
       (b)      Agency action includes inaction.
       (c)      “Person”: basically everyone but agencies.
       (d)      “Party”: persons and agencies can be parties.
       (e)      “Adjudication”: process for making an order (which is a non-rule or instance of
                licensing)
       (f)      “Ex parte communication”: oral or written communication not on the public record of
                which reasonable prior notice to all parties is not given; not including requests for
                status reports.
       (g)      “Licensing” is included in “order” (and therefore adjudication).
       (h)      “Order”: final disposition.
       (i)      “Rule-making”: process for formulating a rule.
       (j)      “Rule”: very broad definition. “An agency statement of general or particular
                applicability and future effect to implement, interpret, or prescribe law or policy or
                describing the organization, procedure, or practice requirements of an agency.” Does
                not use general/specific delineation – encompasses the particular as well as the general.
                Requirement for a “statement”. Breadth of definition seems to defy our understanding
                of what is a “rule”.
2.13   APA – two important parts: “500 series” and “700 series” (referring to the US Code numbering).
       The 500 series deals with the procedure of the agency itself; the 700 series deals with review
       procedures in Court.




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          (a)      §551 – definitions (including of rule-making, rule, adjudication and order)
          (b)      §552 – access to information [added by the Freedom of Information Act]. §552b Open
                   Meeting Statute: Important in advising a government agency.
          (c)      §553 – rule-making
          (d)      §554 – adjudications
          (e)      §556 – hearings etc
          (f)      §557 – initial decisions, conclusiveness, review, submissions by parties, contents of
                   decisions, record.


                   Rule-making                                Adjudication

       Informal    All    informal     rules: publication     Due process (Constitution). Possibly
                   (552(a)(1); petitions to alter (553(e)).   also 555 (PBCG v. LTV), but its
                                                              application remains unclear (see page
                   Substantive informal rules: Notice &
                                                              376), and due process would provide
                   Comment; statement of “basis and
                                                              more rights.
                   purpose; 30 day delay between
                   publication and effect.
       Formal      Trial-type: notice (553(b); hearing        Trial-type: notice, informal settlement,
                   (556); intermediate and final decision     separation of functions (554); hearing
                   (557); 30 day delay between                (556); intermediate and final decision
                   publication and effect (553(d));           (557); declaratory orders (554(e)).
                   petitions to alter (553(e)).



2.14      Rulemaking or adjudication? Look to the APA. Formal or informal? Organic statute.
          Introductory cases on the APA
2.15      Vermont Yankee Nuclear Power Corp v Natural Resources Defense Council 435 US 519
          (1978) Rehnquist J for Ct. In decision-making process for power plants the Atomic Energy
          Commission assigned particular values to waste and used those values in the cost-benefit
          analysis. Relied on opinions of particular scientist. Treated as a case of informal rule-making.
          Court of Appeals criticized this on the basis that there was no discovery or cross-examination.
          Court of Appeal appears to have thought that the APA was not a maximum, but more of a guide
          that could be added to by judges. The Supreme Court held:
          (a)      Generally speaking the APA imposes the maximum procedural requirements to be
                   imposed on administrative agencies, although those agencies may choose to go
                   further (US v Allegheny-Ludlum Steel Corp 406 US 742 (1972) and US v Florida East
                   Coast Ry Co 410 US 224 (1973). Circumstances where the Court will impose further
                   requirements will be extremely rare.
          (b)      Over-ruled approach in the DC Circuit of adding to APA‟s requirements.
          (c)      Where a small number of persons “are exceptionally affected, in each case upon
                   individual grounds” might require additional procedures. Ie APA might put it in rule-
                   making box, but the Constitution might put it in the adjudication category.
          (d)      “Totally unjustified departure from well-settled agency procedures of long standing
                   might require judicial correction.”
          (e)      “Absent constitutional constraints or extremely compelling circumstances the
                   “administrative agencies „should be free to fashion their own rules of procedure and to
                   pursue methods of inquiry capable of permitting them to discharge their multitudinous




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                 duties” – FCC v Schreiber, FCC v Pottsville Broadcasting Co. Making a judgment
                 about procedure requires an understanding of substance, and the agencies were
                 constructed to promote expertise.
       (f)       Positivization of administrative law: need to tie rights to statutory text.
       (g)       Whether an issue warrants procedural safeguards over and above those provided
                 for in the ABA is a matter for the agency to determine (at its discretion).
       Exceptions to Vermont Yankee: (1) due process, because APA is a statute and constitutional
       law would trump the APA; (2) if agency departs from its past practice a particular case,
       agency‟s action can be attacked as an abuse of discretion in its deviation from past practice;
       (c) extremely compelling circumstances.
2.16   Reconciling Vermont Yankee with Overton Park. In Overton Park 401 US 402 (1971) the S.Ct.
       remanded a decision to the agency to provide a fuller explanation of its reasoning. In Pension
       Benefit Guarantee Corp (1990) Blackmun J rationalised the distinction as follows: “Vermont
       Yankee stands for the general proposition that courts are not free to impose upon agencies
       specific procedural requirements that have no basis in the APA. At most, Overton Park suggests
       that §706(2)(A) of the APA, which directs a court to ensure that an agency action is not arbitrary
       and capricious or otherwise contrary to law, imposes a general „procedural‟ requirement of sorts
       by mandating that an agency take whatever steps it needs to provide an explanation that will
       enable the court to evaluate the agency‟s rationale at the time of the decision”.
2.17   APA requires more than the Constitution in the rule-making process.
2.18   In light of Vermont Yankee how could we argue that an administrative tribunal should have gone
       beyond the APA:
       (a)       Reclassify within APA (eg informal to formal)
       (b)       Another statute
       (c)       Substantive review
       (d)       Procedures within the agency‟s own rules or agency‟s own customs
       (e)       “Individuals exceptionally affected” – might fall into adjudication box.
2.19   To make additional arguments about a procedure the agency should follow, need to point to a
       positive source of law (for the Supreme Court, it is not enough to argue that such additional
       procedures are generally a good idea).
2.20   PBGC v. LTV Corp. (US, 1990): PBGC required LTV, which had declared bankruptcy, to
       resume its former obligations. Made decision in the course of an informal adjudication. Court of
       Appeals, by focusing on “fundamental fairness” to LTV, held that there were procedural
       inadequacies in hearing (no adequate opportunity to offer contrary evidence, etc.).
       Court held that the Court of Appeals did not point to any provision in ERISA or the APA which
       gave LTV the procedural rights it had identified. Thus, the Court of Appeals‟ decision was
       contrary to Vermont Yankee. The minimum requirements for informal adjudication are set out in
       section 555 and do not include the elements the Court found that LTV was entitled to.
       Edley: PBCG holds that courts can‟t get any more involved in establishing procedural
       requirements in informal adjudication than the could in Vermont Yankee (informal rulemaking).




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3.    RULE-MAKING
3.1   Introductory notes:
      (a)       Designed to cover the government as regulator, not as employer or caregiver:
                exemption of matters relating to “public property, loans, grants, benefits, or contracts.”
      (b)       §553 (b) – Requirement for notice in the Federal Register (like the Gazette).
      (c)       (c) – people who are given an opportunity to participate are “interested persons” (very
                broad interpretation – almost anyone who wants to participate). Agency has discretion
                over how to structure the participation: “with or without opportunity for oral
                presentation”. There is still some due process requirement in the APA for rulemaking,
                that is not there in the Constitution.
      (d)       “After” consideration – does the agency have to consider and respond to the public‟s
                contributions? Notice-chance to comment-final rule-making = informal rule-making.
      (e)       “When rules are required by statute to be made on the record after the opportunity for
                an agency hearing” – first port of call is the organic statute of the agency itself.
      (f)       Rulemaking can be informal notice & comment type rulemaking, or formal, trial type:
                this is required by some statutes, typically when the agency is making a specific rule.
      (g)       §554 (c) – we have moved to the language of interested parties.
      (h)       “Administrative judges” (see §556(b)(3)) usually preside at hearings. Not judges in the
                Article III sense – administrative officers.
      (i)       §556 (d) and (e) – procedures for hearings. Formal or “on the record” hearings. Usual
                trial-type procedure, but can be done in writing “when a party with not be prejudiced
                thereby”. If it is a formal proceeding and the fact is not in the record, then it cannot be
                relied on by the agency.
      (j)       §557 – agency makes the decision. “Administrative law judge” is really just “hearing
                examiner”, not necessarily the decision maker.


4.    FORMAL ADJUDICATION
4.1   Adjudications: §554. The formal requirements for a trial-type proceeding apply to every case of
      adjudication required by statute to be determined on the record after an opportunity for an agency
      hearing. Some exceptions: subject to subsequent trial of law and facts de novo; employment
      decision; resting on inspections, tests or elections; military or foreign affairs; agency as agent of
      court.
4.2   Informal adjudications are not covered by §554 (no comment on what happens when the statute
      does not require adjudication to be on the record).
4.3   Other provisions:
      (a)       Notice
      (b)       All interested parties with opportunity for submission of facts, arguments, offers of
                settlement etc.
      (c)       Restrictions to ensure impartiality of presiding officer
      (d)       Possibility of declaratory order to termination controversy or remove uncertainty.




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      (e)
4.4   §556 Rules for Trial-type proceedings (On-the-Record proceedings):
      (a)       Apply when the statute requires trial-type procedure for rulemaking or adjudication in
                accordance with sections 553 and 554.
      (b)       S556(b): agency, agency members, or ALJs to preside at taking of evidence; to be
                impartial.
      (c)       S556(c): powers of presiding officers to enforce various trial-like elements of
                procedure: administer oaths, issue subpoenas, regulate hearing, etc.
      (d)       S556(d): serious procedural requirements: party entitlement to present case by oral or
                documentary evidence, rebuttal evidence, and cross-examination as required for a full
                and true disclosure of the facts.
      (e)       In certain situations (rulemaking, determination of claims for money or benefits, or
                applications for initial licenses), the agency may adopt procedures for submission or all
                or part in written form: s. 556(d)
4.5   S 556(e): Requirement of Proceedings on the Record. Transcript of testimony and exhibits, plus
      papers filed, to be exclusive record for decision. If the decision rests on official notice of
      material fact not in record, agency must give notice and (upon timely request of party)
      opportunity to show the contrary.
4.6   S 557: Process of Making a Decision when a hearing is required (applicable when hearings are
      required to be conducted in accordance with section 556).
4.7   Federal Trade Commission v Cement Institute (US, 1948) Cement price-fixing – grant of
      discretion: “unfair methods of competition.” Procedures in the Federal Trade Commission Act
      are typical of formal adjudication. FTC investigates and reports to Congress. It can then vote to
      issue a complaint, which initiates an on-the-record adjudicatory proceeding before an ALJ. ALJ
      makes a recommendation and the FTC then makes the final decision. Complaint that FTC had
      essentially believed its own experts. ALJ and FTC relied on evidence of economists who work
      for the FTC.
      (a)       First, jurisdiction issue. The legislative history showed that Congress was content for
                the FTC‟s functions to cover those subject matters also covered by the Sherman Act
                and thus enforceable by the DOJ and the Federal Courts.
      (b)       Second, alleged bias. Allegation that the FTC had previously prejudged the issue. The
                fact that members of the FTC had produced reports and were of the opinion that the
                multiple basing point system was a price-fixing restraint of trade does not disqualify
                them. The fact that the FTC had entertained such views as a result of its prior
                investigations did not necessarily mean that the minds of its members were irrevocably
                closed on the subject of the respondents‟ basing point practices. Cement industry was
                free to produce evidence, make submissions, etc. A contrary approach would required
                the entire membership to disqualify itself and make experience acquired from work a
                handicap rather than an advantage. This too would be contrary Congress‟ intent. FTC
                and conduct studies and make reports, and then investigate/enforce. No bias so long as
                minds not “irrevocably closed”.
      (c)       Third, deference to the expertise of the FTC. Congress wanted FTC to develop such
                specialized expertise. Advantages of specialization (“expertness coming from
                experience”: FTC v Keppel 291 US 304).
4.8   Landis article. Imbalance in availability of information can lead to breakdown in “umpire” theory
      of administrative law and cause Congress to establish agencies with the power to investigate.
      Also suggests that the ultimate test of the administration is the policy that it formulates.




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       Scope of administrative notice

4.9    Ohio Bell Telephone v. PUC of Ohio (US, 1937): PUC calculated valuation rates for 81/2
       year period by using a complicated formula it had developed itself. Court: This violates due
       process: “The fundamentals of a trial were denied to the appellant when rates previously
       collected were ordered to be refunded upon the strength of evidential facts not spread upon
       the record.”

4.10   Castillo-Villagra v INS (1992) 9th Cir (Kleinfeld J). Illustrates that agencies can take notice of a
       broader range of facts without hearing evidence or conducting a trial than courts. Immigrates
       claimed fear of Sandinista govt in Nicaragua. INS took administrative notice of the election of
       Violeta Chamorro and the passing of the Sandinista regime. No opportunity given to plaintiffs to
       argue why the change in regime should not be taken into account (change in regime occurred
       post-hearing).
       (a)       Ct held that petitioners should have been given such an opportunity.
       (b)       General acceptance of Kenneth Culp Davis‟ thesis that notice may more easily be taken
                 of legislative facts than adjudicative facts.
       (c)       In the administrative context we more readily accept that notice will be taken of certain
                 adjudicative facts. “But the administrative desirability of notice as a substitute for
                 evidence cannot be allowed to outweigh fairness to individual litigants”. May amount
                 to “condemnation without trial”: Ohio Bell Telephone Co (USSC 1937).
       (d)       INS here took notice of legislative facts but also of adjudicative ones: that petitioners
                 had no more to fear from Sandinistas. Adjudicative facts would normally go to a jury
                 and relate to the specifics of the parties involved in the case. Legislative facts are
                 general and usually relate to the content of law or policy.
       (e)       APA §556(e): “When an agency decision rests on official notice of a material fact not
                 appearing in the evidence in the record, a party is entitled, on timely request, to an
                 opportunity to show the contrary.”
       Edley: In all circumstances, the bottom line is abuse of discretion. Thus, we may ask whether
       the agency has abused its discretion by failing to notify parties that is it taking notice of
       adjudicative facts.
4.11   Gramatikov v INS (7th Cir, 1997): Bulgarian asylum seekers given the opportunity to present
       evidence, but the court warns that asylum seekers should have highly credible, expert evidence
       that they are likely to be persecuted in former communist countries.
4.12   Three questions:
       (a)       Can notice be taken at all?
       (b)       Must there be notice given that notice is being taken?
       (c)       Must there be opportunity for rebuttal evidence?
4.13   (c) is most important. Agency has discretion subject to review for abuse. Here the failure to
       allow an opportunity to rebut was in violation of Due Process (5th Am).
4.14   Other notes:
       (a)       Rule 201 of the Federal Rules of Evidence provides that parties must be put on notice
                 if the Court is to take notice of adjudicative facts. (In the administrative setting,
                 whether a fact is adjudicative is merely a relevant factor). Rule 201: “whose accuracy
                 cannot reasonably be questioned”.
       (b)       Generally, administrative tribunals operate under more permissive rules of evidence
                 than courts. For example the hearsay rule is relaxed as is reliance on written




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                 documents not subject to cross-examination (see eg Richmond v Perales 402 US 389
                 (1971)).
       (c)       Whereas juries are “irresponsible decision-makers” (Dean Calabresi) who do not need
                 to explain their decisions and thus should be shielded from unreliable evidence,
                 administrative tribunals are required to give written rulings.
       Burden of Proof under the APA
4.15   Director, Office of Workers’ Compensation Programs v Greenwich Colleries 114 S.Ct 2241
       (1994) – O‟Connor J for the Court. In adjudicating benefit claims the Dept of Labor applies a
       “true doubt” rule, which essentially shifts the burden of persuasion to the party opposing the
       benefit claims. Is this rule consistent with s556(d) of the APA, which states that “except as
       otherwise provided by statute, the proponent of the rule or order has the burden of proof”?
       (a)       First issue: meaning of “burden of proof” (in APA). Two possibilities: “burden of
                 persuasion” or “obligation to produce evidence”. Previous Supreme Court cases
                 (inc Hill v Smith 260 US 592 (1923) Holmes J) attempted to distinguish between
                 burden of proof (defined as burden of persuasion) and the burden of production.
                 “Burden of proof” widely understood to mean “burden of persuasion” in the legally
                 community at the time the APA enacted. APA used words in this sense. This
                 conclusion a departure from previous Supreme Ct decision in Transportation
                 Management.
       (b)       “Under the Department‟s true doubt rule, when the evidence is evenly balanced the
                 claimant wins. Under [section 556(d)], however, when the evidence is evenly
                 balanced, the benefits claimants must lose. Accordingly, we hold that the true doubt
                 rule violates [section 556(d)] of the APA.”
       (c)       Souter, with Blackmun and Stevens joining, dissented. Dispute that there was a settled
                 meaning in 1946. Argue that Congress in 1946 preferred the “burden of production”
                 meaning.
       (d)       Steadman case holds that party with the burden of proof must satisfy that burden with a
                 preponderance of the evidence (not a clear-and-convincing standard). Because APA
                 does not deal with the burden of persuasion, this should be left to the agency‟s
                 discretion.
       (e)       Greenwich Collieries represents a return to textualism in interpretation of the APA.
                 Both majority and dissent focus on the words of the statute. Courts becoming more
                 and more textual. Good idea? Rakoff – intelligent textualism is using the whole text of
                 the paragraph and/or statute and not merely the few magic words that are the subject of
                 the case. O‟Connor seeks “the ordinary meaning of the phrase in 1946”. (Ordinary
                 meaning to lawyers). By focusing on textual meaning in 1946, the Supreme Court
                 makes interpretation clearly a question for the Courts. If the Supreme Court had
                 focused on furthering the APA‟s purposes, the question would have been one for the
                 agencies‟ discretion? Is the Court reading the APA as procedures that constrain
                 agencies? Is it meant to prevent too expansive approach (read plaintiff-friendly).
4.16   Armstrong v Commodity Futures Trading Commission (3rd circuit 1993). Could Armstrong be
       held personally liable as the controlling person of corporations which had violated the
       Commission‟s rules? Armstrong complained that the Commission did not meet the requirements
       of the APA because it did not provide an adequate “statement of … findings and conclusions,
       and the reasons or basis therefore, on all material issues of fact, law, or discretion presented on
       the record” 5 USC s557(c). Administrative agency can adopt ALJ‟s findings (Kenworth Trucks).
       In the present case, however, the administrative agency did not whole-heartedly adopt the ALJ‟s
       reasoning (referring to it as “substantially correct” – also disclaimed ALJ‟s reasoning as not to be
       taken as an expression of the agency‟s views). Did not provide its own reasoning. This prevents
       intelligent appellate review.




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       (a)      Agency had also failed to make findings/give reasons on material issues relevant to
                Armstrong‟s personal liability.
       (b)      Another case on need for reasons: Matter of Issuance of Permit 120 NJ 164 (1990).
       (c)      Courts not too exigent: even if “the findings of the Commission … leave much to be
                desired … the path which it followed can be discerned”. Long-winded reasons
                inappropriate for very busy agencies (see Judge Easterbrook in Stephens v Heckler (7th
                Cir 1985). But not mere conclusory statements: McElroy Electronics Corp v FCC (DC
                Cir 1993).
       (d)      If an agency simply adopts an ALJ‟s decision, no separate explanation is required.
                However, if as in this case, the agency says that an opinion is “substantially correct” it
                is unclear which specific findings or conclusions by the ALJ were incorrect.
                Therefore, to satisfy §557(c), the agency must establish a record and explain its
                conclusions. Rationale: this prevents arbitrary decisions, provides parties with a
                reasoned explanation, settles the law for future cases, and furnishes a basis for effective
                judicial review.
4.17   [Discussion of events in NYC. Agencies have emergency powers to bypass ordinary rule-making
       proceeding: s553(b)(3)(B) (eg new FAA regulations). May have some form of comment period
       afterwards. s559 – APA does not limit procedural requirements in other statutes. The
       requirements have cumulative effect.]




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4.18
5.     INFORMAL RULEMAKING
5.1    Informal rulemaking (notice & comment rulemaking) as a sui generis administrative
       procedure (§553): paradigmatic form of agency rulemaking. Background:
       (a)      DoJ, AG‟s manual on the APA (1947):
                (i)       Interested persons must be given the opportunity to participate through
                          written submissions.
                (ii)      Oral presentations are optional.
                (iii)     The agency must consider the submitted materials but its decision does
                          not have to rely on them.
                (iv)      The agency must provide a “concise general statement of [the] basis and
                          purpose” of the rule.
       (b)      Martin Shapiro, APA: Past, Present, Future (1986). APA was a political
                compromise struck by conservative and liberal Democrats . Liberals got
                rulemaking that was subject only to arbitrary and capricious review and
                conservatives got adjudication subject to relatively strict judicial review.
       (c)      Alan Morrison, The Administrative Procedure Act (1986). Describes the shift from
                adjudicatory proceedings to generalized rulemaking. Gives the following three
                reasons for the shift:
                (i)       Rulemaking allows for consideration of an overall framework that is
                          likely to produce more rationally coherent rules for general application.
                (ii)      Rulemaking is more efficient because it usually resolves a broader range
                          of issues than an adjudication, which only focuses on the specific facts of
                          a particular case.
                (iii)     The advent of new substantive statutes designed to provide protection on
                          an industry wide basis that leaves development of substantive standards
                          to the relevant agencies and specifically require rulemaking.


5.2    American Medical Association v US (7th Circuit, 1989, Cudahy J). Informal (notice and
       comment) rulemaking. Calculating tax payable by AMA on advertising revenue in
       magazines. IRS made rules for calculating liability, AMA didn‟t submit comments, and the
       IRS‟ final rule then made it clear that the rule would apply to the AMA. AMA contended
       that inadequate notice of the rules violated s553(b)(3) of the APA, which requires a notice
       of proposed rulemaking (NPR) that includes “either the terms or substance of the proposed
       rule or a description of the subjects and issues involved. The Court held that the IRS‟s rule
       was not subject to the notice requirement because it was a “logical outgrowth” of the
       original proposal.
       (a)      In International Harvester v Ruckelshaus (DC Cir, 1973) Judge Leventhal pointed
                out that it would be absurd if the agency could learn from comments “only at the
                peril of starting a new procedural round of commentary”.
       (b)      Note that in prior cases outright reversals of the agency‟s position have been
                accepted (odd?). Were the parties affected by the final rule put on notice that their
                “interests were at stake” (Spartan Radiocasting Co v FCC (4th Cir, 1974). Did
                potential commentators known that an issue was “on the table”. Obligation to
                comment not limited to those adversely affected.




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      (c)       “A final rule is not invalid for lack of adequate notice if the rule finally adopted is
                „a logical outgrowth‟ of the original proposal.”
5.3   National Black Media Coalition v FCC (2nd Circuit 1986, Pierce J). Frequency allocation;
      departure from minority preference policy. Notice announced intention to use minority
      preference policy. This abandoned in final policy without opportunity for final comment.
      Further, FCC used certain data and maps that were not disclosed to the parties. In frequency
      allocation process, FCC announced that it would apply criteria used in a previous round.
      Still wished to promote same three goals, including minority ownership. Invited other
      proposals that would benefit public. FCC then decided not to adopt non-technical criteria
      (inc minority ownership). Used technical criteria and gave licenses mainly to existing
      daytime stations to broadcast at night.
      (a)       Standing issue. National Black Media‟s membership affected, therefore proper
                standing.
      (b)       Notice both improves quality of rule-making and provides fairness to affected
                parties: Small Refiner Lead Phase-Down Task Force v EPA (DC Cir 1983).
      (c)       Ct found that no warning that minority preference policy might be abandoned.
                Such warning required. The notice was inadequate because it did not alert parties
                of the scope of the change, its potential impact and rationale, or any alternatives.
                Further, should not make rules on basis of undisclosed information (information
                which to a critical degree is known only to the agency: Nova Scotia Food
                Products.)

5.4   Edley: How much detail are you entitled to receive in notice of a proposed rule in informal
      rule-making? More than you‟d think from looking at the APA. Although you‟re not entitled
      to a trial-type hearing, you are entitled to a paper hearing. If that‟s to be meaningful, parties
      have to know what the subject is. Thus, in NBMC, the Court is trying to ensure the integrity
      of the decision-making process within the agency. The alternative is require the agency to
      explain its findings in judicial review, but then the expert arguments would first take place
      in court. Thus, by requiring meaningful notice the Court is trying to maximize the agency‟s
      role.

5.5   Note: The Regulatory Flexibility Act 1980 and certain Executive Orders have gone even
      further, and often general notice of the subject-matter of proposed rule-making is given well
      before s553 notice.
5.6   FCC v National Citizens Committee for Broadcasting 436 US 775 (1978, Marshall J).
      FCC regs prohibited transfer of radio and TV licenses to owners of newspapers in the same
      community.      Also required divestiture within 5 years of existing combinations,
      grandfathering them (except in 16 “egregious cases” where immediate divestiture was
      ordered). FCC identified reasons why more sweeping divestiture a bad idea. Court of
      Appeals held that FCC had acted unreasonably in not extending this divestiture across the
      board, thus violating the arbitrary and capricious standard in section 706(2)(A). Court of
      Appeal held that “arbitrary” standard reached.
      Supreme Court noted that FCC making essentially a legislative decision and was entitled to
      draw a line somewhere. Some general facts are not susceptible to complete proof (although
      there must be some evidence/proof). “In such circumstances complete factual support for
      the Commission‟s judgment is not possible or rerequired – a forecast of the direction in
      which future public interest lies necessarily involves deductions based on the expert
      knowledge of the agency.” Agency was not arbitrary and capricious. The standards settled
      upon by the FCC reflect a rational legislative-type judgment.




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5.7   Note: Section 553 of APA. Are these provisions written with the purpose of aiding the
      agency to make better policy or are they driven by a desire to protect private rights?
      Efficient rule-making or basic fairness? The first of today‟s cases (AMA) suggests that the
      provisions are basically there to help the agency; the second (Black Media Coalition) is
      written more in terms of fairness.




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5.8    United States v Nova Scotia Food Products Corp. (2nd Circuit, 1977 – One year before
       Vermont Yankee). NSFP appeal District Court decision enjoining it from processing hot
       smoked whitefish except in accordance with specified FDA regulations. Prior to fixing
       regulation, the FDA used informal notice and comment procedures under 21 USC §371(a).
       Sent out notice of proposed rulemaking. Following notice, certain suggestions were made by
       the National Fisheries Institute (the intervenor in the Court proceedings). Various species-
       by-species suggestions made both by the intervenor and by the Bureau of Commercial
       Fisheries of the Department of the Interior. [Appellant‟s first contention that the regulation
       was not supported by statutory authority was dismissed].
5.9    Appellants also contended: (a) that the administrative record was inadequate; and (b) that
       there was a failure to disclose factual material on which the agency relied – this, it was said,
       vitiated the element of fairness essential to any administrative action. Court said that three
       questions raised: (a) What record does a reviewing court look to? (b) How much of what
       the agency relied on should have been disclosed to interested persons? (c) To what extent
       must the agency respond to material criticism? Held:
       (a)      Focus of judicial review should be on the record already in existence: Camp v Pitts
                (1973). The exception to the exclusivity of that record is that “there may be
                independent judicial fact-finding when issues that were not before the agency are
                raised in a proceeding to enforce non-adjudicatory agency action.” : Overton Park.
       (b)      Court criticizes the fact that scientific data relied on by the agency was not
                disclosed. When the pertinent research material is readily available, there is no
                need to conceal it from the parties.
       (c)      A reviewing court will generally not second-guess the agency in its scientific
                conclusions unless those conclusions were arbitrary. However, it will consider
                whether the agency has taken account of “all relevant factors and whether there
                has been a clear error of judgment”: Overton Park. “It is arbitrary or capricious
                for an agency not to take into account all relevant factors in making its
                determination”: Hanly v Mitchell (7th Cir 1977).
       (d)      Failure to disclose scientific evidence prevented presentation of relevant comment
                and therefore the agency may not have been able to consider “all relevant factors”.
                “When the basis for a proposed rule is a scientific decision, the scientific material
                which is believed to support the rule should be exposed to the view of interested
                parties for their comment”.
5.10   Appellant also criticized the failure to provide a “concise general statement” as required by
       section 553. Inadequate explanations for rejection of certain points raised. Not in keeping
       with a rational process to leave vital questions, raised by the comments, completely
       unanswered.
5.11   This case predates Vermont Yankee and Greenwich Collieries. What would the Supreme
       Court do if it heard this case today? Does Nova Scotia impose additional requirements on
       the agency.
5.12   Two holdings in this case: one relating to the release of information; the other relating to the
       need to respond to comments. §553(b) says nothing about the release of information,
       although §553(c) refers to the need to give interested persons “an opportunity to
       participate”. As to having to answer comments, best textual basis (in APA) for the Court‟s
       decision is “after consideration of the relevant matter presented”.
5.13   Relevant text of APA:
       (a)      §553 (c): “[A]gency shall give interested persons an opportunity to participate in
                the rule making through submission of written data … After consideration of the




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                relevant matter presented, the agency shall incorporate in the rules adopted a
                concise general statement of their basis and purpose.”
       (b)      §706 “[R]eviewing court shall … (2) hold unlawful and set aside agency action …
                found to be (A) arbitrary, capricious, an abuse of discretion, or otherwise not in
                accordance with law; … In making the foregoing determinations, the court shall
                review the whole record…”.
5.14   In summary: The FDA didn‟t make its research results available to the public for comment –
       this research formed the core of the FDA‟s final decision. Further, the agency didn‟t
       consider any alternatives suggested during the comment period.
5.15   Edley: “No secret science.” The Court is interpreting section 553, not adding to section
       553, which would be contrary to Vermont Yankee. Underlying this holding is a debate about
       institutional role. Who gets to decide whether particular facts are important enough to be
       considered? Nova Scotia holds that it is the expert agency that decides.
       A party might persuade a court not to defer to the agency‟s expertise by writing comments
       so that they‟re included in the record. After the party gets an explanation, challenge the
       agency‟s action as arbitrary and capricious.
       The Court speaks in the language of procedural, which makes it sound less intrusive than
       using the language of judicial policymaking.
       Why not simply allow agency to publish regulation without explanation / “concise general
       statement”? (1) enhance political accountability by requiring explanation; (2) helps courts
       with judicial review; (3) rationality/science – more explanation helps us understand; (4)
       fairness – to give the public a connection to government decision-making.
       Nova Scotia, which mandates a paper-hearing as part of quasi-legislation, is an example of
       quasi-procedural intervention. The Court takes a “hard look” at the agency‟s actions.
5.16   Notes:
       (a)      AG‟s manual rather suggests that the purpose of the concise general statement is to
                aid the public in interpretation of the rules – not to answer every point raised
                during the rulemaking. Rakoff says that there is a real question as to whether Nova
                Scotia is correctly decided. That being said Courts of Appeal generally continue
                to cite Nova Scotia or its equivalent in other circuits (see eg National Black
                Media).
       (b)      Ethics question about whether attorneys can use the obligations imposed on
                agencies by Nova Scotia (etc) to create excessive procedural burdens for the
                agency (eg by asking a huge number of questions).
       (c)      Recognize that rulemaking costs. Budget of the agency is itself a regulatory
                statement. Eg the Reagan administration‟s tax cut sat comfortably alongside its
                desire for less regulation.
       (d)      H]aving chosen, for whatever reason, to exclude the three draft bridge
                deterioration studies at the administrative stage, the FHWA cannot not rely on
                those same studies to provide the requisite evidentiary support during judicial
                review.” Per Thomas J in Center for Auto Safety v Federal Highway
                Administration (DC Cir, 1992).
       (e)      Agency can, of course, add to the record the material it receives and gathers during
                the comment period: Rybachek v EPA (9th Cir, 1990).
       (f)      Recommendations by the Administrative Conference of the United States and
                criticisms of these: see p 328.




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5.17   Independent US Tanker Owners Committee v Dole (DC Cir, 1987): Judge Bork. Rule
       allowing federally-subsidized ships (so subsidized to compete in foreign markets) to
       compete in the domestic shipping market, principally to allow more tankers to transport oil
       from the Alaska pipeline (so long as they repay the subsidies). Appellants contended that
       the Secretary of Transportation had failed to provide a sufficiently reasoned discussion of
       why this rule was adopted and alternatives were rejected in light of the purposes of the
       Merchant Marine Act. Argued that the rule focused on non-statutory criteria, and was
       therefore arbitrary and capricious within the meaning of section 706(2)(A).
5.18   Court: The Secretary was within her statutory authority in promulgating the rule, but she
       failed to provide an adequate account of how the rule serves the objectives set out in the
       governing statute. Justification for the rule must be given in terms of the applicable statute.
       Rule should further the statutory purposes by which the agency is directed.
       (a)      Relevant provision: §553(c): “After consideration of the relevant matter presented,
                the agency shall incorporate in the rules adopted a concise general statement of
                their basis and purpose.”
       (b)      Concise general statement “should (at least) indicate the major issues of policy that
                were raised in the proceedings and explain why the agency decided to respond to
                these issues as it did, particularly in light of the statutory objectives that the rule
                must serve.”
       (c)      Secretary‟s justifications here were not linked to the objectives specified in the act
                (Merchant Marine Act). The Secretary is “not free to substitute new goals in place
                of the statutory objectives without explaining how these actions are consistent with
                her authority under the statute.” Need to respond to important arguments for
                alternatives.
       (d)      Allow agency to correct the problem/reconsider the matter, rather than invalidating
                the rule.
       (e)      Ober v US: held that additional material provided by the State during the notice
                and comment procedure should have been provided to other parties for comment.
5.19   Potential exam question: should Nova Scotia be regarded as good law in light of Vermont
       Yankee? Or: would you advise an agency to release information to parties? One further
       reason an agency might not like putting information into the public domain is that it
       increases the political risk, and potential for criticism of the agency‟s conduct/approach.
       Note that litigation costs are not such a major concern as the procedural costs of conforming
       with any (supposedly) onerous procedural requirements under the APA.
5.20   Vermont Yankee and Greenwich Collieries raise the question of whether Nova Scotia is still
       good law. Can one get to the result in Nova Scotia (creating an interactive procedure with
       disclosure of info etc) via the words of the APA (as required by Vermont Yankee). Although
       the Supreme Court has not ruled, other courts have treated Nova Scotia as having survived
       Vermont Yankee. In terms of Greenwich Collieries, one might ask whether Nova Scotia is
       sanctioned by the words of the APA as intended in 1946? Prof. Rakoff thinks that answer to
       the latter question is no, but the Supreme Court might limit/recoil from Greenwich
       Collieries next time the APA comes before it.
5.21   Arguments that Nova Scotia effectively over-ruled:
       (a)      W.r.t. requirement that the agency must publish data:
                (i)       AG Manual indicates the 1947 interpretation of the APA: “the agency is
                          free to formulate rules upon the basis of material in its files”.




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                (ii)      APA §553(c) only requires notice as to the “time, place, and nature” of
                          rule making – it doesn‟t require disclose of information on which the
                          agency based its rule.
       (b)      W.r.t requirement that FDA consider alternatives suggested in public comment
                period:
                (i)       AG‟s Manual again makes clear that the intent of the APA (as of 1947)
                          was to give the agency discretion over the public comment period.
                (ii)      APA §553(c) only requires an opportunity to “participate … through
                          submission of written data” (Nova Scotia had such an opportunity”.
       (c)      Policy arguments. The court should defer to the agency on discretionary questions
                – tying the agency‟s hands would undermine the APA, the intent of which was to
                create flexible agencies with some legislative characteristics and some judicial
                characteristics.
       (d)      Requiring that the agency‟s “concise general statement” include responses to every
                comment received during the comment period would be endless.
       (e)      Conclusion: The FDA satisfied the minimum requirements of the APA in
                promulgating the TTS rule: Nova Scotia is no longer good law.
5.22   Nova Scotia is still good law:
       (a)      Statutory arguments:
                (i)       The data used here was not governed by the language in the AG‟s
                          Manual (data used by FDA wasn‟t taken from its “file” – the FDA
                          produced the data specifically for the TTS rule).
                (ii)      Under APA §553(c) the agency must give interested persons a
                          meaningful opportunity to participate.
       (b)      Distinguishing Greenwich Colleries:
                (i)       Greenwich was about the burden of proof in an adjudicatory setting; this
                          is about informal rulemaking. Rulemaking has changed a lot since 1946.
                          It doesn‟t make sense to freeze the structure of rulemaking in the 1946
                          position.
                (ii)      In Greenwich, the Court was dealing with particular phrases (“burden of
                          proof”) rather than with the general intent of the APA. Even if we want
                          to confine phrases to their original meaning, we don‟t want to confine the
                          statute as a whole to its 1946 meaning.
       (c)      The intent of the APA was to protect regulated industries and to guarantee
                informed rulemaking. To advance these purposes, you have to allow industries to
                comment on the agency‟s science.




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6.    THE CHOICE OF PROCEDURE: INFORMAL RULEMAKING OR FORMAL
      ADJUDICATION?
6.1   Securities & Exchange Commission v Chenery Corp (332 US 194 (1947), Murphy J.
      Public Utilities Holding Company Act 1935 aimed to dismantle highly leveraged pyramid
      structures, common in the public utilities industry. Statute provide that SEC was to
      determine, after hearing, whether a reorganization plan was “necessary to effectuate the
      provisions of the Act and fair and equitable to the persons affected by the plan.” Chenerys
      had attempted voluntary reorganization under a plan in which they‟d retain substantial
      control; SEC refused to approve reorganization. Formal adjudication.
      (a)      Chenery I: Court held SEC‟s order could not be sustained on the grounds upon
               which the agency acted; remanded to the SEC for further proceedings. Court set
               out the following rule: “A reviewing court, in dealing with a determination or
               judgment which an administrative agency alone is authorized to make, must judge
               the propriety of such action solely by the grounds invoked by the agency. If those
               grounds are inadequate or improper, the court is powerless to affirm the
               administrative action by substituting what it considers to be a more adequate or
               proper basis. To do so would propel the court into the domain which Congress has
               set aside exclusively for the administrative agency.”
               It follows from this that the basis of the agency‟s decision must be set forth with
               such clarity as to be understandable. “If the administrative action is to be tested by
               the basis upon which it purports to rest, that basis must be set forth with such
               clarity as to be understandable.”
               In Chenery I the SEC had relied solely on what it regarded as judicial precedent
               (relating to fiduciary standards etc) for its position. Review conducted on this
               basis and decision reversed. Sent back to agency. When challenging agency
               action, think about what will happen if you win and the matter is simply sent back
               to the agency for reconsideration. If agency‟s decision doesn‟t hang together,
               remand.
      (b)      Chenery II: The SEC drew “heavily upon its accumulated experience in dealing
               with utility reorganizations. And it has expressed its reasons with a clarity and
               thoroughness that admit of no doubt as to the underlying basis of its order.” Using
               this experience, the SEC concluded that management should not deal in the
               company‟s stock during reorganization.

               “It is true that our prior decision explicitly recognized the possibility that the
               Commission might have promulgated a general rule dealing with this problem
               under its statutory rule-making powers, in which case the issue for our
               consideration would have been entirely different from that which did confront us.
               … The function of filling in the interstices of the Act should be performed, as
               much as possible, through this quasi-legislative promulgation of rules to be applied
               in the future. But any rigid requirement to that effect would make the
               administrative process inflexible and incapable of dealing with many of the
               specialized problems which arise.”

               Not every problem must be dealt with through rulemaking. In some specialized
               situations “the agency must retain the power to deal with the problems on a case-
               to-case basis in the administrative process is to be effective.” “And the choice
               made between proceeding by general rule or by individual, ad hoc litigation is one
               that lies primarily in the informed discretion of the administrative agency.” In




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               Chenery II the Court held that the SEC has authority to promulgate quasi rules
               through case-by-case adjudication.

      (c)      Dissent by Jackson and Frankfurter. No change in decision between Chenery I and
               Chenery II. All that changed was (a) the SEC‟s rationale and (b) the composition
               of the Supreme Court. Whereas Chenery I had stated the need for some prescribed
               standards of conduct (i.e. ahead of time), Chenery II held that the absence of a
               general rule or regulation was not fatal. The difference between the two cases is
               simply the “difference between holding that administrative orders must have a
               basis in law and a holding that absence of a legal basis is no ground on which
               courts may annul them.” Criticize majority as allowing retroactive law-making.
               The Court has approved SEC‟s right to govern matters without law. Decision calls
               to mind Mr. Justice Cardozo‟s statement that “Law as a guide to conduct is
               reduced to the level of mere futility if it is unknown and unknowable.” “The
               Court‟s reasoning adds up to this: The Commission must be sustained because of
               its accumulated experience in solving a problem with which it had never before
               been confronted!”

               Edley: Jackson‟s dissent is one of the great dissents. Why defer to an agency‟s
               choice between rulemaking and adjudication? When moving into a new area,
               choose between BiMetallic (where agency acts like Congress) and Londoner
               (where agency acts like common-law court). Choice between adjudication and
               rulemaking raises the following questions: How urgent is the need to formulate a
               policy? How generalizable are the policy principles? Is it safe to make policy
               without being informed in detail as to the nuances of the dispute? Who needs to
               be involved (access to expertise, interested parties)?


6.2   Note: Jackson and Frankfurter were pro-New Dealers; they were not coming from an anti-
      agency perspective. Note the general shift in the 1970s and 1980s towards rulemaking (as
      opposed to case-by-case decision making). Agencies do sometimes allow amici in the rule-
      making context.
6.3   Of course case by case rule-making happens all the time in the judicial context.
6.4   Tension. What are the utilities of the respective procedures? Jurisprudential question: some
      forms seem to us to be “law like”, and some don‟t. We feel that Congress intended the SEC
      to act in a “law like” manner. The “original sin” of administrative law: desire for
      management versus desire for the rule of law. That is what drives Jackson wild: the feeling
      that the balance was incorrectly struck by the majority.
6.5   Bell Aerospace Co v National Labor Relations Board (2nd Cir 1973, Friendly CJ)
      (overruled by the Supreme Court). Status of a certain class of managerial employees
      (“buyers”) relating to issue of whether they were entitled to unionize. NLRB reversed
      previous position. On first issue (holding that only managerial personnel with a conflict of
      interest were prohibited from unionizing) the Court said that, in light of congressional
      understanding of longstanding agency practice, the NLRB could not reverse its position.
      The Board was not, however, prevented from redefining buyers as not being managerial
      employees. But the Court did object to the Board‟s process. Cited Chenery:
               The function of filling in the interstices of the Act should be performed, as much as
               possible, through this quasi-legislative promulgation of rules to be applied in the future.
               The argument for rule-making is especially strong when the Board is proposing to
               reverse a long-standing and oft-repeated policy on which industry and labor have relied.




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6.6    In Wyman-Gordon a plurality of the Justices had criticized the use of adjudication to avoid
       rule-making procedures. When the Board is proposing a new policy “to fit all cases at all
       times” (Douglas‟ words in Wyman-Gordon) the rule-making procedure should be used.
       Avoid policy making through adjudication.
6.7    Bell Aerospace (US, 1974) On appeal to the Supreme Court – Powell J.
       (a)      “Chenery II and Wyman-Gordon make plain that the Board is not precluded from
                announcing new principles in an adjudicative proceeding and that the choice
                between rulemaking and adjudication lies in the first instance with the Board‟s
                discretion.”
       (b)      Here the Board had reason to proceed with caution, developing its standards on a
                case-by-case basis. There might, however, be circumstances in which the choice
                to rely on adjudication “would amount to an abuse of discretion or a violation of
                the Act.” For example if the Board sought to impose new liability on individuals
                for past actions taken in good faith reliance on Board pronouncements; if fines or
                damages were involved; or if adjudication provided insufficient opportunity for
                those affected by new policy to present their views.
6.8    Bowen v Georgetown University Hospital (US, 1988) Secretary of Health‟s new cost
       schedule invalidated on grounds the agency should have used notice-and-comment
       rulemaking. Rather than appealing, the agency (HHS) paid hospitals on old schedule and
       began notice-and-comment rule-making procedures that would have retroactive effect in
       order to reissue the new cost schedule and to use that schedule to make “retroactive
       corrective adjustments” for the two interim years.
       (a)      No ability to impose retroactive rules. Leaves open the possibility that in some
                circumstances, where a court has invalidated a rule on procedural grounds, the
                agency could promulgate new retroactive rules. The 1984 reinstatement of the
                1981 cost-limit rule is invalid.
       (b)      Scalia J concurring: Refers to APA‟s definition of rule, which refers to future
                effect (s551(4)). Bases his decision on the clear dichotomy in the APA between
                rule-making and adjudication (“Adjudication – the process for formulating orders
                – has future as well as past legal consequences, since the principles announced in
                an adjudication cannot be departed from in future adjudications without reason. A
                rule is a statement that has legal consequences on for the future.”)
       (c)      “A statutory grant of legislative rulemaking authority will not, as a general matter,
                be understood to encompass the power to promulgate retroactive rules unless that
                power is conveyed by Congress in express terms.”
6.9    Landgraf v USI Film Products (114 S.Ct. 1483 (1994). Justice Stevens for the Court wrote
       that prosepectivity is the default position for rule-making, unless Congress has expressed a
       clear intend favoring retroactivity.
6.10   Upshot: The agency has discretion to choose between announcing policy through
       rulemaking or during formal adjudication; courts will only rarely find that the agency
       abused its discretion.
6.11   Clark-Cowlitz Joint Operating Agency v. Federal Energy Regulatory Commission (DC
       Cir., 1987): CC applied for a renewal of its license and relied on “municipal preference”
       (gives preference to municipalities) set out in Federal Power Act. Adjudicatory proceeding
       over whether municipal preference applied to both applications and renewal applications, or
       just applications. FERC decided that it applied to both, upheld by the Eleventh Circuit.
       However, it then concluded that that interpretation was contrary to Congressional intent, and
       that preference applied only to new license applications, set out in its brief to SC following
       11th Circuit‟s decision. In CC‟s application proceeding, FERC expressly overruled other




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       case and awarded the license to CC‟s competitor. Congress then amended the Act to
       eliminate municipal preference in all licensings except CC‟s proceeding.

       Court: FERC‟s change in position was consistent with principles of retroactivity. “The
       general principle is that when as an incident of its adjudicatory function an agency interprets
       a statute, it may apply that new interpretation in the proceeding before it. … Nevertheless, a
       retrospective application can properly be withheld when to apply the new rule to past
       conduct or prior events would work a manifest unjust.”

       Set out five factor approach from RWDSU (DC Cir., 1972): (1) whether the particular case is
       one of first impression; (2) whether the new rule represents an abrupt departure from well
       established practice or merely attempts to fill a void in an unsettled area of law; (3) the
       extent to which a party against whom the new rule is applied relied on the former rule; (4)
       the degree of the burden which a retroactive order imposes on a party; and (5) the statutory
       interest in applying a new rule despite the reliance of a party on the old standard.

       Court held that in the case before, the factors militated in favour of the retroactive
       application of the new principle. It also held that the FERC‟s revised interpretation of the
       municipal preference provision was a reasonable interpretation of an ambiguous statute,
       relying on Chevron.

       Mikva, dissent: There is no general principle favouring retroactive application. Courts
       reviewing an agency‟s attempt to retroactively apply a new policy announced in an
       administrative adjudication must make an independent determination whether “the inequity
       of retroactive application is counterbalance by sufficiently significant statutory interests”:
       RWDSU. Whatever the impact of the first four factors, retroactivity is appropriate only if
       the court finds that the first four factors are counterbalanced by the fifth factor – the
       statutory interest in applying a new rule.

6.12   Note: Could agency announced the new standard in the case but apply the standard
       retrospectively?

6.13   What if the statute provides regulated entities or beneficiaries with the right to an
       individualized hearing? Can the agency nevertheless use rulemaking to settle issues
       generically, thereby obviating or curtailing case-by-case decision-making?

6.14   Heckler v. Campbell (US, 1983): Secretary of Health and Human Services promulgated
       medical-vocational guidelines to determine whether an individual would be able to seek
       alternate employment and thus not be “disabled” within the meaning of the Social Security
       Act. At her hearing before an ALJ, the ALJ used the guidelines to find that Campbell was
       not disabled because there were a number of jobs that existed that she could perform.

       Justice Powell: Although the statutory scheme contemplates that disability hearing will be
       individualized determinations based on evidence adduced at each hearing, the Secretary can
       rely on rulemaking to resolve certain classes of issues that do not require case-by-case
       consideration: Texaco. At the first inquiry, the claimant had adequate opportunity to present
       evidence relating to her own abilities and to offer evidence that the guidelines did not apply
       to her.

       “The use of published guidelines brings with it a uniformity that previously had been
       perceived as lacking. To require the Secretary to relitigate the existence of jobs in the
       national economy at each hearing would hinder needlessly an already overburdened
       agency.” The claimant argued that the regulation and the Due Process clause required the
       Secretary to notify her in advance of the alternative available jobs. The administrative law




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       principle of giving an notice when an agency takes official or administrative notice of facts
       does not apply when the agency has promulgated valid regulations. When the accuracy of
       the facts has already been tested through rulemaking, the rulemaking proceeding itself
       provides sufficient procedural protection.

6.15   Must rules that generically resolve issues provide the opportunity for avoiding the rule in
       specific cases by proof of exceptional circumstances (i.e., “safety valves”)? See pages 462-
       464. SC has noted with favour that rules provided safety valves in Heckler and Texaco.
       However, in FCC v. WNCN Listeners Guild, majority appeared unconcerned with safety
       valve issue. The Supreme Court has not held that an agency may never adopt a rule which
       lacks a safety valve.




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7.    RULEMAKING V. ADJUDICATION: HYBRID PROCEDURES?

      Judicial imposition of additional procedures


7.1   US v Florida East Coast Railway Co (US, 1973): Rule-making proceeding by the Interstate
      Commerce Commission to establish per diem rates for freight (compensation to be paid by
      railroad A to railroad B for use of the latter‟s freight cars). ICC promulgated a proposed
      rule, asked for written statements from railroads, and stated that “any party requesting oral
      hearing shall set forth with specificity the need therefore and the evidence to be adduced.”
      No hearings granted and supplemental report delivered. Did this violate s556(d) of the
      APA?
      (a)      Use of the words “after hearing” in s1(14)(a) of the Interstate Commerce Act not
               enough to trigger the provision of section 553, which triggers ss556 and 557 (i.e.
               formal rule-making) only “when rules are required by statute to be made on the
               record after opportunity for an agency hearing”. Cf Court‟s earlier decision in US
               v Allegheny-Ludlum Steel Corp.
      (b)      Although not required to obey ss556 and 557, ICC still obviously obliged to grant
               whatever “hearing” was required by the ICA.
      (c)      (ICC actually thought that it fell into s556, but that it was entitled to invoke the
               “no prejudice” exception in s556(d), which provides for evidence to be given in
               written form.)
      (d)      Whereas the District Court analyzed the matter in terms of s556 and rejected the
               no prejudice argument, the Supreme Court held that s556 was not even triggered.
      (e)      It isn‟t that you must use exactly the words “on the record after opportunity for an
               agency hearing”. Interpret other act by referring to meaning of “hearing” in the
               APA. Convinced that the term “hearing” in the statute “does not necessarily
               embrace either the right to present evidence orally and to cross-examine opposing
               witnesses, or the right to present oral argument to the agency‟s decisionmaker.
      (f)      Rehnquist considers that s.553 requires 2 things to trigger sections 556 and 557:
               (i)       Hearing; and
               (ii)      Concept of on the record.
      (g)      “It is a legitimate inference that with respect to rulemaking the present dual
               requirement, i.e., „after opportunity for an agency hearing‟ and „on the record‟,
               was intended to avoid the application of formal procedural requirements in cases
               where the Congress intended only to provide an opportunity for the expression of
               views.”
7.2   Rakoff – idea that a hearing would be satisfied by a notice and comment procedure came as
      a surprise. Consequence is that a lot of cases of rule-making are moved into the informal
      rule-making box. Unless Congress is very clear, the Court will put things in the informal
      rule-making box.
7.3   What next? Congress creates hybrids between formal and informal rule-making. Congress
      recognizes the need for more extensive procedures than informal rule-making; add to 553
      but without triggering ss556 and 557.




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7.4   Court reactions to this extension of informal rule-making: DC Circuit in Vermont Yankee
      adding to procedures of 553 with cross-examination; and Nova Scotia requiring release of
      information.
7.5   Historical flow: Florida East Coast – Hybrid statutes – Nova Scotia – DC Circuit in
      Vermont Yankee – Supreme Court winds back again in Vermont Yankee.
7.6   Harry and Bryant Co v FTC (4th Circuit, 1984). Re hybrid procedures in Federal Trade
      Commission Act, which go beyond requirements in section 553, but state that sections 556
      and 557 are not triggered. FTC proposed rule for funeral services. Hearings scheduled and
      held. Conclusions published. 90 days for comment. Complaints:
      (a)       Not every party was entitled to give oral testimony. Court: s18 of the FTC Act
                does not so require. Held that the Presiding Officer was within his rights to limit
                oral testimony.
      (b)       No ability to cross-examine consumers who gave evidence. Court: no such right.
      (c)       No chance to cross-examine FTC on rebuttal material placed in the record after the
                close of the post-hearing rebuttal period. Okay.
      (d)       Presiding Officer cross-examined certain parties himself (using written questions
                submitted by other parties). Okay.

      The Court affirms the rule in its entirety.

7.7   Corrosion Proof Fittings v. EPA (5th Cir., 1991): Toxic Substances Control Act provided
      for hybrid rulemaking procedures, stating that a rule was unlawful where EPA restrictions
      on cross-examination “precluded disclosure of disputed material facts which were necessary
      to a fair determination by the Administrator.” In asbestos rule-making proceeding, EPA
      allowed cross-examination of most, but not all, of its witnesses. Court holds that,
      considering the importance that TSCA accords to cross-examination, EPA should have
      afforded interested parties full cross-examination on all of its witnesses.




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8.    INFORMAL ADJUDICATION

      Permissibility of less formal adjudicatory procedures


8.1   Informal adjudication is given content by APA §555, the Agency‟s own rules or substantive
      statute, and the Due Process Clause.
8.2   Seacoast Anti-Pollution League v Costle (1st Circuit, 1978). Challenge to EPA. Power
      station sought exemption from EPA standard. Act provided that an exemption could be
      granted if the applicant “after opportunity for public hearing, can demonstrate to the
      satisfaction of the Administrator” that the EPA standards were more stringent than
      necessary. Hearing – permit refused – appeal – review – new info submitted – petitioner‟s
      request for hearing on new info refused.
8.3   Did APA (ss 554, 556 and 557) apply to adjudicatory hearings under the Federal Water
      Pollution Control Act. Section 554 (a) provides “This section applies … in every case of
      adjudication required by statute to be determined on the record after opportunity for an
      agency hearing.” The court found:
      (a)      APA does apply. Rejected proposition that precise words “on the record” must be
               used (same conclusion reached by the 9th Circuit in Marathon Oil Co and by the 7th
               in US Steel Corp v Train). “Though general policy considerations may influence
               the decision, the decision will not make general policy. Only the rights of the
               specific applicant will be affected. … Adversarial hearings will be helpful in
               guaranteeing both reasoned decision-making and meaningful judicial review. This
               is exactly the kind of quasi-judicial proceeding for which the adjudicatory
               procedures of the APA were intended.”
      (b)      Resolution turns on the substantive nature of the hearing Congress intended to
               provide. In this case the intent was for a quasi-judicial hearing to determine
               private rights. Crucial that there was a statutorily imposed hearing. Court will
               presume that, unless a statute otherwise specifies, a required hearing subject to
               judicial review must be on the record. “after hearing” in the adjudicatory context
               is enough to trigger a formal procedure.
      (c)      The Court needed to get around Florida East Coast Railway (made in the s553
               rulemaking context). Why should the words “on the record” not be interpreted in
               the same way? “A hearing serves a very different function in the rule making
               context. Witnesses may bring in new information or different points of view, but
               the agency‟s final decision need not reflect the public input. The witnesses are not
               the only source of the evidence on which the Administrator may base his factual
               findings. For these reasons, we place less importance on the absence of the words
               „on the record‟ in the adjudicatory context.”
      (d)      Is Florida East Coast limited to rulemaking, i.e. more of a policy judgment about
               rulemaking than a definitive interpretation of certain words in the APA? The
               Supreme Court has not yet addressed this issue.
      (e)      Remanded to the administrator to decide whether cross-examination on further
               evidence gathered by the Administrator would be useful. Court would not require
               hearing simply to allow written material to be read into the record.
      (f)      Agency experts can help the administrator sift and interpret the evidence; cannot,
               however, add to the record (s556(e)). Administrator‟s decision here based on
               scientific literature introduced by agency experts, not on the record. Remand the




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               decision to the administrator because he based his decision on material not part of
               the record; option either to try to reach a new decision not dependent on the
               supplementary information added to the record, or holding a hearing at which
               parties can cross examine agency experts.
8.4   Chemical Waste Management Inc v US EPA (DC Circuit, 1989). EPA has put out a set
      of procedural rules about how it will approach different questions relating to hazardous
      waste sites. Underlying procedures say that you don‟t get a full adjudicatory hearing when
      you are told to clean up a hazardous waste site. Challenge to regulations as being
      inconsistent with statute. Statute required “public hearing”. EPA‟s Regulations required
      formal adjudicatory proceedings of APA ss 556 and 557 style, but in certain subparts
      provided for only informal adjudicatory proceedings.
      (a)      The words “public hearing” as used by Congress did not unambiguously require
               formal adjudicatory proceedings.
      (b)      The Court rejects the presumption (in its earlier case of Union of Concerned
               Scientists as well as 1st Circuit‟s decision in Seacoast). These cases predated
               Chevron. Under the Chevron analysis, the Court defers to the agency to choose a
               course in light of an ambiguous statutory language. Application of Chevron
               deference to interpretation of “public hearing”. “[A]n agency that reasonably
               reads a simple requirement that it hold a „hearing‟ to allow for informal hearing
               procedures must proceed under the second set of Chevron.”
      (c)      In other words, post-Chevron the Court found the interpretation of an ambiguous
               statute (in this case the APA itself) to be up to the agency; the agency‟s
               interpretation was reasonable.
8.5   Should Chevron apply to agency interpretations of the APA, which is designed to control
      and define the agency? The Supreme Court said no in Metropolitan Stevedore Co. v Rambo
      (1997): “The APA is not a statute that the Director is charged with administering”.
8.6   What about Greenwich Colleries case where the Court took it upon itself to give meaning to
      the ambiguous language regarding burden of proof versus burden of production. Argument
      might be that here we are not talking about the interpretation of the APA, but rather about
      the interpretation of the agency‟s underlying statute.
8.7   Note: whether a party that prevails versus the US gets its fees paid depends on whether the
      victory qualifies as an adversary adjudication, as defined in APA 554.
8.8   § 555 (“Ancilliary matters”). The Supreme Court has said in Pension Benefit Guarantee
      Corporation v. LTV Corp that s555 describes the minimum requirements for informal
      adjudication; the courts cannot impose additional requirements (applying Vermont Yankee).
      Provision that the cases have most emphasized in the requirement at the end of s555(e) party
      is entitled to a brief statement of reasons (“the grounds for denial”).
8.9   Independent US Tanker Owners Committee v Lewis (DC Circuit, 1982): Re Marine
      Administration‟s allowing subsidized international tankers to repay their subsidies and
      engage in domestic trade. MarAd adopted a rule describing the conditions under which it
      would allow repayment, and then applied rule to free up tanker called Bay Ridge. Informal
      adjudication challenged as arbitrary and capricious under section 706(2)(A). No statutory
      provisions regarding procedures in APA (because it‟s informal adjudication) or in the
      statute. “Yet, some minimum procedures are necessary to provide a record adequate for the
      court to perform its review.”
      “The distinct and steady trend of the courts has been to demand in informal adjudications
      procedures similar to those already required in informal rulemaking.” Despite Vermont
      Yankee the Courts are entitled to demand some sort of procedures for notice, comment and




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       reasons, as a necessary means of carrying out the Court‟s responsibility for a thorough and
       searching review.
       MarAd‟s letter falls short of the required explanation for its actions – contains no
       constitutive facts and no analysis of the major issues.
       “An agency is not obliged to publish a tentative opinion for comment. But where an
       agency‟s analytic task begins rather than ends with a set of forecasts, sound practice would
       seem to dictate disclosure of those forecasts so that interest parties can comment upon the
       conclusions properly to be drawn from them.”
8.10   In order to do substantive review adequately, there seems to be some need for procedural
       regularity at the agency level: “some minimum procedures are necessary to provide a record
       adequate for the court to perform its review”.
8.11   Query whether this case is good law in light of Vermont Yankee.
       Exceptions to §553
8.12   As §553 became more demanding, there is more pressure on the exceptions:
       (a)       Internal agency & public property, loans etc.
       (b)      exception for good cause. Eg b/c trivial or the timing is important – this is
                statistically the largest category.
       (c)      Interpretative rules and general statements of policy.
8.13   Note the numerous exceptions in s553(a): matters relating to military or foreign affairs, to
       agency management or personnel, or to public property, loans, grants, benefits, or contracts.
       The exceptions identify matters deemed to be inappropriate for rulemaking.
8.14   Then in s553(b) (A) and (B) further exceptions (good cause, public interest). (B) is
       commonly used. Eg the IRS when it does not want to announce taxation provisions in
       advance.
8.15   Note that even interpretative rules must be published: s552(a)(1).


Very Informal Rulemaking


8.16   “Legal effects” test. Pacific Gas & Electric Co v Federal Power Commission (DC Circuit,
       1974). Federal Power Commission promulgated a policy on schedules for the delivery of
       natural gas without holding a rule-making hearing (so no notice and comment procedure).
       Was it a rule of procedure, an interpretation or a general statement of policy under section
       553(b)(A)? “A critical distinction between a substantive rule and a general statement of
       policy is the different practical effect that these two types of pronouncements have in
       subsequent administrative proceedings.
       (a)      Rule/policy distinction. They have different effect in subsequent administrative
                proceedings. A substantive rule establishes a standard of conduct which has the
                force of law. A statement of policy is not finally determinative of the issues or
                rights to which it is addressed. “A policy statement announces the agency‟s
                tentative intentions for the future. When the agency applies the policy in a
                particular situation, it must be prepared to support the policy just as if the policy
                statement had never been issued. An agency cannot escape its responsibility to
                present evidence and reasoning supporting its substantive rules by announcing
                binding precedent in the form of a general statement of policy.” The Court chose
                the legal effect test, rather than a substantive effect test.




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       (b)      Because a general statement of policy is adopted without public participation, the
                scope of review may be broader than the scope of review for a substantive rule.
                When an agency promulgates a general statement of policy, it does not have the
                benefit of public exploration of the issues. A general statement of policy will
                therefore be entitled to less deference than a decision expressed as a rule or an
                adjudicative order.
       (c)      The Court concluded that the promulgated statement was just a general statement
                of policy and as such did not have to be the subject of rulemaking proceedings.
                The agency was merely advising in advance what it was likely to find to be
                “preferential, discriminatory, unreasonable, or unfair” under s4 of the statute. In
                enforcement actions the agency would necessarily rely on the underlying statute,
                not on its own promulgated interpretation (which has no force of law).
8.17   In Panhandle Producers and Royalty Owners Ass’n v Economic Regulatory Admin (DC
       Circuit, 1987), the Court said that “Presumptions, so long as rebuttable, leave [the requisite
       degree of] freedom”.
8.18   In Lincoln v Vigil (1993) Justice Souter (writing for the Court) referred to general
       statements of policy as “statements issued by an agency to advise the public prospectively of
       the manner in which the agency proposes to exercise a discretionary power”. This case held
       that a decision to reallocate resources from the Indian Children‟s Program in the Southwest
       to a national program was not subject to the notice and comment rulemaking requirements
       imposed by section 553..
8.19   In American Mining Congress v. Mine Safety and Health Administration DC Circ 93, Judge
       Williams held: (1) whether in the absence of the rule there would not be an adequate
       legislative basis for enforcement action or other agency action to confer benefits or ensure
       the performance of duties; (2) whether the agency has published the rule in the Code of
       Federal Regulations; (3) whether the agency has explicitly invoked its general legislative
       authority; (4) whether the rule effectively amends a prior legislative rule. If yes to any, then
       the rule is legislative rather than interpretative.
8.20   CNI v. Young (DC Circ, 1987): Re FDA‟s selection of an “action level” for aflatoxins in
       corn. Action by a public interest group. Was this an interpretive rule? FDA spoke of action
       levels as immediately binding norms and required food producers to apply for exemptions,
       but if agency did bring a suit it would still have to prove that the corn was “adulterated”
       within the meaning of the statute.
       Court held that the agency had sufficiently bound itself for the action level to constitute a
       substantive, legislative rule. A rule which narrowly limits the agency‟s discretion can give
       rise to a need for notice and comment proceedings. Judge Starr dissented, on the ground
       that the court should have applied what he called the Pacific Gas test: whether the agency‟s
       pronouncement has the force of law in subsequent proceedings against the regulated party.
       Edley: How to distinguish this from Pacific Gas? In Pacific Gas, Pacific Gas was
       concerned about the agency‟s curtailment strategy. The court held that the fight over the
       strategy could take place later. Here, not all the questions would be preserved in a
       subsequent proceeding, as the agency had already committed itself to not prosecuting in
       cases where there were less than 20 parts per billion. CNI would never be able to make
       submissions on that issue.
       These cases are about striking a balance between allowing the agency to establish some
       policy guidelines and allowing for transparency, so that we can understand the agency‟s
       enforcement strategy.




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8.21   According to CNI v. Young, a rule limiting an agency‟s own discretion may be subject to
       notice and comment proceedings. This creates an incentive for ad-hoc decisions and
       unchanneled discretion.
8.22   Note that the Freedom of Information Act requires statements of policy and interpretations
       to be published in the Federal Register.
8.23   FDA Good Guidance Practices: way of standardizing informal procedures. Shows the flux
       between formality and informality.
8.24   Hoctor v Department of Agriculture (7th Circuit, 1996, Posner J). The statute required
       “structurally sound” enclosures for animals. This was interpreted by the agency to require
       an 8-foot fence for big cats. Posner found that this was legislative; one could not reason
       one‟s way from “structurally sound” to “8-foot fence”. Because setting such arbitrary
       standards is a legislative function, it requires notice and comment rulemaking. (Rakoff:
       Posner ignores the statutory text which excludes from notice & comment rulemaking not
       just interpretive rules, but also general statements of policy).
8.25   Chief Probation Officers of California v. Shalala: The Dept of Health and Human Services
       ran a program for families with kids, then started funding juvenile justice system, then
       changed its mind because it was not within the purpose of the Emergency Assistance
       Program. The Court found that this was just a new interpretation and, moreover, was a new
       interpretation of a regulation that did not have the force of law.




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9.    THE ROLE OF PRIVATE PARTIES IN SHAPING PROCEEDINGS

      Intervenors

9.1   Office of Communication v. United Church of Christ (DC Cir, 1966): Civil rights groups
      wished to intervene in proceeding granting television station a renewal of its license; FCC
      dismissed petition and granted conditional renewal of the license without a hearing.

      Judge Burger: Since the concept of standing is designed to insure that only those with a
      genuine and legitimate interest can participate in a proceeding, no reason to exclude
      listeners, who have an obvious and acute concern, simply because they lack economic
      interest. Nor is the fact that the FCC itself is charged with protecting the public interest:
      that is no longer a valid assumption. Some “audience participation” must be allowed in
      license renewal proceedings.

      The FCC can avoid “floodgates” by developing appropriate regulations by statutory
      rulemaking. FCC should be accorded broad discretion in establishing and applying rules
      for public participation. Holds that FCC must allow standing to one or more of potential
      intervenors; remanded to Commission.

9.2   Office of Communication is an example of how the presence of intervenors can change the
      character of an agency proceeding. This effect can be even more dramatic in situations
      where there would likely be no formal hearing in the absence of the intervention sought,
      e.g., licensing applications.

9.3   Intervention in a judicial proceeding generally entails full party status; parties‟ rights vary in
      administrative proceedings. Judge Burger proceeded on the assumption that intervention in
      agency proceedings does not necessarily entail a participatory role equivalent to that of the
      original parties. Note that section 555(b) states “So far as the orderly conduct of public
      business permits, an interested person may appear before an agency or its responsible
      employees for the presentation, adjustment, or determination of an issue, request or
      controversy.” This language seems to preclude an agency from adopting an absolute policy
      against intervention.

9.4   Different assumptions about the procedural implications of “intervention” are rooted in
      different understandings of the nature of judicial and administrative process. Paradigm of
      judicial adjudication contains only a limited set of principal roles. Now, in adjudicative
      proceedings, the model has shift to the legislature, or an idealized legislative process in
      which otherwise underrepresented voices would be empowered to participate meaningfully
      in the crafting of public policy.



      Agency Inaction

9.5   Section 551 defines “agency action” as including a “failure to act”. Section 702 provides
      right of judicial review to a “person suffering legal wrong because of agency action, or
      adversely affected or aggrieved by agency action within the meaning of a relevant statute.”
      Section 706(1) states that on judicial review, the reviewing court shall “compel agency
      action unlawfully withheld or unreasonably delayed.”




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9.6    Heckler v Chaney 470 US 821 (1985) (Rehnquist for the Court). Cf s701(a)(2). Judicial
       review of decisions by agencies not to take action. Prisoners sentences to death by lethal
       injection petitioned FDA on the ground that drugs not approved for use in human
       executions, and that given that they would be administered by untrained personnel, likely
       that they would not induce the quick and painless death intended. Statute stated that “the
       Secretary is authorized to conduct examinations and investigations.” FDA refused to take
       requested actions, on the ground that FDA should not exercise jurisdiction to interfered with
       state criminal justice systems and that “generally, enforcement proceedings in this area are
       initiated only when there is a serious danger to the public health or a scheme to defraud.”
       Rehnquist: Rejects argument. Presumption that judicial review is not available in refusal
       to take enforcement, as that is generally committed to an agency‟s absolute discretion.
       Agency‟s decision not to take enforcement action should generally be presumed immune
       from judicial review under section 701(a)(2). Presumption may be rebutted where the statute
       has provided guidelines for the agency to follow in exercising its enforcement powers.
9.7    Three things that Rehnquist relies on:
       (a)      Enforcement discretion. Courts are incompetent at making decisions regarding
                policy, allocation of agency resources, and expertise. If we compel enforcement in
                one pace, resources are taken away from other agency priorities. Courts are not
                competent to decide how many resources should be allocated to enforce which
                policies.
       (b)      When an agency refuses to act it generally does not exercise its coercive power of
                an individual‟s liberty or property rights, and thus does not infringe upon areas that
                the courts often are called upon to protect.
       (c)      Analogy to prosecutorial discretion (more akin to executive act). Separation of
                powers point.
9.8    Note Cass Sunstein‟s criticism of the action/inaction distinction (remember his book Why
       Liberty Depends on Taxes). The majority held that there is a presumption that agency
       inaction is unreviewable. The presumption may be rebutted where the substantive statute
       has provided guidelines for the agency to follow in exercising its enforcement powers.
9.9    Judicial review under the APA applies unless the “statute precludes judicial review”
       [§702(a)(1)] or “agency action is committee to agency discretion by law” [§702(a)(a)]. As
       non-enforcement decisions are committed to agency discretion by law such decisions are
       presumptively unreviewable.
9.10   Criticism:
       (a)      Agencies have been given an affirmative grant of power, which they should
                exercise. When agencies refuse to act, the beneficiaries (consumers, taxpayers,
                welfare recipients, abused children etc) of agency regulation suffer, while the non-
                regulated receive a windfall or subsidy.
       (b)      Leaving the decision entirely to the agency raises the spectre of interest-group
                capture.
       (c)      Marshall‟s concurrence argues that the Court should allow review of agency
                inaction, but defer to such decisions in the absence of a showing of abuse of
                discretion.
       (d)      The analogy to prosecutorial discretion in the criminal context is not transferable
                to agency inaction, because criminal prosecution is a diffuse, intangible, public
                interest, while the right to be free from injuries resulting from misbranded drugs is
                a private, palpable right that applies to particular persons or groups. Also, in
                criminal proceedings, the conduct at issue has already occurred, all that remains is




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                society‟s general interest in ensuring that the guilty are punished; in contrast,
                request for administrative enforcement typically seek to prevent concrete and
                future injuries that Congress has made cognizable or to obtain benefits that
                Congress intended to bestow.
9.11   Cf Dunlop v. Backowski 421 US 560 (1975) where the statutory language supplied
       sufficient standards (Secretary of Labour‟s decision not to investigate and set aside union
       election – the LMRDA provided that Secretary “shall investigate” and must determine
       whether probably cause to believe that violations had occurred – straightforward factual
       determination that can be reviewed), and National Wildlife Federation v EPA (DC Circ,
       1992), where a statute required enforcement by the EPA instead of the States (in this case
       agency regulations purporting to make enforcement discretionary were held to conflict with
       the statute)


       Implied Rights of (Private) Action


9.12   What about implied rights of private action: see Cort v. Ash, 422 U.S. 66 (1975), e.g.,
       prisoners seeking a remedy for alleged violations of FD Act directly against the
       manufacturers.
9.13    Under Cort v. Ash, factors to consider:
       (a)      Is the plaintiff of the class for whose special benefit the statute was enacted? Does
                the statute create a federal right in favour of the plaintiff?
       (b)      Is there explicit or implicit indication of legislative intent to create or deny a right
                of action?
       (c)      Is it consistent with the purposes of the statute to imply a right of action?
       (d)      Is the cause of action one traditionally relegated to state law?
9.14   The Supreme Court has been reluctant to find implied rights of action. Implying a right of
       action encourages Congress to shirk its duties and “leave the [hard questions] to the courts
       to decide”. Cannon v University of Chicago, 441 US 677 (1979) (Powell J, concurring, and
       arguing that entire Cort doctrine was unconstitutional), case where female applicant denied
       admission to medical school sought to sue under Title IX.
9.15   In Touche Ross & Co. v. Reddington (US, 1979), Rehnquist held that ultimate question was
       “one of congressional intent, not one of whether this Court thinks that it can improve upon
       the statutory scheme that Congress enacted into law”, and the first three Cort questions are
       to determine Congressional intent.
9.16   Implying a right of action might undermine policy of agency discretion.
9.17   Consider interaction of these cases with Heckler v Chaney. Does the presumption that non-
       enforcement decisions are unreviewable represent a logical corollary to the restrictive
       approach of implying private causes of action? Or has Chaney created an imperative to
       rethink this approach? What if Congress gives the agency only awkward enforcement
       weapons? What if the agency‟s lack of enforcement activity is attributable not to inadequate
       legal or economic resources, but to the Chief Executive‟s regulatory philosophy?




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       Agency Inaction: Failure to Make a Rule


9.18   Farmworker Justice Fund Inc v Brook (DC Circuit 1987): Again, case about agency
       inaction, but this time failure to make a rule rather than failure to bring a case. Farmworkers
       sought to compel Secretary of Labour under OSHA to issue a field standard sanitation rule
       providing access to drinking water and toilets. Secretary had found, through the rule-
       making process, that there was a need for the rule; however, chose not to promulgate it in
       the hope that the states would enact equivalent protection over the next two years. Court
       orders rule “to end this disgraceful chapter of legal neglect.” Relies on section 706, which
       directs the reviewing court to compel agency action unlawfully withheld or unreasonably
       delayed.
       (a)      The Court seemed slightly more willing to judicially review the decision not to
                make a rule.
       (b)      States that Heckler v. Chaney holds that agency decisions are subject to judicial
                review for “abuse of discretion” and that it in no way precludes judicial review of
                agency decisions that are contrary to law. (cf. section 701(a)(2), which only
                precludes judicial review to the extent that “agency action is committed to agency
                discretion by law.”) “Whatever the extent of a particular agency‟s discretion
                under a particular statute, it does not encompass the authority to contravene
                statutory commands.” The Secretary‟s desire that the states pass similar
                regulations was not a legitimate consideration.
       (c)      Differences? (1) The prosecutorial discretion analogy does not apply. (2) The
                difficulty in reviewing a failure to initiate adjudication is that there is no document
                or record to review. But because there is a specific procedure for requesting rule-
                making, this generates a record for the Court to review. See s553(e) – interested
                persons can petition for a rule; and s555(e) – the agency must give reasons for a
                refusal to make a rule. Judicial review of agency inaction for abuse of
                discretion is allowable where the decision is based on factors that courts are
                competent to evaluate (i.e. there must be a “law to apply”).


9.19   Do the farm workers have an entitlement to a rule (accepting that they are within the scope
       of the statute)? Might the Court order the agency to act, even if the agency had apparently
       genuine reasons (for example lack of resources) for not doing so?
9.20   The farm workers do not have a right to a rule. At most they have a right to ask for a rule
       and to have that request properly considered. The creation of the rule depends on a
       continuing application of political will. It is difficult to police inaction.
9.21   What if the agency determines the need for a rule but decides not to promulgate one.
       Possible explanations:
       (a)      “Our regulatory resources are fully employed, and the rule you want is not a
                priority”. Probably reviewable, but Court likely to show great deference.
       (b)      “The rule you want is outside our regulatory authority”. Most likely reviewable,
                as statutory interpretation is within the Court‟s competence. (Although in Heckler
                the Court did not assess the agency‟s claim of no jurisdiction.)
9.22   Note the distinction drawn between regulated entities and statutory beneficiaries. Regulated
       entities get “rights” (judicial review etc) whereas beneficiaries get “resource allocations”
       (legislative remedies).




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9.23   State of Iowa ex rel. Miller v. Block (8th Cir, 1985) (cert denied). Re Iowa‟s attempt to
       compel the Secretary of Agriculture to implement federal disaster relief programs. The
       Secretary of Agriculture‟s decision not to promulgate general guidelines or regulations for
       implementing the Special Disaster Payments Program was reviewable. Failure to
       “promulgate regulations embodying the intent of Congress” is distinguishable from a
       “decision not to enforce the law in a single instance”.
       “Despite the fact that the statute specifies three criteria for determining the inadequacy of
       federal crop insurance, the Secretary has deliberately taken no steps to implement proper
       procedures to protect applicants from potential abuses of discretion under the statute. …
       [W]hen Congress has created a program which contemplates that such payments will be
       made in appropriate circumstances, it is the clear duty of the Secretary to promulgate
       regulations which carry out the intent of Congress.
9.24   Jean v. Nelson (US, 1985): Haitian immigrants were detained by the US government in
       prisons or camps for months pending the determination of their right to stay in the US. Prior
       to the Haitians‟ arrival, the INS had decided that mass detention was cruel and inhumane,
       closed Ellis Island and announced that detention was to cease except in exceptional cases.
       In 1981, the Reagan Administration announced a crackdown, part of which was detaining
       undocumented aliens.

       The Court found that the particulars of the new policy were never developed fully, that
       immigration inspectors were left to exercise discretion that resulted in the detention of many
       in an arbitrary manner, and that the policy had not been implemented by instituting rule-
       making procedures. The Court held that the INS should have used notice and comment
       rulemaking procedures to adopt a specific policy. “The rulemaking requirements of the
       APA provide a minimum, not a maximum, to administrative procedure; they serve a crucial
       purpose in guiding administrative discretion.” All of the Haitians were released on parole;
       the district court stayed its entry of the order enjoining the future use of the policy so that
       the INS could promulgate the policy in compliance with the APA.

9.25   How to remedy inaction? Affirmative relief raises the following problems: (1) Prudence
       (where there is no record evaluating alternatives, compelling the agency to act may be ill-
       advised); (2) separation of powers problem (but when a court merely orders an agency to
       act, leaving the choice of action to the agency‟s discretion, no problem occurs); (3)
       affirmative relief may seem logically inappropriate in light of the limited scope of judicial
       review applied to inaction. One solution: remand for further explanation, rather than a
       direct order to take action.




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10.    CONSTITUTIONALITY OF DELEGATED LAWMAKING POWER
       Delegation of legislative authority
10.1   Looking at Article 1, Section 1 of the Constitution, one might say that Congress must do all
       legislative work. Congress should itself create all laws with sufficient specificity that they
       are capable of immediate enforcement by the Executive. Such a reading would regard
       Congress as not only authorized to exercise legislative power, but also burdened with
       legislative power.
10.2   Article 1, Section 8: enumerated powers of Congress. See clause 18. This might permit
       Congress to use some institutional flexibility to carry its laws into effect – delegation of
       power should be within Congress‟ discretion.
10.3   There is a continuum between saying that Congress has no power to delegate and saying that
       Congress can delegate all its power.
10.4   Under-enforced constitutional norm and Congress tends to push the boundary up towards
       maximum delegation. Flaws? There is a democratic deficit: the decisions being made by
       agencies might not represent the delegated will of the people; agency given unconstrained
       authority (i.e. beyond constraints of democratic approval). There is also a legal deficit; a
       lack of law to confine the agency within appropriate bounds. Rakoff calls this the original
       sin of administrative law. Many other areas of administrative law are in part a response to
       the democratic deficit.
10.5   Problems with Congress delegating its legislative power to agencies:

       (a)      Accountability: Congress could duck an ugly political issue to insulate itself from
                political accountability.

       (b)      The absence of the deliberative features associated with legislative decision-
                making that promote sound decision-making.

       (c)      The agency may have difficulty doing its job unless Congress sets a concrete
                “intelligible standard”.

       (d)      Determining when an agency‟s action is ultra vires requires an “intelligible
                standard”. If the statute is unclear, then Congress cannot force an agency to obey
                Congress. Congress should not have the option of making the statute so vague that
                the courts cannot supervise the agency. Thus, a standard of intelligibility gives the
                judiciary the ability to do its job in supervising the agency.

       (e)      Text of the Constitution: But Stevens, concurring in Whitman, holds that there is
                nothing in the Constitution that prevents Congress from delegating legislative
                power.


10.6   Mistretta v. United States (US, 1989) Re Sentencing Commission, comprised of judges and
       non-judges, to establish a narrower range of sentencing possibilities. Congress described
       the Sentencing Commission “as an independent commission in the judicial branch” to
       establish the guidelines by rulemaking. Mistretta alleged that the Commission was
       constituted in violation of the established doctrine of separation of powers, and that
       Congress had delegated excessive authority to the Commission to structure the Guidelines.
       Blackmun: Non-delegation doctrine doesn‟t prevent Congress from obtaining the assistance
       of other branches. Delegation is sufficiently specific and detailed to meet constitutional




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       requirements, and Congress prescribed guidelines as a specific tool for the Commission to
       use in regulating sentencing.
       Separation of powers: Commission is not a court and does not exercise judicial power. Act
       does not vest Article III power in nonjudges or require Article III judges to share their power
       with non-judges. President‟s removal power over Commission members does not pose a
       risk to judicial independence, because there is no risk that the removal provision will
       prevent the Judicial Branch from performing its constitutionally assigned function of fairly
       adjudicating cases and controversies.
       Issue: Are you distracting the judiciary by giving it tasks that threaten its ability to perform
       judicial roles?
       Scalia, dissent: Violation of the non-delegation doctrine. No place for an agency created by
       Congress to exercise no governmental power other than the making of laws. The power to
       make law cannot be exercised by anyone other than Congress, except in conjunction with
       the lawful exercise of executive or judicial power. The Commission is not “within the
       Judicial Branch”. Unlike executive power, judicial and legislative powers have never been
       thought delegable. The majority has erred because this case is about the creation of a new
       branch altogether, a “junior-varsity Congress”.


10.7   Industrial Union Department AFL-CIO v American Petroleum Institute (“Benzene
       case”) (US, 1980) Re Regulation of benzene. Section 6(b)(5) states that OSHA “shall set
       the standard which [1] most adequately assures, [2] to the extent feasible, [3] on the basis of
       the best available evidence, [4] that no employee will suffer material impairment of health
       or functional capacity [5] even if such employee has regular exposure … for the period of
       his working life.” Section 3(8) defines “occupational health and safety standard” as “a
       standard which requires conditions … reasonably necessary or appropriate to provide safe or
       healthful employment and places of employment.”
       This case arrived in court by judicial review of a regulation, rather than an appeal of an
       enforcement order.
10.8   What does “to the extent feasible” mean in this context? Technically feasible? Cost/benefit
       analysis (Powell, in the sense of asking the agency to prioritize). What is the majority
       concerned about?
       (a)      Stevens thinks before OSHA can promulgate a standard, it must be “reasonably
                necessary or appropriate to provide safe or healthful employment” in accordance
                with section 3(8). Threshold question never crossed: “Before he can promulgate
                any permanent health or safety Standard, the Secretary is required to make a
                threshold finding that the place of employment is unsafe – in the sense that
                significant risks are present and can be eliminated or lessened by a change in
                practices.”    Rakoff criticizes Stevens‟ opinion. The more specific language
                dealing with toxic substances ought to have prevailed. Stevens is trying to get out
                of the problem, identified by Rehnquist: this is an unlawful order because it
                improperly delegates to the agency decisions that belong in the political realm. Is
                this a proper delegation to experts, or an unlawful delegation of lawmaking
                authority? Did Congress act unconstitutionally by not giving the executive a clear
                enough rule to follow.
       (b)      Rehnquist believes that there is an unconstitutional delegation of Congressional
                authority to the Secretary. It‟s not the rule that is wrong when measured against
                the statute, but the statute that is wrong when measured against the Constitution.
                Congress, not agencies, should strike the balance on v. important matters: “In
                drafting section 6(b)(5), Congress was faced with a clear, if difficult, choice




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                 between balancing statistical lives and industrial resources or authorizing the
                 Secretary to elevate human life above all concerns save massive dislocation in an
                 affected industry. That Congress chose to pass this difficult choice onto the
                 Secretary is evident from the spectral quality of the standard it selected.”
        (c)      Rehnquist holds that non-delegation doctrine serves three important functions: (1)
                 to ensure, to the extent consistent with orderly governmental administration, that
                 important choices of social policy are made by Congress, the branch of
                 government most responsive to the popular will; (2) to provide the agency that
                 receives the delegated authority with an “intelligible principle” to guide the
                 exercise of the delegated discretion; (3) ensures that the reviewing courts will be
                 able to test the exercise of delegated discretion against ascertainable standards.
        (d)      Powell states that the statues also requires the agency to determine that the
                 economic effects of its standard bear a reasonable relationship to the expect
                 benefits: “An occupational health standard is neither “reasonably necessary” nor
                 “feasible”, as required by the statue, if it calls for expenditures wholly
                 disproportionate to the expected health and safety benefits.” E: He makes this up;
                 statute doesn‟t address industry competitiveness.
        (e)      Marshall, dissent: The plurality had mischaracterized the record, substituting its
                 judgment of scientific and technical matters for the Secretary‟s. The court is
                 legislating its own micro-economic preferences when Congress took a non-
                 economic, pro-worker safety view of the issue.
10.9    Although read literally one might say that the Constitution does not allow Congress to
        delegate legislative authority, in practice Congress can delegate a huge amount. But
        Congress must provide some “intelligible principle” on “fundamental policy
        questions” to guide the exercise of that authority. These guidelines also aid the courts in
        reviewing the exercise of discretion.
10.10   Rakoff: Constitutional separation of powers creates branches of government that are
        “omnicompetent” in regard to subject matter, but “unempowered” in regard to their abilities
        (can legislate, execute, or adjudicate). Regulatory agencies, however, are “omnipowered”
        (can legislate, execute and adjudicate), but may do so only within a circumscribed domain.
10.11   Edley: Much of administrative law is implicitly based on the distinctions between (a) law;
        (b) politics (discretion); (c) science (fact). In considering how to challenge a rule such as
        the one promulgated in Benzene, choose between argument that (a) agency got the law
        wrong or (b) the science wrong; or (c) the competing interests were not balanced in the right
        way (a weak argument to make to a judge). Most interesting questions have a combination
        of law, fact and policy.
10.12   There have only been two cases striking a statute for excessive delegation of authority:
        Panama Refining and Poultry Corp. Both cases involved a delegation of power to the
        President (under the National Disaster Recovery Act) to regulate virtually the whole
        economy. Rakoff – Court didn‟t like the fact that too much power given in one act to one
        person. Statutes that give agencies jurisdiction over a defined subject matter have never
        been struck down.
10.13   In Panama Refining Co v. Ryan, 293 U.S. 388 (1935) the Court held that the delegation to
        the President to regulate oil production was too broad. There was “no standard for the
        President to follow in deciding whether or not to close interstate commerce”. Cardozo
        dissenting, saying that the statute‟s limit of the authority to issues of oil production was
        sufficient. One could look at the legislative history and determine constraints on the
        President.




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10.14   In ALA Schechter Poultry Corp v. United States, 295 U.S. 495 (1935) there was too great a
        delegation in the regulation of trade competition. The trade associations could draft a “code
        of fair competition”, and the President would approve them. The Court held that the statute
        was not constitutional. Cardozo concurs, on the basis that this statute goes too far, as it was
        “an attempted delegation not confined to any single act nor to any class or group of acts
        identified or described by reference to a standard.” The plethora of administrative
        impositions is unlimited.
10.15   Fahey v. Mallonee (US, 1947): Home Owners’ Loan Act gave the Board sweeping
        authority, including the power to take over a bank, with rules and regulations, without any
        standards to guide exercise of authority. Court approves it, on the basis that banking is a
        well-regulated industry with its own standards and practices. In Yakus v. United States
        (US, 1944), where the Court sustained the Emergency Price Control Act, which authorized
        the Price Administrator to promulgate regulations fixing prices of commodities which “in
        his judgment will be generally fair and equitable and will effectuate the purposes of the
        Act.” The Act stated the purposes, and the Administrator was to set forth a statement of
        considerations involved in prescribing prices. The Court found that there were standards for
        the guidance of the Administrator‟s action.
10.16   Sidenote: Clinton v. City of New York, (1998), line-item veto case. Majority unhappy at the
        idea that the President could create a different law whose text was not voted on by Congress.
10.17   But in general the courts do not want to interfere with delegation. There is therefore a big
        hole at the beginning of every regulatory agency or process: there is no law to follow.
        Administrative law is about coming up with a procedural process for determining whether
        the agency is carrying out its authority. The question is rarely one of whether the agency is
        within its statutory authority, because the authority delegated is usually extremely broad.
        Nonetheless, delegation doctrine has a shadow effect: government attorney‟s self-police.
        See Touby v U.S., 500 US 160 (1991) – finding that there was no unlawful delegation
        because the government‟s brief conceded that two additional tests were necessary to limit
        the AG‟s power under the Controlled Substance Act of 1970.
10.18   Whitman v. American Trucking Associations (US, 2001): Re EPA‟s authority under the
        Clean Air Act to set national ambient air quality standards “allowing an adequate margin of
        safety that is requisite to protect public health from the adverse effects of the pollutant in
        ambient air”. Is this an improper delegation of legislative power to the EPA?
        Scalia: An agency cannot cure an unlawful delegation of legislative power by adopting a
        limiting construction of the statute. The limits on the EPA‟s authority are similar to the ones
        in the Benzene case. The requirement that the EPA set levels that are “requisite” to protect
        the public health with an adequate margin of safety fits comfortably within the scope of
        discretion permitted by the Court‟s precedent.
        The text of the Act unambiguously bars cost considerations from the national standard-
        setting process.
        Rehnquist joins in upholding this vague delegation notwithstanding that he had serious
        concerns in Benzene.
        Edley: Scalia is saying that delegation doctrine is about making policy decisions and
        making Congress do its job by forcing it to make a decision about an intelligible principle.
        As a result of Whitman, many people argue that non-delegation doctrine is dead.


        Delegation of Judicial Power - by Congress, away from Article III courts.
10.19   Article III, Section 1: “The judicial Power of the United States, shall be vested in one
        supreme Court, and in such inferior Courts as the Congress may from time to time ordain




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        and establish.” (Article III courts). Article I, Section 8(9): “The Congress shall have power
        … to constitute tribunals inferior to the supreme Court.”
10.20   Commodity Futures Trading Commission v Schor 478 US 833 (1986). Brokerage (Conti)
        sues trader (Schor) in Federal District Court for debt. Trader makes a claim against
        brokerage in the CFTC tribunal for violation of the Commodities Exchange Act (CEA).
        Trader also counterclaims against the brokerage in Federal District Court (CEA creates a
        private right of action). Brokerage counterclaims (under state law) against the trader before
        the CFTC. Parties voluntarily dismiss the Federal District Court claim and proceed before
        CFTC. Brokerage wins. Is this an unconstitutional transfer of power out of an Article III
        court? Majority (O‟Connor): No. Factors based approach. Is it constitutional for the CFTC
        to have jurisdiction over Conti‟s common-law counter claim? Yes.
        (a)      “Among the factors upon which we have focused are the extent to which the
                 “essential attributes of judicial power” are reserved to Article III courts, and,
                 conversely, the extent to which the non-Article III forum exercises the range of
                 jurisdiction and powers normally vested only in Article III courts, the origins and
                 importance of the right to be adjudicated, and the concerns that drove Congress to
                 depart of the requirements of Article III.
        (b)      Brennan dissents on the basis that this is a private not a public dispute. See Fallon
                 article for distinction.
        (c)      O‟Connor: The congressional scheme does not impermissibly intrude on the
                 province of the judiciary.
        (d)      “Of course the nature of the claim has significance … it is a “private” right for
                 which state law provides the rule of decision. It is therefore a claim of the kind
                 assumed to be at the “core” of matters normally reserved to Article III courts. Yet
                 … there is no reason inherent in the separation of powers principles to accord the
                 state law character of a claim talismanic power in Article III inquiries.
10.21   Note that constitutional requirements may be satisfied by the availability of judicial review,
        for example, of ALJ decisions.
10.22   Appropriate to be stricter in this area than in delegation of legislative power. Here Congress
        is not simply giving away its own power, but is encroaching on the power of another branch.
        On the other hand the judiciary might quite like to get rid of minor decisions, whilst
        retaining for itself jurisdiction over the big questions on judicial review (Professor Fallon:
        constitutional requirement of judicial review).
10.23   Freytag v Commissioner of Internal Revenue 501 US 868 (1991) Tax court case. Was it a
        “Court of Law”. Majority (Blackmun): Yes. Concurrence (Scalia): Not an Article III Court.
10.24   Northern Pipeline Construction Co. v. Marathon Pipe Line Co. (US, 1982): Re validity of
        the United States Bankruptcy Court. Did the Bankruptcy Act unconstitutionally confer
        Article III judicial power upon bankruptcy judges, who lacked lifetime tenure and salary
        protection but were given substantially all the powers of Article III judges in civil cases?
        Yes, the Act was unconstitutional. Brennan: The Act was unconstitutional because
        bankruptcy proceedings involved private claims. Rehnquist: Marathon was being forced to
        submit to bankruptcy court a claim that it could ordinarily prosecute in state courts. White,
        dissent: In light of the provisions for judicial review and the absence of issues of high
        political interest, the Act‟s provisions do not unacceptably weaken the courts or contribute
        to a dangerous accumulation of power in one of the political branches of government.
10.25   Thomas v. Union Carbide (US, 1985): Re Federal Insecticide, Fungicide and Rodenticide
        Act, which provided the EPA to use one manufacturer‟s research data in considering a
        similar product by another manufacturer, if the second manufacturer agreed to compensate
        the first one and agreed to binding arbitration if they could not agree over the amount. Was




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        the arbitrator an Article III court? No, because the arbitration involved “public rights.” The
        right created by FIFRA was not a purely private right, because it bore many of the
        characteristics of a public right – use of data serves public purpose of safeguarding public
        health. The arbitration scheme incorporates its own system of internal sanctions and relied
        only tangentially on the Judicial Branch for enforcement; also, the parties could bring a
        judicial review application on limited grounds. Note also that the scheme was voluntary.
        This case serves as a precedent for adjudication involving two private parties.


        The lawfulness of reassigned executive authority
10.26   Public Citizen v US Department of Justice 491 US 440 (1989) per Kennedy J:
                  In some of our more recent decisions involving the powers and prerogatives of the
                  President, we have employed something of a balancing approach, asking whether the
                  statute at issue prevents the President „from accomplishing [his] constitutionally
                  assigned functions,‟ Morrison v Olson, 487 US 654 (1988), and whether the extent of
                  the intrusion on the President‟s powers „is justified by an overriding need to promote
                  objectives within the constitutional authority of Congress‟

10.27   In these cases, however, the power was not explicitly assigned by the Constitution.
        “However, where the Constitution by explicit test commits the power at issue to the
        exclusive control of the President, we have refused to tolerate ANY intrusion by the
        Legislative Branch.” Balance is struck by the Constitution itself.
10.28   Myers v US 272 US 52 (1926) Re aggrandizement. Can Congress protect executive officials
        from removal from office without its concurrence? The Court (Taft CJ) held
        unconstitutional a statute requiring the President to get the Senate‟s approval before
        removing an executive officer that he had appointed with its advice and consent.
        Humphrey’s Executor v US, 295 US 602 (1935) Re encroachment (Congress makes
        structural judgments that arguably threaten the President‟s or the Courts‟ constitutionally-
        assigned responsibilities, without misappropriating that authority for itself). The Court held
        that Congress had acted constitutionally in giving Commissioners of the FTC fixed terms of
        office, from which the President could remove them only “for cause”; in this case, Congress
        reserved no role for itself, but somewhat insulated the FTC Commissioners from
        Presidential control.
10.29   “The Executive Power shall be vested in the President of the United States”. Does this
        prohibit fetters on the firing of executive officers? Myers: statute required Congressional
        approval of firing. Case concerned firing a Postmaster. Supreme Court held that such firing
        was within the general executive power. Nine years later: Humphrey’s Executor. FTC
        Commissions to be appointed for a set term and could only be removed for cause. Accepted,
        by bare majority, by the Supreme Court. Because this was an independent agency, the
        restriction did not undercut the executive appointment powers of the President. FTC was
        “an agency of the legislative or judicial department of the government”, exercising in those
        contexts only an “executive function – as distinguished from executive power in the
        constitutional sense.” “Such a body cannot in any proper sense be characterized as an arm
        or eye of the executive … the commission acts in part quasi-legislatively and in part quasi-
        judicially”. Rakoff: double talk. Acceptance by the Supreme Court of institutional
        ingenuity.
10.30   Bowsher v. Synar (US, 1986): Re Congressional self-aggrandizement. Congress passed
        Act that charged Comptroller General with the responsibility of reviewing spending and
        making a report to the President. The Comptroller is appointed by the President with
        senatorial advice and consent. Control over his tenure, however, is exercised by Congress,
        which can remove him for various types of cause, including “inefficiency” or “neglect of
        duty”. If Comptroller was part of the executive, had Congress reserved inappropriate
        participation in his tenure? Article II, Section 4, states that “all civil officers of the United




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        States” can only be removed from Office on Impeachment for treason, bribery and other
        high crimes and misdemeanors.
        Burger, for the Court: The Constitution does not permit this sort of intrusion by Congress.
        The grounds for removal are overly broad, and the Comptroller General‟s functions were
        plainly executive.
        Buckley v. Valeo (US, 1976): Congress amends Federal Election Campaign Act to create an
        8-member Federal Election Commission, comprised of 2 members appointed by President, 2
        by House, 2 by the Senate, and two non-voting members. The 6 voting members required
        confirmation by a majority vote of House and Senate. The FEC had wide-ranging
        investigatory, rulemaking and enforcement powers. Did the FEC‟s duties make members
        “officers of the United States” (Article II, section 2) to be appointed by the President, such
        that their appointment by individuals other than the President was improper?
        Court held that the members of the FEC were officers of the United States required to be
        appointed pursuant to Article II, section 2, and that they had to be appointed by the
        President, with the advice and consent of the Senate. The Buckley Court‟s characterization
        of the FEC‟s functions as “not legislative” was sufficient to remove it from Congress‟
        appointments claim.
        Edley: If the Commission is going to make rules with legal effect, that will be done by
        “officers of the United States”. Congress cannot do this through its appointments clause: if
        Congress wants to make policy, in the form of binding rules, it must pass legislation through
        the House and Senate and give the President the chance to veto it. In Buckley, the FEC
        could not be given the authority to execute the statute so long as its members were appointed
        by Congress.
10.31   Consider the appointments clause Art II, Sec 2, cl 2: “…he [the President] shall nominate,
        and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other
        public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the
        United States, whose Appointments are not herein otherwise provided for, and which shall
        be established by Law: but the Congress may by Law vest the Appointment of such inferior
        Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads
        of Departments”.
10.32   INS v. Chadha (US, 1983): Immigration judge of INS found that alien had established a
        claim to suspension of deportation. Under the Act, the House or the Senate could repudiate
        this finding, and the House did so without printed text, debate or explanation.
        Burger: This statute is unconstitutional. House‟s action was essentially legislative in
        purpose and effect. It altered the legal rights, duties and relations of the AG, Executive
        Branch officials, and Chadha. House veto operated to overrule the AG and mandate
        Chadha‟s deportation. Amendment and repeal of statutes must conform with Article I –
        bicameral passage followed by presentment to the President. Having delegated to the
        Executive Branch the authority to allow deportable aliens to remain in the country, Congress
        must abide by its delegation of authority until the delegation is legislatively altered or
        revoked.
        Concern is that if we permit legislative vetos, this will change the power dynamic by
        shifting power over time from the President to Congress.
        White, dissent: The veto is an ultimate reservation of authority by Congress if it is to fulfill
        its designated role under Article I as the nation‟s lawmaker. The use of a legislative veto is
        not a legislative act. The central concern of Article I is that when a departure from the legal
        status quo is undertaken, it is done with the approval of the President, the House and the
        Senate, and the veto achieves this result because disagreement by any of the three will
        prevent the departure from occurring (functional argument.)




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10.33   Morrison v Olson 487 US 654. Act allowing for appointment of independent counsel
        (enacted in the wake of Watergate). Alexia Morrison was independent counsel appointed to
        investigate actions of Theodore Olson while he was Assistant Attorney General in charge of
        the Justice Department‟s Office of Legal Counsel. Terms of appointment allowed for an
        expansive investigation into violations of federal law.
        Appointment: Attorney General goes before a special panel of the DC Circuit to request
        appointment. Court appoints independent counsel. Can be removed by the Attorney General
        only “for cause”. Independent Counsel has “independent authority” to pursue his/her
        enquiries. Was this an “inferior officer”?
        Divided Court of Appeals had held that provisions of the Act relating to Independent
        Counsel were unconstitutional. Complaint that the power to appoint was placed outside the
        executive branch (AG asks special division of the DC Circuit to appoint). Constitution
        allows Congress to vest the appointment of “inferior officers”. Was Independent counsel
        such an inferior officer? Yes. Because an executive officers can remove a judicially
        appointed officer, is the Act invalid because it violates separation of powers?
        (a)      Limited duties, removable by the AG. Removal powers thus vested in the
                 executive, with no Congressional supervision. Do removal restrictions requiring
                 “good cause” for removal unconstitutionally interfere with the President‟s
                 appointment powers? No, the imposition of a “good cause” (rather than at-will)
                 standard does not unduly trammel executive authority. Held that the Act did not
                 improperly expand that powers of Congress or the judiciary or limit the powers of
                 the Presidency.
        (b)      Scalia dissented: “Congress has effectively compelled a criminal investigation of a
                 high-level appointee of the President in connection with his actions arising out of a
                 bitter power dispute between the President and the Legislative branch”.
                 Constitution requires that all executive power be invested in the President.
                 Expresses concern at independent counsel undermining the Presidency. Not an
                 inferior officer (not subordinate). Whitewater/Monicagate etc seems to bear out
                 Scalia‟s concerns.
10.34   Note: Clinton v. Jones (1997). Unanimous Court determines that a sitting President must
        submit to deposition in civil litigation. The Court says that there is no separation of powers
        problem with requiring the President to participate in litigation, even though the decision
        means that the Court is forcing the President to devote some time and attention to the matter:
        the Court says it is just filling its function of deciding cases and controversies. The Court
        opines that the litigation won‟t be too much of a distraction to the President (oops).




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11.    JUDICIAL REVIEW OF AGENCY FACT DETERMINATIONS
       §706 Scope of Review
11.1   Subsections (A) (“arbitrary, capricious, an abuse of discretion or otherwise not in
       accordance with the law”) , (B) (“contrary to constitutional right, power, privilege or
       immunity”) and (C) (“in excess of statutory jurisdiction, authority, or limitations or short of
       statutory right”) are about the law; (D) (“without observance of procedure required by law”)
       is about procedure; (E) (“unsupported by substantial evidence in a case subject to section
       556 and 557 or otherwise reviewed on the record of an agency hearing provided by statute”)
       and (F) (“unwarranted by the facts to the extent that the facts are subject to trial de novo by
       the reviewing court”) are about the facts. For informal rulemaking, look to (A) (review of
       factual questions) and (C) (the substantial evidence test). Complete standard: “substantial
       evidence” based on the record as a whole.
11.2   What does “substantial evidence” mean? Evidence sufficient for a directed verdict in a
       jury trial. Substantial evidence considering the record as a whole. On the other hand you
       don‟t ask the reviewing Court merely to reweigh the evidence. Is there enough evidence that
       an unprejudiced thinking person could reach the conclusion? “Substantial evidence”
       standard used in judicial review of formal proceedings under sections 556 and 557. This is
       deferential language: “unsupported by substantial evidence”. Note that a substantial
       evidence review case is very hard to make.
11.3   Whereas B,C, and D put the Court directly in the position of deciding the case, E mandates
       deference. But E is limited to formal proceedings; what do we do in informal proceedings
       (and most rulemaking proceedings are now informal)? Two choices: F and A.
11.4   A: “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law”.
       F: “unwarranted by the facts to the extent that the facts are subject to trial de novo by the
       reviewing courts”. F is a real procedural penalty because it requires a new trial. There are
       not many cases under F. Back to A.
11.5   Spectrum based for types of agency action: findings of fact; judgment (application of law to
       facts); discretion (“policy formulation”); conclusions of law. Spectrum of scope of review
       can range from finding administrative action conclusive (“roll over”) to de novo
       determination by reviewing court. These end points aren‟t really review; based on the
       conclusion that the matter is the unique business of the agency (Heckler v. Chaney) or of the
       courts (e.g., constitutional interpretation).
11.6   In between we have standards such as “clearly erroneous”, “substantial evidence on the
       whole record”, “arbitrary and capricious” and “an abuse of discretion”, each of which
       purports to describe a different level of deference.
11.7   Davis‟ simplified principle:

                “Courts usually substitute judgment on the kind of questions of law that are within
                their specialized competence, but on other questions they limit themselves to
                describing reasonableness; they do not clarify the meaning of reasonableness but
                retain full discretion in each case to stretch it in either direction.”


11.8   Consider the following questions:

       (a)      What precisely is the error the complaining party claims the agency committed?

       (b)      Inquiry re “partnership agreement” between the agency and the court: So far as
                the statute indicates, what is the extent of the power delegated to the agency for the




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function under review? How are matters allocated, between agency and court?
Consider the function allocated. Is it adjudicating or rulemaking, on a formal
record or not? If rule-making, was it pursuant to an express grant of power (e.g.,
statute refers to “area of production (as defined by the Administrator”) or was it
pursuant to a general grant of power to “make rules and carry out the purposes of
this Act”? Was the agency finding a fact, making a prediction, exercising
discretion, applying the statute to the situation, construing aspects of the statute
not affected by the particular situation – or deciding its procedure for performing
such functions?




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        Judicial Review of Findings of Fact



11.9    Congress has typically provided in statutes that fact-finding in an on-the-record hearing is
        subject to review on a “supported by substantial evidence” standard. See section 706(b)(E).
        This is a more deferential standard that, e.g., “weight of evidence”, but does not go as far as
        barring judicial review on findings of fact or a standard of “no basis in fact.” Although
        “substantial evidence” standard is understood as “highly deferential”, it has been applied
        with varying degrees of deference in different contexts.
11.10   Universal Camera v. NLRB (US, 1951): Re standard of review for NLRB findings of fact.
        The trial examiner had found that employer did not discharge employee for anti-union
        animus; the Board reached the opposite conclusion and held that the discharge was an unfair
        labour practice.
        How does the APA influence the Courts of Appeals in their review of orders of the NLRB?
        The Court held that the proper standard of review of Board orders is to review the “whole
        record” looking at the “substantiality of evidence”. The substantial evidence test is not a
        formula to be applied by rote; rather it requires looking at the whole record and exercising
        judgment, while keeping in mind that agencies have special expertise and should be
        accorded deference in their findings of fact, much as would be accorded a trial court.
                 “The Board‟s findings are entitled to respect; but they must nonetheless be set
                 aside when the record before a Court of Appeals clearly precludes the Board‟s
                 decision from being justified by a fair estimate of the worth of the testimony of
                 witnesses or its informed judgment on matters within its special competence or
                 both …”
        The Supreme Court should only intervene if the Court of Appeal‟s standard “appears to have
        been misapprehended or grossly misapplied”.
        Re Board‟s standard for reviewing trial examiner‟s findings: Similar to that between trial
        court and appellate court: conclusions, interpretations, law and policy should be open to full
        review. However, the agency should be reluctant to disturb findings of fact, because the
        examiner has heard the evidence and seen the witnesses, unless error is clearly shown.
11.11   Consider distinction between deference owed to fact-finders (ALJ), which is based on
        “impartiality” and observation of the witnesses, and owed to the agency (NLRB), which is
        responsible for the implementation of policy in light of its experience and statutory powers.
        Thus, witness credibility evokes the examiners objectivity and presence, while the idea that
        sudden and drastic employment actions are associated with anti-union animus is not based
        only in objective fact (policy-based commitments to the protection of union organizing
        contribute to it) may be grounded in the agency‟s responsibilities.
11.12   Penasquitos Village, Inc. v. NLRB (9th Cir., 1977): Re discharges from employment. ALJ
        found employees testified untruthfully; Board reversed by relying on other circumstances.
        Were the Board‟s derivative inferences, based on general experience and labour policy,
        enough to constitute “substantial evidence” on the record as a whole.
        Court (majority) holds that a reviewing court will review more critically the Board‟s
        findings of fact if they are contrary to the ALJ‟s factual conclusions. However, deference
        will be granted to the Board‟s inferences because of its expertise in drawing inferences from
        the facts of a labour dispute. Court holds that in the present case, credibility played a
        dominant role, and thus set aside the Board‟s decision.




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11.13    Allentown Mack Sales v. NLRB (1998). Court (Scalia) holds that the NLRB must interpret
        legal terms as they are understood by legal standards (“reasonable doubt”, “preponderance
        of the evidence”, etc). Scalia says that by making up its own standards the NLRB has
        overridden its legislative mandate. Breyer dissents. The NLRB should be able to make its
        own interpretations, when reasonable, of its terms. Rakoff: the agency would be on firmer
        ground if its standards come from a rulemaking rather than an adjudication. In this case
        Chenery catches up with the NLRB.
11.14   In Association of Data Processing Service Organizations Inc v Board of Governors of the
        Federal Reserve System (DC Cir, 1984) Re standard of review of fact-finding in a notice
        and comment rulemaking. Statute provided that “the findings of the Board as to the facts, if
        supported by substantial evidence, shall be conclusive.” Citycorp, beneficiary of the
        regulation, argued that standard of review should be “arbitrary or capricious”.

        Scalia: In an informal rulemaking, to which paragraph (E) does not apply, paragraph (A)
        “takes up the slack”, enabling the courts to strike down as arbitrary agency action that is
        devoid of needed factual support.

        Scalia said that the arbitrary/capricious test is basically the same as the substantial evidence
        test. Otherwise a rulemaking, whose factual elements are reviewed under an “arbitrary and
        capricious” standard would be subject to a more rigorous review than an adjudication,
        whose factual determinations are reviewed under the “substantial evidence” test – even
        though they deal with the same subject matter. This is probably the prevailing view
        although there have been lots of varying judicial pronouncements on the subject. Of course
        the record in a closed-evidence informal proceeding looks different to the record in a formal
        proceeding.

11.15   Congress has on a number of occasions seemed to signal to the courts that it wants
        “unsupported by substantial evidence” to mean more intensive review than “arbitrary and
        capricious.” Thus, the spectrum would be “roll over”, “arbitrary and capricious”,
        “unsupported by substantial evidence” (traditionally associated with formal adjudication or
        rulemaking), de novo review.

        “Jurisdictional” or “Constitutional” Facts

11.16   Ng Fung Ho v. White (US, 1922): Persons detained as illegal aliens argued that they were
        U.S. citizens. Justice Brandeis, for the Court, agree that a citizen could not be lawfully
        deported and held that due process required independent judicial determination of what he
        labeled the “essential jurisdictional fact” of citizenship.

11.17   Crowell v. Benson (US, 1932): Re federal workers‟ compensation scheme for maritime
        employees.       Court upheld use of compensation commissioner, thus sanctioning
        administrative adjudication in general, but held that de novo review was required on certain
        issues that might be presented in a claim – “fundamental or „jurisdictional‟ determinations
        of fact in the sense that their existence is a condition precedent to the operation of the
        statutory scheme.” In this case, the “fundamental requirements” were that the injury occur
        upon the navigable waters of the United states and that the relation of master and servant
        exist. Thus, the reviewing court should make this determination upon its own record and the
        facts elicited before it.

11.18   Criticism: If “jurisdictional facts” are triable de novo, what would be the point of having
        an administrative process? How to confine the “jurisdictional fact” to the legislative scheme
        in Crowell? Dickinson: This is based on the assumption that the existence of a fact is
        something absolute and fixed, and capable of being apprehended rightly or wrongly. From




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        this point of view, the reasonableness or lack of reasonableness of the agency‟s conclusion
        makes no difference. Problem is that the agency‟s “finding” is only a conclusion and the
        court‟s “finding” would also be a conclusion, and no more identical with the fact than the
        agency‟s finding. Thus, it should be enough for the reviewing tribunal to rule on whether
        the agency‟s conclusion was reasonable.

11.19   St. Joseph Stock Yards v. U.S. (US, 1936): Signals a retreat from Crowell, although it
        ostensibly reaffirmed it. “As the ultimate determination whether or not rates are
        confiscatory ordinarily rests upon an varied of subordinate or primary findings of facts to
        particular elements, such findings made by an agency after hearing will not be disturbed as
        in particular instances they are plainly shown to be overborne.”

11.20   Crowell was not extended beyond the statute to which it related; however, we can expect
        reviewing courts to be alert to claims that administrative decisions have affected core
        constitutional values. See A Quaker Action Group, where the DC Circuit held “Absent a
        compelling showing that courts cannot evaluate the questions of fact involved in estimating
        the danger to the President (and thus raising balancing test under the First Amendment), the
        final judgment must rest with the courts.”

        Mixed Questions, and Beyond the Facts
11.21   National Labor Relations Board v Hearst Publications Inc 322 US 111 (1944) Re whether
        “newsboys” are employees or independent contractors.
        Definition of employee? First question: does the statute allow differing common law
        definitions state to state? No. National meaning. How to determine? Look at the “history,
        terms and purposes of the legislation”. Term “must be read in the light of the mischief to
        be corrected and the end to be attained”. In light of the purposes of the Act, are newsboys
        employees.
        (a)      “It is not necessary in this case to make a complete definitive limitation around the
                 term “employee”. That task has been assigned primarily to the agency created by
                 Congress to administer the Act.” The Supreme Court finds that the “record
                 sustains the Board‟s findings and there is ample basis in the law for its
                 conclusions”. In other words, the Court defers to the Board‟s determination.
        (b)      Questions of law for the Court; questions of fact for the agency (not total
                 abdication by the Court, but at least deference to the agency‟s decision). “[I]n
                 reviewing the Board‟s ultimate conclusions, it is not the court‟s function to
                 substitute its own inferences of fact for the Board‟s, when the latter have support
                 in the record. Undoubtedly questions of statutory interpretation, especially when
                 arising in the first instance in judicial proceedings, are for the courts to resolve,
                 giving appropriate weight to the judgment of those whose special duty is to
                 administer the questioned statute.”
        (c)      Statutory interpretation and questions of law are within the special expertise of
                 Courts; not so questions of fact. But great difficulty splitting the two into two
                 clear categories.
        (d)      Here the agency was entitled to find that newsboys were employees. “The Board‟s
                 determination that persons are employees under this Act is to be accepted if it has
                 „warrant‟ in the record‟ (substantial evidence) and „a reasonable basis in law‟”.
        (e)      The statute allocates a judicial review power to the Courts. The division of
                 responsibility above recognizes the delegations of power contained in the Statute.
        (f)      Dissent: “The question who is an employee … is a question of the meaning of the
                 Act and, therefore, is a judicial and not an administrative question.”




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11.22   Another explanation: Court takes broad decisions of principle for itself and leaves the day-
        to-day application of principles to the agency. Also, comparative procedural advantages; the
        agency has the advantage with certain factual decisions because it has seen and heard the
        witnesses.
11.23    Finally, the Constitution (or Marbury) allocates to the Court the power to make final
        determination on issues of law.
11.24   Summary. Reasons for division:
        (a)      Comparative expertise: “it is emphatically for the court to say what the law is”.
        (b)      Comparative authority/delegation
        (c)      Comparative size of question
        (d)      Comparative procedural capacities. Court doesn‟t want to do lots of fact-finding.
        (e)      Comparative legitimacy.

11.25   Gray v. Powell (US, 1941): Re standard of review for agency‟s application of a statutory
        term to undisputed facts: Court should affirm the agency‟s decision if it has a rational basis.
        To determine upon which side of the median line the particular instance falls calls for the
        expert, experience judgment of those familiar with the industry.”

11.26   Packard Motor Car Co. v. NLRB (US, 1947): Re what the court called a “naked question
        of law” – whether foremen could organize for collective bargaining under the NLRA.
        NLRB decided that the foremen were “employees”, and that they constituted an appropriate
        bargaining unit.

        The Court affirmed the Board, but none of the Justices deferred to the Board or cited Hearst
        in connection with deference. “Whatever special questions there are in determining the
        appropriate bargaining unit for the foremen, and the history of the issue in the Board shows
        the difficulty of the problem committed to its discretion. We are not at liberty to be
        governed by those policy considerations.”

11.27   How to reconcile this with Hearst? How is this issue a “naked question of law”?

11.28   Skidmore v Swift & Co (US, 1944) Re whether waiting time is working time within the
        meaning of the FLSA. Factors based approach (in vogue in the 1970s). “We consider that
        the rulings, interpretations and opinions of the Administrator under this Act, while not
        controlling upon the courts by reason of their authority, do constitute a body of experience
        and informed judgment to which courts and litigants may properly resort for guidance. The
        weight of [the Administrator‟s] judgment in a particular case will depend upon the
        thoroughness evident in its consideration, the validity of its reasoning, its consistency with
        earlier and later pronouncements and all those factors which give it power to persuade, if
        lacking power to control”.
11.29   Described as standard of “courteous regard”, the standard of review given to an agency that
        has no authority to adjudicate or make rules.
11.30   Rakoff: this case came out the other way because the agency didn‟t have all the factors lined
        up on its side: in Hearst there was a national law requiring national uniformity in its
        application; an administrative agency had been given important policy-shaping
        responsibilities in administering the statute; the question to be decided arose in a proceeding
        in which the participants had substantial procedural rights, and the agency was a party to the
        proceedings. However in Skidmore only the first of these two factors was present: no law




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        assured the employer an opportunity to be heard on the interpretive question presented, and
        the Administrator was not a party to the dispute.
11.31   Addison v. Holly Hill Fruit Products (US, 1944): Re claim by employees for wages under
        FLSA. Statute provided for exception “to any individual employed within the area of
        production (as defined by the Administrator) …” The Administrator defined area of
        production to exclude operations with less than seven employees.
        Frankfurter: The meaning of “area of production” calls for delimitation of territory, but
        Congress didn‟t give the Administrator the authority to discriminate between bigger and
        smaller establishments. “The determination of the extent of authority given to a delegated
        agency by Congress is not left for the decision of him in whom authority is vested.” The
        limitation as to the number of employees was invalid.

11.32   Consider changing the labels “question of fact”, “mixed” and “question of law” with “fact
        finding”, “law applying” and “law declaring”. This shifts from trying to analyze the nature
        of the question being decided to focusing on which body has what responsibility for
        deciding that question.

11.33   In general, law applying in the administrative routine is reviewed like fact finding, while law
        declaring and unusual law applying are reviewed independently.

        The modern cases
11.34   Citizens to Preserve Overton Park Inc v Volpe (US, 1971). (Marshall). Informal
        adjudication. Department of Transportation Act and Federal-Aid Highway Act prohibited
        the Secretary of Transportation from approving any program that required use of publicly-
        owned lands from parks, unless (1) there is no feasible and prudent alternative; (2) the
        program includes all possible planning to limit the impact on the land. Secretary approved
        six-lane highway through public park. The Secretary‟s approval was not accompanied by a
        statement of factual findings. The plaintiffs argued that (1) the Secretary should have made
        formal findings; and (2) the Secretary did not make an independent determination of the
        factors involved.
        (a)      Decision being made is to approach federal funding for a highway: has do we
                 characterize such a decision? Rulemaking or adjudication? Justice Marshall states
                 that it is “clearly not an exercise of a rulemaking function”. Formal or informal?
                 Was a hearing on the record required? The hearing is “nonadjudicatory, quasi-
                 legislative in nature”. It is not designed to produce a record that is to be the basis
                 of agency action – the basic requirement for substantive-evidence review.
                 Therefore we are in the informal adjudication box.
        (b)      Note: whereas reasons are required for informal rulemaking it is not clear (at least
                 on the face of the APA) that they are required for informal adjudication. Court
                 holds that formal findings not required.
        Threshold question: Are petitioners entitled to any judicial review? Yes. APA §701 allows
        judicial review unless there is a statutory prohibition or “agency action is committee to
        agency discretion by law”, which means that there is “no law to apply”. This case not
        within either exception.
        Respondents argued that the requirement that there be no other “prudent” route requires the
        Secretary to engage in a wide-ranging balancing of competing interests.
        Even though no de novo review, and the Secretary‟s approval of the route doesn‟t have to
        meet the “substantial evidence” test, the generally applicable standards of section 706
        (“arbitrary, capricious, abuse of discretion or otherwise not in accordance with law”) require




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        the court to engage in a substantial inquiry. The Secretary‟s decision is entitled to a
        presumption of regularity, but doesn‟t shield his action from a thorough, probing, in-depth
        review.
11.35   Questions:
        (a)      Did the Secretary act with the scope of his authority? Can the Secretary‟s
                 decision reasonably be said to be within the range of choices that Congress
                 specified that the Secretary could make? The Secretary is not entitled to use a
                 wide-ranging cost-benefit analysis, since it is always cheaper to go through the
                 park, and the intent of the statute is to preserve park land. Rather, the Secretary
                 cannot approve unless alternate routes present unique problems. The Court is
                 speaking in its own voice here. It is appropriate for the Court to interpret the
                 statute. “The reviewing court must be able to find that the Secretary could have
                 reasonably believed that in this case there are no feasible alternatives or that
                 alternatives do involve unique problems.” Remember that in Hearst the Court said
                 that it would defer to the agency so long as there was “warrant in the record and a
                 reasonable basis in law”.
        (b)      Was the decision arbitrary or capricious? Scrutiny of the facts does not end,
                 however, with the determination that the Secretary has acted within the scope of
                 his statutory authority. Section 706(2)(A) requires a finding that the actual choice
                 made was not “arbitrary, capricious, an abuse of discretion, or otherwise not in
                 accordance with law. Was the Secretary‟s decision based on a consideration of the
                 relevant factors? Has there been clear error in judgment? “To make this finding
                 the court must consider whether the decision was based on a consideration of the
                 relevant factors and whether there has been a clear error of judgment …”. This is
                 the big leap in this case. Court is going to analyze the reasons (although of
                 course in this case we have no statement of reasons). “Although this inquiry
                 into the facts is to be searching and careful, the ultimate standard of review is a
                 narrow one. The court is not empowered to substitute its judgment for that of the
                 agency.”
        (c)      Did the Secretary follow the necessary procedural requirements?

11.36   Court holds that there is administrative record that could allow the full and prompt review of
        the Secretary‟s action. The lower courts, however, used affidavits that were “post hoc”
        rationalizations. Thus, remanded to the lower court for plenary review of the Secretary‟s
        decision, but since the bare record might not disclose the factors the Secretary considered, it
        may be necessary for the court to require an explanation to determine if the Secretary acted
        within the scope of his authority and if the Secretary‟s action was justifiable under the
        applicable standard.

        In some exceptional circumstances, the court may require the administrative officers who
        participated in the decision to give testimony explaining their actions. “And where there are
        administrative findings that were made at the same time as the decision … there must be a
        strong showing of bad faith or improper behaviour before such inquiry may be made. But
        here there are no such formal findings and it may be that the only way there can be effective
        judicial review is by examining the decisionmakers themselves.”


11.37   Consequence: development in informal proceedings of closer analysis of decisions. Does
        Vermont Yankee wind this back? On the substantive side no (State Farm). Court performs
        “course of reasoning review” rather than just “within scope of authority” review. See also




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        Justice White in State Farm (595 of book); reaffirms course-of-reasoning review – court
        will analyze the agency‟s process of decision-making.
11.38   Impact of Overton Park:

        (a)      Justice Marshall‟s interpretation of section 701 and his “presumption” of judicial
                 review. Took what seemed to be an largely discretionary government decision and
                 subjected it to the rule of law.

        (b)      Justice Marshall‟s interpretation of the last sentence of section 706 (“In making the
                 foregoing determinations, the court shall review the whole record or those parts of
                 it cited by a party …”). Holds that section 706 ordinarily requires the review, even
                 of informal agency action, to focus on the “whole record” before the agency,
                 despite the fact that the action was informal precisely because no statute required
                 the proceeding to be “on the record.” Cases involving regarding informal action
                 have assumed one of the reasons for requiring procedures is to build the “record”
                 needed for judicial review: Nova Scotia.

        (c)      Connection between administrative findings and the investigation of decision-
                 makers‟ mental processes.


11.39   There is a tension between Vermont Yankee’s statement that judges can‟t import procedural
        requirements not contained in the APA and the kind of substantive review allowed in
        Overton Park. What does it mean to constrain the ability to create procedure, while
        allowing detailed review of the decision-making process on review? In the years after
        Overton Park but before Vermont Yankee there was a controversy in the DC Circuit over the
        appropriate role of reviewing courts. See Ethyl Corp v. EPA (1976). Judge Leventhal
        advocated a searching review of the detailed evidence before the agency as a part of judicial
        review. Judge Bazelon thought that courts had little expertise in reviewing technical data,
        and that they should therefore focus on creating appropriate internal procedures to police
        agency decision-making (The opinions reversed in Vermont Yankee were both written by
        Bazelon).


11.40   Peter Strauss (at 583-584) says that the Court in Overton Park neglected the effectiveness of
        political controls. “Inviting judges to interfere with particular outcomes in the absence of
        constitutional or like instructions, simply on the grounds that political processes may have
        been inadequate, is inviting the whirlwind.”
11.41   Camp v. Pitts (US, 1973): Application to organize a new national bank was denied by
        Comptroller of Currency. No hearing or findings, but a brief explanation by record (“we
        were unable to reach a favorable conclusion on the need factor”. Court of Appeals ordered
        de novo trial, requiring evidence of decision-making process and possibly testimony, and the
        district court to make its own findings of fact and conclusions of law to determine whether
        the Comptroller‟s ruling was capricious or an abuse of discretion.
        Supreme Court reverses, holding that Overton Park only authorizes de novo review where
        (a) there are inadequate factfinding procedures in an adjudicatory proceeding or (b) judicial
        proceedings brought to enforce certain administrative actions. In this case, the only
        deficiency suggested was that the Comptroller failed to adequately explain his decision.
        But, according to Overton Park, that deficiency is not a deficiency in fact-finding
        procedures that would warrant a de novo hearing.
        The appropriate standard for review is whether the Comptroller‟s adjudication was arbitrary,
        capricious or an abuse of discretion contrary to section 706(2)(A). In applying that




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        standard, the focal point for judicial review should be the administrative record already in
        existence, not some new record made initially in the reviewing court. If the failure to
        explain the action would frustrate judicial review, the remedy is not a de novo hearing, but
        to obtain through the agency (either by affidavits or testimony) such additional explanation
        of the agency‟s reasons as may prove necessary. Here, there was an explanation, although
        curt: The validity of the Comptroller‟s action must stand or fall on the propriety of the
        finding in the letter. If the finding cannot be sustained on the basis of the administrative
        record, then the decision must be vacated and remanded to the Comptroller for further
        consideration.
11.42   Edley: What happened in Overton Park is very disfavoured. Judicial review is supposed to
        happen based on the tribunal‟s record, not on a record created by the court on remand. This
        decision indicates that an agency can avoid a lengthy trial on remand by making a few
        simple findings at the time of its decision.
11.43   Overton Park suggests that there can be an inquiry into the mental process of the decision-
        maker if there is “a strong showing of had faith or improper behavior.” In San Luis Obisbo
        Mothers for Peace v. NRC (DC Cir, 1995), Judge Bork refused to look at meeting
        transcripts in camera to determine whether there was bad faith, saying that the plaintiffs had
        not alleged anything specific enough to merit review. Over-eagerness by courts to review
        documents in camera and to supplement the administrative record fails to respect the
        autonomy of administrative agencies. It may be difficult for agencies to fully perform their
        functions without the assurance of secrecy.
11.44   PBGC v. LTV Corp. (US, 1990): PBGC is an agency established to insure certain pension
        benefits. Lower court found that PBGC had focused inordinately on ERISA and given too
        little consideration to bankruptcy and labour law. Justice Blackmun held that the lower
        court‟s holding was irreconcilable with the statute‟s “plain language”. Moreover, “if agency
        action may be disturbed whenever a reviewing court is able to point to an arguably relevant
        statutory policy that was not explicitly considered, then a very large number of agency
        decisions might be open to judicial invalidation.” Also, PBCG can claim no expertise in
        labour and bankruptcy areas, it may be ill-equipped to identify and apply the policies and
        goals of those fields.


11.45   Motor Vehicle Manufacturers v. State Farm Insurance (US, 1983) Re Secretary of
        Transportation‟s duty to establish motor vehicle standards, and to determine whether the
        proposed standard is “reasonable, practicable and appropriate” for the particular type of
        motor vehicle. According to statute, informal rulemaking. The Secretary of Transportation
        rescinded a passive restrain standard (airbags or passive belts) because most manufacturers
        had chosen passive belts rather than airbags, and passive belts could be detached. Thus,
        there was no longer a basis for believing that the standard would lead to any increased use of
        restraints, and no longer reasonable or practicable.
11.46   Court held that the decision was arbitrary and capricious because it gave no consideration to
        modifying the standard to require airbags. Not one sentence of its rulemaking standard
        discussed the airbags-only option. Also, although the issue was closer, the agency was too
        quick to dismiss the safety benefits of automatic seatbelts.
11.47   The Court‟s test was as follows:
        (a)      Rescission or modification of an occupant-protection standard is subject to the
                 same test as promulgation of new standards – the “arbitrary and capricious” test
                 under section 706(2)(A). Under section 103 of the NHTSA, judicial review is
                 authorized for all orders „establishing, amending, or revoking a Federal motor
                 vehicle safety standard‟. Revocation is different than failure to act. If Congress
                 established a presumption from which judicial review should start … it is not




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                 against safety regulation, but against changes in current policy that are not justified
                 by the rulemaking record. “An agency changing its course by rescinding a rule is
                 obligated to supply a reasoned analysis for the change beyond that which may be
                 required when an agency does not act in the first instance.”
        (b)      Standard of review for informal rulemaking: The Court says that it will not “set
                 aside an agency rule that is rational, based on consideration of the relevant factors,
                 and within the scope of the authority delegated” to the agency. Normally, an
                 agency‟s rule would be arbitrary and capricious if (a) it had relied on factors upon
                 which Congress did not intend for its to consider, (b) entirely failed to consider an
                 important aspect of the problem, (c) offered an explanation for its decision that
                 runs counter to the evidence before the agency, or is so implausible that it could
                 not be ascribed to a difference in view or the product of agency expertise.
        (c)      It states that the court is not to substitute its judgment for that of the agency.
        (d)      However, the agency must examine the relevant data and articulate a satisfactory
                 explanation for its action, including a „rational connection between the facts found
                 and the choice made‟. Failure to do so can come in the form of failing to consider
                 an important factor, relying on factors Congress did not mean for it to consider etc.
                 You can think of this as “course of reasoning review” (cf Nova Scotia – were the
                 right factors considered?). Agencies do not get the same kind of rational basis
                 deference as Congress in making their decisions – the court will not invent a
                 reasoned basis where the Agency has not given one.
        (e)       “An agency‟s view of what is in the public interest may change, either with or
                 without a change in circumstances. But an agency changing its course must supply
                 a reasoned analysis.” Here, the agency failed to supply a reasoned analysis.
        (f)      The finding that the agency erred in not considering airbags does not violate
                 Vermont Yankee. The court is not requiring a specific procedure for the agency to
                 follow, but rather that given the prior finding by the agency that airbags were a
                 viable alternative, the agency cannot ignore that option.”
        What is/should the role of politics be in agency decision – making? In his dissent,
        Rehnquist states “the agency‟s changed view of the standard seems to be related to the
        election of a new President of a different political party.” He thought that the changing
        political view of an agency was a legitimate reason to alter the agency‟s cost/benefit
        analysis, and therefore concluded that while it was an error to completely ignore airbags as
        an option, it was reasonable to alter the analysis of the automatic seatbelt based on changed
        political circumstances. Rehnquist is saying it would be more persuasive if we said that if
        the agency reveals value choices in express terms, that commands some deference, provided
        their value commitments have something to do with the statute.

        If we design ad law so that judicial review creates incentives for agencies to reveal value
        choices explicitly, that would be a good thing. One incentive – we‟ll be deferential to them.
        Alternative, agency disguises its value choices in a haze of science or legal mumbo-jumbo.
        “No secret politics”.
11.48   Edley: The Court based its decision on the paradigm of expertise applying a fairly rigourous
        “adequate consideration” brand of arbitrary and capricious review.
11.49   There is a tension between the real political goings-on in this case and the majority‟s focus
        on science and expertise. Reagan had spoken out about deregulation generally, and the
        result was pre-ordained by the election result.

                 “The misidentification of the paradigm as science rather than politics gives the
                 Court‟s decision an odd quality. If the strong role I posit for politics was




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                 permissible and indeed cause for deference, as Rehnquist suggested in State Farm,
                 then the failure of the agency and the Court to identify the political element in the
                 agency‟s action may have resulted in too little judicial deference. If instead the
                 strong role of politics was not permissible, then perhaps an even more
                 interventionist posture would have been appropriate, whether through the doctrinal
                 content of the Court‟s reasoning or through the specificity of the remand order.”

11.50   State Farm is an example of “hard look” review of agency rulemaking process. It
        establishes a judicially-enforceable duty to engage in reasoned decision-making. The Court
        uses hard look review to try to impose a structure on the way that policy discretion is
        exercised by the agency. This give courts a tool to understand the nuts and bolts of policy
        choice and sort through whether the agency was doing going policy work. An advocate will
        then be able to take a perceived flaw and characterize it as an error in fact, policy, law.
        “Hard look” gives you a microscope to discern what the agency was doing and why – to try
        to peel the agency‟s decision apart.

11.51   Does “hard look” judicial review lead to ossification of rulemaking?
        (a)      Professor Mashaw – hard look may cause agencies to move from rulemaking to
                 other policy tools, such as recalls. Agencies have a political job without a political
                 mandate – must proceed in accordance with the fiction that regulation is simply the
                 application of law to facts in compliance with statutory instructions.
        (b)      We could free up rulemaking by: (1) Richard Pierce – abandoning hard look (State
                 Farm) and accepting any plausible explanation for agency action (i.e. greater
                 deference). Prof. Verkuil suggests moving the responsibility to Congress to review
                 important proposed regulation on some sort of fast track procedure.
        (c)      Regulatory negotiation is another possibility. Phillip Harter suggests that the
                 courts should here simply ensure that the complaining party had an opportunity to
                 participate. Judge Wald counters that Harter is equating consensus with
                 reasonableness, which (as discussed above) is not altogether accurate. Note that
                 the Negotiated Rulemaking Act gives no greater deference to negotiated rules than
                 any others.
11.52   The test in State Farm is different from part 3 of Hearst. Even within the scope of the
        agency‟s power and expertise, the agency can make a mistake.




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        Modern Era
11.53   In Overton Park the Court moved beyond just asking whether the agency has acted within
        the scope of its authority and asks also whether the agency has made a “clear error” in the
        decision it reached. Then in the State Farm case the Court looked at the agency‟s decision-
        making procedure: “course of reasoning” or “hard look” review. This brings us to Chevron.


11.54   Chevron USA Inc v Natural Resources Defense Council, Inc 467 US 837 (1984). Justice
        Stevens for the Court. Re EPA‟s issuance of clean air permits. EPA promulgated a
        regulation, based on the “bubble” concept, which allowed an existing plant with several
        polluting devices to modify one piece of equipment without meeting the permit conditions is
        the alteration would not increase the total emissions from the plant. Was the EPA‟s decision
        based on a reasonable construction of the term “stationary source” in the statute? Court of
        Appeals set aside the regulation, relying on purpose of the non-attainment program and its
        precedents to state that the bubble concept was inappropriate in programs enacted to
        improve air quality.


        Justice Stevens: The basic legal error of the Court of Appeals was to adopt a static judicial
        definition of the term “stationary source” when it had decided that Congress itself had not
        commanded that definition.
        Famous “two step” approach: “When a court reviews an agency‟s construction of the
        statute which it administers, it is confronted always with two questions. First, always, is the
        question whether Congress has directly spoken to the precise question at issue. If the intent
        of Congress is clear, that is the end of the matter; for the court, as well as the agency, must
        give effect to the unambiguously expressed intent of Congress. If, however, the court
        determines Congress has not directly addressed the precise question at issue, the court does
        not simply impose its own construction on the statute, as would be necessary in the absence
        of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect
        to the specific issue, the question for the court is whether the agency‟s answer is based on a
        permissible construction of the statute…. “a court may not substitute its own construction of
        a statutory provision for a reasonable interpretation made by the administrator of an
        agency.” [Thus, deference to the agency‟s decision if the statute is silent or ambiguous and
        if the agency‟s decision is a reasonable interpretation of the statute.]
        If Congress explicitly left a gap to fill, there is an express delegation of authority to the
        agency to elucidate a specific provision of the statute by regulation.
        Court finds that Congress did not have a specific intention on the applicability of the bubble
        concept, and concluded that the EPA‟s use of that concept was a reasonable policy choice
        for the agency to make.


        (a)      “An initial agency interpretation is not instantly carved in stone. On the contrary,
                 the agency, to engage in informed rulemaking, must consider varying
                 interpretations and the wisdom of its policy on a continuing basis.”
        (b)       “An agency to which Congress has delegated policy-making responsibilities may,
                 within the limits of that delegation, properly rely upon the incumbent
                 administration‟s views of wise policy to inform its judgments. While agencies are
                 not directly accountable to the people, the Chief Executive is, and it is entirely
                 appropriate for this political branch of the Government to make such policy
                 choices.” [Role of politics]




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        (c)      “When a challenge to an agency construction […] really centers on the wisdom of
                 the agency‟s policy, rather than whether it is a reasonable choice within a gap left
                 open by Congress, the challenge must fail. In such a case, federal judges – who
                 have no constituency – have a duty to respect legitimate policy choices made by
                 those who do.” [Separation of powers]


11.55   So, nominally two steps: (1) Did Congress speak clearly to the issue; and (2) If the language
        is ambiguous, is the agency‟s interpretation permissible? Line is really a bit more blurry; for
        example the tools of statutory construction used in the first step will also help in resolving
        the second (Judge Williams in Chapter v Babbit. Major difference is that if at the second
        step there is more than one acceptable interpretation, the Court must defer if the agency has
        chosen any one of them (Judge Silberman). Risk of an on-off switch approach. If at step (1)
        the statute is thought to be clear, then the agency‟s approach is ignored. If, on the other
        hand, the statute is not clear, then there is total deference shown to the agency to pick an
        interpretation.
11.56   Subsequent case of INS v Cardoza-Fonseca (US, 1987) shows the difficulty of deciding
        when the Court should defer on matters of statutory construction. One provision of the
        Immigration Act stated that an alien could remain if could show a “well-founded fear” or
        persecution in home country, the other stated that it “must be more likely than not that the
        alien would be subject to persecution.” The Act‟s administrator construed the two standards
        as identical.
        Stevens, majority: The case presented a “pure” question of statutory construction for the
        courts to decide. Employing “traditional tools of statutory construction”, he held that there
        was obviously some ambiguity in term “well-founded fear” (agency‟s interpretation through
        case-by-case adjudication would draw deference); however, court was merely holding that
        the two standards were not identical.
        Scalia, concur: Agreed that the language was fit for judicial interpretation, but disagreed
        on interpretation of Chevron. Wrong for Stevens to say that courts can substitute their
        interpretation whenever, “using traditional tools of statutory construction”, they can reach a
        conclusion about the proper interpretation of the statute: this would authorize the courts to
        defer only if they would otherwise been unable to construe the statute in question. Also, no
        support for the proposition that courts can substitute their interpretation whenever the face a
        “pure question of statutory interpretation”, rather than a question where the agency is
        require to apply a legal standard to a particular set of facts.

11.57   Herz: We can understand Cardoza as being a situation where Congress provided the
        answer. Distinction between issues of law and policy, which is at the core of Chevron.

11.58   Such deference is shown only to agencies with rulemaking powers (not to agencies with
        only enforcement powers) (Atchison v Pena). Agencies are accorded Chevron deference
        when they interpret their own regulations.
11.59   Chevron: meaning of “stationary source”. What would the Hearst analysis say?
        Appropriate for the Court or the agency to decide? Seems that the Hearst analysis (factors
        based) might allow us to write an opinion either way. What do we look for, per Chevron, to
        determine whether we should defer? : Ambiguity in the statute. This might well come out
        the same way as Hearst but it is a very different approach to the law. The Chevron case
        effectively reads ambiguity and silence as a delegation of discretion to the executive branch.
        Think about the facts of Rust v Sullivan: allows statutes that Congress passes to oscillate in
        tune with changing political climates.
11.60   [How does Chevron fit with §706?]




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11.61   E: Two interpretations of Chevron.

        (a)      Radical interpretation. They„ve thrown out centuries of doctrine that states that
                 it‟s the court‟s responsibility to determine what the law is and replaced it with a
                 doctrine that says sometimes it‟s the court‟s responsibility, sometimes the
                 agency‟s. Step 1 questions of law and Step 2 questions of law.

        (b)      Modest interpretation: Real law questions are Step 1. Step 2 are “bananas” –
                 mixed law and policy questions, policy questions informed by law.
                 “Permissibility”.



11.62   MCI Telecommunications Corp v ATT (US, 1994). Agency supervision of rates –
        originally designed to combat monopoly power. Is FCC‟s decision to make tariff filing
        optional for all non-dominant long distance carriers (everyone except AT&T) a valid
        exercise of its modification authority? What does the phrase “modify any requirement”
        mean? All dictionaries except one supported AT&T position that “modify” meant only to
        make minor changes.
        Scalia, majority: “Modify” means only minor change. Since an agency‟s interpretation of
        a statute is not entitled to deference when it goes beyond the meaning that the statute can
        bear, Commission‟s action can only be justified if it makes a less than radical change in the
        tariff-filing requirement. Elimination of a crucial provision of the statute for 40% of the
        industry is to extensive to be consider a “modification”. [Shows limits of deference]
        Stevens, dissent: The Commission‟s detariffing orders were squarely within the power to
        “modify any requirement.” Dictionaries can be useful in statutory interpretation, but they
        are no substitute for close analysis of what words mean when used a particular statutory
        context. Commission‟s reading cannot be termed unreasonable: It is informed by a practical
        understanding of the role that filed tariffs play in the modern regulatory climate. The
        Commission is entitled to deference because its use of discretion reflects a reasonable
        accommodation of competing interests, the regulatory scheme is technical and complex, the
        agency considered the matter in a detailed and reasoned fashion, and the decision involves
        reconciling conflicting policies.
        (a)      This case does not seem particularly explicable in terms of Chevron. It might be
                 easier to view this as a case more simply about the allocation of power. Congress
                 did not foresee the situation and no matter how good an idea it might be for the
                 FCC to relax the requirements for new carriers, it was not authorized to do so by
                 Congress.
        (b)      Note recent increase in use of dictionaries. Interesting point that the more textual
                 the approach – the more the ready the Court is to find a plain meaning through
                 analyzing the text of the statute – the less likely the Court is to defer as per
                 Chevron.
        Edley: This case illustrates the conceptual flexibility of the step 1 case of whether Congress
        has spoken clearly.


11.63   Nationwide Mutual Inns v Darden 503 US 318 (1992). Where Congress uses, without
        further explanation, a word that has a settled meaning in law (for example at common law),
        the Court will conclude that Congress intended that meaning.




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11.64   But on the other hand the meaning of words can vary according to the needs and purposes of
        a given piece of legislation: see Nationwide of North Carolina v Variable Annuity Life Co
        115 SCt 810 (1995).
11.65   US v Mead 121 SCt 2164 (2000). Whether a tariff classification ruling by the US Customs
        Service was entitled to deference. The court said no, there being no evidence that Congress
        intended the ruling to have force of law, but that the ruling was eligible to claim respect
        according to its persuasiveness: see Skidmore v Swift. Case concerned rulings letters
        provided by Customs in respect of certain goods.
11.66   Day-planners brought within the definition of “diaries … and similar items”.
        (a)      “We hold that administrative implementation of a particular statutory provision
                 qualifies for Chevron deference when it appears that Congress delegated authority
                 to the agency generally to make rules carrying the force of law, and that the agency
                 interpretation claiming deference was promulgated in the exercise of that
                 authority”.
        (b)      Where Congress has explicitly left a gap for the agency to fill, there is such a
                 delegation of authority.
        (c)      Refers back to Justice Jackson in Skidmore: The weight accorded to agency‟s
                 decision will depend upon “the thoroughness evident in its consideration, the
                 validity of its reasoning, its consistency with earlier and later pronouncements, and
                 all those factors which give it power to persuade, if lacking power to control.”
        (d)      Treatment of Chevron. Focuses on statute and Congressional intent, rather than
                 simply concluding from the fact of ambiguity that Congress intended the agency‟s
                 gap-filling to have force of law. Where the agency must follow procedural
                 requirements before gap-filling, this will strengthen argument that Congress
                 wanted courts to defer. Procedural formality is a sign of intent to give substantive
                 deference.
        (e)      Strong dissent by Scalia (although he reaches the same result). Scalia sees this
                 case as recoiling from Chevron as it says that the Court will defer to the agency
                 where the statute indicates that Congress intended such deference. Scalia says that
                 under Chevron the Court was to presume deference wherever Congress has left a
                 statutory gap or ambiguity that might be filled by the agency. Scalia criticizes idea
                 that procedural formality is an indicia of deference.
11.67   Rakoff – we are in a pretty bad situation in light of all these cases. What is the pattern?
        How do the cases knit together? Used to be that the less legal content to an issue, the more
        deference. But now, how to reconcile Overton Park, State Farm, Vermont Yankee,
        Chevron, MCI and Mead. If the question is ambiguous, we suddenly give a great deal of
        deference, but if there is factual element, we are back to State Farm and the Court will
        examine what the agency did, but there if it is sufficiently factual the Court will take its
        hands off again. Need to ask whether it is a Chevron case (scope of statute) or a State Farm
        case (scope of the evidence).
11.68   Six leading cases on JR in last 30 years: Overton Park (1971), Vermont Yankee (1978), State
        Farm (1983), Chevron (1984), MCI (1994), Mead (2001).
11.69   The two key cases are State Farm and Chevron. MCI and Mead are to some extent clean-
        ups of Chevron. State Farm says that we are really going look at the agency‟s reasoning;
        Chevron says that we will defer on permissible constructions of the statute unless Congress
        clearly stated otherwise. Courts like to stick to what they do well: they do think (State
        Farm) that they can analyze the agency‟s course of reasoning; they don‟t think that they can
        construe ambiguous statutes. Big cultural change. Purpose was the central feature of New
        Deal thinking about statutes. New Deal judges had governmental experience: they thought




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        that they knew how to find the statutory purpose and they thought statutes should have a
        purpose. Judges now, however, no longer think that statutes have a purpose that they, the
        Justices, can understand. Unless Congress has clearly spoken to the issue, the Court cannot
        divine the statutory purpose and would prefer to leave it to the agency. Effect of the liberal
        realistic critique. Statutes are about will not purpose. The culture thinks that rationality
        consists of means – ends relationship. Choices about values should be left to those
        empowered to make those choices, because values are so dependent on who is making the
        decision.
11.70   Rakoff – doesn‟t like this. If the Courts start treating the legal regime of the administrative
        state, then we are left with a totally fragmented legal system, with little enclaves of
        specialization, with no-one understanding and supervising the law as a whole. The point of
        judicial review is for the Courts to bring the general purposes of the legal system to bear on
        agency action. Flight from meaning.
11.71   Also odd result that textual ambiguity, which usually expands judicial power, here constricts
        it. More literal approaches, such as the use of dictionaries, are a way of shifting power back
        to the Courts. Moreover, Chevron transforms a judge‟s commitment to the text from a
        means of allocating power between the legislature and the judiciary into a means of
        allocating power between the judiciary and the executive.
11.72   Rust v. Sullivan: The Court does not deny deference simply because the agency‟s
        interpretation differed from an earlier interpretation. Also, if an agency‟s policy
        interpretation gets past the courts, Congress can‟t change it without the Executive‟s
        agreement, unless it can override a Presidential veto. So the agency (executive) can in some
        respects amend the statute.
11.73   Odd incentives. Agencies want to frame the issue as a question of law with ambiguity
        (Chevron). Private parties want with a clear issue of law (Chevron) or a question of fact
        (State Farm).




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12.    COMMON LAW NORMS
       Consistency
12.1   Shaw’s Supermarkets Inc v NLRB (1st Cir, 1989). NLRB reaches a conclusion that is
       inconsistent with its own precedents. An agency can change course so long as it recognizes
       that it is doing so and explains its new position. (also Bush-Quayle 92 Primary Committee v
       FEC). APA says that a decision cannot be arbitrary and capricious, and there is also a deep-
       routed common-law principle of consistency because of reliance interest, equity interest, and
       because it helps promote rationality in decision-making.


       Detrimental reliance
12.2   Office of Personnel Management v. Richmond (US, 1990): No estoppel argument against
       government in matters involving public funds. Policy reasons. INS v. Yang, Irrational
       departure from prior policy may be found “arbitrary, capricious, or an abuse of discretion”.
12.3   US v. Mendoza (US, 1984): : Issue preclusion because already argued issue in another
       circuit. Doctrine of mutual collateral estoppel applies against government, even across
       circuits. Does that mean that government must obey decision of one circuit, across nation?
       No, but it has to obey it with respect to that same party. Government can relitigate against
       another party in another circuit. Doctrine of intercircuit non-acquiescence.

       Can government relitigate against another party in the same circuit. Intracircuit non-
       acquiescence – not if it‟s the circuit court of appeal. If its different district courts, the issue
       is unresolved.




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13.   CONTROLLING DISCRETION IN ENFORCEMENT AND SANCTIONS
      Butz v. Glover (US, 1973): Re Secretary of Agriculture‟s imposition of 20-day suspension
      for short-weighing cattle. Court of Appeals concluded that despite the fact that the
      Secretary was authorized to suspend, and that the procedure had been followed, the
      suspension order was “unconscionable” because there was no “uniformity of sanctions”.

      Brennan: Agency‟s sanctions are subject to judicial review, but not to be overturned unless
      “unwarranted in law or … without justification in fact …”.

      No requirement of “uniformity of sanctions for similar violations”, or confining sanctions to
      “negligent or careless violations”: “The breadth of the grant of authority to impose the
      sanction strongly implies a congressional purpose to permit the Secretary to impose it to
      deter repeated violations of the Act, whether intentional or negligent.” Congress plainly
      intended to give Secretary the discretion to employ the sanction that in his judgment best
      serves to deter violations and achieve the objectives of the statute.

      Didn‟t we solve this in Heckler v. Chaney? This is about appropriateness of level of
      sanction, not decision to pursue enforcement action. Why shouldn‟t this question fall within
      section 701(a)(2) (exception if agency action is committed to agency discretion by law)?
      Court held that prosecutorial discretion not in section 701(a)(2) and beyond the scope of
      review. How is making sanctions different from agency action in Heckler? There is law to
      apply because agency was uneven in sanctions.

      Edley: It seems circular. I don‟t want my government deciding in arbitrary or capricious
      way whether to clean up site A or B. Shouldn‟t these choices be structured in a rational,
      transparent way. Heckler says complain to Congress, not Court. Unless Congress provided
      standards, we‟ll assume that this form of discretion is ok.

      Court makes different choice when comes to enforcement, presumably because of nature of
      considerations differs from considerations that they use in criminal courts. Expect them to
      think about like cases alike.

      This is amenable to judicial review, unlike prosecutorial discretion, where agencies use
      factors beyond court‟s expertise.

      Jacob Siegel Co. (U.S., 1946): Company used name “Alpacuna”, held by FTC to be
      deceptive because many customers would assume that the coats would contain vicuna. Its
      order forbade the use of the name Alpacuna or any other word indicative of “vicuna”.

      Douglas (unanimous): Judicial review limited, but here Commission didn‟t consider other
      options. Remanded it to the commission. “The courts are not ready to pass on the question
      whether the limits of discretion have been exceeded in the choice of the remedy until the
      administrative determination is first made.”

      Why in Butz doesn‟t SC follow Siegel? Can we argue that Siegel is not about fairness?
      Maybe its about the linkage between the offence and the remedy, the remedy isn‟t solving
      the problem.




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Edley: In Butz, Court is saying can‟t figure out whether 20 v. 30 days provides right level of
deterrence. In Siegel, Court saying judges not in business of determining which label will
explain to consumers.

Procedure/substance. In Siegel, Douglas says important interests, but it doesn‟t seem that
the agency considered the property interest and less burdensome alternatives. Remand to
agency to give better explanation. This is like airbags case, kind of like hard look review,
quasi-procedural. Thus, if litigating on behalf of Siegel, try to shift characterization of
wrong to requirement that they explain themselves better, rather than asking the court to rule
that the penalty is too harsh.




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14.    EDLEY’S JUDICIAL REVIEW OVERVIEW

14.1   First problem arises in determining whether the issue is one of fact, law or “banana” (mixed
       fact and law, application of law to facts).

14.2   Next, figure out how the problem relates to spectrum of verbal formulas for judicial review.
       Spectrum of review formulas (from deferential to intrusive): “abuse of discretion” generally
       more deferential than “arbitrary and capricious”, which is more deferential than
       “unsupported by substantial evidence”.

14.3   Next, how do those verbal formulas reflect the actual deference that the court will give to
       the decision? Spectrum of deference from non-reviewable to “hard look”-type review to
       independent review.

14.4   Will court characterize issue more as law (more amenable to Londoner) or policy (more
       amenable to BiMetallic)?

14.5   Institutional role and comparative expertise in trichotomy:

       (a)      If something looks like politics/values, courts more likely to feel that they should
                elevate Congressional authority and show deference to Congress, try to defer to
                political branch.

       (b)      If something looks like “science”, court more likely to defer to administrative
                expertise. But in some situations, e.g., Nova Scotia, the fact that something
                involves science, rather than suggesting deference, becomes an occasion for
                judicial intervention. See also the airbags case, where the court engaged in “hard
                look” review: the fact that a decision does not involve a purely political choice
                means that the court can check that the agency‟s arithmetic was correct, and policy
                analysis was sound. Courts have found that there is a right way and a wrong way
                to arrive a decision, and the wrong way involves omitting analysis of key data and
                alternatives.

       (c)      If it looks like adjudicator fairness (rule of law), courts will not defer, because
                that‟s what they feel they‟re good at.

14.6   Each of the three themes has a “split personality”.

       (a)      Politics: Deference to political choices, but on the other hand, politics can be
                scary because it is the antithesis of reason, dangerous, and there may be a need to
                intervene and control it.

       (b)      Science: Deference to expertise. However, deference to science can be dangerous
                if it involves elites blocking out the public, so the courts need to make sure the
                experts got it right.

       (c)      Adjudicatory fairness: It‟s good, but can be bad if it interferes with agency‟s
                ability to do its job.




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15.    DUE PROCESS
15.1   Section 1 of the 14th Amendment states:

                 … No States shall make or enforce any law which shall abridge the privileges or
                 immunities of citizens of the United States, nor shall any State deprive any person
                 of life, liberty, or property, without due process of law; nor deny to any person
                 within its jurisdiction the equal protection of the laws.


15.2   There are three distinct guarantees in the 14th amendment:
       (a)       It incorporates the specific protections in the Bill of Rights and applies them to the
                 States.
       (b)       It contains a substantive component, which bars certain arbitrary government
                 actions “regardless of the fairness of the procedures used to implement them”.
       (c)       It is a guarantee of fair procedure.
       See Daniels v Williams 474 US 327, 336-337 (Stevens J concurring).
15.3   Remember from Londoner and Bimetalic that only adjudicatory proceedings have to meet
       due process scrutiny; rulemaking proceedings do not.
15.4   Justice Friendly‟s list of elements of a fair hearing, compiled roughly in order of priority:

       (a)       An unbiased tribunal.

       (b)       Notice of the proposed action and the grounds asserted for it.

       (c)       An opportunity to present reasons why the proposed action should not be taken.

       (d)       The right to call witnesses.

       (e)       The right to know the evidence against one.

       (f)       The right to have the decision based only on the evidence presented.

       (g)       Counsel.

       (h)       The making of a record.

       (i)       A statement of reasons.

       (j)       Public attendance.

       (k)       Judicial review.




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15.5    North American Cold Storage Co v Chicago (1908) 211 US 306. (Peckham). Two issues:
        depravation of property is less likely to require a hearing than deprivation of life or liberty,
        because it can be compensated. Also the urgency issue. Municipal ordinance provided for
        destruction of decayed food products without any opportunity for a hearing.
        Unconstitutional?
        (a)      No. Risk to public health etc, need to immediately seize. Fact of seizure does not
                 prevent the owner from later arguing that the food was not rotten and was wrongly
                 destroyed. In other words, the urgency of the occasion justified immediate
                 destruction, but is not conclusive of the rights or wrongs of the matter, which can
                 only be determined after hearing.
15.6    Federal Deposit Insurance Corp v Mallen (1988) Re Federal Deposit Insurance
        Corporation‟s authority to summarily suspended an officer of an insured bank who has been
        indicted for a felony; hearing not necessary until 30 days after. Stevens: “An important
        government interest, accompanied by a substantial assurance that the deprivation is not
        baseless or unwarranted, may in limited cases demanding prompt action justify postponing
        the opportunity to be heard until after the initial deprivation.” Cold Storage principle
        remains important.
15.7    Justice Brandeis for a unanimous court in Phillips v Commissioner (1931): Tax
        Commissioner can collect its tax by summary administrative process followed by
        subsequent judicial determination of legal rights. “Where only property rights are
        involved, mere postponement of the judicial enquiry is not a denial of due process, if the
        opportunity given for the ultimate judicial determination of the liability is adequate. Delay
        in the judicial determination of property rights is not uncommon where it is essential that
        governmental needs be immediately satisfied.”
15.8    McKesson Corp v Division of Alcoholic Beverages and Tobacco (US, 1990) – gov‟t‟s
        interest in secure revenue allows it to collect tax before finally determining liability, but it
        must provide meaningful redress for tax wrongly collected. The Supreme Court overturned
        a lower court order that enjoined agency from future collection of the tax, but did not
        provide taxpayers with any relief for what they had already paid. That would not do.
15.9    Test of exigency is not met for the seizure of real property (i.e., someone‟s house and land)
        in civil forfeiture cases. Need a hearing first. The test of exigency is not met because real
        property cannot leave the jurisdiction, and there are other ways for the government to assert
        its claim short of seizure: US v James Daniel Good Real Property (US, 1993). 5/4
        decision.
15.10   Bailey v Richardson DC Circuit 1950. Hearing by “Loyalty Board” of civil service. Bailey
        answered interrogatory and presented witnesses before the Board and vigorously asserted
        her loyalty. No witnesses against her were presented. Found “disloyal” nevertheless.
        (a)      Court looked at the matter in a cold war context. Individual interest in knowing
                 allegations against her, versus public interest (as perceived by the President).
        (b)      Could be dismissed but not further disciplined (by being barred from civil service)
                 as this would be a “punishment” requiring compliance with the 6th amendment.
        (c)      Said that the due process clause does not apply to the holding of government office
                 (not property). Linked to the employment at will idea. No right to be protected by
                 the 5th amendment.
15.11   Rakoff criticizes: due process clause reduced to asking how “right-like” is the interest.
15.12   Frankfurter‟s famous concurrence in Joint Anti-Fascist Refugee Committee v McGrath 341
        US 123 (1951) refers to due process as “representing a profound attitude of fairness between




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        man and man”. “The validity and moral authority of a conclusion largely depend on the
        mode by which it was reached.” (relevant to our times) “The Attorney General is certainly
        not immune from the historic requirements of fairness merely because he acts, however
        conscientiously, in the name of security.” But does require a balancing test. Considerations
        will include “the precise nature of the interest that has been adversely affected, the manner
        in which this was done, the reasons for doing it, the available alternatives to the procedure
        that was followed, the protection implicit in the office of the functionary whose conduct is
        challenged, the balance of hurt complained of and good accomplished.”
15.13   Frankfurter speaks of “a principle basic to our society” that a person has “a right to hearing
        before suffering a grievous loss of any kind.”
15.14   Jackson‟s concurrence in Anti-Fascists: “The fact that one may not have a legal right to get
        or keep a government job does not mean that he can be adjudged ineligible illegally”.
15.15   Cafeteria & Restaurant Workers Union v McElroy 367 US 886 (1961) Private cafeteria
        employee denied access to the military facility where she worked. No right to due process
        (5-4) and yet the Court did seem to say that she had an interest in her job sufficient to be
        protected in some circumstances (i.e. exclusion could not be arbitrary) but no requirement
        for a hearing if the reason advanced was rational and in accordance with her contract.
        Another cold war era decision. Brennan, the CJ, Black and Douglas dissented.
15.16   Note: In most of these cases we are talking about due process in the context of informal
        adjudication. The APA requirements for formal adjudication satisfy due process.
15.17   Dixon v Alabama State Board of Higher Education explains Cafeteria Workers has having
        involved the balance of a strong governmental interest against a weak private interest.
        Unlike Bailey, Cafeteria Workers did not adopt this narrow approach of looking for a “right-
        like” interest.
15.18   Goldberg v Kelly 397 US 254 (1970). The Agency already provided an informal hearing
        with a case worker and allowed the opportunity to provide written comments before the
        termination of public assistance payments. However, the formal oral hearing was not held
        until after the benefit was terminated. Does the Due Process Clause require that the
        recipient be afforded an evidentiary hearing before the termination of benefits?
        (a)      In his opinion for the Court, Brennan mandates the need for an oral hearing prior
                 to termination of the benefit, because of recipients need for food, clothing, housing
                 and medical care. “The fundamental requisite of due process of law is the
                 opportunity to be heard. The hearing must be at a meaningful time and in a
                 meaningful manner.”
        (b)      The opportunity to be heard must be tailored to the capacities and circumstances of
                 those who are to be heard. Given welfare recipients‟ abilities, they must be able to
                 state their positions orally.
        (c)       The decision-maker can be a welfare officer, although not someone who was
                 directly involved with the earlier decision. Right to counsel (although not to have
                 counsel provided by the State), oral testimony and cross-examination of witnesses
                 relied on by the department. Not a full trial, but still quite an extensive hearing.
        (d)      Right to certain benefits. Brennan applies the Due Process Clause. “The extent to
                 which procedural process must be afforded the recipient is influenced by the extent
                 to which he may be “condemned to suffer grievous loss” (Joint Anti-Fascist
                 Committee).
        (e)      Thus a broad reading of Goldberg has it expanding the understanding of “grievous
                 less”; a narrow reading might say that it recognized the statute as having created a
                 “right” and thus a classic entitlement to due process.




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        (f)       Goldberg makes it clear that the rights-privilege distinction is dead.
15.19   “The fundamental requisite of due process of law is the opportunity to be heard” (Grannis v
        Odean). “The hearing must be “at a meaningful time and in a meaningful manner.”
        (Armstrong v Manzo).
15.20   Due process is required when “good name, reputation, honor or integrity is at stake”:
        Wisconsin v. Constantineau (SCt 1971).
15.21   Balancing of interests: recipient interest is very strong as it is a question of their subsistence.
        If benefit is erroneously cancelled, it might effectively nullify the recipient‟s ability to
        participate in a later hearing. Bifurcates the government‟s interest. Part of the govt‟s
        interest is with the recipient – interest in accuracy.
15.22   Board of Regents of State Colleges v. Roth (US, 1972). University professor informed that
        he would not be rehired for the next academic year. No reason for decision, and no
        opportunity to challenge it at any sort of hearing. Did Roth have a constitutional right to a
        statement of reasons and a hearing on the University‟s decision not to rehire him for another
        year.
         Stewart, for the Court: “The range of interests protected by procedural due process is not
        infinite.” Look at nature of the interest to if it is within the 14th Amendment‟s protection of
        liberty and property. Liberty is defined very broadly, but Roth‟s liberty interests were not
        implicated. The State didn‟t make any charge against him that could seriously damage his
        reputation, impose any stigma or disability on him that affected his freedom to take
        advantage of other employment opportunities. “It stretches the concept too far to suggest
        that a person is deprived of “liberty” when he is simply not rehired in one job but remains as
        free as before to seek another.
        To have a property interest, must have a legitimate claim to a benefit. Property rights are
        create and defined by existing state law – rules or understandings that secure certain
        benefits. The terms of Roth‟s employment secured absolutely no interest in re-employment
        for the next year. Roth did not have a property interest sufficient to require the University to
        give him a hearing when it declined to renew his contract.
15.23   Roth keeps the courts out of the business of deciding what is property; refers out to other
        law.
15.24   Perry v. Sindermann (US, 1972): College professor‟s contract was not renewed; College
        issued a press release complaining that he was insubordinate, but gave him no official
        statement of reasons and held no hearing for him. Does Sindermann‟s lack of contractual or
        tenure right to re-employment defeat his due process claim?
        Stewart: No. Lack of formal entitlement to continued employment is highly relevant, but
        not entirely dispositive. Here, Sindermann alleged that the college had a de facto tenure
        program, which was a “property” interest. Remands to the District Court to allow
        Sindermann the opportunity to prove his property interest in light of “the policies and
        practices of the institution.”
15.25   Critique: These two decisions simply redefine the boundary between rights and privileges,
        rather than renounce the doctrine.
15.26   Meachum v. Fano (US, 1976): Prison case. Given a valid conviction, a prisoner is
        constitutionally deprived of his liberty. The fact that life in one prison is much more
        disagreeable than in another does not in itself signify that a 14th Amendment liberty interest
        is implicated when there is a transfer to a prison with more severe rules.
15.27   If due process does apply, what process must be used? How do we decide? A balancing
        test between the interests of the state and the interests of the individual. Must also consider




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        the adequacy of existing procedures and the possibility of their improvement. Matthews v
        Eldridge.
15.28   Matthews v. Eldridge (US, 1976): Re cash benefits to workers who are completely
        disability under the Social Security Act. Eldridge was awarded benefits, then completed a
        questionnaire, and then received a letter that the agency had made a tentative determination
        that he was no longer disabled. Eldridge submitted a written response, the agency made its
        final determination, terminated his benefits, and advised him of his right to achieve
        reconsideration. Eldridge argued that he had been denied constitutional due process. Courts
        below held that he was entitled to an evidentiary hearing prior to the determination.
        Supreme Court held that evidentiary hearing was not required prior to the termination and
        the present administrative procedures fully comported with due process.
        Powell, for the Court:
        Three factors:
        (a)      the private interest at stake.
        (b)      the Government‟s interest/burden on administration etc .
        (c)      the risk of erroneous deprivation using existing procedures and the value of
                 additional safeguards (change in risk of erroneous deprivation).
        Here, recipient‟s sole interest in pre-determination hearing is in the uninterrupted flow of
        benefits; the information comes from medical reports and the recipient was given the
        opportunity to submit more evidence. Also, the public interest did not favour a pre-
        determination hearing because of the increase in cost from the increased number of hearings
        and the expense of providing benefits to ineligible recipients pending decision; also, weight
        given to the good faith judgments of administrators charged by Congress with the
        administration of social welfare programs.
15.29   Matthews case. Personal interest in hearing versus administrative costs. Remember in
        Goldberg the Court bifurcated the Govt‟s interest. Accuracy issue: linked to interest
        identified at first step. Court marginalizes Goldberg; focus on administrative efficiency.
        The general rule is that there is no need for an evidentiary hearing in this context. In
        Matthews, Powell says that since the payments were not based on need, there will not be
        such immediate hardship caused by their cessation. Brennan in dissent argues that the
        discontinuation of disability benefits is very serious.
        Edley: Matthews test is “kissing cousin” to cost-benefit analysis. The test is mushy, but
        does it bias the results of the analysis. Concern with cost-benefit analysis was that
        systematic skewing of the analysis is possible if you use cost-benefit analysis. By making
        these considerations fuzzy, does Matthews finesse that problem? Obviously difficult if
        court said attach a dollar value to each factor. Is this ok or can we do better?

        In considering individual‟s interest, all individuals arguably possess an interest in being
        heard that doesn‟t vary across cases. Right not to feel powerless when dealing with
        government. Right to be heard that may be at stake. Difference between having right to
        counsel (even if not a right to have counsel provided for you) is independent of question of
        whether individual will be treated fairly.

        However, if right to be heard is about power imbalance, then it‟s not the same in all
        circumstances. It‟s greater in circumstances where more likely be power imbalance, e.g.,
        more concern for disability claims by individuals than for corporation dealing with the SEC.




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15.30   If we are going to say for life/liberty/property that you need a strong claim to even get in the
        door, then shouldn‟t the presumption be in favor of an evidentiary claim once such an
        interest is established?
15.31   Schweiker v. McClure (US, 1982): Private carriers involved in administration of medicare
        claims; final hearing conducted by hearing officers selected and employed by the carriers.
        Court: Congress can do this; claims were paid from the government‟s pocket, not the
        carriers‟, so no financial interest; no evidence carriers‟ adjudicators were incompetent.
        Plaintiffs did not demonstrate that different or additional procedures would reduce the risk
        of erroneous deprivation.
15.32   Gray Panthers v. Schweiker (D.C. Cir., 1983): Re medicare claims for under $100, where
        only a written, internal review was provided. Judge Wald (D.C. Cir.): Constitution
        required an oral hearing: “An oral hearing requirement serves to ensure that decisions
        recognize that their decisions affect the lives of human beings, a fact that is often obscured
        by a jumble or papers and depersonalized identification numbers.” Streamlined, simplified,
        informal oral procedures are available which would be responsive to claimants and
        Congress‟ concerns of efficiency and low cost. After remand with directions to assist the
        court in framing an order that met these criteria, Judge Mikva (D.C. Cir.): Toll-free
        telephone system meets due process, as a face to face meeting is not required in every case,
        and the telephone system will give many claimants a chance to communicate orally with the
        carrier. “However much we might prefer, as a policy matter, to have face-to-face hearings
        mandated for all beneficiaries, we cannot say that the flexible requirements of due process
        are not satisfied by the complete procedural system that soon will be in place – including an
        improved written notice, the toll-free telephone system, and full written review procedures.”
15.33   See case in the Supplement about parking tickets (p 110). Judge Posner. Officer not present
        at hearing over parking tickets. Posner does a cost/benefit analysis. Judge Posner concludes
        that the City‟s policy is fine.
15.34   Ingraham v. Wright (1977) Re caning at school. Court holds that corporal punishment in
        public schools implicates a constitutionally protected liberty interest, but traditional
        common-law remedies are adequate to afford due process. Liberty interest not that great
        because the court regarding caning as a time-honored tradition. Other remedies, such as a
        tort suit if the school goes too far. Government interest in orderly classroom etc. How
        much weight should be given to an after-the-fact remedy such as a tort suit? Here, the
        emphasis of the court is on the accuracy question; makes a challenge to authority seem like a
        negative. But isn‟t a challenge to authority part of the benefit of procedures. Second aspect:
        the existence of a remedy in court for unreasonable punishment means that a hearing is not
        necessary.
15.35   Under the Matthews test it will count against the need for a pre-deprivation hearing, if the
        value of that hearing would be negligible in preventing the particular nature of wrong
        (Zinermon v. Burch (1990)).

15.36   How does tort remedy fit into Matthews test? Possibility of tort suit operates as
        constraint on discretion, deterrent. But tort is based on what teacher reasonably believed.
        Good faith non-excessive paddle that‟s erroneous goes unpunished. Only deterrent against
        bad faith, excessive paddling, not bad faith. Pretty sloppily-tailored deterrent if object of
        part three of Matthews analysis is error (mistake of fact or mistake of proportionality).
15.37   Background tort law defines what private interest is – not being excessively, tortiously
        paddled. Do I have a right not to be paddled erroneously? Doesn‟t seem that way. It seems
        a little bit muddled. Situation in which substance is also being conditioned upon the extent
        to which there‟s remedy available for it. Compare prison cases, where issue of whether
        being transferred from minimum to medium security constitutes deprivation of liberty, or is




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        the state‟s authority to make that transfer implicit in the sentencing at the trial, thereby
        extinguishing gradation in liberty interest? Here, given history of corporal punishment, tort,
        don‟t really have a right not to be erroneously paddled. That‟s what being a kid‟s about –
        just can‟t be tortious. Liberty interest, but modified by common law framework.
15.38   Stevens dissent in this case argues that liberty interests are harder than property interests to
        vindicate ex post (extreme example: a wrongful death suit does not remedy erroneous capital
        punishment).
15.39   Does this mean that the Sinderman case is wrong. Sinderman was entitled to a hearing if he
        had a cause of action under Texas law for violation of contract (custom of tenure etc). The
        test of legitimate claim was whether he could make out some sort of claim. In other words
        the entitlement was a matter of state law, but if the entitlement is there, then due process is
        required. Odd – surely the due process clause is needed most by those with no other
        protection at state law. Why didn‟t the court just say in Ingraham that he had a claim later?
15.40   It is unclear when the availability of a later remedy will be a major factor in the decision.
15.41   Right to a hearing before being suspended: Goss v. Lopez (US, 1975) – recognizes the
        educational and reputational interests at stake. Student entitled to “Goss conversation” –
        “an informal give and take between student and disciplinarian”. The student should be
        given oral or written notice of the charges against him and, if he denies them, an explanation
        of the evidence the authorities have and an opportunity to present his side of the story.”
15.42   Paul v. Davis (US, 1976): Reporter published in police list of “known shoplifters”, hadn‟t
        been convicted. Rehnquist held that reporter‟s interest in reputation was not “liberty” or
        “property”. Also held that claim was simply common law defamation brought in a federal
        court as a constitutional law matter. This case has been sharply criticized.
15.43   Parratt v. Taylor (US, 1981): Inmate‟s mail opened by guard, his hobby materials were
        lost. Although there was deprivation of property, the state provided a tort claims procedure.
        Since the alleged deprivation resulted from the random and unauthorized act of a state
        official, and not from an established procedure, it is difficult to see how a useful pre-
        deprivation hearing could be held.
        Edley: This is about drawing lines between the constitution and tort law. We don‟t want to
        constitutionalize every tort committed by a government official, every contract violation.
        How draw line? Probably not at step 3, but at threshold, where we ask if there‟s an interest
        at stake. Consider discretion and implementation of policy choices.
15.44   Negligent conduct by government officials (laying a pillow on the stairs, losing inmates
        property) does not violate due process: Daniel v. Williams, Davidson v. Cannon (US,
        1986).
        Although the S.Ct has not expressly said so, due process may not be satisfied if the state tort
        regime applies sovereign immunity to shield a defendant in an intentional action case. See
        both Daniel and Davidson (Stevens J, concurring).
15.45   Intentional deprivation of property violates a due process interest, but a post-deprivation
        remedy will be sufficient (Hudson v. Palmer (1984)).
15.46   One has a property interest in a license (Barry v. Barchi; Chernin v Lyng). Property interest
        in control of the body of dead husband (Brotherton v. Cleveland).
15.47   Selections among applicants must be made with “ascertainable standards”: Hornsby v. Allen;
        Holmes v. NYC Housing Authority.
15.48   Edley: Several situations in which an injury can get washed out: (1) the injury doesn‟t
        satisfy the trigger of a protected interest (“life, liberty, or property”); (2) the loss is not
        cognizable as a deprivation; (3) a hearing (or pre-deprivation hearing) won‟t change the risk
        of erroneous deprivation; (4) circumstances in which all the process that is due is the




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        protection afforded to that interest by other areas of the law (e.g., Ingraham¸ where the court
        held that the tort law regime protected the student‟s interests).
15.49   Cleveland Board of Education v Loudermill (US, 1985): What predetermination process
        must be afforded to a public employee who can be dismissed only for cause? Employee
        discharged for failing to disclose conviction on employment application. Ohio public statute
        provided that employees can only be terminated for cause, and can obtain administrative
        review if discharged. Employee argued that provision was unconstitutional because it did
        not provide an opportunity to respond to charges prior to removal.

        White, majority: holds that compelling private interest in retaining employment, combined
        with the value of presenting evidence prior to dismissal, outweighed the added
        administrative burden of a pretermination hearing. Ohio statue creates a property interest;
        rejects the employer‟s argument that the property right is conditioned on the legislature‟s
        choice of procedures for deprivation: “the Due Process Clause provides that certain
        substantive rights – life, liberty and property – cannot be deprived except pursuant to
        constitutionally adequate procedures. … “Property” cannot be defined by the procedures
        provided for deprivation any more than can life or liberty. … While the legislature may elect
        not to confer a property interest in public employment, it may not constitutionally authorize
        the deprivation of such an interest, once conferred, without appropriate procedural
        safeguards.”

        What process is due? There is a need for some sort of pretermination hearing. Private
        interest in retaining employment, and for employee to present his side of the story.
        Government interest doesn‟t outweigh this; it is preferable to keep a qualified employee than
        to retrain one. If there‟s a perceived hazard in keeping employee on the job, employer can
        suspend with pay. However hearing does not need to be elaborate – the employee is entitled
        to oral or written notice of the charges against him, an explanation of the employer‟s
        evidence, and an opportunity to present his side of the story. This is conditioned on full
        post-termination hearing being available.

        Rehnquist, dissent: Accuses the majority of deciding in an ad hoc fashion. Rehnquist says
        that if we are going to let the statute define the property interest, we should also let the
        statute define the procedure. Statute as the source of both limbs of the due process
        entitlement.
15.50   Back at Roth the Court allowed the legislature to determine the property interest. And yet
        the court claims the content of due process for itself as a matter of constitutional law.
        Edley: Court is thinking about what‟s going to happen in the general run of cases. “Rough
        justice” as we‟re making constitutional doctrine in this context. That‟s part of the answer.
        The advocacy in Matthews lies in the characterization of steps 1 and 2. What about
        governments generally, not just this Board of Education? Multiply Loudermill by all of the
        cases involved, and the cost of hearings could become quite a serious government interest.

        Heart of case: trigger. Rehnquist: Give Ohio a break – they did their best, crafted a statute
        that indicated that the expectations they were conferring on Loudermill were rather narrow.
        E: Let‟s just make it all at-will employment, and write the statute that way. What‟s wrong
        with that?

        Court says won‟t turn to the state to decide the scope of the property interest, at least insofar
        as the state attempts to blur the line between property and procedure. We won‟t give them
        that much deference. E: Why?




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        Why difference between liberty and property? What is the role of politics in making
        judgments about the triggers? Quintessential problem: balancing competing interests;
        that‟s what politics is for. Opposite is protecting fundamental rights in the face of political
        expediency. Obviously the sense that establishing procedures is quasi-legislative, but also
        setting up the rules to someone who‟s screwed, at risk of being victimized. In that sense, we
        know that these are the rules that will govern the interaction between the powerful and the
        powerless. Courts need to be involved. Certain self-abnegation going on in the law. Courts
        denying right to define substantive content of interest – to define property – but reserve anti-
        majoritarian responsibility to use procedure in the application of adjudicative judgments
        made by the state.

15.51   Arnett v. Kennedy (US, 1974): Case re pre-dismissal hearing of federal public servant.
        Statute gave employee 30 days notice of reasons for proposed discharge, a chance to
        respond by submitting affidavits, and a chance to appear personally before the official
        making the decision. However, the employee in this case was required to appear before the
        individual he had allegedly slandered. Rehnquist, majority: This meets due process.
        “Where the grant of a substantive right is inextricably intertwined with the limitations on the
        procedures which are to be employed in determining that right, a litigant must take the bitter
        with the sweet.”
15.52    Walters v National Association of Radiation Survivors (US, 1985): Re death and
        disability benefits scheme for veterans; statute had been amended for a number of years and
        provided only a $10 reimbursement for legal expenses. Walters alleged that the fee
        limitation deprived him of due process by depriving him of representation by expert legal
        counsel.
        Rehnquist, majority: Applies Matthews. Government interest in informality of system
        and prevent unnecessary retention of lawyers by veterans. The invalidation of the fee
        limitation would be contrary to Congress‟ intent in keeping the process as simple as
        possible. Statistics show that success rates of claims with and without lawyers do not vary
        significantly. No violation of due process.
15.53   This case can be seen as an example of the flexibility of the government interest per
        Matthews.

15.54   Brock v. Roadway Express, Inc. 481 U.S. 252 (1987) Section 405 of the Surface
        Transportation Assistance Act protects employees in the commercial transportation industry
        from dismissal for refusing to drive a vehicle that does not comply with applicable safety
        laws. Initial investigation by Secretary of Labor who, on finding reasonable cause to believe
        that the employee was improperly discharged, can order temporary reinstatement. Employer
        can then request an evidentiary hearing. Does the fact that there is no evidentiary hearing
        before temporary reinstatement deprive the employer of due process? Supreme Court holds
        that the Secretary‟s procedures deprived Roadway of procedural due process, by failing to
        provide it with the substance of the employee‟s complaint, but rejected the argument that
        due process prevented the Secretary from ordering interim reinstatement.
        (a)      Conceded by the secretary that the contractual right to discharge an employee for
                 cause (under the collective agreement) constitutes a property right for the purposes
                 of the 5th amendment. “Once it is determined that due process applies, the
                 question remains what due process is due.” Morrissey v. Brewer, 408 U.S. 471,
                 481 (1972).
        (b)      Balancing of factors approach. Government interest in promoting road safety.
                 Private interest in controlling make-up of workforce. But District Court failed to
                 consider employee‟s interest in not being improperly discharged. The Court has




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                 acknowledged the “severity of depriving a person of the means of livelihood”.
                 Cleveland Board of Education v Loudermill, 470 U.S. 532, 543 (1985).
        (c)      So long as the prereinstatement procedures establish a reliable “initial check
                 against mistaken decisions (Loudermill) and complete and expeditious review is
                 available, then the preliminary reinstatement provision of s405 fairly balances the
                 competing interests of the Government, the employer, and the employee, and a
                 prior evidentiary hearing is not otherwise constitutionally required.
        (d)      Minimum prereinstatement due process requires notice of evidence, change to
                 provide written statements in reply, chance to meet with investigator, and change
                 to present statements from rebuttal witnesses. Cross-examination not required at
                 this stage of the proceedings.
        (e)      At some point, a delay in holding a post-reinstatement hearing may become
                 unconstitutional.

        Brennan, concur:        Disagrees that Secretary can order an indefinite preliminary
        reinstatement without first affording employers an opportunity to present contrary testimony
        and cross-examine: “The adequacy of predeprivation procedures is in significant part a
        function of the speed with which a postdeprivation or final determination is made.”

        White, concur: The statute requires the Secretary to have reasonable cause prior to
        ordering the reinstatement; not necessary to turn over names of the employees who
        corroborated the employee‟s claims. Balance is truck by the statute, and the regulations and
        Due Process requires nothing more.


15.55   This case gives weight to the interests of both the employer (the regulated party) and the
        employee (the beneficiary of the regulation). But in terms of the constitutional text, it is
        only the rights/interests of the regulated party that are considered (and that had been the
        approach taken by the Court up until this case). This is what the courts have done since 1937
        on the substantive side of economic regulation; it has been taken for granted that Congress
        can also weigh the rights of the beneficiary of the regulation as well as the regulated party.
        However, on the procedural side it was assumed that you look only to the regulated party.
        Changed by this case.
15.56   This case allows Congress to make pre-deprivation procedures less formal.
15.57   Brennan dissented, saying that employer should have opportunity to confront accuser,
        present witnesses, and cross-examine. Concern about post-reinstatement delay. White,
        Scalia, CJ, thought that the procedures followed by the Secretary were adequate and there
        was no need to give evidence, names of witnesses etc to employer. Stevens, like Brennan,
        thought that you need prereinstatement cross-examination etc.
15.58   Be sure to read pp 833-835 (Rakoff’s article).
15.59   Sandin v Conner 515 US 472 (1995) Prisoner transferred to special holding area; could only
        be done if prisoner breached certain prison rule. Due process?
15.60   Court invents new rule. Negative implication from mandatory language misses the point. Ie
        just because can only be thrown into solitary confinement when you do something, doesn‟t
        mean you get hearing.
15.61   Only a liberty interest if punishment “imposes atypical and significant hardship on the
        inmate in relation to the ordinary incidents of prison life”.
15.62   Rehnquist: what is wrong with pre-Sandin approach. (1) Judicial involvement in day-to-day
        operation of prisons, which is a squandering of judicial resources without benefit to anyone.




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        Rakoff: this is a double irrelevancy. First, if the constitution mandates due process, so what
        if it costs a bit. Secondly, if the holding is limited to the prison context, the decision has
        little impact on the rest of due process law. (2) Due process creates disincentive to states to
        create uniform prison procedures. Speculates that the states may seek to avoid creating
        “liberty” interests, by giving employees greater discretion and by not having regulations.
15.63   The argument is that by making procedural due process in prisons hinge on the existence of
        prison regulations, we create an incentive for states to have very discretionary prison rules.
        Does this say that the Court made a mistake when it said that the term “property” depends
        on positive entitlements? Here Rehnquist is talking about the positive law liberty interests,
        not those liberty interests that come from the Constitution.
15.64   Perversity: if you write a standard does that then create a protected interest and trigger due
        process, e.g., prison cases if policy manual exists. In Wolf, the answer is yes. But Rehnquist
        says that writing a prison manual can‟t create dp rights.
15.65   Edley: Standards to discipline discretion; but Wolf says that that might create liberty
        interests. Don‟t want to respond to risk of proceduralization by having lawlessness in
        prison, but don‟t want hearing every time change cell. Framework: (a) interest/trigger; (b)
        deprivation?; (c) Matthews test. Option 1: No liberty interest – you‟re a prisoner. A prison
        rule isn‟t the kind of positive law that creates liberty. Option 2: Measure of liberty
        extinguished by conviction includes a large class of subsequent decisions of prison officials
        (what‟s going on in many of the cases). Either no liberty or no deprivation. In Sandin, court
        is saying that, but that‟s a 5-4 decision.
15.66   Take a step back and ask what really matters. Parsing the regulations doesn‟t work. Just
        make gross judgments. If it‟s a big deal, we‟ll take a look at it. That seems to be the
        message – see the shoebox case. It‟s property but go some place else; its not a constitutional
        matter.

15.67   Several situations in which some injury can get washed out: (1) doesn‟t satisfy trigger of
        protected interest; (2) loss not cognizable as deprivation; (3) circumstance in which won‟t
        change risk of erroneous deprivation with hearing; (4) situations in which all the process
        that is due is the protection afforded that interest by other areas of the law (tort law regime
        in Ingraham).

15.68   Remember that procedural due process works with statutory administrative law as a tool to
        constrain administrative discretion. We‟re only touching the surface in another area – what
        are the available remedies for governmental misconduct (remedies, immunity, etc.).




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16.    THE PROCESS OF AGENCY DECISION


       FORMAL ADJUDICATION
16.1   Central Platte Natural Resources Dist. v. Wyoming (NE SC, 1994): Re constitutional due
       process. Central Platte filed applications to maintain water flow at a certain level to protect
       birds. State resisted. Department held hearings, and granted Central Platte‟s applications.
       Wyoming appealed from decision, on the ground that Dr. Bleed‟s participation violated its
       rights to due process in an on-the-record adjudication. Dr. Bleed is the state hydrologist,
       served as the “examining officer” at the hearing, and cross-examined witnesses. Alleged
       bias because Dr. Bleed favours specific amount of instream flow requested in CP‟s
       application (because she participated in a study on the Central Platte), and because she
       favours instream flows in general.
       Court: Due process requires disqualification when the adjudicator has actually prejudged
       the precise facts at issue, it does not require the disqualification of someone who has merely
       been exposed to or investigated the facts at issue. Even if she had a general bias, an
       adjudicator‟s prejudgment of a law or policy question is not disqualifying.
       Edley: How do Londoner and Bi-Metallic apply? Policy question – is outflow good or not.
       Saying not fair, but under BiMetallic, that‟s fine - general question of expertise, but at same
       time adjudicating individual water rights, so that‟s indication that maybe have more
       individual hearing rights.

       This is a licensing – sounds Londonerish – but there‟s a quasi-legislative policy issue.
       Distinction re what Dr. Bleed had thought about prior to issue, but hasn‟t prejudged
       adjudicative rights (Londoner). Think about her study and imagine what hydrologist does –
       what would such a report have looked like (lots of data, numbers, equations). Imagine
       alternative characterizations of that report avail to advocates. Is it all about adjudicative
       facts, or simply reflecting some aggregate general legislative facts?

       Distinction between question of whether o.k. for Dr. Bleed to be hearing officer – that‟s one
       question – ok no due process problem. Second question: After hearing completed, and
       agency made decision – can they have side conversation with Dr. Bleed? How should that
       problem be approached? Since agencies finite resources, makes sense to arrive at informed
       decision by having conversation with people who are knowledgeable. Limits: Not if she
       had interest in matter. If she‟s made an initial decision, she shouldn‟t be participating in
       review of her own decision. Due process problem? Ok for judges to talk about the case
       with clerks – obviously judges consult with staff. Here, with the expert, in proximity to
       decision, have stake in decision having rendered it themselves. But is this propriety or
       constitutional due process? This is about propriety.
16.2   Section 554(d) of the APA states that the employee who presides at the reception of
       evidence shall make the decision, unless he becomes unavailable. An employee engaged in
       the performance of investigative or prosecuting functions for an agency in a case may not
       participate or advise in the decision except as witness or counsel in public proceedings. The
       section does not apply to the agency or a member of the body comprising the agency.
       Section 554(d) has an exception for the agency itself – people at the top are allowed
       combine multiple functions. Note that this section applies only to on-the-record
       adjudication, not rulemaking, because rulemaking is not a pure quasi-judicial model. Thus,
       the APA does not impose the same separation of functions straightjacket as applies in a
       licensing or adjudication.




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16.3   Grolier v. FTC (9th Cir., 1980): Re section 554(d). Grolier complained because newly-
       appointed ALJ in the case had served as attorney-advisor to the FTC during the
       investigation. Court: “Congress intended to preclude from decision-making in a particular
       case all persons who had been involved with ex parte information, or who had developed, by
       prior involvement in the case, a will to win.” FTC required to produce sufficient information
       to allow Grolier, who has burden, and court to make an accurate determination. On remand,
       no facts suggesting that ALJ had been personally involved in the earlier investigation, so
       disqualification denied.
16.4   Edley: This can be understood as another Londoner-BiMetallic distinction. This is
       adjudication, and thus requires a firewall between the adjudicator and the
       investigator/prosecutor.
       One could imagine a rulemaking that turned on some adjudicative facts in a way that
       triggered a procedural due process requirement to a hearing or a separation of functions. In
       that case, the escape clause in Vermont Yankee would apply.
16.5   Morgan v United States (US, 1936) (Morgan 1) The Morgan case came to the Supreme
       Court four times. The Act gave the Secretary of Agriculture the right to set rates at the
       Kansas stockyards. Marketing agencies buy and sell the cattle. Subject to rate-making. In
       setting the rates the Secretary disallowed some of the costs claimed, as unreasonable costs.
       Consequence that some of the marketing agencies would be driven out of interest, and the
       industry would be rationalized.
       (a)      The allegation was that the Secretary made the rate order without having read or
                heard the evidence. Only evidence is what he derived from consultation with
                employees of his department.
       (b)      The statutory requirement of a “full hearing” did not require an intermediate report
                on the evidence for submission to the parties for comment. “The statute does not
                require it and what the statute does require relates to substance and not form.”
       (c)      Criticism by plaintiff that the Secretary, who made the decision, was not the one
                who heard the evidence. Not merely an issue of delegation, where the subordinate
                who hears the evidence is delegated power to made the decision.
       (d)      The reference to a “full hearing” has obvious reference to the tradition of judicial
                proceedings in which evidence is received and weighed by the trier of the facts.
                “If the one who determines the facts which underlie the order has not considered
                evidence or argument, it is manifest that the hearing has not been given.” “The
                duty [to render a considered decision] cannot be performed by one who has not
                considered evidence or argument. It is not an impersonal obligation. It is a duty
                akin to that of a judge. The one who decides must hear.”
       (e)      Note that this decision is being made in June 1933, at the inception of the New
                Deal, when the Secretary of Agriculture had lots of other things on his mind. Point
                is not that the Secretary had to decide, but that whoever decided had to do the
                hearing.
       Edley: This principle is puzzling because of the realities of the administrative state. The
       judgment states that “[t]here must be a hearing in a substantial sense.” What if the agency
       member appointed to the agency has no specific expertise? Why should we defer to a
       decision made by her? In a way, Morgan I is really about institutional competence, about
       having procedures and creating bureaucracy. We‟re concerned about the competence of
       bureaucracy, rather than individual expertise. It is the bureaucracy, which can see that the
       appropriate expertise is mobilized, that counts. Does the law help promote the correct
       engineering of the bureaucracy?




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16.6    Morgan v Hughes (US, 1938) (Morgan II): Re ratemaking, which is rulemaking. Secretary
        had read the briefs and the transcript of the oral argument and had talked with some of his
        colleagues in the department. The government did not supply a brief, and just made sketchy
        oral arguments. Morgan requested that the examiner prepare a tentative report, to be
        submitted as a basis for exceptions and argument, but that was refused. Findings were made
        by the Bureau of Animal Industry, and the Secretary, with a few changes in the rates, signed
        the order. Evidence had been received before the Secretary was appointed.
16.7    Secretary had several conferences with Solicitor of the Department and with the officials in
        the Bureau of Animal Industry and discussed the proposed findings. Morgan objected that
        the Secretary conferred ex-parte with one side; and that the petitioners were never had a fair
        opportunity to comment on the Secretary‟s concerns. Chief Justice Hughes: “Congress in
        requiring a “full hearing”, had regard to judicial standards – not in any technical sense but
        with respect to those fundamental requirements of fairness which are of the essence of due
        process in a proceeding of a judicial nature.” “The maintenance of proper standards on the
        part of administrative agencies in the performance of their quasi-judicial functions is of the
        highest importance and in no way cripples or embarrasses the exercise of that appropriate
        authority.”
16.8    All this going on on the eve of the APA. How did the APA approach these questions:
        (a)       Rulemaking or adjudication? Morgan was rulemaking.
        (b)       Formal or informal: look at organic statute. In Morgan it looks like what we are
                  dealing with is formal rule-making.
        (c)       §557. Presiding employee to make the initial decision “unless the agency requires
                  either in specific cases or by general rule, the entire record to be certified to it for
                  initial decision”. In other words, §557(b) provides that either:
                  (i)       the presiding employee shall make the initial decision (a) – that decision
                            becomes the decision of the agency unless appealed. On appeal the
                            agency can make its own decision. If the agency disagrees with the
                            presiding employee on questions of credibility, its decision will carry
                            less weight (Universal Camera).
                  (ii)      the entire record is certified to “the agency” (i.e. its head) for initial
                            decision (b). The presiding employee (ALJ) shall recommend a decision
                            except that in cases of formal rule-making or determining applications
                            for initial licenses, the agency may issue a tentative decision or one of its
                            responsible employees may recommend a decision. Ie somebody other
                            than the ALJ may recommend a decision (in the Morgan case, this might
                            be the financial analysts who summarized the material for the Secretary).
                            An agency expert could make a recommendation if the outside parties are
                            given an opportunity to object to the recommendations before they
                            become final.
16.9    The judgment that is being made is that there is more to be gained by using the expertise of
        internal agency specialists than is to be lost by the fact that they were on a particular side of
        the case. The statute says that this is true for formal rule-making; but it is not true for
        formal adjudication – the decision-maker cannot go to agency staff in the same way.
16.10   Distinguish from §557(d)(1) – deals with people outside the agency. §554(d) – this is about
        adjudication rather than rulemaking.
16.11   See Cement Institute, which rejected a claim that the FTC‟s exposure to contested facts in
        the course of policy-making prevented it from fairly reviewing the same facts in an on-the-
        record adjudication.




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16.12   Ash Grove Cement v. FTC (9th Cir., 1978): FTC conducted inquiry on cement prices, and
        produced report. The report was the subject of public hearings, but no rule ever resulted
        from the analysis. The FTC later announced an enforcement policy, and issued a complaint
        challenging Ash Grove. Complaint sustained by the FTC ALJ after an extensive hearing,
        and then by the FTC. Ash Grove argued that investigation and subsequent promulgation of
        enforcement policy caused it to prejudge the hearing. The Court rejected this argument,
        holding that “claims that an agency is impermissibly biased because of its combination of
        investigative and adjudicative functions must overcome a presumption of honesty and
        integrity on the part of the decision-maker.” It is to be expected that the facts revealed by a
        staff investigation will subsequently form part of a foundation for an enforcement
        proceeding. Burden on Ash Grove to show that undue prejudice did occur. Note that FTC
        is a large, busy agency, structured to keep the work or investigating, prosecuting and judging
        in separate compartments.
16.13   Withrow v. Larkin (US, 1975). Re constitutional due process. Does the combination of
        investigative and adjudicative functions in an administrative adjudication create an
        unconstitutional risk of bias? Abortion doctor had been subject to closed investigatory
        hearing by medical board, and then sought to restrain formal hearing.
        Justice White: In order to succeed with due process claim, would have to overcome
        “presumption of honesty and integrity in those serving as adjudicators.” Case law, and APA
        (with exception for agency) generally rejects idea that combination of judging and
        investigating is a denial of due process. This procedure ok because Larkin and counsel had
        attended the investigatory hearing and knew the facts presented to the board. Like judges
        who preside over criminal pre-trials, etc., it is typical for the members of administrative
        agencies to receive the results of investigations, to approve the filing of charges, and then to
        participate in the ensuing hearings. This mode of procedure does not violate the APA and
        does not violate due process. “Among [the cases where the probability of actual bias is too
        high to be constitutional] are those in which the adjudicator has a pecuniary interest in the
        outcome and in which he has been the target of personal abuse or criticism from the party
        before him.”
16.14   There is no general rule that it is unconstitutional for the same persons to participate in the
        investigation and then adjudication of the same matter. No general rule. Without a showing
        to the contrary, state administrators are assumed to be “men of conscience” (Morgan).
16.15   Texaco v. FTC (D.C. Cir., 1964): Re Texaco‟s practice of encouraging its dealers to
        purchase tires and batteries from particular supplier, so that it could get commissions. FTC
        conducted on-the-record proceedings against Texaco and others. Chair of the FTC made a
        speech that said he was challenging legality of Texaco‟s practices. FTC found that Texaco
        had engaged in illegal conduct. Court of Appeals reversed finding, holding that a
        disinterested reader of Texaco‟s speech would conclude that Chair had decided that Texaco
        had violated Act. Under these circumstances, Chair‟s participation in the hearing amounted
        to a violation of due process. Edley: When compared to Kennecott, it seems that the Court
        is splitting hairs

16.16   Kennecott Copper v. FTC.(10th Cir., 1972): FTC Commissioner gave public interview
        referring to substance of the complaint. Court held that she had not prejudged the case by
        simply referring to the complaint and not her own opinions about it.




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17.    EX PARTE COMMUNICATIONS
17.1   Professional Air Traffic Controllers Organization v FLRA (DC Cir, 1982): Illegal strike.
       Reagan fired the Controllers. Test of strength between Reagan and unions. Unfair labour
       practice proceeding before Federal Labour Relations Authority, threatening the revocation
       of PATCO‟s certificate. ALJ recommended decision revoking certificate. Oral argument on
       review before three members of the FLRA, and ALJ‟s decision affirmed. Members Frazier
       and Applewhaite voted to revoke certification, Haughton would have permitted brief period
       for PATCO to end the strike. Three communications:
       (a)      Applewhaite (Committee member) – conversations with Gordon and Stern.
                Gordon was general counsel for the FLRA; Stern was an attorney in the FLRA
                Solicitor‟s office. Separation of function. See §554 (d). Applies to formal
                adjudication. We are NOT talking about the “the employee who presides at the
                reception of evidence (1st para); rather, we are talking about the “employee or
                agent engaged in the performance of investigative or prosecuting functions for an
                agency.” Gordon is prosecuting thus he may NOT “participate or advice in the
                decision”. So Stern is involved to provide such advice. Gordon could talk to
                agency heads about general agency policy, but cannot discuss the actual case at
                hand with Applewhaite. No problem with Stern (she is a bit like Applewhaite‟s
                law clerk – employed to help). The problem is that Stern and Applewhaite talk
                about the case in front of Gordon. A majority of the Court held that the discussion
                was conducted at such a level of generality that there was no impact on the
                decision. The Court in this case discusses matters as though they arose under
                §557(d) rather than §554(d). There was some regulation within the agency that
                said that the General Counsel was deemed to be outside the agency (she was
                prosecuting the case); that is why §557(d) is used.
                Edley: Court held that maybe it was a problem, but that it would let it slide.
                Londoner-BiMetallic: The discussion was mostly about the law, not the facts.
       (b)      Transportation Secretary Lewis calls Applewhaite and Frazier. Lewis definitely
                an outside person. Was the conversation “relevant to the merits of the
                proceeding”? Edwards‟ decision doesn‟t quite say, but in any event there was no
                improper influence. If an ex-parte communication occurs this should go on the
                record. Additional implication from the fact that it was a Cabinet level official
                who called. Applewhaite could have put the conversation on the record as per the
                APA (risk of starting brouhaha about nothing).
                Edley: The Lewis phone call is an example of how to deal with pressure coming
                from another part of the government on the agency. Start first with APA, not
                constitution. President has been deemed by case law to be outside the agency;
                however, a call that is simply a status inquiry is not an ex parte communication.
       (c)      Applewhaite has dinner with Shanker (union official from NYC). Should
                Applewhaite have gone to dinner? Court split. Edwards says okay; others critical.
17.2   Formal adjudication. On the record and adjudicatory standards apply (§554 etc).
17.3   Judges Edwards and Robinson took a more permissive view of ex-parte communications
       than Judge MacKinnon. Judge Edwards makes points such as that “a judge must have
       neighbors, friends and acquaintances, business and social relations, and be a part of his day
       and generation”. Also sees inevitability of some contact between prosecuting and
       adjudicative branches of an agency (in this case the Fed. Labor Relations Authority).




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17.4   [pp. 191 – 207. Readings on Congressional oversight: possible exam essay question?]
17.5   Agencies act in the midst of the unruly world of politics – exemplified by Secretary Lewis‟
       phone call.
17.6   Portland Audubon Society v The Endangered Species Committee (9th Cir, 1999).
       Committee that gives exemptions from the Endangered Species Act (in this case relating to
       the Northern Spotted Owl).
       (a)      (a) Are Committee proceedings covered by the ban on ex-parte communications in
                5 U.S.C. §557(d)(1)? (b) Are communications from the President and his staff
                covered (interested person outside the agency)?
                (i)      (a) Yes. Committee proceedings are open to the public and function, in
                         effect, like an administrative Court. This would be rendered futile if
                         behind-the-scenes ex-parte communications were allowed.
                (ii)     (b) The President is an interested person in every proceeding.
                         Humphrey’s Executor recognized the power of Congress to create quasi-
                         legislative or quasi-judicial agencies that are to operate independently of
                         executive control.     Judge Goodwin would have left open the question
                         of whether the President himself is an “interested person”.
17.7   Another way of looking at this is through the lens of the due process clause. The President
       should stay out of this as a matter of due process (the next case Pillsbury is cast in due
       process terms). Could this case (Portland Audubon) be limited to cases of formal
       adjudication?
17.8   Pillsbury Co. v FTC (5th Cir., 1966)




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        INFORMAL RULEMAKING


17.9    Sangamon Valley TV Corp. v. US (DC Cir., 1959): Re situation where what is in effect
        adjudication is cast in the form of rulemaking. FCC passed rule that assigned more
        desirable VHF frequency to a St. Louis station. Station‟s president had personally called on
        FCC members, taken them to lunch and sent them turkeys while the matter was still under
        review.
        Court: These proceedings involved not only allocation of TV channels across communities,
        but also resolution of “conflicting private claims to a valuable privilege.” Basis fairness
        requires such a proceeding to be carried out in the open. Private approaches to members of
        FCC vitiated the FCC‟s action.
17.10   Home Box Office Inc v FCC (DC Cir, 1977): Re FCC‟s informal rulemaking procedures
        on which programs could be shown on pay television. Rulemaking included oral argument
        to the FCC. Former Counsel to the FCC suggested to the court that the participants in the
        rulemaking had frequently engaged in private contacts with Commissioners and others at the
        FCC. On Court order, FCC produced a list of ex parte communications involving virtually
        every party before the court. FCC met with broadcast interests, cable interests, but not with
        “public interest” intervenors. It appeared that the final shaping of the rules may have been
        the result of a compromise between the interested parties, rather than by the exercise of the
        independent discretion in the public interest that the Communications Act vests in individual
        commissioners.
        Court: Even the possibility that there is one administrative record for the public and the
        court and another for the Commission and those “in the know” is intolerable. Overton Park
        requires the court to test the full administrative record that was before the agency official at
        the time he made his decision. This cannot be done if communications are made to the
        agency in secret and the agency does not disclose the information presented.
        “We see no difference between assertions of fact and expert opinion tendered by the public,
        as here, and that generated internally in an agency: each may be biased, inaccurate, or
        incomplete – failings which adversary comment may illuminate.” Secrecy is inconsistent
        with fundamental notions of fairness implicit in due process and with the ideal of reasoned
        decision-making on the merits which undergirds all of administrative law.
        Although informal contacts between agencies and the public are the bread and butter of the
        administrative process, they cannot frustrate judicial review or raise serious issues of
        fairness. Communications received prior to issuance of formal notice of rulemaking do not,
        in general, have to be put in a public file (unless it forms the basis for agency action). Once
        the NPR has been issued, “any agency official or employee who is or who may reasonably
        be expected to be involved in the decisional process of the rulemaking proceeding, should
        „refuse to discuss matters relating to the disposition of the rulemaking proceeding with any
        interested private party prior to the agency‟s decision.” If ex parte contacts nevertheless
        occur, any written document or summary of oral communication must be place in the public
        file established for each rulemaking docket immediately after the communication is received
        so that interested parties can comment on it.”
        MacKinnon, dissent: Majority‟s statements are overbroad. The rule issued here was in
        effect an adjudication of the respective rights of the parties vis-à-vis each other. Does not
        want to make statement that would include obiter statements that could be interpreted to
        cover the entire universe of informal rulemaking.
17.11   Edley: What is the legal basis for this holding? How to reconcile it with Vermont Yankee?
        Section 706 of the APA, because the basis of the decision seems to be about how the court
        will review ex parte communications: “…the court shall review the whole record …” A




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        judge cannot do his job if one record exists for the agency, and another for the judge. Here,
        there was a secret record informing the agency, so the court could not do its job.
        In the alternative, section 553 hasn‟t been met. Section 553(c) provides that “the agency
        shall give interested persons an opportunity to participate in the rule making through
        submission of written data, views or arguments with or without opportunity for oral
        presentation.” Because of ex parte communications, some people haven‟t received full
        hearing rights.
17.12   Read this with 6 prior cases in mind:
        (a)      Benzene – can Congress delegate broad policy decisions to agencies?
        (b)      Chenery – can make policy through adjudication. Agency discretion whether to go
                 forward by adjudication or rulemaking.
        (c)      Overton Park – must use the record that was before the decision maker. Was the
                 actual decision a clear error of judgment?
        (d)      State Farm – reasonableness test for analytical process. “Hard look” review
        (e)      Nova Scotia – all evidence should be available to the public. Agency needs a
                 sufficient record for course of reasoning review. Had to allow parties to comment
                 on data.
        (f)      Vermont Yankee – court sdn‟t supplement the APA. So unless disclosure is
                 required for substantive judicial review (Overton Park), the court cannot require it
                 (unless under due process clause …).
        (g)      Roth – find your property claim in external law. The companies with the existing
                 rights to screen the relevant material might have a property interest that will be
                 affected by the decision. What about liberty interest/freedom of contract. Can
                 HBO make this argument?
        (h)      Matthews – balancing test: personal interest v. admin costs. What procedure are
                 the parties entitled to?
        (i)      Londoner – if the facts are individualized, DPC requires adjudication. BiMetallic
                 – no adjudication required for generalized action. The Due Process Clause applies
                 only to adjudication. HBO is about rulemaking not adjudication. Why then refer
                 to due process? (although the concurrence says that the case is really
                 adjudication).
17.13   If the Overton Park theory is correct, then HBO would apply to every case of rulemaking –
        because Overton Park applies to the record in rulemaking. But if the Londoner theory is
        correct, then HBO applies only to cases involving conflicting, specific claims. Would not
        apply to general rulemaking. This latter is how it has been interpreted since.
17.14   However, following HBO most agencies adopted majority‟s approach – all external contacts
        to be placed in the record.
17.15   Action for Children’s Television v. FCC (D.C. Cir., 1977): DC Circuit retreats from HBO.
        “We do think that ex parte contacts in informal rulemaking proceedings do not per se vitiate
        agency informal rulemaking action, but only if it appears from the administrative record
        under review that they may have materially influenced the action ultimately taken. Problem
        of degree: “In light of what must be presumed by Congress‟ intent no to prohibit or require
        disclosure of all ex parte contacts during or after the public comment stage, we would draw
        that line at the point where the rulemaking proceedings involve “competing claims to a
        valuable privilege”. It is at that point where the potential for unfair advantage outweighs the
        practical burdens, which we imagine would not be unsubstantial, that such a judicially
        conceived rule would place upon administrators.”




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17.16   Edley: Some informal rulemakings are different from others. The court in HBO was trying
        to avoid Vermont Yankee by suggesting that there is some individual interest at stake.
17.17   Problems with ex parte communications during the rulemaking process: (1) decision-makers
        may be influence by communications made privately (at odds with concept of open
        government); (2) significant information may be unavailable to reviewing courts; (3)
        interested persons may be unable to reply effectively to information, proposals or arguments
        presented in an ex parte communication.
17.18   USWA v. Marshall (DC Cir., 1981): Massive OSHA rulemaking to regulate worker
        exposure to airborne lead. Re communications between staff advocate (standards attorney)
        and agency. Nothing in the APA bars a staff advocate from advising the agency in setting
        the final rule. Under Vermont Yankee, that‟s the end of the story. Rulemaking is essentially
        an institutional, not an individual, process and its is not vulnerable to communication within
        an agency in the same sense as it is to communication from outside the agency.
        Re OSHA‟s use of consultants. Does this violate Morgan I? To use Morgan I, appellants
        would need specific proof that the Assistant Secretary failed to confront personally the
        essential evidence and argument in setting the final standard. Assistant Secretary
        demonstrated independence from consultants by strongly criticizing some of their
        conclusions; to inquire further would be to probe impermissibly into her mental processes.
        No reason to force agencies to hire enormous regular staffs. There is no functional
        difference between staff and consultants, so there should be no legal difference.
        Edley: How do you regulate interaction of agency with these “experts” and maintain the
        soundness of the rulemaking record? If there is new evidence, it ought to be in the
        rulemaking record. Nova Scotia says there is to be “no secret science.” Give parties the
        chance to participate if the experts are adding new evidence, but not if they are just sifting
        through it. If a consultant is doing both, this is permissible in informal proceedings, but not
        in formal proceedings where there is a prohibition on ex parte communication (a consultant
        from outside the agency cannot add a matter that‟s relevant to the merits).
17.19   Sierra Club v Costle (DC Cir, 1981). Informal rulemaking involving coal emissions
        standards. Sierra club alleged that EPA changed its mind on a coal emissions standard after
        an “ex parte blitz” from the coal industry, the President, and an influential Senator.
        Judge Wald:
        (a)      Where agency action resembles judicial action, where it involves formal
                 rulemaking, adjudication, or quasi-adjudication among “conflicting private claims
                 to a valuable privilege” [Sangamon Valley] the insulation of the decision-maker
                 from ex parte contacts is justified by basic notions of due process to the parties
                 involved. But where the agency action involves informal rulemaking of a
                 policymaking sort, the concept of ex parte contacts is of more questionable utility.
        (b)      Court recognizes the utility of face-to-face contacts. Blanket ban on informal
                 contact during the post-comment period inappropriate. Leave it to EPA to
                 document and place on the record oral communications. Unless specifically
                 prohibited by Congress, there is no ban on intra-executive contact. Only is
                 whether it must be documented.
        (c)      The purposes of full-record review which underlie the need for disclosing ex parte
                 conversations in some settings do not require that courts know the detail of every
                 White House contact, including a Presidential one, in this informal rulemaking
                 setting.
        (d)      There may be instances where the docketing of conversations between the
                 President or other Executive Branch officers and rulemakers may be necessary to
                 ensure due process, e.g., if conversations directly concern the outcome of




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                  adjudications or quasi-adjudicatory proceedings. There is no inherent executive
                  power to control the rights of individuals in that context. Docketing may also be
                  necessary in some circumstances where a statute specifically requires that essential
                  “information or data” upon which a rule is to be based be docketed.
        (e)       It is possible that undisclosed Presidential prodding may direct an outcome that is
                  factually based on the record, but different from the outcome that would have
                  obtained in the absence of Presidential involvement. OK. “We do not believe that
                  Congress intended that the courts convert informal rulemaking into a rarified
                  technocratic process, unaffected by political considerations or the presence of
                  Presidential power.
        (f)       Re Congressional pressure. “Hint” that Senator Byrd had threatened to hold up
                  arms treaty – this isn‟t enough to constitute substantial evidence of extraneous
                  pressure significant to warrant a finding of unlawful congressional interference.
                  “We believe it entirely proper for Congressional representatives vigourously to
                  represent the interests of their constituents before administrative agencies engaged
                  in informal, general policy rulemaking, so long as individual Congressmen do not
                  frustrate the intent of Congress as whole as expressed in statute, nor undermine
                  applicable rules of procedure.”
        (g)       Note that this decision is based on section 307 of the Clean Air Act. Arguments
                  regarding presidential responsibility would be even stronger in the ordinary
                  rulemaking case, since the APA has no provision for docketing written comments,
                  etc.
17.20   Edley: According to Sierra Club, it‟s OK for the White House to let agency know it‟s
        preferences, so long as it is not threatening agency. As a legal matter, it is fine for the
        agency to think about the fact that the President is generally disposed towards a particular
        policy direction. It is not necessary to docket that.
        If President calls up and expresses views, how to know when to docket it. One solution,
        docket it if it is (a) “information or data”; (b) potentially materially relevant; (c) if the input
        suggested ultra vires decision-making. Another suggestion is to docket it if it is rebuttable.
        If the idea is that the President has preferences, and there is some way communicating his
        preferences to the agency, does it follow that there‟s no role for law? Perhaps law should
        structure how politics is conducted. If there is some disclosure, so we know of the fact of
        the President‟s communication and of its content, that might make better politics because the
        disclosure would allow everyone to engage in their own politics. A twin to Nova Scotia:
        “no secret politics.” Thus, the conversation should be docketed, so that others could get
        together to make sure that their voices were heard as well.
        On the other hand, politics is the kind of organism for which sunshine is often lethal. If we
        acknowledge that politics will play a role, then by opening doors, we might kill, distort and
        render politics unrecognizable. That‟s bad if we accept that there is a legitimate role for
        politics.
        What if the true story of why an agency arrived at a decision (i.e., political factors) is
        different from the stated story? It‟s legally permissible for there to be a distinction between
        the stated story and the true story. The law is only concerned to ensure that the stated story
        is a permissible. The facts can support multiple rules, and the Executive Branch is allowed
        to chose a particular policy because it wants to win the next election. As long as the agency
        can craft a decision that is “within the brackets”.
        If the Federal Register has sanitized the presentation, we‟ve succeeded in creating a
        reasonable story. The nightmare of politics is irrelevant because bureaucratic expertise has
        come up with a logical story. The law‟s role is to ensure that the bureaucratic can come up
        with a logical and reasonable story.




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        Contra: This reduces political accountability. But if court will just remand the decision
        back to the agency, so that the agency will reformulate its decision into one that can pass
        scrutiny, it can‟t effectively control politics. We might try to articulate a professional norm
        as to how the President‟s staff should conduct itself. Then a violation would create a
        political scandal.


17.21   D.C. Federation v Volpe requires that two conditions be met before an administrative
        rulemaking may be overturned simply on the grounds of Congressional pressure. First, the
        content of the pressure upon the Secretary is designed to force him to decide upon factors
        not made relevant by Congress in the applicable statute. Second, the Secretary‟s
        determination must be affected by those extraneous considerations. “administrative
        agencies are expected to balance Congressional pressure with the pressure emanating from
        all other sources.”
17.22   One way of looking at why ex parte communications are not prohibited in informal
        rulemaking is that there are no formal parties to the proceedings. There is therefore no
        obligation that talking take place in certain persons‟ presence the way it might with formal
        parties. This should, however, be qualified with Nova Scotia type requirements of
        knowledge of the evidence. Judge Wald: we‟ve moved somewhat towards adjudicative
        standard, but not all the way.
17.23   Still need to read 1077 – 1082 and 215 –225.
        Review by Congress
17.24   Congress has enacted a bewildering array of requirements on agencies: hoops to jump
        through.
17.25   Certain types of regulation must be reviewed by Congress. Supreme Court case INS v
        Chada (sp) said that the only way to get rid of a regulation was to pass an ordinary law. But
        Act provides Congress with a means of saying no before the regulation is finalized –
        Congressional veto on regulation. Happened for the first time recently in relation to OSHA
        regulations relating to ergonomic rules for the workplace. Won‟t happen without an unusual
        political configuration. OSHA regs developed and first put forward in the last days of the
        Clinton administration.
        Review by President
17.26   Clear that White House comment does not bother Judge Wald a great deal. “We do not
        believe that Congress intended that the courts convert informal rulemaking into a rarified
        technocratic process, unaffected by political considerations or the presence of Presidential
        power.” There might be several outcomes that could be supported by the record. Judge
        Wald does not seem to might that Presidential prodding might tilt the Agency to one of
        those outcomes over another. This is however different from having the outcome dictated
        by the President.
        Executive Order 12866 (Rakoff: unlikely to be replaced by current administration).
17.27   Inter alia: “In deciding whether and how to regulate, agencies should assess all costs and
        benefits of available regulatory alternatives, including the alternative of not regulating.”
        Maximize net benefits, but does factor in “potential economic, environmental, public health
        and safety, and other advantages, distributive impacts, and equity” (“unless a statute requires
        another regulatory approach”). Very vague. Factoring “distributive impact” into
        cost/benefit. Why is this even in here? Justifies review by these people external to the
        agency: O.I.R.A. Small group of people directly responsible to the President. Attempt to
        give the President greater control over the regulatory system. Review excludes
        “independent regulatory agencies as defined in 44 USC 3502(10).




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17.28   Section 7 (page 1380): resolution of conflicts. To extent permitted by law, conflicts
        between the agency and OMB shall be resolved by the President, or by the Vice President
        acting at the request of the President, with the relevant agency head (and, as appropriate,
        other interested government officials). Unclear as to what exactly is the authority of the
        President.
17.29   Is this all a good thing? Can be seen to recognize that political acceptability is an important
        facet of the rule-making process. On the other hand, how much should the rule of law – as
        made by Congress –count?
17.30   The course has shown continuous compromise and tension between democratic processes,
        the rule of law, and expertise. Role of law to mediate; constant readjusting of values.




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