Administrative Law Outline

I. Introduction: Admin Law is the study of the procedural and substantive law that governs agencies. A) Nature of Agencies: Bodies that aren’t courts or legislatures. But they

affect the rights and duties of persons or entities. They are created by legislation. The legislative enactment creating the agency is called an Enabling Act. (e.g. EPA is created by federal legislation) Must have a specific mission. (e.g. EPA mission is to protect the environment). They exist at all different levels of government.

B) APA: (Administrative Procedure Act) This was passed in 1946 and the basic structure is still the same. Similar to a code on Civil Procedure, except it applies to federal agencies. Difference is that the APA has substance in it. 1) §551(1): Defines an agency: Each authority of the government of

the United States. Exclusions: Congress (e.g. Congressional Committees); Courts; Governments of territories and possessions of the United States; D.C. government; Military Courts; and the President (e.g. Franklin v. Mass. holds this.)

2) Agencies simulate all 3 branches of government :Adjudication Rulemaking Other

(incl. AgencyInvestigation)

Simulation of Courts Simulation of Legislature Simulation of Executive(e.g. EEOC decides Enactment of rules in CFR Branchwhether someone is (to client these are like (Investigation, publishingdiscriminated against statutes) information, take

measures necessary to enforce the law)

Figure 1All of these functions are taken care of by an agency with one person who is ultimately responsible for the agency action.

3) Reasons for agencies : Ever since the 1930s, since the New Deal, the amount of government involvement in the economy and other phases of the nation have grown considerably. It is not possible to maintain that government involvement without an entity that specializes in areas of involvement. This is the reason the APA was passed in the 40s.

C) Types of Agencies:1) Executive Agency : This is an agency that is located within the

executive branch of the government. Generally these agencies have one person at the head of the agency. It might be a cabinet level person (Secretary of Agriculture) or stand alone (EPA). The

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feature of these agencies is that the head of the agency can be removed by the President, at will. The President does not need to have a any reason to fire this person. As a result, these agencies are very responsive to the President’s will.

2) Independent Agencies : They are generally multi-member agencies. This means that they are headed by several persons (e.g. EEOC). Also the vacancies in these agencies are filled on a rotating basis, by appointment of the President (Subject to Senate confirmation). The President cannot fire the heads of these agencies without a good reason. The result is that it is possible that in this type of agency, the heads could be of a different political party than the President. (Called the Headless 4th Branch of Government)

____________________________II. Procedural Due Process: The procedural due process rules set a floor

on the amount of procedure that agencies can offer. In particular on the amount of procedural due process that agencies must offer in administrative adjudication. A) Relevance: Particularly relevant in the area of administrative

adjudication. It sets a minimum on the amount of process that agencies can provide.

B) The Four Requirements: (For Due Process)1) Governmental Action : The procedural due process clause only

applies to state or governmental actions. It does not apply to any private action. a) This is hardly ever a problem because an agency acts as an

authority of the government. 2) Individualization : Procedural Due Process only applies to

individualized actions. The action has to be directed at a small number of people and it has to be directed for a specific reasona) EXAMPLE #1: Suppose an agency determines that a welfare

beneficiary should get reduced benefits because the beneficiary is making more money that the agency thought. The welfare beneficiary has a job that pays more than minimum wage and under the statutory rules he is supposed to get less money. This is individualized action. The agency has made a determination specific to that welfare beneficiary, and it only affects that welfare beneficiary. There may be a procedural due process problem here.

b) EXAMPLE #2 : Congress decides to reduce welfare benefits to all welfare recipients by 20%. This is not individualized action, It is a generalized action. There is not due process problem here.

Cases: Londoner v. Denver (1908): This case sets out this distinction. In this case Londoner said that property assessment was too high,

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and he should get a reduced assessment. The Supreme Court held this was individualized action, because the city’s actionBimettallic Investment Co. v. State Board of Equalization (1915): City raised property assessments , across the board, by 40%. As a result Bimettallic got a tax bill larger than they were use to. They complained they did not get due process. The S.C. held this was not individualized action, because the City was taking the steps across the board. This is different that Londoner.

Due Process is only allowed in individualized actions because it is expected that in a generalized action, the political process will take care of the problem.

Distinction Generalized actions involve legislative facts that would be relevant are the facts that a legislature should take in to account. Individualized actions are adjudicative facts (Who, what, when, where, why – facts that courts would determine in deciding cases)Normally talking about administrative adjudication. Under the APA,

§551(5) Rulemaking: the agency process to make a rule (making policy)(1) RULES LOOK FORWARD: What conduct is legal in the future. (2) Rules apply to an open class of persons or entities:(3) Almost always generalized actions:§551(4) What is Rulemaking?: Agency statement of designed for general or particular applicability with future effect. Agency takes action that will affect an open group, and it takes effect in the future. (Simulation of legislative branch and this is usually a generalized action. It is not an action that will trigger procedural due process.§551(7) Adjudication: Is the agency process for formulation of an order. (1) ADJUDICATION LOOKS BACKWARD: What conduct (in the past was legal

or not.)(2) Adjudication applies to specific named persons. (3) Almost always individualized action. §551(6) Order: Is the disposition in a matter that is not a rulemaking.Case:American Airlines v. Civil Aeronautics Board (1966): CAB decided that only purely cargo airlines could offer blocked space (airline offers a reserved amount of space for customers) in shipping cargo. Mixed airlines did not like this. Licensed authorized American to block space, and they argued that since this was a new limit on their license that they should get an adjudication. The Court said it was a rulemaking because it applied to a general class of entities (all airlines) and only applied to the future. The CAB had not made a rule specific to American on past actions of American. No Due Process problem, because of generalized action.

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3) Protected Interest : Need to have a protected interest. The Due Process Clause of the 5th and 14th amendment says they protect life, liberty or property. There aren’t any agencies that are authorized to impose the death penalty.a) Property :

(1) Old Property : Traditional wealth. Money, real estate, etc. (e.g. An agency wants to take money by imposing a fine, there is no question that the agency is invading a property interests and would satisfy the 3rd step of the due process test.)

(2) New Property : Other kinds of wealth. Government jobs, social security benefits, welfare benefits, rights as a government contractor. This is trickier to tell if there is a due process problem. The easiest way to look at this is to discuss the following cases:

Cases:Board of Regents v. Roth: Untenured University professor who was fired from his job. There was governmental action in this case. IT was individualized action, because they fired Roth specifically. Roth said that these two items make it a due process problem. The S.C. said no it was not, because Roth had no property interest in his job. They said that for something to be new property a person should have more than an abstract need or desire for the thing in question, and that person must have more than a unilateral expectation for the thing, and must have an entitlement to it. Roth had no entitlement to his job. He was a year to year employee, there was no promise that he could continue his job.Perry v. Sinderman: In this case the S.C. Perry was found to have an interest. Perry was also a college professor who was fired from his job. Perry is different from Roth because the Univ. had passed out faculty handbooks that specifically said that persons in that position could be fired for a good reason. Perry had more than a unilateral expectation to the job, he had an entitlement to it.

b) Liberty : Distinguish liberty interests from property interests. Property interests are always dependent on something that is expressed in state law (Roth & Perry were inquiries in to state law)(1) Fundamental Liberty Interests : are those that are listed in

the constitution or have been declared fundamental by the S.C. (e.g. speech, voting, and privacy). What distinguished these from other liberty interests is that you don’t need to find any expression of fundamental liberty interests in state law. (a) Massive Deprivation of Liberty (Fundamental Liberty

Interest:: (e.g. transfer to a mental hospital) Before any governmental agency could do this, they would have to give you some kind of due process rights.

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(b) Prison Setting : Does transfer to a solitary confinement involve a deprivation of liberty? S.C. has held that does not implicate a fundamental liberty interest, because this treatment is no worse than confinement to a regular prison.

(2) State Created (Non-Fundamental) Liberty Interests : Test for these is a lot like the test for property. In property look to some outside source to see if there is an entitlement to this right (from state law). Look to state law, agency regulation, and federal statutes as to whether there is an entitlement under these laws. This can turn on very narrow wording on the statute.

Case:Wolf v. MacDonald (1974): This was a case where there were prison good time credits under state law. A prison regulation said that if you engage in good behavior, you may be entitled to early release. This would probably not give a non-fundamental liberty interest. The reason is the word “may”, and this gives discretion to the prison officials. If the regulations said “shall” then an entitlement would be created, and non fundamental liberty interest is created. There is no discretion in the prison officials. The entitlement can only be taken away after a hearing.Sandin v. Connor (1995): Alters the test in the prison setting. The S.C. is concerned because of too much prisoner litigation. Some of the cases cited by the S.C. were the liberty interests of prisoners getting hot lunch v. cold lunch or getting 1 ½ hours in the exercise yard as opposed to getting 1 hour. Court said they did not want to hear these cases anymore. The test used now in these case is:TEST: You don’t have a liberty interest in the prison setting unless it is an atypical and significant hardship. Sandin was a solitary confinement case. Sandin had been involved in violent behavior and said he had to get a hearing before he could get moved into solitary confinement. The prison regulation said that prisoners shall be moved to solitary only when there has been a violation of the prison rules. Sandin said he had a non-fundamental liberty interest created in this rule. The S.C. said no the prison does not have to give you a hearing because solitary confinement is not an atypical hardship in the context of the prison system. This applies in the prison setting.

(3) Liberty Interests (Reputational Injury ): Agency actions have deprived a person of their good reputation, and as a result they have been deprived of due process by not affording them a hearing before they lost their good reputation.

Case:Paul v. Davis(1976): Police circulate a flyer with a picture of the person on it saying that the person is an active shoplifter. The person denies this and says that he should have gotten a hearing before the flyer was circulated. He claimed

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a liberty interest regarding the deprivation of his reputation. The S.C. said no, there is no fundamental or non-fundamental liberty interest. The plaintiff may have a defamation right, and can sue the police. Paul is an application of the “Stigma Plus Test” There is a liberty interest in a reputation only if there is a stigma to your reputation plus some other negative consequence. In Paul the S.C. said there is stigma only.Roth Case (supra) Said that he had a liberty interest because the firing stigmatized him. The S.C. said no because just the failure to renew a contract is not a stigma. If he had lost his job with a reason given, such as he was a bad teacher, then there would have been a stigma (reputation hurt) plus another negative consequence (loss of his job).Valmonte v. Bain (1994): There is a worker in a school and she slaps her daughter. A co-worker finds this out and calls NY’s central registry for child abuse. As a result Valmonte was placed on the central registry. She said that she was deprived of due process and that she should have been given a hearing to contest this listing on the registry. She claimed a loss of liberty. Court said she lost liberty under the “Stigma Plus Test” Stigma: She was placed on the child abuse listing. Plus: She wanted to get a job in child care and couldn’t. Seeger v. Gilley (1991): Government psychologist wants to get another job at another institution. He asks for letter of recommendation from his supervisor. The supervisor writes a negative letter and psychologist does not get the job. He finds out and says he lost liberty. I wanted to get a new job, and didn’t as a result of the letter. He claims that he should have gotten a hearing before the letter was written. S.C. said no liberty interest. The difference from Valmonte was that there was no Plus. It was foreseeable that the psychologist would lose his job. That was the point of the letter. The Plus cannot be anticipated. Mere existence of procedures does not create an interest Liberty or Property Interest must be taken away intentionally by the

government (e.g. The mail truck runs over your mailbox. There is not liberty interest. Due process only comes in to play with intention. There is the Federal Tort Claims Act to get the value of the mailbox back.

4) How Much Process is Due? : What’s the minimum process that an agency can provide. The Supreme Court has said a lot and is not consistent:

Cases for Due Process : Goldberg v. Kelley (1970): There are a couple of ADC (welfare) beneficiary who lost their benefits. Their case worker has decided that they are no longer entitled to benefits. (1) Was there government action? There was governmental action(2) Was it individualized? There was individualized action because it was for

specific to the reasons and the beneficiaries. One of them lost her benefits because she would not cooperate with the government in suing her estranged husband for support, she said that would not have bee successful. The other one lost benefits because the case worker thought she needed drug counseling and she denied that she had a drug problem

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(3) Was there a property interest? S.C. said yes, the people are entitled to benefits according to the statute.

(4) How much process was due? In this case, the case worker interviewed the recipients and if the case worker believed there was a problem, they would consult with the supervisor and terminate the benefits. After this took place (after the loss of the benefits) the beneficiary could get what the agency called a fair hearing.

The problem was that the S.C. said that the process was inadequate. Due Process normally requires that you get a pre termination hearing. Pre termination hearings must include: Notice of the potential loss Ability to cross examine opposing witnesses to see if the person is truthful Right to counsel (government does not pay) You can hire a lawyer Oral presentation: must be able to give this.

AFDC beneficiaries were allowed to give a written presentation. The S.C. said that this was not enough and that oral presentation are more responsive to decision makers

Neutral Decision maker. Someone (other that the case worker) must be able to make the decision.

If the government not going to give a pre termination hearing (the norm) and going to only allow a post termination hearing the S.C. said that the agency had to prove to the court it has to do this. EXCEPTION: e.g. Health dept has reason to believe that spoiled food is being served at a restaurant, and they seize the food at the restaurant to impound it and destroy it. This would not afford a pre termination hearing. GOLDBERG TEST: Absolute test. You get a pre-termination hearing, with all of these rights, unless the government can justify some departure from that scheme.Matthews v. Eldridge (1976): Someone was receiving disability benefits. The procedures followed by the Social Security Administration were similar to those found unconstitutional in Goldberg. If the agency made the initial determination that you were no longer disabled, they cut off your benefits and gave you a hearing 9 months later. The beneficiary sued relying on Goldberg, saying he should have received a determination hearing. Eldridge said there wasn’t enough process. The S.C. said that Eldridge could not win the case. This was distinguishable from Goldberg in that (1) You don’t need to have financial need to be involved in Social Security Benefits, unlike AFDC. This means that you don’t necessarily have a dire need. (2) The question if you are eligible is a medical determination for disability. This can be determined from x-rays, medial reports, etc. It is not like Goldberg, where an oral hearing would be more deterministic. The S.C. said in this circumstance it is good enough that the agency review the record before them to make the determination and gives you the opportunity for a post termination hearing. The test used is more flexible than that in Goldberg.MATHEWS BALANCING TEST: Instead of Goldberg Test, the S.C. said to focus on 3 different variables THIS IS THE CURRENT TEST FOR DUE PROCESS

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(1) What is the property or liberty interest worth to the private party? The more valuable it is to the private party the more likely it is that the government will have to provide more process before it takes it away.

(2) What is the risk of error without providing the additional process? What are the chances that the government will make a mistake and erroneously take away a right it shouldn’t if it doesn’t provide additional process?

(3) What is the cost to government in providing the additional procedure? What will it cost the government to give more process? If in the case of Mathews they continued to pay benefits for 9 months and the benefits were then denied, the government would not be able realistically to sue Eldridge and get the money back. Therefore the cost is very high.

There is nothing that says the government can’t give more process. EXAM HINT: Procedural Due Process is usually an add on issue. If the exam question deals with administrative adjudication, one thing that is lurking in the background is (1) Is there a constitutional problem?

_____________________________________III. Administrative Adjudication: This involves specific named parties and is

backward looking. This judges the legality of past events and does not look to the future as rulemaking does.

Formal Rulemaking OtherAdjudication (Incl. Agency

InvestigationInformal Adjudication

2 types of adjudication

Figure 2

A) Formal v. Informal Adjudication:1) Formal Adjudication: involves a tremendous amount of procedure

that is guaranteed by the APA. This is a lot like a civil bench trial, except it is in front of the agency instead of court. This is conducted in front of an agency ALJ. This means that you get all the process required in §554, §556, §557 of the APA.

2) Informal Adjudication: Anything that is not rulemaking or formal adjudication. Example: Park Ranger in a national park tells you to put your fire out because you don’t have a permit. This is an informal adjudication under the APA. The ranger telling you to put out the fire is an order within the APA. It’s adjudication because it is (1) conducted by an agency employee; (2) it is individualized to you; (3) It’s backward looking – it judges the legality of actions in the past and now (the fire). Not formal because it would have to be in front of an ALJ, and you would be able to call in witnesses in that case. MORE OF THESE ARE CONDUCTED BECAUSE THERE ARE A HUGE NUMBER OF THINGS THAT COVER THIS IN THE

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APA. Almost nothing in the APA says anything about informal adjudication. It is difficult to cover minimum requirements for this. But what covers this as well other areas that of adjudication are:

§555: It says (1) you can have a lawyer at your own expense in an informal adjudication, and (2) that interested person can appear (anyone who built the fire could come forward); (3) a witness that is compelled to testify under oath can review the transcript. (This does not usually happen during the informal adjudication—notes are not usually taken); and (4) you can get prompt notice of any denial along with a brief statement for the denial – unless it is self explanatory (Park ranger says put out the fire – this is self explanatory)

§558: Sanctions can only be imposed within the jurisdiction of the agency. (The agency employee who is conducting the informal adjudication must be operating within the agency’s jurisdiction. (EXAMPLE: SEC employee cannot tell you to put out a fire in a national park grounds, only a ranger can)

What is there to protect fairness in informal adjudication. Not much in the APA, other sources are (1) Due Process : This may be relevant: (EXAM: If problem is informal

adjudication, clears up the APA problems, but the due process clause is still relevant)

(2) Agency Hearing Regulations : Agency adopts regulations that are relevant to hearings – specifically to informal adjudication

(3) Statutes : other than those in the APA. Good sources are agency enabling acts. These will impose procedures on agency’s beyond the APA.

(4) Administrative Common Law : These apply to administrative adjudication(5) Hybrid Adjudication : Is informal adjudication where a lot of procedures that

normally apply to formal adjudication are imported into the case. In practice it is a whole lot more formal than the park ranger example. Most common thing that agencies try to avoid is that they don’t like to have an ALJ decide the case. There are a lot of protections on how an ALJ is hired and it’s expensive to hire them, so agencies like informal or hybrid type adjudication. In many circumstances they will hold informal adjudication that looks a lot like formal with an AJ (v. ALJ) Administrative Judge.

B) Nature of Formal Adjudication: Look at §554, §556, and §557 apply in every case of adjudication required by statute.

Procedural Rights under Formal Adjudication:(1) Timely Notice of any Hearing (APA) Must provide notice of the issues

contested. (Could be accomplished by responsive pleadings –CivPro: Agency can limit this with complaint and answer)

(2) All interested persons get a chance to make submissions :

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(3) Must be a recommended decision by the agency employee who hears the case. That agency employee must be an ALJ. This will be reviewed by the whole agency to make a determination. (a) Agencies don’t like this, many individuals don’t like this either, because the

effect is that parties think that the formal adjudication is biased in favor of the government.

(b) Nothing unconstitutional to do this. Due process rights are violated by this? S.C. said no in Withrow v. Larkin (1975): Wisc. agency charged Dr. with conducting illegal abortions. S.C. said they would not tolerate if this was a criminal adjudication, but it was administrative adjudication, and Dr. lost his license. This is OK according to the S.C.

(c) 1200 ALJ’s in the federal system. Employed by 30 agencies. They must be appointed and certified by OPM. ALJ’s salaries are set by the OPM, cannot be supervised by prosecuting wing of agency, and can only be fired by OPM, and must have 7 years of qualifying experience. This is designed to combat perceived ALJ bias.

(d) AJ’s preside over the case in informal adjudication. The above requirements do not come in to play.

(4) Restrictions on internal ex parte contacts . There are limitations regarding who the decision maker can talk to in the agency. (a) §554(d) Prohibits internal ex parte contacts in formal adjudication. Agency

decision makers cannot consult with persons within the agency, even on issues of fact. Absolute prohibition on internal ex parte contacts on issues of fact. ALJ’s may consult with other agency employees on issues of law. (This allows unity on issues of law). The ALJ is not allowed to consult the prosecutor on the case or a factually related case. No off the record contact with ALJ on issues related to the case. EXCEPTIONS: Initial Licenses : Does not apply on applications for initial licenses. First

time licensees, §554(d) does not apply. Rates of Public Utilities : Does not apply in rate making on public

utilities. This is redundant. (§551(4) defines rulemaking as including rate making.)

Agency Heads Exception : This means that if an agency head acts as the trial judge (acts like ALJ in the case), the internal ex parte contact rules do not apply. Where he hears the appeal the internal ex parte rules do apply.

(5) ALJ cannot be supervised by any agency employee in the prosecuting or investigating wing of the agency.

Head of Agency

Adjudication (ALJ) Investigate/Prosecute Rulemaking(6) Person conducting the hearing must be an ALJ or one of the agency

heads.

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(7) ALJ can administer oaths, issue subpoenas, make rulings on offers of evidence (keep out irrelevant evidence), regulate course of hearing, hold pre-hearing conferences, and rule on procedure.

(8) No hearsay rule.(9) No sanction can be imposed without sufficient evidence.(10) Any oral evidence received, must allow for cross examination to expose

the issues fully.(11) ALJ can take official notice of things. (Equal to judicial notice).(12) Opportunity to rebut matters that are officially noticed.(13) Plenary inter-agency review . Agency heads must review ALJ’s

determination and reverse or affirm his findings.(14) Parties have to get the opportunities to present proposed findings

and make exceptions to the ALJ’s decision. (If party things that evidence presented was untrue, he make object to it)(a) If you feel that an ALJ is bias against you or your client you can challenge

the ALJ being connected with the case.(b) Cannot challenge because ALJ is an employee of the agency or

background before agency would be bias against your client.(c) Anything that would bias a judge works. (e.g. ALJ holds stock in a

company that is part of the adjudication, or relative is before the ALJ)(d) Prior statements made by decision maker can be used to challenge the

decision. ALJ don’t usually get challenged, but heads of agencies do. EXAMPLE: Texaco Case: Newspaper report shows that agency head said your company was involved in unfair labor practices. You can challenge that agency head’s right to hear the case, if you can show some real significant prejudice. (e) MORGAN DOCTRINE: All decision makers, including agency decision

makers, must take personal responsibility for their decision. They cannot rely entirely on subordinates in making the decision for them and rubber stamp it. (ALJ’s make a decision, and an appeal is made, in effect, by the administrative agency head.)

(15) Must be a written statement of findings and conclusions with reasons for the findings and conclusions. (Written Opinion)

(16) Limitation on external ex parte contacts. This limits who the agency decision makers can talk to outside the agency and what they can talk about. (this includes the President) The President is still an outsider, even though he sits at the head of the executive branch. §557(d): (a) These apply to any interested person (weak standard) Almost anyone

counts as an ex parte contact. (b) Communication must be relevant to the subject matter. (c) This covers both persons who are expected to make the decision and who

are expected to be involved in the decision. (This covers law clerks as well as the ALJ)

(d) None of the exceptions under §554(d) apply. (e) Apply to formal rulemaking as well (internal ex parte contacts does not).

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(17) Timing regarding ex parte contacts : Both §554(d) and §557(d) kick in when the party who makes that contact, knows or should know that a hearing is going to be noticed. (e.g. Suppose Patco was not under decision, but the head of Pacto knew there probably be a decision made.)

EXAM HINT: §554(d) only applies to formal adjudication. §557(d) applies to formal adjudication and formal rule making. Neither section applies to informal rulemaking or adjudication.

Case regarding ex parte communicationsShould a decision be voided if this happens: PATCO DECISION: PATCO was going to be decertified as representative of the union. The five factors used to determine this were: How grave was the communication? To what degree did it influence the decision? Was the communication beneficial to the person making the communication? Was the communication unknown to the other side? Would remand of the decision make any difference?Court held in this case it would not void the decision. PATCO tried to lobby and made ex parte communications. However, they lost any way, so it made no sense to have a re hearing and possibly allow them to prevail. If agency had decided not to decertify, then there may have been a remand.

The biggest differences between formal adjudication and a trial are in formal adjudication (1) there does not have to be any discovery; (2) hearsay is freely admissible.

Agency could give Formal Adjudication even though they aren’t required to do so under the statute.

WHERE TO LOOK FOR REGULATIONS REGARDING FORMAL ADJUDICATION§554: Applies §554, §556, and §557 in every case of adjudication required by statute, to be determined on the record after an opportunity for agency hearing. Crucial is if it has to be “on the record.” If the enabling act of the agency requires a hearing on the record = formal adjudication. If enabling act is only requires a hearing, an opportunity to be heard, or public hearing, or a fair hearing, it is informal adjudication. “On the record” = formal adjudication. Formal adjudication must be determined on the record, the agency cannot look at anything not on the record. This is burdensome for the agency for informal adjudication. Procedural Rights: §554(b): Notice must include: Time, place and nature of the formal adjudication. Must give the legal authority and jurisdiction. Must give matters of law and fact that are asserted. (allows you to prepare)

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Must tell you that responsive pleadings may be required (e.g. If you are the company who stands to lose money if a penalty is imposed, you might have to file a responsive pleading.

Notice must be issued with due regard for the convenience of the parties (This means that If your party is located in Fla. and the agency decides to notice the hearing for Fairbanks, Alaska –this could create a problem)

Informal adjudication is not covered, but there may be a due process problem if notice is not received in this case. §554(d): Prohibits internal ex parte contacts in formal adjudication. Agency decision makers cannot consult with persons within the agency, even on issues of fact. Absolute prohibition on internal ex parte contacts on issues of fact. ALJ’s may consult with other agency employees on issues of law. (This allows unity on issues of law). The ALJ is not allowed to consult the prosecutor on the case or a factually related case. No off the record contact with ALJ on issues related to the case. EXCEPTIONS: Initial Licenses : Does not apply on applications for initial licenses. First time

licensees, §554(d) does not apply. Rates of Public Utilities : Does not apply in rate making on public utilities.

This is redundant. (§551(4) defines rulemaking as including rate making.) Agency Heads Exception : This means that if an agency head acts as the

trial judge (acts like ALJ in the case), the internal ex parte contact rules do not apply. Where he hears the appeal the internal ex parte rules do apply.

§556: §556(c)(6): Authorizes Conferences for Formal Adjudication. This helps to narrow the issues in a hearing. This does not apply in informal adjudication. §557:§557(c) Agencies must write something, and explain why it has decided this way. Must have finding of facts, and law. This probably applies to informal adjudication as well. §557(d): External Ex parte Communications These apply to any interested person (weak standard) Almost anyone counts

as an ex parte contact. Communication must be relevant to the subject matter. This covers both persons who are expected to make the decision and who

are expected to be involved in the decision. (This covers law clerks as well as the ALJ)

None of the exceptions under §554(d) apply. Apply to formal rulemaking as well (internal ex parte contacts does not).Timing regarding ex parte contacts: Both §554(d) and §557(d) kick in when the party who makes that contact, knows or should know that a hearing is going to be noticed. (e.g. Suppose Patco was not under decision, but the head of Pacto knew there probably be a decision made.) EXAM HINT: §554(d) only applies to formal adjudication. §557(d) applies to formal adjudication and formal rule making. Neither section applies to informal rulemaking or adjudication.

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Hearing Regulations of the Agency: Many agencies have regulations on when, why and how hearings should be held Enabling Legislation: This tells what the basic limits on regulatory agencies.Due Process Clause: This may be relevant and may be applicable in formal adjudication. However, the procedural rights of an individual are listed in the APA, Hearing regulations of the agency, and the enabling legislation of the agency. These rights probably surpass the due process rights of the 5th and 14th amendments of the ConstitutionAdministrative Common Law: This may give some guidance to formal adjudication via cases, etc.

Discovery in Formal Adjudication: The tradition is a very limited discovery. An agency can order discovery, but they don’t do that. ALJ’s can order depositions and subpoenas. There is usually not many pre hearing discoveries. The idea is to keep the cost. FOIA act is the absolute right to some discovery

Admission of Evidence: About the only grounds for exclusion of evidence for a Formal Adjudication are irrelevance and privilege. Hearsay is admissible. Legal Residuum Rule: Although hearsay is admissible, there has to be a

non-hearsay basis for every critical finding by the agency. This is not followed much any more.

Burden of Proof in Administrative adjudication: Usually lies on the party that initiates the proceeding. (e.g. Government trying to seek a civil penalty against a polluter – it’s the government. On the other hand if you have lost your welfare benefits, and trying to get them back – burden of proof is on you. Standard is a preponderance standard. (Who is probably telling the truth – if it ends in a tie – the party with the burden of proof loses)

Appropriate Cross Examination is allowed in Formal Adjudication: This is that it is necessary for a full and fair disclosure. (Informal Adjudication may allow this as well since Due Process would dictate cross-examination)

Participants in Adjudication: The parties who are most interested are usually involved. (e.g. EPA is trying to impose a civil penalty on Dumpco. The participants would be the EPA and Dumpco.) Others would be: Intervenors: Those outside the hearing (e.g. Neighbors of Dumpco) It is

usually up to the agency if they can participate. Exception: However, if someone has a strong interest that is not being

represented, then the agency may be forced to allow participation.CASE: United Church of Christ v. FCC (1966): FCC hearing re: TV station with massive racist programming. This violated the fairness doctrine requiring equal time. The FCC policy was only to allow TV stations to participate in the hearings. The residents in the area, headed up the United Church of Christ wanted to participate to complain about the TV station and the FCC denied their participation because you are not interested you are only a viewer. Court said

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yes they can, the Church had to participate, they had to be allowed, because if they don’t participate the FCC will be denying the viewers to complain, and it was not an interest that was going to be represented, unless viewers in the areas were allowed to participate. Participants have a right to bring in your own lawyer: The agency does

not have to pay for it (This is an APA right, not a Due Process right. Due Process clause does not forbid the exclusion of lawyers)

CASE: Walters v. National Association of Radiation Survivors This involved veterans benefits. It was not a violation of due process to force veterans to appear in this case without an attorney. Agency Decisions in Formal Adjudication: Agencies must decided

consistently. Stare Decisis: This rule of precedent applies to agency, just like it applies to courts. Agencies can overrule their own precedent, but they must explain they are doing it. §557(c) Agencies must write something, and explain why it has decided this way. Must have finding of facts, and law. This probably applies to informal adjudication as well. This is a rule of administrative common law

Case: Matlavich v. Secretary of the Air Force (1978) P was a service man who was gay and discharged. The Air Force did allow for the retention of gay employees under some circumstances, but the Air Force did not explain why they did not apply that policy to Matlavich. D.C. Circuit said they had to explain in writing why he was not given the right to retention. It is also possible tat there is a due process to a written decision. APA gives the right to comment on the decision. You get a right to propose findings of your own in writing. (What you thing the agency should find). If you make exceptions to the agencies findings it must be in the record, why the agency overruled your findings. There is a right to intra agency review. You have the right to take the ALJ’s decision up with the whole agency. Even though the agency can reject the ALJ’s decision, it cannot have an unjustified, unexplained reversal of the ALJ’s decision.The decision has got to be limited to the record. Or it has to be in regard to matters that are officially noticed. Official Notice can either be Things a court could take judicial notice of. I.e. obvious facts that everyone

knows. Things within expertise of the agency: They must give you notice they are

going to do this, and give notice that they are going to do this. (e.g. Agency knows from its files and expertise what the heart attack rates are for men between 55-60. IT can take official notice of this, warn you it is going to do this, and give you the opportunity to rebut this evidence.) With this the decision has got to be limited to the record and to those items officially noticed.

EXAM: Adjudication or Rulemaking. Adjudication involves specific parties and

looks backward (evaluates past conduct). I Is it formal adjudication of informal adjudication?

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FORMAL ADJUDICATION: Look to the enabling act, if it says you get a hearing “on the record” it is formal adjudication. Look to APA rights in §554, §556. §557 for procedural guarantees.

INFORMAL ADJUDICATION: If it only says a hearing or public hearing: it is an informal adjudication Look at Due process, agency hearing regulations, or outside statutes as a source of procedural fairness.

Cases for Adjudication :Chemical Waste Management v. EPA (1989) EPA was imposing corrective action of industry under RICRA. The RICRA statute said that before the EPA does this it needs to conduct a public hearing. The plant subjected to corrective action said they should get formal adjudication. Courts said no, because under §554, §556, and §557 only applied if the enabling act of RICRA said “on the record.” In fact it only called for a public hearing – this is not the same as a formal hearing. There are some older cases that don’t say this:Seacoast Anti Pollution League v. Cossell (1978) This case said that if the statute says hearing, you might have the right to a formal adjudication. This is no longer the leading view. The 3 magic words are “ON THE RECORD.”Wong Yang Sung v. Immigration and Naturalization Service (1950) you may find “ON THE RECORD” in the Constitution. This was a deportation case. All that was involved was that the statute said you were entitled to a hearing before being deported. Wong Yang Sung said, I’m a citizen and I can’t be deported and I’m entitled to formal adjudication before deportation. The agency said no because our enabling act says hearing – which means informal adjudication, and we gave you one, and as a result you are entitled to nothing more. S.C. said that in this case, we think that deportation is so severe that the Constitution would require an “ON THE RECORD HEARING.” Therefore Wong Yang Sung is entitled to formal adjudication – even though the statute says hearing. No one is sure if this would be followed outside the deportation case. It hardly ever is.

____________________________IV. Rulemaking: The difference is in rulemaking informal rulemaking is called

notice and comment rulemaking. Formal rulemaking is very rare.

Formal Formal OtherAdjudication Rulemaking (Inc. Agency

Investigation)Informal InformalAdjudication (Notice & Comment)

Rulemaking

Figure 3

A) Formal v. Informal Rulemaking: Same test when trying to figure out whether rulemaking is formal or informal as adjudication. Look to the

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enabling act of the agency. There are 4 possibilities here: Formal or Informal Adjudication. Formal or Informal Rulemaking.

B) Formal Rulemaking: If the enabling act says that rulemaking has to be “on the record” then it is formal rulemaking. Problem with formal rulemaking is that it implicates all the rights in §556 and §557. Formal adjudication involved the rights in §554, §556, and §557. What is different in formal rulemaking is that §554 does not apply, instead it involves §553. Formal Rulemaking is extremely time consuming (e.g. FDA formal rulemaking whether peanut butter should have 87% or 90% peanuts). This is not authorized by Congress regularly.

Under the APA you get a fair amount of procedural rights that you would think only applies in adjudication like:(1) An agency head or an ALJ has got to sit at the head of rulemaking.(2) Witnesses can be presented under oath.(3) Oral presentation has to be allowed with cross examination. This is the most

significant difference between formal and informal rulemaking. (4) The decision has to be on the record. The agency must compile a record and

base its decision in the rulemaking on the record. (This is not required for informal rulemaking.)

(5) Limitations on external ex parte contacts. The ALJ is limited as to who can be contacted.

(6) Internal ex parte rulemaking does not apply.(7) Agency will have to make findings of fact and conclusions of law. In a detailed

fashion it will have to explain how it reached the conclusion it did. EXAM: Must apply the following§553: This is the basic statute that governs rulemaking. §553(c): Requires a concise general statement of the basis and purpose of the rule. Some courts have used this to imply a significant amount of writing on the part of an agency. A lot of courts say that this requires a very detailed explanation on the part of the agency as to why it rejected certain alternatives. It is clear that courts cannot require an agency to respond to every comment. Courts are limited to requiring what general considerations they took into account. §556:§557:

C) Informal Notice and Comment Rulemaking: If the enabling act says that you get a rulemaking hearing, fair hearing, public hearing or an opportunity to be heard, then it is informal.

§553: Is the only statute that really applies(1) There has to be notice of the proposed rule . The way rulemaking starts is with

this, which must be published in the Federal Register. §553(a) : What has to be in the notice?

(a) You have to have the time, place and nature of any hearing that is going to be conducted on the rule.

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(b) You have to have the legal authority under which the rule is being promulgated (usually means a statutory citation to the specific statute that authorizes the agency to promulgate rules.

(c) Must have the terms or substance or description of the subject of the issues that are involved in the proposed rule.

(d) Must be published in the Federal Register, but affected parties getting notice by another means is OK. If there is a mistake and the Federal Register is not contacted, but the parties get notice anyway, it is OK.

EXCEPTIONS TO §553 notice and comment procedures:(a) Completely exempt : Military or foreign affairs rules. A lot of times notice

and comment are allowed in those rules, but this does not come from the APA.

(b) Agency Management /Personnel/ Public Property / Loans / Grants /Benefits / Contract Rules Exemption: (e.g. if a rule relates to a public benefit program, the APA does not even require notice and comment to those rules. There are other statutes (e.g. enabling act, etc.) that require notice and comment or agencies may volunteer to take notice and comment.

(c) Interpretive Rules Exemption : Don’t set any new policy. They only explain older policy, and they are exempt from notice and comment.

Case:Chamber of Commerce v. OSHA (1980): An OSHA policy dealt with walk around time (an employee of an employer being investigated walks around with an agency investigator during an OSHA inspection). Employers don’t like this because employees may point out deficiencies that OSHA would normally not catch. The policy had been that employers did not have to pay employees for walk around time. The new director of OSHA made a statement that they were going to force employers to pay employees for walk around time. The employers sued and said that you need to engage in notice and comment rule making. Court said this was not an interpretive rule it was substantive rules so there should have been notice and comment. This new rule did not explain positions it changed positions. As a result, it was a substantive rule and had to go through notice and comment.(d) General Policy Statement Exemption : These are open ended

pronouncements that don’t set any binding norm. This is a pretty narrow exemption

Case:Community Nutrition Institute v. Young: Involved the FDA action level for a toxin that are a contaminant which appears in corn. The FDA set a rule that they would only pursue farmers who sold a corn with a toxin limit over 20 ppm. They were sued and the claim was that this was a substantive rule. The FDA said it was a general policy statement, they did not have to follow it if they didn’t want to. Court said this was a specific substantive rule that set a specific standard that does not leave the FDA with a lot of room for discretion. If the FDA had said “we will take appropriate action as we see fit.” This could

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be viewed as a general statement of policy, setting a figure that would trigger an investigation was specific. (e) Good Cause Exemption : Emergency Rules. If the agency has to move

quickly it can make emergency rules under this exemption. Interim Final Rule : A lot of times the agency will do this and then take

comments to see if their emergency rule needs to be revised. (2) How do agencies come up with the proposed rules? Not much in the APA

saying how agencies are to come up with proposed rules. Majority of rules are the result of internal agency study and dialogue, coupled with informal communications with parties outside the agency. Also the agencies perception of that there is a problem that needs to be addressed. (e.g. ICC in Florida East Coast Railway thought there wasn’t enough cars, so they made a rule about it.)(a) NEGOTIATED RULEMAKING : One way that agencies come up with rules

is negotiated rulemaking: This involves diverse parties who sit down at a table and getting them to work out a rule amongst themselves so that there is a rule good for everyone. This is criticized as a transfer of authority from the agency to private parties. The counter to this is that it is a way to work out at getting to a rule that must still be OK’d by the agency.

(3) Comment Period Starts once Notice has taken place. This is the time when written comments on the proposed rule are accepted and reviewed. There is nothing in the APA regarding a right to make an oral presentation (comment) during informal rulemaking. THIS IS DIFFERENT THAN FORMAL RULEMAKING. (a) Agency will allow and even solicit oral comments during rulemaking, but

they do not have to do this. (b) Comment period is open for a reasonable period of time . There is nothing

in the APA requiring a minimum 30 day period of comment. Courts have upheld comment periods as short as 15 days.

(c) Written comments are solicited by the agency . The agency informs where they should be sent in the notice, and collects them.

(4) Procedure for making an rule (informal ) The comments are then reviewed and the agency decides whether it wants to adopt this proposed rule as a final rule, make changes to the rule, or scrap the rule all together. This much less burdensome than formal rulemaking.

(5) Altering or amending a rule during the comment period : Does the agency have to re-notice it as a new rulemaking? This depends. The test that governs this is the:LOGICAL OUTGROWTH TEST: The agency is required to re-notice the rule only if the changes are so significant that they change the character or subjects covered by the rule. (a) If the agency decides to address subjects in the new rule that weren’t

addressed in the new rule that weren’t in the old rule, then a new rulemaking and re-notice are required.

(b) If the agency’s changes are such, that they still cover the original subject, they can adopt the modified rule, without notice a new rule.

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(6) Does the agency have to disclose underlying technical data in the rulemaking ? APA does not require this, however, a lot of courts have required this as a matter of basic fairness. (e.g. If the agency is making a rule and relying on a lot of technical data, they have to let other affected parties know about the data used).

(7) Agency has closed comment period and decided to adopt a final rule : Next step is:(a) This rule cannot take affect for 30 days after publication of final rule. Idea

is to give parties the opportunity to comply. Exceptions are: If the agency’s rule relieves a restriction . It is not a matter that the

parties will have to comply with something new, they are now relieved from a restriction, and it is easier to comply. Rules like this can take effect immediately.

Interpretive or a statement of general policy : This is not a substantive or legislative rule. Interpreting an existing rule does not impose new restrictions, it can take effect immediately.

Good Cause Exception (Emergency Exception : If there is some kind of emergency or other circumstances that require the agency to adopt very swiftly the new rule, it can dispense with the 30 day requirement. THESE MUST BE TRUE EMERGENCIES: Cannot be the result of agency delay (e.g. An agency has a statutory deadline, for adopting a rule and screws around, and does not get around to noticing the rule until almost the deadline. They can’t say they have an emergency, that must take effect immediately. You can’t have self created emergencies.) If it was unforeseeable circumstance, you can use this exception.

(8) Agencies are not limited to the record in informal rulemaking . They are entitled to take into account other information that comes to their attention in other ways, even If it isn’t contained in the record.

(9) Agencies cannot switch rationales for the (formal or informal) rule (e.g. Agency makes a rule limiting building lots in a national forest to 1 acre lots. The justification was pollution problem of septic tanks. This turns out to be an unsound justification. The agency gets sued, and says the rule is arbitrary and capricious, and the agency then changes position and says the reason that the rule was adopted was because of the threat of increased traffic in the area. The agency cannot do this. It could take in to account traffic in making the decision, but switching the rationale is not allowed.

CASE IN RULEMAKING:United States v. Florida East Coast Railway (1973) Involved the ICC attempting to change the rate structure in the use of railway cars. The problem was that the railway rates for loaned cars were so low that railroads kept borrowing each others cars and not returning them. As a result there were never enough railway cars. The ICC decided to fix this by raising the rates.

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Is this rulemaking or adjudication? Rulemaking specifically includes rate making. This is clearly applicable to a broad class of entities (all railroads) and it’s a future effect. This also indicates rulemaking.

Was it formal or informal rulemaking? A lot of railroads did not like the new rates, and they wanted to argue for formal rulemaking. The reasons for this were that: It would take longer to impose the new rates. The agency hadn’t engaged in formal rulemaking when they had

made the rates. If the railroads could convince the courts that it should have been formal rulemaking, they could get the rates voided, and force the agency to remake the rates, and do it in a time consuming fashion.

S.C. said it was not formal rulemaking, because the statute only said pubic hearing. That is all you get. = Informal Rulemaking.

D) Hybrid Rulemaking: is informal rulemaking with a lot of other procedures imposed on it that could be seen as formal rulemaking. The most common additional procedures imposed for Hybrid Rulemaking are: Oral Hearing: Cross Examination: of important witnesses who testify in front of

the agency. Even if this is involved it may still be considered informal rulemaking.

(1) Sources of these additional procedures include : Enabling Statutes of the Agency: Might require a public

hearing Agency Regulations may require oral hearings or cross

examination Agency may just make the decision to add the procedures in

this specific case. Due Process : Usually it is not, because most rulemaking is a

generalized action that does implicate procedural due process. But it is possible to have rulemakings that are very narrow in scope. This happens in rate making usually. (e.g. An agency is making a rate that applies to only one party. This is rulemaking because it is specifically defined as rate making. It isn’t really generalized action, it only applies to one party. Individualized government action with a property or liberty interest may be at stake, which means that it is a due process problem. Look to the MATHEWS BALANCING TEST, the conclusion may be that cross examination of witnesses must be allowed.

(2) To what extent can courts impose additional procedures on agencies ? (e.g. a court says that in this rulemaking we need more process than is provided by the APA. ) Courts in the past have been very aggressive in doing this.

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Case:Vermont Yankee Nuclear Power Corporation v. Natural Resources Defense Council A rulemaking by the Atomic Energy Commission (Nuclear Regulatory Commission) made a rule regarding nuclear waste disposal. Effect of the rule was to not impose on industry very much cost for waste disposal. The NRDC was not happy about the rule, so they sued the agency saying that the rulemaking procedures were not adequate. Questions to ask are: Is this formal or informal rulemaking? It was informal. Only notice and

comment rulemaking. Nothing in the agency’s enabling act saying it had to have a hearing on the record. The agency took some oral and written comments and made the rule. This

all sounds correct. The Court struck down the rule. They said they struck down the rule in part because cross examination had not been allowed of a critical agency witness. This, according to the court, meant that the issue was not fully discussed.

Supreme Court reversed and said courts have no authority to do this. When it comes to rulemaking, agencies are only required to provide the process that is in the APA. They can’t be required to provide more process, unless you provide a citation to another source of law that would impose that. (e.g. another statute). The only exceptions are: Constitution: requires it. This might be the case in certain kinds of

rate makings, but this is not normal. or In extremely rare circumstances: One that might come up is if the

agency had a long tradition of providing for oral comments or cross examination, and decided not to do it in one case.

This case tells you that in informal rulemaking the only procedures needed are in the APA and are notice and comment (written).

(3) External Review of Rules : This is external review by parties other than courts. This is a policy topic that does not have well developed legal standards. (a) Presidential Review : Presidents have campaigned on platforms of

deregulation and campaign reform. The way they have tried to impose this is through executive orders.

EXECUTIVE ORDERS: Executive Order 12291 : Promulgated by Reagan, and continued by

Bush. This required cost/benefit analysis of major rules. Major Rules are those with a $50MM or more impact on the economy. This was enforced by the Office of Management and Budget (OMB). If they were dissatisfied with the analysis conducted in a rulemaking, OMB had the authority to leverage the agency to get them to adopt it. Features of this order are (1) that it did not provide for judicial review (negotiated by branches of government); and (2) did not apply to independent agencies (only to executive branch agencies). Many independent agencies followed it independently, but were not required to do so. This order was not continued by Clinton.

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Executive Order 12866 : Looks like 12291, but has a more flexible notion of cost /benefit analysis. What was objected to in cost benefit analysis was it attempted to put a cost on items that were difficult to value in dollars and cents (e.g. human lives, scenic vistas, etc.) Still imposes review in an entity called OIRA (Office of Information and Regulatory Affairs) a division of OMB. The threshold is now $100MM and gives the Vice-President a significant role in mediating conflicts.

(b) Congressional Review : Congress traditionally reviewed rules through the legislative veto. The theory was that if Congress was unhappy about an agency pronouncement that a resolution of one or both houses of Congress could veto an agency pronouncement. This was struck down INS v. Chadha.

Case:INS v. Chadha (1983) The legislative veto was no longer available to Congress. It was found to be a violation of separation of powers. What Chadha said was available was the report and wait mechanism. This forced agencies to inform Congress of their rules, and gave Congress a chance to enact legislation, with the President’s signature, or enact over a presidential veto that would undo the rule. Contract with America Advancement Act of 1996: Congress took up the challenge of Chadha, and this made some important changes: It provides that every single rule (even interpretive and general statements

of policy) has to be forwarded to Congress and the GAO before they take effect.

Agency must provide a precise explanation and proposed effective date of the rule and provide the GAO with other information (e.g. cost/benefit analysis). If Congress asks for it, they must be provided with the same information.

$100MM plus rules (Major Rules) GAO is required to submit a report to Congress within 15 days.

There is a delayed effective date of 60 days from the date of publication in the federal register or the report to Congress from the GAO, which ever is later.

Rule is further delayed if Congress issues a joint resolution disapproving the rule and tries to override a Presidential veto.

No inferences are to be drawn as far as judicial review. (Courts are not to take attempts by Congress to override a rule into account in determining if the rule is legal or not).

This is an attempt by Congress to be more active in the rulemaking process. The problem may be that so many things count as rules that Congress will get flooded.

(4) Bias and Ex Parte Contacts in Rulemaking : We are very sensitive about ex parte contacts in adjudication because we are sensitive about ex parte contacts in court adjudication. Rulemaking is more like legislation, and legislation is full of ex parte contacts (e.g. lobbying, letters from constituents, etc.)

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(a) BIAS : When can an agency decision maker be challenged in a rulemaking because that person is biased? Almost never, unless it can be shown that the agency decision maker has an unalterably closed mind. (e.g. If an agency has given a speech saying that a trade practice is illegal and the FTC should abolish it, and that person becomes the head of the FTC and they are proposing a rule to abolish the trade practice. Even then, it might be hard to challenge that person, because he may say, I’ll take into account new information.

(b) EX PARTE To what degree are agency personnel in rulemaking forbidden from engaging in ex parte contacts with outside persons in the rulemaking context? They aren’t very closely regulated. This is different in formal rulemaking, §557(d) limits external ex parte contacts.

CASES : HBO v. FCC: Involved a proposed rule on the amount of children advertising that could be done. The FCC was lobbied by agency representatives, and the rule was struck down by the court. The thing to note is that this case was decided before Vermont Yankee. Before Vermont Yankee the court had the ventilation doctrine which they said in HBO that if you have lots of ex parte contacts, we don’t know if the issue was ventilated or not, and as a result we are striking down the rule. Sierra Club v. Cossel (1981): Seemed to disapprove of the HBO case and allowed ex parte contacts in the rulemaking setting. The reason is that there is nothing in §553 that prohibits ex parte contacts.

(5) When is an agency required to engage in rulemaking? The Supreme Court has said that agencies cannot be forced to make rules. If they want to work out the problems on a case by case basis, it is up to the agency to do this.

Cases:Chenery Case (1940s)NLRB v. Bell Aerospace (1974): In both cases the S.C. said agencies have the discretion to decide. The one thing an agency cannot do is use the adjudicatory process to make a rule.NLRB v. Wyman Gordon (1969): NLRB made a rule regarding whether unions could get access to employee lists. They didn’t apply to those parties, it would only apply in the future. It looked like a rule. Applied to a class of parties in the future. The S.C. said this was an improper way to make a rule. They said that the NLRB did not follow rulemaking procedures. The S.C. said it was the next case that really was affected, so it was OK to make policy through adjudication. (Wyman Gordon #2). This really shows how difficult it is to reverse agencies. Retail Clerks v. NLRB (1972 ): The NLRB had a long standing policy that it just up and reversed during an adjudication. The Court set this aside as arbitrary and capricious. The Court said you have to give some advanced warning that you might be thinking about doing this.

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(6) Can you petition to have a rule made ? Yes §553(e) says that you may petition, but you are pretty much at the agencies mercy. If the agency denies you, there is very little recourse to set their decision aside.

EXAM:1) Are you dealing with rulemaking or adjudication?2) Be clear whether it is informal rulemaking or formal rulemaking.

a) Formal is only triggered if the statute says there has to be a “hearing on the record.” §556, and §557 are invoked which involve oral testimony, cross examination, and limitations on ex parte contacts. This is rare

b) Informal rulemaking is most rulemaking. The only statute to be concerned with is §553. The major requirements in §553 are notice and comment (written).

c) Other procedures that would be imposed on an agency would come from hearing regulations, enabling acts, or other statutes. In rare case this could come from the Constitution. Vermont Yankee tells you that you cannot have courts imposing additional restrictions on agencies in informal rulemaking, just because they think it is a good idea.

d) Whether there is some categorical exemption to the rulemaking requirements. Certain categories include this: military rules, foreign affairs rules, benefits program rules are exempt from §553.

e) Other kinds of rules like interpretive rules, statements of general policy and emergency rules that are exempt from most of the requirements of §553. Be careful that if there is a pronouncement of an agency rule, look to see if they are exempt.

__________________________V. Agency Information Gathering: There are 3 principles devices by which

the agency gets information: Searches or inspections, record keeping or reporting requirements, subpoenas (those that require testimony and subpoenas ducus takem which require the production of documents or other tangible things. A) Searches or Inspections: The primary things your need are:

1) Statutory Authority : An agency cannot conduct searches or inspections without a statute authorizing them. This is pretty common. (a) 4 th Amendment : Limits unreasonable searches and seizures and

requires a warrant in some circumstances. This applies to agency officials.

2) Warrant Requirement : Normally it is required, and it must be issued by a neutral magistrate. Warrantless searches are allowed under some circumstances, but warrants are not that hard to get. The reason is the agency does not need to have individualized suspicion (unlike the police). All they need to show is that their search plan is neutral (e.g. If they decided to search every 11th business for fire code violations, and there is statutory authority for them to do that, they can get a warrant from a magistrate by simply filing and saying this is our plan.

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3) Warrantless Searches : They are not difficult. The 3 requirements to do this are:(a) Need a pervasively regulated industry . Industries with a

history of a lot of regulations qualify (e.g. Alcohol, tobacco, fire arms). There are some that don’t have the history but fall with in it.

People v. Burger (1987) NY statute allowed for warrantless searches of auto junkyards. The S.C. said this was OK, because junkyards were a pervasively regulated industry because they were subjected to record keeping, reporting requirements. (b) Statute that Authorizes a Search : This is a substitute for the

warrant. It gives the business owner notice, that he might be subject to a search.

(c) Must be a true administrative purpose : The agency must be looking for regulatory violation. It can’t be an excuse for coming up with criminal violations. However, even a mixed motive has been upheld. (Burger Case: A mixed team went in to the auto junkyard. Police found stolen cars. This was OK.

4) Illegal Search : Can the evidence be excluded in an administrative procedure? Administrative law says generally it can’t be excluded. There is no S.C. authority on point.

B) Record-keeping or Reporting Requirements: There isn’t much on the limitations of agencies. What is needed includes:1) Must be statutory authority : 2) Must be a bare showing of relevance : The agency must have a

reason for this…it does not have to be a strong showing why it needs the information. Some courts have said official curiosity is enough.

3) Can’t be outrageously burdensome : This is a pretty weak standard.

C) Subpoenas: 1) Subpoenas that require someone to testify . These are almost

impossible to resist. Although you could raise objections to specific questions. (e.g. A question is asked that might invade an evidentiary privilege). This assumes that the agency has statutory authority to issue this kind of subpoena.

2) Subpoenas Ducus Takum : These require the production of records or tangible documents. The standards are like record keeping or reporting requirements. (e.g. If an agency tried to subpoena all documentation between you and your attorney, the normal attorney-client evidentiary privilege would apply.)

3) Defense is the 5 th Amendment If a party has some criminal exposure if he produces records he can raise this defense. (a) Does not automatically apply just because the documents would

incriminate the target of the subpoena. This is not grounds for resisting the subpoena. (e.g. IRS wants to subpoena your tax

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records. On the back you have sketched out a plan to rob a bank, and you want to resist. You can’t.

(b) Can you ever resist turning over documents under the 5 th Amendment? Yes. But it has to be the actual act of turning over the documents that incriminates you. It’s not the document that counts, it’s the act of turning it over to the agency. By the act you are implicitly saying something that is incriminating. The 3 common ways this can happen are:(1) Might authenticate them :(2) Show they are in your possession :(3) Show that they actually exist :

Agency Information gathering remember:1) If turning the document over doesn’t add much, you can’t resist.2) Corporations don’t have 5th amendment 3) Agencies can infer a negative component when you resist on the 5th

amendment4) Immunity can usually be obtained. Criminal proceedings will not go

forward if you testify.Required records doctrine: Even records that would incriminate you, and turning them over would incriminate you, there is no privilege that can be raised if you are required to keep them. (e.g. Tax records are required to be kept, therefore this doctrine is a substantial bar to successfully raising the 5th amendment.) An agency can’t say you are required to keep everything that may incriminate you is not allowed. If you can’t comply with the requirement and avoid incriminating yourself does not work.

D) Privilege Limitations:1) Defense is the 5 th Amendment If a party has some criminal exposure

if he produces records he can raise this defense. (a) Does not automatically apply just because the documents would

incriminate the target of the subpoena. This is not grounds for resisting the subpoena. (e.g. IRS wants to subpoena your tax records. On the back you have sketched out a plan to rob a bank, and you want to resist. You can’t.

(b) Can you ever resist turning over documents under the 5 th Amendment? Yes. But it has to be the actual act of turning over the documents that incriminates you. It’s not the document that counts, it’s the act of turning it over to the agency. By the act you are implicitly saying something that is incriminating. The 3 common ways this can happen are:(1) Might authenticate them :(2) Show they are in your possession :(3) Show that they actually exist :

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2) If turning the document over doesn’t add much, you can’t resist .3) Corporations don’t have 5 th amendment rights . 4) Agencies can infer a negative component when you resist on the

5 th amendment .5) Immunity can usually be obtained . Criminal proceedings will not go

forward if you testify.6) Required records doctrine : Even records that would incriminate you,

and turning them over would incriminate you, there is no privilege that can be raised if you are required to keep them. (e.g. Tax records are required to be kept, therefore this doctrine is a substantial bar to successfully raising the 5th amendment.) An agency can’t say you are required to keep everything that may incriminate you is not allowed. If you can’t comply with the requirement and avoid incriminating yourself does not work.

E) Agency Publicity: To what degree can an agency negatively affect you, by publicizing that they are doing an investigation? There is very little that can be done, other than lobby the agency to give you a break.

Case:Paul v. Davis: S.C. said there is no Liberty Interest in your reputation. The fact that the agency is doing something that is negatively impacting your reputation does not automatically trigger a due process investigation.

EXAM: AGENCY INFORMATION GATHERING1) See it in which there is an agency enforcement adjudication. The agency is

trying to enforce a regulation against another party. There might be a questions as to whether the search was legal or the records could be kept.

2) Remember you must be able to point to some statutory authorization in almost every case.

3) Assuming there is statutory authorization, think if there are Constitutional limitations like the 4th or 5th amendment. The Constitutional limitations are probably not going to be sufficient to overcome the agencies investigation.

____________________VI. External Controls on Agencies: The kinds of controls that are not

enforced by courts, but can control what agencies can do. They have the effect without need for court intervention.A) Delegation Doctrine: says that agencies must be lawfully delegated

their power before they can act. The 2 kinds of delegation are:(1) Delegation of Legislative Power : The power to make rules. The

S.C. has only struck this down twice. In both cases it was circumstances it was in the 1930s when the courts were resistant to the New Deal (Roosevelt Court Packing Plan). Narrow construction of the commerce clause. The court said they were too broad. The basic test was that an agency cannot be given unlimited authority to make rules – there has to be some narrowing principle with regard to this.

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Cases re: Delegation Doctrine::Panama Refining v. Ryan (1935):Schecter Poultry Company v. United States (1935):Since these cases the S.C. has upheld the delegation of power to all agencies, even those that are extremely broad.Modern Test: re: Delegation Of Legislative Power: It is seen as Constitutional as long as it states some intelligible principle, that will guide the agencies decision making. Courts have upheld delegation as vague as the agency is to make rules regarding public necessity and convenience. Some on the S.C. (Rehnquist and Scalia) have said they may want to revive the Delegation Doctrine, but has not done so to this point.

(2) Delegation of Judicial Power : The power to conduct adjudications. The relevant portion of the Constitution is Article III. This sets up the Federal Courts. Article III says (a) There must be one Supreme Court and such inferior Courts as

Congress shall ordain and establish, and (b) that the judicial power shall be vested in those Courts. Features of Article III:(a) Federal Judges have jobs for life. (except by impeachment)(b) Federal Judges cannot have their salaries reduced.

This is not true of ALJs. Given that the ALJs are not judges within the meaning of Article

III, how is it they get to decide cases? The S.C. has decided the following cases on this:

CASES: Northern Pipeline Construction Company v. Marathon Pipeline (1982): This is a bankruptcy case (Bankruptcy Court is really an agency – judges are really ALJs). A bankruptcy court was hearing a state law contract matter that arose incidental to the litigation of the bankruptcy. The S.C. said it was unconstitutional (violated Article III) to give Bankruptcy Judges (ALJs) that kind of authority to decide the matter. There were only 3 exceptions to this: Military Courts : Court Martial courts are not under Article III Territorial Courts : These courts operate in areas that are not yet

states, and the are not under Article III Public Rights Matters : Are a kind of adjudication that is common in

administrative matters. Usually it is the government against a private party. (e.g. EPA comes along and tries to impose a civil penalty on a company, this is a public rights matter. It does not present an Article III problem).

This case seemed to save most of administrative adjudication.Thomas v. Union Carbide (1985): This involved pesticide regulations. This case had private parties on both sides of the contest. The S.C. held that is Constitutional also. Public Rights Matters don’t always involve the

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government as a party – it can sometimes involve private parties only. CURRENT CASE:CFTC (Commodity Futures Trading Commission v. Shore : An investor claimed his account had been mismanaged, and the broker (Shore) counter-claimed by saying that he not only managed the account properly—but the client owed him a lot of money for the trades. There was litigation about the legality of this being in front of the OFTC. This is essentially a contract claim, and it does not look like a public rights matter. The S.C. upheld and said it was not a Constitutional violation. Instead of the test in Marathon Pipeline they came up with a multi factor test as to whether the delegation of administrative authority was proper. The test is:

SHORE TEST REGARDING DELEGATION OF JUDICIAL POWER: Are you talking about a particular area of the law ? In this case they

said yes, commodity futures. Is there judicial review ? Is it possible to bring a judicial action to review

it? In this case there was. The Public Rights v. Private Rights is a factor – it’s not dispositive –

but it is a factor. In this case it is a private rights case, which is a factor, but not a dispositive factor.

Efficiency : It is very efficient to allow these kind of counter claims because we know that there is going to be administrative litigation anyway.

Independent Agency : CFTC was an independent agency and not an executive agency

Consent of the Parties: No one objected to the CFTC deciding the contract attributes of the case, and as a result the court said this is enough to uphold it.

5 of the 6 factors weighed in favor of upholding the delegation and it was struck down. After Shore it is tough to invalidate delegation of Judicial Power. The test is designed to uphold the vast majority of administrative litigation.

(3) Right to a Jury Trial (7th Amendment): What do you do if you have an administrative agency deciding what amounts to a common law action? Common law action means legal action, it does not mean equitable action. To the extent an agency is seeking equitable relief (e.g.

injunction, or any other equitable relief) there is no jury trial problem

There is no jury trial right in a Public Rights Matter:CASE:Atlas Roofing v. OHRC (OSHA Case) OSHA imposed a $600 penalty on an unsafe roofer. The roofer refused to pay, claiming he had a right to a jury trial. Instead you had an ALJ decide the case. S.C. said OSHA’s action was not unconstitutional. The right to a jury trial does not apply in public rights

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matters, and this is a classic public rights matter: the government against a private party. Grand Financiera v. Norberg: Bankruptcy case where 2 private parties fight over whether a transaction will be unwound and someone will get their money back. S.C. said this was a private rights matter because of 2 private parties fighting it out, and it’s legal. No one is seeking an injunction, they are trying to get legal relief. The S.C. said that you are entitled to a jury trial in this case. What the S.C. didn’t say was whether the jury trial had to take place in a federal court or in the Bankruptcy Court, or an agency can conduct a jury trial.EXAM: Look for Jury Trlal issue if there are private parties on both sides, and one of them is trying to get money.1) AGENCIES CANNOT CONDUCT CRIMINAL TRIALS: Where a conviction

would impose jail time.2) CONGRESS CAN MAKE A VIOLATION OF AN AGENCY REGULATION

A CRIME

B) Estoppel: To what degree can agencies be estopped by their prior conduct? It is extremely difficult. S.C. has not allowed. The problem is that you can call an agency. The agency person can tell you to take a certain action. Then the agency can change it’s mind. It is tough to set this action aside.

To what degree are agency actions entitled to preclusive effect? To what degree do they bind courts and other agencies? The S.C. has ruled that agency adjudication are entitled to the same res judicata or collateral estoppel that court adjudications are:

Res Judicata: Collateral Estoppel:

C) Freedom of Information Act (FOIA): This is a controversial statute. There are certain kinds of information that fall into different tiers:

(1) Tier 1 : Information that is so important that the agency must publish them in the Federal Register automatically: §552(a)(1)(d): says that rules have to be published (even interpretive and statements of general policy).

(2) Tier 2 : Records that automatically must be made available, and indexed, but don’t need to be published in the Federal Register. §552(a)(2) covers final opinions in adjudications. This is where the agency reaches final opinions. This also covers statements of policy that are not covered in the Federal Register. This also covers staff manuals.

(3) Tier 3 : Records available on demand: §552( Extends to records that are held by the agency, even if the agency didn’t write it. In theory the agency is suppose to determine whether they will give you the documents within 10 days of the request. In practice, it can take 2 years.

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(4) FOIA EXEMPTIONS : (9 )1) National Defense or Foreign Policy 2) Internal Personnel rules and practices 3) Things specifically exempted by another statute 4) Trade secrets and commercial or financial information 5) Intra or Inter agency memos that are not available by law . This

basically involves the opportunity for the agency to formulate policy without turning over those records. (e.g. Encompasses traditional attorney client communications. Suppose that an agency staff member wants to run a proposed policy by agency counsel and agency counsel gives suggestions in writing. These writings do not have to be turned over. Does not cover post decisional documents.

CASE: NLRB v. Sears (1975): This involved memos in an agency as to whether the agency was going to pursue a party for a regulatory violation. S.C. ruled that if the memo said no it was not going to pursue the party this was a final decision and the memo must be turned over. If the memo said yes they were going to pursue the party, then the memo does not have to be turned over, because it was an intra agency doctrine. RATIONALE: The NLRB should not have to turn over its thought process to a party it was going to be litigating with. 6) Personnel Medical Files or other documents that would

amount to a clearly unwarranted invasion of privacy. 7) Law enforcement documents which would have a negative

effect (e.g. revealing a confidential informant – FBI documents)8) Financial Institution regulations doctrines 9) Geological information relating to wells which would be of

great commercial value.

REVERSE FOIA: When can a party who generated a doctrine keep an agency from turning o the document over? Hardly ever. If an agency decides it wants to turn over a document, there is very little that you can do in preventing this. Exception: If you have a trade secret.CASE: Chrysler v. Brown (1979) : The fact that there are other statutes out there that prevent the disclosure of trade secrets is enough to force the agency not to turn things over. This case seems to only apply trade secrets.

EXAM: It is seen if you are looking at information. It is possible to work it into an adjudication. This involves the question as to whether it is a post decisional or pre decisional document. If looking at an adjudication the agency will have to turn over documents that involves a final decision.

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D) Executive and Legislative Controls:Executive Controls: To what extent can the executive branch control agency behavior? 1) Appointments: The President generally appoints agency personnel. The 3

levels:(a) Officers: are the sort of appointees (i.e. cabinet level or agency heads)

that are subject to senate confirmation. CASE: Buckley v. Vallejo (1976): There was legislation that tried to create the Federal Elections Commission so that the president, speaker of the House, and Speaker Pro Tem each got two appointments. The S.C. said no, these are all officers and they all have to be appointed by the President and confirmed by the Senate. This case just extends to heads of agencies.Morrison v. Olsen (1988) Held that Special Prosecutors are not officers. It is OK that someone other than the President can appoint. (b) Inferior Officers: are appointments that can be vested in (1) the

President; (2) Courts of law; or (3) Heads of the department. This is what a special prosecutor is viewed as

CASE: Frytag v. Commissioner of Internal Revenue : This case involved Pro Tem tax court judges. S.C. held that they were inferior officers and did not have to be appointed by the President. It was OK for the tax court chief judge to appoint them. (c) Employees: There is nothing in the Constitution that regulates how

employees are to be appointed. 2) Removing Agency Personnel by the Executive Branch :OLD DISTINCTION: S.C. said the President had to be able to remove any employee who exercised purely executive power. If this was all someone did, the President had to remove them. Congress could not limit this authority.CASE: Myers v. United States (1926): President removed the Oregon Postmaster. S.C. said this was constitutional. CASE: Humphrey’s Executor v. United States: Humphrey was a member of the FTC (Federal Trade Commission). FTC was an agency. There was a statute that made the heads of the FTC immune from removal without good cause, and the President removed Humphrey who sued. The S.C. held for Humphrey. The reasoned that you had to respect Congresses decision to insulate those sorts of people. This case makes Independent Agencies possible (Distinction between Independent and Executive agencies is that Independent agency heads cannot be removed at will. NEW CASE: Morrison v. Olsen: This is the case that set a test. It involved the special prosecutor. One of the provisions in the Special Prosecutor law is that you cannot fire the him at will. It was enacted in response to Archibald Cox’s firing by Nixon. The Special Prosecutor cannot be fired except for good cause. The S.C. upheld this as Constitutional. In the old distinction, it seems that the Special Prosecutor hold Executive Branch Agency. The S.C. said that they had to look to the whole package. Unless the Special Prosecutor impedes the President from performing his duties, then it is not a Constitutional violation. The

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Special Prosecutor serves a limited purpose and a limited term, so it was OK to insulate him from removal. Makes it harder to show a constitutional violation.

3) Legislative Controls : To what extent can the legislature control agencies? There isn’t much they can do directly. This was discussed in:(a) INS v. Chadha : S.C. struck down the one house veto. It said the

legislature cannot veto all by itself agency decision making. (b) Report and Wait Doctrine : Implied in the Contract with America Act of

1996, can give Congress a lot of authority.(c) Informal Authority : If Congress does not like the way an agency is doing

it’s business, it can conduct hearings, cut budgets, and make the agency’s life miserable.

EXAM: There are a variety of doctrines that implicate or control the way agencies behave without being the subject of judicial review. (1) These will likely come up discretely on an exam. If there is an appointment

of removal of an officer, think back to the constitutional decisions.__________________________

VII. Preconditions of Judicial Review: Parties sometimes seek judicial review of administrative agency decisions. Most of the time administrative agencies don’t get sued. The preconditions of judicial review are:A) Standing: Want to make sure this is someone who will try hard to win

the case. For standing you need:(1) Injury in Fact : The person has to be injured in a way that is

different than the general public.CASE: Lujan v. Defenders of Wildlife: The fact that you have vague intentions of visiting a place that the agency is going to affect with a land use decision is not enough injury to give you injury.

(2) Injury must be in “Zone of Interest ”: The injury must be in the zone in which the agency is designed to protect.

CASE: Air Courier Conference of America v. Postal Workers Union (1991): Postal workers sued the postal department over a rule that allowed for Fed-X and UPS overnight. The reason they sued was that they were afraid it would reduce the number of jobs at the post office. The injury in fact was losing jobs. However, the S.C. said it was not within the zone of injury because the postal law is designed primarily to protect consumers, and to the extent that the postal service was imposing regulations that were designed to give better service, this was not a problem.

(3) Fairly Traceable : The redress sought must be fairly traceable to the injury. If there is no hope of the remedy doing you no good, then standing will be denied.

B) Final Order Rule: The agency has to reached a final order. This means the agency has to be done with it’s work.

CASE: FTC v. Socal: FTC decided it was going to institute a proceeding against the company for overcharging for gasoline. The company tried to

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sue in federal court and say this was an absurd charge. The S.C. said too bad, there had been no final order, so the court couldn’t hear the case.

C) Ripeness: The decision has to be ripe for review. If you have a final order, then it is ripe for review. Where it is seen is in regard to rulemaking and it comes up in the context of rules that are not yet enforced. (e.g. An agency adopts a new rule and it will negatively affect your client. You want to litigate to show that the rule is illegal or it is arbitrary . Maybe The question: Is the rule one that doesn’t require more information to determine the legality of the rule?

CASE: Abbott Labs v. Gardner (1967) This case said that judicial review is OK. In this case, it did not make any difference if the case was reviewed for enforcement or not. You could tell everything you needed to know about the legality of the rule without waiting for it to be enforced. Gardner v. Toilet Goods (1967) The case said no judicial review of the rule. The difference was that in this case, you needed more information. This case depended on how the agency exercised its discretion. Three Factors of Ripeness applied by the Courts: (a) Is it a purely legal question ? Does it implicate just legal issues. Then

it is probably ripe. If there are factual issues then you probably have to wait for the agency to enforce against your client.

(b) Would a court or agency benefit from delaying the challenge ? Is there some good reason, or more information we can get if the challenge is delayed. If the answer is yes there is more information to get, then the case is not ripe.

(c) To what extent could the private party be impacted by waiting for the agency to enforce it? In Gardner cases the Court said it was a big factor in its decision to review. One of the cases was a drug labeling and to the extent that the drug companies would have to wait for an enforcement action – this might damage their reputation.

D) Exhaustion of Administrative Remedies: The private party must have exhausted its administrative remedies before seeking judicial review. It must have taken all the steps it can to get a remedy. A lot of times this overlaps with the Final Order Doctrine. However, exhaustion is implicated when a party tries to go directly to court and circumvent the agency. The two exceptions to this are:(1) Futility : If you can show it would have been a waste of time, money

and energy to go to the agency first, then this will work.(2) Inadequate Remedy : Is it the case that the agency does not have

a remedy that is reasonably available to you?

E) Primary Jurisdiction: looks like exhaustion of Administrative Remedies, but it usually comes up when an agency and a court concurrent authority over something. The most common is the

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validity of a rate or tariff. (e.g. One party is suing another on a contract law suit, and they want to get back the contractual tariff rates set by agency. Is the tariff legal?) In Primary Jurisdiction is where an agency and court work side by side. Exhaustion is where the agency has exclusive jurisdiction.

EXAM: Any case where a party is going to court after an administrative adjudication or where they try to go directly to court, then Preconditions of Judicial Review should be discussed.

PRECLUSION OF JUDICIAL REVIEW:F) “Committed to Agency Discretion by Law”: This means that the

agency’s authority is so broad that there are no legal standards to review the decision. THERE IS NO LAW TO APPLY. THERE IS NO WAY TO REVIEW IT. Where the standards are incredibly open ended then judicial review may be precluded.

CASE: Heckler v. Chaney (1985): Heckler is a death row in mate who is going to be put to death by lethal injection. The drug that was going to be used to kill him was never approved by the FDA. He tried to force the FDA to enjoin usage of the drug until it could be proved safe (this is ridiculous). He tried to review the FDA’s decision not to force Texas to stop using the drug. S.C. said there is no law to review here. The FDA has such broad enforcement discretion there are no standards to measure against.

G) Statutory Preclusion of Review: Statutes like this are rare. The S.C. reads these statutes with a heavy presumption that they do allow for judicial review. The S.C. says these statutes only limit the kind of judicial review. If Congress writes a statute that completely precluded judicial review, there might be a Constitutional problem, but the S.C. has never faced this or discussed.

EXAM: Preconditions of Judicial Review especially preclusion of judicial review should be considered before actually looking to what standards do you apply to judicial review.

________________________VIII. Judicial Review: What is it that courts do when they look at agency

decisions. A) Four Questions: Break down what kind of agency decision that are

being discussed.1) Agencies interpret the Law : Agencies make decisions as to legal

standards. This can arise anywhere. This is a default category. If it isn’t any other category, then it is this. What to do here Agencies get deference because, unlike courts, they have a specialized mission and are experts. They know about these issues.

CASE: Chevron v. NRDC (1984): This case says that when an agency makes a legal determination, the agency is entitled to deference. Courts can only set aside an agency determination of the law if it is unreasonable. In this case was a regulation was the bubble regulation that said even if

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you added another smoke stack to your plant, or unitary source of pollution, you could do this without getting a permit as long as you don’t increase the overall amount of pollution. This was not an obvious reading of the clean air act, but it was not unreasonable. Therefore the court gave the agency the benefit of the doubt. AGENCIES GET A LOT OF DEFERENCE.3 Step Test to apply:(a) Is there a clear answer ? Does the statute or case law give a clear

answer? If yes, then it’s over. (b) Whether the agency has been delegated authority to resolve the

question if there is no clear answer? Yes, if it is a complex matter within the agency’s expertise.

(c) If the agency has been delegated authority, is it’s interpretation unreasonable? As long as it has a reasonable possibility, then it should be upheld.

SPLIT MODEL AGENCIES: (i.e. OSHA, IRS and the Tax Court) One side of the agency adjudicates while the other is the rulemaker and enforcer. Which side gets the deference?CASE: Martin v. OHRC (1991): S.C. said the enforcement side of the agency gets deference only.

2) Historical Fact : Who did what, when, where why? Here, you have to look at the context in which the agency made the determination. (a) Substantial Evidence Standard : If the agency made the

determination in a formal adjudication or rulemaking (on the record), then the agency’s decision on issues of historical fact will only be reversed if it lacks substantial evidence. All the agency has to show is there is some reasonable amount of evidence, then it will be upheld (similar standard as to avoiding summary judgement or avoiding a directed verdict).

(b) Arbitrary and Capricious Standard : The agency’s resolution of an historical fact in an informal adjudication. The standard that applies is the arbitrary and capricious standard. An agency’s determination will be set aside if it is arbitrary and capricious. (This means that you have to show that it was an unreasonable factual determination. However, the agency can justify its position outside the record. This is different that the Substantial Evidence rule.)

WHAT IF THE ALJ FINDS ONE WAY AND AGENCY REVERSES?CASE: Universal Camera v. NLRB (1951): The ALJ found that one witness was telling the truth, but then the agency reverses and said that they believed the other witness was telling the truth. Who gets the deference? The Agency’s determination is reviewed under the Substantial Evidence Standard. The ALJ’s determination is part of the record, and the court has to look at the whole record. The Court has to look at both sides of the question. If the Court decides

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that the agency’s determination is unbelievable, and the ALJ’s is more believable it can be reversed. EXAM: Historical Fact Issues: Look at whether it was a formal or informal adjudication or rulemaking. If Formal then the Substantial Evidence Rule Applies, Informal: Arbitrary and Capricious.

3) Make determinations of Policy : What should be the policy? (e.g. Should we have air bags in cars?): How is this reviewed? This usually comes about in rulemaking. There must be a hard look at the agency decision and the agency should have taken a hard look at the alternatives before making policy.

Arbitrary and Capricious Standard of Review Applies: This is a little different than in dealing with fact. There isn’t as much deference in policy matters.

CASE: Motor Vehicle Manufacturing Association v. State Farm (1983): In this case it was said that we have to be able to guarantee that the agency has taken a hard look at all policy considerations. This involved a rule by the National Transportation Safety Board that got rid of the automatic seat belt rule and mandatory air bag rule. The insurance industry sued and said that was arbitrary and capricious. The S.C. said that it was arbitrary because they had not taken into consideration statistical information, and the agency should have done a better job of considering the alternatives and explaining to the court how the decision was reached.

4) Discretion : Agencies make decisions like what penalty should be imposed, etc. When is discretion involved? Usually when determinations are made that aren’t legal or factual but clearly involve a judgement on the part of the agency.

Example: An agency’s determination of what penalty to impose. If an agency decides that some one is guilty of a regulatory violation and they want to impose a one year suspension of their license, or bar them, or impose a fine. The standards are:Arbitrary and Capricious Standard:

orAbuse of Discretion Standard: It has to be shown to the courts that the agency abused its discretion. This is shown usually by a shocking penalty. The penalty is all out of whack in regard to similar penalties. (e.g. An agency usually sends a warning letter to first time offenders, but then a case comes along that is very similar and they suspend another persons license for 10 years) Generally the agency gets a lot of discretion.

EXAM: Assuming that you can get by the preconditions (standing, ripeness, etc.) to judicial review, then you need to think about what kind of decision the agency is making, (law, fact, policy, discretion). Depending on which category that it is put into, you can determine what standard a court would apply. LOOK OUT FOR THIS FOR WHERE THERE IS AN AGENCY DETERMINATION AND YOU HAVE TO EVALUATE A COURT’S REVIEW OF THE DETERMINATION

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B) Venue and the Form of Judicial Review: A lot of times venue statutes provide that venue has to be in a certain court.

(1) VENUE : Often venues rules point to a specific appellate court or allow suit in the D.C. Circuit Court.

(2) FORM OF JUDICIAL REVIEW : Most Common way to seek judicial review is sought is by a party seeking a declaration and an injunction. They seek declaratory relief that the agency’s decision was illegal and the ask to enjoin the agency from enforcing it. This is done by filing a complaint in federal court under the Federal Rules of Civil Procedure.

C) Damages Actions as Methods of Judicial Review: If an agency makes a determination that you can’t review in a normal way with judicial review (e.g. An agency takes the food out of your restaurant and destroys it) The only option would be damages actions as a way of seeking judicial review of agency actions.

(1) State Actions: 42 USC 1983: This gives you a private action against state or local actors that deny you a federal right or a constitutional right (e.g. If the state health dept. took your food and you thought they weren’t entitled to it, you were suppose to get a hearing, you might be able to sue them) (a) Limitations on this are immunities . A government actor could

have a qualified immunity and they can’t be sued unless you can show that (a) their actions were illegal; and (b) their actions were unreasonable.

(2) Federal Actions: Must sue under Bivins v. 6 Unnamed Agents of the FBI : This involved an alleged illegal FBI search. The S.C. held that if there was no other remedy than damages, you can sue federal officials directly for violations of your Constitutional rights. This case is still subject to the immunity limitations of State Actions.

(3) Federal Tort Claims Act: This is limited and does not allow for strict liability or intentional tort theories. It usually allows for negligence theories. (e.g. If you are run over by a postal truck you may be able to sue the Federal government on a negligence theory. ) There are some circumstances In administrative law where you can show that a agency negligently enforced its policy (e.g. If a Federal Health Dept. was negligent in determining that your food was really spoiled, you may be able to recover under this act. However, there are limitations:(a) Discretionary Doctrine: This is a big limitation. If the agency was

exercising policy you may be limited.EXAM: Venue and form of judicial review are usually found if you are in a circumstance where you see a court review of an agency determination. Must look to:1) Preconditions for judicial review2) Standards under which judicial review can be sought, and3) If no traditional judicial review is available, then look to damages.

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