administrative law outline 12-17-10

8/6/2019 Administrative Law Outline 12-17-10

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ADMINISTRATIVE LAW

I. Introduction: What are Administrative Agencies?

The federal govt encompasses 15 cabinet-level dept. and dozens of other agencies,

boards, commissions, bureaus, and dept. divisions that commonly fall under theheading of admin. agencies that operate in conjunction with and independently ofCongress, the President and the courts.

Traditionally, agencies are viewed as having executive power under the Office ofthe President

rulemaking a high proportion of agency rulemaking seems to consist ofthe exercise of legislative power by filling in the statues (Art. I 1)

1. What is legislative power?

power to make binding rules of conduct to resolve major policy issues

2. Main Principle

Congress can delegate, but it has to be limited (i.e. defined specifically and sufficiently)

adjudicationsimilarly, a substantial number of agency adjudicationsseem to entail exercise of judicial power (Art. III)

1. What is judicial power?

power to adjudicate the rights and obligations of regulated parties under various statutoryprovisions

2. Main Principle

Congress cannot delegate adjudicative powers over private rights

HOWEVER, Congress imposes numerous procedural rules to curtaildiscretionary exercise of these powers. Thus, questions ensue whetherthese delegations of policymaking and adjudication responsibilitiesconstitution an unlawful delegation of duties proscribed to Congress, thePresident and the judiciary.

BUT this is really a balancing act because, practically speaking, agenciesneed to assert legislative authority in order to carry out programmingproscribed by Congress in the organic statute.

II. Relationship between Administrative Agencies and Other Branches of Govt

A. Congress and Administrative Agencies

1. Is Congress Delegation of Legislative Authority to Agencies Constitutional?(The Non-Delegation Doctrine)

Introduction

Congress is vested with the power to legislate in order to (1) maintain accountabilityinherent in the democratic process and (2) because legislation is a decision of social policy(i.e. a fundamental policy decision)

Art. 1, 1 Alllegislative power herein granted shall be vestedin the Congress of theUnited States.

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However, the tradition of creating agencies to facilitate government functioning bygranting agency power issue legally binding rules dates back to 1789.

Congress delegates authority to agencies because of (1) the difficulty in negotiating thelegislation, (2) the impracticality of settling all of the details in a timely fashion (3) thelimited expertise of the Congressmen and (4) the inability of Congress to address all

unanticipated facts that the law will need to address The checks and balances on agency regulation include:

a. organic statutesstated limit of authority, 1, procedures, advisory committees (i.e.front end checking by Congress)

b. generic statutesgeneral policies and procedures that agencies must follow (i.e.APA)

c. Other Congressional oversight, judicial review, removal power of the President,self-regulation (But seeAmerican Trucking)

The Court has tried to reconcile this reality with the non-delegation doctrine in severalways:

a. The Brig Aurora (1813) SCOTUS justified Congress act of giving the President theauthority to lift trade embargos on France/England when those countries ceased to

violate neutral commerce as a mere finder of fact that triggers congressionallydefined consequences.

b. Field v. Clark SCOTUS upheld legislation giving the President the power to imposetariffs upon a finding of fact that free trade with the country would be reciprocallyunequal and unreasonable because the Presidents authority was limited to aspecific action when a named contingency occurred.

c. Butterfield v. Stranahan SCOUTS upheld statute that authorized the Secretary ofTreasury to fix uniform standard of purity for imported tea on the basis of the

legislative standard test (i.e. sufficiently limited scope of discretion).[In sum, as long as Congress made the major policy decision, it could delegate gap-filling to an agency.]

d. J.W. Hampton v. U.S. SCOTUS confirmed legislation that allowed the President toincrease tariff by an amount he deemed necessary to equalize differences in costs ofproduction via an argument that the statute provided an intelligible principle toguide the Presidents actions.

e. Another alternative is for the agency to declare the limit of its powers inadvance. However, the problem with this approach is that the agency can alwayschange the limit

f. Finally, some look to the court to limit agency power via its interpretation of thestatute. However, it is now within the courts authority to correct the democraticprocess.

In sum, SCOTUS went to great lengths to avoid declaring a statute unconstitutional onthe basis of the non-delegation doctrine. SCOTUS has only held delegations of powersunconstitutional in two cases under the 1935 National Industrial Recover Act (NIRA)

because

a. NIRA delegated powers to agencies to cartelize virtually all sector of the economy

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b. many of the powers created by the NIRA were delegated to groups in the privatesector that had economic interests in the markets they were assigned to regulate

c. the Justices were extremely skeptical of the Presidents plan for economic recovery

A.L.A. Schechter Poultry

A.LA. Schechter Poultry Corp. v. United States held statute unconstitutional on thebasis that Congress cannot delegate its legislative authority to a trade or industrialassociation with a financial interest in the sector to enact laws that the associations deemnecessary or wise even imposes limits that specify: (1) that there should be noinequitable restrictions on admission to the trade or industrial association, (2) that theassociation must not be designed to promote monopolies or oppress SMEs and (3) thatthe President has the discretion to approve and amend code recommended by the

associationi.e. no intelligible principle guiding the President

In sum, the delegation of power to the President in Schechter Poultry was found to beunconfined and vagrant.

The delegation of authority to an agency is less objectionable than to a private group,

because under the former there is at least some check on administrative agencies viaprocedures laid out in the APA and the organic statute. When you delegate to anindividual private sector group, there is not even this check on procedure.

Decline of the Non-Delegation Doctrine

Since 1935, SCOTUS has employed other tenuous justifications to avoid holding statuesunconstitutional on the basis that:

a. the statute will only be effective for a limited time

b. there are procedural safeguards that the agency is required to employ

c. actions under the statute are subject to judicial review

d. the statute contains a reference to avoid gross inequality by using a fair andequitable standard

e. although the statute does not contain an explicit standard, the agency and reviewingcourts can employ standards used during war time or other emergencies (i.e. aculture of limitation

f. Congress must have a broad leeway to legislate in areas that effect national securityand foreign relations

OSHA Benzene Case

In the 1970s, the Courts seemed to indicate a renewed interest in the non-delegationdoctrine

a. The Benzene Case (J. Stevens) SCOTUS stated in dicta that if as argued by thegovt - the statute did NOT significantly qualify that standard (i.e. merely a findingof a significant health risk) and that therefore the Secretary is arbitrarily setting thestandard using a cost-benefit approach (i.e. lowest technologically feasible level)then the statute COULD be held unconstitutional under the Courts reasoning inA.A.

Schechter Poultry Corp. [Note that J. Stevens is limiting the authority of theagency without declaring the statute unconstitutional]

Rehnquist (concurring) In answer the question of what the balancing of costs andbenefits of limiting benzene in the workplace, Congress is best suited and most

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obligated to make the choice and has improperly delegated that choice to theSecretary of Labor. [Note that Rehnquist would have held the statuteunconstitutional.]

Marshall (dissenting) The court exceeded its authority in this decision. The judicialinquiry should be confined to making a determination that the statutory language

and legislative intent is plain. Unwise legislation should be corrected by thedemocratic process and NOT the court.

The Non-Delegation Doctrine Today American Trucking

Whitman v. American Trucking(reversed that Court of Appeals decision that onlythe EPAs interpretation of the Clean Air Act violate the Constitution and held that anagency may not cure a piece of legislation that lacks an intelligible principle by limitingits own powers).

The case was remanded for reinterpretation that would avoid a supposed delegation oflegislative power. SCOTUS stated that the scope of discretion (i.e. setting how muchpollutant is too much) is well within the outer limits of the non-delegation doctrine.

Today, the non-delegation doctrine does not pose big issue for delegation of legislativepowers. All that is needed is an intelligible principle. In the words of Scalia in Whitman,SCOTUS has almost never felt qualified to second guess Congress regarding thepermissible degree of policy judgment that can be left to those executing or applying thelaw.

2. Is Congress Delegation of Adjudicatory Authority to Agencies Constitutional?

Introduction

Art. III, 1 vests the judicial power is one Supreme Court and other inferior courtsas Congress shall ordain.

Am. VII In suits at common law, where the value in controversy shall exceed twentydollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall beotherwise re-examined in any Court of the United States, than according to the rules ofthe common law.

Although the Constitution clearly designates the adjudicatory function to the courts,officials of the executive branch exercise judicial power every time they determines howto faithfully executive the laws by going through a process of fact finding anddetermining the meaning and application of the law.

Note the distinction between public and private rights:

a. public rightsrights that do not exist under common law, but are created byCongressional statutes (e.g. social security disability cases involving only theapplicant and the govt)

b. private rights rights established pursuant to state common law (e.g. workerscompensation that pit private parties against each other)

Put simply, public rights are created by Congress and can therefore be assigned to a non-Art III court for adjudication

Also note that given the magnitude of adjudicatory functions performed by agencies, theagencys adjudicative function relieves the courts from a task that would be impracticalif not impossible to perform.

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There are two main questions the Court addresses to answer Art. III and Am. 7challenges to agency adjudication:

a. In what circumstances does Art. III compel adjudication by a life-tenured federaljudge?

b. In what circumstances does the 7th Am. require a trial by jury?

CFTC v. Schorr

Commodity Futures Trading Commission v. Schor(holding that the limited jdx(i.e. reviewable by another court) that the agency holds over state law claims is anecessary incident to the adjudication of federal claims willing submitted by the partiesto the agency and therefore does not contravene separations of powers principles.)

Main principle adjudicatory authority may be delegated: we decline to endorse anabsolute prohibition on such jdx out of fear of where some hypothetical slippery slopemight deposit us.

Factors to consider (1) extent to which the essential attributes of judicial power arereserved to Art. III courts, (2) extent to which the non-Art. III forum exercises the range

of jdx and powers normally vested only to Art. III courts, (3) the origins and importanceof the right to adjudicate, and (4) the concern that drove Congress to depart from therequirements of Art. III (i.e. agency jdx to adjudicate is critical to accomplish the purpose

behind the program).

Granfinanciera v. Norberg

Granfinanciera v. Nordberg (holding that the bankruptcy trustees right torecover a fraudulent conveyance under the federal bankruptcy law is a private right thatrequires the VII Am. right to a trial by jury.)

private Am VII right IF (1) legal in nature and (2) private, i.e. NOT a novel cause ofaction

THUS, if NOT a public right, THEN Congress may not assign its adjudication to aspecialize non-Art. III court lacking the essential attributes of the judicial power. (i.e.employing juries as fact finders)

Main Principle Am. VII doesnt always applyand maybe it sometimes depends

3. Other Means by which Congress Influences Administrative Agencies

The primary means that Congress exercises control over Agencies is by limiting the scopeof power delegated in the organic statute.

Other mechanisms include: (1) other statutes that shape the agencies actions, (2)litigating authority of the DoJ, (3) confirmation process for Agency officers, (4)appropriation process, (5) oversight hearings, and (6) appointment and removal powers.

a. Other Statutes

i. Administrative Procedures Act specifies the procedures that agencies must useto make various categories of decisions and the standards court apply inreviewing those decisions.

ii. Freedom of Information Act requires each agency to publish its rules in theFederal Registry, to make its final decisions in adjudications available at a

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publicly accessible location and to disclose information contained in its records toany person who requests that information subject to nine exceptions.

a. exemptions for duty to disclose circle around potential abuses of the FOIA bycriminal organizations and national security concerns

b. technically Agencies are required to respond within 20 days of request, but

many agencies fall short of this goal due to the difficult task associated withscreening requests for exemptions, the high cost, etc.

iii. National Environmental Policy Act requires every agency to prepare anenvironmental impact statement before it take any major federal action that has asignificant effect on the environment

a. However, SCOTUS has repeatedly held that that NEPA has no substantivestandard. Does this mean that NEPA does not affect agency decision making?

b. Consider that every Agency action is subject to judicial review throughapplication of the arbitrary and capricious standard of review

c. NEPA increases the cost of engaging in many socially beneficial actions and

delays implementation of such actions.iv. Civil Service Act eliminated the prior practice of hiring and firing based on

patronage and requires the govt to employ a meritocratic system of hiring,evaluating and promoting employees.

a. BUT, note the trend in increased outsourcing of various govt functions toprivate contracts

b. ALSO, political appointees tend to fill leadership roles and thus influence thepeople who fill up the bureaucracies. So, how much does this really help?

v. Information Quality Act Requires agencies to act only on the basis of highquality information. But, critiques point out that IQA merely instructs theOffice of Mgt. and Budget to publish implementing guidelines and enforce theIQA against agencies.

a. inspired in part by the EPA rulemaking upheld by SCOTUS in Whitman v.American Trucking Assns in which the EPA relied heavily on a study byresearchers from Harvard in which the researchers where not willing to maketheir findings public.

b. possible negative consequence of the act is that is allows special interests toharass agencies by raising frivolous challenges against scientific studies thatsupport particular policy preferences

b. Allocation of Litigating Authority

i. Some agencies have the statutory authority to go to court to enforce their

statutes, whereas others do not.

ii. Those agencies that do not have this authority must rely on the DoJ to enforcethe statute and the Solicitor Generals Office to argue the case before the SupremeCourt

iii. Very few agencies have this power and therefore must rely upon the SolicitorGeneral to litigate for them and to take positions held by the agencies.

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c. Confirmation Process

i. Art. II 2 gives the President the power to nominate, and by and with theAdvice and Consent of the Senate,appointOfficers of the United State.

ii. Art. II 2 also grants Congress the authority to vest the President with thepower to appoint inferior Officers.

iii. any agency official who has the power to make a final, legally binding decisionmust be an Officer.

iv. Thus, the Senate can wield considerable power through the confirmation processvia veto, extraction of leverage from nominees, threats of embarrassment, etc.

d. Appropriation Process and Oversight

i. All funds spent by the govt must be appropriated by Congress.

ii. See Environmental Defense Center v. Babbitt(holding that DOIs statutory dutyto act on the petition to enlist a species as endangered under the ESA wassuspended during the periods in which it was prohibited from using appropriatedfunds for that purpose.)

iii. Also note that there are multiple committees with jdx to conduct hearings toevaluate an agencys peformance

e. Casework communications by members of Congress with agencies to assistconstituents in obtaining the results they desire from agencies in a timely manner

4. What are the Constitutional Limits on Congress Influence on AdministrativeAgencies?

Legislative Due Process

a. The due process clause prescribes the manner in which Congress may take legislativeaction

b. But, at what point is Congress barred from interfering with Agency action?i. Congress MAY express views on rulemaking b/c it is an informal legislative

process

ii. HOWEVER, Congress MAY NOT express views/involve itself in the adjudicativeprocess b/c this interferes with the formal rules of due process ( Note: the samerule applies to the President).

c. The due process clause of the Fifth Amendment limits the ability of Congress to act incertain ways that are designed to influence agency action in some contexts.

d. See Pillsbury Co. v. Federal Trade Commission (holding that Congressional hearingswhere the Pillsbury case was mentioned more than 100 time and a final decision had

not yet been rendered constituted an improper intrusion into the adjudicatoryprocesses of the Commission)

Constitutional Legislative Procedure

a. No provision of the Constitution explicitly authorizes Congress to use informalmeans to persuade agencies to act in ways that are preferred by members ofCongress.

b. HOWEVER, the ability of Congress to influence informally is a by-product of theformal powers conferred on Congress in the Constitution.

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c. So, what are the requirements when Congress takes formal action???they must actlegislatively

Separation of Powers

B. The President and Administrative Agencies

1. Introduction (p. 141-143) Art. 2, Sec. 1, Cl. 1 The executive power shall be vested in the President.

Art. 2, Sec. 2, Cl. 1 empowers the President to require the opinion, in writing, of theprincipal officer in each of the executive departments, upon any subject relating to theirrespective offices

Art. 2, Sec. 3 the President shall take care that the law be faithfully executed.

formalists a separation of powers principle is violated whenever a categorization of theexercised power and the exercising institution do not match and the Constitution doesnot specifically permit such blending

functionalistinfers that Congress is free to allocate as it pleases among subordinateinstitutions, as long as the overall character and quality of the relationship betweenthose institutions and the named heads of the government is consistent with the lattersperformance of their core functions

2. Presidents Appointment Power

Note that officers of the United States must be appointed in accordance with theAppointment Clause, whereas other federal government employees do not.

Issues arise in broad categories including: other public Ministers and Consuls and allother Officers

Buckley v. Valeo (holding that any appointee exercising significant authority pursuantto the laws of the United States is an Officer of the United States and must therefore beappoint in the manner proscribed in Art. 2, Sec. 2, Cl. 3 of the Constitution).

NOTE: dealt w/ the appointment of Officers to the Federal Election Commission

a. Appellant (formalist) argument Congress is precluded under the principles ofseparation of power from vesting in itself the authority to appoint who will exercisesuch wide ranging rulemaking and substantive enforcement powers (i.e. thePresident nominates and with the Advice and Consent of the Senate appoints)

b. Appellee (functionalist) argumentThe Framers had no intention of denying theLegislative Branch authority to appoint its own officers. Congress can either use theappointment clause OR under grants of substantive legislative authority and theNecessary and Proper Clause appointment that is appropriate to its legislative

function.c. In its rationale, the Ct. noted that that powers given to the Commission that are

investigative and informative in nature could be delegated to a Congressionalappointee, BUT the more substantial powers exercised by the Commission place itsappointment within the Confines of the Appointment Clause.

Morrison v. Olson (upholding appointment procedures for an independent counselto investigate and prosecute certain high-ranking government officials on the basis thatthe Counsel is merely an inferior officer and therefore can be appointed by the court).

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a. Put simply, the Court found that the independent counsel was inferior because thetenure, duration and duties of the position were jurisdictionally confined to oneinvestigation.

b. J. Scalia argued fervently that the Court should have put more emphasis on the scopeof the positions authority and the fact that the Officer was not subordinate to another

officer. Freytag v. Commissioner of Internal Revenue (holding that special trial judges

of the US Tax court are inferior officers who can be appointed by the Chief Judge of theTax Court, BUT disagreeing on the rationale)

a. Main Issue on Rationale Is the Chief Judge the Head of the Department OR is theTax Court a court of law?

b. MajorityAppointment Clause was intended to limit strictly the potential diffusionof the appointment power, thus no Agency can be a Department for the purposes ofthe Appointment Clause unless it is a cabinet-level Agency. As such, the Chief Judgemust be a court of law despite the fact that it is an Art. I court.

i. BUT: makes explicit exception for FTC, SEC, Federal Agency RegulationCommission, the Federal Reserve Bank

c. Concurrence the Framers were attempting to limit congressional involvement inthe appointments process by centralizing the power in the President and his directappointees

d. Note D.C. Circuit holding that SEC is sufficiently Cabinet-like to be a departmentfor Appointment Clause purposes b/c it exercises executive authority over a majoraspect of government policy, and its principal Officers are appointed by the President

with the advice and consent of the Senate and subject to removal by the President.

Presidents Recess Appointments

a. Art. II, Sec. 2, Cl. 3 The President shall have Power to fill up all Vacancies thatmay happen during the Recess of the Senate, by granting Commissions which shallexpire at the End of their next Session.

b. Issues

i. what constitutes a recess appointment? only during intra session recess b/wsessions?

ii. what does the requirement that vacancies happen during the recess mean? (e.g.create Executive paralysis and do violence to the orderly functioning of ourcomplex govt?)

iii. where a statute contains a holdover clause (e.g. FTC, serve until successor takesoffice) can the President use a recess appointment?

iv. Does the Constitution allow Congress to constrain presidential exercise of therecess appointment power with the holdover clause????

3. Presidents Power to Remove

Unlike the Appointment Clause, the Constitution does not mention the power to removeofficers at all

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As such, the Courts have been required to draw inferences w/r to the removal power basedon the characteristics of the Constitution.

Meyers v. U.S. (holding the provisions in the Tenure in Office Act that require theapproval of the Senate for removal of executive officers unconstitutional on the basis thatthat power of removal extends by necessity to the President to execute the law.)

a. a veto by the Senate on nominations for appointment is not the same thing as a vetoon removal

b. when a nomination is made, the President may still choose someone else that canappropriately serve as his alter ego or trusted subordinates in executing the law

c. further, in a very practical sense the President who has work with the person inquestion is in a better informed that the Senate as to whether the individual inquestion can faithfully execute his duties .

d. ONLY GOVERNS UNDER CURRENT LAW where the officer is purely executive

Humphrey v. U.S. (departs fromMeyers holding that the limitations place on thePresident to remove a Commissioner from the FTC only for inefficiency, neglect of duty,

or malfeasance in office do not conflict with the Constitution because theCommissioners duties do not coincide with purely executive functions. Instead, theCommissions function is more in the realm of quasi-legislative and quasi-executive innature).

Morrison v. Olson (holding that the since the independent counsel may be terminatedfor good cause that the Executive through the Attorney General retains ampleauthority to assure that the counsel is competently performing his or her statutory

responsibility ability to make policy decisions an indication that authority is not soleexecutive and therefore may be subject so some limitations)

a. States that the real question is whether the removal restrictions are of such anature that they impede the Presidents ability to perform his constitutional duty

and that the functions of the officials in question should be analyzed in that light.

b. Scalia (dissent) There are now no lines. If the removal of a prosecutor, the virtualembodiment of the power to take care that the laws be faithfully executed, can berestricted, what officers removal cannot?

Free Enterprise Fund v. Public Company accounting Oversight Board(heldunconstitutional a provision of the Sarbanes-Oxley Act that protects members of a newlycreated Public Company Accounting Oversight Board from removal except for goodcause).

a. first principles the Constitution give the power to the President to faithfullyexecute the law which includes hoosing, supervising, and if necessary firinginferior government officials

b. HOWEVER, the Court has two varieties of good cause limitations (1) a limit onthe Presidents power to fire high-level officials (like the Commissioners of theFederal Trade Commission) except for good cause, and (2) laws that protect lowerlevel employees from termination except for good cause when good cause is judged

by higher-level officials whom the President can fire at will

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c. But this case, the Court holds, is different. Here, the SEC cannot remove members ofthe Board without good cause, and the President cannot remove members of the SEC

without good cause. This two-tiered scheme, the majority concludes, goes too far.

4. Presidents Tools to Control Agencies (211-215)

Presidential Signing Statements formal statements issued by the President offeringtheir views regarding the legislations constitutionality and meaning

a. Art. I, Sec. 7 calls for bills that have passed both the House and the Senate topresented to the President who, if he approves.shall sign it.

b. BUT, it doesnt mention signing statements

c. critics argue that the President should not sign bills that he thinks areunconstitutional

d. defenders point out that these statements are not legally binding and thatConstitutional concerns expressed the President typically relate to potentialapplications of the provisions in question

Executive Orders presidential directives that govern the actions of governmentofficials and agencies that often carry the force of law

a. The Constitution does not explicitly authorize the President to issue executive orders

b. Presidents often claim that the provisions of Art. II or more ambiguous statutorylanguage authorize a particular executive order

Office of Management and Budget Control(OMB) and Office of Information andRegulatory Affairs (OIRA)

a. established to assemble, correlate, revise, reduce or increase the budget estimates ofthe several departments or establishments

b. evolved to an information clearinghouse that helps the President know about whatthe various government agencies are doing and to influence their actions

c. Under Pres. Reagan the role of OMB expanded to include supervision that directsagency rulemaking efforts.

III. Agency Rulemaking

A. Introduction to Rulemaking

There two main categories of rules: (1) legislative and (2) non-legislative

Non-legislative rules (categories) (a) interpretive, (b) procedural and (c) policystatements

APA 553(b) and (c) describe three step process for adopting a rule (i.e. notice andcomment rulemaking/formal)

1. issuing notice of proposed rulemaking

2. soliciting comments on the proposal

3. publishing final rule w/ an accompanying statement of basis and purpose

APA 553(b) BUT, interpretive rules, general statements of policy, or rules of agencyorganization, procedure or practice are EXEMPT from these procedural requirements

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Whether a rule is legislative or non-legislative is also significant in terms of the scope andavailability of judicial review

Legislative rules carry the same legally binding effect as a statute. In contrast, non-legislative rules may bind agency employees, but are not legally enforceable against thepublic

One issue that comes up is whether an agency has the power to adopt legislative rules in thecontext of a statute that is not clear on the issue.

National Petroleum v. FTC(holding that the FTC had the power to issue legally-bindinglegislative rules, despite the fact that it had only issued procedural rules for the first fifty

years of the statutes application and the organic statute was not explicit on the issue.)

Note that Congress later enacted legislation that affirmed the FTCs power to issuelegislative rule, BUT required the FTC to use procedures that differ from the three stepprocess (i.e. required opportunity to present oral evidence and cross examination ondisputed material facts when necessary for fair determination of the rulemakingproceedingsimilar to the on the record after opportunity for an agency hearingstandard in formal rulemaking proceedings.

B. Relationship between Agency Rulemaking and Adjudication

Why would an agency promulgate legally binding rule (considering the burdensomerequirements in APA) when it much easier to adjudication on a case by case basis?

Rules provide a means through which agencies can limit the discretion of anAdministrative Law Judge (ALJ) by resolving one or more issues that frequently come up

Thus leading to greater accuracy, consistency, and/or efficiency in administering aparticular statutory scheme

1. Heckler v. Campbell(holding that HHS may rely on published medical vocationalguidelines to determine a claimants right to social security benefits)

Guidelines promulgated by the rule, relieved HHS of the need to rely on vocationalexpert by establishing via rulemaking the type and numbers of jobs opportunities thatexisted for the class of applicant in question

standard of reviewarbitrary and capricious

2. Bowen v. Yuckert(holding that both the language of the Social Security Act support theSecretarys decision to require disability claims to make a threshold showing (i.e. via 5-stepseverity regulation) that their medically determinable impairments are severe enough tosatisfy the regulatory standard).

Plaintiffs argument is that the agencys rule does not comport with the statutesrequirement that the agency consider BOTH (1) the severity of the disability and (2) the

applicants age, education and work experience. Since the Severity Regulation dismissedthe inquiry upon a finding that the applicants disability is not sufficiently severe, it failedto apply the balancing approach that the Social Security statute intended and thus, theregulation should be invalidated.

3. SEC v. Chenery (holding that an agency has that the power to issue rules through therulemaking process has the discretion to use the traditional common law rulemaking instead(i.e. to announce broad rules of conduct in the course of resolving a particular adjudicationand then apply the rules as binding precedent in subsequent cases)).

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In sum, an administrative agency retains the power to deal with problems on a case-by-case basis. That such an action has a retroactive effect is not necessarily fatal to theadjudications validity.

Chenery is also cited to support the proposition that the court is powerless to affirm[an] administrative action by substituting what it considers is a more adequate or proper

basis because to do so would propel the court into the domain which Congress has setaside exclusively for the administrative agency.

4.Bowen v. Georgetown U. Hospital(holding that an agency cannot use the APA 553process to issue a rule that has any retroactive effect except in the rate case in whichCongress has explicitly authorized an agency to issue retroactive rules)

However, as in Chenery II, the Court recognized than an agency can use the adjudicationprocess to issue a rule that has retroactive effect

BUT, this ability to act retroactively via adjudication is not unlimited. Chenery IIindicated that such adjudication may be impermissible if the ill effect of the retroactiveapplication of a new standard outweighs the statutory interest.

Factors to consider in balancing interest:a. case of one of first impression

b. abrupt departure from a well-established practice

c. reliance on the former rule

d. degree of burden

e. statutory interest to apply rule despite reliance of party

C. Formal and Informal Rulemaking

1. APA Rulemaking Procedures

Many agencies routinely choose rulemaking as their preferred method for adopting rulesof general applicability.

Such rulemaking procedures generally must comply with the APA requirements.

However, the APA recognizes several different categories or rules and imposes differentprocedural requirements for each one:

a. procedure rules, interpretive rules and policy statementsvery few proceduralrequirements

i. APA 522 tells agencies to publish at least some of such rules in the FederalRegistry

ii. APA 553(d) requires agencies to publish procedural rules at least 30 days

before they become effective

b. legislative rulemore onerous procedural requirements (See APA 553(b) and (c).)

i. must publish notice of the proposed rulemaking in the Federal Register

ii. must offer all interested persons the opportunity to comment on the proposedrule

iii. must publish the final rule in the Federal Register accompanied by a concisestatement of the rules basis and purpose

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c. formal rulemakingdistinguished from informal rulemaking in that an oralevidentiary hearing is required for formal rulemaking as described inAPA 556and 557.

2. The Decline of Formal Rulemaking

Most contemporary rulemaking is informal. In fact, agencies that may only issue

legislative rules through formal rulemaking have pretty much abandon all efforts tomake legislative rules.

When Congress initially adopted the APA, adjudication rather than rulemaking was thenorm for agency policymaking.

However, with the pressure of increased caseload and the need for a more definitestandard, agencies began to embrace rulemaking.

Most agencies believed they were required to use formal rulemaking where statutesauthorized them to act only after a hearing.

So after hearing is a trigger for the formal process BUT now.

See United State v. Florida East Coast Ry. Co(holding that the treatment of theterm hearing in the organic statute does not by its own force require the Commissioneither to hear oral testimony, to permit cross-examination of Commission witnesses, orto hear oral arguments.)

a. after hearingdoes not necessitate a formal rulemaking process

b. NOW on the record after opportunity for an agency hearing magic words toindicate the need for a formal rulemaking process

As a result of the Courts holding inFlorida East Coast Railroad, agencies have largelyceased to engage in formal rulemaking.

In fact, when Congress adds on the record language to a statute, it is effectively

eliminating/reducing the agencys ability to utilize rulemaking to effectuate legal policy,and thus erodes the agencys regulatory power.

3. The Evolution of Informal Rulemaking

With the virtual disappearance of formal rulemaking afterFlorida East Coast Railroad,agencies seeking to promulgate legislative rules typically employ the informal notice-and-comment procedures of APA 553 (b) and (c).

Prior to 1967, the courts rarely reviewed agency rules issued via an informal process. Arule typically was not considered ripe for review until an agency applied the rule in anenforcement proceeding

However, from 1967-1983 judges began interpreting APA 553 (b) and (c) to require

more expansive procedural burdens.

See Abbott Laboratories v. Gardner(announcing a new test to determine whethera rule is ripe for review by asking (1) whether the issues raised by the petition aresusceptible to judicial resolution prior to the application of the rule in an enforcementproceeding and (2) whether the petitioner would be subject to hardship as a result ofdeferral of review).

a. TheAbbott Labs test rendered a high proportion of agency rules ripe for pre-enforcement review

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b. Further, there was no down-side risk to initiate a pre-enforcement review proceedingsince the party would not be subject to civil, criminal or even collateral damages as aresult of the hearing

In the Pre-Abbott Labs environment, the courts considered whether the rule was validusing the record of the enforcement proceeding. AfterAbbott Labs, judges only had the

record of the rulemaking proceeding which consisted of the NOPR, the comments on theNOPR from the public and the final rule incorporating a statement of its basic purpose.

Reviewing courts often concluded that rulemaking records where inadequate andvacated rules on the ground that the agency had not created a record sufficient to allowthe court to engage in a meaningful review.

As a result, agencies where demanded to (1) conduct oral evidentiary hearings in manyrulemakings, (2) issue elaborate and lengthy NOPRs at the beginning of a majorrulemaking and (3) make long and detailed statements of the basis and purpose of finalrules.

See Vermont Yankee Nuclear Power Corp. v. NRDC(remanding D.C. Circuitdecision on the basis that the Court should not stray beyond the judicial province to

explore the procedural format or to impose upon the agency its own notion of whichprocedures are best or most likely to further some vague, undefined public good.).

D. Procedural Requirements for Informal Rulemaking

1. Notice

APA 553(b) general notice of proposed rulemaking shall be published in the FederalRegister UNLESS persons subject are named and either personally server OR otherwisehave actual notice.

Notice shall include:

a. time, place and nature of the public rulemaking proceedings;

b. reference to the legal authority under which the rule is proposed; and

c. either the terms or substance of the proposed rule or a description of the subjects andissues involved

Shell Oil Co. v. EPA (held that the EPA rule was not foreseeable merely becausecomments received in response to the rulemaking appeared to anticipate the rule. Theambiguous comments and weak signals from the agency gave petitioners no suchopportunity to anticipate and criticize the rules or offer alternative and thus the EPArules must be set aside)

a. Noted that an unexpected intention cannot convert a final rule into a logicaloutgrowth that the public should have anticipated. SeeSmall Refiner Lead Phase-

Down Task Force v. EPA.

b. Under the standard of the APA, notice necessarily must come - if at all from the Agency. SeeSmall Refiner

c. logical outgrowth and sufficiently foreshadowed phraseology is interchangeable

d. BUT, agencies cannot be expected to amend their NOPRs for every unanticipatedcomment or suggestion to which they respond by altering their proposal. SeeIntl.

Harvesters Co. v. Ruckelshaus.

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Portland Cement Assn v. Ruckelshaus (invalidating EPA standard ofperformance due to the critical defect in the decisonmaking process whereby the EPApromulgated rules on the basis of inadequate data or data that was, to a critical degree,only know to the agency).

a. BUT, a court may not require an agency to disclose information received after the

comment period is closed IF (1) the data was publicly available and the challengingparty actually responded to it or (2) the technical background of the rule has been thesubject of extensive debate for a substantial period of time.

b. Note that a court MAY allow an agency to rely on undisclosed studies or other datathat is not critical, perhaps b/c such information merely supplements that which

was disclosed in the NOPR OR b/c the studies or other data only support secondaryjustification for the agency action.

American Radio Relay League, Inc. v. FCC(remanded rule to the FCC b/c itfailed to satisfy the notice and comment requirements of the APA by redacting studies on

which it relied in promulgating the rule and failed to provide a reasoned explanation forits choice of the extrapolation factor for measuring Access BPL emissions).

a. among the information that must be revealed for public evaluation are the technicalstudies and datathat was employed in reaching the decisions to propose particularrules.

b. Public notice and comment regarding relied-upon technical analysis are the safetyvalves in the use ofsophisticated methodology.

c. rule of prejudicial errorthe court will not set aside a rule absent a showing by thepetitioner that they suffered prejudice from the agencys failure to provide anopportunity for public comment in sufficient time so that the agencys decisions may

be framed with comment in full view.

[See practice problems on p. 408-409]

2. Statement of Basic Purpose An agency does not need to respond to every comment, but it must respond in a

reasoned manner to significant comments received.

U.S. v. Nova Scotia (holding that the FDAs concise general statement required by theAPA was inadequate by leaving vital question raised during the notice and commentperiod unanswered)

a. The court cannot discharge its role unless the agency is held to a high standard ofarticulation to give a reason why one course of action was selected instead ofanother

b. Need to be able to see what major issues of policy were ventilated by the informal

proceedings and why the agency reacted the way it did.c. These concise general statements are a safeguard against arbitrary decision making

by the agency

d. One may recognize that even commercial infeasibility cannot stand in the way of anoverwhelming public interest. Yet the administrative process should disclose, atleast, whether the proposed regulation is considered to be commercially feasible, or

whether other considerations prevail even if commercial infeasibility isacknowledged.

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3. Ex Parte Communications

APA 557(d)(1) prohibits ex parte communications in formal adjudication and formalrulemaking

Although the APA does not deal directly w/ informal rulemaking. This trilogy of casesestablished that: (1) must disclose to public when they form a basis for action, (2) thelatter are prohibited between form notice of rulemaking and decision-making, (3)motivations irrelevant, just need a reason, (4) the decision maker disqualified if hasunalterably closed mind.

a. Home Box Office v. FCC(stating that once notice of a proposed rulemaking hasbeen issued, agency official/employees should refuse to discuss matters relating tothe disposition of a rulemaking proceeding with any interested private party priorto the agencys decision.)

i. highlights importance of the record as a reference point for the reviewing courtand disclosure is important when a basis for action

ii. all communications must be placed in the public domain immediately after thecommunication is received so that interest parties may comment

b. Action for Childrens TV v. FCC(modified Home Box Office ruling by drawingthe line at the point where rulemaking proceedings involve competing claims to a

valuable privilege b/c it reasoned this is the point where unfair advantage outweighsthe practical burdens of requiring additional comments from the public).

i. Note that ACT was distinguished from HBO in that the informal rulemakingundertaken did not involve such conflicting private claims to a valuable

privilege BUT instead the possible formulation of programming policy revisionsof general applicability

c. Sierra v. Costle (holding that it was not unlawful not to docket a face-to-face policysession involving the President during the post-comment period, since the agencymake no effort to base the rule on any information or data arising from thatmeeting.

i. Our form of government simply could not function effectively or rationally if keyexecutive policymakers were isolated from each other and from the ChiefExecutive. Single mission agencies do not always have the answers to complexregulatory problems.

ii. NoteD.C. Federation of Civil Associations v. Volpe (requiring two

conditions to be met before an administrative rulemaking is overturned simplyon the grounds of Congressional pressure: (1) the content of the pressure uponthe Secretary is designed to force him to decide upon factors not made relevant

by Congress in the applicable statute and (2) the Secretarys determination isaffected by those extraneous considerations.

4. Bias Decisionmaker

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Association of National Advertisers v. FTC(holding that the mere discussion ofpolicy or advocacy on a legal question, however, is not sufficient to disqualify anadministrator).

a. Analogized the role of the Administrator to that of the legislature

b. When a proceeding is classified as rulemaking, due process ordinarily does not

demand procedures more rigorous than those provided by Congress (SeeVermontYankee).

c. Stating it never intended the Cinderella rule to apply to a rulemaking procedure suchas the one under review. The latter disqualifies a decision maker if a disinterestedobserver may conclude that he has in some measure adjudged the facts as well as thelaw of a particular case in advance of hearing it.

d. In the rulemaking context, the factual component of the policy decision is not easilyassessed in terms of an empirically verifiable condition.

e. Rulemaking involves the kind of issues where a month of experience will be worth ayear of hearingsthus application of the Cinderellas strict law-fact dichotomy wouldnecessarily limit the ability of administrators to discuss policy questions.

5. Exemptions from Rulemaking Procedural Requirements: Subject Matter, GoodCause, and Procedural Rules Exemptions

Interpretive Rule Exemption

a. APA 553(b)(3)(A ) exempts interpretive rules from informal rulemakingprocedure requirements

b. But, how do you distinguish legislative rules that require formal rulemakingprocedures from mere interpretive rules?

Legislative Rules Interpretive Rules

Agencies must have statutoryauthority to issue. See National

Petroleum (p. 345)

Have force and Effect of Law(like statutes). SeeHeckler v.Campbell.

Entitled to strong deferencefrom the Court

Affecting individual rights andobligations.See Chrysler Corp.v. Brown.

Dont need expressed statutoryauthority. The authority derivesfrom the Agencys basicexecutive authority to interpretthe law.

Do NOT have the force of law

Just the Agencys view; theCourt can either accept it or not

c. Although SCOTUS often referred to particular regulations as either legislative orinterpretive, the Court has never articulated a clear standard for distinguishing

between the two categories.

d. American Mining Congress v. MSHA (announcing four-pronged test fordetermining whether a rule is legislative or interpretive (1) whether in the absenceof the rule there would not be an adequate legislative basis for enforcement action or

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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 and (4)whether the rule effectively amends a prior legislative rule).

i. If the answer to any of these questions is YES legislative rule

ii. A rule does not become an amendment merely because it supplies crisper andmore detailed lines than the authority being interpreted.

[Q: At what point does it become crisper? At what point does it become a line?]

Policy Statement Exception

a. APA 553(b)(3)(A)also exempts general statements of policy from formalrulemaking procedures

b. Like interpretive rules, policy statements are not legally binding on members of thepublic or on the courts. They also are not subject to judicial review until they areapplied in a particular case (i.e. ripeness issue)

c. Courts trying to distinguish between policy statements and legislative rules often askwhether the agency action is question has binding effect.

d. Pacific Gas & Electric v. FPC(analogized a general policy statement to a pressrelease that presages an upcoming rulemaking or announces the course which theagency intends to follow in future adjudications.)

i. beneficial function of the general statement of policy : (1) provides a formalmethod by which agencies can express its views, (2) encourages publicdissemination of the agencys policies prior to their actual application and (3)facilitates long-range planning within the regulated industry and uniformity inareas of national concern.

ii. binding effects test asks whether the agency action is finally determinative of

the rights and duties of a particular persone. Community Nutrition Institute v. Young (holding that FDA action levels for

aflatoxin contamination are legislative rules subject to the notice-and-commentrequirements of 553 on the basis that (1) the language employed by FDA suggeststhat the action levels have present, binding effect and (2) the FDA policy statementpurports to bind itself

i. restricting an agency more specifically (by a number, action level)

E. Presidential Control of Agency Rulemaking

1. Systematic methods for controlling rulemaking via:

Office of Management and Budget (OMB) to assemble, correlate, revise, reduce, or

increase the budget estimates of the several departments or establishments

a. serves as an information clearinghouse to help the President discern what variousgovt agencies are doing and to influence their actions

b. analyze the costs of proposed rules as well as possible alternatives to regulation (Nowrequired to be done w/in Agencies themselves????)

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Office of Information and Regulatory Affairs (OIRA) subsidiary to OMB that isresponsible for monitoring and reducing the burden of paperwork across the federal govtand also w/ respect to the private sector

2. Executive Orders

presidential directives that govern the actions of govt officials and agencies that often carry

the force of law

F. Court Review of Agency Rulemaking: Arbitrary and Capricious (Hard Look) Review

1. Most rules are reviewable by the courts, as provided in the organic statute as per:

pre-enforcement review, time limit, who may seek review and legislative facts

types of review (i.e. based on the record of the agency, substantial evidence based on therecord as a whole, arbitrary and capricious),

arbitrary and capricious evolved to Hard Look review

a. APA 706(2)(A) instructs reviewing courts to set aside agency action found to bearbitrary and capricious

b. Courts began to vacate agency rules if they concluded that the statement of basis andpurpose that the agency incorporated in the final rule did not demonstrate that theagency had taken a hard look at the issue and that the agency had not explained to thecourts satisfaction why it resolved each contested issue as it did.

c. Have employed the doctrine to delve much more deeply into the quality andthoroughness of agency reasoning

d. Normally, an agency rule would be arbitrary and capricious if the agency has (1) relied onfactors which Congress has not intended it to consider, (2) entirely failed to consider animportant aspect of the problem, (3) offered an explanation for its decision that runs

counter to the evidence before the agency, (4) it is so implausible that it could not beascribed to a difference in view or the product of agency expertise. (See SEC v. CheneryCorp)

e. BUT, We will uphold a decision of less than ideal clarity if the agencys pather may bereasonably discerned. (See Bowman Transp.)

2. National Tire Dealers v. Brinegar( holding that while an agency may act after informalrulemaking procedures upon the basis of information available in its own files, and upon theknowledge and expertise of the agency, the Secretarys allusion to information and knowledgeoutside the record was unpersuasive, i.e. arbitrary and capricious, in the light of the powerfuldoubts raised by the on-therecord comments of petitioners and other about the practicabilityof the requirements.)

standard of review the paramount objective is to see whether the agency, given anessentially legislative task to perform, has carried it out in a manner calculated to negate thedangers of arbitrariness and irrationality in the formulation of rules for general applicationin the future

3. Motor Vehicle Mfrs. v. State Farm( holding that the agency failed to present an adequatebasis and explanation for rescinding a requirement and that it was therefore arbitrary andcapricious.)

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Must offer a rational connection between the facts found and the choice made; reasoneddecisionmaking.

An agencys view of what is in the public interest may change, either with our without achange in circumstances. But an agency changing its course must supply a reasonedanalysis.

4. NFC v. Fox Television (finding that the FCC did not act arbitrarily and capriciously indeviating from its prior policy and refusing to apply a more stringent standard of review to theaction because it changed its policy or because it had implications on constitutional liberties).

Majority noted that such claims may be set aside by the court on the basis of itsunlawfulness 5 U.S.C. 706(2)(A)

Three Part Test Applied by Lower Courts: (1) that the agencys new policy be permissibleunder the statute, (2) that the agency have good reasons for the new policy, and (3) thatthe agency believe that the new policy is better, which the conscious change of courseadequately indicates.

G. Evaluation of Rulemaking

1. Ossification and Responses

Decisions in cases like Portland Cement, Shell Oil, Nova Scotia Food Products and StateFarm have greatly increased the time and the agency resources required to issue a major rule

Arbitrary and capricious or hard look review under APA 706(2)(A) has had a similareffect.

Added requirements that judges have imposed on the informal rulemaking process have, inturn, produced a phenomenon that may scholars call ossification that is a tendency foragencies to refrain from using the informal rulemaking process at all.

BUT other scholars point to the fact that Agencies issue thousands of pages of new rules eachyear. Process is just slowed

Regulatory Flexibility Act adds procedures when an agency issues rules that affect smallentities which essentially require agencies to further explain the reasons and consequences

behind their rules.

2. Negotiated Rulemaking

agency assembles representatives of various parties who are interested in the outcome of arulemaking for the purpose of negotiating the proposed rule

process begins w/ a public notice negotiating committee established neutral

mediator/facilitators chairs the sessions consensus reached NOPR issued notice andcomment, etc.

PRO: (1) reduces the amount of time that an agency needs to promulgate regulations, (2)decreases litigation challenging the regulation once finalized

CON: (1) heightens conflict by excluding some interested parties, (2) any consensus builtlikely to unravel as agencies consider other voices through the notice and comment process

Posner an abdication of regulatory authority to the regulated, the full burgeoning of theinterest-group state, and the final confirmation of the capture theory of the administrativestate.

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Note decline in the use of this method of rulemaking

3. Direct Final Rulemaking

Involves issuing regulations in the Federal Register with a notice that they will become finalon a given future date unless, within the designated comment period, some interested partyfiles comments requesting changes or criticizing the regulations.

If the agency receives negative comments, then follows NOPR process or if it receivesmaterial or substantial negative comments

Under either approach, the agency will publish the rule if it receives only favorablecomments or no comments at all.

4. Remand without Vacatur

controversial remedy issued by a reviewing court that merely remands the regulation to theagency for further action while allowing the rule to remain in effect

whether this remedy is appropriate depends upon the seriousness of the ordersdeficiencies as well as the disruptive consequences of invalidating the rule.

supporters of this remedy note that judicial vacation of an agency rule may seriously disruptagency efforts to implement statutory requirements and accomplish statutory goals

dissenters, however, point out that 706(2)(A) requires a reviewing courts (shall) to vacatethe rulei.e. no other remedy is allowed under the APA.

IV. Adjudication

A. Due Process Protection

1. When Does the Process Apply

Due process requirements attach to agency adjudication, but not to agency rulemaking

a. adjudication agency process for formation of an order w/ order including licensingand disposition, of an agency in a matter other than rulemaking. APA (Appendix B)

b. rulemakingagency process for formulating.a rule. w/ rule defined as an agencystatement of general or particular applicability and future effectdesigned to implement,interpret, or prescribe law or policy.

Londoner v. Denver(holding that a discretionary tax assessed on landowners violateddue process principles in that they were entitled to a hearing and must have notice, eitherpersonal or by publication, or by a law fixing the time and place of the hearing).

Bi-Metallic v. State Board(distinguished from Londoner in that the rule was generallyapplicable to all property holders of the city and that the property owners were notexceptionally affected, in each case upon individual grounds.)

2. Defining Life, Liberty and Property

If the action is adjudicative (i.e. falls on theLondonerside of theLondoner/Bi-Metallicdistinction), then the Court must decide whether the action deprives any person of life,liberty, or property. And if so, what process is due the person

Three Considerations : (1) Does the person have life, liberty or property; and (2) Does theperson have an interest? (3) If so, what procedures are required by the Constitution?

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a. propertycourts tend to defined property narrowly w/ reference to common law(e.g. real or personal property)

b. libertyQuestion arise as to whether the opportunity to apply ones labor and skillfall under this definition.

Over time, SCOTUS has increased the scope of due process.

Goldberg v. Kelly (holding that a States termination of public assistance paymentswithout affording a pre-determination evidentiary hearing denies the recipient proceduraldue process)

a. Notes that a critical fact is that anyone whose govt entitlements end may be deprivedof benefits for which he is eligible since he lacks the independent resources needed toseek redress from the welfare bureaucracy.

b. One compelling state interest argument the Court points out that the interest ofthe eligible recipient in uninterrupted receipt

Board of Regents v. Roth (holding that although there might be a case in which a Staterefused to re-employ a person under such circumstances that interests in liberty would be

implicated, but that this was not one of them.)

a. The Constitution does not require opportunity for a hearing before the nonrenewal ofa non-tenured teachers contract UNLESS there is a show that the decision not torehire somehow deprived the person of an interest in liberty or that there was aproperty interest in continued employment, despite the lack of tenure or a formalcontract

b. liberty interest (def.)not merely freedom from bodily restraint, but also the rightto contract, engage in any common occupation of life, acquire useful knowledge, tomarry, establish a home and bring up children, to worship God and generally enjoythose privileges long recognized

c. So, had the State made any charges against Roth that might seriously damage hisstanding and association with the community, then he might have a liberty interest of

which he was deprived by the State.

d. Here, however Roth makes no such suggestion and was merely denied an abstractneed or unilateral expectation. Further, no interest created under common lawcontract rights

Perry v. Siderman (holding that the respondents lack of a contractual or tenure right toreemployment, taken alone, DOES NOT defeat his claim that the non-renewal of his contract

violated the First and Fourteenths amendments)

a. Claimed that the decision not to rehire him was based on his public criticisms of thecollege administration and thus infringed on his right to freedom of speech

b. Also claimed that their failure to provide him an opportunity for a hearing violatedthe Fourteenth Amendment guarantee of procedural due process

c. The lack of a contract was immaterial to his free speech claim. Found that there is agenuine issue of fact as to whether the college refused to renew the teaching contracton an impermissible basis. Thus, summary jdgt was improper.

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d. Looked at de facto program and the fact that he was under that program wassignificant. the promisors words and conduct in light of the surroundingcircumstancesand the meaning of these words in the past significant.

3. Procedures Required by Due Process

Matthews v. Eldridge (holding that a disabled worker is not entitled to an evidentiary

hearing prior to a withdrawal of benefits because (1) the nature of the interest of disabledworkers need is not analogous to that of public assistance beneficiary in Goldberg and (2)the nature of the govt interest in providing benefits to the disabled worker is outweighed

by the cost to the state that would be imposed by staying on benefits while the adjudicatoryprocedure is pending and (3) in Goldberg written submissions were inadequate because ofthe nature of the issue whereas in this case written submissions by doctors were adequate).

a. Eldridge three part balancing test individual v. public interest v. nature of the issue

b. Goldberg is the only case in which the Court has held that due process requires an oralevidentiary hearing BEFORE the government may deprive a person of a protectedinterest

c. In many cases, the Court has held as it did in Eldridge that a pre-deprivation paperhearing is adequate if the individual has the right to a post-deprivation oral evidentiaryhearing.

d. J. Rehnquist the bitter with the sweet idea that if an individual relies on astatute as the basis for a right that is protected by due process, he must take the bitter

with the sweet (i.e. he must accept the procedural contours of the right along with thesubstantive contours of that right)See Arnett v. Kennedy (holding that theemployees property interest in his govt employment was limited to the proceduralprotections granted by Congress when it strengthened statutory jobs protections for civilservice workers.)

Cleveland Board of Education v. Loudermill(holding that the bitter with the sweetapproach misconceives the constitutional guarantee of due process and that the due processclause provides that certain substantive rights, i.e. here a predetermination.)

a. Claim was against a OH state law for classified civil servants where he could beterminated only for cause and could obtain administrative review if discharged. Thestatute did not provide that the employee an opportunity to respond to the chargesagainst him prior to removal.

b. BUT, the pretermination hearing need not be elaborate. It need only be an initial checkagainst mistaken decision essentially, a determination of whether there are reasonablegrounds to believe that the charges against the employee are true.

Hamdi v. Fumsfeld(holding that although Congress authorized the detention ofcombatants in the narrow circumstances alleged here, due process demands that a citizen

held that a citizen held in the U.S. as an enemy combatant be given meaningful opportunity tcontest the factual basis for that detention before a neutral decisionmaker)

a. Ct. applies Eldridge balancing test (1) individual interest in being free, (2) risk oferroneous deprivation of citizens liberty, and (3) govt interest

b. J. Scalia (dissent) these are not normal criminal proceedings subject to restrictionsof habeas corpus. Having found a congressional authorization for detention of citizens

where none clearly exists; and having discarded the categorical procedural protection of

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the Suspension Clause; the plurality then proceeds under the guise of due process toprescribe what procedural protection IT thinks is appropriate.

basicallythere is no place for this test where the Constitution (via warpowers) and common law already supply an answer.

c. J. Thomas (dissent) the court lacks the expertise and capacity to second guess the

federal govt decision in exercising its war powers. In using the Eldridge test theplurality utterly fails to account for the govts compelling interest and for our owninstitutional inability to weigh competing interest correctly.

B. Statutory Procedures in Adjudication

1. Formal Adjudication

Actions are governed by APA 554-558

An Administrative Law Judge (ALJ) presides over an oral evidentiary hearing and writes anopinion that includes findings of fact and conclusions of law

APA 554(a) talks about when an agency must use the elaborate formal proceduresdescribed in 554, 556, and 557 (i.e. in every case of adjudication required by statute to bedetermined on the record after opportunity for an agency hearing, except as otherwiseprovided)

TheFlorida East Coast Railway decision (dealing w/ when formal procedures arerequired for Agency rulemaking) complicated the question of when statutory hearings arerequired in the context of adjudication.

Chevronclarified this question, employing a two part test for judicial review of agency

interpretations of statutes that they administer: (1) determine whether the meaning is clearand (2) if ambiguous whether the Agencys interpretation is reasonable.

In sum, Chevron held that courts must defer to an agencys reasonable interpretation ofambiguities in the statutes that they administer

Since 1984, every circuit court that has addressed the issue has either held outright that theholding ofFlorida East Coast Railway applies to adjudication (i.e. must have phraseon the record to trigger formal procedures) or has deferred to the agencys interpretationof the statute as not requiring APAs formal procedures.

2. Informal Adjudication

If an agencys organic statute lacks the words on the record or some other verbal formation

that explicitly requires an oral evidentiary hearing, the agency is free to engage in informaladjudication.

The vast majority of agency organic statutes DO NOT include this language and therefore donot trigger the procedural requirements proscribed by APA 554, 556, and 557.

However, due process may impose other procedural requirements

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See Citizens to Preserve Overton Park Inc. v. Volpe (stating that formal findingswhere not required in this case where there is an absence of a statutory directive and thenature of the agencys action is unambiguous).

a. The final inquiry is whether the Secretarys actions followed the necessary proceduralrequirements. Here the only procedural error alleged is the failure of the Secretary to

make formal findings and state his reason for allowing the highway to be built.b. Here the statutes did not require formal findings and the Secretarys determination was

clearly supportable. However, the Court found that the post hoc rationalization was notsufficient. Thus, the case was remanded to be reviewed by the District Court based onthe full administrative record that was before the Secretary at the time the decision wasmade and not merely the litigation affidavits.

c. since there was no official findings, the only way to review is to examine the decisionmakers themselves

C. Separation of Functions in Adjudication

Due process requires a neutral decision-maker (i.e. a decision maker who is free ofimpermissible bias.

The courts have long struggled to apply this requirement to the context of administrativeadjudications.

One means of achieving neutrality is to separate the administrative function of investigatingand prosecuting cases and adjudicating the outcome.

See APA 554(d) and 556(b)restricting which agency employees may preside over thetaking of evidence and render decisions in agency adjudication

APA 554(d) explicitly prohibits employees serving as adjudicators from performinginvestigative or prosecutorial functions and vice versa

APA 556(b) restricts those presiding over the taking of evidence to (1) the agency, (2)one or more members of the body which comprises the agency, or (3) one or moreadministrative law judgesall of whom must proceed in an impartial manner includingpossible disqualification for bias.

HOWEVER, these APA Requirements subject to Two Important Limits:

a. requirements apply only to formal adjudication

b. even when the formal adjudication provisions of the APA apply, the agency is free tosubstitute its opinion for that of an administrative law judge and the agency itself isnot subject to the structural restrictions imposed by the APA

i.e. the Secretary, Administrator or Commissioner of an agency has the power toorder and investigation, order initiation of proceedings to enforce the law andmake a final decision that the conduct at issue violates the law.

Withrow v. Larkin (holding that the state medical examining board could properly rulewith regard to the merits of the same charge it investigated and that this combination ofinvestigative and adjudicatory powers did not create an unconstitutional risk of bias.)

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a. To makes its case, the petitioner would have to overcome a presumption of honestyand integrity afforded adjudicators and that a realistic appraisal of psychologicaltendencies and human weaknesswould pose a risk of actual bias.

b. Analogizes to the judicial court system and points out that it finds no reason toimpose a higher standard on administrative agencies than Art. III judges.

c. BUT notes that its ruling should not be construed to say that there is nothing to theargument that those who have investigated should not then adjudicate.

d. Cases where risk of bias is too high (1) adjudicator has a pecuniary interest, (2) inwhich he has been the target of personal abuse, OR (3) criticism.

e. Other Claims (1) prior exposure to an issue, (2) prior expression of views on anissue

The Split Enforcement Model

a. Alternative to the APA model that divides responsibility for investigation andenforcement from adjudication. (e.g. OSHA (rule maker), OSHRC (adjudicates casesinitiated by OSHA)

D. Judicial Review of Agency Adjudication

In addition to the procedural constraints imposed by the APA, agency action is also limitedby judicial review of the outcomes reached in the course of agency adjudication.

APA 706 articulate standards governing judicial review of agency actions generally

substantial evidence test fact (formal)

arbitrary and capricious test policy/ hard look review

1. Issues of Fact

Universal Camera v. NLRB (affirming the use of substantial evidence test to gauge the

adequacy of the evidence to support the agencys finding of fact and providing that the wholerecord should be considered when making this determination).

a. substantial evidence testdifferent when applied to legislative facts ( i.e. generalfacts looking for a rational connection to the conclusion that the agency reached) v.formal adjudication (i.e. determination of what happened)

b. Notice that this test is highly deferential to the agency findings

c. Also note that APA 706 (2)(E) only calls for judges to apply the substantialevidence standard in cases that are (1) subject to sections 556, 557 and 557 (i.e. thoserequiring formal adjudication) OR (2) otherwise reviewed on the record of an agencyhearing provided by statute.

d. Since most agency adjudications are informal, the question then is when does thesubstantial evidence test actually apply?

e. Alternatively, where the substantial evidence test does not apply, the APA 706(2)(A) requires the arbitrary and capricious standard.

f. However, the Court has never articulated the differences between these two tests intheir application to findings of fact.

Assn of Data Processing v. Board of Governors (holding that the substantialevidence requirement applicable to our review here demands a quantum of factual support

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no different than from that demanded by the substantial evidence provisions of the APAwhich in turn is no different from that demanded by the arbitrary and capricious standard).

a. Note that Scalia justifies equating these standards in part by stating that otherwise anadjudicatory order that that applies to only one regulated party would be subject tomore rigorous judicial review (under the substantial evidence standard) than a

rulemaking of general applicabilityb. Case also noted that the APA 604, 606 requires substantial evidence to be found

within the record of closed-record proceedings to which it exclusively applies

c. Thus, whether the agency acted arbitrarily must be determined on the basis of what ithad before it when it acted and not on the basis of some new record made initially inthe reviewing court.

2. Issues of Law

APA 706 (2)(A) instructs the court to apply the arbitrary and capricious standard ofreview to all agency actions

SCOTUS has held that an agency must explain its reasoning in support of its actions to avoid

the conclusion that its action is NOT arbitrary and capricious

BUT, how does this standard effect informal decision making?

a. A court cannot reverse and agency action taken through the use of informaladjudication on the ground that the agency failed to explain the basis for its action

because the agency has no duty to explain its action.

b. Court deals with this problem by instructing reviewing courts to remand such decisionsto the agency to allow the agency to explain its actions

c. A court can vacate and remand an agency action if the courts concludes that theagency did not adequately explain why it attached greater significance to someevidence than to other evidence

In the cases where an agency is making a decision that is inconsistent w/ prior policy, thenthe agency must acknowledge and explain why it is changing court

An irrational departure from policy (as opposed to an avowed alteration of it) couldconstitute action that must be overturned as arbitrary and capricious, or an abuse ofdiscretion.

FCC v. Fox Television (The agency must who that there are good reasons for the newpolicy, BUT it need not demonstrate that the reasons for the new policy are better. Areasoned explanation is needed for disregarding facts and circumstances that underlay or

were engendered by the prior policy).

Skimore v. Swift & Co stands for the proposition that an agency is not entitled to

deference but respect. (i.e. you look at it and you decide what you want to do)a. We consider that rules, interpretations and opinions of the Administrator under this

while not controlling do constitute a body of experience and informed judgment towhich courts and litigants may properly resort for guidance.

b. The weight that the agency decision will have depends on (1) thoroughness evident inits consideration, (2) the validity of its reasoning, (3) its consistency with earlier andlater pronouncements and (4) all those factors which give it power to persuade.

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V. The Chevron Revolution

A. Chevron v. NRDC, J. Stevens (Issue was whether the EPAs interpretation of the statute wasbased on a reasonable construction of the statutory term. Announced new test when reviewing anAgencys construction of a statute to which it administers).

1. Outcome

marked a major change in how the Courts would review agency actions

If Congress has explicitly left a gap for the agency to fill, there is an express delegation ofauthority to the agency to elucidate a specific provision of the statute by regulation. Suchlegislative regulations are given controlling weight UNLESS they are arbitrary, capricious, ormanifestly contrary to the statute.

A court may not substitute its own construction of a statutory provision for a reasonableinterpretation made by the administrative agency.

When a challenge to an agency construction of a statutory provision, fairly conceptualized,really centers on wisdom of the agencys policy, rather than whether it is a reasonable choice

w/in a gap left open by Congress, the challenge must fail.

Chevron two-step (p. 536) tilted toward deference to the Agency

a. whether Congress has directly spoken to the precise question at issue (i.e. intent clear)

b. whether the agency s answer is based on a permissible construction of the statute(agency deference)

Chevron Raised Several New Issues

a. How does the court decide whether the statute is clear as to what the interpretationshould be? when is the statute clear? (See p. 536)

i. Employing traditional tools of statutory instruction (i.e. words of the statute, thelegislative history, the context, etc.)

ii. Only if it is not clear, does the Court move on to the next test. Who decides? TheCourt does. So, if the Court wants to hear the case, it can say that the Congressionalintent is clear and we dont get to the agency deference part of this test.

B. Applying Chevron

1. Raponos v. U.S. (Scalia rejects the interpretation of regulated watersby the Corps by stating that the statute was NOT ambiguous. He addedthat even if the statute was ambiguous, the interpretation by the Corps wasnot permissible as per Chevron. So, in either case, the regulation wasrejected.)

i.e. the Court decides who decides

J. Stevens characterizes Scalias opinion as an overreaction where he is replacing thepolicies of the politically accountable branch of govt with a policy that is consistent w/ his

views (i.e. a politically unaccountable judge).

p. 601. the specific waters, not general waters

J. Roberts Notes that the Corps and the EPA would have enjoyed plenty of room tooperate in developing SOME notion of an outer bound to the reach of their authority, (i.e. if

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they had gone through the rulemaking process.) Thus, the EPA could have avoided thislitigation and interpretation.

J. Kennedy Agrees w/ Roberts, but notes that rulemaking here may not have helped b/cthe court didnt get to the second step in the Chevron test.

C. The Mead Counter-Revolution

1. U.S. v. Mead( holding that administrative implementation of aparticular statutory provision qualifies for Chevron deference when itappears that Congress delegated authority to the agency generally to makerules carrying the force of law, and that the agency interpretation claimingdeference here was promulgated in the exercises of that authority).

delegation of such authority may be shown in a variety of ways: (1) power to adjudicate, (2)notice and comment or (3) some other indication of Congressional intent.

stands for the proposition that a rule that an agency comes up w/ in an adjudication is alsoentitled to strong deference.

Basically bringing back some of Skidmore

Chevron did nothing to eliminate Skidmores holding than an agencys interpretation maymerit some deference whatever its form, given the specialized experience and broaderinvestigation and information available to the agency.

J. Scalia (dissent) avulsive change in judicial review

The court has largely replaced Chevron, in other words, with the test most beloved by acourt unwilling to be held to rulestotality of the circumstances test

So Mead is incorporating the comments of Roberts and Kennedythe Agency gets moredeference if it does some rulemaking.

2. Gonzales v. Oregon (invalidated interpretation of AG by applying the

Skidmore standard b/c it perceived the relevant regulation as merelyreiterating the statutory language and not really making aninterpretation)

whether registration of physician is NOT inconsistent w/ the public interest

point beingyou cant get Skidmore deference merely by parroting

Competition Conception of Skidmore Deference p. 622

Skidmores emphasis on deferring to agency legal interpretations based on their power topersuade represents no deference at all, as the weight assigned to any advocates position ispresumably dependent upon the thoroughness evident in its consideration and the validityof its reasoning. p. 622

Competing characterization of Skidmore is prescribing deference along a continuum orsliding scale, with the degree of deference varying according to the reviewing courtsevaluation of various contextual factors

VI. Availability of Judicial Review

Answers question of whether or not there is review

Looks to (1) the organic statue and (2) the APA 702, 704, 706

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absent an organic statute, look to the APA

Main questions: (1) is there a review at all or is it excluded?, (2) when may review take placeand (3) who may seek review?

presumption of review traces back to 1967 holding inAbbott Laboratories and reiteratedin Overton Park.

the exception is set forth in that APA 701 (a) 1 &2 (1) the cases where the statute precludesjudicial review and (2) the agency action is committed to agency discretion by law

i. a(1) is concerned with whether Congress expressed an intent to prohibit judicialreview

ii. a(2) applies in those rare instances where statutes are drawn in such broad termsthat in a given case there is no law to apply.

SeeBowen v. Michigan Academy of Family Physicians p. 675 - Subject toconstitutional constrains, Congress can, of course, make exceptions to the historic practice

whereby courts review agency action. The presumption of judicial review is , after all, apresumption, and like all presumptions used in interpreting statutes, may be overcome by ,

inter alia, specific language or specific legislative history that is a reliable indicator ofcongressional intent or a specific congressional intent to preclude judicial review that isfairly discernible in the detail of the legislative scheme.

Agency discretion doesnt only come from the organic statute, but also from congressionalprinciples whereby the agency is given discretion on what to do in a particular action b/cthere is nothing to measure the agency action byi.e. no standing, nothing to review. SeeOverton Park.

p. 682 this is a very narrow exception The legislative history of the APA indicates that it isapplicable in those rare instances where statutes are drawn in such

administrative law outline 12-17-10

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