How to use:
There are four outlines. First, a smaller summary-type outline. The second, third, and fourth are all larger outlines written by other individuals and given to me.
I don't encourage law students to copy this or any other outline prepared by another, but rather, read through it and use it to gap-fill or review the subject matter. I do encourage students to copy the strategy of writing a condensed outline for the final rather than bringing in a giant 80+ page behemoth into finals, provided they are open book/open note. Honestly, I'd prepare short-form outlines even if it was closed notes, just to use as a study aid.
Before using or relying upon this outline, please refer to this website's disclaimer.
Outline 1 (better .doc version available on Drobox)
I. Introduction to Administrative Law
A. Agency
1. §551: Agency means each authority of the US Gov. but does not include :
a. Congress, Federal Courts, Governments of territories or possession of the US, Government of D.C.; Military authority
b. Basically Agency is any part of the government other than Congress, President, Judiciary
2. Two Types of Agencies:
a. Executive Agencies: (FDA, IRS, FBI)
i. Subject to greater degree of presidential control
ii. Established as department or part of department
iii. Usually headed by a single person
iv. Head is removable at will of president
b. Independent Agencies (NLRB, SEC, FTC)
i. Subject to lesser degree of independent control
ii. Free standing
iii. Headed by board or commission comprised of representatives from both parties
iv. Board members/ commissioners serve for fixed term and are only removable for cause
v. Limits on party affiliation
3. What do Agencies do?
a. Execute the law by which they are established and given authority over
b. Regulate private conduct: regulatory agencies can include local governments
c. Administer Entitlement Programs: MediCare, Medicaid, Social Security
d. Everything Else: economic inefficiency and market failure
i. Agencies can require public disclosure to rectify market failure
ii. Deportation
iii. Passports
4. Why Agencies are Needed:
Justification
Defect
Harm
Agency
Inadequate information
Purchase wrong/ dangerous product
Loss of money, physical harm
FDA, FTC
Noncompetitive conditions
Monopoly
Price increases, quantity decreases
Utility regulations
Excessive competition
Unsafe conditions, inadequate supply
Transportation, agriculture
Unequal bargaining power
Low wages, poor working conditions
National Labor Relations Board
Spillover costs
Pollution, unsafe conditions
Safety, health
EPA, OSHA
Public goods
Free riders
Under production
Police, education, welfare
a. Often the market does not work the way it should; agencies ensure efficient allocation of resources
b. Non-economic justifications
i. Pursue values inconsistent w/ efficient allocation
ii. Equity and fairness (e.g., organ transplants)
iii. Redistribute wealth
iv. Altruism
5. Types of Agency Action
a. Rulemaking
i. Equivalent of legislative power; agencies promulgate general standards that control future conduct by regulated entities
ii. Power given to agency b/c legislature is neither equipped or inclined to make decisions
iii. Compare to Legislation
1. Agencies may issue rules only to extent authorized by their organic act
2. Agencies must issue rules in accordance with procedures spelled out by legislature (whether in organic statute (OS) or Administrative Procedure Act (APA))
3. Agency rules are subject to judicial review for compliance w/ substantive standards and procedural requirements in organic statute
b. Adjudication
i. Equivalent of judicial power; agencies apply law to facts and issue binding results
ii. Compare to power of Art. III courts
1. Agencies have limited juris; scope of power limited to area established by OS
2. Agency results subject to Judicial Review
c. Investigations
i. Equivalent of executive power
ii. Agencies have power to subpoena/compel testimony, can usually require regulated entities to generate information, can inspect facilities
iii. May be authorized to prosecute by bringing administrative proceedings in court (e.g., NLRB can declare unfair labor practices) (Administrative compliance proceedings)
iv. Can require regulated entities to generate and keep records
v. Some agencies have power to inspect facilities
vi. Can bring actions directly to the judiciary
6. Separation of Powers Issues:
a. Agency officials are not elected
b. Agency law judges don’t always have to satisfy Art. III requirements
c. May be free of presidential control
d. Agencies often perform multiple governmental functions
7. US Constitution doesn’t mention administrative agencies anywhere
Pro-Agency Position
Anti-Agency Position
Give close call of constality to agency
Views agencies as 4th head of gov.
Overlook minor noncompliance w/ procedures
Have own agendas: self-interest, not public
Defer to substantive agency decision
Tend to infringe on individual rights
Close call of constility agency structure as illegality
Require strict adherence to agency procedures
No satisfied by superfic review of substantive decisions
B. A Walk Through the Administrative Procedures Act: the APA
1. Primary statue that governs federal administrative law
2. Background:
a. APA adopted in 1946 as a compromise b/w opponents and proponents of regulation
b. Opponents of agencies won on adjudication, proponents of agencies won on rulemaking
c. APA provides general requirements that may be superseded/supplemented by agency’s OS
d. Agencies may be subject to addition procedures due to constitutional provisions
e. Residual common law doctrines also come back at times and supplement the APA
Type of Agency Action
When does APA Apply
Formal or Informal
Applicable Procedures
Rulemaking
Section 553 applies unless there is involved:
(1): a military or foreign affairs function of the US or
(2) a matter relating to agency management or personnel or to public property. §553(a)
Formal procedures are required when “rules are required by statute to be made on the record after opportunity for an agency hearing. §553(c)
Formal:
§§ 553(b), 556, 557
Informal: §553(b)—(d)
Hybrid:
Check the OS
Adjudication
Section 554 applies in every case of adjudication “required by statute to be determined on the record after opportunity for an agency hearing,” with six exceptions. §554(a)
Formal procedures are required when adjudication is “required by statute to be determined on the record after opportunity for an agency hearing,” §554(a)
Formal:
§§554(b)—(c), 557—557
Informal:
not governed by APA; see OS, agency regulations, etc.
3. Definition of Adjudication and Rulemaking
a. Adjudication: is the process for the formulation of an order. An ORDER is the whole part of a final disposition other than rule making but including licensing—if it’s not rulemaking it’s adjudication
b. Rulemaking: is the agency process for formulating, amending, or repealing a rule. A RULE is an agency statement of future effect designed to implement, interpret or prescribe law or policy
4. Rulemaking:
a. General:
i. Rulemaking means agency process for formulating, amending, or repealing a rule. §551(5)
ii. Rule means the whole or part of an agency statement of general or particular applicability and future effect … §551(4)
iii. Procedures for rulemaking (553) apply unless concerns military or foreign affairs or matters relating to agency management.
b. Process for Formal Rulemaking
i. Public notice. §553(b)
ii. Follow steps required by §§556—557
iii. Few statutes require formal rules
c. Process for Informal Rulemaking
i. §553(b): Agency must publish notice of a proposed rule in the federal register (unless for interp. Rules, general statements of policy or rules of agency org., proc. & practice, or good cause)
ii. §553(c): Agency must give interested persons opportunity to participate in rule making through submission written data, views, or arguments w/ or w/o opportunity for oral presentation
iii. §553(c): Agency must incorporate in rules a concise general statement of their basis and purpose
d. Process for Hybrid Rulemaking:
i. Congress imposing particular RM procedures on particular agencies that are b/w formal and informal. e.g. FTC
5. Adjudication:
a. General:
i. Adjudication means agency process for formulation of an order. §551(7).
ii. Order means the whole or part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rulemaking but including licensing. §551(6)
iii. APA only has formal adjudication procedures there in, if they’re not triggered by §554(a) then the APA is silent on what procedures govern the adjudication. The OS, or its own regulation may govern informal adjudication.
iv. If it’s not rulemaking, then it’s adjudication
b. Process for Formal Adjudication: (Must resemble a trial)
i. §554(b): Agency must give notice to the parties of its hearing
ii. §554(c)(1): Agency must provide parties with opportunity to settle
iii. §556 – 557: Agency must follow these sections
1. Use an Administrative Law Judge (ALJ)
2. §556(d): burden of proof on the agency, also establishes evidentiary rules and describes extent of cross examination
3. §556(e): agency decision must be based exclusively on the record—no ex parte communications
4. §555(b): right to legal representation
5. §555(d): Agencies have subpoena power
6. §557 is appeal procedures
c. Process for Informal Adjudication:
i. Not governed by the APA
ii. Look to agency’s mandate
iii. See if the due process clause applies to the agencies’ actions
iv. See OS and agency regulations, and due process
d. §554(a): Decides b/w the two
6. Judicial Review
a. Three Questions:
i. Is Judicial Review Available?
1. Generally review is available
2. Exceptions (when review is not available)
a. When Statutes preclude it
b. §701(a): agency action is committed to agency discretion by law
ii. Is the Timing Right?
1. §704: generally the agency action must be final
2. Parties must generally exhaust all internal appeals procedures
3. There may also be questions of ripeness
iii. Does the litigant have standing?
1. §706(2): Constitutional requirement of case/controversy
2. §702: APA requires that person suffer a legal wrong or be adversely affected or aggrieved.
3. Zone of interest of those that the statue was designed to protect and against the specified violation
b. What is the Scope of Review
i. According to §706, there are three levels of review:
1. De novo (court must agree with agency to uphold decision)
2. Substantial evidence (uphold if reasonable, but do not have to agree)
3. Arbitrary and Capricious (highly deferential) (affirm unless decision was arbitrary)
ii. Deciding what Standard Applies
1. Look to OS
2. Typically, court decides based on its interpretation of the statute
c. Summary:
i. Both adjudicatory and rulemaking decisions are subject to judicial review
1. Unless stated in §701 or prohibited in the agency’s mandate
2. Congress has delegated final decision making authority to agency in manner other than by an express declaration
3. Can only seek judicial review on a final action and after exhausting any administrative remedies
4. Must be ripe
5. Must have standing: constitutional requirements and potentially statutory requirements
a. Person suffering legal wrong b/c of agency action or adversely affected or aggrieved by action
b. Zone of interest
C. Administrative Law Practice:
1. Meeting w/ an Agency Attorney
a. APA prohibits ex parte communications b/w the two, but the proceeding hasn’t actually begun, so APA likely does not apply
b. Ensure that client is not violating any regulations to avoid sanctions
c. Quick resolution w/o going to court, try to get decision in writing, could provide a reliance defense, similar to estoppel, unlikely to work against government. Yet, in assessing penalties, cts look @ good faith
d. Disadvantages of meeting w/ agency attorney—don’t want to divulge information that agency would use
2. Effects of Internal Memo
a. Probably should not ignore. It’s agency position though may not be a published rule §551(4) & (5)—is it a statement of future effect designed to implement, interpret, or prescribe law… thus it is a rule and thus it is rulemaking.
b. Procedure requirement that apply to rulemaking depend upon whether or not it should be on the record after chance for hearings
c. Also §552, which is part of the freedom of information act requiring the public of substantive rules. This would seem to include the memo
3. Receiving a Letter from Agency Counsel
a. Is it rulemaking? No clear definition, but letter is likely an agency statement.
b. Will it have future effect? Rules are typically limited to general statements.
c. Is it adjudication? If so, consider whether adjudication procedures apply.
d. Is the letter a final disposition? Depends on phrasings w/in the letter.
e. Options: sue in the court, but first look for internal administrative appeals process.
II. Rulemaking
A. Rulemaking Initiation
1. Starting the Process:
a. Sources of proposed regulations
i. Legislation requiring certain regulations
ii. Staff recommendation upon identification of problem
iii. Political pressure
iv. Public pressure
v. §553(e): “Each agency shall give interest person right to petition for issuance amendment or repeal of rule”—can look confrontational
vi. §555(e): “Prompt notice shall be given of denial in whole/part of written app., petition, or request of interested person made in connection w/ agency proceeding” & notice shall be accompanied by a brief statement.
vii. Lobbyists
viii. Rulemaking petitions
2. Lobbying:
a. Bottom-up Approach
i. Start w/ staff members
ii. Convince agency that clients interest coincide w/ agency’s interests
iii. Skills to have:
1. Understand agency’s problem
2. Have a firm grip on legislative process
3. Be able to deal w/ political environment the agency finds itself in
4. Understand basic policy tools
b. Top-down Approach
i. Why pressure from politicians works
1. Congress appropriates money for agency
2. Congress holds oversight hearings
3. Congress can reduce power of agency
ii. Who to Approach
1. Various committees that supervise agency
2. Appropriations committee
3. Representatives from affected areas
4. Representatives hostile toward the agency
iii. May want to hire professional lobbyist or more experienced attorney who know the lay of the land
3. Petitions for Rulemaking: (one of two ways the public can initiate rulemaking)
a. Background:
i. Each agency shall give an interested person the right to petition for the issuance, amendment or repeal of rule. §553(e) – can look confrontational
ii. But procedural rules governing the filing of petition for rulemaking are rare
iii. §555 agency can’t ignore rulemaking petition
b. Agency Inaction
i. §551(13): agency action includes “failure to act” --> can be applied to judicial review under §701(b)(2)
ii. An agency must proceed to conclude a matter presented to it w/ due regard for the convenience and necessity of the parties or their representatives and w/in a reasonable time. §555(b)
iii. Courts can compel agency action unlawfully withheld or unreasonably delayed. §706(1)
1. But a party must allege more than mere failure to act
a. It must show the agency failed to take discrete agency action
b. It also must show the agency was required to take discrete agency action
2. Court has not defined “discrete agency action”
a. It does not include broad, programmatic actions (i.e., a party cannot claim that an agency is administering an entire regulatory program improperly)
b. It does not include a petition for rulemaking, which asks agency to change a narrow provision
3. Agency action is generally “required” by statute (e.g., §555(b))
a. Delay violates §555(b) mandate to decide matters in a reasonable time
iv. Unreasonable Delay:
1. Telecommunications Research & Action Center v. FCC
a. The time agencies take to make a decision must be governed by a “rule of reason”
b. Where Congress has provided a timetable, statutory scheme may supplement rule of reason
c. Delays reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake
d. The court should consider the effect of expediting delayed action on agency activities of higher or competing priority
e. The court should also consider the nature and extent of the interests prejudiced by delay
f. The court need not find impropriety to hold that agency action is unreasonably delayed
v. Remedies for Unreasonable Delay:
1. Court may issue a decision
2. Court may set a deadline
3. Most likely, court will ask agency to establish a timetable and will retain jurisdiction in case agency violates its own timetable
c. Denial of a Petition
i. Prompt notice of denial is required. Generally, the notice must be accompanied by a brief statement of the grounds for denial. §555(e).
ii. Courts can hold unlawful and set aside agency action. §706(2).
1. Person seeking judicial review must have suffered legal wrong or be adversely affected or aggrieved. §702
2. Final agency action and action made reviewable by statute are subject to judicial review. A party may need to exhaust all internal appeals processes. §704
iii. Courts review denial of petition under Arbitrary and Capricious standard of §706(2)(A)
1. A&C standard as expressed in Arkansas Power & Light Co. v. ICC
a. Did agency adequately explain facts and policy concerns it relied on?
b. Do the facts have some basis in the record?
2. A&C standard as expressed in Northern Spotted Owl v. Hodel
a. Did agency provide explanation?
b. Is there a connection b/w the facts found and the choice made
c. Is decision based on relevant factors
d. Did agency make substantial inquiry
e. Standard is narrow and presumes the agency action is valid but still have a thorough, probing, in-depth review”—no rubberstamping
f. Agency action is A&C if agency failed to articulate a satisfactory explanation for its action including a rational connection b/w the facts found and the choice made
i. But remember even if the court finds the denial to be A&C, that does not mean the agency is forced into rulemaking, here it was remanded for a new explanation
iv. Remedies for Wrongful denial
1. Only in the rarest of circumstances will the court force agency to start rulemaking (courts don’t’ want to disrupt agency priorities)
2. Generally, courts remand to agency to give it another opportunity to explain its decision
B. APA Rulemaking Procedures
1. The Exceptions: (first step is to see if the rules are even applicable)
a. General Exceptions:
i. §553 does not apply to military or foreign affairs function of the US. §553(a)(1)
1. May not be time to engage in procedure
2. may not be wise to notify public
ii. §553 does not apply to “a matter relating to agency management or personnel or to public property, loans, grants, benefits or contracts.” §553(a)(2)
1. Thus §553 does not apply to rules concerning public lands (e.g., Forest Service, BLM, and National Park Service regulations)
2. APA adopted to protect private entities not recipients of government benefits
3. many agencies covered by this exception voluntarily subject themselves to APA requirements
iii. §552 (Freedom from Information Act)
1. Nothing is exempted for §552
a. “substantive rules of general applicability adopted as authorized by law and each amendment revision or repeal of the foregoing be published in the federal register for the guidance of the public.”
i. If they fail to do this, people can’t be adversely affected by it (unless they had other notice)
b. Rules relating to military or agency personnel, while not subject to notice and comment requirements of §553 are subject to §552(a)(1)(D)
b. Notice and Comment Exceptions:
i. Except when notice or hearing is required by statute, §553 does not apply to the following:
1. Interpretative rules, general statements of policy, or rules of agency organization procedure or practice. §553(b)(3)(A).
2. When the agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest. Agency must incorporate the finding in the rules issued. §553(b)(3)(B).
ii. What are Procedural Rules
1. The OLD TEST:
a. American Hospital Associatioin v. Bowen
i. Does the rule have a substantial impact on regulated entities?
ii. Does agency action alter the rights and interests of the parties rather than just how the parties present themselves?
iii. Does agency action encode a substantive value judgment?
iv. Inserting a new standard of review would require notice and comment
2. A Modification:
a. Air Transport Association of America v. DOT
i. Is the rule a mere housekeeping measure?
ii. Does agency action alter the rights and interests of the parties rather than just how the parties present themselves?
iii. Does agency action encode a substantive value judgment?
iv. Can’t cure problems by having notice and comment afterwards
3. Controlling Law
a. JEM Broadcasting Co. v. FCC (Two Part Test)
i. Does agency action alter the rights and interest of the parties rather than just how the parties present themselves? If no, then procedural, but must go to next question.
ii. Is notice and comment necessary to safeguard policies underlying the APA (553(b),(c))
1. Maximize information available to agency before it makes a decision
2. Keep agency from becoming wedded to position by getting comment to it early
3. Legitimize rule in eyes of public and give people a chance to “blow off steam;” promote participatory democracy
iii. §553(b)(B): No need for notice and comment if impractical
1. Impracticable means a situation in which due and required execution of the agency functions would be unavoidably presented by its undertaking public-rule making proceedings
a. Considerations of effectiveness, efficiency, expedition, and reduction in expense outweigh interest of following procedure in rulemaking—balancing test
iv. What Constitutes Good Cause?
1. Definitions:
a. Impracticable means a situation in which due and required execution of the agency functions would be unavoidably presented by its undertaking public-rule making proceedings
b. Unnecessary means unnecessary so far as the public is concerned, as would be the case if a minor or merely technical amendment in which the public is not particularly interest were involved
c. Public interest means that public rulemaking procedures should not prevent an agency from operating
2. Factors that may buttress argument for good cause
a. Rule limited in duration and scope
b. Comment will be solicited later
c. Matter involves protection of public health or safety
d. Agency made good-faith effort to comply w/ APA but faced circumstances out of its control
v. Remedies for wrongful failure to give notice and accept comments
1. Court could hold rule invalid on a case by case basis as to those who lacked knowledge and opportunity to comment
2. More likely that court would declare rule invalid for all purposes
3. Unclear whether rule would be rendered invalid from its adoption or point of challenge
4. Also unclear whether courts should allow rule to remain in effect while agency solicits comments and makes decision
2. Formal, Informal, or Hybrid Rulemaking
a. The different requirements
i. Most common is informal rulemaking, which is subject only to notice-and-comment procedures required by §553 and must be accompanied by a statement of basis and purpose when they are promulgated
ii. In a few circumstances, Congress requires the use of formal rulemaking which means agencies must follow §553 notice and comment and procedures specified in §§556-557
1. Essentially requires a trial type proceeding to promulgate a rule
iii. APA does not govern hybrid rulemaking procedures
b. Determining what is required:
i. When does §553 trigger the requirement of formal rulemaking?
1. Statute must require that rule be made on the record
2. Requirement of just a hearing is insufficient to trigger formal
3. US v. Allegheny Ludlum Steel Corp. (US 1972)
a. §§556-557 (formal rulemaking) apply only when the agency statute in addition to providing a hearing, prescribes explicitly or similarly that it “be on the record,” just requiring a hearing is insufficient.
ii. When does a hearing requirement trigger the need for a trial-type proceeding in a rulemaking, even if formal rulemaking is not required?
1. Depends on the context. Reference to “hearing” does not necessarily mean agency must afford parties opportunity for oral argument and cross examinations
2. §559 preserves Congress’s authority to require hybrid rulemaking
3. United States v. Florida East Coast RR (US 1973)
a. §559 allows congress to create hybrid rulemaking requirements. Hearing has a host of meanings, here the word hearing does not necessarily embrace either the right to present evidence orally and to cross examine opposing witnesses, or the right to present oral argument to the agency’s decision maker
iii. Can courts impose hybrid rulemaking procedures on an agency?
1. Agencies are free to grant additional procedural rights in the exercise of their discretion
2. Reviewing court is generally not free to impose procedural requirements the agency has not chosen to adopt
a. Judicial review is unpredictable, so agencies would always engage in formal rulemaking to eliminate risk in invalidation
b. Formal rulemaking is inefficient, and more procedures do not necessarily produce a better record
3. Vermont Yankee Nuclear Power Co. v. Natural Resources (US 1978)
a. Absence of discovery or cross-examination does not deny a meaningful opportunity to participate in the rulemaking proceedings.
b. Reviewing courts are generally not free to impose additional procedural rights if the agencies have not chosen to grant them--> but remember DUE PROCESS
c. Policy Against Formal Rulemaking Versus Policy in Favor of Formal Adjudication
i. Rulemaking involves legislative facts that help a government institution decide questions of law, policy, and discretion. Such facts can best be determined in informal proceedings.
ii. Adjudication involves facts that answer questions of who did what, where, when, how, why and with what motive or intent. Such facts are related to individual and should not be resolved to the individual’s detriment w/o giving the individual an opportunity to be heard.
3. Informal Rulemaking Requirements:
a. Notice
i. General Requirements
1. §553(b) requires either constructive notice through publication in the Federal Register or actual notice—notice not required if those subject to the rule are named or personally served
2. §553(b)(1): Notice must include the following information
a. Statement of time, place, and nature of public rulemaking proceedings
b. Reference to the legal authority under which the rule is proposed
c. Terms or substance of the proposed rule, or a description of the subjects and issues involved
ii. Policy behind requiring Notice
1. Allow those who might be affected to submit comments
2. Make as much information as possible available to the agency (informed decisions)
3. Increase potential that agency will keep an open mind
b. After Adjusting Rule, Must the Agency Republish Notice
i. New notice is not required if the changes in the original plan are in character w/ the original scheme and the final rule is a “logical outgrowth” of the notice and comments already given.
1. Chocolate Manufacturers Association v. Block (4th Cir. 1985)
a. Notice is adequate if the changes in the original plan are in character w/ original scheme and the final rule is a logical outgrowth of the notice and comment already given.
ii. The crucial issue is whether parties affected by a final rule were put on notice that their interests where at stake. The question is whether interested parties would have known an issue was “on the table.”
1. American Medical Association v. US (7th Cir)
a. This narrowed the “logical outgrowth” test
b. Look to see whether rule materially alters or departs from issues or terms of proposed rule
iii. Courts have upheld final rules that differed from proposals in the following significant respects:
1. Outright reversal of the agency’s initial position
2. Elimination of compliance options contained in a notice of proposed rulemaking
3. Collapsing, or further subdividing, distinct categories of regulated entities established in proposed rule
4. Exempting certain entities from the coverage of final rules
5. Altering the method of calculating or measuring a quantity relevant to a party’s obligation under the rule
iv. Courts have invalidated final rules where:
1. No notice was given of an issue addressed by the final rules
2. An issue was only addressed in the most general terms in the initial proposal
3. Final rule changed a pre-existing agency practice that was only mentioned in a notice of proposed rulemaking to place unrelated changes in the overall regulatory scheme into their proper context
v. Argument can be made that cts. should be strict in reviewing an agency’s compliance w/ procedural rules such as the requirement for notice
c. Opportunity for Public Comment:
i. §553(c): requires agencies to provide interested person an opportunity to comment “through submission of written data, views, or arguments” no requirement for an oral presentation or hearing
1. No requirement that agency provide opportunity for oral presentation or hearing
2. Length of comment period not specified in APA, although Congress often specifies a minimum
ii. §557(d) Ex Parte Communications: APA places specific prohibitions on ex parte communications in formal rulemaking.
1. The APA does not prohibit ex parte communications in informal rulemaking, however, Congress can and sometimes does.
2. Pre-Vermont Yankee rule--> Home Box Office v. FCC
a. Ex parte contracts are admissible before notice of proposed rulemaking is published in the Federal Register
b. But once a notice has been issued, an agency official involved in the process must refuse to discuss matters relating to the proceeding with interested parties
c. If ex parte contacts nonetheless occur, any written document or summary of any oral communication must be placed in the public file established for each rulemaking docket immediately after the communication is received
3. New Rule: Sierra Club v. Costle
a. Home Box Office’s strict ex parte rules are inappropriate to ordinary notice and comment rulemaking
b. Ex Parte contacts are inevitable and may be useful
c. OS at issue required the decision be based only on information in the record
i. Thus agency could not rely on documents not in the record in promulgating rules
ii. OS precluded entering into docket documents of central importantce w/o extending comment period
d. Bottom line: opposing party must have opportunity to respond to any ex parte communication the agency will rely on
iii. Meetings with Government Officials
1. Unless expressly forbidden, intra-executive contacts may take place, both during and after the public comment period. Sierra Club v. Costle
a. President obligated to monitor agency activities
b. In some cases, contact may need to be noted on docket, but only where discussion extends beyond status reports. See §551(14)
2. To conditions must be met before an administrative rulemaking may be overturned simply on the grounds of congressional pressure: DC Federation
a. Content of pressure must be designed to force agency to decide upon factors not made relevant by Congress in the applicable statute
b. Agency’s determination must be affected by those extraneous considerations
iv. Policy arguments against ex parte communications
1. Ex parte contacts undermine integrity and legitimacy of rulemaking process
2. Ex parte contacts enhance the potential for undue industry influence and “agency capture” by those it is supposed to regulate
3. Courts need complete records to review agency action
4. Ex parte communications undermines individuals’ opportunity to comment and respond; this reduces the amount of information to the agency
v. Due Process may also prohibit ex parte contacts when rulemaking involves “conflicting claims to a valuable privilege, (i.e. when agency is allocating property rights) Sangamon Valley TV corp. v. US
d. §553(d) final rules must be published 30 days prior to their effective date.
i. Remember strict forbiddance of ex parte communication in formal rulemaking
ii. Sangamon Valley TV (DC Cir. 1959) held that due process prohibits ex part communication when rulemaking involves conflicting claims to a valuable privilege.
1. Home Box Office v. FCC (DC Cir. 1977)
a. If ex parte contacts occur, then it must be placed in the public file
2. Sierra Club v. Costle (DC Cir 1981):
a. Instead of beginning w/ a conclusion that communications were “ex parte” we must evaluate the various communications in terms of their timing, source, mode, content, and the extent of their disclosure on the docket.
b. Check to see if this violates the agency’s rulemaking procedures
c. This should only apply to hybrid rulemaking
d. Where the documents submitted so late as to preclude any effective public comment
e. Statements of Basis and Purpose:
i. §553(c) requires agencies “after consideration of the relevant matter presented to incorporate in the rules adopted a concise general statement of their basis and purpose.” But this practice has changed, so now preambles are huge.
ii. Preamble generally includes agency response to comments
1. They indicate what the regulation means and what is required for compliance
2. May reveal flaws or gaps in reasoning
iii. Can easily exceed 100 pages
iv. Cause and Effect
1. Agencies fear rules will be found A&C
2. Long preamble slows down issuance of rules, increases power of agency attorney, preambles are often incomprehensible to lay people
4. Hybrid Rulemaking Procedures
a. Background
i. Basis for hybrid rulemaking
1. OS
2. Other statute or executive order that applies to multiple agencies
ii. Courts cannot enforce hybrid rulemaking procedures like they would the APA
b. Three Hybrid Requirements
i. Unfunded Mandates Reform Act provides parliamentary restriction on legislative bills that would impose unfunded mandates that force states to fulfill certain duties. Agencies must select least burdensome alternative.
ii. Regulatory Flexibility Act requires agencies to follow certain procedures when economic effect is on a substantial number of small entities that would be subject to rule
iii. E.O. 12866 requires agencies to assess costs and benefits of proposed and final major rules. OIRA must oversee compliance
c. National Environmental Policy Act: agencies required to make Environmental Impact statements before engaging in activities (including rulemaking) that may have significant effect on human environment 42 USC §4332(c)—but does not require agencies to take some particular action on basis of EIS.
d. Regulatory Flexibility Act: agencies have to create a regulatory Flexibility Analysis when propose rule that may have significant economic impact on substantial number of small business, organizations, or governments. 5 USC §601
i. Typically interpreted to mean the business would be subject to the rule
ii. Analysis includes:
1. reasons why the agency is proposing the rule
2. Objective statements and legal basis for the proposed rule
3. Description of the affected small entities
4. Identification of other federal rules that may overlap or conflict
5. Description of alternatives that would accomplish but minimize impact
iii. Court can consider the RFA when determining if rule is A&C
e. Paperwork Reduction Act: 44 USC §3501: agency must determine that:
i. collection of information is necessary for proper performance of agency function
ii. is not unnecessary duplicative information otherwise available to agency
iii. takes account of the particular problems of small entities
iv. written plan language
v. uses information technology to reduce burden
f. Executive Order 12866: is significant action (has impact of more than $100 million) must issue const benefit analysis of rule and show why it is beneficial, unless not doing something would be contrary to agency purpose---no judicial enforcement
g. Unfunded Mandates Reform Act: requires federal agencies before promulgating either proposed or final regulation that would include “mandate” resulting in costs of over $100 million annually on state, local, or tribal governments or the private sector to:
i. Prepare statement assessing effect of regulation
ii. Include summary of statement in the proposed and final rules
iii. Agency must identify & consider alternatives
iv. Agency must select the least costly, most cost effective, or least burdensome alternative that achives the objectives of the rule
C. Judicial Review
Issue
Section
Scope of review
Constitutional violation
§ 706(2)(B)
De novo
Statutory compliance
§ 706(2)(C)
Chevron
Procedural violation
§ 706(2)(D)
De novo
Findings and conclusion
Informal rulemaking
§ 706(2)(A)
Arbitrary and Capricious/State Farm
Formal rulemaking
§ 706(2)(E)
Substantial evidence
1. Statutory Interpretation (does the agency know the law)
a. Two different arguments
i. Courts should defer to agency interpretation
1. Congress delegated power to agency
2. Agencies have expertise and familiarity with record
3. Inefficient to engage in de novo review
ii. Courts should not defer to agency interpretation
1. It is the courts’ job to decide what the law is
2. Agencies are prone to abuse the powers given to them; agencies should not get to define the scope of their own jurisdiction
b. Judicial Review of agency action interpretation of statutes involves two steps under Chevron v. Natural Resources Defense Council:
i. Has Congress directly spoken to the precise question at issue (is the statute clear or ambiguous)
1. If the state is clear, follow the intent of Congress and that is the end of the matter
2. Judiciary is final authority on issues of statutory construction
3. Reject agency constructions that are contrary to clear congressional intent
a. Look at plain meaning, design of statute as a whole. K Mart case
b. Legislative history? Scalia v. Breyer
4. The stronger the plain meaning is, the less you get to question 2
ii. If the statute is unclear, decide whether agency’s interpretation is reasonable
1. This requires deferential review
2. Policy:
a. If statute ambiguous then Congress delegated decision to agency
b. Agencies are in better position to make decisions given their expertise
c. Judges are not elected and thus are not accountable to the public
3. Does not have to be the only possible construction, just permissible
4. The agency’s interpretation prevails unless A&C, or manifestly contrary to the statute.
c. Parties challenging agency action rarely win if the case reaches the second step.
i. Thus, they want to make a strong argument that the statute is clear
ii. Factor courts consider in interpreting statute:
1. Discrete text of the statute
2. Language and design of statute as a whole
3. Statutory objectives
4. Legislative history
5. Canons
6. Feasibility
7. Dictionary definitions
d. FDA v. Brown and Williamson Tobacco (2000): court found Chevron inapplicable b/c it had doubts that congress actually intended to delegate interpretive authority to the FDA, notwithstanding the presence of a statutory ambiguity
2. Substantive Decision (is decision supported by the facts?)
a. General:
i. Two Types: 1) what are relevant facts; 2) What rule type is appropriate for these facts
ii. §706 allows ct. to review both, & can set aside if A&C, an abuse of discretion, or not otherwise in accordance w/ law; and unsupported by substantial evidence in a case subject to §556, 557
iii. §706 requires ct to review whole record
1. The facts in rulemaking are prospective
2. the facts in adjudication are retrospective
iv. Adequate Explanation: agencies must provide adequate reasons for the adoption of the rule
1. SEC v. Chenery Corp. (US 1943)
a. When an agency has not provided an adequate explanation, even if the court itself could discern an adequate explanation from the record, the court should remand the case back to the agency
2. Motor Vehicle Manufacturers Assoc. v. State Farm Mutual Automobile Ins. Co (US 1983)
a. Agency must examine relevant data & articulate a satisfactory explanation for action including “rational connection b/w facts found and choice made” reviewing that explanation, “consider whether decision based on consideration of relevant factors and whether there has been clear error of judgment.”
3. Hard look Doctrine:
a. The reviewing court scrutinizes the agency’s reasoning to make sure that the agency carefully deliberated about the issues raised by its decision
b. Informal rulemaking
i. The arbitrary and capricious standard under §706(2)(A)
1. A deferential, but probing, in-depth review. Court must look to whether decision based on relevant factor and whether there was a clear error of judgment
2. Substantial uncertainty that a regulation will accomplish its purpose is sufficient reason to rescind, but an agency cannot merely recite the terms “substantial uncertainty.” It must explain the evidence that is available and offer a rational connection b/w facts found and choice made. Motor Vehicle Manufactures Assoc. v. State Farm
3. State Farm looks to four factors to decide whether decision is A&C:
a. Agency relied on factors Congress did not intend for it to consider
b. Agency failed to consider an important aspect of the problem
c. Agency offered an explanation counter to evidence
d. Agency explanation so implausible that it could not be ascribed to a difference in view or the product of agency expertise
4. Political motivation or change in administrative may be an adequate reason
ii. Record:
1. Agency can rely on any information that comes to its attention
2. No formal record. Record is anything on which agency relies. Citizens to Preserve Overton Park v. Volpe.
c. Formal Rulemaking
i. The substantial evidence under §706(2)(E)
1. Court must uphold rule if it finds the agency’s decision to be reasonable based on the record
2. B/c formal rulemaking are rare, the substantial evidence standard is addressed in section on adjudication
ii. Record:
1. The “whole record” under §556(e)
2. Created by hearing procedures
d. Note that arbitrary and capricious and substantial evidence standards have all but converged. Both require adequate reasons.
III. Adjudication
A. Introduction:
1. What is Adjudication?
a. Except for rulemaking, any final disposition by an agency is an order. §551(6)
b. An agency process that results in an order is an adjudication. §551(7)
c. One exception: investigations/ information gathering
d. Generally, adjudication is everything that is not rulemaking
2. What Procedures Apply?
a. §§555, 558: provide minimal requirement (e.g. notice) applicable to all agency proceedings
b. Otherwise only formal adjudications are governed by the APA §§554, 556, 557
c. Informal adjudications governed by OS, due process and agency regulations
B. Formal or Informal Adjudications (APA adjudications or non-APA adjudications)
1. Adjudication is formal when decision must be made on the record after opportunity for a hearing. §554
2. Courts have adopted differing views on whether the words “on the record” must be present in the OS to trigger formal requirements
a. Seacoast Anti-Pollution League v. Costle (1st Cir. 1978) (exact words are not needed)
i. The resolution of the issue turn on the substantive nature of the hering Congress intended to provide.
ii. Presumption exists that unless otherwise specified, an adjudicatory hearing subject to judicial review must be on the record
b. City of West Chicago v. US Nuclear Regulatory Commission (7th Cir. 1983):
i. In the absence of “on the record” language, Congress must clearly indicate its intent to trigger the formal, on the record-hearing provision of the APA
ii. Focus on legislative intent
iii. Presumption that unless words present, adjudication not subject to formal procedural requirements
c. Chemical Waste Management, Inc. v. EPA (DC Cir. 1989)
i. After Chevron, DC Circuit held that if statute not clear as to producers required, court must defer to reasonable agency interpretation.
ii. But Chevron dealt with technical expertise which is not present in this determination
3. Argument for and Against Formal Adjudication
a. Pro-Formal
i. Legislative history suggests drafters intended to exclude only a narrow range of adjudications from APA
ii. Adjudication does not involve policy decision. Instead, it involves factual disputes which adversary process would be helpful in solving
b. Anti-Formal
i. Formal hearings are time consuming and expensive, and not very helpful
C. Adjudicatory Procedures:
1. Notice: §554(b)
a. Basic requirements
i. Time, place, nature of hearing
ii. Legal authority and jurisdiction under which the hearing is to be held
iii. Matters of fact and law asserted
b. Notice requirement is satisfied if party proceeded against understands the issue and is afforded full opportunity to justify conduct. Southwest Sunsites, Inc. v. FTC
c. To be adequate, notice provided by an agency to an adverse party must contain information to provide the respondent a genuine opportunity to identify material issues of fact. John D. Copanos and Sons, Inc. v. FDA
2. Intervenors §555(b)
a. An interested person may appear before an agency for the presentation, adjustment, or determination of an issue, request, or controversy in a proceeding.
b. Supreme Court has not ruled on this issue
c. Office of Communication of United Church of Christ v. FCC (DC Cir. 1966)
i. If person has standing to appeal agency decision, as a matter of case and controversy constitutional requirements, then the person has a right to intervene
d. Koniag Inc. Andrus (DC Cir. 1978)
i. Even if person doesn’t have standing may be justified limited intervention (i.e. agency can’t deny)—But different when trying to intervene under statute that is not APA
3. Settlement: §§554(c), 556(c)(6)
a. Give chance prior to hearing for parties to settle/adjust dispute
b. Also, there is the ADR act—allowing different techniques, never required
4. Administrative Law Judges
a. ALJs preside over most agency hearings
i. Have authority comparable to Art. III judge
ii. Cannot invalidate agency policy
b. ALJs usually employed by agency even though they are supposed to act independently
c. Safeguards in place to shield ALJs from agency pressure
i. Task of removing or rewarding ALJs delegated to separate agency
ii. Agency EE engaged in investigation or prosecution of case may not participate or advise in ALJs decision except as witness or counsel in public proceeding. §554(d)
iii. ALJs can be disqualified for bias. §556(b)
iv. ALJs have to follow all of the adopted legal rules of the agency
5. The Split-Enforcement Arrangement
a. Applies to Occupational Safety and Health Administration (OSHA) and Mine Safety and Health Administration (MSHA)
i. OSHA and MSHA each appoint a commission to handle adjudication
1. ALJ is employee of commission
2. Appeals from the ALJ made to commission
3. The agency head is not involved in the adjudication
ii. Policy: protect employers from possible bias of Department of Labor
b. Commissions must defer to OSHA or MSHA in interpreting regulations
i. Commission have no policy role
ii. See Martin v. OSHRC
6. Burden of Proof
a. §556(d): The proponent of a rule or order (usually the agency) has the burden of proof
b. The burden is one of persuasion rather than production. Agency decision must be supported by reliable, probative, substantial evidence
i. In this context, substantial evidence refers to quality not quantity
ii. E.g., agency decision based entirely on hearsay may or may not be supported by substantial evidence
iii. APA allows hearsay if not irrelevant, immaterial, unduly repetitive §556(d)
1. Richardson v. Perales: can use hearsay if:
a. Reliable and
b. Affected party had chance to subpoena orignl person but didn’t’ take advantage of opportunity
c. Requires a preponderance of the evidence
7. Testimony and Documents: §556(d)
a. Types of evidence allowed
i. Parties may present case by oral or documentary evidence
ii. Parties may offer rebuttal evidence and cross examine witness
iii. Whatever is necessary for full and true disclosure of facts
b. Opportunity for cross examination is an element of fundamental fairness if needed for full disclosure of facts. Wallace v. Bowen
i. When ALJ chooses to go outside testimony adduced at hearing, ALJ must afford the claimant not only an opportunity to comment and present evidence but also an opportunity to cross examine the authors of any post-hearing reports.
ii. Note that agency can rely on hearsay if respondent fails to exercise right of subpoena
iii. Further, different considerations may apply to post-hearing evidence than pre-hearing evidence
8. The record and ex parte communications
a. Decision must be limited to what is in record (transcript, exhibits, all papers) §556(e)
i. Transcript, exhibits & papers constitute the exclusive record for the decision
b. Strict limits on ex parte contacts during formal adjudications. §557(d)
c. Violations cured by placing communications in record, invalidating agency action, or other sanctions
i. Ex parte communication: communication b/w someone involved in the decision process from an interested person outside the agency w/ respect to the merits of particular case and not made on the public record. §551(14) and 557(d)
ii. If it happens, it is placed on record, and there may be sanctions against violator.
9. Appeals: §557(c)
a. Initial or recom. Decision includes finding of fact and conclusions of law reasoning and concl
10. State Adjudications: most states follow the federal mode
11. Applying Adjudicatory Procedures:
a. NLRB v. Local Union No. 25, International Brotherhood of Electrical Workers (2d 1978)
i. Since question was not reaised in complaint, or oral argument and no evidence was presented concerning that issue, they did not receive notice required by the APA (§554) --> the decision of the ALJ can’t stand
b. Southwest Sunsites Inc. v. FTC (9th Cir. 1986)
i. ALJ applied a new standard for his review of a decision: “the purpose of the notice requirement in the APA is satisfied:
1. if the party proceeded against understood the issue and was afforded full opportunity to justify conduct
ii. Here the new theory was more narrow and took in the old, so all evidence relevant to the old was relevant to the new
c. John D. Copanos and Sons Inc. v. FDA (DC Cir. 1988)
i. Did documents and regs give sufficient notice for summary judgment?
ii. The possibility of summary action makes requirement of due notice especially important
iii. In SJ to be adequate the notice must contain enough info to provide a genuine opportunity to identify material issues of fact.
iv. The requirements depend upon the context of the agency’s action. Was there significant ambiguity regarding type of info that would warrant agency hearing.
d. Wallace v. Bowen (3rd Cir. 1989)
i. Agency statute says decision should be based on evidence at the hearing. Thus, Under the statute the secretary may not rely on post-hearing reports w/o giving the claimant the opportunity to cross examine.
ii. Richardson v. Perales: accepted the proposition that procedural due process is applicable to the adjudicative administrative proceeding involving the differing rules of fair play… to require cross examination may be required for a full and true disclosure of the facts.
iii. We construe Richardson as holding that an opportunity for cross examination is an element of fundamental fairness of the hearing to which a claimant is entitled
D. Ex Parte Communications
1. APA prohibits ex parte communications during formal adjudications and rulemakings (not informal)
a. No interested person outside the agency shall make to any member of the agency involved in the decision process of the proceeding an ex parte communication relevant to the merits of the proceeding. §557(d)(1)(A)
b. No member of the agency involved in the decision process of the proceeding shall make to any interested person outside the agency an ex parte communication relevant to the merits of the proceeding. §557(d)(1)(B)
c. A member of the agency involved in the decisional process of the proceeding who receives or makes an ex parte communication must place such communication in the public record. §557(d)(1)(C)
d. Upon receipt of an ex parte communication made by a party, the agency may require the party to show cause why his claim should not be dismissed or otherwise adversely affected. §556(d)(1)(D).
e. Prohibition on ex parte communications begins no later than time at which proceeding is noticed for hearing §557(d)(1)(E)
2. In determining whether prohibition violated, consider the following:
a. Was person outside the agency or a member of the agency
b. Was person interested
i. Broadly construed
ii. May include public officials
c. Was communication ex parte?
i. Ex parte communications are oral or written communications not on the public record with respect to which reasonable prior notice to all parties is not given. §551(14)
d. Was communication “relevant to the merits”
3. Ex parte communications do not necessarily void an agency decision.
a. Rather, agency proceeding blemished by ex parte communications are VOIDABLE.
b. Professional Air Traffic Controllers Organization v. Federal Labor Relations Authority
i. Congress did not intend for agency to dismiss a party’s interest more than rarely
ii. Consider whether agency’s decision-making process was irrevocably tainted so as to make ultimate judgment unfair.
1. Factors:
a. Gravity of the ex parte communications
i. Did it go to the hear of the merits
ii. Did it include a veiled threat
b. Whether the contacts may have influenced agency’s ultimate decision
c. Whether the party making the improper contacts benefited from the agency’s ultimate decision
d. Whether the contents of the communication were unknown to the opposing parties who thus had no opportunity to respond
e. Whether vacation of the agency’s decision and remand for new proceedings would serve a useful purpose
i. Don’t’ have to prove result would change, just have to prove result MIGHT change
ii. How close was the vote?
iii. Even if agency not subject to the APA, due process may prohibit ex part contacts
1. Introduction of new material by means of ex parte communications undermines the public employee’s constitutional due process guarantee of notice and the opportunity to respond. Stone v. Federal Deposit Insurance Corp.
2. Due Process protections only apply if a liberty or property interest at stake
3. Not every ex parte communication undermines the due process guarantee. Consider:
a. Whether ex parte communication introduce new information or merely cumulative information
b. Whether party knew of error and had a chance t respond to it
c. Whether the ex parte communication was of a type likely to result in undue pressue upon the deciding official
c. APA defines ex parte communication as “an oral communications to or from an “interested person” with reasonable prior notice to all parties is not given, but not including requests for status reports on any matter or proceeding:
i. However, remember that status reports can be a subtle effort to influence so if doubtful then assume it is ex parte communication
d. Purpose of requiring disclosure of ex parte communication:
i. To prevent appearance of impropriety
ii. Instrument of fair decision making
e. Two possible administrative Remedies for improper ex parte communication
i. Disclosure of the communication and its content
ii. Requires violating party to “show cause why his claim or interest in the proceeding should not be dismissed, denied, disregarded, or otherwise adversely affected on account of the violation
4. Stone v. FDIC (Fed. Cir. 1999)
a. The essential requirements of due process are notice and an opportunity to respond. The tenured EE is entitled to oral or written notice of charges, an explanation of evidence and opportunity to present his side of the story. Cleveland Bd. Of Educ. V. Loudermill (US)
i. Dismissals for cause will often involve factual disputes
ii. Also to determine what level of punishment is appropriate
b. Only ex parte communications that introduce new and material information to the deciding official will violate the due process guarantees of notice.
i. Factors:
1. Is it new or cumulative
2. Whether EE knew of the error and had a chance to respond
3. Were they of the type likely to result in undue pressure
c. Ultimately concern is whether the ex parte communication is so substantial and so likely to cause prejudice that no EE can fairly be required to be subjected to a deprivation of property under such circumstances
E. Due Process Hearing:
1. Background:
a. Due Process guarantees rights found in the 5th and 14th Amendments
b. Due Process only protects against governmental deprivations, not private action
c. Issue of due process seldom arise in context of formal adjudication; generally arises in context of informal adjudication
2. Individualized Decision Making (Londener and Bi-Metallic)
a. Due Process protections only apply in context of individualized decision
i. For example, due process was violated where city taxed a few homeowners for cost of street repair but failed to provide them with notice and hearing. Londoner v. Denver
ii. Conversely, due process was not violated where city increased valuation of all taxable property. Bi-Metallic Investment Co. v. State Board of Equalization
b. Rationale
i. Constitution does not require all public acts to be done in town meeting
ii. When rule applies to more than a few people, it is impracticable that everyone should have a direct voice
iii. Rights of large bodies are protected by political process
c. Factors to determine whether individuals have a constitutional right to be heard:
i. Number of people affected
ii. Extent of impact on each person
iii. Factual basis for determining the impact on each person
1. Are parties affected on individualized grounds
2. Hearing procedures are more necessary to resolve disputes involving adjudicative facts than to resolve disputes involving legislative facts
3. Protected Interests
a. Property Interests
i. Court in Goldberg v. Kelly held that a person has a property interest in welfare benefits. It has since retreated from this holding and narrowed the definition.
ii. A person must have more than abstract need or desire for a benefit. He must have more than a unilateral expectation of it. He must have a legitimate claim of entitlement to it. Board of Regents v. Roth
1. E.g., high schools students have a property interest in continued enrollment: Goss v. Lopez
2. Property interest may also be shown by existence of implied contract. Perry v. Sindermann.
iii. If you want to invoke the due process buzz words for property rights characterize them as unilateral expectation rather than a legitimate entitlement. Board of Regents v. Roth (US 1972)
iv. 14th Amendment includes the right to contract, engage in any common occupations of life, acquire useful knowledge, to marry, establish a home an bring up children, to worship God according to his own…
b. Liberty Interest:
i. Liberty includes all those privileges long recognized as essential to the orderly pursuit of happiness by free men.
1. E.g., right to pursue a common calling or profession
a. Gibson v. Berryhill (US 1973) Due process protections are triggered when it denies or revokes a person’s license to engage in a profession.
2. Reputation alone does not appear to be a protected liberty interest. Paul v. Davis
a. However, if branding of someone as something (i.e. public drunkard) removes a right (like ability to buy alcohol) then there is a procedural due process issue.
b. This is the “Stigma Plus” test
c. Statement must be sufficiently serious. Charge of insubordination not enough to implicate a liberty interest. Shands v. City of Kennett
3. Prisoners’ Liberty:
a. A decision to revoke parole also has due process consideration. Gagnon. In prison, no due process problem if it is “ordinarily contemplated by a prison sentence.” Thus, moving to max security ok, but behavior modif therapy not okay.
ii. Due Process unnecessary if individual does not dispute charge that deprives him of liberty. Codd v. Velger.
1. Hearing is intended to determine facts
2. If no factual dispute, hearing not useful
4. Procedures Required
a. Court held in Goldberg v. Kelly that recipients of welfare benefits entitled to evidentiary hearing before termination
i. Case since limited to facts
ii. Welfare unique b/c it provides “last safety net”
b. In deciding what process is due, consider three factors from Mathews v. Eldridge:
i. Private interest affected by official action
ii. Risk of erroneous deprivation of such interest through procedures used and probably value, if any, of additional or substitute procedural safeguards
iii. Government’s Interest
c. Student Cases:
i. High school student did not have right to counsel or to call witnesses before being suspended. Goss v. Lopez
ii. Due process satisfied when university notified medical student of poor academic performance and risk of dismissal. Board of Curators of the University of Missouri v. Horowitz.
1. Formal hearings costly and harmful to teaching process
2. Evaluation of academic progress more subjective than what is typically solved in formal hearing
iii. Student expelled from university for fighting did not have right to counsel. Osteen v. Henley.
1. Failure to follow state rights is not a violation of federal due process.
2. Mainly apply Mathews v. Eldridge.
d. Matthews v. Eldridge (US 1976):
i. Due process is flexible and calls for procedural protections as the particular situation demands”
ii. Three Factor Balancing Test:
1. The private interest that will be affected by the official action
a. Degree of potential deprivation
b. Look prospectively and retrospectively, Compare severity of impact arguments to each case.
c. Is there an appellate procedure
2. The risk of an erroneous deprivation of such interest through the procedures used, and the probable value of additional or substitute procedural safeguard
a. When arguing for plaintiff say:
i. Value additional safeguards would make it more likely to get the decision right
ii. That there was no opportunity to present your side of the story
b. When arguing for defendant say:
i. Procedures asked for will not add anything.
ii. Only will be duplicative
iii. Case law makes it clear that procedures asked for do not promote reliability (compare to other cases)
3. The governments interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.
a. Government has an interest in conserving scarce fiscal resources
b. Argument for plaintiff
i. Any additional burden would be minimal. Costs a little amount of money
c. Argument for government:
i. Risk of error is relatively small
ii. Additional procedures will not add that much to reduce the risk
e. Only deliberate decision of government officials trigger procedural due process. Deniels v. Williams (US 1986).
5. Neutral Decision Maker
a. Difficult to show that combination of investiagative and adjudicative functions necessarily creates an unconstitutional risk of bias.
b. Two Steps under Withrow v. Larkin
i. Overcome presumption of honesty and integrity in those serving as adjudicators
1. Show either:
a. Risk of bias:
i. Pecuniary interest
ii. Decision maker target of personal abuse or criticism by appearing party
b. Prejudgment
ii. Mere exposure to evidence presented in a nonadversary investigative procedures is insufficient to impugn the fairness of the board members at a later adversary hearing.
c. Withrow v. Larken (US 1975)
i. A fair trial in a fair tribunal is a basic requirement of due process.
ii. Don’t allow judges or administrative decision makers who have a:
1. Pecuniary interest in the matter at hand
2. Target of personal abuse b one of the parties
iii. However, there is a presumption of honesty and integrity
iv. §544(d) says that no EE engaged in investigating or prosecuting may also participate or advices in the adjudication function but which also expressly exempts from this prohibition the agency or a member or members of the body comprising the agency
F. Judicial Review:
1. the Substantial Evidence Standard
a. §706(2)(E): provides that the agency action is unlawful if “unsupported by substantial evidence in a case subject to §§556 and 557 or otherwise reviewed on the record of an agency hearing provided by statute.
b. Universal Camera Corp. v. NLRB (1951):
i. “the substantial evidence test applies to evidence in whole record on both sides” but still a highly deferential standard, equivalent of enough to withstand a motion for directed verdict, but more deferential than the clearly erroneous test.
ii. Essentially the question is “would a reasonable mind accept a particular evidentiary record as adequate to support a conclusioni.” In Re Zurko (1999).
c. Agency conclusions must be supported by substantial evidence in formal proceedings. §706(2)(E)
i. Note that substantial evidence standard applies to both formal rulemaking and formal adjudication
ii. Formal rulemaking is rare, so §706(2)(E) arises mostly in context of formal adjudication
d. A deferential standard
i. Court does not reweigh evidence
ii. Rather, it asks whether reasonable mind would find that evidentiary record supports agency conclusion
e. But court must look at entire record, including both sides and contradicting evidence. Universal Camera Corp. v. NLRB
2. Substantial Evidence and the ALJ’s credibility findings
a. What happens if ALJ and Agency has issued conflicting finding of fact and law?
i. §557 agency in making its decision on review has powers it would have in making the initial decision
ii. the ALJ’s decision is a part of the whole record and must be taking into accout when assessing whether an agency has substantial evidence for its conclusions.
b. On appeal from ALJ, agency has “all the powers which it would have in making the initial decision.” In other words, agency review is de novo. §557(b).
c. But on appeal from agency, court may not ignore ALJ findings. They are part of the “whole record.” Universal Camera Corp. v. NLRB
d. Dichotomy b/w testimonial and derivative inferences as explained in Penasquitos Village, Inc. v. NLRB and Jackson v. Veterans Administration
i. Reviewing court should defer to ALJ’s Testimonial Inferences
1. Policy:
a. ALJ sees the witness, hears the testimony
b. Board bases decision only on written record
2. Examples
a. Witness incredible, sincere, or forthright
b. Witness brusque and opinionated
ii. Reviewing courts should defer to board’s Derivative Inferences
1. Policy:
a. Board has broad experience and expertise
b. Congress delegated decision-making power to board
2. Examples
a. Witness unable to verify exact dates or times
b. Witness made admission
3. How board should proceed if it wants decision to overturn ALJ upheld
a. Refute ALJs derivative conclusions
b. Ignore ALJs conclusions on witness demeanor
c. Weigh evidence of record
d. Don’t frame opinion in terms of believability
e. Challenge distinction b/w testimonial and derivative inferences
e. Penasquitos Village Inc. v. NLRB:
i. Statutorily mandated deference to finding of fact runs in favor of the agency, not in favor of the initial trier of facts, the ALJ
ii. Should take particular note of ALJ’s finding when these conclusions are based upon the demeanor of the witnesses.
iii. Dissent doesn’t buy into distinguishing testimonial v. derivative inferences--> don’t get too wrapped up in the behavior of witness indicating whether he’s lying
f. Jackson v. Vetermans Administration (Fed. Cir. 1985)
i. Can’t just ignore testimony, either it’s discredited w/ reason given or included
3. Mixed Questions of Law and Fact
a. Substantial Evidence Standard applies when there is dispute concerning facts found by agency. If it’s just a legal issue then §706 authorizes the court to hold unlawful and set aside.
i. Unconstitutional agency action: “in excess of statutory jurisdiction, authority, or limitations or short of statutory right” or otherwise not in accordance with the law.
b. Three Situations:
i. Pure questions of law
1. Court appears to have de novo review under §706
2. Not that argument could be made for deference to agency
ii. Pure question of fact
1. In a formal proceeding, court examines whether decision based on substantial evidence
2. In an informal proceeding, court makes sure decision not arbitrary and capricious
iii. Mixed Question of Law and Fact
1. Courts should defer to agency
a. Agencies have expertise
b. Congress delegated decision making authority to agency
2. Two step process to determine whether substantial evidence exists under NLRB v. Hearst
a. Is there in the record for agency’s factual finding? (e.g. does record support conclusions regarding working conditions and length of work day)
b. Is there reasonable basis in law for agency explanation of its decision (i.e. court reviews agency decision to see if it serves goals and purposes of organic act
c. Chevron’s effect on Judicial Review of Mixed Questions
Hearst (arose in adjudication)
Chevron (arose in informal rulemaking)
Result
Step 1
Is there a pure question of law?
Is the statute clear and unambiguous?
If yes, de novo and stop.
If no, go to step 2.
Step 2
Does agency decision have warrant in record and reasonable basis in law?
Is agency resolution reasonable?
If yes, uphold.
If no, reverse.
i. Scalia advocates using Chevron whether rulemaking or adjudication at issue
ii. Others apply Chevron only if there is a mixed question of law and fact
1. If a pure question, de novo review
2. if statute unclear and ambiguous, defer to agency and decide whether resolution is reasonable
iii. Others hold that Chevron does not apply to adjudications at all
d. NLRB v. Hearst (US 1944) Newsboys = Employees
i. Resolving questions of law and fact “belongs to the usual administrative routine”
1. Look at the courts facts conclusions and see if there was a basis in the record and then
2. look to see whether the conclusions had a reasonable basis in law
ii. Son in mixed questions: the agency’s finding are to be accepted unless they are unsupported by substantial evidence on the record considered as a whole
e. O’Leary v. Brown:
i. But there may be a Chevron analysis before all of this to determine if the question of law is appropriate for the agency. Scalia favors, but not all judges agree
f. Evening Star Newspaper Company v. Kemp
i. Does a review of the record support the decision
4. Arbitrary and Capricious Review
a. Informal Adjudication
i. Arbitrary and Capricious standard applies
ii. §706(2)(F) almost never applies
1. §706(2)(F) provides for cts to determine facts independently by authorizing a ct to overturn an agency decision if it is “unwarranted by the facts to the extent that facts are subject to a trial de novo by the reviewing court.”
b. Citizens to Preserve Overton Park v. Volpe (US 1971)
i. For reviewing standard look to §706 of the APA which provides that a reviewing ct shall hold unlawful and set aside agency action found not to meet six separate standards. In all cases, agency action must be set aside if the action was “arbitrary and capricious, an abuse of discretion or otherwise not in accordance with the law.
ii. De novo review (706(2)(F)) is only applied in two circumstances
1. Authorized when the action is adjudicatory in nature and the agency fact finding procedures are inadequate
a. Absence of a hearing or particular adjudicatory proceeding does not render the “fact finding procedures inadequate”
2. When issues that were not before the agency are raised in a proceeding to enforce nonadjudicatory agency action
iii. §706(2)(a): requires a finding that the actual choice made was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
1. Preference for cts to remand a decision back to an agency to prepare an explanation rather than to require testimony in court.
c. Review for “Adequate Reasons”
i. Agency must articulate a satisfactory explanation for its adjudicatory actions, including a rational connection b/w facts found and choice made
ii. State Farm: decide in context of informal rulemaking, but the arbitrary and capricious test is really the same for both informal rulemaking and informal adjudication
1. Interpreting the arbitrary and capricious scope as requiring agencies to articulate a satisfactory explanation for action including a rational connection b/w the facts found and the choice made.
2. Agency decision must be logical and rationale
iii. Consider:
1. Whether agency relied on factors Congress did not intend for it to consider
2. Whether agency failed to consider an important aspect of the problem
3. Whether agency offered an explanation counter to evidence
4. Whether agency explanation so implausible that it could not be ascribed to a difference in view or the product of agency expertise
d. Review for Consistency:
i. The law prohibits agencies from adopting significantly inconsistent policies that result in the creation of conflicting lines of precedent governing the identical situation. Davila-Bardales v. INS
1. Courts are skeptical of abrupt changes in agency position.
a. Like cases should be decided alike
2. Exceptions:
a. Change in policy
b. Reasonable basis for difference in treatment
ii. Courts often force agencies to explain inconsistent decision. E.g., agency may have to show how it weighed competing factors. Yepes-Prado v. INS
1. “while agencies must have significant flexibility to adapt their practices to meet changed circumstances of the facts of a particular case, they cannot reach their decision capriciously.”
IV. Choice of Procedure and Non-Legislative Rules
A. Advantages and Disadvantages of Adjudication and Rulemaking
1. Adjudication:
a. Pros:
i. Allows for treatment of specialized and unanticipated problems
ii. Less likely to attract attention so agency and proceed w/o large-scale opposition
iii. Proceeding against a single individual is often cheaper and faster than rulemaking
iv. Agency gets to pick defendant
b. Cons:
i. Has retroactive effect
ii. May not be fair (current parties have no notice they are breaking the law)
2. Rulemaking:
a. Pros:
i. May be more fair b/c of general application and prospective effect
ii. Likely to bring about industry-wide compliance
iii. Tend to be more clear, set down a bright line rule
iv. Process open to broad range of criticism, advice and date
b. Cons:
i. More likely than adjudication to engage national interests able to mount extensive and expensive campaigns in opposition to rule
ii. Substantial procedural requirements
3. Adjudication advantages over Rulemaking:
a. Not everything is ripe for a rule
b. Some situations are individual / unforeseeable
c. Rule words can be imprecise & require adjudication
d. Insulated from political pressures (no ex parte)
e. Less of a spotlight in adjudication
f. Cheaper to go after one violator, than write a rule
g. Agency get to pick the defendant
B. Legal Constraints
1. Agencies usually have discretion to choose rulemaking or adjudication. NLRB Bell Aerospace Company Division of Textron, Inc.
2. Choosing adjudication over rulemaking might disadvantage some litigants, but agencies generally are not precluded from using adjudication merely b/c of its retroactive effect. SEC v. Chenery Corp.
3. Retroactivity must be balanced against the mischief of producing a result that is contrary to a statutory design ot to legal and equitable principles. Retail Wholesale and Department Store Union v. NLRB
First impression Second impression
Case one events Case two events Case one decision Case two decision
a. Is the case one of first impression
i. Once an adjudication is finished, other regulated entities are warned by the decision that the agency has adopted a new policy.
ii. Exception for firms engaged in the behavior now prohibited by the agency before it announced this result in an adjudication.
iii. In both cases, application is retroactive, and in that sense, both parties are treated unfairly. However, party in Case two may be treated even more unfairly b/c it was not allowed to argue against initial adoption of policy in Case one and must rely on competence of lawyers in Case one to defend its interest. Remember that Wyman-Gordon application of new policy in case of first impression
b. Does the new rule represent an abrupt departure from well-established practice or merely attempt to fill a void in an unsettled area of law.
c. To what extent did the party against the new rule is applied, rely on the old rule?
d. What is the degree of burden a retroactive order imposes on a party
i. Is agency seeking just a cease and desist order?
ii. Or is it seeking to impose fines
e. What is the statutory interest in applying a new rule despite the reliance of the party on the old standard
4. If agency chooses to proceed by adjudication, it must apply its new policy to the regulated entity; it cannot sue adjudication to promulgate rules of wholly prospective application. NLRB v. Wyman-Gordon Co.
a. Prospective adjudication amounts to rulemaking w/o notice and comment and is thus invalid
b. However, agency can use invalid decision as precedent in subsequent adjudication. It will have to re-argue merits of policy.
5. Cases:
a. NLRB v. Bell Aerospace Company (US 1974)
i. Allowed to make adjudicative rule retroactive if public benefit balances strongly against impact of the retroactive effect on the defendant.
b. SEC v. Chenery Corp:
i. The choice made b/w proceeding by a general rule or by individual ad hoc litigation is on that lies primarily in the informed discretion of the administrative agency
1. Adjudication is more appropriate if the standard w/ in the industry varies widely
2. Adjudication is less appropriate if regulated body made good faith efforts to conform
c. Retail Wholesale and Dept. Store Union v. NLRB (DC Cir 1972)
i. What’s the propriety of applying retroactively a change in policyi effectuated by it through adjudication rather than rulemaking
1. SEC v. Chenery: retroactivity must be balanced against the mischief of producing a result which is contrary to statutory design or to legal and equitable principles. If that mischief is greater than the ill effect of the retroactive application of a new standard, it is not the type of retroactivity condemned by law
a. This is a question of law: no deference to agencies.
2. Factors:
a. Whether the particular case is one of first impression (agency has advantage)
b. Whether the new rule represents abrupt departure from well established practice or merely attempt to fill a void in an unsettled are of law.
c. Extent to which party against whom the new rule is applied relied on old rule
d. The degree of the burden which a retroactive order imposes on a party
e. Statutory interest in apply new rule despite reliance of party on old standard
i. Whatever the reach of Wyman-Gordon in terms of agency power to engage in wholly prospective adjudication, id does not prevent an agency in adjudication from declining in subsequent cases to apply a new rule retroactively if equitable or statutory considerations mitigate against it.
C. Rulemaking
1. Rulemaking Authority
a. Agency only has authority to promulgate rules if Congress has given it that power
b. Generally, delegation is explicit
c. Further, most agencies have such authority
2. Four Issues that Arise when agency makes policy in rulemaking and enforces it through adjudication
a. Does the agency have the authority to make substantive rules
b. Can agency restrict adjudicatory scope hearing rights by promulgating rules that eliminates matter of facts that otherwise would be subject resolution in hearing
c. Can an agency give retroactive effect to a rule
d. What extent does due process limit an agency’s authority to use adjudication to clarify ambiguity in a rule.
3. Impact on Adjudication Rights
a. B/c most rulemaking are informal, by adopting policy through rulemaking agencies can limit the scope fo adjudication rights
i. Informal rulemaking do not give regulated entity a chance to cross examine
ii. Yet when agency enforces rulemaking in adjudication, regulated entity can only adjudicate facts, not the policy underlying the rule
iii. Contrast to adoption of policy through adjudication, which gives regulated entity opportunity to call witnesses to testify concerning the potential benefits and costs of such a policy.
b. The courts have said eliminating the right to cross examination is Okay. United States v. Storer Broadcasting Co.
c. Basically it is okay for the agency to:
i. Redefine what the scope in adjudication though the rules
ii. Can even use rulemaking to eliminate the need to hold adjudicatory hearings
4. Retroactive Rulemaking
a. Agencies do not have the power to give rules retroactive effect w/o an express grant of such authority by Congress. Bowen v. Georgetown University Hospital (US 1988)
i. Remember: an agency’s power to issue rules is limited to the authority delegated by congress, agencies do not have the power to give rules retroactive effect w/o express grant of such authority by congress
b. Two Steps:
i. Does the regulation even have retroactive effect?
ii. If so, does agency have explicit authorization?
c. Also consider
i. Whether retroactivity would violate due process
ii. Whether agency abused its discretion
5. Ambiguous Rules:
a. Although agency interpretations of their own rules are given deference, enforcement w/o notice of interpretation may violate due process. General Electric Co. v. EPA
i. Notice can come from regulation or previous enforcement
ii. Notice cannot come from initial enforcement
b. Regulated entity, acting in good faith, must be able to identify standards with agency expects it to conform
c. Note that where new policy announced through adjudication as in Retail and Wholesale, no due process issue arises b/c agency not seeking to deprive regulated entity of property/money.
d. General Electric Co. v. EPA
i. “b/c the regulation did not provide GE w/ fair warning of the agency’s interpretation we vacate the finding of liability.”
ii. If fines and sanctions then there may be due process problems w/ ambiguous rules.
iii. Be wary if an agency attempt to use a citation as the initial means for announcing a particular interpretation.
iv. Question is regulated party received or should have received notice of agency’s interpretation by reading regulation –is the agency’s interpretation “ascertainably certain” –good faith.
v. If unclear, where the petitioners interpretation is reasonable and agency struggles to provide a definitive reading of regulatory requirements, party is not “on notice” of agneyc interpretation of the regulations and may not be punished.
D. Nonlegislative Rules
1. Defined:
a. Agency pronouncement that advises the public of the agency’s view on an issue
b. Not binding until adopted in adjudication
i. Provides notice for purposes of due process
ii. But ct will have to determine whether policy announced in nonlegislative rule is consistent w/ the statute
c. §553 recognized two type of nonlegislative rules
i. Interpretive rules: a statement issued by an agency to advise the public of the agency construction of the statutes and rules which it administers
ii. Statement of policy: statement issued by agency to advise public prospectively of the manner in which the agency proposes to exercise discretionary power
d. Legal Issues that arise from using nonlegislative rules
i. Can be done w/o notice and comment, but some requirement in the APA
ii. A party might challenge a nonlegislative rule on ground that pronouncement is really a legislative rule—and no notice and comment used
iii. What are the consequences when a member of the public relies on this statement and then the government later refuses to follow it
2. Advantages and Disadvantages
a. Pros
i. Efficient b/c not subject to procedural requirement of APA and effective immediately upon publication
ii. Inform public of agency’s views and intentions
iii. Can be used as a management tool to issue guidance to agency employees
iv. Provide flexibility in that they allow agency to change its mind
b. Cons
i. Can be adopted w/o public input which fosters uniformed decision making
ii. Pre-enforcement review is expensive and may not be available to regulated entities b/c of lack of ripeness/finality; regulated entities may be compelled to comply b/c of threat of enforcement
iii. On the other hand, regulated entities may ignore a nonbinding rule
iv. Agency may treat nonlegislative rules as binding on the public
v. Members of public can be adversely affected by reliance on nonlegislative rules
3. APA Procedures
a. §552 of the APA (also the Freedom of Information Act) requires each agency to publish in the federal register “statement of general policy or interpretations of general applicability formulated and adopted by the agency”
b. A person may not be adversely affected by a matter required to be published and not so published unless from legislative rules
4. Distinguishing nonlegislative from legislative rules (Legislative rules require notice and comment)
a. Policy Statements:
i. Advise public prospectively of how agency intends to exercise discretionary power; does not establish a binding rule
ii. Statement of policy have only prospective effect and leave agency free to exercise discretion. American Hospital Association v. Bowen
iii. How agency characterizes its own action, while not decisive, is a factor to consider
iv. If a court has previously found a statute to be ambiguous, agency pronouncement as to its meaning will likely be viewed as a legislative rule
v. Binding Effects Test:
1. Courts use a binding effect test to distinguish legis v. nonlegis: question is whether the statement of the agency imposes a new duty or merely announces the intention to impose a new duty at some future time:
a. Look for MUST and SHALL
2. American Hospital Ass’n v. Bowen (DC Cir. 1987)
a. Remember that “general statements of policy do not establish a “binding norm.”
b. Two Tests:
i. Unless a pronouncement acts prospectively, it si a binding norm—so no present effect imposing rights and obligations
ii. Whether a purported policy statement genuinely leaves agency, decisionmakers free to exercise discretion
vi. How an agency considers it is a factor, but it is not determinative
1. Notice that a rule can be binding only on the agency and its still a legislative rule requiring notice and comment
b. Interpretive Rules
i. Interpretive or clarify the nature of the duties previously established by an agency statutory mandate or by a regulation promulgated by the agency is NOT binding
ii. As a threshold matter, agency must have power to promulgate legislative rules: then courts look to two factors to decide whether a rule is merely interpretive
1. Agency’s characterization of its actions
2. Source of duty a party is obligated to obey
iii. Under American Mining Congress v. Mine Safety and Health Administration (DC Cir. 1993)
1. A rule has legislative force if agency intended to exercise the power given it by Congress. Consider:
a. Whether in the absence of the rule there would not be adequate legislative basis for enforcement action or other agency action to confer benefits or ensure the performance of duties
b. Whether the agency has published the rule in the code of federal regulations
c. Whether the agency has explicitly invoked its general legislative authority
d. Whether the rule effectively amends a prior legislative rule
i. A rule does not become an amendment merely b/c it supplies crisper and more detailed lines than the authority being interpreted
ii. Amendments must repudiate or be irreconcilable with a prior legislative rule
2. If the answer to any of these is YES, then it is a Legislative Rule
iv. Metropolitan School District v. Davila (7th Cir. 1992)
1. Starting point of the analysis is the agency’s characterization of the rule, not dispositive but factor
2. An interpretive rule simply states what the administrative agency thinks the underlying statute means and only remind affected parties of existing duties.
3. On the other hand, if by its action the agency intends to create new law, rights, or duties, the rule is properly considered to be a legislative rule
v. Do not apply the substantial impact test: Vermont Yankee Nuclear Power Corp.
5. Legal Protection of Reliance on NonLegislative Rules
a. Once an agency gives its regulation an interpretation, it can only change that interpretation as it would formally modify the regulation itself, through notice and comment rulemaking. Alaska Professional Hunters Association, Inc. v. FAA
b. But where the agency never adopts a definitive interpretation, no administrative common law exists and there is no need for notice and comment b/c there has been no real reliance.. Association of American Railroads v. DOT
c. It is unclear whether the federal government may be estopped
i. If it can, there are at least two requirements
1. Regulated entity must have relied on agency’s conduct in such a manner as to change his position for the worse
2. Reliance must have been reasonable
ii. Where regulated entity’s position does not change—e.g., where entity’s only detriment was inability to retain money it should never have received in the first place—government is not estopped. Heckler v. Community Health Services
iii. Government cannot be forced to act in a manner contrary to statute even if estoppel would otherwise be appropriate. Office of Personal Management v. Richmond
iv. At least one state has held that where government repeatedly led plaintiff to believe she was entitled to unemployment benefits, it could not later deny benefits. Appeal of Eno
v. Some basic Rules:
1. Further, those who deal w/ the gov. are expected to know the law and may not rely on conduct of gov. agents contrary to law
2. Oral instruction are always suspect
3. Regulated entities should not rely on low-level employees
d. If estoppel argument doesn’t work, due process argument might. It is relatively well established that one cannot be held criminal responsible for acting in reasonable reliance upon the advice of a government agent.
e. Another possible argument is the prohibition against inconsistent application. To extent agency is asking a court to defer to its new interpretation, courts may refuse that deference b/c the agency has not been consistent
f. Cases:
i. Alaska Professional Hunters Ass’n v. FAA (DC Cir. 1999)
1. Rulemaking as defined in the APA include not only the agency’s process of formulating a rule, but also the agency’s process of modifying a rule. §551(5)
2. When an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish w/o notice and comment
3. But notice that this may be wrong—b/c if it’s just a nonlegislative rule to begin w/ then to change all that is required is to publish something different in the federal register.
a. Requiring more would be contrary to Vermont Yankee
ii. Association of American Railroads v. DOT (DC Cir. 1999)
1. Was there ever a definitive interpretation of the rule to begin with? If NOT then it’s not like Alaska Prof. Hunters and it is okay to make first interpretation. Also look at the level of reliance.
iii. Heckler v. Community Health Services (US 1984)
1. P relied on the express authorization of the gov. agent.
2. Estoppel is an equitable doctrine invoked to avoid injustice in particular cases.
3. If one person makes a definitive misrepresentation of fact to another person having reason to believe that the other will rely upon it and the other in reasonable reliance upon it the first person is not entitled to regain property or its value that other acquired by the act
4. Party claiming the estoppel must have relied for worse but the gov. may not be estopped on the same terms as other litigants
5. It is possible to estoppe the gov, but just about impossible
6. Policy against estopping the government
a. Soverign Immunity
b. Separation of Powers
iv. Office of Personal Management v. Richmond (US 1990)
1. There can’t be estoppel of the government when it is a claim for payment of money from public treasury contrary to a statutory appropriation
v. Appeal of ENO (New Hampshire Dept. of Employment Security) (NH 1995)
1. Some states are more willing to find equitable estoppel
2. To the Extent Justice Requires
3. But remember that cannot be held criminally responsible for acting in a reasonable reliance upon the advice of a gov. agent.
4. Also remember to consider inconsistent application. One basis for finding agency action arbitrary and capricious is if the agency acts inconsistently w/ past decision w/o explaining the basis for the change.
E. Judicial Deference
1. Legislative Rules receive Chevron deference: a court will defer to an agency’s statutory interpretation if it concludes that a statutory term is ambiguous and that the agency’s interpretation of the terms is reasonable or permissible
2. Formal Adjudication receives Hearst deference: a court is to accept the result of an adjudication if the decision has warrant in the record and reasonable basis in the law
3. Interpretive rules
a. Ruling, interpretations, and opinion of administrator, while not controlling upon the courts, do constitute a body of experience and informed judgment to which courts may properly resort for guidance. Skidmore v. Swift & Co. (US 1944)
b. Interpretive rules are not entitled to Chevron-style deference. They are merely entitled to respect. Christensen v. Harris County—ct specifically reject applying Chevron to an advisory letter
i. Under Skidmore, interpretive rules are only entitled to deference to extent they have the power to persuade. Consider:
1. the thoroughness evident in its consideration
2. the Validity of its reasoning
3. Its Consistency with earlier and later pronouncements
ii. How are the two tests different?
1. Chevron requires the court to defer if agency interpretation of statute—as expressed in rulemaking— is reasonable
2. Skidmore requires the court to defer only if agency interpretation of statute—as expressed in interpretive rule—is persuasive
Summary:
* Interpretations made in context of decisions that have force of law (i.e., formal and informal rulemakings and adjudications) are entitled to Chevron deference.
* Nonlegislative rules and policies are not entitled to Chevron deference but may be entitled to Skidmore deference if persuasive.
* Interpretations of agency rules are entitled to Chevron deference.
4. Informal Adjudications:
a. Informal adjudication are entitled to Chevron deference.
i. Congress delegated authority to agency w/ intent that it fill the gap
ii. Agency has special expertise and takes a deliberate and official position when it engages in informal adjudication
b. Court has generally deferred to an agency’s interpretation of its own regulations w/o regard to the formal used to adopt that interpretation.
c. Gonzalez v. Reno (11th Cir. 2000)
i. Question whether Congress has directly spoken to the precise question at issue
1. If the intent of Congress is clear, that is the end of the matter, for the court as well as for the agency. Must give effect to the unambiguously expressed intent of congress.
2. If there is a gap --> Executive Discretion
ii. The agency policy gets some deference under Chevron and that deference when we take account of implications of policy for foreign affairs, is considerable.
iii. Then check to see if the agency action was reasonable
d. Gonzalez v. Reno (11th Cir. EN BANC 2000)
i. Informal adjudication was due some deference? YES
ii. Deference can be strengthened by factors such as foreign affairs? YES
iii. Informal adjudication gets more deference than opinion letter in Christensen
e. Arguable then that informal adjudication is lawmaking and should get lots of deference
f. United States v. Mead (Fed. Cir. 1999)
i. In informal adjudication the ct held that the agency’s interpretation was entitled to no deference b/c it was not adopted by notice and comment rulemaking. Thus didn’t get Chevron deference or Skidmore deference
V. Reviewability
A. Jurisdiction
1. Intro:
a. Generally not an issue
b. Provided by organic state or by federal question statute
c. APA does not create subject matter jurisdiction over any action
2. First question is whether the ct has jurisdiction (ct. can review at any time)
a. Jurisdiction requires standing—if there is standing there must still be a statutory grant of jurisdiction over that particular type of case
b. If a P does not have jurisdiction under a particular statutory regime, the general federal jurisdictional statute is normally available. 28 USC §1331:
i. The district courts shall have original juris. of all civil actions arising under the constitution, law or treaties of the US.
3. Second question—P has to state a cause of action. Fall back provision is APA §702—cause of action for a person suffering legal wrong b/c of agency action, or adversely affected w/in meaning of relevant state
4. There are four Requirements (Gov. must object or they are waived)
a. The appeal must be one that is not excluded from review -- §701
b. Limited to person suffering a legal wrong (an action by the gov. that interferes w/ a person’s constitutional, statutory or common law right)
i. Zone of interest (can also be an element of standing)
c. Finality doctrine: §794 only agency action specifically reviewable by statue or final agency action for which there is no adequate remedy in a court
d. Ripeness: primary jurisdiction—common law doctrine “when a court is faced w/ an issue over which an agency also has jurisdiction, the court may stay the court case pending a determination by the agency with primary jurisdiction
B. Standing
1. Comes from cases and controversies limitation in Art. II §2. --> Constitutional test: has the P suffered an injury by the illegal action, and would a favorable court decision remedy or avoid that injury
Constitutional
Prudential
Statutory
Source of Requirement
Art III, § 2 (case or controversy)
Court created
Statute (e.g., § 702)
Required showing
* Injury in fact
* Causation
* Redressability
* No generalized grievances
* Plaintiff must assert own rights
Plaintiff’s alleged injury must fall within the zone of interest of Constitution or statutory provision
Waivable?
No
Yes
N/A
2. Injury in fact
a. Must be concrete and particularized, actual or imminent
b. Ideological/ theoretical injury is not sufficient
i. A citizens is not deemed injured simply b/c the gov. acts unlawfully and the person is upset
ii. Federal taxpayer is generally not deemed injured by an agency actions simply b/c they involved the illegal expenditure of federal funds
c. Nexus requirement under Lujan v. Defense of Wildlife
i. Temporal: Past exposure to illegal conduct does not in itself show a present case/controversy regarding injunctive relief if Unaccompanied by any continuing, present adverse effects
ii. Geographic: impeding “someday” intentions to visit a place w/o concrete plan does not support a finding of actual and imminent injury
d. A P cannot base injury in fact merely upon a procedural violation. However, P can sue to enforce procedural rights so long as the procedures in question are designed to protect some threatened concrete interest that is the ultimate basis of his standing. Lujan v. Defense of Wildlife
e. Sierra Club v. Morton (US 1972)
i. Court allowed the injury to environmental, aesthetic, or rec int actually suffered by person could qualify as injury in fact. A group can sue on behalf of its members if:
1. One of its members would have had standing to bring the action
2. The lawsuit relates to the purposes of the organization
3. Neither claim asserted nor relief requested requires participation of individual members--> so cannot be for damages, just injunctive relief
3. Causation and Redressability
a. Injury must be fairly traceable to the defendant
b. It must be likely that injury could be redressed through a favorable decision
c. Where injury based in part on procedural violation, courts relax standards for showing causation and redressability.
d. So even when a person can demonstrate “injury in fact”, a court must still determine whether the injury is the result of the government action and that a favorable court decision would remedy the injry.
i. Causation cannot be purely speculative
ii. Redressability cannot be purely speculative
4. Prudential requirements
a. No generalized grievances
i. Requires that harm be both abstract and widespread
ii. Just b/c a harm is widespread does not necessarily mean it is abstract
b. P must assert own right, although associational standing may suffice if:
i. One of its members would have standing to bring the action
ii. The lawsuit relates to the purposes of the organization
iii. Neither the claim asserted not the relief requested requires the participation of individuals members (this means action is not for damages but for declaratory / injunctive relief)
c. Prudential requirement can be waived where Congress provides for cause of action. FEC v. Akins
5. Litigation of Standing:
a. Lujan v. Defenders of Wildlife (US 1992)
i. Three constitutional elements of standing:
1. P must have suffered an injury in fact--> an invasion of a legally protected interest which is
a. Concrete and particularized (injury is personal and individual)
b. Actual or imminent not conjectural or hypothetical
2. Must be causal connection b/w injury and the conduct complained of (traceable)
3. It must be likely (not speculative) that injury will be redressed by favorable decision
ii. Remember temporal Nexus: must show D’s conduct and imminent injury to P
iii. Geographical Nexus (enviro cases) D’s conduct and area used by P
b. FEC v. Akins (US 1998)
i. Where large number of American suffer alike the political process may provide the more appropriate remedy for a widely shared grievance
ii. However, the fact that a political forum may be more readily available where an injury is widely share does not automatically disqualify an interest for Art. III purposes
C. Cause of Action under §702:
1. Plaintiff suffered legal wrong b/c of agency action
a. This requires violation of constitutional or statutory right
b. When an agency regulates a person, that person always has a cause of action under §702
2. Plaintiff adversely affected or aggrieved by agency action w/in the meaning of a relevant statute
a. This requires P to show he is w/in the zone of interest Congress intended to protect when it enacted statue. Air Courier conference of America v. American Post Workers Union, AFL-CIO
b. The Zone of Interest test only arises when the person who challenges the agency is not one who ahs suffered a legal wrong
c. The proper inquiry is simply whether the interest sought to be protected by the complainant is ARGUABLY w/in the zone of interest to be protected;
i. Plaintiff does not have to show indication of congressional intent. National Credit Union Admin v. First National Bank & Trust Co.
D. Exclusions From Judicial Review under §701
1. §701 of the APA provides that the judicial review chapter applies EXCEPT to the extent that:
a. Statutes preclude judicial review OR
b. Agency action is committed to agency discretion by law (rare)
2. Court takes narrow, strict view of preclusion
a. Preclusion can create due process problems
b. Preclusion conflicts w/ notion that Art. III vests judicial power in courts
c. Preclusion particularly troublesome when it prevents constitutional claims; courts often construe statues to avoid this problem
3. Statutory Preclusion
a. APA embodies basic presumption of judicial review that will not be cut off unless there is a persuasive reason to believe that such was the purposes of Congress. Abbott Laboratories v. Gardner
i. Suggests standard is one of clear and convincing evidence
ii. Mere fact that statute specifies certain reviewable decision does not preclude others
b. In fact, court does not require clear and convincing evidence of intent; presumption can be overcome whenever congressional intent to preclude judicial review is fairly discernible. Block v. Community Nutrition Institute:
i. Evidence of intent need not be explicit. Consider the following:
1. Language (e.g., including some but not others suggests preclusion
2. Structure
3. Objectives
4. History
5. Nature of Action
ii. Block guts Abbot Labs. All that remains is requirement of Intent
4. Committed to agency discretion
a. Preclusion on ground of commitment to agency discretion is a very narrow rule that applies only where a statute is phrased in such broad terms that there is no law to apply. Citizens to Preserve Overton Park v. Volpe
i. The question is whether a court would have a meaningful standard against which to judge the agency’s exercises of discretion.
ii. If no judicially manageable standards are available for judging how and when an agency should exercise its discretion, it is impossible to evaluate agency action for abuse of discretion
b. However, presumption exists that judicial review is not available when agency refused to take enforcement steps. Heckler v. Chaney
i. Rationale:
1. When an agency refuses to act, it generally does not exercise its coercive power over an individual’s liberty/property rights.
2. Agency is best suited to pick its own battles; decision to enforce depends on a number of factors
3. Compare to executive’s decision not to indict in criminal context; court should not interfere w/ prosecutorial discretion
ii. Presumption is rebuttable where substantive statute has provided guidelines for the agency to follow in exercising its enforcement powers; court must find a meaningful standard to apply
c. There is no presumption of unreviewability concerning an agency decision not to issue a rule. American Horse Protection Association v. Lyng
i. A meaningful standard exists: APA requires agencies to allow interested persons to petition for the issuance, amendment or repeal of a rule
ii. Compare to application for waiver, the denial of which is likely reviewable
d. Where Congress intends to preclude constitutional claims, its intent must be clear. Webster v. Doe
e. Heckler v. Chaney (US 1985): sentenced to death.
i. §701(a)(1) applies when congress expressed intent to preclude judicial review
ii. §701(a)(2) applies in different circumstances, even where congress has not affirmatively precluded review, review is not to be had if the statute drawn so that a court would have no meaningful standard against which to judge the agency’s exercise of discretion
1. An agency decision not to enforce often involves complicated balancing
2. Not enforcing doesn’t infringe on areas where court protect
3. Similar ot decision of a prosecutor not to indict
iii. Brennan Concurs: to point out that the court did not decide that nonenforcement decision are unreviewable in cases where:
1. an agency flatly claims that it has not statutory jurisdiction to reach conduct
2. an agency engaged in a patter of nonenforcement of clear statutory language
3. an agency has refused to enforce a regulation lawfully promulgated and in effect
4. a nonenforcement decision violates constitutional rights
f. Webster v. Doe (US 1988)
i. CIA director can fire anyone whenever he wants. Is this judicially reviewable
1. Relevant provision says director can fire when “deems” necessary “this fairly exudes deference”
2. However constitutional claims remain—and congress must be clear if it want to preclude constitutional claims
5. Cases:
a. Abbott Laboratores v. Gardner (1967 US) --> Clear and Convincing
i. Trying to advertise generic drug. Judicial review of a final agency action by an aggrieved person will not be cut off unless persuasive reason to believe that such was the purpose of congress.
ii. Court wants explicit statement, rejects argument of exclusion by not listing as optional
b. Block v. Community Nutrition Institute (US 1984)
i. To what extent a particular statute precludes judicial review is determined by:
1. express language
2. Structure of statutory scheme
3. its objective
4. its legislative history
5. Nature of the administrative action involved
ii. Absence of an express provision in a complex scheme… omission of such a provision is sufficient reason to believe that congress intended to foreclose consumer participation in the regulatory process
iii. The presumption favoring judicial review of administrative action may be overcome by:
1. Specific language or specific legislative history that is a reliable indicator of congressional intent
2. Inferred from contemporaneous judicial construction barring review and the congressional acquiescence or form the collective import of legislative and judicial history
3. Inferences of intent drawn from the statutory scheme as a whole, particularly when a statute provides a detailed mechanism for judicial consideration of particular issues at the behest of particular persons.
Prof. Levy – Fall 2008 – Samsel
Ch. 1-Administrative State
* 1. Intro
* 2. Modes of Agency Action
* 3. The APA-Overview
* 4. Agency & Legislative Power
* 5. Agency & Judicial Power
* 6. Agency & Executive Power
Ch. 2-Judicial Review
* 1. Intro to Scope of Review—§ 706 Grounds for Reversal
* 2. Substantial Evidence Standard [Facts]
o When to apply the 3 standards: A&C, Substantial Evidence, Clearly Erroneous
* 3. Review of Stat. Interpretation-Chevron [Interpretations]
* 4. Review of Stat. Interpret. non-Chevron
* 5. A&C Review [Policy Judgments]
Ch. 3-RM: Legislative Rules & Regs
* 1. RM Authority
o Source & Limit on Authority: OS, APA, DP (limit only)
* 2. Initiation of RM
* 3. Types of RM Procedures
o Spectrum: Exceptions to N&C; Informal RM (N&C; §553); Formal RM (§§556-57)
* 4. Elements of N&C—Informal RM: Notice; Opp. for Comment; Stmt of Basis & Purpose
* 5. Special Problems of N&C RM
Ch. 4-Policy Making by Adjudication
* 1. Constraints on Using Adjudication
o Restraints: OS; APA; Fairness, Consistency, & DP; Liability, Remedy, & RM v. Adj.
* 2. Problem of Retroactivity
* 3. Types of Adjudication: APA & Non-APA
o Triggering Formal APA Adjudication; Procedures for Both
* 4. The Agency & ALJ Relationship
* 5. EPC
Ch. 5-Problems of Mass Adjudication
* 1. Adjudicatory Bureaucracy
* 2. Impact of Rules
* 3. Due Process & Problems of Mass Justice
o Liberty & Property Interests: Legit Claim + Insufficient Process (Some Kind of Hearing)
* 5. Some Kind of Hearing
Ch. 6-Informal Action
* 2. Non-Legislative Rules & Their Limits
o Interpretive Rules, Policy Statements, & Agency Practice
* 5. Agency Advice & Estoppel
o Estoppel; Scienter; DP; APH
Ch. 8-Availability of Review
* 1. Preclusion: Presumption v. Statutory & Committed.
* 4. Standing: Constitution & Prudential components.
* 6. Timing of Review: Finality, Ripeness & Exhaustion.
1.1 INTRODUCTION TO ADMINISTRATIVE LAW
A. (ADMINISTRATIVE) AGENCY
* Defined. Generally: Any public body that exercises government authority other than Congress (or state legislature), the President (or governor), or courts.
* § 551. Each authority of the Government of the U.S., whether or not it is within or subject to review by another agency EXCEPT Congress, U.S. courts, U.S. territories, and governments of D.C.
o President also exempted by Franklin v. Massachusetts.
* Types of Agencies
o Executive Agencies. Agencies w/in an executive department (e.g. Dep’t of Agriculture).
* Typically follow the agenda of the President (can be removed at will).
o Independent Establishments. Agencies NOT located in an executive department (e.g. EPA)
* “Independent Agencies”: Some independent establishments are insulated from presidential control. (e.g. NLRB & FCC, but not EPA).
o Executive v. Independent Agencies. See handout chart for differences.
* Location: within department v. free standing
* Typical Form: single head v. board/commission (members of both parties)
* Removal: at will v. for cause (serve fixed terms)
* Presidential Control: more v. less (plus limits on party affiliation)
* What Agencies Do:
o Agencies execute the laws passed by Congress. This includes (1) regulating private conduct; (2) administering entitlement programs; (3) managing federal property; and (4) many other activities that don’t fit neatly in a category (e.g. issue passports, admit/deport aliens, space shuttle, collect taxes).
* All Agencies subject to at least 3 Sources of Law:
o Constitutional principles
o The Administrative Procedure Act (APA)
* Applies unless superseded by another statute.
* Judicial Review: 700s.
* Procedural: 500s.
o Organic Statutes
* Creates the agency and its mandate (purpose/problem to solve).
* May supersede APA.
o Maybe Others
* E.g. judge-made law or specific (binding) regulations
B. REGULATORY STATE—THE HISTORY OF AGENCIES
* Early Administrative Law
o The First Congress created the first “agencies”: Departments of State, War, & Treasury.
o Marbury v. Madison known as the “first great administrative law decision”
* Decline of Laissez Faire
o Laissez Faire: Characterized by absence of government regulation of business except for public utilities (e.g. gas, water, electricity, & telephone companies)
o Beginning w/ “Progressive” movement of 19th century, states and federal government began to address social and economic ills through regulatory and benefit programs.
* Growth of Agencies
o Birth of Modern Administrative Law: New Deal response to Great Depression in 1930-40s: securities laws, labor laws, benefits.
o Great Society initiatives in 1960-70s: civil rights programs, birth of modern environmental law.
* Regulatory Reform
C. JUSTIFICATIONS FOR AGENCIES, I.E., REGULATIONS & BENEFIT PROGRAMS
* Economic [Called Economic Regulatory Policy/Analysis—dominant language in policy debates]
o Efficiency of Markets
* Efficient allocation maximizes social welfare. See, e.g., trade barriers.
o Market Failures/Defects
* Non-Competitive Markets. (e.g. monopoly)
* Externalities (Spillover Costs). Not borne by person producing them (e.g. pollution)
* Public Goods (Prisoners’ Dilemma). Market will under-produce. Gov’t steps in to produce (e.g. lighthouse; national defense).
* Imperfect Information. Buyers/Sellers (buyers will make bad decisions b/c they can’t afford to conduct research).
* Non-Economic [reflect values: social justice, fairness; market doesn’t care about fairness]
o Concentration of Wealth
* Give from the rich to the poor (‘tho not explicitly stated in programs)
o Non-Market Goods
* Goods or services that are too important or otherwise inappropriate for allocation on the basis of willingness to pay.
* E.g. Scarce goods (Access shouldn’t be decided by wealth).
o Livers, babies for adoption, broadcast licenses.
o Objectionable Transactions
* Objectionable on moral or ethical grounds (although market would permit).
* E.g. slavery, racial or gender discrimination, prostitution, drug use
* Demand for these items can lead to black markets (drugs)
D. THE ADVANTAGES OF AGENCIES—REASONS WHY AGENCIES ARE MORE EFFICIENT
* Efficiency
o Streamlined Process
* No lengthy process of Congress, Prez, or judiciary
* Can do more, faster
o Relieve Burden on Congress & Courts
* Expertise (probably more significant than Efficiency)
o Specialization; Experience.
* Bureaucratic Neutrality
o Policy decision on merits; Less directly political
E. FUNDAMENTAL QUESTIONS
* The Essential (Admin Law) Conflict
o Effectiveness (Pro-Agency) v. Control (Anti-Agency)
o Issue: Conflict b/w (1) the need to empower agencies to fulfill important public purposes and (2) the need to constrain agencies so as to protect and preserve individual rights against errors and abuse, and ensure conformance to legislative dictates.
o See Table 1-1 on page 13.
* Shared Oversight
o Shared oversight of agencies represents an uneasy accommodation to solve the conflict above.
o Example: NLRB makes regulations, enforces them, and adjudicates them.
* Solution: All 3 branches get a piece of the agency.
* Regulations must comply w/ statutes made by Congress.
* Prez can often fire commissioners.
* Courts often have judicial review.
* Morton v. Ruiz [13].
1.2 AGENCIES & MODES OF AGENCY ACTION
Five Modes of Agency Action
* Legislative Rules.
o Agencies act through the adoption of binding regulations, called legislative rules.
o These rules have much the same appearance and effect as statutes.
* Policy Making Adjudications.
o Agencies act by deciding cases that interpret and apply statutes and regulations.
o Generally have a precedential effect in later agency decisions and create agency common law.
* Mass Adjudication.
o Agencies determine hundreds of thousands of cases promptly, fairly, and accurately.
o Especially in the context of administering benefits and claims systems.
* Informal Actions.
o Agencies take a host of informal actions that resolve issues, provide guidance to the public, or otherwise implicate public policy.
* Enforce Statutory & Regulatory Requirements.
o Agencies investigate, monitor, or other forms of gathering info to enforce requirements.
o Agencies take enforcement steps like issuing citations, seeking sanctions, or denying or revoking licenses.
Summary of the 5 Agencies
* See Handout chart for Agency Structures & Programs.
* Key points:
o Structure features and “independence”
o Organic Statutes (Creates agency) and Mandates (Duties)
o Powers & Modes of Action
o Fundamental Questions: (1) Balance & Essential conflict; (2) Separation of Powers
o Connection to APA
1.3 THE ADMINISTRATIVE PROCEDURE ACT (APA)
INTRODUCTION
* General federal statute that applies to most agencies and governs the admin process.
* Establishes basic procedures for agencies to follow when making rules or adjudicating cases.
* Includes generally applicable provisions for the availability and scope of judicial review.
* Interacts w/ and may be superseded by other sources of law, including:
o Organic statutes, the Constitution, and other generally applicable statutes.
HISTORICAL CONTEXT
* Pre-APA. APA adopted in 1946.
o Chenery I principle: Agency decisions can only be sustained on the basis of the reasons given by the agency; if the given reasons are inadequate, the court may NOT uphold the decision on other grounds. It must remand to the agency for consideration on those grounds.
* Subsequent Developments.
o Currently, APA remains the fundamental, overarching fed admin law statute.
* It has undergone relatively few changes; basic structure & core provisions remain intact.
o Freedom of Info Act: Increased access to agency records.
o Gov’t in the Sunshine Act: Required agency meets to be conducted in public sessions.
o Reform: Impact Statements required before adopting important policies.
o Other Reform Efforts: NEPA; Unfunded Mandates Reform Act; Paperwork Reduction Act. [4].
OVERVIEW OF THE APA
* Basic Concepts
o Agency: APA applies to everything except legislature, Prez, courts, & exempted agencies §551(1)
* Reinforce: APA can NOT be subsequently superseded unless done so expressly. §559
* General Rule: Assume APA applies unless something exempts it.
o Distinguish Rulemaking v. Adjudication
* E.g. see handout chart “RM v. adjudication”
o Given essential differences b/w RM and adjudication, the APA provides different kinds of procedures for the two.
* Rulemaking
o Defined: Agency process for making, amending, or repealing a rule. §551(5)
o Rule (defined): An agency statement of general or particular applicability and future effect. 551(5)
o Bottom-Line: A RM is a decision to adopt a general, across-the-board policy that will apply broadly in the future.
o Trial-like hearings are neither necessary nor appropriate.
* Adjudication
o Defined: The agency process formulating an order. 551(7)
o Order: The whole or part of final disposition … other than RM, but including licensing. 551(6)
* i.e. Basically ANY type of agency action that is NOT a rulemaking.
o Bottom-Line: An adjudication is an individualized decision in which an agency makes determinations of historical facts, and applies the law to those facts in such a manner as to fix legal consequences.
o Trial-like hearing is appropriate.
* When APA Applies to Rulemaking
o [Rule: An agency statement of general or particular applicability and future effect.]
o § 553 effectively establishes 3 broad categories of rules applicable to RM procedures.
* 1. Notice & Comment Procedures: Rules promulgated pursuant to §553 requirements.
* Notice: Published in Federal Register.
* Opportunity for Comment: Chance to participate; oral hearing is discretionary.
* Concise general statement. [ More details at 5.]
* Less formal than Formal RM.
* 2. Exceptions from N&C Procedures (of § 553).
* Two categories:
o Exempt Altogether. §553(a).
* Rules concerning military or foreign affairs, and
* Matters of agency mgmt or personnel; public property, loans, grants, benefits, or contracts.
o Exempt from Notice Requirement. §553(b).
* Interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.
* Agency finds good cause and says so.
* 3. Formal RM. Look for triggering language.
* Triggering Language. Triggered when another statute—usually organic statute—requires a rule to be made (1) on the record (2) after opportunity for an agency hearing.
* Effect: Must be promulgated using trial-like procedures of §§ 556 & 557.
* Rarely required and courts have construed the language strictly.
* More formal than N&C—Record closely resembles a judicial trial.
* Additional Requirements for Any of the 3 Categories
* APA establishes basics. Other sources may create additional requirements:
* Hybrid Procedures. Agency’s organic statute may impose procedures that supplement or supersede APA rqmts.
o More requirements than N&C; less formal than §§556-57.
* Agency Adoptions Agency may adopt procedures that supplement or exceed statutory requirements—binding the agency.
* Impact Analysis. RM may be subject to regulatory impact analysis requirements imposed by statute or executive order.
* DP. If RM is sufficiently individualized, may be subject to due process rqmts.
* When APA Applies to Adjudications.
o [Adjudication: Any type of agency action that is NOT a RM.]
o Formal Procedures. Governed by §§ 554, 556, & 557.
o Triggering Language [same as Formal RM]: §554, and therefore §§ 556-67, applies in every case of adjudication when a statute requires determination (1) on the record (2) after opportunity for an agency hearing.
* Includes licenses. [see 7].
o Exceptions. Won’t apply in class. §554(a)
o Informal Adjudications? Don’t exist in APA! Either formal or nothing.
o Key Elements of Formal Hearings.
* Timely notice. §554(b). Requirements on 7.
* Opportunity for Settlement. §554(c)(1).
* Hearing under § 556-57. §554(c)(2).
* Presiding Officer: ALJ and Agency. 556(b); 557(b)-(c).
* Hearing rights. 556(d).
* Ex Parte Contacts. 554(d)(1); 557(d).
* Separation of Functions. 554(d).
* Substantial Evidence Review.
* Enforcement. Largely governed by organic statute and other sources. Some in §555.
* Judicial Review
o Availability
* General Presumption: Judicial review is available—cause of action. §702
* Two Exceptions:
o Statutes that preclude review. §701(a)
o Agency action is committed to agency discretion by law. §701(a)
* Limited to those affected, such as zone of interests.
* Timing Limitations. Finality, exhaustion, mootness. §704
o Scope of Review. §706.
INTERACTION B/W APA AND OTHER SOURCES OF LAW
* Addressed by §559. Two basic principles:
o Procedural and judicial review provisions of APA “do NOT limit or repeal additional requirements imposed by statute or otherwise recognized by law.”
o Subsequent statutes may NOT supersede or modify the APA unless it does so expressly.
* Effect: Limits exceptions; underscoring intention that APA applies broadly to all agencies.
Richardson v. Perales [12].
Robinette v. Comm’r of the IRS [15].
1.4 AGENCIES & THE LEGISLATIVE POWER
THE LEGISLATIVE POWER
* Agencies and the powers they wield are products of antecedent legislative acts (ends & means).
* Only Congress has the legislative power; may not delegate to Prez or anyone else. Steel Seizure
* Issue: Whether Congress has permissibly delegated legislative power to admin agencies.
o Answer: Nondelegation doctrine. By establishing an IP, Congress has set antecedent policy.
NONDELEGATION DOCTRINE
* Congress must grant authority to the executive and judicial branches. B/c the powers of these 3 overlap, Congress may delegate authority to take actions & perform functions that could have been done by legislation. Thus, agencies may make policies to fill in details of the statutory scheme.
o Trick: Distinguish necessary and permissible delegation of admin discretion from impermissible delegation of the legislative power itself.
* Test—Intelligible Principle Test: A statutory delegation of authority is permissible if it contains an intelligible principle, or standard, that is sufficient to guide and control agency discretion.
o Implementation is executive in character, even if it resembles legislative action is some respects.
* Basic Purposes:
o Ensures that important social policy choices are made by Congress.
o Provides recipient of authority w/ “intelligible principle” to guide its exercise.
o Ensures that courts have a test to review the exercise against ascertainable standards.
* Bottom-Line: Nondelegation challenges rarely succeed. But it influences the construction of statutes before a challenge arises. [4].
* Other Factors: Breadth of power; Recipient of authority; Procedural safeguards; Criminal sanctions.
o Power Delegated:
* Broad Power. The more significant the power delegated, the more likely that the delegation is excessive and, conversely, the more specific the standards that are needed to satisfy the intelligible principle test.
* Principle: Broad scope of agency authority = Narrower standards. [14].
* “Too Important to Delegate” Powers. Some powers may be so important that they cannot be delegated at all or must be delegated under stricter standards—maybe; it’s implied.
* E.g. Power to Declare war
o Recipients of Delegated Authority
* Suspect Recipient. If the recipient is suspect, such as private parties or judiciary, stricter nondelegation principles apply.
* Independent Power. Conversely, broader delegations of authority may be tolerated where the recipient has independent constitutional authority to act. [16].
* E.g. President (and prosecutorial discretion), Tribe, State
o Judicial Review: NOT always constitutionally required.
STATUTORY INTERPRETATION
* Narrowing constructions. Threat of nondelegation challenge forces narrow construction.
* Clear statement/Constitutional avoidance. [6].
Legislative Veto
* Congress retains ultimate authority to reverse agency policy by statute, but this can be difficult over presumptive presidential veto.
* Thus, Congress sought to implement a legislative veto—preventing agency action from becoming effective by adopting a resolution disproving (rather than amending the statute).
* Rule: Legislative vetoes are unconstitutional, in all forms. Chadha
* Lingering Issues:
o (1) Whether an unconstitutional legislative veto invalidates the entire statute or just the clause.
o (2) Report-and-wait provisions. Agency must report, then delay for specified period. Congress can then enact legislation before agency action takes effect.
Whitman v. American Trucking [6]. Rejection of agency narrowing approach.
* Upheld EPA’s interpretation of statute as consistent w/ nondelegation doctrine.
Pittston Co. v. United States [10].
* Private recipients of authority.
* Advisory and ministerial functions.
1.5 AGENCIES & THE JUDICIAL POWER
Squaring agencies’ quasi-judicial power w/ Article III, 17th Amendment’s jury requirement, and due process.
HISTORICAL BACKGROUND—PUBLIC & PRIVATE RIGHTS
Two kinds of rights that might be adjudicated by agencies:
* Public Rights (Murray’s Lease): (Historically) A right asserted against the gov’t.
o Rule: Administrative adjudication is per se permissible.
o Remedy against the government is public right. Optional: Government need NOT give a remedy.
o Agencies can adjudicate public rights b/c the government need NOT give the right to begin with.
o Theory: Gov’t entitled to sovereign immunity. Thus, should be grateful for any remedy.
* Private Rights (Crowell v. Benson): (Historically) A right asserted against a private party.
o Rule: Administrative adjudication is permissible ONLY if the “essential attributes of judicial power” are reserved to the courts.
o Agency adjudication is permissible if agency is merely fact-finding.
o Agency adjudication is permissible if it feeds into a court, w/ the court having control to review.
* Court must be able to review questions of LAW de novo (w/o deference).
* Most facts left to the agency. A few exceptions for review of constitutional facts.
MODERN SYNTHESIS—RESOLVING ARTICLE III & 7TH AMENDMENT ISSUES
* See handout chart, p.3
* Test: Determining whether admin adjudication violates Article III or Seventh Amendment requires 3 steps:
o Step 1. Determine whether the rights is a public or private right.
* Public: The right is a public right if the government is a party (except in criminal cases) or under Granfinanciera if it is a statutory right b/w private parties that is closely regulated into a regulatory scheme.
* Private: The right is a private right if it is a common law right that arises b/w private parties, including a common law right that has been converted into a statutory right.
o Step 2—Public Rights.
* Rule: Admin adjudication of public rights is permissible under the 7th Amendment and probably consistent w/ Art. III.
* Art. III: Even if admin adjudication is not per se admissible under Art. III, it would be unconstitutional ONLY if other Schor factors weigh very heavily against it b/c, in contrast to Schor, this factor favors constitutionality.
o Step 3—Private Rights.
* Rule: Admin adjudication may violate either the 7th Amendment, Art. III, or both.
* 7th Amendment: The 7th Amendment is violated UNLESS the case would not have been tried to a jury at common law (1790 inquiry) (e.g. action in admiralty or for equitable relief), OR the parties have waived their 7th Amendment rights.
* Art. III: Determination of a possible Art. III violation requires application of the Schor test.
THE SCHOR TEST—ARTICLE III QUESTIONS
* Rule: To determine whether agency adjudication violates Art. III, apply the Schor test.
* The Schor Test—3 Factors:
o 1. Extent to which the agency has “essential attributes of judicial power.”
* i.e. the extent to which non-Article III courts exercise the range of jurisdiction and powers normally vested only in Art. III courts.
* Scope of Jurisdiction given to the Agency (Very important!)
* Broad jurisdiction (big power) v. Narrow jurisdiction (small power)
* Scope of Review that courts retain over the agency.
* Spectrum: No review --> Full de novo review
o (big power/more Art. III problems) v. (small power/less problems)
* Incidental Judicial Powers of the Agency
o 2. Origins and importance [Nature] of the right to be adjudicated.
* Seems to reflect a fundamental change in the public rights doctrine.
* Implies that admin adjudication of public rights is NOT per se constitutional.
* Rather, might be unconstitutional if Schor factors weigh heavily against it.
o 3. Congressional purpose behind the decision to give agency the judicial power.
* Good, e.g.: Congress just trying to accomplish admin procedures
* Bad, e.g.: Congress trying to remove cases from the jurisdiction of fed courts/overtake judicial branch
THE SEVENTH AMENDMENT WRINKLE
* Public Rights Rule: The 7th Amendment does NOT prevent admin adjudication w/o a jury in cases involving public rights. Implied by Granfinanciera
* Public Rights Redefined—Expanded: A right created by statute AND that right is closely related to regulatory regime.
o “A seemingly private right that is so closely integrated into a public regulatory scheme as to be a matter appropriate for agency resolution w/ limited involvement by the Art. III judiciary. Granfinanciera
* For Private Rights: The 7th Amendment is violated UNLESS the case would not have been tried to a jury at common law (1790 inquiry) (e.g. action in admiralty or for equitable relief), OR the parties have waived their 7th Amendment rights.
Marine Shale Processors v. EPA [7].
NLRB v. Robbins Tire & Rubber Co. [10].
Nash Miami Motors v. Comm’r of Internal Revenue [13].
JUDICIAL REVIEW—RELATED ISSUE
* Agency adjudication involves “first instance” adjudication
o If courts conduct de novo review, admin adjudication has NO adverse impact on judicial power.
o Conversely, if review is foreclosed, the impact on judicial power is severe and raises questions under both Art. III and DP.
* Article III. When judicial review is foreclosed, a category of cases “arising under” federal law is removed from the jurisdiction of the courts.
* Lingering Issue: Whether Congress can strip courts of jurisdiction—violation of Art. III? [15].
* Lingering Issue 2: Whether foreclosure violates due process? [15].
DUE PROCESS—RELATED ISSUE
* Admin agencies deprive people of “liberty” and “property” interests. Thus, procedures must meet DP.
o Vast Majority of Cases: Admin adjudication satisfies DP if there is (1) adequate notice and (2) an opportunity to be heard by a neutral decision-maker.
* Overlapping Issue: Separation of Powers. Admin agencies serve both as prosecutor and judge.
o Common Law: No problem unless bias is shown.
o § 554(d): Requires separation of functions in formal adjudications.
1.6 AGENCIES & THE EXECUTIVE POWER
THE UNITARY EXECUTIVE
* Historical Context
o Articles of Confederation didn’t have an executive branch; didn’t work. Needed an executive.
* Article II. Vesting/Take Care Clause.
o Executive power vested in the Prez. He shall ensure the laws are faithfully executed.
* Presidential Control of Agencies
o 1. Appoint trusted officers who share the President’s views.
o 2. Some degree of direct oversight and control, including the ability to order an official to take or refrain from certain action.
o 3. Inherent power to remove officers.
APPOINTMENTS CLAUSE (ART. II, § 2, CL. 2)
* Two categories of officers:
o 1. Principal officers who must be appointed by the Prez w/ Senate consent;
o 2. Inferior officers as to whom Congress may use 4 options of appointment:
* A. Same method as principal officers;
* B. the Prez alone;
* C. the courts of law; or
* D. the heads of departments.
o The Prez appoints all officers EXCEPT where Congress vests power in courts or dep’t heads.
* Starting Point. For analysis of Appointments Clause issues, begin w/ the statutory provisions concerning appointment. If they:
o Provide for appointment by the Prez w/ Senate consent --> No constitutional issue.
o Provide for appointment by the Prez, courts, or head of department --> appointment provisions are unconstitutional IF the appointee is a principal officer.
o Do not conform to Article II --> they are unconstitutional IF the appointee is an officer of the U.S.
* Inferior Officer Issues
o Summary: An inferior officer is directed and supervised at some level by an appointee of the Prez—not the Prez himself. The only way an inferior officer can be appointed is through a dep’t.
o Whether there are limits to Congress’s choice among appointment options? Morrison
o What constitutes a head of department or a court of law? Freytag
DIRECT OVERSIGHT
* President’s authority to exercise direct authority over civil officers—Issue executive orders (EO).
* Rule: Executive orders are generally permissible.
o Limit: Simply cannot direct others to violate the law—bound by law.
* Controversial Issue: Regulatory review process.
o Defined. Established by EO, a system of regulatory planning and review in which major regulations and other important policy actions must be reviewed and approved by the Office of Info and Regulatory Affairs (OIRA) w/in the Office of Mgmt and Budget, a White House agency.
o Agencies must engage in “regulatory impact analysis” and can NOT act unless the actions’ benefits outweigh their costs.
o Independent Agencies: Exempt from regulatory review process.
o Proponents: “Essential means of coordinating regulatory process w/in executive branch and consistent w/ the President’s function as the head of a unitary executive.”
o Critics: “Inconsistent w/ the congressional delegation of statutory policymaking discretion to admin agencies w/ expertise and undermines the transparency and accountability of policymaking process.”
REMOVAL [see Removal Matrix & Removal Power Decision Tree—handout]
* Groundwork for Modern Doctrine. Laid in 2 cases:
o Myers v. United States (Inherent Power).
* Appeared to create absolute power for Prez to remove officials.
* Ct held that Prez had inherent power to remove executive officials, invalidating a statutory provision requiring Senate consent for the removal of a postmaster from office.
o Humphrey’s Executor v. United States (Independent Agencies).
* Limited Prez’s power to remove officials—must be for cause.
* When acting in quasi-legislative or quasi-judicial --> Prez’s power is NOT absolute.
o Bottom-Line (see Removal Matrix—handout)
* Supreme Court cases identify 2 critical factors:
* 1. Nature of the removal provisions
* 2. Nature of the agency functions
* Rule: Congressional control over removal is impermissible if an officer performs any executive functions, BUT Prez “for cause” removals are permissible if agencies perform quasi-legislative and quasi-judicial functions.
o Principal v. Inferior Officers
* Although the line is unclear, Morrison identified several factors [6]:
* Rank and Authority. Someone (AG) had independent authority to fire the official, indicating some degree of “inferiority” in rank and authority.
* Make Policy or Limited? The official couldn’t make policy—bound by other policy. Could perform only certain, limited duties --> indicating “inferiority”
* Jurisdiction. Act itself restricted jurisdiction to investigating certain officials and crimes, and also could act only when requested by another higher official.
* Tenure: Permanent or Temporary. Temporary in the sense that official was appointed essentially to accomplish a single task…when it’s over, the office is terminated. --> Indicating inferiority.
o Inferior Officer v. Employee. See Freytag. [11].
Morrison v. Olson
* Addresses whether presidential for cause removal provisions are permissible if agencies perform quasi-legislative or quasi-judicial functions.
* Three issues: appointment; removal; separation of powers. Factors for Principal v. Inferior officers.
JUDICIAL REVIEW ENFORCEMENT OF EXECUTIVE ORDERS—RELATED ISSUE
* Issue: When executive orders impose procedural or substantive requirements on agency officials, can other parties seek judicial enforcement of those requirements.
* Held: Usually NOT. B/c orders are intended to manage internal operations of the executive branch, rather than to create private rights.
o But: Some executive orders may be treated as agency actions and reviewed under the APA.
* Three-part Test for review: City of Albuquerque v. U.S. Dep’t of Interior [18]
o To be enforceable under the APA, the EO must meet three specific requirements:
* 1. EO must have a “specific statutory foundation.” If it does, it’s given the effect of a congressional statute.
* 2. Neither the statutory foundation for the EO must preclude review.
* [Some EOs expressly preclude review].
* 3. There must be “law to apply,” i.e. there must be an objective standard by which a court can judge the agency’s actions.
RELATED ISSUE: RELATIONSHIP B/W REMOVAL & INDEPENDENT AGENCIES (AFTER MORRISON)
* “Appears to have little impact on the analysis of independent agencies.” [19].
CH.2: JUDICIAL REVIEW
TRANSMISSION BELT MODEL:
Legislative Executive Judicial
INTRO
* The Rule of Law. Essential constraint on the exercise of broad powers by agencies.
o Agencies act only pursuant to law and are bound by statutory requirements. Within this model, judicial review is presumed to be available to sufficiently enforce statutory & constitutional constraints.
o Thus, 2 essential issues: (1) Availability of Review [Chapter 8] & (2) Scope of Review
* Scope of Review: The issues subject to review.
* Standard of Review: The degree of deference. [Scope & standard often merged w/o differentiation]
2.1 INTRODUCTION TO SCOPE OF REVIEW
HOW MUCH DEFERENCE? PRO-DEFERENCE V. ANTI-DEFERENCE
* Reflects the fundamental admin law conflict:
o Allowing agencies enough latitude to operate effectively v. desire to control agencies.
* Pro-Deference [see handout—Deference Arguments]
o Delegation; competence/expertise; familiarity w/ record; efficiency.
* Anti-Deference
o Rule of law; agency bias (capture); familiarity of record might not be implicated (no witnesses); protect rights
APA §706—SCOPE OF REVIEW
* § 706. To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall:
o [On questions of law --> NO deference to agency. But not so in practice.]
o (1) compel agency action unlawfully withheld or unreasonably delayed; and
o (2) hold unlawful and set aside agency action, findings and conclusions found to be:
* [Six standards of review:]
* (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance w/ law;
* (B) contrary to constitutional right, power, privilege, or immunity;
* (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
* (D) w/o observance of procedure required by law
* (E) unsupported by substantial evidence in case subject to sections 556 & 557 or otherwise reviewed on the record of an agency hearing provide by statute; or
* (F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the review court.
o The court shall review the WHOLE record [before the agency; NOT a record created by the court] or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.
* [NEW evidence impermissible. Thus, both anti- and pro-agency.]
* Breaking Down § 706(2)—The 6 grounds for reversal
o Substantive Standards. Substantial evidence (E); statutory violation (C); A&C (A)
* These standards apply to judicial review of the substance of agency decisions.
o Non-substantive Standards: constitutional issues (B); procedural defects (D); de novo review (F)
* Discussed in related issues.
* Substantive Standards. [See Roadmap, handout—“Review of Fact, Law & Policy]
o Setting: An agency decision—whether RM, formal adjudication, or some other agency action—inherently involves (1) factual determinations made by the agency on the basis of a record created by the agency’s procedure; (2) the agency’s understanding of what the statutory standards mean; and (3) a policy judgment about how to best apply those standards to the facts.
o Facts [Generally substantial evidence, covered in 2.2]
* Two types:
* Judicial facts: Historical facts regarding events
* Legislative facts: Policy facts re: social and economic conditions
* Standard of Review: Substantial Evidence [covered in 2.2]
* Both kinds of factual determinations are reviewed under the “substantial evidence” standard in formal adjudication or RM under §§ 556 & 557 and in other kinds of proceedings when the agency’s organic statute specifies.
* IF substantial evidence standard does NOT apply, the A&C standard applies.
o Law [Standards covered in 2.3 & 2.4]
* The interpretation of the statute and other legal questions would appear to be a de novo matter for the court under §706, but courts have developed and apply standards of review that often require deference to agencies’ interpretations of the statutes and regulations they administer.
o Policy [A&C in 2.5]
* Ultimately, the agency must apply the law to the facts to make a decision. Often referred to as a “mixed” question of law and fact, but essentially involves the exercise of policymaking discretion delegated to the agency, to which courts tend to defer under the A&C standard of review [as discussed in 2.5].
o Focus. In conducting review according to the framework above, courts focus on the reasons given by the agency, which must explain (1) how the agency viewed the facts in light of the record; (2) what the agency understood the statutory standards to mean; and (3) why the agency thought the statute, as applied to the facts, supported its decision. [4].
Judicial Review Outline per Other Outline:
Issue
Section
Scope of Review
Constitutional violation
§ 706(2)(B)
De novo
Statutory compliance
§ 706(2)(C)
Chevron
Procedural violation
§ 706(2)(D)
De novo
Findings & conclusion Informal rulemaking
Formal rulemaking
§706(2)(A)
§ 706(2)(E)
A&C/State Farm
Substantial evidence
APPLICATION OF §706: OVERTON PARK (The foundational decision)
* “Substantial Inquiry” of “Generally Applicable Standards” of § 706
o 1. Court must define the scope of the agency’s statutory authority and discretion, and determine whether it acted within its authority;
o 2. Inquire into whether the agency’s ultimate choice was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance w/ law” [as in 2.5];
o 3. Whether the agency engaged in procedural errors.
* After Overton Park, many judicial decisions focused on ensuring an adequate record for review, particularly in notice & comment RM under § 553 and in informal decision-making now includes the creation of a record.
THE REASONS REQUIREMENT—CHENERY
* Setting: An agency is required to provide reasons for its decision, and judicial review concentrates on those reasons.
* Inquiry: Thus, the question on judicial review is NOT whether the agency’s result is correct, but whether the agency’s reasoning provides a plausible explanation for that result, particularly whether the agency’s explanation of why application of the statute to the facts supports the agency decision.
* Parties Challenging Agency Action: Should not try to reargue the merits, but try to identify gaps, flaws, or other problems w/ the agency’s reasoning.
* Rule: An agency decision must stand or fall on the basis of the reasons given by the agency.
o If an agency decision cannot be sustained on the basis of the reasons given by the agency, the reviewing court may NOT uphold it based on alternate reasons. SEC v. Chenery [6]
o Note: A court of appeals can affirm on grounds other than those relied upon by a lower court. The Chenery rule just requires all courts to focus on the reasoning given by the agency.
* Effect of Flaw: If there is a flaw in the agency’s reasoning, the court does not simply reverse. Rather, remand to the agency to consider other analysis.
* Although the Chenery principle predates the APA, it remains a cardinal rule of judicial review.
o Nonetheless, some tension b/w the Chenery principle and harmless error under §706. [See Allen v. Barnhart on 11].
Ethyl Corp.—The “Hard Look” Doctrine [Covered also in 2.5: A&C].
* J. Bazelon v. J. Leventhal. Illustration of debate: greater deference v. aggressive review.
o B Approach: Look at the procedures, ensuring that the agency looked at all the issues.
o L Approach: Responsibility to learn the technical info by steeping in the agency’s record, therefore taking a “Hard Look” themselves.
o L won. “Hard Look” by Courts (rather than Agency) is largely used.
Allen v. Barnhart [11]
* 5-step process of the SSA. Flawed reasoning (Grids/VE) --> Remand.
RELATED ISSUES—THE 3 NON-SUBSTANTIVE STANDARDS OF REVIEW UNDER § 706(2)
* Constitutional Review—§ 706(2)(B)
o Courts could likely review constitutional issues w/o this statute: Interpreting and applying the Constitution is one of the core functions of the judiciary.
* Little doubt that courts owe NO deference to an agency’s construction of the Constitution
o Issue: Whether courts may review agency factual determinations de novo when a constitutional issue is involved.
* Crowell v. Benson implies that DP and separation of powers require de novo review of “constitutional facts” determined by agencies. The review, however, has largely disappeared in the admin law context. [15].
* Procedural Review—§ 706(2)(D)
o Particular modes covered in later chapters.
o Issue: Whether courts should defer to agency decisions re: procedures?
* The language of § 706(2)(D) might support de novo review b/c it omits any terms of deference. And courts often showed little deference until late 1970s:
* Vermont Yankee held that courts had NO authority to order procedures beyond those required by statute or DP; and rejected the assumption that more procedures would produce better decision.
* Chevron articulated a very deferential standard of review for agency interpretations of ambiguous statutes that has been applied to procedural as well as substantive questions.
* To the extent that agencies have discretion to provide procedures or choose among procedures, that choice is subject to the A&C standard of review.
* De Novo Review—§ 706(2)(F)
o Before Overton Park, courts assumed that when agencies did not have a hearing and there was no record for review, that a de novo trial was necessary. But OP’s application of the A&C standard, rather than de novo, changed the courts’ approach to review of informal adjudications conducted w/o a hearing:
o Rule: De novo review is available ONLY when:
* (1): fact-finding procedures in an informal adjudication are “inadequate”; OR
* “Adequacy” bar appears to be set very low. Hence, a very rare argument.
o The Court’s conclusory rejection of de novo review under this standard in OP upheld the Sec’y of Transportation’s use of whatever sources he deemed appropriate to be “adequate” fact-finding procedures.
* (2): Factual issues NOT addressed by agency are raised in a proceeding to enforce a rule.
o Somewhat frequent area of litigation: Freedom of Info Act. But NOT much success. [17].
o De novo review contrasted w/ “Plenary” Review. NOT the same. Don’t confuse w/ de novo!
* Plenary Review: When informal procedures do NOT create a sufficient record to review under the A&C standard of review.
* Here, a hearing may be held to determine the basis for agency decision.
* This review focuses on the agency record and does not take evidence on the underlying factual issues in dispute.
THE EQUAL ACCESS TO JUSTICE ACT—RELATED ISSUE
* Permits parties to recover attorneys fees if the agency’s position is not “substantially justified.”
* “Substantial”: Justified in substance or in the main--to a degree that could satisfy a reasonable person.
o More than merely undeserving of sanctions for frivolousness
* If an agency fails the substantial evidence test, it correlates that its position is NOT substantially justified b/c is lacks a reasonable factual basis. Whether the same applies to A&C review is unclear.
2.2 SUBSTANTIAL EVIDENCE REVIEW [INCLUDING WHEN TO APPLY THE 3 STANDARDS]
SETTING—REASONS FOR DEFERENCE
* Regardless of the form of agency action, admin decisions inherently involve some determination of the facts to which the law will be applied.
* Judicial review of those factual determinations is usually deferential for several reasons:
o Delegation by Congress of fact-finding power to agency
o Familiarity. Particularly important when the testimony involves witness testimony regarding “judicial facts” b/c the opportunity to observe the witness’ testimony is important when determining credibility.
o Expertise. Particularly important when “legislative facts” involving a judgment based on scientific research, expert testimony, or technical sources.
APPLICABLE STANDARDS OF REVIEW & WHEN THEY APPLY
* Three principal standards of review may apply to agency findings of fact:
o “Substantial Evidence” standard [Language on handout-“BOP & Std of Review”]
o “Arbitrary & Capricious” standard
o “Clearly Erroneous” Standard
* Rule: Which standard applies depends upon the APA and the organic statute.
* SUBSTANTIAL EVIDENCE STANDARD. Applies when formal hearings under §§ 556 and 557 of the APA are conducted (including both APA adjudication and formal RM). Also when organic statute requires.
o Does NOT apply in notice & comment RM and other informal actions UNLESS the organic statute requires it.
* Arbitrary & Capricious Standard. Applies when the substantial evidence standard does NOT apply.
* Clearly Erroneous Standard. Normally applies to review of factual findings by lower court judges, and may also apply to agency determinations of fact IF required by organic statute. [rarely used-tax ct maybe]
* Bottom-Line: All 3 reflect the same basic concept of deference: The question is NOT whether the court agrees, but whether the agency’s findings are reasonable in light of the evidence in the record. [2].
* Standards express somewhat more or less aggressive inquiry into the reasonableness of findings.
o [This difference appears negligible in practice.]
SPECTRUM OF DEFERENCE
Most Deference (Less likely to reverse) (More opportunity to reverse) Least Deference
No Review A&C Substantial Evidence Clearly Erroneous De Novo
(Jury Verdicts) (Judge’s Findings)
APPLICATION OF THE SUBSTANTIAL EVIDENCE STANDARD
* Seminal case: Universal Camera Corp. v. NLRB (UC)
* Flawed Application: Prior to UC, some courts considered only the evidence in the record favorable to the Board’s ruling, upholding the Board notwithstanding overwhelming contrary evidence, as long as some evidence supported its finding.
* Correct Application: Courts must consider the record as a whole: Supporting v. contrary evidence.
* “Substantial Evidence” defined. Such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. More than a mere scintilla.
* Core Idea. The question is NOT whether the reviewing court would reach the same conclusion based on the same evidence, but rather whether the evidence is sufficient that a reasonable fact-finder could be persuaded by it.
o Thus, evidence might support more than one conclusion, and it is the Board that makes the choice among those possible conclusions b/c it is the original trier of fact & has expertise in the field.
* Basic Propositions for Analyzing under Substantial Evidence Standard:
o 1. Focus on the quality of the evidence, not quantity.
o 2. For parties challenging fact-finding, DON’T simply reargue the facts or claim that the agency should have weighed the evidence differently.
o 3. Effective challenges usually ID particular gaps or flaws in the agency explanations.
RELATIONSHIP B/W THE ALJ AND AGENCY
* Recurrent Issue: Relationship when the ALJ and Agency reach different conclusions under the substantial evidence standard.
* Agency review of ALJ decision is de novo.
o But some deference appears warranted: ALJ conducted the hearing & observed witnesses.
* Rule: When an agency reverses the ALJ, the ALJ’s decision is part of the contrary evidence in light of which the reviewing court must determine the substantiality of the evidence relied on by the agency.
o Thus, although the standard doesn’t change, the agency must be particularly careful to explain why it disagrees w/ the ALJ’s conclusions.
* Witnesses—Special Issue [4].
o Rule: An agency can reject demeanor-based inferences by the ALJ, but must have particularly cogent reasons for doing so.
* [Courts often overturn agency decisions rejecting credibility determinations of the ALJ.]
o Review by Court: The agency decision is reviewed for substantial evidence although it is the ALJ who observed the witnesses and ought to receive deference.
* Tax Court. Similar issues. See if necessary. [4].
Center Construction v. NLRB [5]. See handout—“Center” [1].
* Standard of Review language. [7].
* ALJ found 6 violations; Board affirmed 5 (so did court). Board reversed 1 (reversed by court). [12].
SUBSTANTIAL EVIDENCE STANDARD IN ORGANIC STATUTES—RELATED ISSUE
* Remember: Substantial evidence applies under the APA only when hearings are held pursuant to §§ 556 and 557, BUT may ALSO apply under an agency’s organic statute (as is the case w/ NLRB & SSA).
* Identical Meaning. Same standard whether applied in APA or OS, despite minor language variations.
* Relation to “On the Record” Hearings. Any difference? Procedural implications? Maybe. See [15].
OTHER STANDARDS FOR REVIEW OF AGENCY FACTUAL DETERMINATIONS [A&C & Clearly Erroneous]
* A&C Rule: When the substantial evidence standard does NOT apply, factual findings usually subject to review under A&C standard.
o The distinction b/w the 2, to the extent it ever existed, has all but disappeared.
* Other Standards. Organic statutes may provide for other standards (not SE or A&C).
o One possibility is the clearly erroneous standard.
* Thought to be less deferential than SE standard.
* Does NOT currently apply to review of any federal agencies. [used by some states]
* BUT does apply to review of Tax Court decisions by federal Courts of Appeals.
o Other possibilities: preponderance of evidence or weight of evidence. [16].
SCOPE OF REVIEW & BURDEN OF PROOF
* Distinguish the Two: [See handout—“Burden of Proof”!!! [1]].
o Burden of Proof is applied by the finder of fact and relates to which party must persuade the finder and the persuasive force of the evidence that is necessary to succeed.
o Standard of Review. The reviewing court does NOT ask whether the preponderance standard has been met, but rather whether a reasonable finder of fact could conclude that it has been.
* Interaction. See chart (same as above). SE & A&C use same, but higher standards do not. [16].
2.3 REVIEW OF STATUTORY INTERPRETATION UNDER CHEVRON
INTRO TO UNITS 2.3 (CHEVRON) & 2.4 (SKIDMORE) TESTS
* Unites 2.3 & 2.4 consider the standard of review for agency interpretations of statutes (& other sources of law) [as opposed to factual determinations in 2.2].
* Issue: Whether and to what extent courts should defer to an agency’s interpretation of the statute(s) it administers?
* Rule: Ultimately, the Court has developed two distinct approaches under two distinct tests:
o 1. The “Chevron test” [2.3]
o 2. The “Skidmore test” [2.4]
GENERAL BACKGROUND
* Goal of Chevron: Balance 2 competing sets of considerations re: judicial review of agency interpretations of statutes:
o Balance: The statute binds both the agency and the court, and under Marbury v. Madison, it is emphatically the province and duty of the judiciary to say what the law is.
o Versus: Statutory interpretation implicates policy choices that Congress has delegated to the agency, which has expertise to better understand the full implications of competing interpretations.
IS JUDICIAL DEFERENCE TO AGENCY RESOLUTIONS OF LEGAL QUESTIONS APPROPRIATE?
* Underlying Issue: Same as above. Whether, and to what extent, courts should defer?
* Judicial Power—De novo review? Article III implies that de novo review is constitutionally required.
o Accordingly, the APA’s judicial review provisions appear to provide for de novo review. [3].
o But notwithstanding constitutional principles and APA language, there are good reasons for deferring to at least some agency constructions of the statutes they administer.
* Such as Congress has delegated to agency; agency expertise. See [2].
* General Rule: Courts often defer to agencies when interpreting ambiguous statutes, especially under the Chevron test, which requires reviewing courts to defer to an agency’s reasonable construction of an ambiguous statute.
* The Chevron Debate. Critics v. supporters. See [2].
THE CHEVRON TWO-STEP PROCESS
* Focal Point for analysis of the degree of deference owed by the courts to the statutory interpretations of admin agencies the Chevron two-step test.
* The Chevron Two-Step Test. Test for judicial review of agency statutory interpretations.
o Step One. Whether Congress has directly spoken to the precise question at issue? If the intent of Congress is CLEAR, that is the end of the matter. Both the court & agency must give effect to the unambiguously expressed intent of Congress.
o Step Two. If the statute is silent or ambiguous w/ respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.
* Rationales:
* (1) Ambiguous statutes constitute an implicit delegation of policy discretion.
* (2) Requires the expertise of the agency.
o See [4] for the Court’s reasoning in Chevron, such as statutory construction & legislative history.
o Rule: “When a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency’s policy, rather than whether it is a reasonable choice w/in a gap left open by Congress, the challenge must fail.”
APPLYING CHEVRON
* Step Zero [addressed in 2.4]: Does Chevron test apply at all?
* Critical Issues in Apply Steps 1 & 2
o (Step 1 is usually the critical step b/c agency loses here w/ some frequency. Agency almost never loses at Step 2.)
o Step One Issues—Clarity.
* How “clear” must the statute be?
* How should courts determine whether the statute is clear?
* Use the traditional tools of statutory construction. Including text of the statute, dictionary definitions, inferences from surrounding text & related provisions, canons of statutory construction, and legislative history. [4].
o Step Two Issues—Meaning.
* Implied focus is on whether the agency construction is w/in the discretion created by the ambiguity identified at Step One.
* Unresolved Issue: Whether an interpretation w/in the scope of ambiguity might nevertheless fail at Step Two b/c it’s unreasonable.
* A reasonableness approach would tend to merge Step Two and A&C review of an agency’s discretionary policy decisions.
Alliance for Community Media v. FCC [5]
* Applies Chevron Two-Step on page 9. See also handout “ACM” [2].
DEFERENCE TO AGENCY REGULATIONS—RELATED ISSUE
* Setting: In addition to statutes, agencies must also interpret their own regulations & other sources of law.
* Practice: Although § 706 says courts should determine the meaning of the terms of agency action (which would include regulations), courts afford even more deference to an agency’s interpretation of its own regulations than of its organic statute.
* Rule: An agency’s interpretation of its own legislative rules is controlling unless it is “plainly erroneous or inconsistent w/ the regulation.”
o But: An agency’s regulatory interpretation is generally entitled to “substantial deference,” BUT NOT if it merely restates the terms of the statute. In such a case, the normal Chevron rules apply b/c the agency is essentially interpreting the statute. [16].
o Technical Matters. Deference is particularly likely when the regulation concerns tech matters.
MORE RELATED ISSUES:
* Legislative History at Step One: Textualist v. Intentionalist Debate
o Issue re: the relevance of legislative history in applying Chevron Step One. See [16].
* Relationship b/w Chevron and A&C Review
o Issue: Uncertain relationship b/w Step Two of Chevron and review under A&C standard. [17].
* Judicial Review of Agency Preemption Determinations (Regulations) of State Law
o Issue: Potential conflict exists b/w federal & state law; agency tries to preempt state law.
o Likely answer: Courts reluctant to give Chevron deference to the agency interpretation of the preemptive effect of an ambiguous statute.
2.4 REVIEW OF STATUTORY INTERPRETATION UNDER ALTERNATIVES TO CHEVRON
PRE-CHEVRON & THE EMERGENCE OF CHEVRON
* Two Important Features of Pre-Chevron Cases
o 1. In Adjudications, the Court distinguished b/w questions of fact, law, & mixed questions.
* [Called the Hearst approach/test]
* Questions of Law [require no facts to decide]: Generally de novo review.
* Questions of Fact: Generally defer.
* Mixed Questions of Law & Fact: Generally defer.
* E.g. see NLRB v. Hearst Publications [1] (distinguishing the 3 types).
o 2. In agency interpretations thru Informal (Nonbinding) Rulings, the Court applied the Skidmore test.
* Test—Sliding Scale of Deference based upon Factors:
* [Is this really deference? You’re persuading…]
* Skidmore is much less deferential than Chevron (step 2); almost de novo.
* “The weight of the agency’s judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency w/ earlier & later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”
* Underlying Issue w/ Chevron Landmark Decision
o Chevron appeared to comprehensively restate judicial review doctrine for agency interpretations of their organic statutes.
o Issue: Insofar as Chevron involved deference to interpretations in binding regulations, it did NOT resolve whether it applied to other modes of agency actions and whether it superseded the tests articulated in Hearst (adjudication) and Skidmore (nonbinding guidance documents).
CHEVRON STEP ZERO—LIMITATIONS ON THE APPLICABILITY OF CHEVRON
* Threshold Question—Step Zero: Does Chevron apply? See handout “Statutory Decision Tree [1].
o If yes, Chevron applies: go to Steps 1 & 2.
o If no, Chevron does not apply: determine which standard to apply.
* When does Chevron apply?—Step Zero Test United States v. Mead Corp. [4]
o Lawmaking-YES [BUT consider Pure ?s of Law (below)]. Chevron deference applies when agencies exercise delegated lawmaking authority.
* Includes RM under §553 and Adjudication under §§ 556 & 557.
* “Chevron deference applies when Congress has delegated authority to the agency generally to make rules carrying the force of law, and the agency interpretation claiming deference was promulgated in that authority. Mead
* “Delegation of such authority may be shown in a variety of ways, as by an agency’s power to adjudicate or notice-and-comment RM, or by some other indication of a comparable congressional intent.”
o Not Lawmaking-NO. Skidmore deference applies to interpretations that lack the force of law—they do NOT warrant Chevron-style deference. Rather, these interpretations are “entitled to respect” under Skidmore, but only to the extent they have the “power to persuade.” Christensen [3]
* Includes opinion letters (such as interpretations contained in policy statements, agency manuals, & enforcement guidelines); decision to prosecute; agency speech; and a brief submitted to court.
APPLYING THE SKIDMORE FACTORS
* Thoroughness evident in agency’s consideration
o The more thoroughly the agency considered the problem --> the more deference it gets.
* Levy: Two components.
* (1) The process the agency followed (more inputs, comprehensive, thoughtful, etc); and
* (2) The explanation (does it show all the pros, cons, step-by-step reasoning?)
* The validity of the reasoning
o Levy: Chicken/egg problem. You have to look at reasoning before you decide deference. Aren’t you supposed to decide deference before you determine validity??
* Consistency w/ earlier and later pronouncements, and
o Does the agency change/flip-flop? If so, court gives less difference.
* But countervailing argument: Agencies are allowed to change position.
* All those factors which give it power to persuade, if lacking power to control
o Basically: Is the court persuaded?
* Bottom-Line (Levy): Key factors are #1 and #3. These exist independently of the judges’ views about whether the decision is right or wrong.
Barnhart v. Walton [5].
* Application of Chevron. Why Chevron applies and implications.
Aeroquip-Vickers v. Comm’r of Internal Revenue [8].
* Revenue ruling is nonbinding (Christensen). Should have deferred under Skidmore.
CHEVRON & FORMAL ADJUDICATION—RELATED ISSUE
* Assumed that Chevron applies to APA adjudications, which reflect the exercise of delegated lawmaking authority and have the requisite procedural formality to warrant deference.
* Issue: Formal Adjudications: Is there a pure question of law?
* Rule: De novo review might still apply to pure questions of law. [15]. INS v. Cardoza-Fonseca
o Harkens back to the Hearst approach. This idea was strongly rejected by J. Scalia.
* Bottom Line: Even if Chevron applies, ask “Is there a pure question of law?”
o If so, there may be de novo review.
o But this analysis is questionable. Levy NOT sure if Cardozo-Fonseca is controlling.
RELATED ISSUES: THE FUTURE OF CHEVRON & THE APPLICATION OF SKIDMORE
* Supreme Court developed a new “ultimate question.” See Long Island Care at Home v. Coke [16].
* This new analysis seems to increase the importance of Chevron Step Zero and transform the simple two-step approach into a multifaceted inquiry that incorporates elements of BOTH Skidmore & Chevron.
* Future Cases. As the range of cases qualifying for Chevron deference shrinks, the courts may turn increasingly to the Skidmore factors to determine how much weight to place on agency statutory interpretations. [17].
* Effect: B/c Skidmore deference is weaker than Chevron deference, agency interpretations become less important determinants of statutory meaning as courts assess the validity of those interpretations under Skidmore.
2.5 ARBITRARY & CAPRICIOUS REVIEW
GENERAL BACKGROUND
* Focuses on review of agency policy judgments, which are expressed in the reasons they agency provides to support its ultimate decision.
o i.e. its explanation of why the application of the statute, as interpreted by the agency, to the facts, as determined by the agency, support the ultimate decision.
* Rule: The A&C standard of review applies to judicial review of agency policy judgments—whether in the adoption of a rule, an adjudicatory decision, or some other type of agency action.
* § 706(2)(A). Reviewing courts shall “hold unlawful and set aside agency action, findings, and conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance w/ law.”
o Despite the 4 distinct grounds, the standard is usually applied as a single standard: A&C.
o Generally regarded as very deferential.
* Most quoted formulation: “Whether the decision was (1) based on a consideration of the relevant factors and (2) whether there has been a clear error of judgment.” Overton Park
HARD LOOK REVIEW & THE A&C STANDARD
* Two Distinct Approaches to Hard Look Review
o Hard Look by Agency (J. Bazelon approach)
* Courts should review to make sure the agency had taken a hard look at the issue.
* The court itself would back off.
o Hard Look by Courts (J. Leventhal approach)
* The courts should take a hard look at the agency decision.
* This position largely won out; although remnants of Agency Hard Look remain.
o See [2] for the debate: proponents of each.
ADDITIONAL FORMULATIONS & A&C BOTTOM-LINE
* Baltimore Gas (appears more deferential) [3].
o Test: “Whether the Commission has (1) considered the relevant factors and (2) articulated a rational connection b/w the facts found and the choice made.”
o Note the similarities and differences to Overton Park standard.
* State Farm (appears less deferential) [3].
o Test: An agency rule is A&C if the agency (4 factors):
* 1. Has relied on factors which Congress has not intended it to consider;
* 2. Entirely failed to consider an important aspect of the problem;
* 3. Offered an explanation for its decision that runs counter to the evidence before the agency; OR
* 4. Is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
* [Levy]: 1 & 2 correspond to “Hard Look by Agency”
* Summary: Baltimore Gas (very deferential) is hard to reconcile w/ the approach in State Farm (more consistent w/ “hard look” review by courts). Nonetheless, both are good law and often quoted simultaneously (along w/ OP) for their articulation of A&C standard of review.
* Bottom Line: In practice, lower courts often apply the 4-part State Farm inquiry and reverse if one of the factors is met. SF also provides useful guidance for framing arguments against an agency decision.
WAYS TO CHALLENGE AN AGENCY ACTION WITH A&C
* Relied on Improper Factors [SF]
o Agency has set standards but didn’t rely on them or relied on others.
* Failed to Consider Relevant Factor(s) [SF, Baltimore Gas, & OP]
o Most common challenge. Find something the agency failed to consider (that’s important to the outcome).
o E.g. SF: Failed to consider airbags (a relevant factor); only focused on seatbelts.
* Counter to Evidence. [SF]
* Implausible [SF]
* Rational Connection [Baltimore Gas & SF]
* Clear Error [OP]
o [Levy]: Still out there, but don’t rely on unless the above don’t work.
* Bottom-Line: Look at agency’s reasoning, then argue against it w/ the factors above.
Bluewater Network v. EPA [4]. (Dealing w/ regulation; similar to SF) (Snowmobile rule: 70%).
* Court reversed for 2 reasons: (1) Failure to consider discontinuation; (2) Failed to explain arrival at 70%).
* Failure to consider catalyst was okay.
New England Health Care Employees Union [10]. Employer secretly hired permanent replacements during strike.
* Inference from lack of duty to disclose: A&C. Held: Agency failed to consider a relevant factor.
EFFECT OF A&C REVIEW ON ADMINISTRATIVE RECORDS [15]
* Court’s approach gives strong incentives for parties to submit info & arguments to the agency.
o Protects interests before the agency and preserves a basis in the record to appeal.
* Forces agency to respond to arguments made in comments. Agency need not put in evidence if no arg.
* Converted admin records from short & sweet to massive, long records.
See [16] for overlap b/w A&C, substantial evidence review, and Chevron. Probably little difference.
Indeterminate Standards: Courts have substantial discretion to choose more or less deferential standards or formulations of the applicable standards of review. [17].
CH. 3-6 MODES OF ACTION—HIERARCHY OF AGENCY NORMS
BINDING
* 1. Constitution
* 2. Statute
* 3. Legislative Rules (aka Binding Regulations)
o Highest that can be adopted by the Agency. E.g. a binding regulation.
o Can only be amended or repealed by another Legislative Rule
* 4. Lawmaking Adjudication
o Binds ONLY the parties. Also has precedential effect.
o CANNOT use an adjudication to reverse a legislative rule.
NON-BINDING. But still persuasive.
* 5. Non-Legislative Rules (aka Non-Binding Regulations)
o E.g. a letter-making or non-binding regulation
* 6. Non-Lawmaking Adjudication
* 7. Informal Advice
CH. 3 – RULEMAKING: LEGISLATIVE RULES & REGULATIONS
Legislative Rules (the most forceful action an agency can take)
* BINDING on agency and parties.
* Resource-intensive to make and/or change
Chapter 3 focuses on the promulgation of binding [known as “legislative”] rules and regulations.
* Agency regulations, which are codified in the Code of Federal Regulations, represent a substantial body of subsidiary legislation that affects a wide array of economic and other activity.
* Scope of judicial review of legislative rules: Ch. 2. Availability of judicial review: Ch. 8.
Unit 3.1: Agencies’ authority to use legislative rules as a policy tool.
* Includes constraints imposed by organic statute, the APA, and Due Process Clause.
Unit 3.2: Initiation of RM; w particular attention to the right of interested person to petition for promulgation of rule
Unit 3.3: Types of RM procedures that may apply, depending on the OS and its interaction w/ the APA
Unit 3.4: Basic requirements for “notice & comment” RM under APA, as developed by courts into paper hearings.
Unit 3.5: Further issues in N&C procedures: major changes from proposed rules & ex parte communications
3.1 RULEMAKING AUTHORITY
GENERAL BACKGROUND
* Valid agency regulations resemble statutes in force and effect.
o Collected in the Code of Federal Regulations.
o Violation of a regulation can result in severe consequences
* Including civil or crim penalties, suspend/revoke license, termination of gov’t benefits
* Benefit of Regulations: B/c they are BINDING, issues resolved by regulation CANNOT be re-litigated in subsequent administrative proceedings.
o Thus agencies can use RM to simplify or avoid individual adjudications altogether.
* Threshold Question: Whether the agency has the authority to promulgate a legislative rule?
o Three Legal Constraints (on that authority:)
* 1. The authority must be delegated and is thus limited by the agency’s organic statute.
* B/c fed agencies have no inherent authority to promulgate legislative rules.
* 2. The APA constrains agency RM authority through its definition of RM and also permits a party to challenge the choice to proceed by rule as A&C.
* 3. Requirements of due process may constrain RM.
o To understand these 3 constraints, must distinguish b/w RM and adjudication.
RULEMAKING V. ADJUDICATION
* See handout “RM v. Adjudication” & yin-yang [2].
* Rulemaking (Bi-Metallic): Involves generally applicable policies. [But can also be specific, see [6]].
o No hearing required.
* Rationale: “Notice and a hearing are NOT necessary for general rules b/c individualized hearings would be impractical and b/c the political process provides a safeguard.” [3].
* Adjudication (Londoner): Involves individualized decisions applying policy to specific facts.
o Three Critical Elements:
* 1. Few people are involved;
* 2. These people are especially affected by the decision; and
* 3. The decision rests on individualized grounds.
* See Professor Davis’s article for more distinctions—legislative facts v. adjudicative facts. [3]
* Procedures Fundamentally Different:
o Agency Adjudication: Resembles a judicial hearing & employs similar procedural safeguards.
o RM: Legislative in character and employs procedures to facilitate broad input.
ORGANIC STATUTES—SOURCE & LIMIT 1
* Rule: The organic statute (as made by Congress) both empowers and limits an agency’s authority to promulgate legislative regulations.
* General/Broad Grants of RM Authority
o Recurrent Issue: Whether a statutory delegation of general RM authority (to carry out a comprehensive system of agency enforcement & adjudication) authorizes the agency to adopt substantive rules defining statutory violations? Held: Yes, under current law:
o Watershed case: Nat’l Petroleum Refiners Ass’n [4].
o Rule: A general grant of authority to implement statutory provisions by regulation includes authority to make substantive rules, unless peculiar circumstances of a given provision suggest otherwise.
o Effect: Courts generally like RM. Courts construe grants of authority broadly.
o Advantages of RM: Listed on [4].
* More Particularized Delegation of RM Authority
o Litigants can also challenge that agency regulations exceed particular delegations.
* But these delegations are also construed broadly. Du Pont [5]
* Apparent Rule: “A general grant of RM authority supplements a more specific grant in the same statute; rather than being limited by the requirements of the specific grant.” [5].
* Exception to General Practice of Constructing Agency RM Authority Broadly
o Retroactive Effect. B/c retroactive rules present problems of fairness and may violate DP, courts are reluctant to interpret statutory grants of RM authority as extending to promulgation of retroactive rules.
* “A general grant of authority does NOT include the authority to promulgate rules w/ retroactive application unless their language requires this result. [6].
THE APA—SOURCE & LIMIT 2
* Rule: In addition to the constraints imposed by the OS, the APA constrains an agency’s ability to use RM in 2 distinct ways:
o 1A. “Rule”: An agency’s use of RM must be consistent w/ the APA definition of “rule” as “the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy;” and
o 1B. “Rulemaking”: “as the agency process for formulating, amending, or repealing a rule.”
* Bottom-Line: Focus on whether the rules have future effect as the basis for distinguishing RM from adjudication.
* Rule: “Rules” applied retrospectively violate the definition of a rule.
* [Courts have departed from Londoner/Bi-Metallic; focusing on APA § 551(4)]
o Rule 1 Qualification: With “specific congressional authorization,” Congress can permit agencies to promulgate rules w/ retroactive effect.
o 2. Subject to A&C. When the rule is subject to judicial review, the decision to use rules—as opposed to other modes of procedure—can be challenged as A&C under § 706(2)(A).
* These challenges are difficult and largely unsuccessful, however. See [6].
DUE PROCESS—LIMIT 3
* Rule: In addition to the constraints imposed by the OS and the APA, DP challenges can be based on 2 distinct arguments (similar to the APA arguments):
o 1. Individualized = Hearing. Adjudications require a hearing. Thus, affected entities may argue that DP requires notice and opportunities to be heard that extend beyond the N&C procedures contemplated by § 553.
* Essential Question: Whether a few people were especially affected on individualized grounds by the agency’s so-called rule.
* Answer: If so, then DP might require an adjudicatory hearing. [7].
o 2. Retroactivity. Regulations w/ retroactive effect may violate DP.
* Reinforces the requirement of explicit congressional authorization for agencies to promulgate retroactive rules.
* A regulation that violates constitutional rules against retroactivity is invalid, moreover, even if there is explicit statutory authority.
* Prospective Rule w/ Secondary Retroactive Effects. Even the prospective rule may be unconstitutionally invalid (or A&C).
* E.g. Altering future regulation that makes substantial investment (reliance) on the prior rule virtually worthless.
Citizens to Save Spencer Co v. EPA [8]. Retroactivity case. See handout [3].
IMPLIED RM AUTHORITY—RELATED ISSUE
* Practical need for agencies to make rules “to fill gaps left open—implicitly or explicitly—by Congress.
* Lower courts reluctant to uphold legislative rules rooted in such implied authority, even when the agency has legislative RM authority to implement some aspects of a statute.
* General Rule: If the OS includes NO express grant of RM authority, the agency is considered to have NO authority to issue rules w/ binding effects. [16]
RETROACTIVE AGENCY ISSUE & “SECONDARY RETROACTIVE EFFECTS”
* Distinguish:
o Rules that apply retroactively
* Have more severe constraints
* Rule: Strictly limited by narrow interpretations of statutes and APA definition of rule.
o Rules that apply prospectively but have “secondary retroactive effects”
* Rule: Limited only by A&C and DP constraints
* Standard of Reasonableness. See [17].
o Good example on [16].
INDIVIDUALIZED RELIEF FROM AGENCY RULES (e.g. waiver or exemption)
* Bottom Line: It would be likely be difficult to argue successfully that an agency regulation is invalid b/c it fails to include a safety valve, such as exceptions or waiver.
* But see [18] for du Pont statement and good reasons should you make this argument.
3.2 INITIATION OF RM
GENERAL BACKGROUND
* Assuming that an agency has authority, the first step in the process is the agency’s decision to make a rule.
* Very powerful tool; but very resource-intensive: personnel, material, time, impact analysis, docket, respond
* Decision to promulgate regulations thus is a momentous decision that reflects the high priority an agency places on the subject.
* The Agency Agenda. An issue must find its way onto the agenda—Agency must recognize it.
o Setting: Not a lot of doctrine in this area.
o Impetus for action may come from legislative action (Congress), policy decisions by the executive branch, internal proposals from agency staff, or private parties, including both regulated entities and the beneficiaries of regulation.
o Internal. Top down [e.g. prez] or Bottom up [e.g. experts]
o External. Materials focus on RM petitions.
o See [1] for actions by Congress or Prez and disagreements w/ agency on pursuing the issue.
o Discretionary RM Authority. See [2] for example.
REGULATORY AGENDAS & IMPACT ANALYSIS
* Executive Orders & Process. Recent prez initiatives to improve regulatory planning, coordinate regulatory priorities among agencies, and ensure full consideration of the impact of regulations.
o Implemented through White House agencies OIRA within Office of Mgmt and Budget.
* Key Order: EO 12866. Requires agencies to participate in an annual policy meeting chaired by VP.
o In practice, the EOs require the initiation of a RM to be approved by OIRA.
o Legal Issues: OIRA review may not delay agency action past statutory deadlines (if any).
* Independent Agencies are expressly EXCLUDED.
RM PETITIONS
* Getting an Agency to Promulgate Regulations
o In addition to informal, behind-the-scenes efforts, parties may formally “petition” to initiate RM
o Two Sources that authorize petitions.
* OS: Sometimes the agency’s OS authorizes the petition. “Any person” may petition…
* APA: Even if the OS does not authorize the filing of RM petitions, the APA does.
* § 553. “Each agency shall give an interested person the right to petition for the issuance, amendment, or repeal of a rule.
* Note: The agency need NOT agree w/ the petition. BUT it must consider the petition and respond, including an explanation for the denial of a RM petition.
* Procedures
o In practice, don’t file a petition unless and until informal methods fail.
o APA does NOT include any procedures for filing a RM petition; some statutes may.
o In absence of statutory procedures, most agencies have adopted procedures.
o Typical Procedures: Require petitioner to provide substance of requested rule (or actual language) and include info and documentation to support the request.
* Announcement. Typically specify that agency will announce its decision in the Federal Register, either providing notice of a proposed rule (thus initiating RM procedures) or publishing the denial of the petition along w/ an explanation of denial.
* Judicial Review
o Denial of RM petition is generally final agency action and thus reviewable.
o Approval of decision to propose a rule is NOT final agency action; thus not reviewable.
o Standard of Review: A&C. Focuses on the agency’s explanation—very deferential.
* In rare cases, courts may reverse if denial is based on erroneous interpretation of the applicable statute or agency’s factual basis is not supported by the record.
Massachusetts v. EPA [5]. Review of agency denial of RM Petition. The outcome is unusual.
REVIEWABILITY & FINALITY
* General Rule: Denial of RM petitions is usually subject to judicial review.
o Finality: Only final agency decisions are reviewable.
* Unreasonable Delay Exception: Cases where agency simply doesn’t respond; rather than deny.
o Rule: In the absence of any response, the agency has effectively denied the petition.
o Test: Six Factors should be considered in determining whether review is available based on unreasonably delay: Telecommunications Research & Action Center [14]
* Rule of Reason;
* W/ regard to Rule of Reason, see if Congress has provided a timetable or other indication of speed;
* Reasonable delays in economic regulation might be less tolerable when human health and welfare are at stake;
* Effects of expediting delayed action on other, higher agency priorities;
* Nature and extent of the interests prejudiced by delay; and
* Court need NOT find any impropriety lurking behind agency lassitude.
o In practice: Very difficult to meet.
REMEDIES FOR IMPROPER DENIAL OR DELAY
* Courts generally reluctant to order agencies to initiate a RM. Reasons at [15].
STATUTORY RESPONSES TO AGENCY INACTION—RELUCTANCE TO ENFORCE STATUTORY MANDATE
* Issue: Delay or inaction in the face of statutory provisions/mandates.
* Possible Approaches:
o Hammer Provisions: Congress will specify substantive consequences that go into effect automatically if the agency misses its deadlines (set by Congress).
o Federal Courts/De Novo: If agency denies or fails to on a petition as required by statute, Congress permits the citizen to present the petition to a fed district court for de novo consideration
* Courts NOT particularly receptive to this approach. See [16].
AGENCY DENIES RM ON GROUND THAT IT WILL PROCEED BY ADJUDICATION
* Covered in 4.1. Issues overlap.
3.3 TYPES OF RM PROCEDURES
GENERAL BACKGROUND
* Underlying Issue: Assuming that an agency (1) has authority to issue a rule and (2) has decided to do so, the question becomes what procedures the agency must follow in promulgating it.
* Answer depends upon the complex interplay b/w OS and APA.
* Core RM Provision of APA: § 553. Creates 3 basic categories of RM procedures:
o 1. Informal RM Requirements / Notice & Comment Procedures [same thing]. § 553.
* Most legislative rules follow “N&C procedures” found in § 553(b)-(c).
o 2. Exceptions to N&C Procedures.
* Several sets exceptions excuse agencies from complying w/ some or all of § 553.
o 3. Formal RM Requirements. If triggered by 553c --> §§ 556 & 557.
* The organic statute may require that rules comply w/ “formal” RM requirements of §§ 556 & 557.
* Apply ONLY if triggered by the necessary language in the organic statute. 553(c).
* Require opportunity for interested persons to testify & cross-ex witnesses.
* Opportunity for written comments does NOT suffice.
o NOTE: The organic statute may also contain procedural requirements that supplement or supersede the RM procedures of APA.
PROCEDURAL FORMALITY SPECTRUM
Less Procedural Formality More Procedural Formality
The 4 Exceptions to N&C Informal RM/N&C Procedures: § 553 Formal RM: §§ 556 & 557
OVERVIEW/ARCHITECTURE OF § 553. See RM Decision Tree [1]. KNOW FOR EXAM!
* Step One--§ 553(a). § 553 applies to everything EXCEPT to
[These categories are TOTALLY exempt to § 553]
o (1) military or foreign affairs functions of the U.S., § 553(a)(1) or
o (2) matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts. § 553(a)(2)
* [But agencies will usually follow voluntarily anyway. “Benefits” in a2 is huge]
* Step Two—§ 553(b). Except when required by statute, § 553(b) [and thus (c)] do NOT apply:
[These categories are exempt from NOTICE requirements of § 553(b) & COMMENT requirements of § 553(c). Must still comply with § 553(d) & (e).]
o (1) to [non-legislative rules: non-binding!] interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; §553(b)(A) or
o (2) when the agency for good cause finds … impractical, unnecessary, or contrary to public interest. § 553(b)(B)
* Summary of 4 Exceptions: If in (a), exempt from all 553. If in (b), exempt from 553b & 553c.
* If not exempt from § 553(b) [or (a)], § 553(b) requires:
o “Notice of proposed RM must be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice.”
* The notice must include:
* (1) a statement of time, place, and nature of public RM proceedings;
* (2) reference to the legal authority under which the rule is proposed; and
* (3) either the terms or substance of the proposed rule or a description of the subjects and issues involved.
* Step Three—§ 553(c). Also if not exempt from § 553(b) [or (a)], § 553(c) creates 2 categories of rules:
o 553(c) doesn’t apply if triggering language in OS --> 556 & 557 apply.
* When the OS requires a rule “to be made on the record after opportunity for an agency hearing, §§ 556 & 557 apply.
* Almost exact language is required: “Hearing on the Record”
* §§ 556 & 557 are provisions for formal adversarial hearings that typically accompany adjudication, including the right to present evidence, oral argument, and cross-exam witnesses. Also “on the record,” in that agency may rely only on evidence in the record of the hearing as a basis for its decision.
* Ex parte communications are strictly prohibited.
* Note: § 554 does NOT apply to formal RM here. It governs adjudication and triggers hearings under §§ 556 & 557 also, but does NOT apply here.
* Key Difference: § 554 requires individual notice. Here, just publish in FR.
o No triggering language --> 553c applies (comment and basis & purpose)
* Procedurally, the agency must “give interested persons an opportunity to participate [comment] in the RM through submission of written data, views, or arguments w/ or w/o opportunity for oral presentation.
* Plus, after consideration, of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis & purpose.
* These procedures reflect the legislative character of RM processes (open w/ broad input)
* Do NOT require oral argument, testimony, or cross-exam of witnesses (unlike trial-like hearings [and §§ 556-57])
* Step Four—§ 553(d) & (e). If not one of the 4 exceptions in (a) & (b), these requirements apply.
o (d) & (e) contain additional requirements that are ancillary to the core N&C procedures.
o (d): Requires “publication or service of a substantive rule be made w/in 30 days before its effective date,” w/ certain exceptions.
* These exceptions overlap w/ many of those in § 553(b), thus most rules subject to the § 553(b) exceptions are also exempt from § 553(d). [discussed in retroactive [3.1]]
o (e): Requires each agency to give an interested person the right to petition for the issuance, amendment, or repeal of a rule. [discussed in 3.2]
EXCEPTIONS TO THE REQUIREMENTS OF N&C RULEMAKING
* As noted above, § 553 creates four sets of exceptions to the requirements of N&C RM. These exceptions allow agencies to promulgate rules w/ less procedural formality than N&C.
* 1. § 553(a)(1). Military & foreign matters.
o Need for prompt & at times secret action. Not covered in detail.
* 2. § 553(a)(2). Government employment, contracts, & benefits.
o Reflects historical understanding that these interests were “mere privileges,” rather than rights.
o This understanding has been largely abandoned. Thus, most agencies voluntarily use N&C proc.
* 3. § 553(b)(A). General statements of policy, interpretative rules, & rules of agency org., proc., or practice
o Frequently called Non-Legislative Rules b/c they do NOT have binding effect.
o Extremely important in modern admin practice as sources of authority for informal agency actions.
o Covered in more detail in Ch. 6.
* 4. § 553(b)(B). Good cause. Follows in related materials & Duquesne Light Co.—principal case
* WHAT PROCEDURES, IF ANY, APPLY TO THESE RULES (that are exempt from N&C requirements)?
o The APA contains few applicable provisions.
o Rules must be published in the Federal Register. See [3] for effect of failure to do so.
o Agency may choose to allow comments to be submitted after the promulgation of a rule, w/ the idea that adjustments to the rule can be made if comments identify significant problems.
NOTICE & COMMENT V. FORMAL RULEMAKING
* Under § 553(c), if the organic statute contains the necessary language to “trigger” the formal procedures of §§ 556 & 557, the agency must promulgate rules w/ more procedural formality than N&C.
* Triggering Language: “to be made on the record after opportunity for an agency hearing.”
* Formal RM procedures are relatively rare b/c very cumbersome.
o Rule: These require an oral hearing at which interested persons have the right to testify and cross-examine witnesses; simply allowing the submission of written comments does NOT suffice.
* Ex parte communications prohibited.
* Must base its decision entirely on matters in the admin record.
* Must issue findings of fact and conclusions of law to support its decision; instead of being able to issue a statement of purpose that conforms to § 553(c).
* Narrow Construction of the Triggering Language of § 553(c). United States v. Allegheny-Ludlum Steel[4]
o Rule: General reference to “hearing” NOT sufficient.
* “after hearing” NOT sufficient to trigger formal RM.
o Rule: Something in the OS must indicate a congressional intent that the hearing be held “on the record.”
o Also, Florida East Coast held the same despite legislative history to the contrary.
ADDITIONAL NON-APA PROCEDURES
* Setting: Congressional and judicial responses to concerns (1) by regulated entities that the significant burdens necessitated their full opportunity to present concerns, and (2) by interested parties that agencies would be captured by the industries w/ behind-the-scenes lobbying.
* Statutory Responses:
o “Hybrid” Procedures: Some elements of formal RM but otherwise N&C procedures.
o Impact Assessments.
* Judicial Responses (Requirements) (Vermont Yankee)
o Paper Hearings. Court interpreted the requirements of notice, opportunity for comment, and statement of basis and purpose to create a kind of “paper hearing” under § 553. See [6].
o Procedural Hard Look Doctrine. Abolished by Vermont Yankee!
* Under this rejected doctrine, courts imposed additional procedural requirements.
* Rule: Courts have NO authority to order RM procedures beyond those required by the APA and OS, except perhaps in the unusual case where an agency rule is really an “adjudication” such that DP requires a formal adjudicatory hearing.
o Change of Court’s Approach in Vermont Yankee.
* Courts began to view additional procedures as imposing additional costs on agencies w/o necessarily improving the substance of agency decisions. [7].
Duquesne Light Co. v. EPA [7]. Addresses Exception 4—Good Cause—§ 553(b)(B).
GOOD CAUSE EXCEPTION—RELATED ISSUE
* Application of the Good Cause exception to N&C RM requirements.
* Majority Approach: Interpret this exception narrowly (unlike Duquesne)
o Should be limited to emergency situations.
* Analyze all 3 Elements of the Rule:
o Impracticable
o Unnecessary
o Contrary to the public interest
o (See [15] for cases reaching opposite results.)
RM AND SCOPE OF REVIEW
* Judicial Review Implications. The choice b/w N&C RM and Formal RM has implications not only for the procedures that an agency must follow, but also for judicial review.
o ALL rulemakings may be reviewed under A&C standard in § 706(2)(E).
o Only Formal RM (under §§ 556 & 557) may be reviewed under the substantial evidence std.
o [Of course, although SE originally thought to be less deferential, they appear to have merged.]
o But be aware of agency’s OS and “hybrid” RM procedures. See [15]
DUE PROCESS & RM PROCEDURES [“RULE IS REALLY AN ADJUDICATION”]
* Rule: IF there a few people, especially affected, on individualized grounds, and judicial facts are at issue, DP may require a hearing even if the agency decision is couched as a rule.
* See [16] for cases.
3.4 ELEMENTS OF NOTICE & COMMENT / INFORMAL RM
GENERAL BACKGROUND
* Informal Rulemaking is often referred to as Notice and Comment Rulemaking.
o Evoking the procedural obligations that apply under § 553 to an agency’s adoption of rules when formal RM requirements do not apply.
* Basic Procedural Requirements (3) [See handout “N&C” for relationship.]
o Notice. Protects parties.
o Comment. Key! Protect parties & Provides info. Notice & Statement close the loop.
o Publication of a statement of “basis and purpose” with the final rule. Ensures consideration.
APA INFORMAL RM REQUIREMENTS
* The APA establishes 3 basic requirements for the promulgation of rules using informal rules. See handout.
o 1. Notice. § 553(b).
* Agency must publish a “general notice of proposed RM” in the Federal Register, unless persons subject to the rule are named and personally served or have actual notice.
* Minimum Requirements of Notice:
* 1. Statement of nature of the proceedings (time, place, & nature);
* 2. Reference to the legal authority under which the rule is proposed;
* 3. Either the terms or substance of proposed rule or description of the subjects and issues involved. [99% just include the proposed rule]
* And routinely 4. Impact statements.
o 2. Comment. § 553(c).
* After providing notice, agency must provide to interested persons “an opportunity to participate in the RM through submission of written data, views, or arguments, w/ or w/o opportunity for oral presentation.
o 3. Statement of Basis & Purpose. § 553(c).
* After relevant matter is presented, agency must incorporate in the rules adopted “a concise general statement of their basis and purpose.”
* Little guidance, BUT see expanded requirement of paper hearings (maybe).
NOTICE—REQUIREMENT 1
* Standard. Notice must be “sufficient to fairly apprise interested persons of the issues involved, so that they may present responsive data or argument.”
* Purpose/Rationale. Relate to comment: Provide sufficient factual detail and rationale for the rule to permit interested parties to comment.
* 3 Distinct Purposes
o 1. Improves quality of agency RM: tested and exposed to diverse public comment.
o 2. Fairness to affected parties.
o 3. Enhances the quality of judicial review: develops the record.
OPPORTUNITY FOR COMMENT—REQUIREMENT 2
* Reasons for comment are closely related to notice reasons.
* Oral Hearings NOT required—optional.
o Agencies often confine public participation to written submissions, although more likely to convene hearings w/ oral presentations in controversial RM.
o These oral hearings (if any) are NOT formal hearings per §§ 556 & 557 (Not “on the record”)
* Effect: Agency is NOT limited to evidence adduced at the hearing.
* Effect: Typically do NOT provide opportunity for witnesses, presentation or cross-exam.
* RM Docket
o Although not required by APA, agencies typically make a RM docket anyway.
* RM Docket: Record of written comments, available to other interested persons.
o Sometimes a statute delegating substantive authority may impose a docket requirement.
* Responding to Comments. See [4]. Not all comments created equal.
o Another issue: Comments on comments?
* Late comments? Off the record comments? See related issue below.
STATEMENT OF BASIS & PURPOSE—REQUIREMENT 3
* Shows whether the agency considered the comments it received.
* Typically takes the form of a regulatory “preamble”
o (1) Describes the substance of the final rule; (2) explains how it promotes relevant statutory goals; (3) points out differences b/w the proposed and final rules; and (4) summarizes the agency’s responses to significant comments.
* Interpreted to require fairly elaborate explanations.
* Standard: The scope and degree of detail required by 553c depends on the scope and detail provided in the comments. See [5].
* Review. Under A&C, procedural and substantive. Better off challenging w/ A&C than B&P. See [5].
Solite Corp. v. EPA [5]. Industry denied opportunity to comment after new survey came out, on which EPA relied.
Ober v. EPA [8]. Post comment submissions by state. Held: violation of N&C b/c relied on by EPA.
NE Maryland Waste Disposal [11]. Basis & purpose challenge (normally brought as A&C), but won anyway.
REMEDIES FOR VIOLATIONS OF N&C PROCEDURES—RELATED ISSUE
* Issue: What is the proper remedy for RM that violates § 553 procedures
* Three Options:
o Vacate & Remand. Courts can “set aside agency action” found to be w/o observance of procedure required by law. § 706(2)(D)
* Courts often vacate rules or other agency actions adopted in noncompliance w/ APA procedures and remand so that the agency can reconsider the action properly.
o Remand w/o Vacating. Rules remain in effect while the matter is on remand before agency.
* Most likely to use this option when a strong possibility to remedy the problem exists and vacating immediately would be disruptive to the larger regulatory scheme.
o Cure? Publishing previously undisclosed info or soliciting comments after the rule goes into effect and promising to consider amending the rule in light of those comments.
* General Rule: Post-promulgation opportunities do NOT cure failure to follow § 553.
* Those affected are not placed in the same position.
o Levy: Aren’t the last 2 options essentially the same?
MATERIAL DIFFERENCES & EX PARTE COMMUNICATIONS—RELATED ISSUE 2
* Issue—New Notice? When the rule adopted differs materially from the one originally proposed, parties affected by the final rule may not have had notice that their interests were affected; thus, could not exercise right to comment on the rule.
o General Rule: An agency must provide a new notice and opportunity for comment WHEN the final rule is not a “logical outgrowth” of the proposed rule, so that a party was not on notice that its interests were affected. [17].
* Issue—Off the Record Communication w/ Agencies. N&C RM is NOT an “on the record” procedure and there is NO statutory ban on ex parte communications.
o General Rule: Agencies must put communications of central relevance to the RM, especially those containing data or info on which the agency relies, into the RM docket for comment.
o § 553 does not prohibit EPC, but EPCs can go too far.
3.5 SPECIAL PROBLEMS OF N&C RULEMAKING
GENERAL BACKGROUND
* Continued from 3.4, this unit expands on 2 issues:
o 1. New Notice. Whether an agency must issue a new notice of proposed RM when it alters a proposed rule in response to info it received during the public comment period.
o 2. EPC. Whether an agency engaged in informal RM may engage in ex parte communications, i.e., communications other than comments submitted during the comment period.
o Ultimate Answer to Both: Whether interested parties have a fair opportunity to comment on proposed rules.
NEW NOTICE & OPPORTUNITY FOR COMMENT
* General Rule: Submitting a proposed rule for comment does NOT automatically generate a new opportunity for comment merely b/c the rule promulgated by the agency differs from the rule it proposed, partly at least in response to submissions.
o A contrary rule would lead to the absurdity that in RM under the APA the agency can learn from comments on its proposals only at the peril of starting a new procedural round of commentary.
* Test: Whether the final rule is a “logical outgrowth” of the proposed rule? Chocolate Mfrs. [2]
o Sounds good, but not very helpful standard --> leading to the following functional assessment:
* Functional Assessment (Real Test): Did the agency’s notice “fairly apprise interested persons of the subjects and issues of RM?”
o i.e.: Did the party have a real opportunity to comment on the issue?
* Surprise factor?
EX PARTE COMMUNICATIONS
* Defined. Info provided to the agency outside the procedures for public participation established by the APA or the agency’s OS.
* Issue: Whether agencies may engage in EPC w/o violating the APA, OS, or Constitution?
* Answer depends in significant part on the nature of the proceeding.
o EPC Prohibited: Formal RM and adjudication.
o EPC Not Prohibited: N&C RM under § 553.
* Exception: EPC are prohibited in RM proceedings involving conflicting claims to a valuable privilege. Sangamon Valley [3]
* Courts have struggled w/ the scope of this holding. Some restrictions on EPC apply even when a RM does NOT involve competing claims to a valuable privilege. See Sierra Club v. Costle [8].
* Three Principal Concerns of EPCs
o 1. Reviewing courts denied access to complete record.
o 2. Not tested by adversarial discussion among parties.
o 3. Fundamental notions of fairness, implicit in DP.
* EPC Synthesis—Ways to Challenge EPC
o SV cases. Conflicting claims to the same privilege (both want the same thing).
* Easiest, but narrow group.
o Must be docketed if they contain:
* Hard data & info
* Comments of central relevance (core)
* Focus on prejudice—Need to respond.
o D.C. Federation cases [16].
* Improper considerations (e.g. threat by legislator), and
* It had an actual effect on decision/outcome.
RELATED ISSUES
* Ex Parte Communications & Due Process
o Due Process justifies the insulation of the decision-maker from EPC where agency action:
* 1. Resembles judicial action; or
* 2. Involves formal RM, adjudication, or quasi-adjudication among conflicting private claims to a valuable privilege.
* [Note: DP does NOT generally apply to RM proceedings].
o Some “RM” may sufficiently resemble adjudications to engage DP concerns. Addressed in 4.5.
* EPC & Agency Reasoning
o Judicial review of agency reasoning under A&C standard imposes 2 practical constraints:
o 1. Agency’s rationale must be supported by the record, so the agency may NOT rely on info received through EPC unless that info is docketed for inclusion on the record.
o 2. If the agency relies on EPC that raise improper considerations, the agency’s docketing of those comments will NOT erase the substantive error (as explained by State Farm).
* Hybrid N&C Procedures
o The OS may impose additional procedural requirements beyond those in § 553. Look at the OS!
CH.4 POLICY MAKING BY ADJUDICATION
Adjudication: individualized decision
* But contrast mass adjudication
4.1 CONSTRAINTS ON MAKING POLICY BY ADJUDICATION
RM V. ADJUDICATION: ADVANTAGES & DISADVANTAGES
* Adjudication: flexibility, immediacy, political insulation, obtaining oral testimony
* RM: efficiency, comprehensive input thru public comment, consistency of treatment for regulated parties
ORGANIC STATUTES—RESTRAINT 1
* Authority to Adjudicate.
o General Rule: Agencies must trace their authority to adjudicate to their OS—NO inherent authority to conduct binding adjudications.
o OS both enables and limits agencies’ ability to conduct binding adjudications.
o If an OS requires agency to address a particular policy question thru the issuance of regulations, the agency can NOT ignore the directive and formulate via adjudication instead.
* Effect of Violating Procedures Required by OS: A suit may be brought challenging the agency’s choice of procedure under APA and the court may invalidate the agency’s action on the ground that it is “w/o observance of law.” § 706(2)(D)
o Regulations w/ Deadlines --> RM required? When Congress orders agency to adopt regulations by deadlines set forth in the statute, such deadlines usually indicative of Congress’s intent to force agency to make policy by rule. Another congressional intent: uniform treatment.
* NLRB
o Broad power to both promulgate rules and adjudicate
* Despite criticism, NLRB uses adjudication almost exclusively
APA—RESTRAINT 2
* General Rule: Even if OS does not constrain an agency’s authority to adjudicate, the APA may in 2 ways:
o 1. Definitional “Rule”. Adjudication and RM are mutually exclusive.
* Adjudication results in an order, which is a final disposition “in a matter other than RM”
* Thus, argument: Agencies CANNOT use adjudications to make rules.
* Rule: If an agency action meets the definition of a rule, it CANNOT be taken in an adjudication and failure to provide public notice & opportunity for comment violates § 553 unless one of the exceptions to that § applies.
* A.P.W. Prods. Co. [3]. This argument failed.
o Clear Rule: An adjudication is NOT invalid even if it adopts a broad rule that will apply future cases.
* See also WG (infra): “Nothing inherently wrong w/ announcing what looks like a rule when making an adjudication.”
o 2. A&C. Agency’s decision to use adjudication instead of RM may be challenged as A&C under § 706(2)(A).
* Use Londoner & Bi-Metallic arguments: If an agency uses adjudication to adopt a policy that affects a broad class of people, and that agency’s decision rests on legislative facts rather than adjudicative facts --> might be A&C.
* But courts usually defer to agency procedural choices and Vermont Yankee strongly cautions against judicial interference w/ those decisions.
FAIRNESS, RETROACTIVITY, & DP—RESTRAINT 3
* General Rule: Even if agency not otherwise precluded from using adjudication, may face other concerns:
o Fairness/Consistency. PM by adjudication results in ad hoc decision that may treat similar parties inconsistently and are particularly prone to abuse.
* A party is singled out and bears the brunt of defending before other competitors/persons.
* Rule: Failure to adopt any kind of standards is a violation of DP.
* Yick Wo [17]. Licenses denied to nearly all Chinese Americans; granted to most Eur. Am.
o Retroactive Effects. (see also 4.2). In adjudication, the resulting rule applies to conduct that occurred before the rule was adopted.
* Concerns: lack of fair notice and A&C. If serious --> DP violation (constitutional).
* Balancing Test [16]. Public policy ends to be accomplished weighed against unfairness of the retroactive application of the new rule to the party.
* Sometimes DP inquiry; sometimes A&C inquiry [Levy]
* Basic elements of Test: How unfair is it to the party who relied on the old rule?
* NOT allowed if so extreme as to violate DP.
* Language: Retroactive adjudication is impermissible if the “practical operation of the change of policy will work hardship upon respondent altogether out of proportion to the public ends to be accomplished.”
Wyman-Gordon [5]. (APA Definitions).
* Rule: If the adjudication results in a policy [rule] that purports to have only a future effect, and does NOT apply to the case at hand, the policy is INVALID.
o Reasoning: A “rule” has general or particular applicability and future effect. Adjudication, therefore, must have present effect also.
* Bottom-Line: If the agency wants to adopt a rule in adjudication, it MUST apply in the current case (to the parties).
Bell Aerospace [11]. (A&C case).
* Reasons that might justify using Adjudication to make Rules:
o [First 3: Chenery & Bell Aero. Last 3: Candidates per Levy]
o Unanticipated problem in the adjudication. Never encountered before? New problem in world?
o Insufficient Experience. Not enough evidence to promulgate rule. This is a baby-step.
o Factual variances (most common probably). Issues change to often (e.g. tort law-negligence)
o Limited resources. RM is resource-intensive.
o Immediate effect.
o Avoid duplication. Rule must be made anyway. Save time or money.
LIABILITY, REMEDY AND CHOICE OF RM OR ADJUDICATION—LIMIT 4 (Related Matter)
* [Primary Conduct (liability) v. Secondary Conduct (remedy)]
* Subject Matter of Adjudication. Courts less likely to force agency to use RM when a change in procedural rules re: remedies are at issue rather than a change in substantive rules re: liability.
o Sheet Metal Workers [15]. Held RM ok b/c agency was just changing the remedy “for conduct which has long been deemed improper” [changing procedural remedy] rather than “rendering unlawful that which had previously been lawful” [changing substantive law].
4.2 PROBLEM OF RETROACTIVITY
GENERAL BACKGROUND
* Retroactivity is generally disfavored in the law.
o “Something fundamentally unfair about government altering rules that govern past conduct.”
o Elementary Consideration: Opportunity to know the law and conform conduct accordingly.
* Nevertheless, SCOTUS has recognized entirely benign and legit purposes:
o Respond to emergencies;
o Correct mistakes;
o Prevent circumvention of a new statute in the interval immediately preceding its passage; or
o Simply give comprehensive effect to a new law Congress considers salutary. [1].
CONSTITUTIONAL LIMITS ON RETROACTIVITY
* Due Process. Pretty easy standard to meet:
o Rational Basis Test (easiest test to meet). Retroactive application of a statute must be rationally related to a legit legislative purpose.
o Same standard as A&C [Pension Benefits, 2]. Standard for reviewing the validity of retroactive legislation under DP does NOT differ from A&C. Thus, very difficult to win an argument here.
* Ex Post Facto Clause. Prohibits retroactive application of penal legislation.
PRESUMPTION AGAINST RETROACTIVITY (IN LEGISLATION, I.E. STATUTES & REGULATIONS)
* Canon of Statutory Construction. Unless Congress makes clear that a statute is meant to have retroactive effect, courts assume it’s meant to be prospective only.
o To rebut: Matter of statutory interpretation. Express language & Look to inferences from statutory text & context, legislative history, & other tools of construction.
* Claim that retroactive application would promote the purposes of legislation for fully is NOT usually sufficient to rebut presumption.
DIFFERENT ATTITUDE OF RETROACTIVITY IN ADJUDICATION (ART. III COURTS)
* General Rule: While courts generally disfavor retroactive application of statutes and regulations, they have a different attitude toward retroactivity in adjudication (strong presumption in favor of retro).
o Retroactivity is the norm (inherent) in common law decisions.
o Courts differentiate procedural retroactivity (ok) v. substantive retroactivity (not ok)
* Agency adjudications compared to Court adjudications
o Adjudications operate much in the same was as judicial decisions --> procedural reasons for permitting retroactivity
o But can argue for less tolerance of retroactivity in agency adjudications b/c agencies have RM authority, whereas courts have no other choice
o [Levy]: Another difference: judges have tenure; unsure which way this cuts.
DEGREE OF RETROACTIVE EFFECTS—CRITICAL FACTOR (RELATED ISSUE)
* Critical factor in retroactivity cases: Degree of retroactive effect.
* Rule: The extent to which applying a rule to past conduct is unfair depends on the extent to which a party reasonably relied on the rule and is worse off b/c of that reliance.
o Clearly, retroactive application of rules permitting conduct that was previously prohibited would NOT be unfair to a person who engaged in that conduct when it was prohibited.
o Also, retroactivity is NOT a problem if remedy does NOT make the person worse off (same sit.).
* Illustration (link also). Chenery. Although rule applied to past conduct, shareholders were NOT worse off under the new rule than they were under the old rule.
o Rule: To win a retroactive effect argument, you must show being worse off under the NEW rule as opposed to the old rule.
* Primary (Substantive) v. Secondary (Procedural) Distinctions also. [16].
RETROACTIVITY IN ADMINISTRATIVE CONTEXTS (Related Issue)
* Falls in the middle of legislation (disfavored) and court adjudications (inherently retro).
* Strong presumption in favor of retroactive application of judicial decisions in cases of both 1st and 2nd impression. Harper.
* As for Agencies? Courts haven’t decided. See Retail Wholesale Balancing Test.
Retail Wholesale Balancing Test for Newly Adopted Admin Rule[6]
* Issue: Whether to grant or deny retroactive force to newly adopted administrative rules?
* Rule: Retroactivity must be balanced against the mischief of producing a result which is contrary to a statutory design or to legal & equitable principles. If that mischief is greater than the ill effect of the retroactive application of a new standard, it is NOT the type of retroactivity which is condemned by law.
o Balancing Test Factors (5):
* First or Second Impression? See handout [1].
* Cts should be more reluctant to allow retroactivity in a case of 2nd impression b/c some of the considerations that supported retro in the 1st are gone.
* Abrupt Departure v. Merely Fill Void?
* Depart from well-settled law (not ok) v. filling void in unsettled area of law (ok)
* Extent to which the party relied on old rule
* Advice of counsel?
* Degree of Burden which a retroactive order imposes on a party, and
* Statutory Interest in applying new standard despite reliance of party on old standard.
* As applied in RW: See notes & D’s outline.
United Food [9]. Filled void in unsettled area of law. Opposite conclusion of RW.
Problem also applies general considerations and factors.
4.3 TYPES OF ADJUDICATION: APA AND NON-APA ADJUDICATION
GENERAL BACKGROUND
* There are two types of adjudication:
o APA (Formal) Adjudication
* Governed by § 554. (the triggering language is also here).
o Non-APA (Informal) Adjudication
* Unlike RM, the APA does NOT have procedures that must be followed.
* Rather, these procedures may be based on the OS, agency regulations, or DP clause.
* Crucial Starting Point: Do the APA formal adjudication procedures apply?
o Triggering Language: § 554. If yes --> APA procedures apply. If no --> No APA procedures.
* Sources of Procedures. The procedures that an agency must use in conducting adjudications may be specified by agency’s OS, APA, agency regulations, or perhaps Constitution (if the DP Clause demands more “process” than statutory or regulatory procedures provide.
TRIGGERING FORMAL APA ADJUDICATION
* Rule: APA formal adjudication procedures apply ONLY if triggered by language in the agency’s OS.
* Starting Point: § 554, which directs the agency to follow §§ 556 and 557 if statute requires adjudication to be “on the record after opportunity for hearing.” [554a identical to 553c]
o This language contains 3 essential requirements:
* 1. Must be an adjudication.
* E.g. in Bricklayers, no formal adjudication requirement b/c it did not result in an “order” and thus were not “adjudications”
* 2. Organic statute must require a hearing.
* 3. OS must specify that the hearing is “on the record” or other similar language.
* [See directly below for modern court approach re: this language.]
o Exceptions also in § 554(a).
* Trigger for formal adjudication [554(a)] is identical to that of formal RM [553(c)], but formal adjudication is much more common b/c more OS have triggering language or provide directly for formal adjudications.
o Early Approach: Require formal adjudication even in absence of “on the record” language.
* Seacoast [now overruled by Dominion Energy]established a presumption in favor of formal adjudication when OS required a hearing.
* Cts relied on Londoner and Bi-Metallic to find formal adjudication requirements and to distinguish cases like FEC and Alleghency-Ludlum, which applied the triggering language in for formal RM narrowly.
o Modern Approach: Move away from requiring formal adjudication unless OS explicitly triggers
* West Chicago: While OS does not have to contain magic words “on the record,” similarly strong language intended to trigger formal adjudication must be used.
* Waste Mgmt: Court abandoned earlier interpretation of 558(c) which required formal adjudication in licensing applications
* Dominion Energy (overruling Seacoast); follows Chevron.
o Interpreting the OS when necessary to determine the applicability of formal adjudicatory procedures to determine congressional intent --> Cts increasingly apply Chevron test to an agency’s decision NOT to use formal APA procedures.
* Test: Whether the OS is clear, and if not, defer to agency’s construction if reasonable. [3]
* For more “language” examples, see [4].
WHAT PROCEDURES APPLY TO APA (FORMAL) ADJUDICATIONS?
* Key Elements of APA Formal Adjudication Procedures (4):
o 1. Notice. Agency must provide personal notice of any hearing to affected parties that contains time, place, nature of hearing, legal authority under which it is held and the matters of fact and law asserted. § 554(b).
o 2. Hearings on the Record. Only testimony, exhibits, and records filed in the proceeding can be used to make decision; no EPC; participants have broad participatory rights (oral, documentary, and rebuttal evidence, and cross-exam; burden of proof on proponent. See [1] for more details.
o 3. Decision. Must be written; parties may propose findings and conclusion; must include “findings and conclusion, and the reasons or basis therefore, on the material issues of fact, law, or discretion” and “the appropriate rule, order, sanction, relief, or denial thereof.” 557(c).
o 4. ALJs (Role).
* Most cases heard first by ALJ.
* ALJs somewhat independent from agency.
* Can issue subpoenas, rule on evidence, and regulate hearing.
* Issues either a recommended or binding decision (agency can adopt or reverse, respectively). Agencies review de novo per APA.
* ALJs are employees of the agency they work for, but safeguards
* Exempt from performance reviews. Can ONLY be fired for cause.
WHAT PROCEDURES APPLY TO NON-APA (INFORMAL) ADJUDICATIONS?
* Defined. Informal adjudications are ALL adjudications NOT subject to §§ 554, 556, & 557 and not RM.
* Rule: Agencies have large discretion, subject to the following limits:
* Requirements [from APA].
o Prompt notice of the denial (in whole or in part) of a written application or other request.
o Brief statement of the grounds for denial.
* Sources of Informal Adjudication Procedures
o OS. May authorize agency to disallow cross-x or limit power of presiding officer.
o Agency’s may adopt their own procedures by regulation.
* Must adhere to these unless amended or appealed.
o DP Clause. May dictate the use of procedures to protect property or liberty interests.
* Review of Agency Procedural Decisions in Informal Adjudications
o Reviewed for abuse of discretion.
o Deference especially likely if decision involves forward-looking, industry-wide regulation.
o Bright-Line Rule: Courts may NOT order agency to use additional procedures beyond those required by statute or DP.
THE ROLE OF SUBSTANTIAL EVIDENCE TEST IN DETERMINING ADJUDICATORY PROCEDURES
* Substantial Evidence test usually applies to formal adjudications.
o Decisions in formal adjudications limited to materials on the record.
* Informal proceedings usually have sketcher admin record, so harder to review for SE
o But implications of Vermont Yankee?
o Effect: Some courts treat a statutory reference to SE review as evidence of congressional intent for formal adjudication to apply. [16].
STANDARD & BURDEN OF PROOF
* “Standards”: e.g. preponderance, clear & convincing, etc. preponderance is most common.
* Formal APA Adjudications
o Standard: Traditional preponderance of the evidence test.
o BOP is on the proponent of the rule or order.
* Agency is proponent in an enforcement action against a party.
* Private party is proponent when seeking license, permit, or other agency action.
* Non-APA Adjudications
o Generally whoever is seeking agency action has BOP.
o But in certification elections, cts have consistently held that the party objecting to the results bears the burden of adducing facts that, if true, would invalidate the election.
* Thus it appears that BOP has shifted from proponent of the rule (agency) to the non-proponent (employer) on some issues.
PRECLUSIVE EFFECT OF AGENCY DECISIONS
* General Rule: Courts treat administrative factual decisions as binding if same issues arise in court.
o Essentially a form of issue preclusion or collateral estoppel.
* But OS can negate this rule.
Van Leer Containers [5]. Hearing required? Held, yes b/c disputed issues of material fact.
Beverly Enterprises [13]. Cross-X and DP arguments. Single hearing.
See N’s notes for “admin SJ”
4.4 THE AGENCY & ALJ
GENERAL BACKGROUND
* ALJs Role: How ALJ fits into a decision-making processes for formal adjudication in which he is both an employee of the agency and a decision-maker in disputes involving the agency as a party.
* Issues Addressed:
o Role of agency in hiring and firing ALJ
o Degree to which agencies are bound by findings and conclusions of the ALJ
* 556(b) requires the agency, one or more of its members, or an appointed ALJ to preside over all formal RM or adjudication proceedings governed by APA.
o In practice, presiding officer is almost always an ALJ.
ALJ’S AUTHORITY TO MANAGE FORMAL ADJUDICATION HEARINGS
* Functions are similar to those of federal trial ct judges
* 556(c) authorizes ALJs to:
o Administer oaths and affirmations; Issue subpoenas; Rule on and receive evidence; Take depos or have them taken; Regulate the course of the hearing; Hold conferences on settlement; Dispose of procedural requests; Make or recommend decisions in accordance w/ § 557; and Take other action authorized by agency rule consistent w/ the APA.
* Courts tend to be deferential to the manner in which ALJ conducts adjudication
* OS may impose additional procedural requirements.
ALJ INDEPENDENCE & OVERSIGHT
* Though employees of the agency, ALJs’ independence is protected by APA procedural requirements and APA provisions concerning hiring, firing, and discipline of ALJs.
o APA Procedural Requirements [2]
* ALJ must conduct proceedings in impartial manner
* ALJs can’t perform duties inconsistent w/ their duties & responsibilities as ALJs
* Can’t be subject to supervision of anyone prosecuting for agency
* Must be assigned in rotation “as far as practicable”—avoid perceived favorable judges
o APA Provisions for Hiring, Firing, and Disciplining ALJs
* To be appointed, ALJs must be on list provided by Office of Personnel Mgmt
* Office of Personnel Mgmt decides compensation
* No annual performance evaluations
* Agency may remove, suspend, or reduce pay if Merit System Protection Board finds good cause for doing so in a formal adjudication
* Removable for national security or as part of reduction in force
* Agency Checks on ALJ Power
o Agencies can establish and conduct training programs for employees, including ALJs
o ALJs bound by agency regulations & policies
o ALJ remains subject to de novo review by agency
AGENCY REVIEW OF ALJ DECISIONS
* De Novo Review
o ALJ makes an initial decision or certifies the record to agency w/ recommended decision
o On appeal or own motion, agency retains ALL powers it would have had in making initial dec.
* Substantial Evidence Standard: If agency reverses ALJ, there is a heightened burden on agency to explain why.
* Demeanor Evidence: ALJ decisions get great weight in credibility determinations b/c they had chance to observe demeanor evidence of witnesses.
* NLRB Procedures. Recommended Decision Model primarily. See D’s notes.
REMEDIAL AUTHORITY
* Two distinct types of Remedial Authority: Violations of OS & Misconduct during course of admin hearing.
* Procedural Violations: Authority to Remedy Misconduct during Admin Hearing
o Derived from APA.
o § 556(c)(5). Employees presiding at hearing may regulate the course of the hearing.
o § 559 (ch. 7). Each agency is granted the authority necessary to comply w/ the requirements of this subchapter thru issuance of rules or otherwise.
o Aramark: The authority to impose sanctions is implicit in the power to regulate the conduct of a hearing under § 556(c)(5).
* Substantive Violations: Authority to Remedy Violations of OS
o Derived from OS. Permanent Label.
NON-APA PROCEDURES
* APA procedures do NOT apply to elections and certifications
o Usually, matters are investigated by the regional office, which makes factual determinations.
o A hearing is held ONLY if there are objections. See D’s notes for more details.
o Hearing officers in certification. Absence of recommend decisions.
AGENCY OVERSIGHT & DECISIONAL INDEPENDENCE OF ALJS
* High Allowance Rates. Heckler held that SSA could NOT target ALJs who had high allowance rates for “own motion” review.
o Undermined ALJ independence & thus violated spirit of APA. Right to decisional independence?
Aramark [4]. Noncompliance w/ subpoenas and bad faith. Nature of sanctions/source of power.
Permanent Label [9]. Extreme remedy for unfair election case. Involves Gissel and reasons requirement.
4.5 EX PARTE COMMUNICATIONS (NOT OUTLINED—SEE NOTES 35-37
GENERAL BACKGROUND
* Rulemaking: EPC generally tolerated under § 553, provided important info and critical arguments are docketed for comment.
* Adjudication: Prohibited in Formal APA adjudications (subject to exceptions)& limited in other contexts by statutes, regulations, and DP.
o Rationale: EPC have potential to unfairly influence the decision-maker and deprive an excluded party of the opportunity to know and respond to the communications.
APA’S TREATMENT OF EX PARTE COMMUNICATIONS
Two separate and overlapping APA provisions restrict EPC in formal adjudications:
> § 554(d) – Broad Prohibition on EPC
* Rule 1: ALJ (or the employee presiding at formal adjudication) can’t consult a person or party about fact in issue, unless notice and opportunity to participate provided to all parties.
* Effect: Another agency employee can’t participate or advise the decision of a case
* Rule 2: ALJ can’t be responsible to or subject to the supervision/direction of an agency employee who does investigating or prosecuting work for the agency.
* Effect: Such an employee can’t consult in or advise a case decision except as a witness or counsel in public proceedings
* Exceptions: Does NOT apply to certain kinds of proceedings, including applications for initial licenses and proceedings involving the rates, facilities, or practices of public utilities or carriers
> § 557(d) – Narrows Limit on EPC to Interested Persons [Applies to both formal adj. & formal RM]
* Rule: Bars any interested person outside the agency from knowingly making or causing to be made an EPC relevant to the proceeding to the ALJ or other agency employee who may reasonably be expected to be involved in the decisional process
* Also prohibits EPC from the employee to the outside person
* Noncompliance: Any such communication must be placed in the public record
* Effect of Violation: ALJ can dismiss/deny the claim or interest of any person who makes an EPC.
> Organic statute or regulations may supplement restrictions on ex parte communications
RATIONALE FOR BANNING EX PARTE COMMUNICATIONS
> Deprive interested persons of notice to information relied on by the agency in making its decision
> Prevent interested persons from responding to the information conveyed
> Prevent the courts from carrying out their judicial oversight functions
DEFINITIONS OF EPC & INTERESTED PARTY
* Definition of Ex Parte Communication
> Definition under 551 is very broad, any communication outside the hearing
> Older View: Under 554(c), “facts in issue”
> Modern Approach: Under 557(d), “relevant to the merits”
* This language broadened the scope of the ban on EPC.
> But NOT EPC: Procedural inquiries & other communications “not relevant to the merits” are permitted.
> See [3] for other specific examples of non-EPCs.
* Definition of Interested Party PATCO [4]
> Definition is very broad in the APA: Any individual or other person with an interest in the agency proceeding that is greater than the general interest the public as a whole may have
REMEDIES FOR EPCS
Section 557(d) refers to both mandatory and discretionary consequences:
> Mandatory: Placement of the communications in the public record—557(d)(1)(C)
> Discretionary: May have claim dismissed if can’t show cause why not—557(d)(1)(D)
* NLRB has even more specific consequences
> May have adjudication reversed—706(2)(D)
* Cts consider whether the agency’s decision-making process was tainted enough that the ultimate judgment is unfair, either an innocent party or the public interest
* Apply the PATCO Factors
* The gravity of the ex parte communication
* In PATCO not grave (limited and general)
* Graver if longer or more specific, or $$$, threat, etc.
* Whether the communication may have influenced the decision
* In PATCO no influence (lost issue)
* Whether the party making the communication benefited from decision
* In PATCO no benefit (interest slight; lost issue)
* Whether opposing parties knew of the communication and had an opportunity to rebut
* In PATCO Opportunity to rebut (generic arguments for unions)
* Whether vacation and remand of the decision would serve a useful purpose
* Levy says it’s hard to understand what this means; maybe don’t worry about it too much
> Key Point: Even though there is a procedural violation (EPC), it does NOT necessarily reverse the decision. Apply the PATCO test!
EXCEPTIONS TO PROHIBITION ON EX PARTE COMMUNICATIONS
> Exempt Subjects
* Status reports exempted from definition of EPC under 551(14)
* Not regarding merits (557d or Facts 554d)
> Exempt persons (557(d))
* People not interested
* Tho anyone who might make an EPC is probably an “interested person”
* People not outside the agency
* Internal communications allowed
> Other Exceptions
* Disposition of ex parte matters as required by law—554(d) and 557(d)
* Can be fleshed out by agency regulation
* Initial licenses and proceedings involving public utility rates or practices
* Settlement negotiations
EX PARTE COMMUNICATIONS IN NON-APA ADJUDICATIONS
> Nothing prohibiting this in APA
> Organic statute or agency regulations may restrict
* Absent one of these, courts are reluctant to ban EPC in informal proceedings
* But they may be so unfair as to violate Due Process
* Valuable Privilege. Sangamon Valley, ct held that EPC violated DP b/c basic fairness required that a RM proceeding to allocate conflicting private claims to a valuable privilege (TV channels) be conducted without EPC
* US Lines, ct held that EPC violated DP b/c they denied meaningful participation to the public and potentially adversely affected 3rd persons
* Extent of ban unclear: Must show how DP rights were violated
> i.e. notice, opportunity to be heard, or bias or prejudice by ALJ
THE EXECUTIVE POWER AND EX PARTE COMMUNICATIONS
> Due Process Concerns. Presidential oversight vs. due process (Weiner)
* Violates DP if re: merits of the case.
* Pres can’t fire an ALJ, even tho has oversight power, if doesn’t like ALJ decision
> APA restrictions (spotted owl case)
* Violates APA if discussing merits of the case.
* APA restrictions on EPC apply to the President; he is an interested person and thus can’t engage in EPC with the ALJ
Pioneer Hotel, p. 7
* one ALJ consulting with another about procedure isn’t a violation of EPC standards
* Held: not “outside agency” (557(d)).
* ALJ is talking to other ALJs within the agency.
* Held: not regarding a fact in issue (554(d))
* It was about the process; not an issue.
Anchor Inns, p. 10
* certification of unions after an election; alleged unfair labor practice
* certifications aren’t subject to formal rulemaking, so neither 554(d)(1) nor 557(d)(1) apply
* Regional Director’s Report tainted by ex parte communications; decides insufficient to set aside election, so union should be certified
* Question to think about: are these really adjudicatory hearings, or more an investigation?
* None of this would be a big deal if it just dealt with the certification; however, bc you can’t relitigate the fact-finding, the hearing officer’s report cannot be relitigated.
INTRO TO CHAPTER 5: PROBLEMS OF MASS ADJUDICATION
* SSA administers 2 programs
> Old Age, Survivors, and Disability Insurance (OASDI) Program --> Contribution based
> Supplemental Security Income (SSI) Program --> Need based
* Determining disability is complicated
> Requires both medical evidence that establishes the extend of the impairment and vocational considerations that address how impairments affect a claimant’s ability to work
> Requires consideration of subjective complaints such as pain
> Many claimants have long and complicated medical histories
> Assessing vocational prospects difficult bc varies w/ age, education, and work experience
* Disability Wars of the 1980s
> SSA reduced the number of disability recipients by 891,000 between 1981-84
* Later conceded 200,000 of these were wrongly denied benefits
* Numbers
> over 57 million total recipients
> 14.5 million disability recipients
> Almost 200,000 disability apps/mo
> 430,000 ALJ decisions/year; each ALJ making 400-500 decisions/year
5.1: ADJUDICATORY BUREAUCRACY
GENERAL BACKGROUND
* SSA has adopted 2 basic strategies in response to difficulties above:
o 5-Step Sequential Evaluation Process. To systematize the evaluation of disability, it developed and promulgated this process by regulation.
o Multiple Level Adjudicatory Process. With initial screening by state agencies before formal agency hearings.
5-STEP SEQUENTIAL EVALUATION PROCESS OF OASDI
> Step 1: currently engaged in substantial gainful activity?
* Yes—not disabled
* No—step 2
> Step 2: are the impairment(s) severe? (affect ability to work in a significant way)
* No—not disabled
* Yes—step 3
> Step 3: impairments meet or equal severity of the symptoms in the listings?
* No—not disabled
* Yes--Determine residual functional capacity
> RFC to return to pas work?
* Yes—not disabled
* No—step 5
> Other substantial gainful activity? RFC/Vocational
* Yes—not disabled
* No—DISABLED
STAGES IN ADJUDICATORY PROCESS (similar for both initial applications and continuing reviews)
> State Disability Determination Service (initial determination)
> Applicant provides records and info, DDS can solicit more med records and order exams to be done by contracted physician
* Subject to Reconsiderations by the state agency
* Using a different med advisor and disability examiner
* Additional medical evidence may be added
* Applicant may request reconsideration or SSA may request it as a “quality assurance review”
* Funded by SSA and subject to its supervision
> Hearing before a federal ALJ, subject to review by SSA’s Appeals Council
* Hearing is de novo
* Formal, on the record hearing
* Claimant may present evidence and cross-x
* SSA is not opposing party; SSA must help applicant develop evidence
* Applicant must seek Appeals Council review before seeking judicial review
* Appeals Council is de novo but on the basis of the record of the ALJ hearing
> Judicial Review in federal district court, subject to ordinary rights of appeal
* Incorporates substantial evidence standard of review
CONTROVERSIAL POLICIES
> In 1970s and 80s, SSA aggressively denied and discontinued benefits
> Specific policies detailed. See my notes 39.
SYSTEMIC LITIGATION [CLASS ACTION LAWSUITS]
> Class action lawsuits challenging SSA policies and practices face a number of specialized administrative law hurdles (procedural barriers). [18].
* Examples
* Exhaustion: litigants must pursue all avail administrative remedies before challenging agency action in court
* Time limits for appeals
INFORMAL GUIDANCE
* Other Practices
> SSA issues various guidance documents; they are subordinate to the regs and NOT “binding” in same way as legislative rules
* May not be consistent with the statute or regs, and may send mixed signals to decisionmakers.
* Many such docs internal, so applicants can’t see, and public can’t comment
* 2 important kinds of guidance documents
* Social Security Rulings (SSRs)
> Provide more detailed treatment of particular issues that arise in the applications of the sequential evaluation process
> Published in Federal Register; take effect upon publication
> BINDING w/in the SSA.
* Program Operations Manual System (POMS)
> Internal personnel manual that guide SSA employees in processing claims
COOPERATIVE FEDERALISM AND THE ROLE OF STATES
> Using state agencies to implement federal programs;
* Use of state DDSs to make initial determination of benefits is an example of cooperative federalism
Dixon v. Shalala
> SSA denied benefits to Ps in systematic and illegal manner using “noncombination” of impairments, which denied some applicants who could not, in fact, perform “basic work activity.” Was in effect, a heightened standard illegal under the 5-step regulatory procedure. Step 2 may only be used to weed out de minimus claims
5.2: IMPACT OF RULES
Agencies can adopt a regulation to resolve an issue and streamline the process and promote consistency.
* These regulations are BINDING in subsequent adjudications.
* Agencies have multiple options, from promulgating binding regulations (SSRs) [formal] to issuing POMRs, e-mails, etc [less formal]
RESOLVING ISSUES BY REGULATION—EVADING HEARINGS
> Prevents affected parties from relitigating the issue in an adjudication
> Rule itself may be challenged on the basis of the RM record
> Consistent with statutory and due process requirements for an adjudicatory hearing
> Rule: Even if statute says you get a HEARING, none of that matters if the issue is resolved by REGULATION.
> Storer Broadcasting, Ct upheld FCC’s denial of a broadcasting license w/o a hearing bc the FCC had adopted a regulation limiting the no. of stations a licensee could own and the applicant already owned the max. no. of stations
* No hearing nec. even tho statute required “full hearing” before denying license
* Basically like an administrative summary judgment
SSA’S USE OF REGULATIONS (PER SE RULES)
> SSA relies extensively on regulations and SSRs to guide analysis and resolve issues
* Helps streamline adjudications and ensure consistency
* Listings: SSA relies on “listings” of impairments at Step 3 of impairments that are per se disabling
* Claimants whose impairments meet or exceed the listings awarded benefits without evaluation at Steps 4 and 5
* Some claimants whose impairments do not meet the listings are denied benefits without evaluation at Steps 4 and 5
* Grids: SSA relies on “grids” at Step 5 to determine whether there are jobs available in the national economy for claimants with different levels of impairment and different categories of age, education, and work experience
* used vocational experts to make the grids
* not don’t need vocational experts; just use the grids instead
* Ct upheld use of grids in Heckler
* Grids don’t apply if the claimant has additional, non-exertional impairments that prevent him or her from performing some of the jobs in a given exertional category
INDIVIDUALIZED CONSIDERATION—SAFETY VALVE
> Factual Issues: Agencies can resolve factual issues by use of regulations, but this may be inappropriate where particular issues require individualized consideration.
> Safety Value: Some regulations have a “safety valve” allowing a waiver when circumstances warrant individualized consideration
> Modern Approach: Cases imply that grids are appropriate ONLY if there is a safety valve whereby special cases can be argued. But this is NOT absolutely required, maybe in some circumstances. [3]
> Grids—Precise!: Grids can be used ONLY if claimant precisely meets the requirements.
* E.g. in SSA context, if you have non-exertional impairments (noise, dust, etc, rather than strength), you can NOT rely on the grids b/c they will NEVER match the claimant precisely.
SSRS AND OTHER NONLEGISLATIVE GUIDANCE
> Status: SSRs are NOT regulations and do NOT follow § 553 procedures. Although best understood as policy statements under the exception in § 553(b)(B), they are nevertheless BINDING on SSA.
> Relation to Non-Legislative Rules: Sykes and Heckler suggest allowing reliance on nonlegislative rules, but allowing the introduction of evidence to challenge the rule in the context of the adjudication
* Legislative rules cannot be challenged that way. Explored further in Ch. 6.
OVERRELIANCE ON STEP 3
> ALJs like to stay “on the grids” and rely on listings at Step 3
* Sullivan: when determining if kids were disabled, SSA stopped at Step 3 because steps 4 and 5 were inapplicable, as kids do not work
* Ct held at step 1 of Chevron that the clear statutory language required the SSA to use the same disability standard for kids as adults.
* ALJ approach was denying benefits to many kids who met the statutory definition of “disabled.”
* Heckler: SSA had clandestine policy of declaring that claimants whose mental impairments did not meet or exceed listings at stop 3 were conclusively presumed able to perform unskilled jobs and were thus not disabled
* Ct held that this was illegal
NONACQUIESCENCE
> SSA adopted nonacquiesence policy where it refused to apply judicial decisions invalidating policies or regs to other cases, even in the same juris, so each and every applicant had to take the same issue through the entire system, and some applicants can’t hang that long
> Legality of nonacquiescence never fully resolved; SSA eventually abandoned the policy
Sykes, p. 3 (shoulder + eye injuries)
* reliance on grids not appropriate bc grids do not take into account non-exertional factors
* non-exertional factors: environmental restrictions on ability to perform work, etc.
* Levy reads Sykes as saying that official notice of SSR is needed; however, the ct in Allen stopped short of requiring official notice of SSRs
* Sometimes grids require extra evidence, sometimes they don’t
Allen, p. 11 (mental impairments)
* ALJ’s finding: claimant could perform unskilled work so not disabled under the grids
* ALJ relied on SSR 85-15; Ct held ALJ misapplied the SSR
* Ct implied that ALJ needed to give notice that he was going to rely on the SSR; said will give less deference if don’t give notice. Differs from Sykes in that ct stopped short of saying needed notice for the SSRs.
5.3: DUE PROCESS AND THE PROBLEMS OF MASS JUSTICE—Property & Liberty Interests
Focus of 5.3: Extent to which DP requires procedural safeguards to protect the interests of those who seek or receive government benefits.
* Agencies may seek to limit the procedural formalities of hearings.
* Rule: Formal APA procedures under §§ 554, 556, & 557 ordinarily sufficient to satisfy DP, but procedural decisions or rulings made in the course of such hearings may be challenged as a violation of DP.
* Another Potential Issue: OS. May be more or less formal and may or may not satisfy DP.
GENERAL BACKGROUND—DP & RULE OF LAW
* Due Process Clause of 5th & 14th Amendments. Bars the federal government from depriving any person of “life, liberty, or property, w/o DP of law.”
o Requires, at a minimum: Notice and Opportunity to be heard by an unbiased decision-maker.
o Issue: In the context of denial or termination of gov’t benefits, as elsewhere, the gov’t may violate DP by failing to provide those affected w/ procedures demanded by the Constitution.
o Focus Here is on procedural DP; not substantive.
HAS DP BEEN VIOLATED? 2 STEPS
* Setting: Assertions by those claiming wrongful denial or termination of government benefits in violation of their DP rights must meet 2 steps:
* 1. Must show an interest protected by the DP Clause that you’ve been deprived of;
> i.e., Does the person have a claim to liberty or property interests?
* [Life interest usually not triggered in admin law]
* 2. Assuming #1, whether you received adequate procedure to protect the interest?
> i.e., Was the process provided by the gov’t sufficient to provide full and fair opportunity to protect that interest that the Due Process Clause requires?
STEP 1: CLAIM TO LIBERTY OR PROPERTY INTERESTS?
RULE: Unless the claimant has a liberty or property interest at stake [in the government benefit, etc], the DP Clause does NOT apply.
* Note: Even if DP applies, the gov’t can still deprive the interest—it just has to follow proper procedure
> Historical/Conventional Approach
* Distinguish rights from privileges. Mere privileges were NOT protected by DP.
* Rights: private property, contracts, “privately created interests”
* Privileges: “Something from the government”, licenses, benefits, jobs --> “mere privilege”
> The DP “Revolution” – Goldberg
* SCOTUS rejected the right-privilege distinction w/ respect to “property” rights.
* Held that financial aid was a property interest protected by DP.
* Thus, treated benefits as a property right. Thus, you get a hearing before terminating benefits.
* “Relevant constitutional restraints apply as much to the withdrawal of public assistance benefits as to disqualification for unemployment compensation, or to denial of a tax exemption, or to discharge from public employment.”
* Reasoning was murky
> Modern Approach—“Legitimate Claim of Entitlement” – Roth [3]
* General Rule: A person must establish that he has been deprived of a “protected interest” in order to claim the protections of DP. [Here, we discuss property interests as protected interests. Liberty interests as protected interests in the related material.]
* Property Interest Rule: to have a property interest in a benefit, a person must have a “legitimate clam of entitlement to it.”
* Roth held an untenured professor’s annual contract was not a property interest protected by due process, nor was his interest in continued employment.
* Language: “To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.”
* Property interests are not created by the Constitution; instead they are “created and their dimensions defined by existing rules or understandings that stem from an independent source such as state law”
* So Congress or state leg can preclude DP analysis by declining to create entitlement to a gov’t benefit
* Even if benefit is really important to holder or gov’t has acted arbitrarily.
* Bottom Line: B/c something in the law must give you a legal entitlement, point to the law where it entitles you to the property [an external source]
* Easy for state regulations, etc: find the statute or law.
* Harder for others, e.g. law school: go to the catalog or Honor Code.
* Or employees, go to Collective Bargaining agreement, employee handbook, etc.
* Can be implied from negative inferences. E.g. Honor Code lists circumstances where you can be kicked out…so if you don’t violate…you have an entitlement claim.
Three Main Categories that will trigger property right protections (DP) --> “New Property”
* Benefits: e.g. food stamps or welfare --> once you meet the requirements --> you’re entitled.
* See Flatford below for more on “entitlement” to benefits and employment
* Employment/Govt Job: Only if you’re legally entitled to continue (e.g. tenure) --> you’re entitled
* Primarily, are there removal limitations (entitled) or merely at-will (not entitled)
* Licenses: Once you earn it, you’re entitled as a property right.
* E.g. passing the bar, construction permit, driver’s license
STEP 2: PROCESS DUE: WAS THE PROCESS SUFFICIENT UNDER THE DUE PROCESS CLAUSE?
> RULE: Once a court has determined that a litigant has been deprived of a property or liberty interest so as to trigger the application of DP Clause, it must decide whether the procedures the agency used were sufficient. See Mathews!
> Bottom-Line: Parties won’t challenge that the APA violates DP. Rather, challenge a specific procedure on DP.
> High-water mark – Goldberg. “Although minimum procedural safeguards were due, they must be held at a meaningful time and in a meaningful manner and timely and adequate notice must be given which details the reasons for the proposed termination, and the recipient must have opportunity to confront adverse witnesses and present arguments and evidence, and must be allowed to retain an attorney.
> Subsequent Flexible (Lower) Standard. Court has permitted deviations from the adversary model of civil litigation to satisfy DP.
* E.g. Richardson: ALJ can have “3-hat role” and take on responsibilities of legal counsel for both sides as well as deciding the case.
> “Some Kind of Hearing” – famous article by Judge Friendly leading to landmark decision in Mathews.
* Every hearing need NOT resemble a judicial hearing. Can vary.
> Modern Standard. Mathews v. Eldridge [5] (Landmark Case). [More in unit 5.5].
* Foundation: DP is flexible and calls for such procedural protections as the particular situation demands. [7].
* Rule: To determine whether the administrative procedures provided are adequate requires analysis of the governmental and private interests that are affected. More precisely, the identification of the specific dictates of DP generally requires consideration of 3 distinct factors: [7]
* (1) Importance of the Interest
* The loss that’s suffered.
* (2) Risk of Error / Probable Value of Increased or Substite Procedures
* Must convince the court that additional procedures are needed to obtain more accurate results.
* (3) Cost of Procedures (Gov’t Interest)
* Fiscial and administrative burdens of new procedures
* Bottom-Line Formula: [Levy: This is an illusion. Judge can plug in any value to achieve ends sought]
* (Importance of Interest) x (Increased Accuracy) > or < (Cost of Additional Procedures)
FORMULA AS APPLIED IN GOLDBERG & MATHEWS
Case
Importance of Interest
Increased Accuracy
Cost of Procedures
Goldberg
Great: “brutal need”
Significant: disputed facts
Small: minimized
Mathews
Less: Not need based
None: neutral experts
Great: Less $ for benefits
PROCESS DUE—INCREASING DISTINCTIONS: JUDICIAL “ADVERSARIAL” HEARING V. ADMIN HEARING
Traditional Hearing
Some Kind of Hearing
Oral hearing
Opportunity to respond
Present evidence; Call witnesses basically unlimited
Oral testimony limited; Limited scope
Know evidence; Cross-X witnesses
Hearsay admissible; Cross may be limited
Right to counsel
May be denied. Period.
Decision on the record
Not absolute
Application v. Termination. Flatford.
* Issue: Whether an applicant, as opposed to someone who already had job, has a property interest?
* Property is the interest you have in something you’ve already acquired.
* Roth: You don’t have a property interest in a job when you’re merely applying.
* Even if you’re qualified --> No guarantee you’ll get the job.
> Not so w/ benefits: If you qualify --> You get them.
> Roth seems to say, if taken literally, you have NO interest in potential benefits.
* Still left open by SCOTUS.
* Right to Cross-X or Subpoena. applying the 3 factors from Mathews, ct held that applicants for social security disability benefits had no absolute right to subpoena or cross-examine witnesses; instead, interrogatories would suffice.
> Hearing components
* Traditional hearing: oral hearing, present evidence, call witnesses, know evidence, cross-x witnesses, right to counsel, decision on the record
* Some kind of hearing: opportunity to respond, oral testimony limited scope, hearsay admissible, cross-x may be limited, right to counsel may be denied, decision on the record not absolute
LIBERTY INTERESTS
> Extend beyond freedom from incarceration
> Specific Types
* Freedom of Movement
* E.g. sexual predator can’t live in school zone
* Bodily Integrity
* E.g. unwanted medical treatment, punishment
* Pursuit of a Calling
* Overlaps “jobs,” e.g., barred from practicing law
* Licenses protected both as property and liberty interest
* Public Education
* Expelled/suspended from school
* Fundamental Rights
* Free speech, press, right to marry, parental rights
* Reputation Plus [i.e. reputation + legal disability]
* E.g. habitual drunkard. Before the State labels you something.
* But LEO flyer okay: shoplifter to all stores.
* Distinction: Drunkard couldn’t buy alcohol. Shoplifter could still enter and buy.
* Bottom-Line: Reputation PLUS some legal impediment is a liberty interest.
> Includes the right to contract, to engage in the common occupations of life, to acquire useful knowledge, to marry, to establish a home, to bring up children, etc.
> Examples
* Constantineau: Statute allowing police to post notices declaring a person a “habitual drunkard” without allowing the person a chance to challenge the characterization overturned
* Stigma affected person’s liberty interest
* Goss: suspension of public school students for alleged misconduct overturned bc students deprived of liberty interest by potentially damaging their standing with fellow students and teachers and interfering with opportunities for higher education and employment
* But see Paul v. Davis, where Court denied the due process concerns were raised when police circulated names and photos of “active shoplifters” to merchants without giving those persons a chance to contest they were shoplifters
THE REQUIREMENT OF A NEUTRAL DECISION-MAKER
> Presumption: Adjudicators (ALJs)—honest and integrity in service.
* Thus, deciding case and representing the agency’s interests --> AOK.
> Bias. Party claiming bias of decision-maker may rebut the presumption of the decision-maker’s honesty and integrity by showing that the decision-maker:
* Has a pecuniary interest in the outcome
* Has been the target of personal abuse or criticism from the party before him or her
* Has some other conflict of interest
> Example
* Molloy, No DP violation even though ALJ’s statements clearly indicated his impatience at the pace of the hearing and his predisposition regarding the issue of whether the claimant’s alcoholism was a contributing factor to her disability
5.5: SOME KIND OF HEARING
MATHEWS FORMULA FOR DETERMINING IF A GIVEN PROCEDURAL SAFEGUARD IS REQUIRED BY DUE PROCESS:
> (importance of interest) x (increased accuracy) >/ < (cost of additional procedures)
1. IMPORTANCE OF THE INTEREST
* Rule: the more important a property or liberty interest is, the greater the loss suffered by a person who is wrongfully deprived of it and, consequently, the greater the justification there is for procedural safeguards
* Focus: importance of interest turns on the impact the deprivation will have on the affected person, NOT the monetary value
* Hierarchy:
* Less Important: Disability insurance benefits (Mathews) & Employment
* Both of these have alternate sources available, despite the negative impact. Not need-based.
* More Important: Welfare benefits (Goldberg) & Basic Utilities (heat & water)
* “Brutal need.” “Margins of existence.”
* Even More Important: Personal rights & Parental rights
* Court has required more procedures.
2. INCREASED ACCURACY:
* Rule: the importance of the interest is multiplied by the risk of error or the increased accuracy from additional procedures
* Focus on the particular procedure the party claims entitlement to.
* Remember courts are increasingly skeptical to the value of additional procedures providing additional accuracy.
* This if you’re challenging: Show SPECIFICALLY how a new procedure would have CHANGED the outcome.
* “Instrumental Value of Procedures”. Value of procedures in getting accurate info.
* Bottom-Line: If increased procedures don’t improve accuracy, there’s little need for them.
* essentially “discounts” the cost of erroneous deprivation
* so even when the importance of the interest is high, the formula does not require additional procedures if they will not reduce the risk of erroneous deprivations
* criticisms of second factor: doesn’t take into account “dignitary” and “participatory” values
* Walters v. National Ass’n of Radiation Survivors, Ct upheld statute limiting the amount attorneys representing veterans seeking benefits to $10 bc veterans represented by legal counsel did not enjoy a significantly higher success rate (19-20% v. 16%) than those represented by service organizations.
* Hence, no increased accuracy and this is NOT supposed to be adversarial proceeding anyway
* Levy: the success rate actually translates into a 25% increase in the likelihood of success
3. COST OF PROCEDURES
* Attitude Change: Courts used to like procedures. NOT anymore.
* Nature of Programs (e.g. Education or Veteran’s benefits)
* Cost isn’t just money value. Requiring more procedures or imposing adversarial proceedings on school’s disciplinary process would undermine the educational nature
* Mathews focuses on the substantial costs of pre-termination hearings and the cost of continuing benefits prior to those hearings
4. PARTICULAR PROCEDURAL REQUIREMENTS
> NOTICE [5 & 16] Also see Gonzales (apply both Mathews & Mullane)
* Cts often look to Mullane test to determine if notice was adequate:
* Rule: Notice must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”
* But you can also look to the Mathews test.
* Notice must not only be deficient; must also show detrimental reliance
* No notice of right to appeal may also be claimable
* Bottom-Line: Did the party have an opportunity to effectively object and prepare to protect interests at the hearing?
* Post-Hearing Notice of Appeal. Similar. Gonzales.
> Hearing Rights [5 & 17]. Also see Hepp (accused examiner of bias and right to cross-x). Notes [47].
* Timing of the hearing
* Right to be represented by counsel
* Gov’t counsel for indigents?
* Limits on counsel at litigants’ own expense?
* Burden of Proof
* Use “clear and convincing evidence” instead of “preponderance of evidence” for a particularly important interest?
* Right to present evidence
* Right to cross-x witnesses
* Particularly the use of subpoenas to call medical consultants as witnesses to cross-x them about adverse written reports
* SSA has held that medical consultants can only be subpoenaed when necessary for fundamental fairness and to obtain evidence that could not be obtained by interrogatories or other means
> Decisions involving hearing issues
* Ct found violation of due process when ct relied on med exam done after hearing with no opp to cross-x
* Ct found violation when ct relied on post-hearing vocational expert
* Ct found violation when ct refused to reschedule hearing to allow claimant to testify when good cause for rescheduling found
* But no violation when prison inmate given only a telephone hearing
*
> Appeal Rights and Requirements: Gonzalez
PROCEDURAL DEFECTS, HARMLESS ERROR, AND DISPUTED ISSUES—ADMIN SJ
> Does administrative summary judgment violate due process?
* If no facts in dispute, no
* If harmless error, probably no.
* “A hearing is held to facilitate the accurate determination of facts, particularly judicial facts for which witness testimony and cross-x are important.
* Cases
> Crux of these cases is the due process procedures used or omitted and whether the outcome would have been different had they not been used or omitted.
> Gonzalez, p. 5
* Notice issue: post-hearing notice of appeal
* Standard SSA notice unconstitutional: standard was to just say SSA didn’t believe claimant’s claim of the severity of the pain and that evidence didn’t support degree of pain.
> Hepp, p. 10
* Pain issue/failure to object to consulting examiner
* Ct said bc didn’t object to consulting examiner before the exam, so waived right to object to consulting examiner after the exam.
* Levy is concerned about this; seems odd that you would have to look up your consulting examiner’s record and make any objections before you meet him
* Telephone cross-x OK per Mathews
CH. 6 INFORMAL ACTION
TIP OF THE ICEBERG. Thus far, only covered the most formal actions under APA.
* Those are most visible and w/ the most impact. But like the tip of iceberg --> very small proportion.
Range of Informal Action (IRS)—Most to Least Formal
* Regulations per Specific Grants of Authority (§ 553—Full N&C)
o Require [procedures ?] like EPA requirements studied earlier.
o Language: “The IRS shall promulgate rules of …(something very specific).”
* Regulations per General Grants of Authority (Voluntary § 553)
o IRS position: § 553 is not required to promulgate these, but we’ll follow anyway.
o Scholars: IRS doesn’t actually comply w/ 553 in 50% of cases, although it claims to.
o Language: “The IRS can make all other rules necessary to …”
* Revenue Rulings & Procedures
o NO Note & Comment
* Private Letter Rulings*
* Determination Letters*
o More specific and direct than private letter rulings. Usually reserved for easy cases.
* Technical Advice Memorandum (TAM)*
* Oral Advice
o E.g. phone lines during tax season.
* * These 3 (PLR, DL, & TAM) are NOT binding or even precedential outside the specific case
o Apply only to the party that requests it. Perhaps shows a likely outcome.
IRS’ INFORMAL ACTIONS
> REGULATIONS: issued by the Secretary of the Treasury to enforce the Internal Revenue Code.
* Legislative Regulations. Those made pursuant to specific grants of authority.
* IRS typically follows N&C, tho it claims it doesn’t have to.
* Interpretative Regulations. Those made pursuant to general grants of authority.
* Certainly triggers § 553 procedures.
* Temporary Regulations. Those made if immediate interpretation of a new statute is necessary.
* Effective only until superseded by final regulations.
* IRS claims these are exempt from N&C procedures. [2].
* Procedural Regulations. Compiled in IRS Statement of Procedural Rules.
* IRS does NOT follow § 553 procedures.
> GENERAL ADVICE: Other actions to interpret the Internal Revenue Code.
* Revenue Rulings. IRS’s interpretation of the tax code as it applies to a particular set of facts.
* Promotes uniform application of tax laws; voluntary compliance by taxpayers.
* Often relied on when structuring transactions.
* May be revoked by subsequent legislation, court decisions, or Treasury Dep’t regulations.
* Revenue Procedures. Official statements of procedure.
* Analogous to Revenue Rulings, except that they provide guidance relating to procedural matters.
> Taxpayer-Specific Advice: No precedential value, except to the person it’s issued to.
* (Private) Letter Ruling (PLR): statement issued to the taxpayer by the national headquarters of the IRS interpreting and applying tax code to specific set of facts
* Determination Letter: issued by the directors of the IRS Operating Divisions and applying clearly established rules from IRC, IRS regs, and judicial decisions to a specific set of facts
* Technical Advice Memorandum (TAM): express the IRS’s view on how the rules from the IRC, IRS regs, or judicial precedents should apply to a specific fact pattern
* Force: These sources of advice carry no precedential value, but are published to help guide others
6.2: NONLEGISLATIVE RULES AND THEIR LIMITS
GENERAL BACKGROUND
* Remember: APA exempts from N&C requirements, the promulgation of informal rules contained in § 553 that qualify as “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice, unless notice or hearing is required by statute. § 553(b)(A).
* Known as NL Rules --> The group of agency actions covered by this exemption.
NATURE AND KINDS OF NONLEGISLATIVE RULES
* 3 Kinds of NL Rules. § 553(b)(A) exempts 3 kinds of agency action from the informal, N&C RM requirements that apply to Legislative Rules:
* 1. Interpretative Rules: Statement issued by an agency to advise the public of the agency’s construction of the statutes and rules which it administers
* 2. Policy Statements: Statements issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power
* 3. Rules of Agency Practice and Procedure: Rules that govern internal agency operations and organization
* Bottom-Line: § 553 does NOT apply to these NL rules.
* Rationale: These kinds of rules do NOT affect the public in ways that make it appropriate to require agencies to provide a right to participate in their adoption.
* Nature of NL Rules
* Essential difference: NL rules are NOT normally binding (either on agency, regulated entity, or other interested persons)
* If not binding, why call a rule? B/c it meets APA definition --> Has general or particular applicability and future effect.
* Procedural Difference: Exempt from N&C rulemaking requirements of § 553(b) and (c).
* Not entirely free from procedural restraints however:
* Must publish NL rules in the Federal Register
* May NOT enforce an unpublished rule against a party unless it had actual notice
* Must also make available statements & interpretations which it has adopted but not published in Federal Register, as well as admin staff manuals
DISTINGUISHING NL RULES FROM LEGISLATIVE RULES
* Common Scenario: Whether a rule has been properly characterized as NL typically arises when a party challenges an agency rule that was adopted w/o using N&C procedures and the agency claims that an exemption found in §553(b)(A) applies.
* E.g. Cabais v. Egger
* Common Scenario: An agency or party may argue that it’s NOT bound by a rule b/c the rule is NL.
* E.g. Estate of Shapiro
> Solutions:
* Easy --> No authority for Legislative Rules. If agency’s OS does NOT delegate it the authority to adopt legislative rules, the rule is necessarily NL. Estate of Shapiro.
* More Often --> Apply Distinct Test for Each Type of NL Rule (below).
* But note historical approaches on [5].
* Substantive v. Procedural test --> Now generally rejected.
* Substantial Impact test --> Not very helpful and no longer favored.
* Intent test --> Also not very helpful
1. INTERPRETIVE RULES TEST (NL or Legislative Rule?) [6]
* Setting: An agency can interpret a statute that it administers through the issuance of either a legislative rule or an interpretative rule.
o Interpretative Rules = Quicker. B/c interpretative rules are NOT subject to N&C requirements, they can be issued much more quickly than legislative rules.
o Effect. Although interpretative rules are not legally binding, if it reflects a valid interpretation, parties are bound by the underlying statute or regulation, as interpreted in the rule.
* New Duty Test
o If rule creates a new duty on affect parties --> problem. If existing duty --> no problem.
o “Interpretative rules” merely explain, but do not add to, the substantive law that already exists in the form of a statute or legislative rule; whereas
o “Legislative rules” creates rights, impose obligations, or effect a change in existing law pursuant to authority delegated by Congress.
* Focus on Interpretative Reasoning.
o Setting: Despite test above, it’s not always easy to determine if a duty is imposed by the rule or underlying statute or regulation, so it may be useful to focus on the reasoning advanced by the agency to support the rule.
o General Rule 1: If looking at statutory language --> More likely an interpretative rule.
* If an agency’s reasoning in support of a rule involves interpretation of the relevant statute, using traditional tools of statutory construction, the rule is likely to be regarded as interpretative.
o General Rule 2: If looking at policy considerations --> More likely a legislative rule.
* If an agency’s reasoning in support of a rule is policy-based, and adds content NOT already present on the face of the statute, it’s likely to be regarded as a legislative rule.
o D.C. Circuit Factors Test: If the purported interpretative rule has “legal effect,” the rule is a legislative, NOT interpretative, rule. Legal effect is established if ANY of the following 4 questions are answered affirmatively: American Mining Cong., [7]
* 1. Whether in the absence of the rule there would not be an adequate legislative basis for enforcement action or other agency action to confer benefits or ensure the performance of duties?
* 2. Whether the agency has published the rule in the Code of Federal Regulations?
* 3. Whether the agency has explicitly invoked its general legislative authority?
* 4. Whether the rule effectively amends a prior legislative rule?
2. POLICY STATEMENTS TEST (NL or Legislative Rule?) [7]
* Setting: Like interpretative rules, policy statements are NOT binding on either the public or the agency.
o “An agency policy statement does not seek to impose or elaborate or interpret a legal norm. It merely represents an agency position w/ respect to how it will treat—typically enforce—the governing legal norm.”
* Binding/Nonbinding Test: Courts focus on whether a rule is binding on the parties or the agency in order to distinguish policy statements from legislative rules.
o General Rule 1: “Can’t have your cake & eat it too.” If it’s nonbinding, it’s nonbinding (a policy statement)
o General Rule 2: If the rule is binding, it’s a legislative rule.
* Focus on Facial and/or Application
o Rule: An agency pronouncement will be considered binding if it either:
* 1. Appears binding on its face; or
* 2. Is applied by the agency in a way that indicates it is binding.
3. RULES OF AGENCY PRACTICE & PROCEDURE TEST (NL or Legislative Rule?) [8]
* Setting: Substance v. Procedure (remember Erie doctrine). Primary v. Secondary conduct.
* Two likely scenarios:
o 1. Agency wants to impose procedure against party.
* Party will argue that the procedures required by § 553 haven’t been followed.
* Thus, if it meets any of the § 553(b) exceptions, then a violation is hard to prove b/c N&C need not be followed.
o 2. Agency tries to avoid its own rule; Party wants it enforced.
* Agency claims the procedure is non-binding; merely interpretative. Party argues the rule is binding—must be followed.
* Purpose: To ensure that agencies retain latitude in organizing internal operations.
o Interests promoted by public participation in RM are outweighed by the countervailing considerations of effectiveness, efficiency, expedition, and reduction in expense.
* Easy Cases: Statement of Procedural Rules that address internal IRS organization & procedural matters.
o Unfortunately, this obvious set of rules is very limited in scope.
* Most Cases. No clear test. Difficult to distinguish b/w substantive and procedural rules.
o Among the Various Tests:
* Encoded Value Judgment Test (Bowen).
* Court distanced itself from this test in JEM Broadcasting. [9].
* “Uniform Plan” Test (Chao v. Rothermel)
IMPACT OF NL RULES ON ADJUDICATION
* Setting: An agency can use a previously adopted legislative rule to resolve issues that arise in adjudications (as in unit 5.2).
* Issue: Can NL rules be used to do the same? Answer: Less clear.
o Problem: To adopt a legislative rule, the agency had to provide N&C opportunity—not so w/ NL rules.
* Shalala v. Guernsey Memorial Hosp. is an example where court permitted NL rule to resolve an issue in an adjudication. See [19] for reasoning and holding.
> Extent to which agency can rely on nonlegislative rules is unclear
* No notice and comment in promulgating
* Not binding, but can they be treated as binding in subsequent adjudications?
* Probably not—agency retains the discretion to change its position at any time
* What if a party, rather than the agency, wants to rely on the nonlegislative rule in an adjudication?
> Guernsey Memorial Hosp., hospital argued that HHS determination was invalid bc it was based on a guideline that was did not comply with 553. Ct held that the guideline was an interpretive rule, and tho not binding, it was appropriate for HHS to use it to make its determination.
JUDICIAL DEFERENCE TO NL RULES
* Setting: What standard of review applies when a litigant challenges the validity of a NL rule in court?
* Issue: Are NL entitled to deference, and if so, how much?
* Rule: It’s unclear. See [20] & Notes [51]. But most likely:
o NL Rules get Skidmore deference; NOT Chevron.
* Agency, by definition, is issuing NL rules.
* [Skidmore is applicable to most NL rules under Christensen.] [22].
o But General Regulations (after following § 553) probably get Chevron deference.
* [Chevron deference applies to most legislative rules.] [22].
> Some courts may give less than full Chevron deference to non-legislative rules
> May come down to Chevron Step 2, “reasonableness”
MINIMUM PROCEDURAL GUARANTEES & NL RULES
* Setting: Vermont Yankee ended the practice of courts imposing procedures on agencies not required by statute or agency regulations. Congress, also concerned that § 553 and OS procedures were insufficient, resorted to hybrid RM provisions to provide additional constraints on agency RM and foster agency accountability (as discussed in unit 3.6).
* Effect: Huge incentive for agencies to avoid Legislative RM (and thus § 553) altogether!
o If agencies opted for NL rules instead of Legislative rules, § 553 N&C and most hybrid procedures simply would NOT apply.
* Not really any rule here. But perhaps an incentive for agencies to opt for Legislative rules is the increased deference under Chevron rather than Skidmore deference.
* Bottom-Line: If an agency is careful to shape a NL rule then it can accomplish much of what a Legislative rule does—shape to future.
Cabais, p. 10
* Involved interpretive rule
* Agency can do almost anything if it phrases it as a procedural rule rather than a binding rule
Estate of Shapiro, p. 13
* Involved procedural rule. Primary v. secondary conduct. But secondary conduct can often regulate primary conduct also. See notes [52].
6.5: AGENCY ADVICE AND ESTOPPEL
GENERAL BACKGROUND
* Setting: Regulated entities or party relies on agency advice. Agency then seeks to alter position or the advice was bad in the first place.
* Issue: The extent to which courts will estop agency from changing their legal positions when others adversely rely on informal advice.
* Estoppel: If one party reasonably relies on another’s misrepresentation, then the latter party may be estopped from [whatever].
* Bottom-Line: If the agency changes course, a party may have 4 arguments:
1. Estoppel
2. Scienter (if a statute requires willfulness or a mental state)
3. Due Process
4. APH Argument
[None of these are easy to win. Often, you rely on agency advice at your own risk.]
AGENCY ADVICE TO TAXPAYERS
* Two Common Problems:
o Agency gives bad advice
o Agency seeks to change position, although its original advice was correct.
> IRS advises taxpayers through legislative rules, oral advice by phone, revenue rulings, PLRs, TAMs, determination letters, etc.
* IRS gives erroneous advice 10% - 20% of the time
* The less formal the situation, the more likely the advice is wrong
* IRS may also change its mind about a ruling
> Central question: What happens when the taxpayer relies on erroneous advice?
RELIANCE AND ESTOPPEL
> Estoppel Generally: the party claiming the estoppel must have reasonably relied on the other party’s conduct and changed his position for the worse.
> Estopping the government: Courts may refuse to estop the government even if all the elements of estoppel can be proven
* Very High Standard. Supreme Court has consistently rejected efforts to estop the government, tho it has left open the possibility of estoppel in an extreme case
* Parties must “turn square corners” in order to argue gov’t should be estopped
* Rationale: Rule of law. The law is binding on government officials. The legislative power belongs to the legislative branch; agency officials could effectively change the law by misrepresenting it.
* Appropriations—Money from the Treasury. Even in an extreme case, estoppel is precluded if it would require the payment of moneys to a party that are not authorized by statute.
* Rule: NO money shall be taken from the treasury except for appropriation by law (authorization by statute). If an estoppel would require payment from the treasury --> Invalid.
* OPM v. Richmond, Ct held that estoppel doctrine was precluded when claimant lost 6 months of disability benefits due to reliance on erroneous advice from an agency
* Lower court cases on estoppel are inconsistent. See [4].
* Key Factor: Did the agency invite the public to rely on rulings? See McLendon.
RELIANCE AND SCIENTER
* Setting: Even if estoppel argument fails, the taxpayer or regulated can argue a scienter defense.
> Rule: Reasonable reliance on government’s erroneous advice may negate the scienter requirement of statutes that impose liability only on those engaged in knowing or willful violations.
* Success of scienter argument depends on reasonableness of reliance and whether it was in good faith
* See Donovan, where an employer’s good faith reliance on agency advice was sufficient to establish that any statutory violations arising from the reliance were not willful
* But see DeSabato, where the court rejected delinquent taxpayers’ argument that they reasonably relied on agency advice bc they had omitted crucial facts from their conversations with the agency and therefore their reliance was not reasonable
* Argument has been used in labor law and tax contexts. See [5].
RELIANCE AND DUE PROCESS
* Fairness Concerns. Fundamental notions of fairness.
o Seems unfair to punish action that were permissible when committed.
* Relation to Retroactivity Issues
* Criminal v. Civil Penalties
o Criminal: Ex Post Facto problem
o Civil: Similar analysis. If you can’t get estoppel, argue DP—fundamentally unfair.
> PICCO, Ct held that the chemical company should have been allowed to introduce evidence concerning its reliance on the agency’s interpretation of the scope of the applicable regulation.
AUTHORITATIVE INTERPRETATIONS AND N&C RM—APH
> Rule: Under some circumstances, changes in longstanding agency interpretations must comply with the N&C requirements of 553, even though the interpretations were adopted through less formal means
* Alaska Professional Hunters [19].
* CAB gave licenses for airline pilots. Hunting guides were not “commercial pilots” and thus not required to get the licenses. CAB later decided that hunting guides needed licenses.
* Held: Can’t really do that. They’ve been doing this over 30-year period. Must change by Legislative Rule.
* Rule: To argue that changes in “authoritative interpretations” require N&C procedures, must prove 2 key elements
> Long-standing Authoritative Interpretation. Interpretation of the statute was authoritative over many years. Though it was never promulgated, it became binding, authoritative interpretation.
> Detrimental Reliance. Must show.
* Alaska Professional Hunters, the agency changed course and published a “Notice to Operators” in the Federal Register that the advise was wrong and that guides needed commercial licenses. The court held that the Notice was invalid bc the agency did not follow 553 procedures; court reasoned that once an agency “authoritatively interprets” its regulations, it can only change the interpretation by using the same process applicable to formal modification of the rule itself, ie, notice and comment rulemaking
* Rationale: entire businesses had been built up over the 30-year period; also not having formal RM deprived guides of the opportunity to argue that their operations merited special treatment
> Alaska Professional Hunters: odd case. subsequent cases consistently distinguished it.
* APH is the only case to win per Levy’s knowledge.
* Bottom Line
> You can make estoppel, scienter, DP, and Alaska Professional Hunters arguments, in that order, but all will be difficult to get
* Cases
> Estate of McClendon, p. 6
* Agency can do almost anything if it phrases it as a procedural rule rather than a binding rule
* Recognizes estoppel where agency invites the public to follow rulings.
> American Stores, p. 12
CH. 8 AVAILABILITY OF REVIEW
GENERAL BACKGROUND
* To obtain review, you must have 6 things:
o Jurisdiction.
* Must have jurisdiction to get in court.
* Subject matter jurisdiction is usually NOT a problem—usually arises under federal law.
* But might require you go to a specific court. e.g. Tax Court. Thus, limited jurisdiction.
o Cause of Action.
* Fallback if nothing else: APA §702. Usually can co-exist w/ another cause of action.
* § 702: A person suffering legal wrong b/c of agency action, or adversely affect or aggrieved by agency action w/in the meaning of a relevant statute, is entitled to judicial review thereof.
* OS can also provide basis for judicial review. Or other federal question juris. statutes.
o Reviewability. APA creates a cause for review but makes exceptions. See 8.1 for all limits.
o Standing. Among most important barriers. Can be a barrier where 3rd party is making arguments.
o Timing. Includes finality; exhaustion of other admin remedies; & ripeness of case or controversy.
o Other Doctrines. Not covered in class, but includes primary jurisdiction.
* We focus on reviewability (preclusion), standing, and timing.
8.1 PRECLUSION OF JUDICIAL REVIEW
GENERAL BACKGROUND
* APA Rule. Judicial review is generally available under § 702, with 2 exceptions:
o Statutes preclude judicial review; or
o Agency action is committed to agency discretion by law.
o However, even in applying these exceptions, there is a general presumption in favor of review.
THE PRESUMPTION OF REVIEWABILITY
* Presumption in favor of review has both constitutional and statutory dimensions.
o Constitutionally. Statutes that preclude review may violate DP or separation of powers, which under the canon of constitutional avoidance justifies construing the statute to avoid the constitutional issues.
o Statutory. APA § 702 provides review except when:
* 1. Statutes preclude review § 701(a)(1)
* Two types:
o Express exclusion. Issue is whether the case falls w/in that statute’s scope.
o Implied exclusion. Statute doesn’t expressly foreclose review, but the implication is such.
* 2. Agency action is committed to agency discretion. See bonus material. § 701(a)(2)
* Historical Approach. APA seen as having “generous review provisions” which give a presumption of reviewability unless there is “clear and convincing evidence” that the legislature intended to preclude review.
* Modern Approach. Courts have indicated that a less demanding presumption applies, such that preclusion can be implied rather than actually stated.
* Court pretends there is no difference despite clearly lower standard. Thus, easier to foreclose review.
* E.g. Block, held statute implicitly precluded bringing an action for review.
* Clear & Convincing standard (high standard) v. Fairly Discernable (more recent cases).
* Bottom-Line: Application of the statutory preclusion exception in §701(a)(1) is essentially a matter of construing the OS to determine it’s “fairly discernable” that Congress intended to foreclose review. [Either expressly or implicitly-covered next].
* To do this, courts examine OS’s language, structure, and history to determine if there is sufficient evidence of congressional intent to foreclose review.
THE SCOPE OF EXPRESS PRECLUSION PROVISION
* Setting: When a statute expressly precludes review, the statutory text provides clear evidence of the intent to foreclose review.
* Issue: Whether a specific agency action is w/in the scope of that express preclusion?
* General Approach: Courts will interpret statutes to permit review when precluding review might violate the Constitution. Narrow constructions!
o E.g. Bowen v. Michigan Academy
o Extreme case, Johnson v. Robinson
* Narrow constructions of statutes expressly precluding review are not uncommon, and at times difficult to square w/ the relevant statutory language.
* Cardinal principle: Construe statute to avoid constitutional questions.
IMPLIED PRECLUSION
* Setting: A statute that does NOT expressly preclude review may nonetheless preclude review by implication.
* Expression Unius (maxim): Express inclusion of something in a statute implies the exclusion of certain other things.
o Effect: Courts can go either way.
o Compare Abbott Labs (Refused to recognize negative and allowed review to go forward) v. Block (Court drew negative inference)
* Key Difference: Congress’s apparent intent.
TOTAL V. PARTIAL PRECLUSION
* Total: Agency action will NEVER be reviewed again. By anyone. Period.
* Partial: Party may still get review. It just has to wait and follow the right path.
CONSTITUTIONAL LIMITS ON PRECLUSION
* Spectrum. Cases suggest 3 categories of cases for which constitutionality may be at issue.
o One End—Constitutional Claims: It seems highly likely that preclusion of review of a constitutional claim would itself be unconstitutional.
o Middle Ground—Ultra Vires Manner: Agency’s compliance w/ statutory provisions it administers.
* Notwithstanding McAnnulty & Leedom, which support the conclusion that preclusion of such issues would be unconstitutional, other cases are less clear.
* Constitutionality can also be affected by the nature of the decision.
* Some decisions, like whether to prosecute, are seen as inherently a matter of executive discretion.
* Likewise, perceived necessity of review may be affected by the underlying right at issue.
o Other End—Run-of-the-Mill Decisions. It seems highly likely that Congress may preclude review of run-of-the-mill decisions finding facts and applying legal standards to them.
* Other Doctrines. Constitutionality of preclusion is further complicated by the interplay of distinct yet overlapping doctrines, including DP, limits on delegation of judicial power to agencies, and the authority of Congress to limit jurisdiction under Art. III, § 2, cl. 2.
o i.e. Might violate DP (Rule of Law) or Art. III (Separation of Power) at a minimum.
* Bottom-Line: Court has never squarely held a statute unconstitutional for precluding review, but general consensus is that it could. Thus, most outlandish efforts to construe statutes to permit review.
PRECLUSION & CAUSE OF ACTION ISSUES
* Analysis of preclusion may require careful attention to the cause of action at issue.
o E.g. a cause of action under general federal question jurisdiction.
Natural Res. Defense Council [5]. Scope of express exclusion.
United Food Workers [11]. Implied preclusion.
COMMITTED TO AGENCY DISCRETION
* Premise: Some decisions are sufficiently discretionary as to be exempt from review under 701(a)(2), which is an exception to the general rule.
o This exception is in tension with 706(2)(A), which authorizes a reviewing court to set aside agency action found to be an “abuse of discretion.”
* Focus. Both the statutory provision that precludes review and “committed to agency discretion” exceptions to reviewability turn on congressional intent, but the focus of the analysis is different.
o While statutory preclusion exception looks to the judicial review provisions of the OS; the
o Committed to Agency Discretion exception looks to whether the OS’s substantive standards reflect unreviewable agency discretion.
* Presumption of reviewability still applies
* This exception has been applied narrowly
o Applies in those “rare instances” when statute are drawn in such broad terms that in a given case there is no law to apply. Overton Park, Heckler.
* i.e. it’s so open-ended that it may reflect intention that agency have unreviewable discretion.
* See Webster, where the Director of the CIA is given the power to terminate employees when he “deems such termination necessary or advisable in the interests of the US”
* Language: “deems….advisable” or “in his discretion” dead giveaway it’s discretionary and thus not reviewable. Lester v. Doe
* But employee’s constitutional claims still reviewable
* And does national security context make a difference? May indicate more discretion.
* Reverse Presumption in Prosecutorial Decisions (Inaction)
o Rule: Presumption of review is reversed in cases involving the agency’s prosecutorial discretion
o B/c such decisions involve matters of agency priorities and resource allocation; not taking enforcement action does not involve the exercise of coercive authority against a private party; and agency enforcement actions are similar to prosecutorial decisions that historically have been a matter of unreviewable discretion within the executive branch
o To rebut the presumption of nonreviewability, a party must point to statutory language that effectively mandates prosecution. Language: “Agency shall …”
o Reverse presumption does NOT apply to rulemaking.
8.4 STANDING
GENERAL BACKGROUND
* Setting: Even if judicial review is not precluded by the APA or agency’s OS, a court does NOT have jurisdiction to address the merits of a challenge to agency action if the plaintiff lacks standing to sue.
* Standing doctrine focuses on the identity of the plaintiff rather than nature of the issues the P raises.
o Is the P an appropriate person to bring the lawsuit in question?
* Widespread perception that standing doctrine is manipulated, depending on whether courts wish to hear the merits of a case.
INTRO TO STANDING
* Essential Concept: A party must have a “personal stake” in the outcome of the lawsuit to have standing.
* Two Parts: Standing doctrine has both constitutional and prudential (statutory) components.
o Constitutional
* Derives primarily from Art. III, § 2.
* “Case or Controversy” Requirement: Judicial power extends only to concrete disputes b/w adverse parties that can be resolved through the application of law.
* Embraces a # of related doctrines: Rule against advisory opinions; Requirement of standing; Ripeness; Mootness
* “Irreducible Constitutional Minimum” for Standing has 3 elements: Lujan v. Defenders
* 1. Injury in Fact. Plaintiff must have suffered injury in fact. Not necessarily a legal right, but concrete.
o “An invasion of a legally protected interest which is:
* A. Concrete and particularized; and
* B. Actual or imminent; NOT conjectural or hypothetical.”
* 2. Causal Connection. b/w the injury and the conduct complained of.
o “Fairly traceable to the challenged action of the D; NOT the result of independent action of some 3rd party not before the court.”
* 3. Likely Redressed. Must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
* SCOTUS: Personal stake and the 3 elements above essentially seek the same thing. [2].
o Prudential
* Derived from judicial self-restraint and statutory provisions.
* Judge-made requirements. Grow out of same principles, but don’t rest on Constitution. Judge can create own rules—can be altered by Congress.
* Limits Include (list not exhaustive; limits still being defined):
* General prohibition on a litigant’s raising another person’s legal rights;
* Rule barring adjudication of generalized grievances more appropriately addressed in the representative branches; and
* Requirement that a P’s complaint fall w/in the zone of interests protected by the law invoked.
INJURY IN FACT (CONSTITUTIONAL ELEMENT #1)
* Rule: Injury must be “distinct and palpable” and “concrete and particularized,” AND injury must be actual or imminent” rather than conjectural or hypothetical. Defenders of Wildlife.
* KEY ELEMENT #1. Distinct, Palpable, Concrete, Particularized. 4 Categories Addressed by Courts:
o Ideological Injury --> Insufficient.
* e.g. “We’re committed to the environment so we should have standing.”
* Sierra Club held: Nothing concrete. No injury in fact.
* But dicta: If some of your members hiked in area, impaired: Good enough.
o Recreational & Aesthetic --> Good.
* Standard method for environmental groups to get standing. Allege that members’ use and enjoyment of areas is impaired. Sierra Club.
o (Purely) Procedural Injury --> Insufficient [Independent of interest in the outcome].
* Right to have agencies follow the procedures required by law generally insufficient.
* Rule: Denial of procedural rights generally confers standing ONLY if the P would have standing to challenge the substantive outcome. NOT merely abstract participatory opportunities. Luhan
o Lack of Information Injury --> Might work.
* Political Rights/Election Cases. Entitlement to info --> injury w/o it. Akins
* Could work in other contexts: FDA food labeling, e.g.
* KEY ELEMENT #2. Actual or Imminent.
o P Injured. Must be among the injury suffered.
* If hasn’t already occurred --> must be virtually certain to occur.
o NOT Speculative: Geographic and Temporal Nexus
* Geographic: e.g. wilderness area. Not just in the area, but right there.
* Temporal: Not just some day in the future, but concrete plans/dates to be there.
* Near-term. Tree falling in the forest; Does it make a sound? Tree says “shit!”
* Bottom Line: Must be experienced directly, and soon, by P.
CAUSATION & REDRESSABILITY (CONSTITUTIONAL ELEMENTS #2 & #3)
* Rule: To satisfy constitutional requirements of standing, an injury in fact must also be caused by the challenged agency action redressable by a favorable decision.
* Causation: Deals w/ the connection b/w the D’s conduct and the alleged injury.
o Rule: To establish causation, a P ordinarily must show that an alleged injury is “fairly traceable” to the challenged agency action.
* Similar to proximate cause in torts.
* Redressability: Implicates the connection b/w the alleged injury and judicial relief requested.
* General Principle: Neither is likely to be a problem if a person or business challenges the application of a regulatory program to it.
* Most Likely Scenario: Indirect Injury—Unlawful regulation (or lack of regulation) of someone else
o Direct Injury: Agency commands or denies permission that injures that party. No issue usually.
o Indirect Injury: Agency regulates “loosely” (grants permit/nonintervention) to 3rd party. Then the 3rd party competes/develops, causing injury to the party. Intervening party problem.
* Rule: When P is not himself the object of the government action or inaction he challenges, standing is not precluded, but it’s ordinarily “substantially more difficult” to establish. Defenders of Wildlife
PRUDENTIAL REQUIREMENTS
* Three requirements, most important to admin law is zone of interest test.
* Third Party Standing
o Rule: Litigants must assert their own rights, NOT the rights of 3rd parties not before the court.
o Setting: All 3 constitutional elements met (injury in fact, causation, & redressability); and P injured—but the rights belong to a 3rd party.
o Blackie the Talking Cat
* P’s put on show, charged admission. City made them get permit. P clearly injured, lost opportunity to put on show.
* P alleged that cat’s free speech rights were violated.
* “Blackie can clearly speak for himself.” Hahaha. Cat should assert his own rights, despite the owners being injured.
o Or, e.g., party is wrongly denied benefits, doc loses business. Doc can’t sue the agency.
* Generalized Grievances
o Flip side of injury in fact—not distinct & palpable. Better addressed politically.
o But contrast “widely shared injury,” which is distinct and does confer standing.
* E.g. Faulty levy in New Orleans. Injury is widely shared, but each person is injured in a distinct and palpable way.
* Zone of Interests Test—“Arguable w/in Zone of Interests” Test
o Defined. “Within the meaning [zone] of a relevant statute” --> You’re the type of person sought to be protected by the statute.
o Applies ONLY when the parties state a cause of action under the “adversely affected or aggrieved” component of § 702; NOT when parties challenging agency action have suffered “legal wrong.”
o But Congress may override the Zone of Interest Requirement by creating a broad cause of action.
* Statutory Language: “Any person” can bring suit … Bennett
o Air Couriers. Postal workers had injury in fact, and arguably causation and redressability; but statute meant to protect delivery routes—not the jobs. Thus, workers not in zone of interest.
SPECIAL STANDING RULES FOR PARTICULAR KINDS OF PLAINTIFFS OR COMPLAINTS
* Associational Standing
o Three-part test—Generally pretty easy to meet.
o Rule: An association has standing on behalf of its members when:
* 1. At least one member has standing;
* 2. The interests at stake are germane to the organizations purposes; and
* 3. Neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. Laidlaw
* State Standing
o States get more generous standing than individual (ordinary) citizens. Massachusetts v. EPA
o Not clear how far this will go. Might allow generalized grievances.
* Taxpayer Standing
o Challenge tax assessment (easy)
o Challenge use of taxes (hard)
* E.g. oppose Iraq War. Can you challenge the war based on unconstitutional use of tax dollars? Answer: ALMOST NEVER. Such taxpayer lacks direct injury to establish standing.
* One possible exception, but virtually irrelevant.
o Bottom Line: Don’t use this method to get standing—It won’t work!
Laidlaw. Fear-based injury recognized. Redressability: More penalties = More deterrence.
CAPH. Injury was NOT caused by agency’s action. It simply refused to intervene.
8.6 TIMING OF REVIEW: FINALITY, RIPENESS & EXHAUSTION
GENERAL BACKGROUND
* Purpose. Doctrines of finality, ripeness & exhaustion are interrelated requirements that serve to prevent premature judicial review.
o Premature review is undesirable b/c:
* Allowing agency action to run its course may make judicial review unnecessary;
* Intervention by courts may disrupt and delay agency’s decision-making process; and
* Judicial review will be more informed and accurate when based on a complete admin record and benefits from fully articulated views of the agency.
FINALITY
* Setting. Derived from APA § 704, which provides a right of review of “final agency action for which there is no other adequate remedy in a court.” Similar provisions typically included in OS.
* Rule: Agency action is final if:
o 1. The agency process is complete, AND
* (“Consummation of the agency’s decision-making process”)
o 2. It has legal effect. i.e. affects rights/duties/obligations immediately.
* (“rights or obligations have been determined and legal consequences flow from it.”)
* E.g. Denial of RM petition is final, but granting a RM petition is just the beginning.
* Exception: Excessive delay in responding.
o When agency delays action for so long that is has effectively refused to act, the finality requirement is met.
o Six Factors for Unreasonable Delay:
* 1. “Rule of Reason”;
* 2. Where Congress has provided a timetable or other indication of speed;
* 3. Human health & welfare delays are less tolerable than economic delays;
* 4. Effect of expediting delayed action on other agency actions of higher of competing priority;
* 5. Nature and extent of the interests prejudiced by delay;
* 6. Court need not find any impropriety lurking behind agency lassitude.
EXHAUSTION
* Rule: P must present his argument to the agency before taking it to court. “exhaust” admin remedies.
* Three Components:
o 1. Prevents a P from circumventing the admin process
* “Pre-Agency Action.” Don’t mess w/ agency at all. Go straight to court.
* “Statute doesn’t apply to me at all.”
o 2. Requires P to pursue admin appeals.
* “Start agency action—Don’t want to finish it.”
* E.g. Get state DDS, don’t pursue further.
o 3. Parties must raise arguments at the agency level to preserve them for judicial review.
* “Gone thru entire admin process; but try to raise new argument.”
* More like a waiver argument. Object at the time or don’t raise later.
* Exhaustion (Recognized) Exceptions. Party need NOT exhaust remedies if: McCarthy
o 1. P will suffer irreparable, immediate harm, such that P could never be made whole;
o 2. Agency lacks authority or competence to grant requested relief;
* Most commonly, arguing that (OS) statute is unconstitutional.
o 3. Admin body is biased or has predetermined the issue before it.
* Waste of time to go to agency—it’s a forgone conclusion.
* Very hard to win.
* Internal Appeals—APA Darby
o SCOTUS interpreted § 704 to define the scope of internal appeals
o Rule: Must only exhaust internal appeals when:
* 1. Agency’s OS requires it (like SSA); and
* 2. Agency requires exhaustion by rule and stays the operation of its decision pending the completion of the internal appeal.
* Can’t be forced to comply until after the appeal. “stays the effect”
RIPENESS
* Setting: Grows out of “case or controversy” requirements of Art. III.
* Pre-Enforcement Review: Happens after an agency makes a rule but before it’s enforced against a party.
o Often but not always possible.
* Test in Abbott Labs (usually cited)
o “Fitness for review” weighed against “hardship to the parties by withholding court consideration”
o Tends to be Fit when decision involves legal aspects only.
o Tends to be Unfit for review when it must be applied to specific facts.
* More Recent Ohio Forestry Test [Tends to focus more on how it interferes w/ agency.
o Must consider 3 Factors:
* 1. Whether delayed review would cause hardship to the plaintiffs;
* 2. Whether judicial intervention would inappropriately interfere w/ further admin action;
* 3. Whether the courts would benefit from further factual development of the issues presented.
Is exhaustion a jurisdictional issue?
- Matters because
o Can’t waive, it’s mandatory, so it depends.
o Courts not able to make exceptions to jurisdictional requirements.
* So irreparable harm, agency lacks power, futility exceptions would be unavailable
- Term jurisdictional
o It’s not unless the statute explicitly says so
- Finality
o Agency process complete
o Direct/immediate/legal effect
- Ripeness
Outline 1 (better .doc version available on Drobox)
Administrative Law, Generally
A. Basic Doctrine: Administrative law governs agency action.
1. Administrative Agencies and Administrative Law
a. Admin Agency: any public body that exercises gov authority other than Congress, Pres, or Courts.
i. SCOTUS says President isn’t an agency, although it’s not explicitly stated in statute.
b. Administrative Procedure Act defines agency to include each authority of the Government of the United States, whether or not it is within or subject to review by another agency, with exceptions for things such as Congress, the Courts, governments of territories or possessions of the US, or the government of D.C., or except as required by 5 USC § 552.
c. Agencies not located in any department, such as EPA, NLRB and FCC are referred to in statute as independent establishments.
i. Insulated from presidential control, normally by “for cause” removal requirement and terms of years.
2. The Rise of the Administrative State
a. [History stuff, not important]
3. Why Agencies?
a. Implementation of certain programs are complex regulatory functions that Congress is not well suited for. Courts would be inundated.
b. More efficient. Sound policy judgment through neutral application of scientific knowledge.
c. Critics say isolated from political pressures and blah, not good.
4. Organic statute: statutes that govern an administrative agency.
a. As opposed to APA, which is general statute governing all administrative agencies
B. Principal Case
1. National Broadcasting Co. v. United States, 319 U.S. 190 (1943)
a. Criterion governing the exercise of the Commission’s licensing power is the “public interest, convenience, or necessity.” Shall distribute… as to provide fair, efficient, and equitable distribution of radio service to each of the same.
b. The public interest to be served under Communications Act is thus the interest of the listening public in the ‘larger and more effective use of radio.’
c. First amendment prevents prohibition of use based on any views or any arbitrary or capricious basis.
d. Radio is limited, not everyone has a voice, unlike other exercises of free speech.
e. Here, license limited with chain radio stations. Can only own so many stations.
i. Types of Issues
1. Statutory FCC Authority to issue Rules. Do they have the authority to issue these rules under the statute?
a. Statute says “have authority to make special regulations applicable to radio stations engaged in chain broadcasting”. Can “make regulations not inconsistent with law as it may deem… to carry out provisions of this Act.”… “Authority to prescribe the qualifications of station operators…”
b. Only limited by what serves public interest, can’t be arbitrary or capricious. The main reason/justification is to prevent stations for interfering with each other’s ratio stations. Or, middle ground, limited to purpose of making broadcasting available to the public.
i. So could interpret this narrowly or broadly in terms of the powers of the FCC. Court took middle ground.
2. Judicial review, Merits of Agency Action
a. Here, it’s arbitrary and capricious. They defer to the agency’s determination.
3. Procedures
a. Agency used public hearings mentioned as providing ample opportunities for input by affected parties.
4. Other, Consistency with higher laws, such as first amendment
a. FCC must comply with first amendment but details of why there was no important violation here.
ii. Remember, that FCC is always subordinate to statute. Also, they usually play a little fast and loose with separation of powers – doesn’t require strict separation, but rather that the powers overlap to some extent, and what’s important is that there are checks on administrative agencies. Executive appoints and removes, congress defines, and courts have review and enforce compliance with the law. Also, there is deference given to agencies’ policy judgments in the courts.
C. Related matters
1. Economic Justifications for Regulation
a. Economic theory = when markets function properly, they produce an ‘efficient’ allocation of resources that maximizes social welfare.
b. Economic justifications point to market defects or a market failure that warrants government intervention.
i. Non-competitive conditions, unequal bargaining power, excessive competition.*
ii. Externalities, such as harm to health, property or the environment
iii. Public Goods, characterized by 1) once produced, producer cannot control who benefits from it and 2) one person’s consumption of a public good does not diminish the possibility of consumption by others. Problem with tragedy of commons, overuse, or rationalization of standards means that markets operate more efficiently when products conform to the same standards.
2. Non-Economic Justifications for Regulation
a. Uneven distribution of wealth – ‘cause it offends social values
b. Objectionable transactions – such as laws against slavery or racial/gender discrimination
c. Non-market goods – allocates goods and services based upon ability and willingness to pay. Some goods or services are considered too important or otherwise inappropriate for allocation on this basis.
3. Fundamental Questions
a. Agencies which create binding laws is a lot of power. How to fix?
i. Oversight by government, most agency decisions are subject to judicial review for compliance with statutory standards and procedures, adequate support in the agency record, and compliance with other legal requirements.
Overview of Statutory Analysis
1. Legal Syllogisms
a. If-then statements. If a, then b, then c.
2. Statutes as Positive Law
a. Text is binding
i. If x then b; does not mean, unless stated explicitly, if not x then not b.
b. Implications for analysis
3. Framework
a. Identify/situate issues
i. What are the rights and duties of the agency, what powers do they have, etc.
b. Zoom-in on provisions/operative terms
c. Structure analysis
d. Interpretive Issues
i. Textual ambiguity/uncertainty
ii. Interpretive inferences and canons
- Organic Statutes
o Establish Regulatory or Benefit Program
* Organic Statute establishes legal rights/duties
* Terms and Scope
o Governs Administrative Agency
* Composition and Location
* Power and Authority to act
o Requirements for Action
* Substantive standards for agency action
* Procedural requirements for agency action
* Provisions for judicial review
- APA
o Generally applicable statute; applies to all agencies, except some things
o Two sets of provisions
* Procedural provisions (551-559)
* Judicial Review Provisions (701-706)
o Interaction with the Organic Statutes
* May supplement or displace organic requirements (559)
* Organic Statutes may trigger APA requirements or actions. (this applies if statutes says x happens)
* Organic Statute Supersedes APA
Agencies and Modes of Agency Action
- Five modes of agency action
o 1. Legislative rules
* Agencies act through the adoption of binding regulations that have much the same appearance and effect as statutes
o 2. Agency Common Law
* Agencies act through policy-making adjudications that interpret and apply statutes and regulations with precedential effect in later agency decisions.
o 3. Mass adjudication
* Many, especially those administering benefits and claims systems, engage in mass adjudication and must determine hundreds of thousands or even millions of cases promptly, fairly, and accurately
o 4. Informal actions
* Agencies take a host of informal actions that resolve issues, provide guidance to the public, or otherwise implicate public policy
o 5. Enforcement
* Agencies take actions to enforce statutory or regulatory requirements, which include investigations, prosecutions, and the implementation of regulatory methods to enhance enforcement.
- Agencies
o Environmental Protection Agency (EPA)
* 1. History and Purpose
* 1970, Nixon.
* Federal environmental regulation, justified on grounds of: tragedy of commons; pollution as a negative externality; moral or ethical obligation
* 2. Composition and Structure
* Free-standing regulatory agency (independent establishment)
* Headed by single individual, EPA Administrator
* EPA leaders are appointed by president with advice and consent of Senate, serve at pleasure of president
* 3. Statutes and Programs
* No single organic statute. Derives authority from Clean Air Act, Clean Water Act, Resource Conservation and Recover Act, Toxic Substances Control Act, and others.
* 4. Administrative Functions
* Oversees various environmental programs and performs a host of administrative functions for those programs
* Registration of pesticides, may compel parties to clean up releases of hazardous substances, rulemaking powers to regulate on a host of topics, and others
o National Labor Relations Board (NLRB)
* 1. History and Purpose
* National Labor Relations Act, 1935.
* Employees have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.
* Prevents labor unrest, combats wage depression.
* 2. Composition and Structure
* Independent agency, free-standing.
* Board’s five members are appointed by President, consent of Senate, 5 year terms, may be removed for cause only, by the President.
* 3. Statutes and Programs
* Organic Statute: NLRA.
* Establishes certified unions, ensures good faith negotiations. Applies to all interstate commerce employers.
* 4. Administrative Functions
* Oversee union elections, works primarily through adjudications rather than rulemaking.
o Social Security Administration (SSA)
* 1. History and Purpose
* Social Security Act, 1935
* Justified as public good, protects vulnerable members of society, safety net that the market does not provide, preserves social order by preventing widespread poverty. Although most benefits or justifications are non-economic
* 2. Composition and Structure
* Used to be under the Department of Health and Human Services, headed by Commissioner, appointed by president with advice and consent of Senate. Six year term, removable only for cause.
* IS now a free-standing independent department.
* Massive program, providing benefits to millions of people. Much of resources go to determining or adjudicating eligibility in respect to disability.
* 3. Statutes and Programs
* SSA administers two principal benefit program, OASDI and SSI (social security and disability). OASDI is insurance that determines eligibility on basis of contributions into system by employees and employers. SSI = need based determination of eligibility.
* 4. Administrative Functions
* Determines eligibility. Conducts review, hearings, appeals of determinations.
o Internal Revenue Service (IRS)
* 1. History and purpose
* 1862, Congress enacted income tax and created position of Commissioner of Internal Revenue.
* Organic Statute: Internal Revenue Code.
* 2. Composition and Structure
* Located within Department of Treasury. Commissioner appointed by President, advice and consent of Senate. 5 year term, removable at will of President.
* Massive in size and complexity.
* 3. Statutes and Programs
* Individual income tax
* Corporate income tax
* Estate and Gift tax
* Excise tax (production of certain commodities)
* Other programs (payroll deductions for things like medicare)
* 4. Administrative functions
* Assesses taxes imposed by federal law, applying rules and rates to determine amounts owed.
* Collects taxes through withholding from payroll or other income, and through voluntary filing of tax returns.
* Enforces compliance with tax obligations, auditing accounts, collecting and assessing penalties for nonpayment. May result in criminal prosecutions for nonpayment
o Federal Communications Commission (FCC)
* 1. History and Purpose
* Regulation of communications that cross state lines.
* Organic Statute: Communications Act of 1934, to regulate interstate and foreign commerce in communication by wire and radio so as to make available… to all the people of the United States… a rapid, efficient, Nationwide, and world wide wire and radio communication service with adequate facilities at reasonable charges…
* 2. Composition and Structure
* Independent agency directed by 5 commissioners, appointed by Prez and confirmed by senate for 5 year terms. Only 3 may be of the same political party, 1 designated as chair by Pres. No provision for removal, assumed for cause only.
* 3. Regulatory Programs
* Telephone, much like common carrier, only regulates to promote competition and prevent monopoly. Must file rates and charges with FCC. Investigates complaints.
* Radio and TV: Grants authority to prohibit transmission without a license, give “if public convenience, interest, or necessity will be served thereby.” Broad powers here.
* 4. Administrative Functions
* Variety of programs to implement policies. Extensive body of regulations.
* Enforcement of statutory and regulatory requirements.
The Administrative Procedure Act
- APA
o General federal statute governing the administrative process.
o Establishes basic procedures for agencies to follow as well as applicable provisions concerning availability and scope of judicial review.
- A. Basic Doctrine
o 1. Key Concepts
* Distinction between adjudication and rulemaking
* Rulemaking
o Agency process for formulating, amending, or repealing a rule.
* Rule
o The whole or a part of an agency statement of general or particular applicability and future effect.
* Adjudication
o Process for formulation of an order.
* Order
o Whole or part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rule making but including licensing.
o 2. Rulemaking (§553)
* 3 broad categories of rules and applicable rulemaking procedures
* 1. Notice and comment
o Generally, notice of a proposed rule must be published in the Federal Register and must include the content of the rule, instructions for submitting comments, and other pertinent information.
o Shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation.
* 2. Exceptions (553(a) and (b))
o Rules exempt from notice and comment procedures (a)
* 1) Military or foreign affairs function of the US
* 2) Matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts
o (b) Interpretive rules, general statements of policy, rules of agency organization, procedure, or practice; if for good cause finds notice and comment unpractical.
* 3. Formal Rulemaking
o Rules that must be promulgated using the formal hearing procedures, which contemplate an on the record hearing that closely resembles a jury trial.
o Triggered when another statute requires a rule to be made on the record after opportunity for an agency hearing. Organic statute may trigger this.
* 4. Additional Requirements
o ABA establishes basic requirements for rulemaking, but additional requirements may arise.
o Organic statute may impose procedures that supplement or supersede APA requirements
o Agency may adopt procedures that supplement or exceed statutory requirements and those procedures will bind the agency
o A rulemaking may be subject to regulatory impact analysis requirements imposed by statute or executive order.
o 3. Adjudication (§554, 556, 557)
* Any type of agency action that is not rulemaking.
* Scope of ADA adjudication
o In every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing.
* ADA hearing requirements
o Personal notice of hearing; legal authority and jurisdiction; matters of fact and law asserted; ban ex parte communications; presided by officer or administrative law judge; hearing on the record; right to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross examination as may be required for a full and true disclosure of the facts.
o Hearings on the record
o 4. Enforcement Functions
* Depends on organic statutes. Not much in ADA here.
o 5. Judicial Review
* Availability of Review
* Establish a general presumption that judicial review of agency action is available (702)
* Cause of action supplements any specific review provisions in organic statute’s organic statute.
* Exception, 701(a) and 704. For whatnot.
* Scope of Review (706)
* Clearly erroneous standard of review
* Court may set aside agency action that is a) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.
* Standard is very deferential to the agency determination.
- Principal Cases
o Richardson v. Perales, 402 U.S. 389 (1971)
* Facts
* Claimant filed for SS benefits on back injury that wasn’t relieved by treatment and surgery.
* SSA concluded claimant hadn’t established sufficiently severe impairment to prevent engagement in gainful activity. Doctors concluded injury and emotional overlay wasn’t sufficient disability.
* Rule
* Procedural due process is applicable to the adjudicative administrative proceeding involving the differing rules of fair play, which through the years, have become associated with differing types of proceedings; and that the right to SS benefits is in one sense earned.
* Application
* What procedural due process is required with respect to examining physicians’ reports in SS disability claim hearing?
o May be received as evidence, and despite presence of opposing direct medical testimony and testimony of claimant, may constitute substantial evidence supportive of a finding by the hearing examiner adverse to claimant, when claimant hasn’t exercised right to subpoena the reporting physician and providing himself with opportunity for cross examination.
* Conclusion
* It’s fine.
* Class Notes on Richardson
* A) Reliance on reports (hearsay, cross)
* B) Separation of Functions
* C) Three Sources: SSA, APA, Due Process
o Robinette v. Commissioner of the IRS, 439 F.3d (8th Cir. 2006)
* Facts
* P failed to file tax returns for years, owed over 1 million in taxes, penalties and interest.
* IRS sent notice. He submitted offer of compromise. IRS accepted, but then failed to file again. IRS notified him that failing to file would place him in default on offer-in-compromise, resulting in levy against his property for the entire amount owed. He was placed in default, assets levied, P requested hearing before imposition of levy. Process consisted of calls and correspondence between IRS appeals officer and P’s atty. Levy was approved. P appealed arguing abuse of discretion, claiming his failure to file 1998 was not material to the offer-in-compromise.
* Rule
* Standard of review: abuse of discretion.
* Organic statutes modify APA only if explicitly stating so. Legislative intent to depart from the norm must be explicit.
* Application
* Here, dispute about scope of record. Does it include first determination of compromise in addition to current issue?
o Tax court says that it may receive new evidence while reviewing if appeals officer abused discretion. Largely based on evidence not presented at initial hearing.
* Usually, limited to evidence already disclosed.
* I mean, can’t be held to abuse discretion for failing to recognize evidence not presented.
* Ruling
* Nope. Review should not exceed the record created before the agency.
* Class Notes on Robinette
* Initial hearings don’t trigger 554, but does apply APA review procedures.
- C. Related Matters
o 1. The APA and Other Laws
* APA interacts in important ways with agency’s organic statutes.
* APA’s formal rulemaking and adjudication procedures are triggered by language in the agency’s organic statute requiring that an agency decision must be “on the record” after “opportunity for agency hearing”
Unit 1.5: Agencies and the Legislative Power
- A. Basic Doctrine
o 1. Non-delegation doctrine
* Vesting of legislative power in Congress precludes the delegation of legislative power to any other body.
* Permits subsidiary lawmaking authority to president or agencies as necessary and proper to execution of the laws
* Organic statute must provide a standard to guide and control agency discretion.
* Cannot be overly broad or powerful. Considerations:
o Breadth of power
o Recipient of Authority
o Procedural Safeguards
o Criminal Sanctions
o 2. Bicameralism and Presentment
* Legislation must pass both houses and be presented before the president to be signed into law
* Congress can’t allow agency action to skirt this power. Can’t have legislative veto of agency action.
* No line item vetoes, either.
o 3. Legislative power and the Rule of Law
* President may not order officers to violate a valid statute.
* Requires that statutes guide and constrain agency discretion.
Unit 1.6: Agencies and the Judicial Power
- 1. Administrative Adjudication
o Cases distinguish between public rights and private rights.
* Public rights involve the government, and Congress may delegate the adjudication of public rights to agencies
* Derived from sovereign immunity doctrine. Because state can’t be sued without consent, congress may elect to afford only an administrative rather than judicial remedy.
* Private Rights
* Permissible only if the agency is acting as an adjunct to the courts, provided that the courts retain the essential attributes of judicial power, including authority to review agency decision.
- 2. Application of the Schor Test (3 factor test)
o 1. The extent to which the essential attributes of judicial power are reserved to Article III courts, and the extent to which the non-Article 3 forum exercises the range of jurisdiction and powers normally vested only in Article III courts.
* Scope of jurisdiction, standard of judicial review, incidental powers of the agency
o 2. Administrative adjudication of public rights is not per se constitutional, but rather may be unconstitutional if other factors weigh against it.
* “The nature of the right”
o 3. Congressional reasons for delegating adjudicative authority
* Vague standard, but basically, if it tries to take jurisdiction from Article 3 courts, that will weigh against it’s constitutionality.
- 3. Seventh Amendment Wrinkle
o Agencies, no right to jury trial, so it may be a deprivation of that right.
* Congress can only assign public rights to administrative adjudications.
o Public rights definition expanded - Congressionally created rights, closely integrated into a public regulatory scheme, appropriate for agency resolution
- Recap and Key points
o Due process is the minimum protection. The APA provides sufficient due process as a floor (§559), and the organic statutes provide even more procedural safeguards.
* Review of agency actions is on the record.
o About Exercise 1:
* Be sure to be exact with language. Make judgment calls about what to include and what not to include. Get a goal of what to cover. And, this isn’t the kind of thing you do in real life. More often, you would look to a treatise.
Unit 1.7: Agencies & The Executive Power
- A. Basic Doctrine
o 1. Unitary Executive
* The president oversees a single unified executive branch capable of prompt, coordinated action.
* Implies presidential control over executive officers
o However, independent agencies exist, insulated from Presidential authority
* Practical means of control
o Power of appointment; direct oversight, or the ability to give orders and have them obeyed; removal.
* Two kinds of presidential control
* Power to ‘take care’ that the laws are faithfully executed and
o Ensure that executive branch officials faithfully comply with the law
* The power to control the exercise of delegated administrative discretion.
o Constitution not clear about the degree of control, so it depends. Military matters, President has absolute control and for civil, Congress may create independent agencies.
* Independent agencies.
* Highlights the differences in kinds of control
* President may ensure faithful execution of the laws, but only remove for cause. But cannot control their action
o President has less power. Should be accountable to Congress? Meh, they suck.
o 2. Appointments
* President controls through appointment of officers loyal to him. May appoint, although often requiring congressional approval.
* Appointment required of all public officers, who exercise “significant” authority pursuant to the laws of the US.
* Principal and inferior officers. Principal must be confirmed, inferior may be appointed by president alone, courts, or heads of departments.
o 3. Direct Oversight
* Ranges from informal day-to-day instructions to formal written executive orders.
* Informal directions may raise procedural questions concerning ex parte communications.
o Requires docketing of communications of central relevance to rule-making
* Constitution (Article II) doesn’t directly say anything that authorizes direct oversight, except maybe as commander in chief for Army and Navy, but it doesn’t say that about executive agencies. Only requires that POTUS may ask for written opinions for principal officer of executive departments.
* Executive orders
* Generally designed to direct inter-workings of executive branch, they do not establish rights or responsibilities for outside parties. In order to be enforceable, must:
o 1) have specific statutory foundation
o 2) neither statutory foundation nor XO must preclude judicial review
o 3) must be law to apply… whatever
* May be ancillary to explicit constitutional power or pursuant to statutory authority, or implied or inherent authority.
* President may not direct officers to violate the law.
o 4. Removal
* Power to remove is generally regarded as the most important means of controlling executive branch employees.
* The constitution is generally silent. Only says Art II §4: President, VP, all civil officers, removed on impeachment, and conviction of treason, bribery, or other high crimes and misdemeanors.
* President has inherent authority to remove executive officials. However, may limit to for cause removal.
* Generally,
* 1) Congressional control over removal of officers performing any executive functions is impermissible; and
* (2) For-cause removal provisions are valid if they do not unduly interfere with the President’s executive functions in light of the functions and authority of the officer in question.
o POTUS must ensure faithful execution of the laws.
- B. Principal Cases
o Free Enterprise Fund v. Public Company Accounting Oversight Board, 130 S. Ct. 3138 (2010)
* Facts
* Act regulated accounting industry under Board. Board may regulate every deal of accounting firm’s practice, including hiring and… ethics standards.
* Act places board under SEC oversight. Members of the
* Dual for-cause limitations on removal of board members. SEC board only removable for cause, and SEC board can only remove Board for cause. President has very limited control over Board.
* Rule
* Executive power vested in President
* Removal power…
* Conclusion
* Dual for cause limitations on removal is in violation of separation of powers doctrine. (pretty much any lesser other ones are okay)
o New York v. Reilly, 969 F.2d 1147 (D.C. Cir. 1992)
* Facts
* EPA regulation challenged that requires incinerator operators to separate a percent of certain kinds of waste from their waste streams before incineration and would have placed a ban on the incineration of lead-acid vehicle batteries.
* Clean Air Act, authorizes EPA to regulate municipal incinerators as sources of air pollution.
* Requires EPA to set standards of performance.
o PEA’s BDT analysis resulted in proposals, including on limiting emissions of incinerators. Prohibition against burning lead-acid vehicle batteries.
o EPA submitted proposal to Office of Management and Budget pursuant to Executive Order. OMB did not approve proposed rules. EPA appealed to Counsel. Council rejected proposed rules.
* Issue
* Petitioners claim EPA acted improperly in relying on opinion of the Council rather than expressing its own expertise.
o No. Did exercise it’s own, and properly considered Council’s views in formulating final policy. EPA just changed position, which is okay.
- C. Related Matters
o 1. Principal v. Inferior Officers
* It’s confusing and I don’t know. Apparently neither does anyone. Covered this in Corn Law in more detail. Just refer to that when writing my final exam out.
o 2. Judicial Enforcement of Executive Officers
* When executive orders impose procedural or substantive requirements on agency officials, question may arise whether other parties may seek judicial enforcement of those requirements.
* Generally no
* But yes if
o 1) executive order must have a specific statutory foundation.
o 2) neither the statutory foundation nor the executive order must preclude judicial review
o 3) must be “law to apply”, that is, there must be an objective standard by which a court can judge the agency’s actions.
o 3. The Future of Independent Agencies
* For cause removal of inferior officers constitutional? Idk…
o 4. Recess Appointments
* President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.
- D. Problem
o National Labor Relations Act
* For cause removal of General Counsel of NLRB
o Questions
* 1) Yes, violation of appointments clause.
* 2) Yes, as executive officer, was bound by his order.
* Maybe?
* 3) It’s silent on this statute. Sort un unclear if he has this power, or if he needs cause, but he has for-cause grounds.
* I don’t think Gen Counsel has ground to stand on here, if I’m understanding the question correctly.
- Other Things talked about in class
o Separation of powers issues
* Outer limits of agency structure
* Legislative and judicial power limits are well established, but executive or presidential control over agencies is the most significant and controversial
* Legislative power and agencies
* 1. Power to make law
o Power to create binding rules
o Ends/Means of policy
o And then the Executive implements and the judiciary applies
* 2. Delegation
o Need for and limits on delegation of power
* Because legislature can’t execute or interpret it’s own laws
* But can’t delegate all legislative authority, non-delegation doctrine
* Intelligible principle test:
o Congress must lay down by legislative act an intelligible principle to which the person or body authorized to act is directed to conform, such as legislative action is not a forbidden delegation of legislative power.
o Three functions: 1) forces congress to make important choices of social policy, 2) intelligible principle guides exercise of delegated discretion rather than leaving them without any guidance, 3) courts must have ascertainable standards by which to determine if the agency has exercised proper discretion.
* May look to other factors too
o Scope of power
* If scope is narrow, can be wide discretion. If scope is wide, discretion must be narrow. It’s about the total power being limited, based on these.
o Non-delegable power
* Like the power to tax, inherently lies with legislature and is especially protected
o Recipient of authority
* Treats private parties vested with authority with suspicion
* Independent power; may accept broader delegation of authority to president in foreign relations powers, or the states, or native tribes
o Other
* Existence of procedural safeguards to constrain discretion.
* Criminal sanctions are generally disallowed for violations of agency laws
* Judicial review of agency actions is looked at.
* 3. Variations on Bicameralism and Presentment
o Legislative Veto (invalidated in Chadha)
* Allows house or senate to veto agency action. Can’t do that.
o Line Item Veto (invalidated in Clinton v. New York)
* Can’t give president authority to veto spending provisions.
Unit 2.1: Introduction to Judicial Review
- Deference to agency action
o Components of Decisions or judgments of agency determinations
* Facts
* They make decisions about the facts and what they are.
* Law
* They interpret legal standards
* Policy
* Mix of law and fact, determining how the law should apply to the facts, and exercising discretionary judgment.
o Ethyl Corp
Ethyl Corp.—The “Hard Look” Doctrine [Covered also in 2.5: A&C].
* J. Bazelon v. J. Leventhal. Illustration of debate: greater deference v. aggressive review.
o B Approach: Look at the procedures, ensuring that the agency looked at all the issues.
o L Approach: Responsibility to learn the technical info by steeping in the agency’s record, therefore taking a “Hard Look” themselves.
o L won. “Hard Look” by Courts (rather than Agency) is largely used.
Unit 3.0 Statutory Analysis – Constructing Statutory Frameworks
- Interactive tool for analysis (what it is good for)
o Recognize issues
o Identify applicable rules
o Use facts to develop conclusion
- Organizing the Framework
o 1. Order of issues and rules
* Some flexibility, but sometimes you have to analyze one issue before you get to the next.
* If a, then b,c, or d. if c, then e, f,g. Can’t go willy-nilly describing rules and things.
* Hierarchy of rules
* A, b, or c; a, b, AND c? etc.
* Statement of rules
* Must be accurate and complete
* Must be precise, often meaning you should use the text of the statute
- APPLYING TO §706
o 1. Is review available?
* Standing, exceptions to review apply, is it timely, admin remedies exhausted, final agency decision, etc.
* Will focus on this at the end of the semester
o 2. Conduct of review (§706)
* “To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall:
* [On questions of law --> NO deference to agency. But not so in practice.]
* (1) compel agency action unlawfully withheld or unreasonably delayed; and
* (2) hold unlawful and set aside agency action, findings and conclusions found to be:
o [Six standards of review:]
o (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance w/ law;
* [Read as a single standard called the “arbitrary and capricious” standard of review. Highly deferential.]
o (B) contrary to constitutional right, power, privilege, or immunity;
* [Unnecessary statutory provision. Obviously if agency acted unconstitutionally, it would be struck, because the constitution supersedes the APA and applies]
o (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
* [Agencies under executive and subject to rule of law]
o (D) w/o observance of procedure required by law
* [pretty clear, if they violate procedural rules]
o (E) unsupported by substantial evidence in case subject to sections 556 & 557 or otherwise reviewed on the record of an agency hearing provide by statute; or
o (F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the review court.
* The court shall review the WHOLE record [before the agency; NOT a record created by the court] or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.
o [ignores harmless error]
* A. Selecting the standards
* B. Applying the standards
* 1. Standard in the light of Organic statute
- Overton Park (case)
o Dep of Trans trying to build highway through park
o Standards of review
* No substantial evidence, because not an adjudication under 556-557
* De Novo Review inapplicable
* Defined very narrowly
* Basic inquiries
* Is it within the statutory authority and discretion?
* Is it not arbitrary and capricious of facts and policy?
* Did they follow necessary procedures?
o Deference to Agency under arbitrary/capricious standard
* Presumption of regularity – i.e. deference
* But presumption doesn’t shield from thorough proving and in-depth review – i.e. non-deferential
* The court must consider whether decision based on consideration of relevant factors, and if there is a clear error of judgment.
* Inquiry into facts must be searching and careful, but
* Ultimate review is a narrow one. Court isn’t empowered to substitute its judgment for that of the agency.
* So the good news, is that there is always room to argue about deference because it’s somewhat schizophrenic.
Outline 2 (better .doc version available on Drobox)
I. Introduction to Administrative LawA. Agency
1. §551: Agency means each authority of the US Gov. but does not include :
a. Congress, Federal Courts, Governments of territories or possession of the US, Government of D.C.; Military authority
b. Basically Agency is any part of the government other than Congress, President, Judiciary
2. Two Types of Agencies:
a. Executive Agencies: (FDA, IRS, FBI)
i. Subject to greater degree of presidential control
ii. Established as department or part of department
iii. Usually headed by a single person
iv. Head is removable at will of president
b. Independent Agencies (NLRB, SEC, FTC)
i. Subject to lesser degree of independent control
ii. Free standing
iii. Headed by board or commission comprised of representatives from both parties
iv. Board members/ commissioners serve for fixed term and are only removable for cause
v. Limits on party affiliation
3. What do Agencies do?
a. Execute the law by which they are established and given authority over
b. Regulate private conduct: regulatory agencies can include local governments
c. Administer Entitlement Programs: MediCare, Medicaid, Social Security
d. Everything Else: economic inefficiency and market failure
i. Agencies can require public disclosure to rectify market failure
ii. Deportation
iii. Passports
4. Why Agencies are Needed:
Justification
Defect
Harm
Agency
Inadequate information
Purchase wrong/ dangerous product
Loss of money, physical harm
FDA, FTC
Noncompetitive conditions
Monopoly
Price increases, quantity decreases
Utility regulations
Excessive competition
Unsafe conditions, inadequate supply
Transportation, agriculture
Unequal bargaining power
Low wages, poor working conditions
National Labor Relations Board
Spillover costs
Pollution, unsafe conditions
Safety, health
EPA, OSHA
Public goods
Free riders
Under production
Police, education, welfare
a. Often the market does not work the way it should; agencies ensure efficient allocation of resources
b. Non-economic justifications
i. Pursue values inconsistent w/ efficient allocation
ii. Equity and fairness (e.g., organ transplants)
iii. Redistribute wealth
iv. Altruism
5. Types of Agency Action
a. Rulemaking
i. Equivalent of legislative power; agencies promulgate general standards that control future conduct by regulated entities
ii. Power given to agency b/c legislature is neither equipped or inclined to make decisions
iii. Compare to Legislation
1. Agencies may issue rules only to extent authorized by their organic act
2. Agencies must issue rules in accordance with procedures spelled out by legislature (whether in organic statute (OS) or Administrative Procedure Act (APA))
3. Agency rules are subject to judicial review for compliance w/ substantive standards and procedural requirements in organic statute
b. Adjudication
i. Equivalent of judicial power; agencies apply law to facts and issue binding results
ii. Compare to power of Art. III courts
1. Agencies have limited juris; scope of power limited to area established by OS
2. Agency results subject to Judicial Review
c. Investigations
i. Equivalent of executive power
ii. Agencies have power to subpoena/compel testimony, can usually require regulated entities to generate information, can inspect facilities
iii. May be authorized to prosecute by bringing administrative proceedings in court (e.g., NLRB can declare unfair labor practices) (Administrative compliance proceedings)
iv. Can require regulated entities to generate and keep records
v. Some agencies have power to inspect facilities
vi. Can bring actions directly to the judiciary
6. Separation of Powers Issues:
a. Agency officials are not elected
b. Agency law judges don’t always have to satisfy Art. III requirements
c. May be free of presidential control
d. Agencies often perform multiple governmental functions
7. US Constitution doesn’t mention administrative agencies anywhere
Pro-Agency Position
Anti-Agency Position
Give close call of constality to agency
Views agencies as 4th head of gov.
Overlook minor noncompliance w/ procedures
Have own agendas: self-interest, not public
Defer to substantive agency decision
Tend to infringe on individual rights
Close call of constility agency structure as illegality
Require strict adherence to agency procedures
No satisfied by superfic review of substantive decisions
B. A Walk Through the Administrative Procedures Act: the APA
1. Primary statue that governs federal administrative law
2. Background:
a. APA adopted in 1946 as a compromise b/w opponents and proponents of regulation
b. Opponents of agencies won on adjudication, proponents of agencies won on rulemaking
c. APA provides general requirements that may be superseded/supplemented by agency’s OS
d. Agencies may be subject to addition procedures due to constitutional provisions
e. Residual common law doctrines also come back at times and supplement the APA
Type of Agency Action
When does APA Apply
Formal or Informal
Applicable Procedures
Rulemaking
Section 553 applies unless there is involved:
(1): a military or foreign affairs function of the US or
(2) a matter relating to agency management or personnel or to public property. §553(a)
Formal procedures are required when “rules are required by statute to be made on the record after opportunity for an agency hearing. §553(c)
Formal:
§§ 553(b), 556, 557
Informal: §553(b)—(d)
Hybrid:
Check the OS
Adjudication
Section 554 applies in every case of adjudication “required by statute to be determined on the record after opportunity for an agency hearing,” with six exceptions. §554(a)
Formal procedures are required when adjudication is “required by statute to be determined on the record after opportunity for an agency hearing,” §554(a)
Formal:
§§554(b)—(c), 557—557
Informal:
not governed by APA; see OS, agency regulations, etc.
3. Definition of Adjudication and Rulemaking
a. Adjudication: is the process for the formulation of an order. An ORDER is the whole part of a final disposition other than rule making but including licensing—if it’s not rulemaking it’s adjudication
b. Rulemaking: is the agency process for formulating, amending, or repealing a rule. A RULE is an agency statement of future effect designed to implement, interpret or prescribe law or policy
4. Rulemaking:
a. General:
i. Rulemaking means agency process for formulating, amending, or repealing a rule. §551(5)
ii. Rule means the whole or part of an agency statement of general or particular applicability and future effect … §551(4)
iii. Procedures for rulemaking (553) apply unless concerns military or foreign affairs or matters relating to agency management.
b. Process for Formal Rulemaking
i. Public notice. §553(b)
ii. Follow steps required by §§556—557
iii. Few statutes require formal rules
c. Process for Informal Rulemaking
i. §553(b): Agency must publish notice of a proposed rule in the federal register (unless for interp. Rules, general statements of policy or rules of agency org., proc. & practice, or good cause)
ii. §553(c): Agency must give interested persons opportunity to participate in rule making through submission written data, views, or arguments w/ or w/o opportunity for oral presentation
iii. §553(c): Agency must incorporate in rules a concise general statement of their basis and purpose
d. Process for Hybrid Rulemaking:
i. Congress imposing particular RM procedures on particular agencies that are b/w formal and informal. e.g. FTC
5. Adjudication:
a. General:
i. Adjudication means agency process for formulation of an order. §551(7).
ii. Order means the whole or part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rulemaking but including licensing. §551(6)
iii. APA only has formal adjudication procedures there in, if they’re not triggered by §554(a) then the APA is silent on what procedures govern the adjudication. The OS, or its own regulation may govern informal adjudication.
iv. If it’s not rulemaking, then it’s adjudication
b. Process for Formal Adjudication: (Must resemble a trial)
i. §554(b): Agency must give notice to the parties of its hearing
ii. §554(c)(1): Agency must provide parties with opportunity to settle
iii. §556 – 557: Agency must follow these sections
1. Use an Administrative Law Judge (ALJ)
2. §556(d): burden of proof on the agency, also establishes evidentiary rules and describes extent of cross examination
3. §556(e): agency decision must be based exclusively on the record—no ex parte communications
4. §555(b): right to legal representation
5. §555(d): Agencies have subpoena power
6. §557 is appeal procedures
c. Process for Informal Adjudication:
i. Not governed by the APA
ii. Look to agency’s mandate
iii. See if the due process clause applies to the agencies’ actions
iv. See OS and agency regulations, and due process
d. §554(a): Decides b/w the two
6. Judicial Review
a. Three Questions:
i. Is Judicial Review Available?
1. Generally review is available
2. Exceptions (when review is not available)
a. When Statutes preclude it
b. §701(a): agency action is committed to agency discretion by law
ii. Is the Timing Right?
1. §704: generally the agency action must be final
2. Parties must generally exhaust all internal appeals procedures
3. There may also be questions of ripeness
iii. Does the litigant have standing?
1. §706(2): Constitutional requirement of case/controversy
2. §702: APA requires that person suffer a legal wrong or be adversely affected or aggrieved.
3. Zone of interest of those that the statue was designed to protect and against the specified violation
b. What is the Scope of Review
i. According to §706, there are three levels of review:
1. De novo (court must agree with agency to uphold decision)
2. Substantial evidence (uphold if reasonable, but do not have to agree)
3. Arbitrary and Capricious (highly deferential) (affirm unless decision was arbitrary)
ii. Deciding what Standard Applies
1. Look to OS
2. Typically, court decides based on its interpretation of the statute
c. Summary:
i. Both adjudicatory and rulemaking decisions are subject to judicial review
1. Unless stated in §701 or prohibited in the agency’s mandate
2. Congress has delegated final decision making authority to agency in manner other than by an express declaration
3. Can only seek judicial review on a final action and after exhausting any administrative remedies
4. Must be ripe
5. Must have standing: constitutional requirements and potentially statutory requirements
a. Person suffering legal wrong b/c of agency action or adversely affected or aggrieved by action
b. Zone of interest
C. Administrative Law Practice:
1. Meeting w/ an Agency Attorney
a. APA prohibits ex parte communications b/w the two, but the proceeding hasn’t actually begun, so APA likely does not apply
b. Ensure that client is not violating any regulations to avoid sanctions
c. Quick resolution w/o going to court, try to get decision in writing, could provide a reliance defense, similar to estoppel, unlikely to work against government. Yet, in assessing penalties, cts look @ good faith
d. Disadvantages of meeting w/ agency attorney—don’t want to divulge information that agency would use
2. Effects of Internal Memo
a. Probably should not ignore. It’s agency position though may not be a published rule §551(4) & (5)—is it a statement of future effect designed to implement, interpret, or prescribe law… thus it is a rule and thus it is rulemaking.
b. Procedure requirement that apply to rulemaking depend upon whether or not it should be on the record after chance for hearings
c. Also §552, which is part of the freedom of information act requiring the public of substantive rules. This would seem to include the memo
3. Receiving a Letter from Agency Counsel
a. Is it rulemaking? No clear definition, but letter is likely an agency statement.
b. Will it have future effect? Rules are typically limited to general statements.
c. Is it adjudication? If so, consider whether adjudication procedures apply.
d. Is the letter a final disposition? Depends on phrasings w/in the letter.
e. Options: sue in the court, but first look for internal administrative appeals process.
II. Rulemaking
A. Rulemaking Initiation
1. Starting the Process:
a. Sources of proposed regulations
i. Legislation requiring certain regulations
ii. Staff recommendation upon identification of problem
iii. Political pressure
iv. Public pressure
v. §553(e): “Each agency shall give interest person right to petition for issuance amendment or repeal of rule”—can look confrontational
vi. §555(e): “Prompt notice shall be given of denial in whole/part of written app., petition, or request of interested person made in connection w/ agency proceeding” & notice shall be accompanied by a brief statement.
vii. Lobbyists
viii. Rulemaking petitions
2. Lobbying:
a. Bottom-up Approach
i. Start w/ staff members
ii. Convince agency that clients interest coincide w/ agency’s interests
iii. Skills to have:
1. Understand agency’s problem
2. Have a firm grip on legislative process
3. Be able to deal w/ political environment the agency finds itself in
4. Understand basic policy tools
b. Top-down Approach
i. Why pressure from politicians works
1. Congress appropriates money for agency
2. Congress holds oversight hearings
3. Congress can reduce power of agency
ii. Who to Approach
1. Various committees that supervise agency
2. Appropriations committee
3. Representatives from affected areas
4. Representatives hostile toward the agency
iii. May want to hire professional lobbyist or more experienced attorney who know the lay of the land
3. Petitions for Rulemaking: (one of two ways the public can initiate rulemaking)
a. Background:
i. Each agency shall give an interested person the right to petition for the issuance, amendment or repeal of rule. §553(e) – can look confrontational
ii. But procedural rules governing the filing of petition for rulemaking are rare
iii. §555 agency can’t ignore rulemaking petition
b. Agency Inaction
i. §551(13): agency action includes “failure to act” --> can be applied to judicial review under §701(b)(2)
ii. An agency must proceed to conclude a matter presented to it w/ due regard for the convenience and necessity of the parties or their representatives and w/in a reasonable time. §555(b)
iii. Courts can compel agency action unlawfully withheld or unreasonably delayed. §706(1)
1. But a party must allege more than mere failure to act
a. It must show the agency failed to take discrete agency action
b. It also must show the agency was required to take discrete agency action
2. Court has not defined “discrete agency action”
a. It does not include broad, programmatic actions (i.e., a party cannot claim that an agency is administering an entire regulatory program improperly)
b. It does not include a petition for rulemaking, which asks agency to change a narrow provision
3. Agency action is generally “required” by statute (e.g., §555(b))
a. Delay violates §555(b) mandate to decide matters in a reasonable time
iv. Unreasonable Delay:
1. Telecommunications Research & Action Center v. FCC
a. The time agencies take to make a decision must be governed by a “rule of reason”
b. Where Congress has provided a timetable, statutory scheme may supplement rule of reason
c. Delays reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake
d. The court should consider the effect of expediting delayed action on agency activities of higher or competing priority
e. The court should also consider the nature and extent of the interests prejudiced by delay
f. The court need not find impropriety to hold that agency action is unreasonably delayed
v. Remedies for Unreasonable Delay:
1. Court may issue a decision
2. Court may set a deadline
3. Most likely, court will ask agency to establish a timetable and will retain jurisdiction in case agency violates its own timetable
c. Denial of a Petition
i. Prompt notice of denial is required. Generally, the notice must be accompanied by a brief statement of the grounds for denial. §555(e).
ii. Courts can hold unlawful and set aside agency action. §706(2).
1. Person seeking judicial review must have suffered legal wrong or be adversely affected or aggrieved. §702
2. Final agency action and action made reviewable by statute are subject to judicial review. A party may need to exhaust all internal appeals processes. §704
iii. Courts review denial of petition under Arbitrary and Capricious standard of §706(2)(A)
1. A&C standard as expressed in Arkansas Power & Light Co. v. ICC
a. Did agency adequately explain facts and policy concerns it relied on?
b. Do the facts have some basis in the record?
2. A&C standard as expressed in Northern Spotted Owl v. Hodel
a. Did agency provide explanation?
b. Is there a connection b/w the facts found and the choice made
c. Is decision based on relevant factors
d. Did agency make substantial inquiry
e. Standard is narrow and presumes the agency action is valid but still have a thorough, probing, in-depth review”—no rubberstamping
f. Agency action is A&C if agency failed to articulate a satisfactory explanation for its action including a rational connection b/w the facts found and the choice made
i. But remember even if the court finds the denial to be A&C, that does not mean the agency is forced into rulemaking, here it was remanded for a new explanation
iv. Remedies for Wrongful denial
1. Only in the rarest of circumstances will the court force agency to start rulemaking (courts don’t’ want to disrupt agency priorities)
2. Generally, courts remand to agency to give it another opportunity to explain its decision
B. APA Rulemaking Procedures
1. The Exceptions: (first step is to see if the rules are even applicable)
a. General Exceptions:
i. §553 does not apply to military or foreign affairs function of the US. §553(a)(1)
1. May not be time to engage in procedure
2. may not be wise to notify public
ii. §553 does not apply to “a matter relating to agency management or personnel or to public property, loans, grants, benefits or contracts.” §553(a)(2)
1. Thus §553 does not apply to rules concerning public lands (e.g., Forest Service, BLM, and National Park Service regulations)
2. APA adopted to protect private entities not recipients of government benefits
3. many agencies covered by this exception voluntarily subject themselves to APA requirements
iii. §552 (Freedom from Information Act)
1. Nothing is exempted for §552
a. “substantive rules of general applicability adopted as authorized by law and each amendment revision or repeal of the foregoing be published in the federal register for the guidance of the public.”
i. If they fail to do this, people can’t be adversely affected by it (unless they had other notice)
b. Rules relating to military or agency personnel, while not subject to notice and comment requirements of §553 are subject to §552(a)(1)(D)
b. Notice and Comment Exceptions:
i. Except when notice or hearing is required by statute, §553 does not apply to the following:
1. Interpretative rules, general statements of policy, or rules of agency organization procedure or practice. §553(b)(3)(A).
2. When the agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest. Agency must incorporate the finding in the rules issued. §553(b)(3)(B).
ii. What are Procedural Rules
1. The OLD TEST:
a. American Hospital Associatioin v. Bowen
i. Does the rule have a substantial impact on regulated entities?
ii. Does agency action alter the rights and interests of the parties rather than just how the parties present themselves?
iii. Does agency action encode a substantive value judgment?
iv. Inserting a new standard of review would require notice and comment
2. A Modification:
a. Air Transport Association of America v. DOT
i. Is the rule a mere housekeeping measure?
ii. Does agency action alter the rights and interests of the parties rather than just how the parties present themselves?
iii. Does agency action encode a substantive value judgment?
iv. Can’t cure problems by having notice and comment afterwards
3. Controlling Law
a. JEM Broadcasting Co. v. FCC (Two Part Test)
i. Does agency action alter the rights and interest of the parties rather than just how the parties present themselves? If no, then procedural, but must go to next question.
ii. Is notice and comment necessary to safeguard policies underlying the APA (553(b),(c))
1. Maximize information available to agency before it makes a decision
2. Keep agency from becoming wedded to position by getting comment to it early
3. Legitimize rule in eyes of public and give people a chance to “blow off steam;” promote participatory democracy
iii. §553(b)(B): No need for notice and comment if impractical
1. Impracticable means a situation in which due and required execution of the agency functions would be unavoidably presented by its undertaking public-rule making proceedings
a. Considerations of effectiveness, efficiency, expedition, and reduction in expense outweigh interest of following procedure in rulemaking—balancing test
iv. What Constitutes Good Cause?
1. Definitions:
a. Impracticable means a situation in which due and required execution of the agency functions would be unavoidably presented by its undertaking public-rule making proceedings
b. Unnecessary means unnecessary so far as the public is concerned, as would be the case if a minor or merely technical amendment in which the public is not particularly interest were involved
c. Public interest means that public rulemaking procedures should not prevent an agency from operating
2. Factors that may buttress argument for good cause
a. Rule limited in duration and scope
b. Comment will be solicited later
c. Matter involves protection of public health or safety
d. Agency made good-faith effort to comply w/ APA but faced circumstances out of its control
v. Remedies for wrongful failure to give notice and accept comments
1. Court could hold rule invalid on a case by case basis as to those who lacked knowledge and opportunity to comment
2. More likely that court would declare rule invalid for all purposes
3. Unclear whether rule would be rendered invalid from its adoption or point of challenge
4. Also unclear whether courts should allow rule to remain in effect while agency solicits comments and makes decision
2. Formal, Informal, or Hybrid Rulemaking
a. The different requirements
i. Most common is informal rulemaking, which is subject only to notice-and-comment procedures required by §553 and must be accompanied by a statement of basis and purpose when they are promulgated
ii. In a few circumstances, Congress requires the use of formal rulemaking which means agencies must follow §553 notice and comment and procedures specified in §§556-557
1. Essentially requires a trial type proceeding to promulgate a rule
iii. APA does not govern hybrid rulemaking procedures
b. Determining what is required:
i. When does §553 trigger the requirement of formal rulemaking?
1. Statute must require that rule be made on the record
2. Requirement of just a hearing is insufficient to trigger formal
3. US v. Allegheny Ludlum Steel Corp. (US 1972)
a. §§556-557 (formal rulemaking) apply only when the agency statute in addition to providing a hearing, prescribes explicitly or similarly that it “be on the record,” just requiring a hearing is insufficient.
ii. When does a hearing requirement trigger the need for a trial-type proceeding in a rulemaking, even if formal rulemaking is not required?
1. Depends on the context. Reference to “hearing” does not necessarily mean agency must afford parties opportunity for oral argument and cross examinations
2. §559 preserves Congress’s authority to require hybrid rulemaking
3. United States v. Florida East Coast RR (US 1973)
a. §559 allows congress to create hybrid rulemaking requirements. Hearing has a host of meanings, here the word hearing does not necessarily embrace either the right to present evidence orally and to cross examine opposing witnesses, or the right to present oral argument to the agency’s decision maker
iii. Can courts impose hybrid rulemaking procedures on an agency?
1. Agencies are free to grant additional procedural rights in the exercise of their discretion
2. Reviewing court is generally not free to impose procedural requirements the agency has not chosen to adopt
a. Judicial review is unpredictable, so agencies would always engage in formal rulemaking to eliminate risk in invalidation
b. Formal rulemaking is inefficient, and more procedures do not necessarily produce a better record
3. Vermont Yankee Nuclear Power Co. v. Natural Resources (US 1978)
a. Absence of discovery or cross-examination does not deny a meaningful opportunity to participate in the rulemaking proceedings.
b. Reviewing courts are generally not free to impose additional procedural rights if the agencies have not chosen to grant them--> but remember DUE PROCESS
c. Policy Against Formal Rulemaking Versus Policy in Favor of Formal Adjudication
i. Rulemaking involves legislative facts that help a government institution decide questions of law, policy, and discretion. Such facts can best be determined in informal proceedings.
ii. Adjudication involves facts that answer questions of who did what, where, when, how, why and with what motive or intent. Such facts are related to individual and should not be resolved to the individual’s detriment w/o giving the individual an opportunity to be heard.
3. Informal Rulemaking Requirements:
a. Notice
i. General Requirements
1. §553(b) requires either constructive notice through publication in the Federal Register or actual notice—notice not required if those subject to the rule are named or personally served
2. §553(b)(1): Notice must include the following information
a. Statement of time, place, and nature of public rulemaking proceedings
b. Reference to the legal authority under which the rule is proposed
c. Terms or substance of the proposed rule, or a description of the subjects and issues involved
ii. Policy behind requiring Notice
1. Allow those who might be affected to submit comments
2. Make as much information as possible available to the agency (informed decisions)
3. Increase potential that agency will keep an open mind
b. After Adjusting Rule, Must the Agency Republish Notice
i. New notice is not required if the changes in the original plan are in character w/ the original scheme and the final rule is a “logical outgrowth” of the notice and comments already given.
1. Chocolate Manufacturers Association v. Block (4th Cir. 1985)
a. Notice is adequate if the changes in the original plan are in character w/ original scheme and the final rule is a logical outgrowth of the notice and comment already given.
ii. The crucial issue is whether parties affected by a final rule were put on notice that their interests where at stake. The question is whether interested parties would have known an issue was “on the table.”
1. American Medical Association v. US (7th Cir)
a. This narrowed the “logical outgrowth” test
b. Look to see whether rule materially alters or departs from issues or terms of proposed rule
iii. Courts have upheld final rules that differed from proposals in the following significant respects:
1. Outright reversal of the agency’s initial position
2. Elimination of compliance options contained in a notice of proposed rulemaking
3. Collapsing, or further subdividing, distinct categories of regulated entities established in proposed rule
4. Exempting certain entities from the coverage of final rules
5. Altering the method of calculating or measuring a quantity relevant to a party’s obligation under the rule
iv. Courts have invalidated final rules where:
1. No notice was given of an issue addressed by the final rules
2. An issue was only addressed in the most general terms in the initial proposal
3. Final rule changed a pre-existing agency practice that was only mentioned in a notice of proposed rulemaking to place unrelated changes in the overall regulatory scheme into their proper context
v. Argument can be made that cts. should be strict in reviewing an agency’s compliance w/ procedural rules such as the requirement for notice
c. Opportunity for Public Comment:
i. §553(c): requires agencies to provide interested person an opportunity to comment “through submission of written data, views, or arguments” no requirement for an oral presentation or hearing
1. No requirement that agency provide opportunity for oral presentation or hearing
2. Length of comment period not specified in APA, although Congress often specifies a minimum
ii. §557(d) Ex Parte Communications: APA places specific prohibitions on ex parte communications in formal rulemaking.
1. The APA does not prohibit ex parte communications in informal rulemaking, however, Congress can and sometimes does.
2. Pre-Vermont Yankee rule--> Home Box Office v. FCC
a. Ex parte contracts are admissible before notice of proposed rulemaking is published in the Federal Register
b. But once a notice has been issued, an agency official involved in the process must refuse to discuss matters relating to the proceeding with interested parties
c. If ex parte contacts nonetheless occur, any written document or summary of any oral communication must be placed in the public file established for each rulemaking docket immediately after the communication is received
3. New Rule: Sierra Club v. Costle
a. Home Box Office’s strict ex parte rules are inappropriate to ordinary notice and comment rulemaking
b. Ex Parte contacts are inevitable and may be useful
c. OS at issue required the decision be based only on information in the record
i. Thus agency could not rely on documents not in the record in promulgating rules
ii. OS precluded entering into docket documents of central importantce w/o extending comment period
d. Bottom line: opposing party must have opportunity to respond to any ex parte communication the agency will rely on
iii. Meetings with Government Officials
1. Unless expressly forbidden, intra-executive contacts may take place, both during and after the public comment period. Sierra Club v. Costle
a. President obligated to monitor agency activities
b. In some cases, contact may need to be noted on docket, but only where discussion extends beyond status reports. See §551(14)
2. To conditions must be met before an administrative rulemaking may be overturned simply on the grounds of congressional pressure: DC Federation
a. Content of pressure must be designed to force agency to decide upon factors not made relevant by Congress in the applicable statute
b. Agency’s determination must be affected by those extraneous considerations
iv. Policy arguments against ex parte communications
1. Ex parte contacts undermine integrity and legitimacy of rulemaking process
2. Ex parte contacts enhance the potential for undue industry influence and “agency capture” by those it is supposed to regulate
3. Courts need complete records to review agency action
4. Ex parte communications undermines individuals’ opportunity to comment and respond; this reduces the amount of information to the agency
v. Due Process may also prohibit ex parte contacts when rulemaking involves “conflicting claims to a valuable privilege, (i.e. when agency is allocating property rights) Sangamon Valley TV corp. v. US
d. §553(d) final rules must be published 30 days prior to their effective date.
i. Remember strict forbiddance of ex parte communication in formal rulemaking
ii. Sangamon Valley TV (DC Cir. 1959) held that due process prohibits ex part communication when rulemaking involves conflicting claims to a valuable privilege.
1. Home Box Office v. FCC (DC Cir. 1977)
a. If ex parte contacts occur, then it must be placed in the public file
2. Sierra Club v. Costle (DC Cir 1981):
a. Instead of beginning w/ a conclusion that communications were “ex parte” we must evaluate the various communications in terms of their timing, source, mode, content, and the extent of their disclosure on the docket.
b. Check to see if this violates the agency’s rulemaking procedures
c. This should only apply to hybrid rulemaking
d. Where the documents submitted so late as to preclude any effective public comment
e. Statements of Basis and Purpose:
i. §553(c) requires agencies “after consideration of the relevant matter presented to incorporate in the rules adopted a concise general statement of their basis and purpose.” But this practice has changed, so now preambles are huge.
ii. Preamble generally includes agency response to comments
1. They indicate what the regulation means and what is required for compliance
2. May reveal flaws or gaps in reasoning
iii. Can easily exceed 100 pages
iv. Cause and Effect
1. Agencies fear rules will be found A&C
2. Long preamble slows down issuance of rules, increases power of agency attorney, preambles are often incomprehensible to lay people
4. Hybrid Rulemaking Procedures
a. Background
i. Basis for hybrid rulemaking
1. OS
2. Other statute or executive order that applies to multiple agencies
ii. Courts cannot enforce hybrid rulemaking procedures like they would the APA
b. Three Hybrid Requirements
i. Unfunded Mandates Reform Act provides parliamentary restriction on legislative bills that would impose unfunded mandates that force states to fulfill certain duties. Agencies must select least burdensome alternative.
ii. Regulatory Flexibility Act requires agencies to follow certain procedures when economic effect is on a substantial number of small entities that would be subject to rule
iii. E.O. 12866 requires agencies to assess costs and benefits of proposed and final major rules. OIRA must oversee compliance
c. National Environmental Policy Act: agencies required to make Environmental Impact statements before engaging in activities (including rulemaking) that may have significant effect on human environment 42 USC §4332(c)—but does not require agencies to take some particular action on basis of EIS.
d. Regulatory Flexibility Act: agencies have to create a regulatory Flexibility Analysis when propose rule that may have significant economic impact on substantial number of small business, organizations, or governments. 5 USC §601
i. Typically interpreted to mean the business would be subject to the rule
ii. Analysis includes:
1. reasons why the agency is proposing the rule
2. Objective statements and legal basis for the proposed rule
3. Description of the affected small entities
4. Identification of other federal rules that may overlap or conflict
5. Description of alternatives that would accomplish but minimize impact
iii. Court can consider the RFA when determining if rule is A&C
e. Paperwork Reduction Act: 44 USC §3501: agency must determine that:
i. collection of information is necessary for proper performance of agency function
ii. is not unnecessary duplicative information otherwise available to agency
iii. takes account of the particular problems of small entities
iv. written plan language
v. uses information technology to reduce burden
f. Executive Order 12866: is significant action (has impact of more than $100 million) must issue const benefit analysis of rule and show why it is beneficial, unless not doing something would be contrary to agency purpose---no judicial enforcement
g. Unfunded Mandates Reform Act: requires federal agencies before promulgating either proposed or final regulation that would include “mandate” resulting in costs of over $100 million annually on state, local, or tribal governments or the private sector to:
i. Prepare statement assessing effect of regulation
ii. Include summary of statement in the proposed and final rules
iii. Agency must identify & consider alternatives
iv. Agency must select the least costly, most cost effective, or least burdensome alternative that achives the objectives of the rule
C. Judicial Review
Issue
Section
Scope of review
Constitutional violation
§ 706(2)(B)
De novo
Statutory compliance
§ 706(2)(C)
Chevron
Procedural violation
§ 706(2)(D)
De novo
Findings and conclusion
Informal rulemaking
§ 706(2)(A)
Arbitrary and Capricious/State Farm
Formal rulemaking
§ 706(2)(E)
Substantial evidence
1. Statutory Interpretation (does the agency know the law)
a. Two different arguments
i. Courts should defer to agency interpretation
1. Congress delegated power to agency
2. Agencies have expertise and familiarity with record
3. Inefficient to engage in de novo review
ii. Courts should not defer to agency interpretation
1. It is the courts’ job to decide what the law is
2. Agencies are prone to abuse the powers given to them; agencies should not get to define the scope of their own jurisdiction
b. Judicial Review of agency action interpretation of statutes involves two steps under Chevron v. Natural Resources Defense Council:
i. Has Congress directly spoken to the precise question at issue (is the statute clear or ambiguous)
1. If the state is clear, follow the intent of Congress and that is the end of the matter
2. Judiciary is final authority on issues of statutory construction
3. Reject agency constructions that are contrary to clear congressional intent
a. Look at plain meaning, design of statute as a whole. K Mart case
b. Legislative history? Scalia v. Breyer
4. The stronger the plain meaning is, the less you get to question 2
ii. If the statute is unclear, decide whether agency’s interpretation is reasonable
1. This requires deferential review
2. Policy:
a. If statute ambiguous then Congress delegated decision to agency
b. Agencies are in better position to make decisions given their expertise
c. Judges are not elected and thus are not accountable to the public
3. Does not have to be the only possible construction, just permissible
4. The agency’s interpretation prevails unless A&C, or manifestly contrary to the statute.
c. Parties challenging agency action rarely win if the case reaches the second step.
i. Thus, they want to make a strong argument that the statute is clear
ii. Factor courts consider in interpreting statute:
1. Discrete text of the statute
2. Language and design of statute as a whole
3. Statutory objectives
4. Legislative history
5. Canons
6. Feasibility
7. Dictionary definitions
d. FDA v. Brown and Williamson Tobacco (2000): court found Chevron inapplicable b/c it had doubts that congress actually intended to delegate interpretive authority to the FDA, notwithstanding the presence of a statutory ambiguity
2. Substantive Decision (is decision supported by the facts?)
a. General:
i. Two Types: 1) what are relevant facts; 2) What rule type is appropriate for these facts
ii. §706 allows ct. to review both, & can set aside if A&C, an abuse of discretion, or not otherwise in accordance w/ law; and unsupported by substantial evidence in a case subject to §556, 557
iii. §706 requires ct to review whole record
1. The facts in rulemaking are prospective
2. the facts in adjudication are retrospective
iv. Adequate Explanation: agencies must provide adequate reasons for the adoption of the rule
1. SEC v. Chenery Corp. (US 1943)
a. When an agency has not provided an adequate explanation, even if the court itself could discern an adequate explanation from the record, the court should remand the case back to the agency
2. Motor Vehicle Manufacturers Assoc. v. State Farm Mutual Automobile Ins. Co (US 1983)
a. Agency must examine relevant data & articulate a satisfactory explanation for action including “rational connection b/w facts found and choice made” reviewing that explanation, “consider whether decision based on consideration of relevant factors and whether there has been clear error of judgment.”
3. Hard look Doctrine:
a. The reviewing court scrutinizes the agency’s reasoning to make sure that the agency carefully deliberated about the issues raised by its decision
b. Informal rulemaking
i. The arbitrary and capricious standard under §706(2)(A)
1. A deferential, but probing, in-depth review. Court must look to whether decision based on relevant factor and whether there was a clear error of judgment
2. Substantial uncertainty that a regulation will accomplish its purpose is sufficient reason to rescind, but an agency cannot merely recite the terms “substantial uncertainty.” It must explain the evidence that is available and offer a rational connection b/w facts found and choice made. Motor Vehicle Manufactures Assoc. v. State Farm
3. State Farm looks to four factors to decide whether decision is A&C:
a. Agency relied on factors Congress did not intend for it to consider
b. Agency failed to consider an important aspect of the problem
c. Agency offered an explanation counter to evidence
d. Agency explanation so implausible that it could not be ascribed to a difference in view or the product of agency expertise
4. Political motivation or change in administrative may be an adequate reason
ii. Record:
1. Agency can rely on any information that comes to its attention
2. No formal record. Record is anything on which agency relies. Citizens to Preserve Overton Park v. Volpe.
c. Formal Rulemaking
i. The substantial evidence under §706(2)(E)
1. Court must uphold rule if it finds the agency’s decision to be reasonable based on the record
2. B/c formal rulemaking are rare, the substantial evidence standard is addressed in section on adjudication
ii. Record:
1. The “whole record” under §556(e)
2. Created by hearing procedures
d. Note that arbitrary and capricious and substantial evidence standards have all but converged. Both require adequate reasons.
III. Adjudication
A. Introduction:
1. What is Adjudication?
a. Except for rulemaking, any final disposition by an agency is an order. §551(6)
b. An agency process that results in an order is an adjudication. §551(7)
c. One exception: investigations/ information gathering
d. Generally, adjudication is everything that is not rulemaking
2. What Procedures Apply?
a. §§555, 558: provide minimal requirement (e.g. notice) applicable to all agency proceedings
b. Otherwise only formal adjudications are governed by the APA §§554, 556, 557
c. Informal adjudications governed by OS, due process and agency regulations
B. Formal or Informal Adjudications (APA adjudications or non-APA adjudications)
1. Adjudication is formal when decision must be made on the record after opportunity for a hearing. §554
2. Courts have adopted differing views on whether the words “on the record” must be present in the OS to trigger formal requirements
a. Seacoast Anti-Pollution League v. Costle (1st Cir. 1978) (exact words are not needed)
i. The resolution of the issue turn on the substantive nature of the hering Congress intended to provide.
ii. Presumption exists that unless otherwise specified, an adjudicatory hearing subject to judicial review must be on the record
b. City of West Chicago v. US Nuclear Regulatory Commission (7th Cir. 1983):
i. In the absence of “on the record” language, Congress must clearly indicate its intent to trigger the formal, on the record-hearing provision of the APA
ii. Focus on legislative intent
iii. Presumption that unless words present, adjudication not subject to formal procedural requirements
c. Chemical Waste Management, Inc. v. EPA (DC Cir. 1989)
i. After Chevron, DC Circuit held that if statute not clear as to producers required, court must defer to reasonable agency interpretation.
ii. But Chevron dealt with technical expertise which is not present in this determination
3. Argument for and Against Formal Adjudication
a. Pro-Formal
i. Legislative history suggests drafters intended to exclude only a narrow range of adjudications from APA
ii. Adjudication does not involve policy decision. Instead, it involves factual disputes which adversary process would be helpful in solving
b. Anti-Formal
i. Formal hearings are time consuming and expensive, and not very helpful
C. Adjudicatory Procedures:
1. Notice: §554(b)
a. Basic requirements
i. Time, place, nature of hearing
ii. Legal authority and jurisdiction under which the hearing is to be held
iii. Matters of fact and law asserted
b. Notice requirement is satisfied if party proceeded against understands the issue and is afforded full opportunity to justify conduct. Southwest Sunsites, Inc. v. FTC
c. To be adequate, notice provided by an agency to an adverse party must contain information to provide the respondent a genuine opportunity to identify material issues of fact. John D. Copanos and Sons, Inc. v. FDA
2. Intervenors §555(b)
a. An interested person may appear before an agency for the presentation, adjustment, or determination of an issue, request, or controversy in a proceeding.
b. Supreme Court has not ruled on this issue
c. Office of Communication of United Church of Christ v. FCC (DC Cir. 1966)
i. If person has standing to appeal agency decision, as a matter of case and controversy constitutional requirements, then the person has a right to intervene
d. Koniag Inc. Andrus (DC Cir. 1978)
i. Even if person doesn’t have standing may be justified limited intervention (i.e. agency can’t deny)—But different when trying to intervene under statute that is not APA
3. Settlement: §§554(c), 556(c)(6)
a. Give chance prior to hearing for parties to settle/adjust dispute
b. Also, there is the ADR act—allowing different techniques, never required
4. Administrative Law Judges
a. ALJs preside over most agency hearings
i. Have authority comparable to Art. III judge
ii. Cannot invalidate agency policy
b. ALJs usually employed by agency even though they are supposed to act independently
c. Safeguards in place to shield ALJs from agency pressure
i. Task of removing or rewarding ALJs delegated to separate agency
ii. Agency EE engaged in investigation or prosecution of case may not participate or advise in ALJs decision except as witness or counsel in public proceeding. §554(d)
iii. ALJs can be disqualified for bias. §556(b)
iv. ALJs have to follow all of the adopted legal rules of the agency
5. The Split-Enforcement Arrangement
a. Applies to Occupational Safety and Health Administration (OSHA) and Mine Safety and Health Administration (MSHA)
i. OSHA and MSHA each appoint a commission to handle adjudication
1. ALJ is employee of commission
2. Appeals from the ALJ made to commission
3. The agency head is not involved in the adjudication
ii. Policy: protect employers from possible bias of Department of Labor
b. Commissions must defer to OSHA or MSHA in interpreting regulations
i. Commission have no policy role
ii. See Martin v. OSHRC
6. Burden of Proof
a. §556(d): The proponent of a rule or order (usually the agency) has the burden of proof
b. The burden is one of persuasion rather than production. Agency decision must be supported by reliable, probative, substantial evidence
i. In this context, substantial evidence refers to quality not quantity
ii. E.g., agency decision based entirely on hearsay may or may not be supported by substantial evidence
iii. APA allows hearsay if not irrelevant, immaterial, unduly repetitive §556(d)
1. Richardson v. Perales: can use hearsay if:
a. Reliable and
b. Affected party had chance to subpoena orignl person but didn’t’ take advantage of opportunity
c. Requires a preponderance of the evidence
7. Testimony and Documents: §556(d)
a. Types of evidence allowed
i. Parties may present case by oral or documentary evidence
ii. Parties may offer rebuttal evidence and cross examine witness
iii. Whatever is necessary for full and true disclosure of facts
b. Opportunity for cross examination is an element of fundamental fairness if needed for full disclosure of facts. Wallace v. Bowen
i. When ALJ chooses to go outside testimony adduced at hearing, ALJ must afford the claimant not only an opportunity to comment and present evidence but also an opportunity to cross examine the authors of any post-hearing reports.
ii. Note that agency can rely on hearsay if respondent fails to exercise right of subpoena
iii. Further, different considerations may apply to post-hearing evidence than pre-hearing evidence
8. The record and ex parte communications
a. Decision must be limited to what is in record (transcript, exhibits, all papers) §556(e)
i. Transcript, exhibits & papers constitute the exclusive record for the decision
b. Strict limits on ex parte contacts during formal adjudications. §557(d)
c. Violations cured by placing communications in record, invalidating agency action, or other sanctions
i. Ex parte communication: communication b/w someone involved in the decision process from an interested person outside the agency w/ respect to the merits of particular case and not made on the public record. §551(14) and 557(d)
ii. If it happens, it is placed on record, and there may be sanctions against violator.
9. Appeals: §557(c)
a. Initial or recom. Decision includes finding of fact and conclusions of law reasoning and concl
10. State Adjudications: most states follow the federal mode
11. Applying Adjudicatory Procedures:
a. NLRB v. Local Union No. 25, International Brotherhood of Electrical Workers (2d 1978)
i. Since question was not reaised in complaint, or oral argument and no evidence was presented concerning that issue, they did not receive notice required by the APA (§554) --> the decision of the ALJ can’t stand
b. Southwest Sunsites Inc. v. FTC (9th Cir. 1986)
i. ALJ applied a new standard for his review of a decision: “the purpose of the notice requirement in the APA is satisfied:
1. if the party proceeded against understood the issue and was afforded full opportunity to justify conduct
ii. Here the new theory was more narrow and took in the old, so all evidence relevant to the old was relevant to the new
c. John D. Copanos and Sons Inc. v. FDA (DC Cir. 1988)
i. Did documents and regs give sufficient notice for summary judgment?
ii. The possibility of summary action makes requirement of due notice especially important
iii. In SJ to be adequate the notice must contain enough info to provide a genuine opportunity to identify material issues of fact.
iv. The requirements depend upon the context of the agency’s action. Was there significant ambiguity regarding type of info that would warrant agency hearing.
d. Wallace v. Bowen (3rd Cir. 1989)
i. Agency statute says decision should be based on evidence at the hearing. Thus, Under the statute the secretary may not rely on post-hearing reports w/o giving the claimant the opportunity to cross examine.
ii. Richardson v. Perales: accepted the proposition that procedural due process is applicable to the adjudicative administrative proceeding involving the differing rules of fair play… to require cross examination may be required for a full and true disclosure of the facts.
iii. We construe Richardson as holding that an opportunity for cross examination is an element of fundamental fairness of the hearing to which a claimant is entitled
D. Ex Parte Communications
1. APA prohibits ex parte communications during formal adjudications and rulemakings (not informal)
a. No interested person outside the agency shall make to any member of the agency involved in the decision process of the proceeding an ex parte communication relevant to the merits of the proceeding. §557(d)(1)(A)
b. No member of the agency involved in the decision process of the proceeding shall make to any interested person outside the agency an ex parte communication relevant to the merits of the proceeding. §557(d)(1)(B)
c. A member of the agency involved in the decisional process of the proceeding who receives or makes an ex parte communication must place such communication in the public record. §557(d)(1)(C)
d. Upon receipt of an ex parte communication made by a party, the agency may require the party to show cause why his claim should not be dismissed or otherwise adversely affected. §556(d)(1)(D).
e. Prohibition on ex parte communications begins no later than time at which proceeding is noticed for hearing §557(d)(1)(E)
2. In determining whether prohibition violated, consider the following:
a. Was person outside the agency or a member of the agency
b. Was person interested
i. Broadly construed
ii. May include public officials
c. Was communication ex parte?
i. Ex parte communications are oral or written communications not on the public record with respect to which reasonable prior notice to all parties is not given. §551(14)
d. Was communication “relevant to the merits”
3. Ex parte communications do not necessarily void an agency decision.
a. Rather, agency proceeding blemished by ex parte communications are VOIDABLE.
b. Professional Air Traffic Controllers Organization v. Federal Labor Relations Authority
i. Congress did not intend for agency to dismiss a party’s interest more than rarely
ii. Consider whether agency’s decision-making process was irrevocably tainted so as to make ultimate judgment unfair.
1. Factors:
a. Gravity of the ex parte communications
i. Did it go to the hear of the merits
ii. Did it include a veiled threat
b. Whether the contacts may have influenced agency’s ultimate decision
c. Whether the party making the improper contacts benefited from the agency’s ultimate decision
d. Whether the contents of the communication were unknown to the opposing parties who thus had no opportunity to respond
e. Whether vacation of the agency’s decision and remand for new proceedings would serve a useful purpose
i. Don’t’ have to prove result would change, just have to prove result MIGHT change
ii. How close was the vote?
iii. Even if agency not subject to the APA, due process may prohibit ex part contacts
1. Introduction of new material by means of ex parte communications undermines the public employee’s constitutional due process guarantee of notice and the opportunity to respond. Stone v. Federal Deposit Insurance Corp.
2. Due Process protections only apply if a liberty or property interest at stake
3. Not every ex parte communication undermines the due process guarantee. Consider:
a. Whether ex parte communication introduce new information or merely cumulative information
b. Whether party knew of error and had a chance t respond to it
c. Whether the ex parte communication was of a type likely to result in undue pressue upon the deciding official
c. APA defines ex parte communication as “an oral communications to or from an “interested person” with reasonable prior notice to all parties is not given, but not including requests for status reports on any matter or proceeding:
i. However, remember that status reports can be a subtle effort to influence so if doubtful then assume it is ex parte communication
d. Purpose of requiring disclosure of ex parte communication:
i. To prevent appearance of impropriety
ii. Instrument of fair decision making
e. Two possible administrative Remedies for improper ex parte communication
i. Disclosure of the communication and its content
ii. Requires violating party to “show cause why his claim or interest in the proceeding should not be dismissed, denied, disregarded, or otherwise adversely affected on account of the violation
4. Stone v. FDIC (Fed. Cir. 1999)
a. The essential requirements of due process are notice and an opportunity to respond. The tenured EE is entitled to oral or written notice of charges, an explanation of evidence and opportunity to present his side of the story. Cleveland Bd. Of Educ. V. Loudermill (US)
i. Dismissals for cause will often involve factual disputes
ii. Also to determine what level of punishment is appropriate
b. Only ex parte communications that introduce new and material information to the deciding official will violate the due process guarantees of notice.
i. Factors:
1. Is it new or cumulative
2. Whether EE knew of the error and had a chance to respond
3. Were they of the type likely to result in undue pressure
c. Ultimately concern is whether the ex parte communication is so substantial and so likely to cause prejudice that no EE can fairly be required to be subjected to a deprivation of property under such circumstances
E. Due Process Hearing:
1. Background:
a. Due Process guarantees rights found in the 5th and 14th Amendments
b. Due Process only protects against governmental deprivations, not private action
c. Issue of due process seldom arise in context of formal adjudication; generally arises in context of informal adjudication
2. Individualized Decision Making (Londener and Bi-Metallic)
a. Due Process protections only apply in context of individualized decision
i. For example, due process was violated where city taxed a few homeowners for cost of street repair but failed to provide them with notice and hearing. Londoner v. Denver
ii. Conversely, due process was not violated where city increased valuation of all taxable property. Bi-Metallic Investment Co. v. State Board of Equalization
b. Rationale
i. Constitution does not require all public acts to be done in town meeting
ii. When rule applies to more than a few people, it is impracticable that everyone should have a direct voice
iii. Rights of large bodies are protected by political process
c. Factors to determine whether individuals have a constitutional right to be heard:
i. Number of people affected
ii. Extent of impact on each person
iii. Factual basis for determining the impact on each person
1. Are parties affected on individualized grounds
2. Hearing procedures are more necessary to resolve disputes involving adjudicative facts than to resolve disputes involving legislative facts
3. Protected Interests
a. Property Interests
i. Court in Goldberg v. Kelly held that a person has a property interest in welfare benefits. It has since retreated from this holding and narrowed the definition.
ii. A person must have more than abstract need or desire for a benefit. He must have more than a unilateral expectation of it. He must have a legitimate claim of entitlement to it. Board of Regents v. Roth
1. E.g., high schools students have a property interest in continued enrollment: Goss v. Lopez
2. Property interest may also be shown by existence of implied contract. Perry v. Sindermann.
iii. If you want to invoke the due process buzz words for property rights characterize them as unilateral expectation rather than a legitimate entitlement. Board of Regents v. Roth (US 1972)
iv. 14th Amendment includes the right to contract, engage in any common occupations of life, acquire useful knowledge, to marry, establish a home an bring up children, to worship God according to his own…
b. Liberty Interest:
i. Liberty includes all those privileges long recognized as essential to the orderly pursuit of happiness by free men.
1. E.g., right to pursue a common calling or profession
a. Gibson v. Berryhill (US 1973) Due process protections are triggered when it denies or revokes a person’s license to engage in a profession.
2. Reputation alone does not appear to be a protected liberty interest. Paul v. Davis
a. However, if branding of someone as something (i.e. public drunkard) removes a right (like ability to buy alcohol) then there is a procedural due process issue.
b. This is the “Stigma Plus” test
c. Statement must be sufficiently serious. Charge of insubordination not enough to implicate a liberty interest. Shands v. City of Kennett
3. Prisoners’ Liberty:
a. A decision to revoke parole also has due process consideration. Gagnon. In prison, no due process problem if it is “ordinarily contemplated by a prison sentence.” Thus, moving to max security ok, but behavior modif therapy not okay.
ii. Due Process unnecessary if individual does not dispute charge that deprives him of liberty. Codd v. Velger.
1. Hearing is intended to determine facts
2. If no factual dispute, hearing not useful
4. Procedures Required
a. Court held in Goldberg v. Kelly that recipients of welfare benefits entitled to evidentiary hearing before termination
i. Case since limited to facts
ii. Welfare unique b/c it provides “last safety net”
b. In deciding what process is due, consider three factors from Mathews v. Eldridge:
i. Private interest affected by official action
ii. Risk of erroneous deprivation of such interest through procedures used and probably value, if any, of additional or substitute procedural safeguards
iii. Government’s Interest
c. Student Cases:
i. High school student did not have right to counsel or to call witnesses before being suspended. Goss v. Lopez
ii. Due process satisfied when university notified medical student of poor academic performance and risk of dismissal. Board of Curators of the University of Missouri v. Horowitz.
1. Formal hearings costly and harmful to teaching process
2. Evaluation of academic progress more subjective than what is typically solved in formal hearing
iii. Student expelled from university for fighting did not have right to counsel. Osteen v. Henley.
1. Failure to follow state rights is not a violation of federal due process.
2. Mainly apply Mathews v. Eldridge.
d. Matthews v. Eldridge (US 1976):
i. Due process is flexible and calls for procedural protections as the particular situation demands”
ii. Three Factor Balancing Test:
1. The private interest that will be affected by the official action
a. Degree of potential deprivation
b. Look prospectively and retrospectively, Compare severity of impact arguments to each case.
c. Is there an appellate procedure
2. The risk of an erroneous deprivation of such interest through the procedures used, and the probable value of additional or substitute procedural safeguard
a. When arguing for plaintiff say:
i. Value additional safeguards would make it more likely to get the decision right
ii. That there was no opportunity to present your side of the story
b. When arguing for defendant say:
i. Procedures asked for will not add anything.
ii. Only will be duplicative
iii. Case law makes it clear that procedures asked for do not promote reliability (compare to other cases)
3. The governments interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.
a. Government has an interest in conserving scarce fiscal resources
b. Argument for plaintiff
i. Any additional burden would be minimal. Costs a little amount of money
c. Argument for government:
i. Risk of error is relatively small
ii. Additional procedures will not add that much to reduce the risk
e. Only deliberate decision of government officials trigger procedural due process. Deniels v. Williams (US 1986).
5. Neutral Decision Maker
a. Difficult to show that combination of investiagative and adjudicative functions necessarily creates an unconstitutional risk of bias.
b. Two Steps under Withrow v. Larkin
i. Overcome presumption of honesty and integrity in those serving as adjudicators
1. Show either:
a. Risk of bias:
i. Pecuniary interest
ii. Decision maker target of personal abuse or criticism by appearing party
b. Prejudgment
ii. Mere exposure to evidence presented in a nonadversary investigative procedures is insufficient to impugn the fairness of the board members at a later adversary hearing.
c. Withrow v. Larken (US 1975)
i. A fair trial in a fair tribunal is a basic requirement of due process.
ii. Don’t allow judges or administrative decision makers who have a:
1. Pecuniary interest in the matter at hand
2. Target of personal abuse b one of the parties
iii. However, there is a presumption of honesty and integrity
iv. §544(d) says that no EE engaged in investigating or prosecuting may also participate or advices in the adjudication function but which also expressly exempts from this prohibition the agency or a member or members of the body comprising the agency
F. Judicial Review:
1. the Substantial Evidence Standard
a. §706(2)(E): provides that the agency action is unlawful if “unsupported by substantial evidence in a case subject to §§556 and 557 or otherwise reviewed on the record of an agency hearing provided by statute.
b. Universal Camera Corp. v. NLRB (1951):
i. “the substantial evidence test applies to evidence in whole record on both sides” but still a highly deferential standard, equivalent of enough to withstand a motion for directed verdict, but more deferential than the clearly erroneous test.
ii. Essentially the question is “would a reasonable mind accept a particular evidentiary record as adequate to support a conclusioni.” In Re Zurko (1999).
c. Agency conclusions must be supported by substantial evidence in formal proceedings. §706(2)(E)
i. Note that substantial evidence standard applies to both formal rulemaking and formal adjudication
ii. Formal rulemaking is rare, so §706(2)(E) arises mostly in context of formal adjudication
d. A deferential standard
i. Court does not reweigh evidence
ii. Rather, it asks whether reasonable mind would find that evidentiary record supports agency conclusion
e. But court must look at entire record, including both sides and contradicting evidence. Universal Camera Corp. v. NLRB
2. Substantial Evidence and the ALJ’s credibility findings
a. What happens if ALJ and Agency has issued conflicting finding of fact and law?
i. §557 agency in making its decision on review has powers it would have in making the initial decision
ii. the ALJ’s decision is a part of the whole record and must be taking into accout when assessing whether an agency has substantial evidence for its conclusions.
b. On appeal from ALJ, agency has “all the powers which it would have in making the initial decision.” In other words, agency review is de novo. §557(b).
c. But on appeal from agency, court may not ignore ALJ findings. They are part of the “whole record.” Universal Camera Corp. v. NLRB
d. Dichotomy b/w testimonial and derivative inferences as explained in Penasquitos Village, Inc. v. NLRB and Jackson v. Veterans Administration
i. Reviewing court should defer to ALJ’s Testimonial Inferences
1. Policy:
a. ALJ sees the witness, hears the testimony
b. Board bases decision only on written record
2. Examples
a. Witness incredible, sincere, or forthright
b. Witness brusque and opinionated
ii. Reviewing courts should defer to board’s Derivative Inferences
1. Policy:
a. Board has broad experience and expertise
b. Congress delegated decision-making power to board
2. Examples
a. Witness unable to verify exact dates or times
b. Witness made admission
3. How board should proceed if it wants decision to overturn ALJ upheld
a. Refute ALJs derivative conclusions
b. Ignore ALJs conclusions on witness demeanor
c. Weigh evidence of record
d. Don’t frame opinion in terms of believability
e. Challenge distinction b/w testimonial and derivative inferences
e. Penasquitos Village Inc. v. NLRB:
i. Statutorily mandated deference to finding of fact runs in favor of the agency, not in favor of the initial trier of facts, the ALJ
ii. Should take particular note of ALJ’s finding when these conclusions are based upon the demeanor of the witnesses.
iii. Dissent doesn’t buy into distinguishing testimonial v. derivative inferences--> don’t get too wrapped up in the behavior of witness indicating whether he’s lying
f. Jackson v. Vetermans Administration (Fed. Cir. 1985)
i. Can’t just ignore testimony, either it’s discredited w/ reason given or included
3. Mixed Questions of Law and Fact
a. Substantial Evidence Standard applies when there is dispute concerning facts found by agency. If it’s just a legal issue then §706 authorizes the court to hold unlawful and set aside.
i. Unconstitutional agency action: “in excess of statutory jurisdiction, authority, or limitations or short of statutory right” or otherwise not in accordance with the law.
b. Three Situations:
i. Pure questions of law
1. Court appears to have de novo review under §706
2. Not that argument could be made for deference to agency
ii. Pure question of fact
1. In a formal proceeding, court examines whether decision based on substantial evidence
2. In an informal proceeding, court makes sure decision not arbitrary and capricious
iii. Mixed Question of Law and Fact
1. Courts should defer to agency
a. Agencies have expertise
b. Congress delegated decision making authority to agency
2. Two step process to determine whether substantial evidence exists under NLRB v. Hearst
a. Is there in the record for agency’s factual finding? (e.g. does record support conclusions regarding working conditions and length of work day)
b. Is there reasonable basis in law for agency explanation of its decision (i.e. court reviews agency decision to see if it serves goals and purposes of organic act
c. Chevron’s effect on Judicial Review of Mixed Questions
Hearst (arose in adjudication)
Chevron (arose in informal rulemaking)
Result
Step 1
Is there a pure question of law?
Is the statute clear and unambiguous?
If yes, de novo and stop.
If no, go to step 2.
Step 2
Does agency decision have warrant in record and reasonable basis in law?
Is agency resolution reasonable?
If yes, uphold.
If no, reverse.
i. Scalia advocates using Chevron whether rulemaking or adjudication at issue
ii. Others apply Chevron only if there is a mixed question of law and fact
1. If a pure question, de novo review
2. if statute unclear and ambiguous, defer to agency and decide whether resolution is reasonable
iii. Others hold that Chevron does not apply to adjudications at all
d. NLRB v. Hearst (US 1944) Newsboys = Employees
i. Resolving questions of law and fact “belongs to the usual administrative routine”
1. Look at the courts facts conclusions and see if there was a basis in the record and then
2. look to see whether the conclusions had a reasonable basis in law
ii. Son in mixed questions: the agency’s finding are to be accepted unless they are unsupported by substantial evidence on the record considered as a whole
e. O’Leary v. Brown:
i. But there may be a Chevron analysis before all of this to determine if the question of law is appropriate for the agency. Scalia favors, but not all judges agree
f. Evening Star Newspaper Company v. Kemp
i. Does a review of the record support the decision
4. Arbitrary and Capricious Review
a. Informal Adjudication
i. Arbitrary and Capricious standard applies
ii. §706(2)(F) almost never applies
1. §706(2)(F) provides for cts to determine facts independently by authorizing a ct to overturn an agency decision if it is “unwarranted by the facts to the extent that facts are subject to a trial de novo by the reviewing court.”
b. Citizens to Preserve Overton Park v. Volpe (US 1971)
i. For reviewing standard look to §706 of the APA which provides that a reviewing ct shall hold unlawful and set aside agency action found not to meet six separate standards. In all cases, agency action must be set aside if the action was “arbitrary and capricious, an abuse of discretion or otherwise not in accordance with the law.
ii. De novo review (706(2)(F)) is only applied in two circumstances
1. Authorized when the action is adjudicatory in nature and the agency fact finding procedures are inadequate
a. Absence of a hearing or particular adjudicatory proceeding does not render the “fact finding procedures inadequate”
2. When issues that were not before the agency are raised in a proceeding to enforce nonadjudicatory agency action
iii. §706(2)(a): requires a finding that the actual choice made was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
1. Preference for cts to remand a decision back to an agency to prepare an explanation rather than to require testimony in court.
c. Review for “Adequate Reasons”
i. Agency must articulate a satisfactory explanation for its adjudicatory actions, including a rational connection b/w facts found and choice made
ii. State Farm: decide in context of informal rulemaking, but the arbitrary and capricious test is really the same for both informal rulemaking and informal adjudication
1. Interpreting the arbitrary and capricious scope as requiring agencies to articulate a satisfactory explanation for action including a rational connection b/w the facts found and the choice made.
2. Agency decision must be logical and rationale
iii. Consider:
1. Whether agency relied on factors Congress did not intend for it to consider
2. Whether agency failed to consider an important aspect of the problem
3. Whether agency offered an explanation counter to evidence
4. Whether agency explanation so implausible that it could not be ascribed to a difference in view or the product of agency expertise
d. Review for Consistency:
i. The law prohibits agencies from adopting significantly inconsistent policies that result in the creation of conflicting lines of precedent governing the identical situation. Davila-Bardales v. INS
1. Courts are skeptical of abrupt changes in agency position.
a. Like cases should be decided alike
2. Exceptions:
a. Change in policy
b. Reasonable basis for difference in treatment
ii. Courts often force agencies to explain inconsistent decision. E.g., agency may have to show how it weighed competing factors. Yepes-Prado v. INS
1. “while agencies must have significant flexibility to adapt their practices to meet changed circumstances of the facts of a particular case, they cannot reach their decision capriciously.”
IV. Choice of Procedure and Non-Legislative Rules
A. Advantages and Disadvantages of Adjudication and Rulemaking
1. Adjudication:
a. Pros:
i. Allows for treatment of specialized and unanticipated problems
ii. Less likely to attract attention so agency and proceed w/o large-scale opposition
iii. Proceeding against a single individual is often cheaper and faster than rulemaking
iv. Agency gets to pick defendant
b. Cons:
i. Has retroactive effect
ii. May not be fair (current parties have no notice they are breaking the law)
2. Rulemaking:
a. Pros:
i. May be more fair b/c of general application and prospective effect
ii. Likely to bring about industry-wide compliance
iii. Tend to be more clear, set down a bright line rule
iv. Process open to broad range of criticism, advice and date
b. Cons:
i. More likely than adjudication to engage national interests able to mount extensive and expensive campaigns in opposition to rule
ii. Substantial procedural requirements
3. Adjudication advantages over Rulemaking:
a. Not everything is ripe for a rule
b. Some situations are individual / unforeseeable
c. Rule words can be imprecise & require adjudication
d. Insulated from political pressures (no ex parte)
e. Less of a spotlight in adjudication
f. Cheaper to go after one violator, than write a rule
g. Agency get to pick the defendant
B. Legal Constraints
1. Agencies usually have discretion to choose rulemaking or adjudication. NLRB Bell Aerospace Company Division of Textron, Inc.
2. Choosing adjudication over rulemaking might disadvantage some litigants, but agencies generally are not precluded from using adjudication merely b/c of its retroactive effect. SEC v. Chenery Corp.
3. Retroactivity must be balanced against the mischief of producing a result that is contrary to a statutory design ot to legal and equitable principles. Retail Wholesale and Department Store Union v. NLRB
First impression Second impression
Case one events Case two events Case one decision Case two decision
a. Is the case one of first impression
i. Once an adjudication is finished, other regulated entities are warned by the decision that the agency has adopted a new policy.
ii. Exception for firms engaged in the behavior now prohibited by the agency before it announced this result in an adjudication.
iii. In both cases, application is retroactive, and in that sense, both parties are treated unfairly. However, party in Case two may be treated even more unfairly b/c it was not allowed to argue against initial adoption of policy in Case one and must rely on competence of lawyers in Case one to defend its interest. Remember that Wyman-Gordon application of new policy in case of first impression
b. Does the new rule represent an abrupt departure from well-established practice or merely attempt to fill a void in an unsettled area of law.
c. To what extent did the party against the new rule is applied, rely on the old rule?
d. What is the degree of burden a retroactive order imposes on a party
i. Is agency seeking just a cease and desist order?
ii. Or is it seeking to impose fines
e. What is the statutory interest in applying a new rule despite the reliance of the party on the old standard
4. If agency chooses to proceed by adjudication, it must apply its new policy to the regulated entity; it cannot sue adjudication to promulgate rules of wholly prospective application. NLRB v. Wyman-Gordon Co.
a. Prospective adjudication amounts to rulemaking w/o notice and comment and is thus invalid
b. However, agency can use invalid decision as precedent in subsequent adjudication. It will have to re-argue merits of policy.
5. Cases:
a. NLRB v. Bell Aerospace Company (US 1974)
i. Allowed to make adjudicative rule retroactive if public benefit balances strongly against impact of the retroactive effect on the defendant.
b. SEC v. Chenery Corp:
i. The choice made b/w proceeding by a general rule or by individual ad hoc litigation is on that lies primarily in the informed discretion of the administrative agency
1. Adjudication is more appropriate if the standard w/ in the industry varies widely
2. Adjudication is less appropriate if regulated body made good faith efforts to conform
c. Retail Wholesale and Dept. Store Union v. NLRB (DC Cir 1972)
i. What’s the propriety of applying retroactively a change in policyi effectuated by it through adjudication rather than rulemaking
1. SEC v. Chenery: retroactivity must be balanced against the mischief of producing a result which is contrary to statutory design or to legal and equitable principles. If that mischief is greater than the ill effect of the retroactive application of a new standard, it is not the type of retroactivity condemned by law
a. This is a question of law: no deference to agencies.
2. Factors:
a. Whether the particular case is one of first impression (agency has advantage)
b. Whether the new rule represents abrupt departure from well established practice or merely attempt to fill a void in an unsettled are of law.
c. Extent to which party against whom the new rule is applied relied on old rule
d. The degree of the burden which a retroactive order imposes on a party
e. Statutory interest in apply new rule despite reliance of party on old standard
i. Whatever the reach of Wyman-Gordon in terms of agency power to engage in wholly prospective adjudication, id does not prevent an agency in adjudication from declining in subsequent cases to apply a new rule retroactively if equitable or statutory considerations mitigate against it.
C. Rulemaking
1. Rulemaking Authority
a. Agency only has authority to promulgate rules if Congress has given it that power
b. Generally, delegation is explicit
c. Further, most agencies have such authority
2. Four Issues that Arise when agency makes policy in rulemaking and enforces it through adjudication
a. Does the agency have the authority to make substantive rules
b. Can agency restrict adjudicatory scope hearing rights by promulgating rules that eliminates matter of facts that otherwise would be subject resolution in hearing
c. Can an agency give retroactive effect to a rule
d. What extent does due process limit an agency’s authority to use adjudication to clarify ambiguity in a rule.
3. Impact on Adjudication Rights
a. B/c most rulemaking are informal, by adopting policy through rulemaking agencies can limit the scope fo adjudication rights
i. Informal rulemaking do not give regulated entity a chance to cross examine
ii. Yet when agency enforces rulemaking in adjudication, regulated entity can only adjudicate facts, not the policy underlying the rule
iii. Contrast to adoption of policy through adjudication, which gives regulated entity opportunity to call witnesses to testify concerning the potential benefits and costs of such a policy.
b. The courts have said eliminating the right to cross examination is Okay. United States v. Storer Broadcasting Co.
c. Basically it is okay for the agency to:
i. Redefine what the scope in adjudication though the rules
ii. Can even use rulemaking to eliminate the need to hold adjudicatory hearings
4. Retroactive Rulemaking
a. Agencies do not have the power to give rules retroactive effect w/o an express grant of such authority by Congress. Bowen v. Georgetown University Hospital (US 1988)
i. Remember: an agency’s power to issue rules is limited to the authority delegated by congress, agencies do not have the power to give rules retroactive effect w/o express grant of such authority by congress
b. Two Steps:
i. Does the regulation even have retroactive effect?
ii. If so, does agency have explicit authorization?
c. Also consider
i. Whether retroactivity would violate due process
ii. Whether agency abused its discretion
5. Ambiguous Rules:
a. Although agency interpretations of their own rules are given deference, enforcement w/o notice of interpretation may violate due process. General Electric Co. v. EPA
i. Notice can come from regulation or previous enforcement
ii. Notice cannot come from initial enforcement
b. Regulated entity, acting in good faith, must be able to identify standards with agency expects it to conform
c. Note that where new policy announced through adjudication as in Retail and Wholesale, no due process issue arises b/c agency not seeking to deprive regulated entity of property/money.
d. General Electric Co. v. EPA
i. “b/c the regulation did not provide GE w/ fair warning of the agency’s interpretation we vacate the finding of liability.”
ii. If fines and sanctions then there may be due process problems w/ ambiguous rules.
iii. Be wary if an agency attempt to use a citation as the initial means for announcing a particular interpretation.
iv. Question is regulated party received or should have received notice of agency’s interpretation by reading regulation –is the agency’s interpretation “ascertainably certain” –good faith.
v. If unclear, where the petitioners interpretation is reasonable and agency struggles to provide a definitive reading of regulatory requirements, party is not “on notice” of agneyc interpretation of the regulations and may not be punished.
D. Nonlegislative Rules
1. Defined:
a. Agency pronouncement that advises the public of the agency’s view on an issue
b. Not binding until adopted in adjudication
i. Provides notice for purposes of due process
ii. But ct will have to determine whether policy announced in nonlegislative rule is consistent w/ the statute
c. §553 recognized two type of nonlegislative rules
i. Interpretive rules: a statement issued by an agency to advise the public of the agency construction of the statutes and rules which it administers
ii. Statement of policy: statement issued by agency to advise public prospectively of the manner in which the agency proposes to exercise discretionary power
d. Legal Issues that arise from using nonlegislative rules
i. Can be done w/o notice and comment, but some requirement in the APA
ii. A party might challenge a nonlegislative rule on ground that pronouncement is really a legislative rule—and no notice and comment used
iii. What are the consequences when a member of the public relies on this statement and then the government later refuses to follow it
2. Advantages and Disadvantages
a. Pros
i. Efficient b/c not subject to procedural requirement of APA and effective immediately upon publication
ii. Inform public of agency’s views and intentions
iii. Can be used as a management tool to issue guidance to agency employees
iv. Provide flexibility in that they allow agency to change its mind
b. Cons
i. Can be adopted w/o public input which fosters uniformed decision making
ii. Pre-enforcement review is expensive and may not be available to regulated entities b/c of lack of ripeness/finality; regulated entities may be compelled to comply b/c of threat of enforcement
iii. On the other hand, regulated entities may ignore a nonbinding rule
iv. Agency may treat nonlegislative rules as binding on the public
v. Members of public can be adversely affected by reliance on nonlegislative rules
3. APA Procedures
a. §552 of the APA (also the Freedom of Information Act) requires each agency to publish in the federal register “statement of general policy or interpretations of general applicability formulated and adopted by the agency”
b. A person may not be adversely affected by a matter required to be published and not so published unless from legislative rules
4. Distinguishing nonlegislative from legislative rules (Legislative rules require notice and comment)
a. Policy Statements:
i. Advise public prospectively of how agency intends to exercise discretionary power; does not establish a binding rule
ii. Statement of policy have only prospective effect and leave agency free to exercise discretion. American Hospital Association v. Bowen
iii. How agency characterizes its own action, while not decisive, is a factor to consider
iv. If a court has previously found a statute to be ambiguous, agency pronouncement as to its meaning will likely be viewed as a legislative rule
v. Binding Effects Test:
1. Courts use a binding effect test to distinguish legis v. nonlegis: question is whether the statement of the agency imposes a new duty or merely announces the intention to impose a new duty at some future time:
a. Look for MUST and SHALL
2. American Hospital Ass’n v. Bowen (DC Cir. 1987)
a. Remember that “general statements of policy do not establish a “binding norm.”
b. Two Tests:
i. Unless a pronouncement acts prospectively, it si a binding norm—so no present effect imposing rights and obligations
ii. Whether a purported policy statement genuinely leaves agency, decisionmakers free to exercise discretion
vi. How an agency considers it is a factor, but it is not determinative
1. Notice that a rule can be binding only on the agency and its still a legislative rule requiring notice and comment
b. Interpretive Rules
i. Interpretive or clarify the nature of the duties previously established by an agency statutory mandate or by a regulation promulgated by the agency is NOT binding
ii. As a threshold matter, agency must have power to promulgate legislative rules: then courts look to two factors to decide whether a rule is merely interpretive
1. Agency’s characterization of its actions
2. Source of duty a party is obligated to obey
iii. Under American Mining Congress v. Mine Safety and Health Administration (DC Cir. 1993)
1. A rule has legislative force if agency intended to exercise the power given it by Congress. Consider:
a. Whether in the absence of the rule there would not be adequate legislative basis for enforcement action or other agency action to confer benefits or ensure the performance of duties
b. Whether the agency has published the rule in the code of federal regulations
c. Whether the agency has explicitly invoked its general legislative authority
d. Whether the rule effectively amends a prior legislative rule
i. A rule does not become an amendment merely b/c it supplies crisper and more detailed lines than the authority being interpreted
ii. Amendments must repudiate or be irreconcilable with a prior legislative rule
2. If the answer to any of these is YES, then it is a Legislative Rule
iv. Metropolitan School District v. Davila (7th Cir. 1992)
1. Starting point of the analysis is the agency’s characterization of the rule, not dispositive but factor
2. An interpretive rule simply states what the administrative agency thinks the underlying statute means and only remind affected parties of existing duties.
3. On the other hand, if by its action the agency intends to create new law, rights, or duties, the rule is properly considered to be a legislative rule
v. Do not apply the substantial impact test: Vermont Yankee Nuclear Power Corp.
5. Legal Protection of Reliance on NonLegislative Rules
a. Once an agency gives its regulation an interpretation, it can only change that interpretation as it would formally modify the regulation itself, through notice and comment rulemaking. Alaska Professional Hunters Association, Inc. v. FAA
b. But where the agency never adopts a definitive interpretation, no administrative common law exists and there is no need for notice and comment b/c there has been no real reliance.. Association of American Railroads v. DOT
c. It is unclear whether the federal government may be estopped
i. If it can, there are at least two requirements
1. Regulated entity must have relied on agency’s conduct in such a manner as to change his position for the worse
2. Reliance must have been reasonable
ii. Where regulated entity’s position does not change—e.g., where entity’s only detriment was inability to retain money it should never have received in the first place—government is not estopped. Heckler v. Community Health Services
iii. Government cannot be forced to act in a manner contrary to statute even if estoppel would otherwise be appropriate. Office of Personal Management v. Richmond
iv. At least one state has held that where government repeatedly led plaintiff to believe she was entitled to unemployment benefits, it could not later deny benefits. Appeal of Eno
v. Some basic Rules:
1. Further, those who deal w/ the gov. are expected to know the law and may not rely on conduct of gov. agents contrary to law
2. Oral instruction are always suspect
3. Regulated entities should not rely on low-level employees
d. If estoppel argument doesn’t work, due process argument might. It is relatively well established that one cannot be held criminal responsible for acting in reasonable reliance upon the advice of a government agent.
e. Another possible argument is the prohibition against inconsistent application. To extent agency is asking a court to defer to its new interpretation, courts may refuse that deference b/c the agency has not been consistent
f. Cases:
i. Alaska Professional Hunters Ass’n v. FAA (DC Cir. 1999)
1. Rulemaking as defined in the APA include not only the agency’s process of formulating a rule, but also the agency’s process of modifying a rule. §551(5)
2. When an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish w/o notice and comment
3. But notice that this may be wrong—b/c if it’s just a nonlegislative rule to begin w/ then to change all that is required is to publish something different in the federal register.
a. Requiring more would be contrary to Vermont Yankee
ii. Association of American Railroads v. DOT (DC Cir. 1999)
1. Was there ever a definitive interpretation of the rule to begin with? If NOT then it’s not like Alaska Prof. Hunters and it is okay to make first interpretation. Also look at the level of reliance.
iii. Heckler v. Community Health Services (US 1984)
1. P relied on the express authorization of the gov. agent.
2. Estoppel is an equitable doctrine invoked to avoid injustice in particular cases.
3. If one person makes a definitive misrepresentation of fact to another person having reason to believe that the other will rely upon it and the other in reasonable reliance upon it the first person is not entitled to regain property or its value that other acquired by the act
4. Party claiming the estoppel must have relied for worse but the gov. may not be estopped on the same terms as other litigants
5. It is possible to estoppe the gov, but just about impossible
6. Policy against estopping the government
a. Soverign Immunity
b. Separation of Powers
iv. Office of Personal Management v. Richmond (US 1990)
1. There can’t be estoppel of the government when it is a claim for payment of money from public treasury contrary to a statutory appropriation
v. Appeal of ENO (New Hampshire Dept. of Employment Security) (NH 1995)
1. Some states are more willing to find equitable estoppel
2. To the Extent Justice Requires
3. But remember that cannot be held criminally responsible for acting in a reasonable reliance upon the advice of a gov. agent.
4. Also remember to consider inconsistent application. One basis for finding agency action arbitrary and capricious is if the agency acts inconsistently w/ past decision w/o explaining the basis for the change.
E. Judicial Deference
1. Legislative Rules receive Chevron deference: a court will defer to an agency’s statutory interpretation if it concludes that a statutory term is ambiguous and that the agency’s interpretation of the terms is reasonable or permissible
2. Formal Adjudication receives Hearst deference: a court is to accept the result of an adjudication if the decision has warrant in the record and reasonable basis in the law
3. Interpretive rules
a. Ruling, interpretations, and opinion of administrator, while not controlling upon the courts, do constitute a body of experience and informed judgment to which courts may properly resort for guidance. Skidmore v. Swift & Co. (US 1944)
b. Interpretive rules are not entitled to Chevron-style deference. They are merely entitled to respect. Christensen v. Harris County—ct specifically reject applying Chevron to an advisory letter
i. Under Skidmore, interpretive rules are only entitled to deference to extent they have the power to persuade. Consider:
1. the thoroughness evident in its consideration
2. the Validity of its reasoning
3. Its Consistency with earlier and later pronouncements
ii. How are the two tests different?
1. Chevron requires the court to defer if agency interpretation of statute—as expressed in rulemaking— is reasonable
2. Skidmore requires the court to defer only if agency interpretation of statute—as expressed in interpretive rule—is persuasive
Summary:
* Interpretations made in context of decisions that have force of law (i.e., formal and informal rulemakings and adjudications) are entitled to Chevron deference.
* Nonlegislative rules and policies are not entitled to Chevron deference but may be entitled to Skidmore deference if persuasive.
* Interpretations of agency rules are entitled to Chevron deference.
4. Informal Adjudications:
a. Informal adjudication are entitled to Chevron deference.
i. Congress delegated authority to agency w/ intent that it fill the gap
ii. Agency has special expertise and takes a deliberate and official position when it engages in informal adjudication
b. Court has generally deferred to an agency’s interpretation of its own regulations w/o regard to the formal used to adopt that interpretation.
c. Gonzalez v. Reno (11th Cir. 2000)
i. Question whether Congress has directly spoken to the precise question at issue
1. If the intent of Congress is clear, that is the end of the matter, for the court as well as for the agency. Must give effect to the unambiguously expressed intent of congress.
2. If there is a gap --> Executive Discretion
ii. The agency policy gets some deference under Chevron and that deference when we take account of implications of policy for foreign affairs, is considerable.
iii. Then check to see if the agency action was reasonable
d. Gonzalez v. Reno (11th Cir. EN BANC 2000)
i. Informal adjudication was due some deference? YES
ii. Deference can be strengthened by factors such as foreign affairs? YES
iii. Informal adjudication gets more deference than opinion letter in Christensen
e. Arguable then that informal adjudication is lawmaking and should get lots of deference
f. United States v. Mead (Fed. Cir. 1999)
i. In informal adjudication the ct held that the agency’s interpretation was entitled to no deference b/c it was not adopted by notice and comment rulemaking. Thus didn’t get Chevron deference or Skidmore deference
V. Reviewability
A. Jurisdiction
1. Intro:
a. Generally not an issue
b. Provided by organic state or by federal question statute
c. APA does not create subject matter jurisdiction over any action
2. First question is whether the ct has jurisdiction (ct. can review at any time)
a. Jurisdiction requires standing—if there is standing there must still be a statutory grant of jurisdiction over that particular type of case
b. If a P does not have jurisdiction under a particular statutory regime, the general federal jurisdictional statute is normally available. 28 USC §1331:
i. The district courts shall have original juris. of all civil actions arising under the constitution, law or treaties of the US.
3. Second question—P has to state a cause of action. Fall back provision is APA §702—cause of action for a person suffering legal wrong b/c of agency action, or adversely affected w/in meaning of relevant state
4. There are four Requirements (Gov. must object or they are waived)
a. The appeal must be one that is not excluded from review -- §701
b. Limited to person suffering a legal wrong (an action by the gov. that interferes w/ a person’s constitutional, statutory or common law right)
i. Zone of interest (can also be an element of standing)
c. Finality doctrine: §794 only agency action specifically reviewable by statue or final agency action for which there is no adequate remedy in a court
d. Ripeness: primary jurisdiction—common law doctrine “when a court is faced w/ an issue over which an agency also has jurisdiction, the court may stay the court case pending a determination by the agency with primary jurisdiction
B. Standing
1. Comes from cases and controversies limitation in Art. II §2. --> Constitutional test: has the P suffered an injury by the illegal action, and would a favorable court decision remedy or avoid that injury
Constitutional
Prudential
Statutory
Source of Requirement
Art III, § 2 (case or controversy)
Court created
Statute (e.g., § 702)
Required showing
* Injury in fact
* Causation
* Redressability
* No generalized grievances
* Plaintiff must assert own rights
Plaintiff’s alleged injury must fall within the zone of interest of Constitution or statutory provision
Waivable?
No
Yes
N/A
2. Injury in fact
a. Must be concrete and particularized, actual or imminent
b. Ideological/ theoretical injury is not sufficient
i. A citizens is not deemed injured simply b/c the gov. acts unlawfully and the person is upset
ii. Federal taxpayer is generally not deemed injured by an agency actions simply b/c they involved the illegal expenditure of federal funds
c. Nexus requirement under Lujan v. Defense of Wildlife
i. Temporal: Past exposure to illegal conduct does not in itself show a present case/controversy regarding injunctive relief if Unaccompanied by any continuing, present adverse effects
ii. Geographic: impeding “someday” intentions to visit a place w/o concrete plan does not support a finding of actual and imminent injury
d. A P cannot base injury in fact merely upon a procedural violation. However, P can sue to enforce procedural rights so long as the procedures in question are designed to protect some threatened concrete interest that is the ultimate basis of his standing. Lujan v. Defense of Wildlife
e. Sierra Club v. Morton (US 1972)
i. Court allowed the injury to environmental, aesthetic, or rec int actually suffered by person could qualify as injury in fact. A group can sue on behalf of its members if:
1. One of its members would have had standing to bring the action
2. The lawsuit relates to the purposes of the organization
3. Neither claim asserted nor relief requested requires participation of individual members--> so cannot be for damages, just injunctive relief
3. Causation and Redressability
a. Injury must be fairly traceable to the defendant
b. It must be likely that injury could be redressed through a favorable decision
c. Where injury based in part on procedural violation, courts relax standards for showing causation and redressability.
d. So even when a person can demonstrate “injury in fact”, a court must still determine whether the injury is the result of the government action and that a favorable court decision would remedy the injry.
i. Causation cannot be purely speculative
ii. Redressability cannot be purely speculative
4. Prudential requirements
a. No generalized grievances
i. Requires that harm be both abstract and widespread
ii. Just b/c a harm is widespread does not necessarily mean it is abstract
b. P must assert own right, although associational standing may suffice if:
i. One of its members would have standing to bring the action
ii. The lawsuit relates to the purposes of the organization
iii. Neither the claim asserted not the relief requested requires the participation of individuals members (this means action is not for damages but for declaratory / injunctive relief)
c. Prudential requirement can be waived where Congress provides for cause of action. FEC v. Akins
5. Litigation of Standing:
a. Lujan v. Defenders of Wildlife (US 1992)
i. Three constitutional elements of standing:
1. P must have suffered an injury in fact--> an invasion of a legally protected interest which is
a. Concrete and particularized (injury is personal and individual)
b. Actual or imminent not conjectural or hypothetical
2. Must be causal connection b/w injury and the conduct complained of (traceable)
3. It must be likely (not speculative) that injury will be redressed by favorable decision
ii. Remember temporal Nexus: must show D’s conduct and imminent injury to P
iii. Geographical Nexus (enviro cases) D’s conduct and area used by P
b. FEC v. Akins (US 1998)
i. Where large number of American suffer alike the political process may provide the more appropriate remedy for a widely shared grievance
ii. However, the fact that a political forum may be more readily available where an injury is widely share does not automatically disqualify an interest for Art. III purposes
C. Cause of Action under §702:
1. Plaintiff suffered legal wrong b/c of agency action
a. This requires violation of constitutional or statutory right
b. When an agency regulates a person, that person always has a cause of action under §702
2. Plaintiff adversely affected or aggrieved by agency action w/in the meaning of a relevant statute
a. This requires P to show he is w/in the zone of interest Congress intended to protect when it enacted statue. Air Courier conference of America v. American Post Workers Union, AFL-CIO
b. The Zone of Interest test only arises when the person who challenges the agency is not one who ahs suffered a legal wrong
c. The proper inquiry is simply whether the interest sought to be protected by the complainant is ARGUABLY w/in the zone of interest to be protected;
i. Plaintiff does not have to show indication of congressional intent. National Credit Union Admin v. First National Bank & Trust Co.
D. Exclusions From Judicial Review under §701
1. §701 of the APA provides that the judicial review chapter applies EXCEPT to the extent that:
a. Statutes preclude judicial review OR
b. Agency action is committed to agency discretion by law (rare)
2. Court takes narrow, strict view of preclusion
a. Preclusion can create due process problems
b. Preclusion conflicts w/ notion that Art. III vests judicial power in courts
c. Preclusion particularly troublesome when it prevents constitutional claims; courts often construe statues to avoid this problem
3. Statutory Preclusion
a. APA embodies basic presumption of judicial review that will not be cut off unless there is a persuasive reason to believe that such was the purposes of Congress. Abbott Laboratories v. Gardner
i. Suggests standard is one of clear and convincing evidence
ii. Mere fact that statute specifies certain reviewable decision does not preclude others
b. In fact, court does not require clear and convincing evidence of intent; presumption can be overcome whenever congressional intent to preclude judicial review is fairly discernible. Block v. Community Nutrition Institute:
i. Evidence of intent need not be explicit. Consider the following:
1. Language (e.g., including some but not others suggests preclusion
2. Structure
3. Objectives
4. History
5. Nature of Action
ii. Block guts Abbot Labs. All that remains is requirement of Intent
4. Committed to agency discretion
a. Preclusion on ground of commitment to agency discretion is a very narrow rule that applies only where a statute is phrased in such broad terms that there is no law to apply. Citizens to Preserve Overton Park v. Volpe
i. The question is whether a court would have a meaningful standard against which to judge the agency’s exercises of discretion.
ii. If no judicially manageable standards are available for judging how and when an agency should exercise its discretion, it is impossible to evaluate agency action for abuse of discretion
b. However, presumption exists that judicial review is not available when agency refused to take enforcement steps. Heckler v. Chaney
i. Rationale:
1. When an agency refuses to act, it generally does not exercise its coercive power over an individual’s liberty/property rights.
2. Agency is best suited to pick its own battles; decision to enforce depends on a number of factors
3. Compare to executive’s decision not to indict in criminal context; court should not interfere w/ prosecutorial discretion
ii. Presumption is rebuttable where substantive statute has provided guidelines for the agency to follow in exercising its enforcement powers; court must find a meaningful standard to apply
c. There is no presumption of unreviewability concerning an agency decision not to issue a rule. American Horse Protection Association v. Lyng
i. A meaningful standard exists: APA requires agencies to allow interested persons to petition for the issuance, amendment or repeal of a rule
ii. Compare to application for waiver, the denial of which is likely reviewable
d. Where Congress intends to preclude constitutional claims, its intent must be clear. Webster v. Doe
e. Heckler v. Chaney (US 1985): sentenced to death.
i. §701(a)(1) applies when congress expressed intent to preclude judicial review
ii. §701(a)(2) applies in different circumstances, even where congress has not affirmatively precluded review, review is not to be had if the statute drawn so that a court would have no meaningful standard against which to judge the agency’s exercise of discretion
1. An agency decision not to enforce often involves complicated balancing
2. Not enforcing doesn’t infringe on areas where court protect
3. Similar ot decision of a prosecutor not to indict
iii. Brennan Concurs: to point out that the court did not decide that nonenforcement decision are unreviewable in cases where:
1. an agency flatly claims that it has not statutory jurisdiction to reach conduct
2. an agency engaged in a patter of nonenforcement of clear statutory language
3. an agency has refused to enforce a regulation lawfully promulgated and in effect
4. a nonenforcement decision violates constitutional rights
f. Webster v. Doe (US 1988)
i. CIA director can fire anyone whenever he wants. Is this judicially reviewable
1. Relevant provision says director can fire when “deems” necessary “this fairly exudes deference”
2. However constitutional claims remain—and congress must be clear if it want to preclude constitutional claims
5. Cases:
a. Abbott Laboratores v. Gardner (1967 US) --> Clear and Convincing
i. Trying to advertise generic drug. Judicial review of a final agency action by an aggrieved person will not be cut off unless persuasive reason to believe that such was the purpose of congress.
ii. Court wants explicit statement, rejects argument of exclusion by not listing as optional
b. Block v. Community Nutrition Institute (US 1984)
i. To what extent a particular statute precludes judicial review is determined by:
1. express language
2. Structure of statutory scheme
3. its objective
4. its legislative history
5. Nature of the administrative action involved
ii. Absence of an express provision in a complex scheme… omission of such a provision is sufficient reason to believe that congress intended to foreclose consumer participation in the regulatory process
iii. The presumption favoring judicial review of administrative action may be overcome by:
1. Specific language or specific legislative history that is a reliable indicator of congressional intent
2. Inferred from contemporaneous judicial construction barring review and the congressional acquiescence or form the collective import of legislative and judicial history
3. Inferences of intent drawn from the statutory scheme as a whole, particularly when a statute provides a detailed mechanism for judicial consideration of particular issues at the behest of particular persons.
Outline 3 (better .doc version available on Drobox)
ADMINISTRATIVE LAW OUTLINEProf. Levy – Fall 2008 – Samsel
Ch. 1-Administrative State
* 1. Intro
* 2. Modes of Agency Action
* 3. The APA-Overview
* 4. Agency & Legislative Power
* 5. Agency & Judicial Power
* 6. Agency & Executive Power
Ch. 2-Judicial Review
* 1. Intro to Scope of Review—§ 706 Grounds for Reversal
* 2. Substantial Evidence Standard [Facts]
o When to apply the 3 standards: A&C, Substantial Evidence, Clearly Erroneous
* 3. Review of Stat. Interpretation-Chevron [Interpretations]
* 4. Review of Stat. Interpret. non-Chevron
* 5. A&C Review [Policy Judgments]
Ch. 3-RM: Legislative Rules & Regs
* 1. RM Authority
o Source & Limit on Authority: OS, APA, DP (limit only)
* 2. Initiation of RM
* 3. Types of RM Procedures
o Spectrum: Exceptions to N&C; Informal RM (N&C; §553); Formal RM (§§556-57)
* 4. Elements of N&C—Informal RM: Notice; Opp. for Comment; Stmt of Basis & Purpose
* 5. Special Problems of N&C RM
Ch. 4-Policy Making by Adjudication
* 1. Constraints on Using Adjudication
o Restraints: OS; APA; Fairness, Consistency, & DP; Liability, Remedy, & RM v. Adj.
* 2. Problem of Retroactivity
* 3. Types of Adjudication: APA & Non-APA
o Triggering Formal APA Adjudication; Procedures for Both
* 4. The Agency & ALJ Relationship
* 5. EPC
Ch. 5-Problems of Mass Adjudication
* 1. Adjudicatory Bureaucracy
* 2. Impact of Rules
* 3. Due Process & Problems of Mass Justice
o Liberty & Property Interests: Legit Claim + Insufficient Process (Some Kind of Hearing)
* 5. Some Kind of Hearing
Ch. 6-Informal Action
* 2. Non-Legislative Rules & Their Limits
o Interpretive Rules, Policy Statements, & Agency Practice
* 5. Agency Advice & Estoppel
o Estoppel; Scienter; DP; APH
Ch. 8-Availability of Review
* 1. Preclusion: Presumption v. Statutory & Committed.
* 4. Standing: Constitution & Prudential components.
* 6. Timing of Review: Finality, Ripeness & Exhaustion.
1.1 INTRODUCTION TO ADMINISTRATIVE LAW
A. (ADMINISTRATIVE) AGENCY
* Defined. Generally: Any public body that exercises government authority other than Congress (or state legislature), the President (or governor), or courts.
* § 551. Each authority of the Government of the U.S., whether or not it is within or subject to review by another agency EXCEPT Congress, U.S. courts, U.S. territories, and governments of D.C.
o President also exempted by Franklin v. Massachusetts.
* Types of Agencies
o Executive Agencies. Agencies w/in an executive department (e.g. Dep’t of Agriculture).
* Typically follow the agenda of the President (can be removed at will).
o Independent Establishments. Agencies NOT located in an executive department (e.g. EPA)
* “Independent Agencies”: Some independent establishments are insulated from presidential control. (e.g. NLRB & FCC, but not EPA).
o Executive v. Independent Agencies. See handout chart for differences.
* Location: within department v. free standing
* Typical Form: single head v. board/commission (members of both parties)
* Removal: at will v. for cause (serve fixed terms)
* Presidential Control: more v. less (plus limits on party affiliation)
* What Agencies Do:
o Agencies execute the laws passed by Congress. This includes (1) regulating private conduct; (2) administering entitlement programs; (3) managing federal property; and (4) many other activities that don’t fit neatly in a category (e.g. issue passports, admit/deport aliens, space shuttle, collect taxes).
* All Agencies subject to at least 3 Sources of Law:
o Constitutional principles
o The Administrative Procedure Act (APA)
* Applies unless superseded by another statute.
* Judicial Review: 700s.
* Procedural: 500s.
o Organic Statutes
* Creates the agency and its mandate (purpose/problem to solve).
* May supersede APA.
o Maybe Others
* E.g. judge-made law or specific (binding) regulations
B. REGULATORY STATE—THE HISTORY OF AGENCIES
* Early Administrative Law
o The First Congress created the first “agencies”: Departments of State, War, & Treasury.
o Marbury v. Madison known as the “first great administrative law decision”
* Decline of Laissez Faire
o Laissez Faire: Characterized by absence of government regulation of business except for public utilities (e.g. gas, water, electricity, & telephone companies)
o Beginning w/ “Progressive” movement of 19th century, states and federal government began to address social and economic ills through regulatory and benefit programs.
* Growth of Agencies
o Birth of Modern Administrative Law: New Deal response to Great Depression in 1930-40s: securities laws, labor laws, benefits.
o Great Society initiatives in 1960-70s: civil rights programs, birth of modern environmental law.
* Regulatory Reform
C. JUSTIFICATIONS FOR AGENCIES, I.E., REGULATIONS & BENEFIT PROGRAMS
* Economic [Called Economic Regulatory Policy/Analysis—dominant language in policy debates]
o Efficiency of Markets
* Efficient allocation maximizes social welfare. See, e.g., trade barriers.
o Market Failures/Defects
* Non-Competitive Markets. (e.g. monopoly)
* Externalities (Spillover Costs). Not borne by person producing them (e.g. pollution)
* Public Goods (Prisoners’ Dilemma). Market will under-produce. Gov’t steps in to produce (e.g. lighthouse; national defense).
* Imperfect Information. Buyers/Sellers (buyers will make bad decisions b/c they can’t afford to conduct research).
* Non-Economic [reflect values: social justice, fairness; market doesn’t care about fairness]
o Concentration of Wealth
* Give from the rich to the poor (‘tho not explicitly stated in programs)
o Non-Market Goods
* Goods or services that are too important or otherwise inappropriate for allocation on the basis of willingness to pay.
* E.g. Scarce goods (Access shouldn’t be decided by wealth).
o Livers, babies for adoption, broadcast licenses.
o Objectionable Transactions
* Objectionable on moral or ethical grounds (although market would permit).
* E.g. slavery, racial or gender discrimination, prostitution, drug use
* Demand for these items can lead to black markets (drugs)
D. THE ADVANTAGES OF AGENCIES—REASONS WHY AGENCIES ARE MORE EFFICIENT
* Efficiency
o Streamlined Process
* No lengthy process of Congress, Prez, or judiciary
* Can do more, faster
o Relieve Burden on Congress & Courts
* Expertise (probably more significant than Efficiency)
o Specialization; Experience.
* Bureaucratic Neutrality
o Policy decision on merits; Less directly political
E. FUNDAMENTAL QUESTIONS
* The Essential (Admin Law) Conflict
o Effectiveness (Pro-Agency) v. Control (Anti-Agency)
o Issue: Conflict b/w (1) the need to empower agencies to fulfill important public purposes and (2) the need to constrain agencies so as to protect and preserve individual rights against errors and abuse, and ensure conformance to legislative dictates.
o See Table 1-1 on page 13.
* Shared Oversight
o Shared oversight of agencies represents an uneasy accommodation to solve the conflict above.
o Example: NLRB makes regulations, enforces them, and adjudicates them.
* Solution: All 3 branches get a piece of the agency.
* Regulations must comply w/ statutes made by Congress.
* Prez can often fire commissioners.
* Courts often have judicial review.
* Morton v. Ruiz [13].
1.2 AGENCIES & MODES OF AGENCY ACTION
Five Modes of Agency Action
* Legislative Rules.
o Agencies act through the adoption of binding regulations, called legislative rules.
o These rules have much the same appearance and effect as statutes.
* Policy Making Adjudications.
o Agencies act by deciding cases that interpret and apply statutes and regulations.
o Generally have a precedential effect in later agency decisions and create agency common law.
* Mass Adjudication.
o Agencies determine hundreds of thousands of cases promptly, fairly, and accurately.
o Especially in the context of administering benefits and claims systems.
* Informal Actions.
o Agencies take a host of informal actions that resolve issues, provide guidance to the public, or otherwise implicate public policy.
* Enforce Statutory & Regulatory Requirements.
o Agencies investigate, monitor, or other forms of gathering info to enforce requirements.
o Agencies take enforcement steps like issuing citations, seeking sanctions, or denying or revoking licenses.
Summary of the 5 Agencies
* See Handout chart for Agency Structures & Programs.
* Key points:
o Structure features and “independence”
o Organic Statutes (Creates agency) and Mandates (Duties)
o Powers & Modes of Action
o Fundamental Questions: (1) Balance & Essential conflict; (2) Separation of Powers
o Connection to APA
1.3 THE ADMINISTRATIVE PROCEDURE ACT (APA)
INTRODUCTION
* General federal statute that applies to most agencies and governs the admin process.
* Establishes basic procedures for agencies to follow when making rules or adjudicating cases.
* Includes generally applicable provisions for the availability and scope of judicial review.
* Interacts w/ and may be superseded by other sources of law, including:
o Organic statutes, the Constitution, and other generally applicable statutes.
HISTORICAL CONTEXT
* Pre-APA. APA adopted in 1946.
o Chenery I principle: Agency decisions can only be sustained on the basis of the reasons given by the agency; if the given reasons are inadequate, the court may NOT uphold the decision on other grounds. It must remand to the agency for consideration on those grounds.
* Subsequent Developments.
o Currently, APA remains the fundamental, overarching fed admin law statute.
* It has undergone relatively few changes; basic structure & core provisions remain intact.
o Freedom of Info Act: Increased access to agency records.
o Gov’t in the Sunshine Act: Required agency meets to be conducted in public sessions.
o Reform: Impact Statements required before adopting important policies.
o Other Reform Efforts: NEPA; Unfunded Mandates Reform Act; Paperwork Reduction Act. [4].
OVERVIEW OF THE APA
* Basic Concepts
o Agency: APA applies to everything except legislature, Prez, courts, & exempted agencies §551(1)
* Reinforce: APA can NOT be subsequently superseded unless done so expressly. §559
* General Rule: Assume APA applies unless something exempts it.
o Distinguish Rulemaking v. Adjudication
* E.g. see handout chart “RM v. adjudication”
o Given essential differences b/w RM and adjudication, the APA provides different kinds of procedures for the two.
* Rulemaking
o Defined: Agency process for making, amending, or repealing a rule. §551(5)
o Rule (defined): An agency statement of general or particular applicability and future effect. 551(5)
o Bottom-Line: A RM is a decision to adopt a general, across-the-board policy that will apply broadly in the future.
o Trial-like hearings are neither necessary nor appropriate.
* Adjudication
o Defined: The agency process formulating an order. 551(7)
o Order: The whole or part of final disposition … other than RM, but including licensing. 551(6)
* i.e. Basically ANY type of agency action that is NOT a rulemaking.
o Bottom-Line: An adjudication is an individualized decision in which an agency makes determinations of historical facts, and applies the law to those facts in such a manner as to fix legal consequences.
o Trial-like hearing is appropriate.
* When APA Applies to Rulemaking
o [Rule: An agency statement of general or particular applicability and future effect.]
o § 553 effectively establishes 3 broad categories of rules applicable to RM procedures.
* 1. Notice & Comment Procedures: Rules promulgated pursuant to §553 requirements.
* Notice: Published in Federal Register.
* Opportunity for Comment: Chance to participate; oral hearing is discretionary.
* Concise general statement. [ More details at 5.]
* Less formal than Formal RM.
* 2. Exceptions from N&C Procedures (of § 553).
* Two categories:
o Exempt Altogether. §553(a).
* Rules concerning military or foreign affairs, and
* Matters of agency mgmt or personnel; public property, loans, grants, benefits, or contracts.
o Exempt from Notice Requirement. §553(b).
* Interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.
* Agency finds good cause and says so.
* 3. Formal RM. Look for triggering language.
* Triggering Language. Triggered when another statute—usually organic statute—requires a rule to be made (1) on the record (2) after opportunity for an agency hearing.
* Effect: Must be promulgated using trial-like procedures of §§ 556 & 557.
* Rarely required and courts have construed the language strictly.
* More formal than N&C—Record closely resembles a judicial trial.
* Additional Requirements for Any of the 3 Categories
* APA establishes basics. Other sources may create additional requirements:
* Hybrid Procedures. Agency’s organic statute may impose procedures that supplement or supersede APA rqmts.
o More requirements than N&C; less formal than §§556-57.
* Agency Adoptions Agency may adopt procedures that supplement or exceed statutory requirements—binding the agency.
* Impact Analysis. RM may be subject to regulatory impact analysis requirements imposed by statute or executive order.
* DP. If RM is sufficiently individualized, may be subject to due process rqmts.
* When APA Applies to Adjudications.
o [Adjudication: Any type of agency action that is NOT a RM.]
o Formal Procedures. Governed by §§ 554, 556, & 557.
o Triggering Language [same as Formal RM]: §554, and therefore §§ 556-67, applies in every case of adjudication when a statute requires determination (1) on the record (2) after opportunity for an agency hearing.
* Includes licenses. [see 7].
o Exceptions. Won’t apply in class. §554(a)
o Informal Adjudications? Don’t exist in APA! Either formal or nothing.
o Key Elements of Formal Hearings.
* Timely notice. §554(b). Requirements on 7.
* Opportunity for Settlement. §554(c)(1).
* Hearing under § 556-57. §554(c)(2).
* Presiding Officer: ALJ and Agency. 556(b); 557(b)-(c).
* Hearing rights. 556(d).
* Ex Parte Contacts. 554(d)(1); 557(d).
* Separation of Functions. 554(d).
* Substantial Evidence Review.
* Enforcement. Largely governed by organic statute and other sources. Some in §555.
* Judicial Review
o Availability
* General Presumption: Judicial review is available—cause of action. §702
* Two Exceptions:
o Statutes that preclude review. §701(a)
o Agency action is committed to agency discretion by law. §701(a)
* Limited to those affected, such as zone of interests.
* Timing Limitations. Finality, exhaustion, mootness. §704
o Scope of Review. §706.
INTERACTION B/W APA AND OTHER SOURCES OF LAW
* Addressed by §559. Two basic principles:
o Procedural and judicial review provisions of APA “do NOT limit or repeal additional requirements imposed by statute or otherwise recognized by law.”
o Subsequent statutes may NOT supersede or modify the APA unless it does so expressly.
* Effect: Limits exceptions; underscoring intention that APA applies broadly to all agencies.
Richardson v. Perales [12].
Robinette v. Comm’r of the IRS [15].
1.4 AGENCIES & THE LEGISLATIVE POWER
THE LEGISLATIVE POWER
* Agencies and the powers they wield are products of antecedent legislative acts (ends & means).
* Only Congress has the legislative power; may not delegate to Prez or anyone else. Steel Seizure
* Issue: Whether Congress has permissibly delegated legislative power to admin agencies.
o Answer: Nondelegation doctrine. By establishing an IP, Congress has set antecedent policy.
NONDELEGATION DOCTRINE
* Congress must grant authority to the executive and judicial branches. B/c the powers of these 3 overlap, Congress may delegate authority to take actions & perform functions that could have been done by legislation. Thus, agencies may make policies to fill in details of the statutory scheme.
o Trick: Distinguish necessary and permissible delegation of admin discretion from impermissible delegation of the legislative power itself.
* Test—Intelligible Principle Test: A statutory delegation of authority is permissible if it contains an intelligible principle, or standard, that is sufficient to guide and control agency discretion.
o Implementation is executive in character, even if it resembles legislative action is some respects.
* Basic Purposes:
o Ensures that important social policy choices are made by Congress.
o Provides recipient of authority w/ “intelligible principle” to guide its exercise.
o Ensures that courts have a test to review the exercise against ascertainable standards.
* Bottom-Line: Nondelegation challenges rarely succeed. But it influences the construction of statutes before a challenge arises. [4].
* Other Factors: Breadth of power; Recipient of authority; Procedural safeguards; Criminal sanctions.
o Power Delegated:
* Broad Power. The more significant the power delegated, the more likely that the delegation is excessive and, conversely, the more specific the standards that are needed to satisfy the intelligible principle test.
* Principle: Broad scope of agency authority = Narrower standards. [14].
* “Too Important to Delegate” Powers. Some powers may be so important that they cannot be delegated at all or must be delegated under stricter standards—maybe; it’s implied.
* E.g. Power to Declare war
o Recipients of Delegated Authority
* Suspect Recipient. If the recipient is suspect, such as private parties or judiciary, stricter nondelegation principles apply.
* Independent Power. Conversely, broader delegations of authority may be tolerated where the recipient has independent constitutional authority to act. [16].
* E.g. President (and prosecutorial discretion), Tribe, State
o Judicial Review: NOT always constitutionally required.
STATUTORY INTERPRETATION
* Narrowing constructions. Threat of nondelegation challenge forces narrow construction.
* Clear statement/Constitutional avoidance. [6].
Legislative Veto
* Congress retains ultimate authority to reverse agency policy by statute, but this can be difficult over presumptive presidential veto.
* Thus, Congress sought to implement a legislative veto—preventing agency action from becoming effective by adopting a resolution disproving (rather than amending the statute).
* Rule: Legislative vetoes are unconstitutional, in all forms. Chadha
* Lingering Issues:
o (1) Whether an unconstitutional legislative veto invalidates the entire statute or just the clause.
o (2) Report-and-wait provisions. Agency must report, then delay for specified period. Congress can then enact legislation before agency action takes effect.
Whitman v. American Trucking [6]. Rejection of agency narrowing approach.
* Upheld EPA’s interpretation of statute as consistent w/ nondelegation doctrine.
Pittston Co. v. United States [10].
* Private recipients of authority.
* Advisory and ministerial functions.
1.5 AGENCIES & THE JUDICIAL POWER
Squaring agencies’ quasi-judicial power w/ Article III, 17th Amendment’s jury requirement, and due process.
HISTORICAL BACKGROUND—PUBLIC & PRIVATE RIGHTS
Two kinds of rights that might be adjudicated by agencies:
* Public Rights (Murray’s Lease): (Historically) A right asserted against the gov’t.
o Rule: Administrative adjudication is per se permissible.
o Remedy against the government is public right. Optional: Government need NOT give a remedy.
o Agencies can adjudicate public rights b/c the government need NOT give the right to begin with.
o Theory: Gov’t entitled to sovereign immunity. Thus, should be grateful for any remedy.
* Private Rights (Crowell v. Benson): (Historically) A right asserted against a private party.
o Rule: Administrative adjudication is permissible ONLY if the “essential attributes of judicial power” are reserved to the courts.
o Agency adjudication is permissible if agency is merely fact-finding.
o Agency adjudication is permissible if it feeds into a court, w/ the court having control to review.
* Court must be able to review questions of LAW de novo (w/o deference).
* Most facts left to the agency. A few exceptions for review of constitutional facts.
MODERN SYNTHESIS—RESOLVING ARTICLE III & 7TH AMENDMENT ISSUES
* See handout chart, p.3
* Test: Determining whether admin adjudication violates Article III or Seventh Amendment requires 3 steps:
o Step 1. Determine whether the rights is a public or private right.
* Public: The right is a public right if the government is a party (except in criminal cases) or under Granfinanciera if it is a statutory right b/w private parties that is closely regulated into a regulatory scheme.
* Private: The right is a private right if it is a common law right that arises b/w private parties, including a common law right that has been converted into a statutory right.
o Step 2—Public Rights.
* Rule: Admin adjudication of public rights is permissible under the 7th Amendment and probably consistent w/ Art. III.
* Art. III: Even if admin adjudication is not per se admissible under Art. III, it would be unconstitutional ONLY if other Schor factors weigh very heavily against it b/c, in contrast to Schor, this factor favors constitutionality.
o Step 3—Private Rights.
* Rule: Admin adjudication may violate either the 7th Amendment, Art. III, or both.
* 7th Amendment: The 7th Amendment is violated UNLESS the case would not have been tried to a jury at common law (1790 inquiry) (e.g. action in admiralty or for equitable relief), OR the parties have waived their 7th Amendment rights.
* Art. III: Determination of a possible Art. III violation requires application of the Schor test.
THE SCHOR TEST—ARTICLE III QUESTIONS
* Rule: To determine whether agency adjudication violates Art. III, apply the Schor test.
* The Schor Test—3 Factors:
o 1. Extent to which the agency has “essential attributes of judicial power.”
* i.e. the extent to which non-Article III courts exercise the range of jurisdiction and powers normally vested only in Art. III courts.
* Scope of Jurisdiction given to the Agency (Very important!)
* Broad jurisdiction (big power) v. Narrow jurisdiction (small power)
* Scope of Review that courts retain over the agency.
* Spectrum: No review --> Full de novo review
o (big power/more Art. III problems) v. (small power/less problems)
* Incidental Judicial Powers of the Agency
o 2. Origins and importance [Nature] of the right to be adjudicated.
* Seems to reflect a fundamental change in the public rights doctrine.
* Implies that admin adjudication of public rights is NOT per se constitutional.
* Rather, might be unconstitutional if Schor factors weigh heavily against it.
o 3. Congressional purpose behind the decision to give agency the judicial power.
* Good, e.g.: Congress just trying to accomplish admin procedures
* Bad, e.g.: Congress trying to remove cases from the jurisdiction of fed courts/overtake judicial branch
THE SEVENTH AMENDMENT WRINKLE
* Public Rights Rule: The 7th Amendment does NOT prevent admin adjudication w/o a jury in cases involving public rights. Implied by Granfinanciera
* Public Rights Redefined—Expanded: A right created by statute AND that right is closely related to regulatory regime.
o “A seemingly private right that is so closely integrated into a public regulatory scheme as to be a matter appropriate for agency resolution w/ limited involvement by the Art. III judiciary. Granfinanciera
* For Private Rights: The 7th Amendment is violated UNLESS the case would not have been tried to a jury at common law (1790 inquiry) (e.g. action in admiralty or for equitable relief), OR the parties have waived their 7th Amendment rights.
Marine Shale Processors v. EPA [7].
NLRB v. Robbins Tire & Rubber Co. [10].
Nash Miami Motors v. Comm’r of Internal Revenue [13].
JUDICIAL REVIEW—RELATED ISSUE
* Agency adjudication involves “first instance” adjudication
o If courts conduct de novo review, admin adjudication has NO adverse impact on judicial power.
o Conversely, if review is foreclosed, the impact on judicial power is severe and raises questions under both Art. III and DP.
* Article III. When judicial review is foreclosed, a category of cases “arising under” federal law is removed from the jurisdiction of the courts.
* Lingering Issue: Whether Congress can strip courts of jurisdiction—violation of Art. III? [15].
* Lingering Issue 2: Whether foreclosure violates due process? [15].
DUE PROCESS—RELATED ISSUE
* Admin agencies deprive people of “liberty” and “property” interests. Thus, procedures must meet DP.
o Vast Majority of Cases: Admin adjudication satisfies DP if there is (1) adequate notice and (2) an opportunity to be heard by a neutral decision-maker.
* Overlapping Issue: Separation of Powers. Admin agencies serve both as prosecutor and judge.
o Common Law: No problem unless bias is shown.
o § 554(d): Requires separation of functions in formal adjudications.
1.6 AGENCIES & THE EXECUTIVE POWER
THE UNITARY EXECUTIVE
* Historical Context
o Articles of Confederation didn’t have an executive branch; didn’t work. Needed an executive.
* Article II. Vesting/Take Care Clause.
o Executive power vested in the Prez. He shall ensure the laws are faithfully executed.
* Presidential Control of Agencies
o 1. Appoint trusted officers who share the President’s views.
o 2. Some degree of direct oversight and control, including the ability to order an official to take or refrain from certain action.
o 3. Inherent power to remove officers.
APPOINTMENTS CLAUSE (ART. II, § 2, CL. 2)
* Two categories of officers:
o 1. Principal officers who must be appointed by the Prez w/ Senate consent;
o 2. Inferior officers as to whom Congress may use 4 options of appointment:
* A. Same method as principal officers;
* B. the Prez alone;
* C. the courts of law; or
* D. the heads of departments.
o The Prez appoints all officers EXCEPT where Congress vests power in courts or dep’t heads.
* Starting Point. For analysis of Appointments Clause issues, begin w/ the statutory provisions concerning appointment. If they:
o Provide for appointment by the Prez w/ Senate consent --> No constitutional issue.
o Provide for appointment by the Prez, courts, or head of department --> appointment provisions are unconstitutional IF the appointee is a principal officer.
o Do not conform to Article II --> they are unconstitutional IF the appointee is an officer of the U.S.
* Inferior Officer Issues
o Summary: An inferior officer is directed and supervised at some level by an appointee of the Prez—not the Prez himself. The only way an inferior officer can be appointed is through a dep’t.
o Whether there are limits to Congress’s choice among appointment options? Morrison
o What constitutes a head of department or a court of law? Freytag
DIRECT OVERSIGHT
* President’s authority to exercise direct authority over civil officers—Issue executive orders (EO).
* Rule: Executive orders are generally permissible.
o Limit: Simply cannot direct others to violate the law—bound by law.
* Controversial Issue: Regulatory review process.
o Defined. Established by EO, a system of regulatory planning and review in which major regulations and other important policy actions must be reviewed and approved by the Office of Info and Regulatory Affairs (OIRA) w/in the Office of Mgmt and Budget, a White House agency.
o Agencies must engage in “regulatory impact analysis” and can NOT act unless the actions’ benefits outweigh their costs.
o Independent Agencies: Exempt from regulatory review process.
o Proponents: “Essential means of coordinating regulatory process w/in executive branch and consistent w/ the President’s function as the head of a unitary executive.”
o Critics: “Inconsistent w/ the congressional delegation of statutory policymaking discretion to admin agencies w/ expertise and undermines the transparency and accountability of policymaking process.”
REMOVAL [see Removal Matrix & Removal Power Decision Tree—handout]
* Groundwork for Modern Doctrine. Laid in 2 cases:
o Myers v. United States (Inherent Power).
* Appeared to create absolute power for Prez to remove officials.
* Ct held that Prez had inherent power to remove executive officials, invalidating a statutory provision requiring Senate consent for the removal of a postmaster from office.
o Humphrey’s Executor v. United States (Independent Agencies).
* Limited Prez’s power to remove officials—must be for cause.
* When acting in quasi-legislative or quasi-judicial --> Prez’s power is NOT absolute.
o Bottom-Line (see Removal Matrix—handout)
* Supreme Court cases identify 2 critical factors:
* 1. Nature of the removal provisions
* 2. Nature of the agency functions
* Rule: Congressional control over removal is impermissible if an officer performs any executive functions, BUT Prez “for cause” removals are permissible if agencies perform quasi-legislative and quasi-judicial functions.
o Principal v. Inferior Officers
* Although the line is unclear, Morrison identified several factors [6]:
* Rank and Authority. Someone (AG) had independent authority to fire the official, indicating some degree of “inferiority” in rank and authority.
* Make Policy or Limited? The official couldn’t make policy—bound by other policy. Could perform only certain, limited duties --> indicating “inferiority”
* Jurisdiction. Act itself restricted jurisdiction to investigating certain officials and crimes, and also could act only when requested by another higher official.
* Tenure: Permanent or Temporary. Temporary in the sense that official was appointed essentially to accomplish a single task…when it’s over, the office is terminated. --> Indicating inferiority.
o Inferior Officer v. Employee. See Freytag. [11].
Morrison v. Olson
* Addresses whether presidential for cause removal provisions are permissible if agencies perform quasi-legislative or quasi-judicial functions.
* Three issues: appointment; removal; separation of powers. Factors for Principal v. Inferior officers.
JUDICIAL REVIEW ENFORCEMENT OF EXECUTIVE ORDERS—RELATED ISSUE
* Issue: When executive orders impose procedural or substantive requirements on agency officials, can other parties seek judicial enforcement of those requirements.
* Held: Usually NOT. B/c orders are intended to manage internal operations of the executive branch, rather than to create private rights.
o But: Some executive orders may be treated as agency actions and reviewed under the APA.
* Three-part Test for review: City of Albuquerque v. U.S. Dep’t of Interior [18]
o To be enforceable under the APA, the EO must meet three specific requirements:
* 1. EO must have a “specific statutory foundation.” If it does, it’s given the effect of a congressional statute.
* 2. Neither the statutory foundation for the EO must preclude review.
* [Some EOs expressly preclude review].
* 3. There must be “law to apply,” i.e. there must be an objective standard by which a court can judge the agency’s actions.
RELATED ISSUE: RELATIONSHIP B/W REMOVAL & INDEPENDENT AGENCIES (AFTER MORRISON)
* “Appears to have little impact on the analysis of independent agencies.” [19].
CH.2: JUDICIAL REVIEW
TRANSMISSION BELT MODEL:
Legislative Executive Judicial
INTRO
* The Rule of Law. Essential constraint on the exercise of broad powers by agencies.
o Agencies act only pursuant to law and are bound by statutory requirements. Within this model, judicial review is presumed to be available to sufficiently enforce statutory & constitutional constraints.
o Thus, 2 essential issues: (1) Availability of Review [Chapter 8] & (2) Scope of Review
* Scope of Review: The issues subject to review.
* Standard of Review: The degree of deference. [Scope & standard often merged w/o differentiation]
2.1 INTRODUCTION TO SCOPE OF REVIEW
HOW MUCH DEFERENCE? PRO-DEFERENCE V. ANTI-DEFERENCE
* Reflects the fundamental admin law conflict:
o Allowing agencies enough latitude to operate effectively v. desire to control agencies.
* Pro-Deference [see handout—Deference Arguments]
o Delegation; competence/expertise; familiarity w/ record; efficiency.
* Anti-Deference
o Rule of law; agency bias (capture); familiarity of record might not be implicated (no witnesses); protect rights
APA §706—SCOPE OF REVIEW
* § 706. To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall:
o [On questions of law --> NO deference to agency. But not so in practice.]
o (1) compel agency action unlawfully withheld or unreasonably delayed; and
o (2) hold unlawful and set aside agency action, findings and conclusions found to be:
* [Six standards of review:]
* (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance w/ law;
* (B) contrary to constitutional right, power, privilege, or immunity;
* (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
* (D) w/o observance of procedure required by law
* (E) unsupported by substantial evidence in case subject to sections 556 & 557 or otherwise reviewed on the record of an agency hearing provide by statute; or
* (F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the review court.
o The court shall review the WHOLE record [before the agency; NOT a record created by the court] or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.
* [NEW evidence impermissible. Thus, both anti- and pro-agency.]
* Breaking Down § 706(2)—The 6 grounds for reversal
o Substantive Standards. Substantial evidence (E); statutory violation (C); A&C (A)
* These standards apply to judicial review of the substance of agency decisions.
o Non-substantive Standards: constitutional issues (B); procedural defects (D); de novo review (F)
* Discussed in related issues.
* Substantive Standards. [See Roadmap, handout—“Review of Fact, Law & Policy]
o Setting: An agency decision—whether RM, formal adjudication, or some other agency action—inherently involves (1) factual determinations made by the agency on the basis of a record created by the agency’s procedure; (2) the agency’s understanding of what the statutory standards mean; and (3) a policy judgment about how to best apply those standards to the facts.
o Facts [Generally substantial evidence, covered in 2.2]
* Two types:
* Judicial facts: Historical facts regarding events
* Legislative facts: Policy facts re: social and economic conditions
* Standard of Review: Substantial Evidence [covered in 2.2]
* Both kinds of factual determinations are reviewed under the “substantial evidence” standard in formal adjudication or RM under §§ 556 & 557 and in other kinds of proceedings when the agency’s organic statute specifies.
* IF substantial evidence standard does NOT apply, the A&C standard applies.
o Law [Standards covered in 2.3 & 2.4]
* The interpretation of the statute and other legal questions would appear to be a de novo matter for the court under §706, but courts have developed and apply standards of review that often require deference to agencies’ interpretations of the statutes and regulations they administer.
o Policy [A&C in 2.5]
* Ultimately, the agency must apply the law to the facts to make a decision. Often referred to as a “mixed” question of law and fact, but essentially involves the exercise of policymaking discretion delegated to the agency, to which courts tend to defer under the A&C standard of review [as discussed in 2.5].
o Focus. In conducting review according to the framework above, courts focus on the reasons given by the agency, which must explain (1) how the agency viewed the facts in light of the record; (2) what the agency understood the statutory standards to mean; and (3) why the agency thought the statute, as applied to the facts, supported its decision. [4].
Judicial Review Outline per Other Outline:
Issue
Section
Scope of Review
Constitutional violation
§ 706(2)(B)
De novo
Statutory compliance
§ 706(2)(C)
Chevron
Procedural violation
§ 706(2)(D)
De novo
Findings & conclusion Informal rulemaking
Formal rulemaking
§706(2)(A)
§ 706(2)(E)
A&C/State Farm
Substantial evidence
APPLICATION OF §706: OVERTON PARK (The foundational decision)
* “Substantial Inquiry” of “Generally Applicable Standards” of § 706
o 1. Court must define the scope of the agency’s statutory authority and discretion, and determine whether it acted within its authority;
o 2. Inquire into whether the agency’s ultimate choice was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance w/ law” [as in 2.5];
o 3. Whether the agency engaged in procedural errors.
* After Overton Park, many judicial decisions focused on ensuring an adequate record for review, particularly in notice & comment RM under § 553 and in informal decision-making now includes the creation of a record.
THE REASONS REQUIREMENT—CHENERY
* Setting: An agency is required to provide reasons for its decision, and judicial review concentrates on those reasons.
* Inquiry: Thus, the question on judicial review is NOT whether the agency’s result is correct, but whether the agency’s reasoning provides a plausible explanation for that result, particularly whether the agency’s explanation of why application of the statute to the facts supports the agency decision.
* Parties Challenging Agency Action: Should not try to reargue the merits, but try to identify gaps, flaws, or other problems w/ the agency’s reasoning.
* Rule: An agency decision must stand or fall on the basis of the reasons given by the agency.
o If an agency decision cannot be sustained on the basis of the reasons given by the agency, the reviewing court may NOT uphold it based on alternate reasons. SEC v. Chenery [6]
o Note: A court of appeals can affirm on grounds other than those relied upon by a lower court. The Chenery rule just requires all courts to focus on the reasoning given by the agency.
* Effect of Flaw: If there is a flaw in the agency’s reasoning, the court does not simply reverse. Rather, remand to the agency to consider other analysis.
* Although the Chenery principle predates the APA, it remains a cardinal rule of judicial review.
o Nonetheless, some tension b/w the Chenery principle and harmless error under §706. [See Allen v. Barnhart on 11].
Ethyl Corp.—The “Hard Look” Doctrine [Covered also in 2.5: A&C].
* J. Bazelon v. J. Leventhal. Illustration of debate: greater deference v. aggressive review.
o B Approach: Look at the procedures, ensuring that the agency looked at all the issues.
o L Approach: Responsibility to learn the technical info by steeping in the agency’s record, therefore taking a “Hard Look” themselves.
o L won. “Hard Look” by Courts (rather than Agency) is largely used.
Allen v. Barnhart [11]
* 5-step process of the SSA. Flawed reasoning (Grids/VE) --> Remand.
RELATED ISSUES—THE 3 NON-SUBSTANTIVE STANDARDS OF REVIEW UNDER § 706(2)
* Constitutional Review—§ 706(2)(B)
o Courts could likely review constitutional issues w/o this statute: Interpreting and applying the Constitution is one of the core functions of the judiciary.
* Little doubt that courts owe NO deference to an agency’s construction of the Constitution
o Issue: Whether courts may review agency factual determinations de novo when a constitutional issue is involved.
* Crowell v. Benson implies that DP and separation of powers require de novo review of “constitutional facts” determined by agencies. The review, however, has largely disappeared in the admin law context. [15].
* Procedural Review—§ 706(2)(D)
o Particular modes covered in later chapters.
o Issue: Whether courts should defer to agency decisions re: procedures?
* The language of § 706(2)(D) might support de novo review b/c it omits any terms of deference. And courts often showed little deference until late 1970s:
* Vermont Yankee held that courts had NO authority to order procedures beyond those required by statute or DP; and rejected the assumption that more procedures would produce better decision.
* Chevron articulated a very deferential standard of review for agency interpretations of ambiguous statutes that has been applied to procedural as well as substantive questions.
* To the extent that agencies have discretion to provide procedures or choose among procedures, that choice is subject to the A&C standard of review.
* De Novo Review—§ 706(2)(F)
o Before Overton Park, courts assumed that when agencies did not have a hearing and there was no record for review, that a de novo trial was necessary. But OP’s application of the A&C standard, rather than de novo, changed the courts’ approach to review of informal adjudications conducted w/o a hearing:
o Rule: De novo review is available ONLY when:
* (1): fact-finding procedures in an informal adjudication are “inadequate”; OR
* “Adequacy” bar appears to be set very low. Hence, a very rare argument.
o The Court’s conclusory rejection of de novo review under this standard in OP upheld the Sec’y of Transportation’s use of whatever sources he deemed appropriate to be “adequate” fact-finding procedures.
* (2): Factual issues NOT addressed by agency are raised in a proceeding to enforce a rule.
o Somewhat frequent area of litigation: Freedom of Info Act. But NOT much success. [17].
o De novo review contrasted w/ “Plenary” Review. NOT the same. Don’t confuse w/ de novo!
* Plenary Review: When informal procedures do NOT create a sufficient record to review under the A&C standard of review.
* Here, a hearing may be held to determine the basis for agency decision.
* This review focuses on the agency record and does not take evidence on the underlying factual issues in dispute.
THE EQUAL ACCESS TO JUSTICE ACT—RELATED ISSUE
* Permits parties to recover attorneys fees if the agency’s position is not “substantially justified.”
* “Substantial”: Justified in substance or in the main--to a degree that could satisfy a reasonable person.
o More than merely undeserving of sanctions for frivolousness
* If an agency fails the substantial evidence test, it correlates that its position is NOT substantially justified b/c is lacks a reasonable factual basis. Whether the same applies to A&C review is unclear.
2.2 SUBSTANTIAL EVIDENCE REVIEW [INCLUDING WHEN TO APPLY THE 3 STANDARDS]
SETTING—REASONS FOR DEFERENCE
* Regardless of the form of agency action, admin decisions inherently involve some determination of the facts to which the law will be applied.
* Judicial review of those factual determinations is usually deferential for several reasons:
o Delegation by Congress of fact-finding power to agency
o Familiarity. Particularly important when the testimony involves witness testimony regarding “judicial facts” b/c the opportunity to observe the witness’ testimony is important when determining credibility.
o Expertise. Particularly important when “legislative facts” involving a judgment based on scientific research, expert testimony, or technical sources.
APPLICABLE STANDARDS OF REVIEW & WHEN THEY APPLY
* Three principal standards of review may apply to agency findings of fact:
o “Substantial Evidence” standard [Language on handout-“BOP & Std of Review”]
o “Arbitrary & Capricious” standard
o “Clearly Erroneous” Standard
* Rule: Which standard applies depends upon the APA and the organic statute.
* SUBSTANTIAL EVIDENCE STANDARD. Applies when formal hearings under §§ 556 and 557 of the APA are conducted (including both APA adjudication and formal RM). Also when organic statute requires.
o Does NOT apply in notice & comment RM and other informal actions UNLESS the organic statute requires it.
* Arbitrary & Capricious Standard. Applies when the substantial evidence standard does NOT apply.
* Clearly Erroneous Standard. Normally applies to review of factual findings by lower court judges, and may also apply to agency determinations of fact IF required by organic statute. [rarely used-tax ct maybe]
* Bottom-Line: All 3 reflect the same basic concept of deference: The question is NOT whether the court agrees, but whether the agency’s findings are reasonable in light of the evidence in the record. [2].
* Standards express somewhat more or less aggressive inquiry into the reasonableness of findings.
o [This difference appears negligible in practice.]
SPECTRUM OF DEFERENCE
Most Deference (Less likely to reverse) (More opportunity to reverse) Least Deference
No Review A&C Substantial Evidence Clearly Erroneous De Novo
(Jury Verdicts) (Judge’s Findings)
APPLICATION OF THE SUBSTANTIAL EVIDENCE STANDARD
* Seminal case: Universal Camera Corp. v. NLRB (UC)
* Flawed Application: Prior to UC, some courts considered only the evidence in the record favorable to the Board’s ruling, upholding the Board notwithstanding overwhelming contrary evidence, as long as some evidence supported its finding.
* Correct Application: Courts must consider the record as a whole: Supporting v. contrary evidence.
* “Substantial Evidence” defined. Such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. More than a mere scintilla.
* Core Idea. The question is NOT whether the reviewing court would reach the same conclusion based on the same evidence, but rather whether the evidence is sufficient that a reasonable fact-finder could be persuaded by it.
o Thus, evidence might support more than one conclusion, and it is the Board that makes the choice among those possible conclusions b/c it is the original trier of fact & has expertise in the field.
* Basic Propositions for Analyzing under Substantial Evidence Standard:
o 1. Focus on the quality of the evidence, not quantity.
o 2. For parties challenging fact-finding, DON’T simply reargue the facts or claim that the agency should have weighed the evidence differently.
o 3. Effective challenges usually ID particular gaps or flaws in the agency explanations.
RELATIONSHIP B/W THE ALJ AND AGENCY
* Recurrent Issue: Relationship when the ALJ and Agency reach different conclusions under the substantial evidence standard.
* Agency review of ALJ decision is de novo.
o But some deference appears warranted: ALJ conducted the hearing & observed witnesses.
* Rule: When an agency reverses the ALJ, the ALJ’s decision is part of the contrary evidence in light of which the reviewing court must determine the substantiality of the evidence relied on by the agency.
o Thus, although the standard doesn’t change, the agency must be particularly careful to explain why it disagrees w/ the ALJ’s conclusions.
* Witnesses—Special Issue [4].
o Rule: An agency can reject demeanor-based inferences by the ALJ, but must have particularly cogent reasons for doing so.
* [Courts often overturn agency decisions rejecting credibility determinations of the ALJ.]
o Review by Court: The agency decision is reviewed for substantial evidence although it is the ALJ who observed the witnesses and ought to receive deference.
* Tax Court. Similar issues. See if necessary. [4].
Center Construction v. NLRB [5]. See handout—“Center” [1].
* Standard of Review language. [7].
* ALJ found 6 violations; Board affirmed 5 (so did court). Board reversed 1 (reversed by court). [12].
SUBSTANTIAL EVIDENCE STANDARD IN ORGANIC STATUTES—RELATED ISSUE
* Remember: Substantial evidence applies under the APA only when hearings are held pursuant to §§ 556 and 557, BUT may ALSO apply under an agency’s organic statute (as is the case w/ NLRB & SSA).
* Identical Meaning. Same standard whether applied in APA or OS, despite minor language variations.
* Relation to “On the Record” Hearings. Any difference? Procedural implications? Maybe. See [15].
OTHER STANDARDS FOR REVIEW OF AGENCY FACTUAL DETERMINATIONS [A&C & Clearly Erroneous]
* A&C Rule: When the substantial evidence standard does NOT apply, factual findings usually subject to review under A&C standard.
o The distinction b/w the 2, to the extent it ever existed, has all but disappeared.
* Other Standards. Organic statutes may provide for other standards (not SE or A&C).
o One possibility is the clearly erroneous standard.
* Thought to be less deferential than SE standard.
* Does NOT currently apply to review of any federal agencies. [used by some states]
* BUT does apply to review of Tax Court decisions by federal Courts of Appeals.
o Other possibilities: preponderance of evidence or weight of evidence. [16].
SCOPE OF REVIEW & BURDEN OF PROOF
* Distinguish the Two: [See handout—“Burden of Proof”!!! [1]].
o Burden of Proof is applied by the finder of fact and relates to which party must persuade the finder and the persuasive force of the evidence that is necessary to succeed.
o Standard of Review. The reviewing court does NOT ask whether the preponderance standard has been met, but rather whether a reasonable finder of fact could conclude that it has been.
* Interaction. See chart (same as above). SE & A&C use same, but higher standards do not. [16].
2.3 REVIEW OF STATUTORY INTERPRETATION UNDER CHEVRON
INTRO TO UNITS 2.3 (CHEVRON) & 2.4 (SKIDMORE) TESTS
* Unites 2.3 & 2.4 consider the standard of review for agency interpretations of statutes (& other sources of law) [as opposed to factual determinations in 2.2].
* Issue: Whether and to what extent courts should defer to an agency’s interpretation of the statute(s) it administers?
* Rule: Ultimately, the Court has developed two distinct approaches under two distinct tests:
o 1. The “Chevron test” [2.3]
o 2. The “Skidmore test” [2.4]
GENERAL BACKGROUND
* Goal of Chevron: Balance 2 competing sets of considerations re: judicial review of agency interpretations of statutes:
o Balance: The statute binds both the agency and the court, and under Marbury v. Madison, it is emphatically the province and duty of the judiciary to say what the law is.
o Versus: Statutory interpretation implicates policy choices that Congress has delegated to the agency, which has expertise to better understand the full implications of competing interpretations.
IS JUDICIAL DEFERENCE TO AGENCY RESOLUTIONS OF LEGAL QUESTIONS APPROPRIATE?
* Underlying Issue: Same as above. Whether, and to what extent, courts should defer?
* Judicial Power—De novo review? Article III implies that de novo review is constitutionally required.
o Accordingly, the APA’s judicial review provisions appear to provide for de novo review. [3].
o But notwithstanding constitutional principles and APA language, there are good reasons for deferring to at least some agency constructions of the statutes they administer.
* Such as Congress has delegated to agency; agency expertise. See [2].
* General Rule: Courts often defer to agencies when interpreting ambiguous statutes, especially under the Chevron test, which requires reviewing courts to defer to an agency’s reasonable construction of an ambiguous statute.
* The Chevron Debate. Critics v. supporters. See [2].
THE CHEVRON TWO-STEP PROCESS
* Focal Point for analysis of the degree of deference owed by the courts to the statutory interpretations of admin agencies the Chevron two-step test.
* The Chevron Two-Step Test. Test for judicial review of agency statutory interpretations.
o Step One. Whether Congress has directly spoken to the precise question at issue? If the intent of Congress is CLEAR, that is the end of the matter. Both the court & agency must give effect to the unambiguously expressed intent of Congress.
o Step Two. If the statute is silent or ambiguous w/ respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.
* Rationales:
* (1) Ambiguous statutes constitute an implicit delegation of policy discretion.
* (2) Requires the expertise of the agency.
o See [4] for the Court’s reasoning in Chevron, such as statutory construction & legislative history.
o Rule: “When a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency’s policy, rather than whether it is a reasonable choice w/in a gap left open by Congress, the challenge must fail.”
APPLYING CHEVRON
* Step Zero [addressed in 2.4]: Does Chevron test apply at all?
* Critical Issues in Apply Steps 1 & 2
o (Step 1 is usually the critical step b/c agency loses here w/ some frequency. Agency almost never loses at Step 2.)
o Step One Issues—Clarity.
* How “clear” must the statute be?
* How should courts determine whether the statute is clear?
* Use the traditional tools of statutory construction. Including text of the statute, dictionary definitions, inferences from surrounding text & related provisions, canons of statutory construction, and legislative history. [4].
o Step Two Issues—Meaning.
* Implied focus is on whether the agency construction is w/in the discretion created by the ambiguity identified at Step One.
* Unresolved Issue: Whether an interpretation w/in the scope of ambiguity might nevertheless fail at Step Two b/c it’s unreasonable.
* A reasonableness approach would tend to merge Step Two and A&C review of an agency’s discretionary policy decisions.
Alliance for Community Media v. FCC [5]
* Applies Chevron Two-Step on page 9. See also handout “ACM” [2].
DEFERENCE TO AGENCY REGULATIONS—RELATED ISSUE
* Setting: In addition to statutes, agencies must also interpret their own regulations & other sources of law.
* Practice: Although § 706 says courts should determine the meaning of the terms of agency action (which would include regulations), courts afford even more deference to an agency’s interpretation of its own regulations than of its organic statute.
* Rule: An agency’s interpretation of its own legislative rules is controlling unless it is “plainly erroneous or inconsistent w/ the regulation.”
o But: An agency’s regulatory interpretation is generally entitled to “substantial deference,” BUT NOT if it merely restates the terms of the statute. In such a case, the normal Chevron rules apply b/c the agency is essentially interpreting the statute. [16].
o Technical Matters. Deference is particularly likely when the regulation concerns tech matters.
MORE RELATED ISSUES:
* Legislative History at Step One: Textualist v. Intentionalist Debate
o Issue re: the relevance of legislative history in applying Chevron Step One. See [16].
* Relationship b/w Chevron and A&C Review
o Issue: Uncertain relationship b/w Step Two of Chevron and review under A&C standard. [17].
* Judicial Review of Agency Preemption Determinations (Regulations) of State Law
o Issue: Potential conflict exists b/w federal & state law; agency tries to preempt state law.
o Likely answer: Courts reluctant to give Chevron deference to the agency interpretation of the preemptive effect of an ambiguous statute.
2.4 REVIEW OF STATUTORY INTERPRETATION UNDER ALTERNATIVES TO CHEVRON
PRE-CHEVRON & THE EMERGENCE OF CHEVRON
* Two Important Features of Pre-Chevron Cases
o 1. In Adjudications, the Court distinguished b/w questions of fact, law, & mixed questions.
* [Called the Hearst approach/test]
* Questions of Law [require no facts to decide]: Generally de novo review.
* Questions of Fact: Generally defer.
* Mixed Questions of Law & Fact: Generally defer.
* E.g. see NLRB v. Hearst Publications [1] (distinguishing the 3 types).
o 2. In agency interpretations thru Informal (Nonbinding) Rulings, the Court applied the Skidmore test.
* Test—Sliding Scale of Deference based upon Factors:
* [Is this really deference? You’re persuading…]
* Skidmore is much less deferential than Chevron (step 2); almost de novo.
* “The weight of the agency’s judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency w/ earlier & later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”
* Underlying Issue w/ Chevron Landmark Decision
o Chevron appeared to comprehensively restate judicial review doctrine for agency interpretations of their organic statutes.
o Issue: Insofar as Chevron involved deference to interpretations in binding regulations, it did NOT resolve whether it applied to other modes of agency actions and whether it superseded the tests articulated in Hearst (adjudication) and Skidmore (nonbinding guidance documents).
CHEVRON STEP ZERO—LIMITATIONS ON THE APPLICABILITY OF CHEVRON
* Threshold Question—Step Zero: Does Chevron apply? See handout “Statutory Decision Tree [1].
o If yes, Chevron applies: go to Steps 1 & 2.
o If no, Chevron does not apply: determine which standard to apply.
* When does Chevron apply?—Step Zero Test United States v. Mead Corp. [4]
o Lawmaking-YES [BUT consider Pure ?s of Law (below)]. Chevron deference applies when agencies exercise delegated lawmaking authority.
* Includes RM under §553 and Adjudication under §§ 556 & 557.
* “Chevron deference applies when Congress has delegated authority to the agency generally to make rules carrying the force of law, and the agency interpretation claiming deference was promulgated in that authority. Mead
* “Delegation of such authority may be shown in a variety of ways, as by an agency’s power to adjudicate or notice-and-comment RM, or by some other indication of a comparable congressional intent.”
o Not Lawmaking-NO. Skidmore deference applies to interpretations that lack the force of law—they do NOT warrant Chevron-style deference. Rather, these interpretations are “entitled to respect” under Skidmore, but only to the extent they have the “power to persuade.” Christensen [3]
* Includes opinion letters (such as interpretations contained in policy statements, agency manuals, & enforcement guidelines); decision to prosecute; agency speech; and a brief submitted to court.
APPLYING THE SKIDMORE FACTORS
* Thoroughness evident in agency’s consideration
o The more thoroughly the agency considered the problem --> the more deference it gets.
* Levy: Two components.
* (1) The process the agency followed (more inputs, comprehensive, thoughtful, etc); and
* (2) The explanation (does it show all the pros, cons, step-by-step reasoning?)
* The validity of the reasoning
o Levy: Chicken/egg problem. You have to look at reasoning before you decide deference. Aren’t you supposed to decide deference before you determine validity??
* Consistency w/ earlier and later pronouncements, and
o Does the agency change/flip-flop? If so, court gives less difference.
* But countervailing argument: Agencies are allowed to change position.
* All those factors which give it power to persuade, if lacking power to control
o Basically: Is the court persuaded?
* Bottom-Line (Levy): Key factors are #1 and #3. These exist independently of the judges’ views about whether the decision is right or wrong.
Barnhart v. Walton [5].
* Application of Chevron. Why Chevron applies and implications.
Aeroquip-Vickers v. Comm’r of Internal Revenue [8].
* Revenue ruling is nonbinding (Christensen). Should have deferred under Skidmore.
CHEVRON & FORMAL ADJUDICATION—RELATED ISSUE
* Assumed that Chevron applies to APA adjudications, which reflect the exercise of delegated lawmaking authority and have the requisite procedural formality to warrant deference.
* Issue: Formal Adjudications: Is there a pure question of law?
* Rule: De novo review might still apply to pure questions of law. [15]. INS v. Cardoza-Fonseca
o Harkens back to the Hearst approach. This idea was strongly rejected by J. Scalia.
* Bottom Line: Even if Chevron applies, ask “Is there a pure question of law?”
o If so, there may be de novo review.
o But this analysis is questionable. Levy NOT sure if Cardozo-Fonseca is controlling.
RELATED ISSUES: THE FUTURE OF CHEVRON & THE APPLICATION OF SKIDMORE
* Supreme Court developed a new “ultimate question.” See Long Island Care at Home v. Coke [16].
* This new analysis seems to increase the importance of Chevron Step Zero and transform the simple two-step approach into a multifaceted inquiry that incorporates elements of BOTH Skidmore & Chevron.
* Future Cases. As the range of cases qualifying for Chevron deference shrinks, the courts may turn increasingly to the Skidmore factors to determine how much weight to place on agency statutory interpretations. [17].
* Effect: B/c Skidmore deference is weaker than Chevron deference, agency interpretations become less important determinants of statutory meaning as courts assess the validity of those interpretations under Skidmore.
2.5 ARBITRARY & CAPRICIOUS REVIEW
GENERAL BACKGROUND
* Focuses on review of agency policy judgments, which are expressed in the reasons they agency provides to support its ultimate decision.
o i.e. its explanation of why the application of the statute, as interpreted by the agency, to the facts, as determined by the agency, support the ultimate decision.
* Rule: The A&C standard of review applies to judicial review of agency policy judgments—whether in the adoption of a rule, an adjudicatory decision, or some other type of agency action.
* § 706(2)(A). Reviewing courts shall “hold unlawful and set aside agency action, findings, and conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance w/ law.”
o Despite the 4 distinct grounds, the standard is usually applied as a single standard: A&C.
o Generally regarded as very deferential.
* Most quoted formulation: “Whether the decision was (1) based on a consideration of the relevant factors and (2) whether there has been a clear error of judgment.” Overton Park
HARD LOOK REVIEW & THE A&C STANDARD
* Two Distinct Approaches to Hard Look Review
o Hard Look by Agency (J. Bazelon approach)
* Courts should review to make sure the agency had taken a hard look at the issue.
* The court itself would back off.
o Hard Look by Courts (J. Leventhal approach)
* The courts should take a hard look at the agency decision.
* This position largely won out; although remnants of Agency Hard Look remain.
o See [2] for the debate: proponents of each.
ADDITIONAL FORMULATIONS & A&C BOTTOM-LINE
* Baltimore Gas (appears more deferential) [3].
o Test: “Whether the Commission has (1) considered the relevant factors and (2) articulated a rational connection b/w the facts found and the choice made.”
o Note the similarities and differences to Overton Park standard.
* State Farm (appears less deferential) [3].
o Test: An agency rule is A&C if the agency (4 factors):
* 1. Has relied on factors which Congress has not intended it to consider;
* 2. Entirely failed to consider an important aspect of the problem;
* 3. Offered an explanation for its decision that runs counter to the evidence before the agency; OR
* 4. Is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
* [Levy]: 1 & 2 correspond to “Hard Look by Agency”
* Summary: Baltimore Gas (very deferential) is hard to reconcile w/ the approach in State Farm (more consistent w/ “hard look” review by courts). Nonetheless, both are good law and often quoted simultaneously (along w/ OP) for their articulation of A&C standard of review.
* Bottom Line: In practice, lower courts often apply the 4-part State Farm inquiry and reverse if one of the factors is met. SF also provides useful guidance for framing arguments against an agency decision.
WAYS TO CHALLENGE AN AGENCY ACTION WITH A&C
* Relied on Improper Factors [SF]
o Agency has set standards but didn’t rely on them or relied on others.
* Failed to Consider Relevant Factor(s) [SF, Baltimore Gas, & OP]
o Most common challenge. Find something the agency failed to consider (that’s important to the outcome).
o E.g. SF: Failed to consider airbags (a relevant factor); only focused on seatbelts.
* Counter to Evidence. [SF]
* Implausible [SF]
* Rational Connection [Baltimore Gas & SF]
* Clear Error [OP]
o [Levy]: Still out there, but don’t rely on unless the above don’t work.
* Bottom-Line: Look at agency’s reasoning, then argue against it w/ the factors above.
Bluewater Network v. EPA [4]. (Dealing w/ regulation; similar to SF) (Snowmobile rule: 70%).
* Court reversed for 2 reasons: (1) Failure to consider discontinuation; (2) Failed to explain arrival at 70%).
* Failure to consider catalyst was okay.
New England Health Care Employees Union [10]. Employer secretly hired permanent replacements during strike.
* Inference from lack of duty to disclose: A&C. Held: Agency failed to consider a relevant factor.
EFFECT OF A&C REVIEW ON ADMINISTRATIVE RECORDS [15]
* Court’s approach gives strong incentives for parties to submit info & arguments to the agency.
o Protects interests before the agency and preserves a basis in the record to appeal.
* Forces agency to respond to arguments made in comments. Agency need not put in evidence if no arg.
* Converted admin records from short & sweet to massive, long records.
See [16] for overlap b/w A&C, substantial evidence review, and Chevron. Probably little difference.
Indeterminate Standards: Courts have substantial discretion to choose more or less deferential standards or formulations of the applicable standards of review. [17].
CH. 3-6 MODES OF ACTION—HIERARCHY OF AGENCY NORMS
BINDING
* 1. Constitution
* 2. Statute
* 3. Legislative Rules (aka Binding Regulations)
o Highest that can be adopted by the Agency. E.g. a binding regulation.
o Can only be amended or repealed by another Legislative Rule
* 4. Lawmaking Adjudication
o Binds ONLY the parties. Also has precedential effect.
o CANNOT use an adjudication to reverse a legislative rule.
NON-BINDING. But still persuasive.
* 5. Non-Legislative Rules (aka Non-Binding Regulations)
o E.g. a letter-making or non-binding regulation
* 6. Non-Lawmaking Adjudication
* 7. Informal Advice
CH. 3 – RULEMAKING: LEGISLATIVE RULES & REGULATIONS
Legislative Rules (the most forceful action an agency can take)
* BINDING on agency and parties.
* Resource-intensive to make and/or change
Chapter 3 focuses on the promulgation of binding [known as “legislative”] rules and regulations.
* Agency regulations, which are codified in the Code of Federal Regulations, represent a substantial body of subsidiary legislation that affects a wide array of economic and other activity.
* Scope of judicial review of legislative rules: Ch. 2. Availability of judicial review: Ch. 8.
Unit 3.1: Agencies’ authority to use legislative rules as a policy tool.
* Includes constraints imposed by organic statute, the APA, and Due Process Clause.
Unit 3.2: Initiation of RM; w particular attention to the right of interested person to petition for promulgation of rule
Unit 3.3: Types of RM procedures that may apply, depending on the OS and its interaction w/ the APA
Unit 3.4: Basic requirements for “notice & comment” RM under APA, as developed by courts into paper hearings.
Unit 3.5: Further issues in N&C procedures: major changes from proposed rules & ex parte communications
3.1 RULEMAKING AUTHORITY
GENERAL BACKGROUND
* Valid agency regulations resemble statutes in force and effect.
o Collected in the Code of Federal Regulations.
o Violation of a regulation can result in severe consequences
* Including civil or crim penalties, suspend/revoke license, termination of gov’t benefits
* Benefit of Regulations: B/c they are BINDING, issues resolved by regulation CANNOT be re-litigated in subsequent administrative proceedings.
o Thus agencies can use RM to simplify or avoid individual adjudications altogether.
* Threshold Question: Whether the agency has the authority to promulgate a legislative rule?
o Three Legal Constraints (on that authority:)
* 1. The authority must be delegated and is thus limited by the agency’s organic statute.
* B/c fed agencies have no inherent authority to promulgate legislative rules.
* 2. The APA constrains agency RM authority through its definition of RM and also permits a party to challenge the choice to proceed by rule as A&C.
* 3. Requirements of due process may constrain RM.
o To understand these 3 constraints, must distinguish b/w RM and adjudication.
RULEMAKING V. ADJUDICATION
* See handout “RM v. Adjudication” & yin-yang [2].
* Rulemaking (Bi-Metallic): Involves generally applicable policies. [But can also be specific, see [6]].
o No hearing required.
* Rationale: “Notice and a hearing are NOT necessary for general rules b/c individualized hearings would be impractical and b/c the political process provides a safeguard.” [3].
* Adjudication (Londoner): Involves individualized decisions applying policy to specific facts.
o Three Critical Elements:
* 1. Few people are involved;
* 2. These people are especially affected by the decision; and
* 3. The decision rests on individualized grounds.
* See Professor Davis’s article for more distinctions—legislative facts v. adjudicative facts. [3]
* Procedures Fundamentally Different:
o Agency Adjudication: Resembles a judicial hearing & employs similar procedural safeguards.
o RM: Legislative in character and employs procedures to facilitate broad input.
ORGANIC STATUTES—SOURCE & LIMIT 1
* Rule: The organic statute (as made by Congress) both empowers and limits an agency’s authority to promulgate legislative regulations.
* General/Broad Grants of RM Authority
o Recurrent Issue: Whether a statutory delegation of general RM authority (to carry out a comprehensive system of agency enforcement & adjudication) authorizes the agency to adopt substantive rules defining statutory violations? Held: Yes, under current law:
o Watershed case: Nat’l Petroleum Refiners Ass’n [4].
o Rule: A general grant of authority to implement statutory provisions by regulation includes authority to make substantive rules, unless peculiar circumstances of a given provision suggest otherwise.
o Effect: Courts generally like RM. Courts construe grants of authority broadly.
o Advantages of RM: Listed on [4].
* More Particularized Delegation of RM Authority
o Litigants can also challenge that agency regulations exceed particular delegations.
* But these delegations are also construed broadly. Du Pont [5]
* Apparent Rule: “A general grant of RM authority supplements a more specific grant in the same statute; rather than being limited by the requirements of the specific grant.” [5].
* Exception to General Practice of Constructing Agency RM Authority Broadly
o Retroactive Effect. B/c retroactive rules present problems of fairness and may violate DP, courts are reluctant to interpret statutory grants of RM authority as extending to promulgation of retroactive rules.
* “A general grant of authority does NOT include the authority to promulgate rules w/ retroactive application unless their language requires this result. [6].
THE APA—SOURCE & LIMIT 2
* Rule: In addition to the constraints imposed by the OS, the APA constrains an agency’s ability to use RM in 2 distinct ways:
o 1A. “Rule”: An agency’s use of RM must be consistent w/ the APA definition of “rule” as “the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy;” and
o 1B. “Rulemaking”: “as the agency process for formulating, amending, or repealing a rule.”
* Bottom-Line: Focus on whether the rules have future effect as the basis for distinguishing RM from adjudication.
* Rule: “Rules” applied retrospectively violate the definition of a rule.
* [Courts have departed from Londoner/Bi-Metallic; focusing on APA § 551(4)]
o Rule 1 Qualification: With “specific congressional authorization,” Congress can permit agencies to promulgate rules w/ retroactive effect.
o 2. Subject to A&C. When the rule is subject to judicial review, the decision to use rules—as opposed to other modes of procedure—can be challenged as A&C under § 706(2)(A).
* These challenges are difficult and largely unsuccessful, however. See [6].
DUE PROCESS—LIMIT 3
* Rule: In addition to the constraints imposed by the OS and the APA, DP challenges can be based on 2 distinct arguments (similar to the APA arguments):
o 1. Individualized = Hearing. Adjudications require a hearing. Thus, affected entities may argue that DP requires notice and opportunities to be heard that extend beyond the N&C procedures contemplated by § 553.
* Essential Question: Whether a few people were especially affected on individualized grounds by the agency’s so-called rule.
* Answer: If so, then DP might require an adjudicatory hearing. [7].
o 2. Retroactivity. Regulations w/ retroactive effect may violate DP.
* Reinforces the requirement of explicit congressional authorization for agencies to promulgate retroactive rules.
* A regulation that violates constitutional rules against retroactivity is invalid, moreover, even if there is explicit statutory authority.
* Prospective Rule w/ Secondary Retroactive Effects. Even the prospective rule may be unconstitutionally invalid (or A&C).
* E.g. Altering future regulation that makes substantial investment (reliance) on the prior rule virtually worthless.
Citizens to Save Spencer Co v. EPA [8]. Retroactivity case. See handout [3].
IMPLIED RM AUTHORITY—RELATED ISSUE
* Practical need for agencies to make rules “to fill gaps left open—implicitly or explicitly—by Congress.
* Lower courts reluctant to uphold legislative rules rooted in such implied authority, even when the agency has legislative RM authority to implement some aspects of a statute.
* General Rule: If the OS includes NO express grant of RM authority, the agency is considered to have NO authority to issue rules w/ binding effects. [16]
RETROACTIVE AGENCY ISSUE & “SECONDARY RETROACTIVE EFFECTS”
* Distinguish:
o Rules that apply retroactively
* Have more severe constraints
* Rule: Strictly limited by narrow interpretations of statutes and APA definition of rule.
o Rules that apply prospectively but have “secondary retroactive effects”
* Rule: Limited only by A&C and DP constraints
* Standard of Reasonableness. See [17].
o Good example on [16].
INDIVIDUALIZED RELIEF FROM AGENCY RULES (e.g. waiver or exemption)
* Bottom Line: It would be likely be difficult to argue successfully that an agency regulation is invalid b/c it fails to include a safety valve, such as exceptions or waiver.
* But see [18] for du Pont statement and good reasons should you make this argument.
3.2 INITIATION OF RM
GENERAL BACKGROUND
* Assuming that an agency has authority, the first step in the process is the agency’s decision to make a rule.
* Very powerful tool; but very resource-intensive: personnel, material, time, impact analysis, docket, respond
* Decision to promulgate regulations thus is a momentous decision that reflects the high priority an agency places on the subject.
* The Agency Agenda. An issue must find its way onto the agenda—Agency must recognize it.
o Setting: Not a lot of doctrine in this area.
o Impetus for action may come from legislative action (Congress), policy decisions by the executive branch, internal proposals from agency staff, or private parties, including both regulated entities and the beneficiaries of regulation.
o Internal. Top down [e.g. prez] or Bottom up [e.g. experts]
o External. Materials focus on RM petitions.
o See [1] for actions by Congress or Prez and disagreements w/ agency on pursuing the issue.
o Discretionary RM Authority. See [2] for example.
REGULATORY AGENDAS & IMPACT ANALYSIS
* Executive Orders & Process. Recent prez initiatives to improve regulatory planning, coordinate regulatory priorities among agencies, and ensure full consideration of the impact of regulations.
o Implemented through White House agencies OIRA within Office of Mgmt and Budget.
* Key Order: EO 12866. Requires agencies to participate in an annual policy meeting chaired by VP.
o In practice, the EOs require the initiation of a RM to be approved by OIRA.
o Legal Issues: OIRA review may not delay agency action past statutory deadlines (if any).
* Independent Agencies are expressly EXCLUDED.
RM PETITIONS
* Getting an Agency to Promulgate Regulations
o In addition to informal, behind-the-scenes efforts, parties may formally “petition” to initiate RM
o Two Sources that authorize petitions.
* OS: Sometimes the agency’s OS authorizes the petition. “Any person” may petition…
* APA: Even if the OS does not authorize the filing of RM petitions, the APA does.
* § 553. “Each agency shall give an interested person the right to petition for the issuance, amendment, or repeal of a rule.
* Note: The agency need NOT agree w/ the petition. BUT it must consider the petition and respond, including an explanation for the denial of a RM petition.
* Procedures
o In practice, don’t file a petition unless and until informal methods fail.
o APA does NOT include any procedures for filing a RM petition; some statutes may.
o In absence of statutory procedures, most agencies have adopted procedures.
o Typical Procedures: Require petitioner to provide substance of requested rule (or actual language) and include info and documentation to support the request.
* Announcement. Typically specify that agency will announce its decision in the Federal Register, either providing notice of a proposed rule (thus initiating RM procedures) or publishing the denial of the petition along w/ an explanation of denial.
* Judicial Review
o Denial of RM petition is generally final agency action and thus reviewable.
o Approval of decision to propose a rule is NOT final agency action; thus not reviewable.
o Standard of Review: A&C. Focuses on the agency’s explanation—very deferential.
* In rare cases, courts may reverse if denial is based on erroneous interpretation of the applicable statute or agency’s factual basis is not supported by the record.
Massachusetts v. EPA [5]. Review of agency denial of RM Petition. The outcome is unusual.
REVIEWABILITY & FINALITY
* General Rule: Denial of RM petitions is usually subject to judicial review.
o Finality: Only final agency decisions are reviewable.
* Unreasonable Delay Exception: Cases where agency simply doesn’t respond; rather than deny.
o Rule: In the absence of any response, the agency has effectively denied the petition.
o Test: Six Factors should be considered in determining whether review is available based on unreasonably delay: Telecommunications Research & Action Center [14]
* Rule of Reason;
* W/ regard to Rule of Reason, see if Congress has provided a timetable or other indication of speed;
* Reasonable delays in economic regulation might be less tolerable when human health and welfare are at stake;
* Effects of expediting delayed action on other, higher agency priorities;
* Nature and extent of the interests prejudiced by delay; and
* Court need NOT find any impropriety lurking behind agency lassitude.
o In practice: Very difficult to meet.
REMEDIES FOR IMPROPER DENIAL OR DELAY
* Courts generally reluctant to order agencies to initiate a RM. Reasons at [15].
STATUTORY RESPONSES TO AGENCY INACTION—RELUCTANCE TO ENFORCE STATUTORY MANDATE
* Issue: Delay or inaction in the face of statutory provisions/mandates.
* Possible Approaches:
o Hammer Provisions: Congress will specify substantive consequences that go into effect automatically if the agency misses its deadlines (set by Congress).
o Federal Courts/De Novo: If agency denies or fails to on a petition as required by statute, Congress permits the citizen to present the petition to a fed district court for de novo consideration
* Courts NOT particularly receptive to this approach. See [16].
AGENCY DENIES RM ON GROUND THAT IT WILL PROCEED BY ADJUDICATION
* Covered in 4.1. Issues overlap.
3.3 TYPES OF RM PROCEDURES
GENERAL BACKGROUND
* Underlying Issue: Assuming that an agency (1) has authority to issue a rule and (2) has decided to do so, the question becomes what procedures the agency must follow in promulgating it.
* Answer depends upon the complex interplay b/w OS and APA.
* Core RM Provision of APA: § 553. Creates 3 basic categories of RM procedures:
o 1. Informal RM Requirements / Notice & Comment Procedures [same thing]. § 553.
* Most legislative rules follow “N&C procedures” found in § 553(b)-(c).
o 2. Exceptions to N&C Procedures.
* Several sets exceptions excuse agencies from complying w/ some or all of § 553.
o 3. Formal RM Requirements. If triggered by 553c --> §§ 556 & 557.
* The organic statute may require that rules comply w/ “formal” RM requirements of §§ 556 & 557.
* Apply ONLY if triggered by the necessary language in the organic statute. 553(c).
* Require opportunity for interested persons to testify & cross-ex witnesses.
* Opportunity for written comments does NOT suffice.
o NOTE: The organic statute may also contain procedural requirements that supplement or supersede the RM procedures of APA.
PROCEDURAL FORMALITY SPECTRUM
Less Procedural Formality More Procedural Formality
The 4 Exceptions to N&C Informal RM/N&C Procedures: § 553 Formal RM: §§ 556 & 557
OVERVIEW/ARCHITECTURE OF § 553. See RM Decision Tree [1]. KNOW FOR EXAM!
* Step One--§ 553(a). § 553 applies to everything EXCEPT to
[These categories are TOTALLY exempt to § 553]
o (1) military or foreign affairs functions of the U.S., § 553(a)(1) or
o (2) matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts. § 553(a)(2)
* [But agencies will usually follow voluntarily anyway. “Benefits” in a2 is huge]
* Step Two—§ 553(b). Except when required by statute, § 553(b) [and thus (c)] do NOT apply:
[These categories are exempt from NOTICE requirements of § 553(b) & COMMENT requirements of § 553(c). Must still comply with § 553(d) & (e).]
o (1) to [non-legislative rules: non-binding!] interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; §553(b)(A) or
o (2) when the agency for good cause finds … impractical, unnecessary, or contrary to public interest. § 553(b)(B)
* Summary of 4 Exceptions: If in (a), exempt from all 553. If in (b), exempt from 553b & 553c.
* If not exempt from § 553(b) [or (a)], § 553(b) requires:
o “Notice of proposed RM must be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice.”
* The notice must include:
* (1) a statement of time, place, and nature of public RM proceedings;
* (2) reference to the legal authority under which the rule is proposed; and
* (3) either the terms or substance of the proposed rule or a description of the subjects and issues involved.
* Step Three—§ 553(c). Also if not exempt from § 553(b) [or (a)], § 553(c) creates 2 categories of rules:
o 553(c) doesn’t apply if triggering language in OS --> 556 & 557 apply.
* When the OS requires a rule “to be made on the record after opportunity for an agency hearing, §§ 556 & 557 apply.
* Almost exact language is required: “Hearing on the Record”
* §§ 556 & 557 are provisions for formal adversarial hearings that typically accompany adjudication, including the right to present evidence, oral argument, and cross-exam witnesses. Also “on the record,” in that agency may rely only on evidence in the record of the hearing as a basis for its decision.
* Ex parte communications are strictly prohibited.
* Note: § 554 does NOT apply to formal RM here. It governs adjudication and triggers hearings under §§ 556 & 557 also, but does NOT apply here.
* Key Difference: § 554 requires individual notice. Here, just publish in FR.
o No triggering language --> 553c applies (comment and basis & purpose)
* Procedurally, the agency must “give interested persons an opportunity to participate [comment] in the RM through submission of written data, views, or arguments w/ or w/o opportunity for oral presentation.
* Plus, after consideration, of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis & purpose.
* These procedures reflect the legislative character of RM processes (open w/ broad input)
* Do NOT require oral argument, testimony, or cross-exam of witnesses (unlike trial-like hearings [and §§ 556-57])
* Step Four—§ 553(d) & (e). If not one of the 4 exceptions in (a) & (b), these requirements apply.
o (d) & (e) contain additional requirements that are ancillary to the core N&C procedures.
o (d): Requires “publication or service of a substantive rule be made w/in 30 days before its effective date,” w/ certain exceptions.
* These exceptions overlap w/ many of those in § 553(b), thus most rules subject to the § 553(b) exceptions are also exempt from § 553(d). [discussed in retroactive [3.1]]
o (e): Requires each agency to give an interested person the right to petition for the issuance, amendment, or repeal of a rule. [discussed in 3.2]
EXCEPTIONS TO THE REQUIREMENTS OF N&C RULEMAKING
* As noted above, § 553 creates four sets of exceptions to the requirements of N&C RM. These exceptions allow agencies to promulgate rules w/ less procedural formality than N&C.
* 1. § 553(a)(1). Military & foreign matters.
o Need for prompt & at times secret action. Not covered in detail.
* 2. § 553(a)(2). Government employment, contracts, & benefits.
o Reflects historical understanding that these interests were “mere privileges,” rather than rights.
o This understanding has been largely abandoned. Thus, most agencies voluntarily use N&C proc.
* 3. § 553(b)(A). General statements of policy, interpretative rules, & rules of agency org., proc., or practice
o Frequently called Non-Legislative Rules b/c they do NOT have binding effect.
o Extremely important in modern admin practice as sources of authority for informal agency actions.
o Covered in more detail in Ch. 6.
* 4. § 553(b)(B). Good cause. Follows in related materials & Duquesne Light Co.—principal case
* WHAT PROCEDURES, IF ANY, APPLY TO THESE RULES (that are exempt from N&C requirements)?
o The APA contains few applicable provisions.
o Rules must be published in the Federal Register. See [3] for effect of failure to do so.
o Agency may choose to allow comments to be submitted after the promulgation of a rule, w/ the idea that adjustments to the rule can be made if comments identify significant problems.
NOTICE & COMMENT V. FORMAL RULEMAKING
* Under § 553(c), if the organic statute contains the necessary language to “trigger” the formal procedures of §§ 556 & 557, the agency must promulgate rules w/ more procedural formality than N&C.
* Triggering Language: “to be made on the record after opportunity for an agency hearing.”
* Formal RM procedures are relatively rare b/c very cumbersome.
o Rule: These require an oral hearing at which interested persons have the right to testify and cross-examine witnesses; simply allowing the submission of written comments does NOT suffice.
* Ex parte communications prohibited.
* Must base its decision entirely on matters in the admin record.
* Must issue findings of fact and conclusions of law to support its decision; instead of being able to issue a statement of purpose that conforms to § 553(c).
* Narrow Construction of the Triggering Language of § 553(c). United States v. Allegheny-Ludlum Steel[4]
o Rule: General reference to “hearing” NOT sufficient.
* “after hearing” NOT sufficient to trigger formal RM.
o Rule: Something in the OS must indicate a congressional intent that the hearing be held “on the record.”
o Also, Florida East Coast held the same despite legislative history to the contrary.
ADDITIONAL NON-APA PROCEDURES
* Setting: Congressional and judicial responses to concerns (1) by regulated entities that the significant burdens necessitated their full opportunity to present concerns, and (2) by interested parties that agencies would be captured by the industries w/ behind-the-scenes lobbying.
* Statutory Responses:
o “Hybrid” Procedures: Some elements of formal RM but otherwise N&C procedures.
o Impact Assessments.
* Judicial Responses (Requirements) (Vermont Yankee)
o Paper Hearings. Court interpreted the requirements of notice, opportunity for comment, and statement of basis and purpose to create a kind of “paper hearing” under § 553. See [6].
o Procedural Hard Look Doctrine. Abolished by Vermont Yankee!
* Under this rejected doctrine, courts imposed additional procedural requirements.
* Rule: Courts have NO authority to order RM procedures beyond those required by the APA and OS, except perhaps in the unusual case where an agency rule is really an “adjudication” such that DP requires a formal adjudicatory hearing.
o Change of Court’s Approach in Vermont Yankee.
* Courts began to view additional procedures as imposing additional costs on agencies w/o necessarily improving the substance of agency decisions. [7].
Duquesne Light Co. v. EPA [7]. Addresses Exception 4—Good Cause—§ 553(b)(B).
GOOD CAUSE EXCEPTION—RELATED ISSUE
* Application of the Good Cause exception to N&C RM requirements.
* Majority Approach: Interpret this exception narrowly (unlike Duquesne)
o Should be limited to emergency situations.
* Analyze all 3 Elements of the Rule:
o Impracticable
o Unnecessary
o Contrary to the public interest
o (See [15] for cases reaching opposite results.)
RM AND SCOPE OF REVIEW
* Judicial Review Implications. The choice b/w N&C RM and Formal RM has implications not only for the procedures that an agency must follow, but also for judicial review.
o ALL rulemakings may be reviewed under A&C standard in § 706(2)(E).
o Only Formal RM (under §§ 556 & 557) may be reviewed under the substantial evidence std.
o [Of course, although SE originally thought to be less deferential, they appear to have merged.]
o But be aware of agency’s OS and “hybrid” RM procedures. See [15]
DUE PROCESS & RM PROCEDURES [“RULE IS REALLY AN ADJUDICATION”]
* Rule: IF there a few people, especially affected, on individualized grounds, and judicial facts are at issue, DP may require a hearing even if the agency decision is couched as a rule.
* See [16] for cases.
3.4 ELEMENTS OF NOTICE & COMMENT / INFORMAL RM
GENERAL BACKGROUND
* Informal Rulemaking is often referred to as Notice and Comment Rulemaking.
o Evoking the procedural obligations that apply under § 553 to an agency’s adoption of rules when formal RM requirements do not apply.
* Basic Procedural Requirements (3) [See handout “N&C” for relationship.]
o Notice. Protects parties.
o Comment. Key! Protect parties & Provides info. Notice & Statement close the loop.
o Publication of a statement of “basis and purpose” with the final rule. Ensures consideration.
APA INFORMAL RM REQUIREMENTS
* The APA establishes 3 basic requirements for the promulgation of rules using informal rules. See handout.
o 1. Notice. § 553(b).
* Agency must publish a “general notice of proposed RM” in the Federal Register, unless persons subject to the rule are named and personally served or have actual notice.
* Minimum Requirements of Notice:
* 1. Statement of nature of the proceedings (time, place, & nature);
* 2. Reference to the legal authority under which the rule is proposed;
* 3. Either the terms or substance of proposed rule or description of the subjects and issues involved. [99% just include the proposed rule]
* And routinely 4. Impact statements.
o 2. Comment. § 553(c).
* After providing notice, agency must provide to interested persons “an opportunity to participate in the RM through submission of written data, views, or arguments, w/ or w/o opportunity for oral presentation.
o 3. Statement of Basis & Purpose. § 553(c).
* After relevant matter is presented, agency must incorporate in the rules adopted “a concise general statement of their basis and purpose.”
* Little guidance, BUT see expanded requirement of paper hearings (maybe).
NOTICE—REQUIREMENT 1
* Standard. Notice must be “sufficient to fairly apprise interested persons of the issues involved, so that they may present responsive data or argument.”
* Purpose/Rationale. Relate to comment: Provide sufficient factual detail and rationale for the rule to permit interested parties to comment.
* 3 Distinct Purposes
o 1. Improves quality of agency RM: tested and exposed to diverse public comment.
o 2. Fairness to affected parties.
o 3. Enhances the quality of judicial review: develops the record.
OPPORTUNITY FOR COMMENT—REQUIREMENT 2
* Reasons for comment are closely related to notice reasons.
* Oral Hearings NOT required—optional.
o Agencies often confine public participation to written submissions, although more likely to convene hearings w/ oral presentations in controversial RM.
o These oral hearings (if any) are NOT formal hearings per §§ 556 & 557 (Not “on the record”)
* Effect: Agency is NOT limited to evidence adduced at the hearing.
* Effect: Typically do NOT provide opportunity for witnesses, presentation or cross-exam.
* RM Docket
o Although not required by APA, agencies typically make a RM docket anyway.
* RM Docket: Record of written comments, available to other interested persons.
o Sometimes a statute delegating substantive authority may impose a docket requirement.
* Responding to Comments. See [4]. Not all comments created equal.
o Another issue: Comments on comments?
* Late comments? Off the record comments? See related issue below.
STATEMENT OF BASIS & PURPOSE—REQUIREMENT 3
* Shows whether the agency considered the comments it received.
* Typically takes the form of a regulatory “preamble”
o (1) Describes the substance of the final rule; (2) explains how it promotes relevant statutory goals; (3) points out differences b/w the proposed and final rules; and (4) summarizes the agency’s responses to significant comments.
* Interpreted to require fairly elaborate explanations.
* Standard: The scope and degree of detail required by 553c depends on the scope and detail provided in the comments. See [5].
* Review. Under A&C, procedural and substantive. Better off challenging w/ A&C than B&P. See [5].
Solite Corp. v. EPA [5]. Industry denied opportunity to comment after new survey came out, on which EPA relied.
Ober v. EPA [8]. Post comment submissions by state. Held: violation of N&C b/c relied on by EPA.
NE Maryland Waste Disposal [11]. Basis & purpose challenge (normally brought as A&C), but won anyway.
REMEDIES FOR VIOLATIONS OF N&C PROCEDURES—RELATED ISSUE
* Issue: What is the proper remedy for RM that violates § 553 procedures
* Three Options:
o Vacate & Remand. Courts can “set aside agency action” found to be w/o observance of procedure required by law. § 706(2)(D)
* Courts often vacate rules or other agency actions adopted in noncompliance w/ APA procedures and remand so that the agency can reconsider the action properly.
o Remand w/o Vacating. Rules remain in effect while the matter is on remand before agency.
* Most likely to use this option when a strong possibility to remedy the problem exists and vacating immediately would be disruptive to the larger regulatory scheme.
o Cure? Publishing previously undisclosed info or soliciting comments after the rule goes into effect and promising to consider amending the rule in light of those comments.
* General Rule: Post-promulgation opportunities do NOT cure failure to follow § 553.
* Those affected are not placed in the same position.
o Levy: Aren’t the last 2 options essentially the same?
MATERIAL DIFFERENCES & EX PARTE COMMUNICATIONS—RELATED ISSUE 2
* Issue—New Notice? When the rule adopted differs materially from the one originally proposed, parties affected by the final rule may not have had notice that their interests were affected; thus, could not exercise right to comment on the rule.
o General Rule: An agency must provide a new notice and opportunity for comment WHEN the final rule is not a “logical outgrowth” of the proposed rule, so that a party was not on notice that its interests were affected. [17].
* Issue—Off the Record Communication w/ Agencies. N&C RM is NOT an “on the record” procedure and there is NO statutory ban on ex parte communications.
o General Rule: Agencies must put communications of central relevance to the RM, especially those containing data or info on which the agency relies, into the RM docket for comment.
o § 553 does not prohibit EPC, but EPCs can go too far.
3.5 SPECIAL PROBLEMS OF N&C RULEMAKING
GENERAL BACKGROUND
* Continued from 3.4, this unit expands on 2 issues:
o 1. New Notice. Whether an agency must issue a new notice of proposed RM when it alters a proposed rule in response to info it received during the public comment period.
o 2. EPC. Whether an agency engaged in informal RM may engage in ex parte communications, i.e., communications other than comments submitted during the comment period.
o Ultimate Answer to Both: Whether interested parties have a fair opportunity to comment on proposed rules.
NEW NOTICE & OPPORTUNITY FOR COMMENT
* General Rule: Submitting a proposed rule for comment does NOT automatically generate a new opportunity for comment merely b/c the rule promulgated by the agency differs from the rule it proposed, partly at least in response to submissions.
o A contrary rule would lead to the absurdity that in RM under the APA the agency can learn from comments on its proposals only at the peril of starting a new procedural round of commentary.
* Test: Whether the final rule is a “logical outgrowth” of the proposed rule? Chocolate Mfrs. [2]
o Sounds good, but not very helpful standard --> leading to the following functional assessment:
* Functional Assessment (Real Test): Did the agency’s notice “fairly apprise interested persons of the subjects and issues of RM?”
o i.e.: Did the party have a real opportunity to comment on the issue?
* Surprise factor?
EX PARTE COMMUNICATIONS
* Defined. Info provided to the agency outside the procedures for public participation established by the APA or the agency’s OS.
* Issue: Whether agencies may engage in EPC w/o violating the APA, OS, or Constitution?
* Answer depends in significant part on the nature of the proceeding.
o EPC Prohibited: Formal RM and adjudication.
o EPC Not Prohibited: N&C RM under § 553.
* Exception: EPC are prohibited in RM proceedings involving conflicting claims to a valuable privilege. Sangamon Valley [3]
* Courts have struggled w/ the scope of this holding. Some restrictions on EPC apply even when a RM does NOT involve competing claims to a valuable privilege. See Sierra Club v. Costle [8].
* Three Principal Concerns of EPCs
o 1. Reviewing courts denied access to complete record.
o 2. Not tested by adversarial discussion among parties.
o 3. Fundamental notions of fairness, implicit in DP.
* EPC Synthesis—Ways to Challenge EPC
o SV cases. Conflicting claims to the same privilege (both want the same thing).
* Easiest, but narrow group.
o Must be docketed if they contain:
* Hard data & info
* Comments of central relevance (core)
* Focus on prejudice—Need to respond.
o D.C. Federation cases [16].
* Improper considerations (e.g. threat by legislator), and
* It had an actual effect on decision/outcome.
RELATED ISSUES
* Ex Parte Communications & Due Process
o Due Process justifies the insulation of the decision-maker from EPC where agency action:
* 1. Resembles judicial action; or
* 2. Involves formal RM, adjudication, or quasi-adjudication among conflicting private claims to a valuable privilege.
* [Note: DP does NOT generally apply to RM proceedings].
o Some “RM” may sufficiently resemble adjudications to engage DP concerns. Addressed in 4.5.
* EPC & Agency Reasoning
o Judicial review of agency reasoning under A&C standard imposes 2 practical constraints:
o 1. Agency’s rationale must be supported by the record, so the agency may NOT rely on info received through EPC unless that info is docketed for inclusion on the record.
o 2. If the agency relies on EPC that raise improper considerations, the agency’s docketing of those comments will NOT erase the substantive error (as explained by State Farm).
* Hybrid N&C Procedures
o The OS may impose additional procedural requirements beyond those in § 553. Look at the OS!
CH.4 POLICY MAKING BY ADJUDICATION
Adjudication: individualized decision
* But contrast mass adjudication
4.1 CONSTRAINTS ON MAKING POLICY BY ADJUDICATION
RM V. ADJUDICATION: ADVANTAGES & DISADVANTAGES
* Adjudication: flexibility, immediacy, political insulation, obtaining oral testimony
* RM: efficiency, comprehensive input thru public comment, consistency of treatment for regulated parties
ORGANIC STATUTES—RESTRAINT 1
* Authority to Adjudicate.
o General Rule: Agencies must trace their authority to adjudicate to their OS—NO inherent authority to conduct binding adjudications.
o OS both enables and limits agencies’ ability to conduct binding adjudications.
o If an OS requires agency to address a particular policy question thru the issuance of regulations, the agency can NOT ignore the directive and formulate via adjudication instead.
* Effect of Violating Procedures Required by OS: A suit may be brought challenging the agency’s choice of procedure under APA and the court may invalidate the agency’s action on the ground that it is “w/o observance of law.” § 706(2)(D)
o Regulations w/ Deadlines --> RM required? When Congress orders agency to adopt regulations by deadlines set forth in the statute, such deadlines usually indicative of Congress’s intent to force agency to make policy by rule. Another congressional intent: uniform treatment.
* NLRB
o Broad power to both promulgate rules and adjudicate
* Despite criticism, NLRB uses adjudication almost exclusively
APA—RESTRAINT 2
* General Rule: Even if OS does not constrain an agency’s authority to adjudicate, the APA may in 2 ways:
o 1. Definitional “Rule”. Adjudication and RM are mutually exclusive.
* Adjudication results in an order, which is a final disposition “in a matter other than RM”
* Thus, argument: Agencies CANNOT use adjudications to make rules.
* Rule: If an agency action meets the definition of a rule, it CANNOT be taken in an adjudication and failure to provide public notice & opportunity for comment violates § 553 unless one of the exceptions to that § applies.
* A.P.W. Prods. Co. [3]. This argument failed.
o Clear Rule: An adjudication is NOT invalid even if it adopts a broad rule that will apply future cases.
* See also WG (infra): “Nothing inherently wrong w/ announcing what looks like a rule when making an adjudication.”
o 2. A&C. Agency’s decision to use adjudication instead of RM may be challenged as A&C under § 706(2)(A).
* Use Londoner & Bi-Metallic arguments: If an agency uses adjudication to adopt a policy that affects a broad class of people, and that agency’s decision rests on legislative facts rather than adjudicative facts --> might be A&C.
* But courts usually defer to agency procedural choices and Vermont Yankee strongly cautions against judicial interference w/ those decisions.
FAIRNESS, RETROACTIVITY, & DP—RESTRAINT 3
* General Rule: Even if agency not otherwise precluded from using adjudication, may face other concerns:
o Fairness/Consistency. PM by adjudication results in ad hoc decision that may treat similar parties inconsistently and are particularly prone to abuse.
* A party is singled out and bears the brunt of defending before other competitors/persons.
* Rule: Failure to adopt any kind of standards is a violation of DP.
* Yick Wo [17]. Licenses denied to nearly all Chinese Americans; granted to most Eur. Am.
o Retroactive Effects. (see also 4.2). In adjudication, the resulting rule applies to conduct that occurred before the rule was adopted.
* Concerns: lack of fair notice and A&C. If serious --> DP violation (constitutional).
* Balancing Test [16]. Public policy ends to be accomplished weighed against unfairness of the retroactive application of the new rule to the party.
* Sometimes DP inquiry; sometimes A&C inquiry [Levy]
* Basic elements of Test: How unfair is it to the party who relied on the old rule?
* NOT allowed if so extreme as to violate DP.
* Language: Retroactive adjudication is impermissible if the “practical operation of the change of policy will work hardship upon respondent altogether out of proportion to the public ends to be accomplished.”
Wyman-Gordon [5]. (APA Definitions).
* Rule: If the adjudication results in a policy [rule] that purports to have only a future effect, and does NOT apply to the case at hand, the policy is INVALID.
o Reasoning: A “rule” has general or particular applicability and future effect. Adjudication, therefore, must have present effect also.
* Bottom-Line: If the agency wants to adopt a rule in adjudication, it MUST apply in the current case (to the parties).
Bell Aerospace [11]. (A&C case).
* Reasons that might justify using Adjudication to make Rules:
o [First 3: Chenery & Bell Aero. Last 3: Candidates per Levy]
o Unanticipated problem in the adjudication. Never encountered before? New problem in world?
o Insufficient Experience. Not enough evidence to promulgate rule. This is a baby-step.
o Factual variances (most common probably). Issues change to often (e.g. tort law-negligence)
o Limited resources. RM is resource-intensive.
o Immediate effect.
o Avoid duplication. Rule must be made anyway. Save time or money.
LIABILITY, REMEDY AND CHOICE OF RM OR ADJUDICATION—LIMIT 4 (Related Matter)
* [Primary Conduct (liability) v. Secondary Conduct (remedy)]
* Subject Matter of Adjudication. Courts less likely to force agency to use RM when a change in procedural rules re: remedies are at issue rather than a change in substantive rules re: liability.
o Sheet Metal Workers [15]. Held RM ok b/c agency was just changing the remedy “for conduct which has long been deemed improper” [changing procedural remedy] rather than “rendering unlawful that which had previously been lawful” [changing substantive law].
4.2 PROBLEM OF RETROACTIVITY
GENERAL BACKGROUND
* Retroactivity is generally disfavored in the law.
o “Something fundamentally unfair about government altering rules that govern past conduct.”
o Elementary Consideration: Opportunity to know the law and conform conduct accordingly.
* Nevertheless, SCOTUS has recognized entirely benign and legit purposes:
o Respond to emergencies;
o Correct mistakes;
o Prevent circumvention of a new statute in the interval immediately preceding its passage; or
o Simply give comprehensive effect to a new law Congress considers salutary. [1].
CONSTITUTIONAL LIMITS ON RETROACTIVITY
* Due Process. Pretty easy standard to meet:
o Rational Basis Test (easiest test to meet). Retroactive application of a statute must be rationally related to a legit legislative purpose.
o Same standard as A&C [Pension Benefits, 2]. Standard for reviewing the validity of retroactive legislation under DP does NOT differ from A&C. Thus, very difficult to win an argument here.
* Ex Post Facto Clause. Prohibits retroactive application of penal legislation.
PRESUMPTION AGAINST RETROACTIVITY (IN LEGISLATION, I.E. STATUTES & REGULATIONS)
* Canon of Statutory Construction. Unless Congress makes clear that a statute is meant to have retroactive effect, courts assume it’s meant to be prospective only.
o To rebut: Matter of statutory interpretation. Express language & Look to inferences from statutory text & context, legislative history, & other tools of construction.
* Claim that retroactive application would promote the purposes of legislation for fully is NOT usually sufficient to rebut presumption.
DIFFERENT ATTITUDE OF RETROACTIVITY IN ADJUDICATION (ART. III COURTS)
* General Rule: While courts generally disfavor retroactive application of statutes and regulations, they have a different attitude toward retroactivity in adjudication (strong presumption in favor of retro).
o Retroactivity is the norm (inherent) in common law decisions.
o Courts differentiate procedural retroactivity (ok) v. substantive retroactivity (not ok)
* Agency adjudications compared to Court adjudications
o Adjudications operate much in the same was as judicial decisions --> procedural reasons for permitting retroactivity
o But can argue for less tolerance of retroactivity in agency adjudications b/c agencies have RM authority, whereas courts have no other choice
o [Levy]: Another difference: judges have tenure; unsure which way this cuts.
DEGREE OF RETROACTIVE EFFECTS—CRITICAL FACTOR (RELATED ISSUE)
* Critical factor in retroactivity cases: Degree of retroactive effect.
* Rule: The extent to which applying a rule to past conduct is unfair depends on the extent to which a party reasonably relied on the rule and is worse off b/c of that reliance.
o Clearly, retroactive application of rules permitting conduct that was previously prohibited would NOT be unfair to a person who engaged in that conduct when it was prohibited.
o Also, retroactivity is NOT a problem if remedy does NOT make the person worse off (same sit.).
* Illustration (link also). Chenery. Although rule applied to past conduct, shareholders were NOT worse off under the new rule than they were under the old rule.
o Rule: To win a retroactive effect argument, you must show being worse off under the NEW rule as opposed to the old rule.
* Primary (Substantive) v. Secondary (Procedural) Distinctions also. [16].
RETROACTIVITY IN ADMINISTRATIVE CONTEXTS (Related Issue)
* Falls in the middle of legislation (disfavored) and court adjudications (inherently retro).
* Strong presumption in favor of retroactive application of judicial decisions in cases of both 1st and 2nd impression. Harper.
* As for Agencies? Courts haven’t decided. See Retail Wholesale Balancing Test.
Retail Wholesale Balancing Test for Newly Adopted Admin Rule[6]
* Issue: Whether to grant or deny retroactive force to newly adopted administrative rules?
* Rule: Retroactivity must be balanced against the mischief of producing a result which is contrary to a statutory design or to legal & equitable principles. If that mischief is greater than the ill effect of the retroactive application of a new standard, it is NOT the type of retroactivity which is condemned by law.
o Balancing Test Factors (5):
* First or Second Impression? See handout [1].
* Cts should be more reluctant to allow retroactivity in a case of 2nd impression b/c some of the considerations that supported retro in the 1st are gone.
* Abrupt Departure v. Merely Fill Void?
* Depart from well-settled law (not ok) v. filling void in unsettled area of law (ok)
* Extent to which the party relied on old rule
* Advice of counsel?
* Degree of Burden which a retroactive order imposes on a party, and
* Statutory Interest in applying new standard despite reliance of party on old standard.
* As applied in RW: See notes & D’s outline.
United Food [9]. Filled void in unsettled area of law. Opposite conclusion of RW.
Problem also applies general considerations and factors.
4.3 TYPES OF ADJUDICATION: APA AND NON-APA ADJUDICATION
GENERAL BACKGROUND
* There are two types of adjudication:
o APA (Formal) Adjudication
* Governed by § 554. (the triggering language is also here).
o Non-APA (Informal) Adjudication
* Unlike RM, the APA does NOT have procedures that must be followed.
* Rather, these procedures may be based on the OS, agency regulations, or DP clause.
* Crucial Starting Point: Do the APA formal adjudication procedures apply?
o Triggering Language: § 554. If yes --> APA procedures apply. If no --> No APA procedures.
* Sources of Procedures. The procedures that an agency must use in conducting adjudications may be specified by agency’s OS, APA, agency regulations, or perhaps Constitution (if the DP Clause demands more “process” than statutory or regulatory procedures provide.
TRIGGERING FORMAL APA ADJUDICATION
* Rule: APA formal adjudication procedures apply ONLY if triggered by language in the agency’s OS.
* Starting Point: § 554, which directs the agency to follow §§ 556 and 557 if statute requires adjudication to be “on the record after opportunity for hearing.” [554a identical to 553c]
o This language contains 3 essential requirements:
* 1. Must be an adjudication.
* E.g. in Bricklayers, no formal adjudication requirement b/c it did not result in an “order” and thus were not “adjudications”
* 2. Organic statute must require a hearing.
* 3. OS must specify that the hearing is “on the record” or other similar language.
* [See directly below for modern court approach re: this language.]
o Exceptions also in § 554(a).
* Trigger for formal adjudication [554(a)] is identical to that of formal RM [553(c)], but formal adjudication is much more common b/c more OS have triggering language or provide directly for formal adjudications.
o Early Approach: Require formal adjudication even in absence of “on the record” language.
* Seacoast [now overruled by Dominion Energy]established a presumption in favor of formal adjudication when OS required a hearing.
* Cts relied on Londoner and Bi-Metallic to find formal adjudication requirements and to distinguish cases like FEC and Alleghency-Ludlum, which applied the triggering language in for formal RM narrowly.
o Modern Approach: Move away from requiring formal adjudication unless OS explicitly triggers
* West Chicago: While OS does not have to contain magic words “on the record,” similarly strong language intended to trigger formal adjudication must be used.
* Waste Mgmt: Court abandoned earlier interpretation of 558(c) which required formal adjudication in licensing applications
* Dominion Energy (overruling Seacoast); follows Chevron.
o Interpreting the OS when necessary to determine the applicability of formal adjudicatory procedures to determine congressional intent --> Cts increasingly apply Chevron test to an agency’s decision NOT to use formal APA procedures.
* Test: Whether the OS is clear, and if not, defer to agency’s construction if reasonable. [3]
* For more “language” examples, see [4].
WHAT PROCEDURES APPLY TO APA (FORMAL) ADJUDICATIONS?
* Key Elements of APA Formal Adjudication Procedures (4):
o 1. Notice. Agency must provide personal notice of any hearing to affected parties that contains time, place, nature of hearing, legal authority under which it is held and the matters of fact and law asserted. § 554(b).
o 2. Hearings on the Record. Only testimony, exhibits, and records filed in the proceeding can be used to make decision; no EPC; participants have broad participatory rights (oral, documentary, and rebuttal evidence, and cross-exam; burden of proof on proponent. See [1] for more details.
o 3. Decision. Must be written; parties may propose findings and conclusion; must include “findings and conclusion, and the reasons or basis therefore, on the material issues of fact, law, or discretion” and “the appropriate rule, order, sanction, relief, or denial thereof.” 557(c).
o 4. ALJs (Role).
* Most cases heard first by ALJ.
* ALJs somewhat independent from agency.
* Can issue subpoenas, rule on evidence, and regulate hearing.
* Issues either a recommended or binding decision (agency can adopt or reverse, respectively). Agencies review de novo per APA.
* ALJs are employees of the agency they work for, but safeguards
* Exempt from performance reviews. Can ONLY be fired for cause.
WHAT PROCEDURES APPLY TO NON-APA (INFORMAL) ADJUDICATIONS?
* Defined. Informal adjudications are ALL adjudications NOT subject to §§ 554, 556, & 557 and not RM.
* Rule: Agencies have large discretion, subject to the following limits:
* Requirements [from APA].
o Prompt notice of the denial (in whole or in part) of a written application or other request.
o Brief statement of the grounds for denial.
* Sources of Informal Adjudication Procedures
o OS. May authorize agency to disallow cross-x or limit power of presiding officer.
o Agency’s may adopt their own procedures by regulation.
* Must adhere to these unless amended or appealed.
o DP Clause. May dictate the use of procedures to protect property or liberty interests.
* Review of Agency Procedural Decisions in Informal Adjudications
o Reviewed for abuse of discretion.
o Deference especially likely if decision involves forward-looking, industry-wide regulation.
o Bright-Line Rule: Courts may NOT order agency to use additional procedures beyond those required by statute or DP.
THE ROLE OF SUBSTANTIAL EVIDENCE TEST IN DETERMINING ADJUDICATORY PROCEDURES
* Substantial Evidence test usually applies to formal adjudications.
o Decisions in formal adjudications limited to materials on the record.
* Informal proceedings usually have sketcher admin record, so harder to review for SE
o But implications of Vermont Yankee?
o Effect: Some courts treat a statutory reference to SE review as evidence of congressional intent for formal adjudication to apply. [16].
STANDARD & BURDEN OF PROOF
* “Standards”: e.g. preponderance, clear & convincing, etc. preponderance is most common.
* Formal APA Adjudications
o Standard: Traditional preponderance of the evidence test.
o BOP is on the proponent of the rule or order.
* Agency is proponent in an enforcement action against a party.
* Private party is proponent when seeking license, permit, or other agency action.
* Non-APA Adjudications
o Generally whoever is seeking agency action has BOP.
o But in certification elections, cts have consistently held that the party objecting to the results bears the burden of adducing facts that, if true, would invalidate the election.
* Thus it appears that BOP has shifted from proponent of the rule (agency) to the non-proponent (employer) on some issues.
PRECLUSIVE EFFECT OF AGENCY DECISIONS
* General Rule: Courts treat administrative factual decisions as binding if same issues arise in court.
o Essentially a form of issue preclusion or collateral estoppel.
* But OS can negate this rule.
Van Leer Containers [5]. Hearing required? Held, yes b/c disputed issues of material fact.
Beverly Enterprises [13]. Cross-X and DP arguments. Single hearing.
See N’s notes for “admin SJ”
4.4 THE AGENCY & ALJ
GENERAL BACKGROUND
* ALJs Role: How ALJ fits into a decision-making processes for formal adjudication in which he is both an employee of the agency and a decision-maker in disputes involving the agency as a party.
* Issues Addressed:
o Role of agency in hiring and firing ALJ
o Degree to which agencies are bound by findings and conclusions of the ALJ
* 556(b) requires the agency, one or more of its members, or an appointed ALJ to preside over all formal RM or adjudication proceedings governed by APA.
o In practice, presiding officer is almost always an ALJ.
ALJ’S AUTHORITY TO MANAGE FORMAL ADJUDICATION HEARINGS
* Functions are similar to those of federal trial ct judges
* 556(c) authorizes ALJs to:
o Administer oaths and affirmations; Issue subpoenas; Rule on and receive evidence; Take depos or have them taken; Regulate the course of the hearing; Hold conferences on settlement; Dispose of procedural requests; Make or recommend decisions in accordance w/ § 557; and Take other action authorized by agency rule consistent w/ the APA.
* Courts tend to be deferential to the manner in which ALJ conducts adjudication
* OS may impose additional procedural requirements.
ALJ INDEPENDENCE & OVERSIGHT
* Though employees of the agency, ALJs’ independence is protected by APA procedural requirements and APA provisions concerning hiring, firing, and discipline of ALJs.
o APA Procedural Requirements [2]
* ALJ must conduct proceedings in impartial manner
* ALJs can’t perform duties inconsistent w/ their duties & responsibilities as ALJs
* Can’t be subject to supervision of anyone prosecuting for agency
* Must be assigned in rotation “as far as practicable”—avoid perceived favorable judges
o APA Provisions for Hiring, Firing, and Disciplining ALJs
* To be appointed, ALJs must be on list provided by Office of Personnel Mgmt
* Office of Personnel Mgmt decides compensation
* No annual performance evaluations
* Agency may remove, suspend, or reduce pay if Merit System Protection Board finds good cause for doing so in a formal adjudication
* Removable for national security or as part of reduction in force
* Agency Checks on ALJ Power
o Agencies can establish and conduct training programs for employees, including ALJs
o ALJs bound by agency regulations & policies
o ALJ remains subject to de novo review by agency
AGENCY REVIEW OF ALJ DECISIONS
* De Novo Review
o ALJ makes an initial decision or certifies the record to agency w/ recommended decision
o On appeal or own motion, agency retains ALL powers it would have had in making initial dec.
* Substantial Evidence Standard: If agency reverses ALJ, there is a heightened burden on agency to explain why.
* Demeanor Evidence: ALJ decisions get great weight in credibility determinations b/c they had chance to observe demeanor evidence of witnesses.
* NLRB Procedures. Recommended Decision Model primarily. See D’s notes.
REMEDIAL AUTHORITY
* Two distinct types of Remedial Authority: Violations of OS & Misconduct during course of admin hearing.
* Procedural Violations: Authority to Remedy Misconduct during Admin Hearing
o Derived from APA.
o § 556(c)(5). Employees presiding at hearing may regulate the course of the hearing.
o § 559 (ch. 7). Each agency is granted the authority necessary to comply w/ the requirements of this subchapter thru issuance of rules or otherwise.
o Aramark: The authority to impose sanctions is implicit in the power to regulate the conduct of a hearing under § 556(c)(5).
* Substantive Violations: Authority to Remedy Violations of OS
o Derived from OS. Permanent Label.
NON-APA PROCEDURES
* APA procedures do NOT apply to elections and certifications
o Usually, matters are investigated by the regional office, which makes factual determinations.
o A hearing is held ONLY if there are objections. See D’s notes for more details.
o Hearing officers in certification. Absence of recommend decisions.
AGENCY OVERSIGHT & DECISIONAL INDEPENDENCE OF ALJS
* High Allowance Rates. Heckler held that SSA could NOT target ALJs who had high allowance rates for “own motion” review.
o Undermined ALJ independence & thus violated spirit of APA. Right to decisional independence?
Aramark [4]. Noncompliance w/ subpoenas and bad faith. Nature of sanctions/source of power.
Permanent Label [9]. Extreme remedy for unfair election case. Involves Gissel and reasons requirement.
4.5 EX PARTE COMMUNICATIONS (NOT OUTLINED—SEE NOTES 35-37
GENERAL BACKGROUND
* Rulemaking: EPC generally tolerated under § 553, provided important info and critical arguments are docketed for comment.
* Adjudication: Prohibited in Formal APA adjudications (subject to exceptions)& limited in other contexts by statutes, regulations, and DP.
o Rationale: EPC have potential to unfairly influence the decision-maker and deprive an excluded party of the opportunity to know and respond to the communications.
APA’S TREATMENT OF EX PARTE COMMUNICATIONS
Two separate and overlapping APA provisions restrict EPC in formal adjudications:
> § 554(d) – Broad Prohibition on EPC
* Rule 1: ALJ (or the employee presiding at formal adjudication) can’t consult a person or party about fact in issue, unless notice and opportunity to participate provided to all parties.
* Effect: Another agency employee can’t participate or advise the decision of a case
* Rule 2: ALJ can’t be responsible to or subject to the supervision/direction of an agency employee who does investigating or prosecuting work for the agency.
* Effect: Such an employee can’t consult in or advise a case decision except as a witness or counsel in public proceedings
* Exceptions: Does NOT apply to certain kinds of proceedings, including applications for initial licenses and proceedings involving the rates, facilities, or practices of public utilities or carriers
> § 557(d) – Narrows Limit on EPC to Interested Persons [Applies to both formal adj. & formal RM]
* Rule: Bars any interested person outside the agency from knowingly making or causing to be made an EPC relevant to the proceeding to the ALJ or other agency employee who may reasonably be expected to be involved in the decisional process
* Also prohibits EPC from the employee to the outside person
* Noncompliance: Any such communication must be placed in the public record
* Effect of Violation: ALJ can dismiss/deny the claim or interest of any person who makes an EPC.
> Organic statute or regulations may supplement restrictions on ex parte communications
RATIONALE FOR BANNING EX PARTE COMMUNICATIONS
> Deprive interested persons of notice to information relied on by the agency in making its decision
> Prevent interested persons from responding to the information conveyed
> Prevent the courts from carrying out their judicial oversight functions
DEFINITIONS OF EPC & INTERESTED PARTY
* Definition of Ex Parte Communication
> Definition under 551 is very broad, any communication outside the hearing
> Older View: Under 554(c), “facts in issue”
> Modern Approach: Under 557(d), “relevant to the merits”
* This language broadened the scope of the ban on EPC.
> But NOT EPC: Procedural inquiries & other communications “not relevant to the merits” are permitted.
> See [3] for other specific examples of non-EPCs.
* Definition of Interested Party PATCO [4]
> Definition is very broad in the APA: Any individual or other person with an interest in the agency proceeding that is greater than the general interest the public as a whole may have
REMEDIES FOR EPCS
Section 557(d) refers to both mandatory and discretionary consequences:
> Mandatory: Placement of the communications in the public record—557(d)(1)(C)
> Discretionary: May have claim dismissed if can’t show cause why not—557(d)(1)(D)
* NLRB has even more specific consequences
> May have adjudication reversed—706(2)(D)
* Cts consider whether the agency’s decision-making process was tainted enough that the ultimate judgment is unfair, either an innocent party or the public interest
* Apply the PATCO Factors
* The gravity of the ex parte communication
* In PATCO not grave (limited and general)
* Graver if longer or more specific, or $$$, threat, etc.
* Whether the communication may have influenced the decision
* In PATCO no influence (lost issue)
* Whether the party making the communication benefited from decision
* In PATCO no benefit (interest slight; lost issue)
* Whether opposing parties knew of the communication and had an opportunity to rebut
* In PATCO Opportunity to rebut (generic arguments for unions)
* Whether vacation and remand of the decision would serve a useful purpose
* Levy says it’s hard to understand what this means; maybe don’t worry about it too much
> Key Point: Even though there is a procedural violation (EPC), it does NOT necessarily reverse the decision. Apply the PATCO test!
EXCEPTIONS TO PROHIBITION ON EX PARTE COMMUNICATIONS
> Exempt Subjects
* Status reports exempted from definition of EPC under 551(14)
* Not regarding merits (557d or Facts 554d)
> Exempt persons (557(d))
* People not interested
* Tho anyone who might make an EPC is probably an “interested person”
* People not outside the agency
* Internal communications allowed
> Other Exceptions
* Disposition of ex parte matters as required by law—554(d) and 557(d)
* Can be fleshed out by agency regulation
* Initial licenses and proceedings involving public utility rates or practices
* Settlement negotiations
EX PARTE COMMUNICATIONS IN NON-APA ADJUDICATIONS
> Nothing prohibiting this in APA
> Organic statute or agency regulations may restrict
* Absent one of these, courts are reluctant to ban EPC in informal proceedings
* But they may be so unfair as to violate Due Process
* Valuable Privilege. Sangamon Valley, ct held that EPC violated DP b/c basic fairness required that a RM proceeding to allocate conflicting private claims to a valuable privilege (TV channels) be conducted without EPC
* US Lines, ct held that EPC violated DP b/c they denied meaningful participation to the public and potentially adversely affected 3rd persons
* Extent of ban unclear: Must show how DP rights were violated
> i.e. notice, opportunity to be heard, or bias or prejudice by ALJ
THE EXECUTIVE POWER AND EX PARTE COMMUNICATIONS
> Due Process Concerns. Presidential oversight vs. due process (Weiner)
* Violates DP if re: merits of the case.
* Pres can’t fire an ALJ, even tho has oversight power, if doesn’t like ALJ decision
> APA restrictions (spotted owl case)
* Violates APA if discussing merits of the case.
* APA restrictions on EPC apply to the President; he is an interested person and thus can’t engage in EPC with the ALJ
Pioneer Hotel, p. 7
* one ALJ consulting with another about procedure isn’t a violation of EPC standards
* Held: not “outside agency” (557(d)).
* ALJ is talking to other ALJs within the agency.
* Held: not regarding a fact in issue (554(d))
* It was about the process; not an issue.
Anchor Inns, p. 10
* certification of unions after an election; alleged unfair labor practice
* certifications aren’t subject to formal rulemaking, so neither 554(d)(1) nor 557(d)(1) apply
* Regional Director’s Report tainted by ex parte communications; decides insufficient to set aside election, so union should be certified
* Question to think about: are these really adjudicatory hearings, or more an investigation?
* None of this would be a big deal if it just dealt with the certification; however, bc you can’t relitigate the fact-finding, the hearing officer’s report cannot be relitigated.
INTRO TO CHAPTER 5: PROBLEMS OF MASS ADJUDICATION
* SSA administers 2 programs
> Old Age, Survivors, and Disability Insurance (OASDI) Program --> Contribution based
> Supplemental Security Income (SSI) Program --> Need based
* Determining disability is complicated
> Requires both medical evidence that establishes the extend of the impairment and vocational considerations that address how impairments affect a claimant’s ability to work
> Requires consideration of subjective complaints such as pain
> Many claimants have long and complicated medical histories
> Assessing vocational prospects difficult bc varies w/ age, education, and work experience
* Disability Wars of the 1980s
> SSA reduced the number of disability recipients by 891,000 between 1981-84
* Later conceded 200,000 of these were wrongly denied benefits
* Numbers
> over 57 million total recipients
> 14.5 million disability recipients
> Almost 200,000 disability apps/mo
> 430,000 ALJ decisions/year; each ALJ making 400-500 decisions/year
5.1: ADJUDICATORY BUREAUCRACY
GENERAL BACKGROUND
* SSA has adopted 2 basic strategies in response to difficulties above:
o 5-Step Sequential Evaluation Process. To systematize the evaluation of disability, it developed and promulgated this process by regulation.
o Multiple Level Adjudicatory Process. With initial screening by state agencies before formal agency hearings.
5-STEP SEQUENTIAL EVALUATION PROCESS OF OASDI
> Step 1: currently engaged in substantial gainful activity?
* Yes—not disabled
* No—step 2
> Step 2: are the impairment(s) severe? (affect ability to work in a significant way)
* No—not disabled
* Yes—step 3
> Step 3: impairments meet or equal severity of the symptoms in the listings?
* No—not disabled
* Yes--Determine residual functional capacity
> RFC to return to pas work?
* Yes—not disabled
* No—step 5
> Other substantial gainful activity? RFC/Vocational
* Yes—not disabled
* No—DISABLED
STAGES IN ADJUDICATORY PROCESS (similar for both initial applications and continuing reviews)
> State Disability Determination Service (initial determination)
> Applicant provides records and info, DDS can solicit more med records and order exams to be done by contracted physician
* Subject to Reconsiderations by the state agency
* Using a different med advisor and disability examiner
* Additional medical evidence may be added
* Applicant may request reconsideration or SSA may request it as a “quality assurance review”
* Funded by SSA and subject to its supervision
> Hearing before a federal ALJ, subject to review by SSA’s Appeals Council
* Hearing is de novo
* Formal, on the record hearing
* Claimant may present evidence and cross-x
* SSA is not opposing party; SSA must help applicant develop evidence
* Applicant must seek Appeals Council review before seeking judicial review
* Appeals Council is de novo but on the basis of the record of the ALJ hearing
> Judicial Review in federal district court, subject to ordinary rights of appeal
* Incorporates substantial evidence standard of review
CONTROVERSIAL POLICIES
> In 1970s and 80s, SSA aggressively denied and discontinued benefits
> Specific policies detailed. See my notes 39.
SYSTEMIC LITIGATION [CLASS ACTION LAWSUITS]
> Class action lawsuits challenging SSA policies and practices face a number of specialized administrative law hurdles (procedural barriers). [18].
* Examples
* Exhaustion: litigants must pursue all avail administrative remedies before challenging agency action in court
* Time limits for appeals
INFORMAL GUIDANCE
* Other Practices
> SSA issues various guidance documents; they are subordinate to the regs and NOT “binding” in same way as legislative rules
* May not be consistent with the statute or regs, and may send mixed signals to decisionmakers.
* Many such docs internal, so applicants can’t see, and public can’t comment
* 2 important kinds of guidance documents
* Social Security Rulings (SSRs)
> Provide more detailed treatment of particular issues that arise in the applications of the sequential evaluation process
> Published in Federal Register; take effect upon publication
> BINDING w/in the SSA.
* Program Operations Manual System (POMS)
> Internal personnel manual that guide SSA employees in processing claims
COOPERATIVE FEDERALISM AND THE ROLE OF STATES
> Using state agencies to implement federal programs;
* Use of state DDSs to make initial determination of benefits is an example of cooperative federalism
Dixon v. Shalala
> SSA denied benefits to Ps in systematic and illegal manner using “noncombination” of impairments, which denied some applicants who could not, in fact, perform “basic work activity.” Was in effect, a heightened standard illegal under the 5-step regulatory procedure. Step 2 may only be used to weed out de minimus claims
5.2: IMPACT OF RULES
Agencies can adopt a regulation to resolve an issue and streamline the process and promote consistency.
* These regulations are BINDING in subsequent adjudications.
* Agencies have multiple options, from promulgating binding regulations (SSRs) [formal] to issuing POMRs, e-mails, etc [less formal]
RESOLVING ISSUES BY REGULATION—EVADING HEARINGS
> Prevents affected parties from relitigating the issue in an adjudication
> Rule itself may be challenged on the basis of the RM record
> Consistent with statutory and due process requirements for an adjudicatory hearing
> Rule: Even if statute says you get a HEARING, none of that matters if the issue is resolved by REGULATION.
> Storer Broadcasting, Ct upheld FCC’s denial of a broadcasting license w/o a hearing bc the FCC had adopted a regulation limiting the no. of stations a licensee could own and the applicant already owned the max. no. of stations
* No hearing nec. even tho statute required “full hearing” before denying license
* Basically like an administrative summary judgment
SSA’S USE OF REGULATIONS (PER SE RULES)
> SSA relies extensively on regulations and SSRs to guide analysis and resolve issues
* Helps streamline adjudications and ensure consistency
* Listings: SSA relies on “listings” of impairments at Step 3 of impairments that are per se disabling
* Claimants whose impairments meet or exceed the listings awarded benefits without evaluation at Steps 4 and 5
* Some claimants whose impairments do not meet the listings are denied benefits without evaluation at Steps 4 and 5
* Grids: SSA relies on “grids” at Step 5 to determine whether there are jobs available in the national economy for claimants with different levels of impairment and different categories of age, education, and work experience
* used vocational experts to make the grids
* not don’t need vocational experts; just use the grids instead
* Ct upheld use of grids in Heckler
* Grids don’t apply if the claimant has additional, non-exertional impairments that prevent him or her from performing some of the jobs in a given exertional category
INDIVIDUALIZED CONSIDERATION—SAFETY VALVE
> Factual Issues: Agencies can resolve factual issues by use of regulations, but this may be inappropriate where particular issues require individualized consideration.
> Safety Value: Some regulations have a “safety valve” allowing a waiver when circumstances warrant individualized consideration
> Modern Approach: Cases imply that grids are appropriate ONLY if there is a safety valve whereby special cases can be argued. But this is NOT absolutely required, maybe in some circumstances. [3]
> Grids—Precise!: Grids can be used ONLY if claimant precisely meets the requirements.
* E.g. in SSA context, if you have non-exertional impairments (noise, dust, etc, rather than strength), you can NOT rely on the grids b/c they will NEVER match the claimant precisely.
SSRS AND OTHER NONLEGISLATIVE GUIDANCE
> Status: SSRs are NOT regulations and do NOT follow § 553 procedures. Although best understood as policy statements under the exception in § 553(b)(B), they are nevertheless BINDING on SSA.
> Relation to Non-Legislative Rules: Sykes and Heckler suggest allowing reliance on nonlegislative rules, but allowing the introduction of evidence to challenge the rule in the context of the adjudication
* Legislative rules cannot be challenged that way. Explored further in Ch. 6.
OVERRELIANCE ON STEP 3
> ALJs like to stay “on the grids” and rely on listings at Step 3
* Sullivan: when determining if kids were disabled, SSA stopped at Step 3 because steps 4 and 5 were inapplicable, as kids do not work
* Ct held at step 1 of Chevron that the clear statutory language required the SSA to use the same disability standard for kids as adults.
* ALJ approach was denying benefits to many kids who met the statutory definition of “disabled.”
* Heckler: SSA had clandestine policy of declaring that claimants whose mental impairments did not meet or exceed listings at stop 3 were conclusively presumed able to perform unskilled jobs and were thus not disabled
* Ct held that this was illegal
NONACQUIESCENCE
> SSA adopted nonacquiesence policy where it refused to apply judicial decisions invalidating policies or regs to other cases, even in the same juris, so each and every applicant had to take the same issue through the entire system, and some applicants can’t hang that long
> Legality of nonacquiescence never fully resolved; SSA eventually abandoned the policy
Sykes, p. 3 (shoulder + eye injuries)
* reliance on grids not appropriate bc grids do not take into account non-exertional factors
* non-exertional factors: environmental restrictions on ability to perform work, etc.
* Levy reads Sykes as saying that official notice of SSR is needed; however, the ct in Allen stopped short of requiring official notice of SSRs
* Sometimes grids require extra evidence, sometimes they don’t
Allen, p. 11 (mental impairments)
* ALJ’s finding: claimant could perform unskilled work so not disabled under the grids
* ALJ relied on SSR 85-15; Ct held ALJ misapplied the SSR
* Ct implied that ALJ needed to give notice that he was going to rely on the SSR; said will give less deference if don’t give notice. Differs from Sykes in that ct stopped short of saying needed notice for the SSRs.
5.3: DUE PROCESS AND THE PROBLEMS OF MASS JUSTICE—Property & Liberty Interests
Focus of 5.3: Extent to which DP requires procedural safeguards to protect the interests of those who seek or receive government benefits.
* Agencies may seek to limit the procedural formalities of hearings.
* Rule: Formal APA procedures under §§ 554, 556, & 557 ordinarily sufficient to satisfy DP, but procedural decisions or rulings made in the course of such hearings may be challenged as a violation of DP.
* Another Potential Issue: OS. May be more or less formal and may or may not satisfy DP.
GENERAL BACKGROUND—DP & RULE OF LAW
* Due Process Clause of 5th & 14th Amendments. Bars the federal government from depriving any person of “life, liberty, or property, w/o DP of law.”
o Requires, at a minimum: Notice and Opportunity to be heard by an unbiased decision-maker.
o Issue: In the context of denial or termination of gov’t benefits, as elsewhere, the gov’t may violate DP by failing to provide those affected w/ procedures demanded by the Constitution.
o Focus Here is on procedural DP; not substantive.
HAS DP BEEN VIOLATED? 2 STEPS
* Setting: Assertions by those claiming wrongful denial or termination of government benefits in violation of their DP rights must meet 2 steps:
* 1. Must show an interest protected by the DP Clause that you’ve been deprived of;
> i.e., Does the person have a claim to liberty or property interests?
* [Life interest usually not triggered in admin law]
* 2. Assuming #1, whether you received adequate procedure to protect the interest?
> i.e., Was the process provided by the gov’t sufficient to provide full and fair opportunity to protect that interest that the Due Process Clause requires?
STEP 1: CLAIM TO LIBERTY OR PROPERTY INTERESTS?
RULE: Unless the claimant has a liberty or property interest at stake [in the government benefit, etc], the DP Clause does NOT apply.
* Note: Even if DP applies, the gov’t can still deprive the interest—it just has to follow proper procedure
> Historical/Conventional Approach
* Distinguish rights from privileges. Mere privileges were NOT protected by DP.
* Rights: private property, contracts, “privately created interests”
* Privileges: “Something from the government”, licenses, benefits, jobs --> “mere privilege”
> The DP “Revolution” – Goldberg
* SCOTUS rejected the right-privilege distinction w/ respect to “property” rights.
* Held that financial aid was a property interest protected by DP.
* Thus, treated benefits as a property right. Thus, you get a hearing before terminating benefits.
* “Relevant constitutional restraints apply as much to the withdrawal of public assistance benefits as to disqualification for unemployment compensation, or to denial of a tax exemption, or to discharge from public employment.”
* Reasoning was murky
> Modern Approach—“Legitimate Claim of Entitlement” – Roth [3]
* General Rule: A person must establish that he has been deprived of a “protected interest” in order to claim the protections of DP. [Here, we discuss property interests as protected interests. Liberty interests as protected interests in the related material.]
* Property Interest Rule: to have a property interest in a benefit, a person must have a “legitimate clam of entitlement to it.”
* Roth held an untenured professor’s annual contract was not a property interest protected by due process, nor was his interest in continued employment.
* Language: “To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.”
* Property interests are not created by the Constitution; instead they are “created and their dimensions defined by existing rules or understandings that stem from an independent source such as state law”
* So Congress or state leg can preclude DP analysis by declining to create entitlement to a gov’t benefit
* Even if benefit is really important to holder or gov’t has acted arbitrarily.
* Bottom Line: B/c something in the law must give you a legal entitlement, point to the law where it entitles you to the property [an external source]
* Easy for state regulations, etc: find the statute or law.
* Harder for others, e.g. law school: go to the catalog or Honor Code.
* Or employees, go to Collective Bargaining agreement, employee handbook, etc.
* Can be implied from negative inferences. E.g. Honor Code lists circumstances where you can be kicked out…so if you don’t violate…you have an entitlement claim.
Three Main Categories that will trigger property right protections (DP) --> “New Property”
* Benefits: e.g. food stamps or welfare --> once you meet the requirements --> you’re entitled.
* See Flatford below for more on “entitlement” to benefits and employment
* Employment/Govt Job: Only if you’re legally entitled to continue (e.g. tenure) --> you’re entitled
* Primarily, are there removal limitations (entitled) or merely at-will (not entitled)
* Licenses: Once you earn it, you’re entitled as a property right.
* E.g. passing the bar, construction permit, driver’s license
STEP 2: PROCESS DUE: WAS THE PROCESS SUFFICIENT UNDER THE DUE PROCESS CLAUSE?
> RULE: Once a court has determined that a litigant has been deprived of a property or liberty interest so as to trigger the application of DP Clause, it must decide whether the procedures the agency used were sufficient. See Mathews!
> Bottom-Line: Parties won’t challenge that the APA violates DP. Rather, challenge a specific procedure on DP.
> High-water mark – Goldberg. “Although minimum procedural safeguards were due, they must be held at a meaningful time and in a meaningful manner and timely and adequate notice must be given which details the reasons for the proposed termination, and the recipient must have opportunity to confront adverse witnesses and present arguments and evidence, and must be allowed to retain an attorney.
> Subsequent Flexible (Lower) Standard. Court has permitted deviations from the adversary model of civil litigation to satisfy DP.
* E.g. Richardson: ALJ can have “3-hat role” and take on responsibilities of legal counsel for both sides as well as deciding the case.
> “Some Kind of Hearing” – famous article by Judge Friendly leading to landmark decision in Mathews.
* Every hearing need NOT resemble a judicial hearing. Can vary.
> Modern Standard. Mathews v. Eldridge [5] (Landmark Case). [More in unit 5.5].
* Foundation: DP is flexible and calls for such procedural protections as the particular situation demands. [7].
* Rule: To determine whether the administrative procedures provided are adequate requires analysis of the governmental and private interests that are affected. More precisely, the identification of the specific dictates of DP generally requires consideration of 3 distinct factors: [7]
* (1) Importance of the Interest
* The loss that’s suffered.
* (2) Risk of Error / Probable Value of Increased or Substite Procedures
* Must convince the court that additional procedures are needed to obtain more accurate results.
* (3) Cost of Procedures (Gov’t Interest)
* Fiscial and administrative burdens of new procedures
* Bottom-Line Formula: [Levy: This is an illusion. Judge can plug in any value to achieve ends sought]
* (Importance of Interest) x (Increased Accuracy) > or < (Cost of Additional Procedures)
FORMULA AS APPLIED IN GOLDBERG & MATHEWS
Case
Importance of Interest
Increased Accuracy
Cost of Procedures
Goldberg
Great: “brutal need”
Significant: disputed facts
Small: minimized
Mathews
Less: Not need based
None: neutral experts
Great: Less $ for benefits
PROCESS DUE—INCREASING DISTINCTIONS: JUDICIAL “ADVERSARIAL” HEARING V. ADMIN HEARING
Traditional Hearing
Some Kind of Hearing
Oral hearing
Opportunity to respond
Present evidence; Call witnesses basically unlimited
Oral testimony limited; Limited scope
Know evidence; Cross-X witnesses
Hearsay admissible; Cross may be limited
Right to counsel
May be denied. Period.
Decision on the record
Not absolute
Application v. Termination. Flatford.
* Issue: Whether an applicant, as opposed to someone who already had job, has a property interest?
* Property is the interest you have in something you’ve already acquired.
* Roth: You don’t have a property interest in a job when you’re merely applying.
* Even if you’re qualified --> No guarantee you’ll get the job.
> Not so w/ benefits: If you qualify --> You get them.
> Roth seems to say, if taken literally, you have NO interest in potential benefits.
* Still left open by SCOTUS.
* Right to Cross-X or Subpoena. applying the 3 factors from Mathews, ct held that applicants for social security disability benefits had no absolute right to subpoena or cross-examine witnesses; instead, interrogatories would suffice.
> Hearing components
* Traditional hearing: oral hearing, present evidence, call witnesses, know evidence, cross-x witnesses, right to counsel, decision on the record
* Some kind of hearing: opportunity to respond, oral testimony limited scope, hearsay admissible, cross-x may be limited, right to counsel may be denied, decision on the record not absolute
LIBERTY INTERESTS
> Extend beyond freedom from incarceration
> Specific Types
* Freedom of Movement
* E.g. sexual predator can’t live in school zone
* Bodily Integrity
* E.g. unwanted medical treatment, punishment
* Pursuit of a Calling
* Overlaps “jobs,” e.g., barred from practicing law
* Licenses protected both as property and liberty interest
* Public Education
* Expelled/suspended from school
* Fundamental Rights
* Free speech, press, right to marry, parental rights
* Reputation Plus [i.e. reputation + legal disability]
* E.g. habitual drunkard. Before the State labels you something.
* But LEO flyer okay: shoplifter to all stores.
* Distinction: Drunkard couldn’t buy alcohol. Shoplifter could still enter and buy.
* Bottom-Line: Reputation PLUS some legal impediment is a liberty interest.
> Includes the right to contract, to engage in the common occupations of life, to acquire useful knowledge, to marry, to establish a home, to bring up children, etc.
> Examples
* Constantineau: Statute allowing police to post notices declaring a person a “habitual drunkard” without allowing the person a chance to challenge the characterization overturned
* Stigma affected person’s liberty interest
* Goss: suspension of public school students for alleged misconduct overturned bc students deprived of liberty interest by potentially damaging their standing with fellow students and teachers and interfering with opportunities for higher education and employment
* But see Paul v. Davis, where Court denied the due process concerns were raised when police circulated names and photos of “active shoplifters” to merchants without giving those persons a chance to contest they were shoplifters
THE REQUIREMENT OF A NEUTRAL DECISION-MAKER
> Presumption: Adjudicators (ALJs)—honest and integrity in service.
* Thus, deciding case and representing the agency’s interests --> AOK.
> Bias. Party claiming bias of decision-maker may rebut the presumption of the decision-maker’s honesty and integrity by showing that the decision-maker:
* Has a pecuniary interest in the outcome
* Has been the target of personal abuse or criticism from the party before him or her
* Has some other conflict of interest
> Example
* Molloy, No DP violation even though ALJ’s statements clearly indicated his impatience at the pace of the hearing and his predisposition regarding the issue of whether the claimant’s alcoholism was a contributing factor to her disability
5.5: SOME KIND OF HEARING
MATHEWS FORMULA FOR DETERMINING IF A GIVEN PROCEDURAL SAFEGUARD IS REQUIRED BY DUE PROCESS:
> (importance of interest) x (increased accuracy) >/ < (cost of additional procedures)
1. IMPORTANCE OF THE INTEREST
* Rule: the more important a property or liberty interest is, the greater the loss suffered by a person who is wrongfully deprived of it and, consequently, the greater the justification there is for procedural safeguards
* Focus: importance of interest turns on the impact the deprivation will have on the affected person, NOT the monetary value
* Hierarchy:
* Less Important: Disability insurance benefits (Mathews) & Employment
* Both of these have alternate sources available, despite the negative impact. Not need-based.
* More Important: Welfare benefits (Goldberg) & Basic Utilities (heat & water)
* “Brutal need.” “Margins of existence.”
* Even More Important: Personal rights & Parental rights
* Court has required more procedures.
2. INCREASED ACCURACY:
* Rule: the importance of the interest is multiplied by the risk of error or the increased accuracy from additional procedures
* Focus on the particular procedure the party claims entitlement to.
* Remember courts are increasingly skeptical to the value of additional procedures providing additional accuracy.
* This if you’re challenging: Show SPECIFICALLY how a new procedure would have CHANGED the outcome.
* “Instrumental Value of Procedures”. Value of procedures in getting accurate info.
* Bottom-Line: If increased procedures don’t improve accuracy, there’s little need for them.
* essentially “discounts” the cost of erroneous deprivation
* so even when the importance of the interest is high, the formula does not require additional procedures if they will not reduce the risk of erroneous deprivations
* criticisms of second factor: doesn’t take into account “dignitary” and “participatory” values
* Walters v. National Ass’n of Radiation Survivors, Ct upheld statute limiting the amount attorneys representing veterans seeking benefits to $10 bc veterans represented by legal counsel did not enjoy a significantly higher success rate (19-20% v. 16%) than those represented by service organizations.
* Hence, no increased accuracy and this is NOT supposed to be adversarial proceeding anyway
* Levy: the success rate actually translates into a 25% increase in the likelihood of success
3. COST OF PROCEDURES
* Attitude Change: Courts used to like procedures. NOT anymore.
* Nature of Programs (e.g. Education or Veteran’s benefits)
* Cost isn’t just money value. Requiring more procedures or imposing adversarial proceedings on school’s disciplinary process would undermine the educational nature
* Mathews focuses on the substantial costs of pre-termination hearings and the cost of continuing benefits prior to those hearings
4. PARTICULAR PROCEDURAL REQUIREMENTS
> NOTICE [5 & 16] Also see Gonzales (apply both Mathews & Mullane)
* Cts often look to Mullane test to determine if notice was adequate:
* Rule: Notice must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”
* But you can also look to the Mathews test.
* Notice must not only be deficient; must also show detrimental reliance
* No notice of right to appeal may also be claimable
* Bottom-Line: Did the party have an opportunity to effectively object and prepare to protect interests at the hearing?
* Post-Hearing Notice of Appeal. Similar. Gonzales.
> Hearing Rights [5 & 17]. Also see Hepp (accused examiner of bias and right to cross-x). Notes [47].
* Timing of the hearing
* Right to be represented by counsel
* Gov’t counsel for indigents?
* Limits on counsel at litigants’ own expense?
* Burden of Proof
* Use “clear and convincing evidence” instead of “preponderance of evidence” for a particularly important interest?
* Right to present evidence
* Right to cross-x witnesses
* Particularly the use of subpoenas to call medical consultants as witnesses to cross-x them about adverse written reports
* SSA has held that medical consultants can only be subpoenaed when necessary for fundamental fairness and to obtain evidence that could not be obtained by interrogatories or other means
> Decisions involving hearing issues
* Ct found violation of due process when ct relied on med exam done after hearing with no opp to cross-x
* Ct found violation when ct relied on post-hearing vocational expert
* Ct found violation when ct refused to reschedule hearing to allow claimant to testify when good cause for rescheduling found
* But no violation when prison inmate given only a telephone hearing
*
> Appeal Rights and Requirements: Gonzalez
PROCEDURAL DEFECTS, HARMLESS ERROR, AND DISPUTED ISSUES—ADMIN SJ
> Does administrative summary judgment violate due process?
* If no facts in dispute, no
* If harmless error, probably no.
* “A hearing is held to facilitate the accurate determination of facts, particularly judicial facts for which witness testimony and cross-x are important.
* Cases
> Crux of these cases is the due process procedures used or omitted and whether the outcome would have been different had they not been used or omitted.
> Gonzalez, p. 5
* Notice issue: post-hearing notice of appeal
* Standard SSA notice unconstitutional: standard was to just say SSA didn’t believe claimant’s claim of the severity of the pain and that evidence didn’t support degree of pain.
> Hepp, p. 10
* Pain issue/failure to object to consulting examiner
* Ct said bc didn’t object to consulting examiner before the exam, so waived right to object to consulting examiner after the exam.
* Levy is concerned about this; seems odd that you would have to look up your consulting examiner’s record and make any objections before you meet him
* Telephone cross-x OK per Mathews
CH. 6 INFORMAL ACTION
TIP OF THE ICEBERG. Thus far, only covered the most formal actions under APA.
* Those are most visible and w/ the most impact. But like the tip of iceberg --> very small proportion.
Range of Informal Action (IRS)—Most to Least Formal
* Regulations per Specific Grants of Authority (§ 553—Full N&C)
o Require [procedures ?] like EPA requirements studied earlier.
o Language: “The IRS shall promulgate rules of …(something very specific).”
* Regulations per General Grants of Authority (Voluntary § 553)
o IRS position: § 553 is not required to promulgate these, but we’ll follow anyway.
o Scholars: IRS doesn’t actually comply w/ 553 in 50% of cases, although it claims to.
o Language: “The IRS can make all other rules necessary to …”
* Revenue Rulings & Procedures
o NO Note & Comment
* Private Letter Rulings*
* Determination Letters*
o More specific and direct than private letter rulings. Usually reserved for easy cases.
* Technical Advice Memorandum (TAM)*
* Oral Advice
o E.g. phone lines during tax season.
* * These 3 (PLR, DL, & TAM) are NOT binding or even precedential outside the specific case
o Apply only to the party that requests it. Perhaps shows a likely outcome.
IRS’ INFORMAL ACTIONS
> REGULATIONS: issued by the Secretary of the Treasury to enforce the Internal Revenue Code.
* Legislative Regulations. Those made pursuant to specific grants of authority.
* IRS typically follows N&C, tho it claims it doesn’t have to.
* Interpretative Regulations. Those made pursuant to general grants of authority.
* Certainly triggers § 553 procedures.
* Temporary Regulations. Those made if immediate interpretation of a new statute is necessary.
* Effective only until superseded by final regulations.
* IRS claims these are exempt from N&C procedures. [2].
* Procedural Regulations. Compiled in IRS Statement of Procedural Rules.
* IRS does NOT follow § 553 procedures.
> GENERAL ADVICE: Other actions to interpret the Internal Revenue Code.
* Revenue Rulings. IRS’s interpretation of the tax code as it applies to a particular set of facts.
* Promotes uniform application of tax laws; voluntary compliance by taxpayers.
* Often relied on when structuring transactions.
* May be revoked by subsequent legislation, court decisions, or Treasury Dep’t regulations.
* Revenue Procedures. Official statements of procedure.
* Analogous to Revenue Rulings, except that they provide guidance relating to procedural matters.
> Taxpayer-Specific Advice: No precedential value, except to the person it’s issued to.
* (Private) Letter Ruling (PLR): statement issued to the taxpayer by the national headquarters of the IRS interpreting and applying tax code to specific set of facts
* Determination Letter: issued by the directors of the IRS Operating Divisions and applying clearly established rules from IRC, IRS regs, and judicial decisions to a specific set of facts
* Technical Advice Memorandum (TAM): express the IRS’s view on how the rules from the IRC, IRS regs, or judicial precedents should apply to a specific fact pattern
* Force: These sources of advice carry no precedential value, but are published to help guide others
6.2: NONLEGISLATIVE RULES AND THEIR LIMITS
GENERAL BACKGROUND
* Remember: APA exempts from N&C requirements, the promulgation of informal rules contained in § 553 that qualify as “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice, unless notice or hearing is required by statute. § 553(b)(A).
* Known as NL Rules --> The group of agency actions covered by this exemption.
NATURE AND KINDS OF NONLEGISLATIVE RULES
* 3 Kinds of NL Rules. § 553(b)(A) exempts 3 kinds of agency action from the informal, N&C RM requirements that apply to Legislative Rules:
* 1. Interpretative Rules: Statement issued by an agency to advise the public of the agency’s construction of the statutes and rules which it administers
* 2. Policy Statements: Statements issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power
* 3. Rules of Agency Practice and Procedure: Rules that govern internal agency operations and organization
* Bottom-Line: § 553 does NOT apply to these NL rules.
* Rationale: These kinds of rules do NOT affect the public in ways that make it appropriate to require agencies to provide a right to participate in their adoption.
* Nature of NL Rules
* Essential difference: NL rules are NOT normally binding (either on agency, regulated entity, or other interested persons)
* If not binding, why call a rule? B/c it meets APA definition --> Has general or particular applicability and future effect.
* Procedural Difference: Exempt from N&C rulemaking requirements of § 553(b) and (c).
* Not entirely free from procedural restraints however:
* Must publish NL rules in the Federal Register
* May NOT enforce an unpublished rule against a party unless it had actual notice
* Must also make available statements & interpretations which it has adopted but not published in Federal Register, as well as admin staff manuals
DISTINGUISHING NL RULES FROM LEGISLATIVE RULES
* Common Scenario: Whether a rule has been properly characterized as NL typically arises when a party challenges an agency rule that was adopted w/o using N&C procedures and the agency claims that an exemption found in §553(b)(A) applies.
* E.g. Cabais v. Egger
* Common Scenario: An agency or party may argue that it’s NOT bound by a rule b/c the rule is NL.
* E.g. Estate of Shapiro
> Solutions:
* Easy --> No authority for Legislative Rules. If agency’s OS does NOT delegate it the authority to adopt legislative rules, the rule is necessarily NL. Estate of Shapiro.
* More Often --> Apply Distinct Test for Each Type of NL Rule (below).
* But note historical approaches on [5].
* Substantive v. Procedural test --> Now generally rejected.
* Substantial Impact test --> Not very helpful and no longer favored.
* Intent test --> Also not very helpful
1. INTERPRETIVE RULES TEST (NL or Legislative Rule?) [6]
* Setting: An agency can interpret a statute that it administers through the issuance of either a legislative rule or an interpretative rule.
o Interpretative Rules = Quicker. B/c interpretative rules are NOT subject to N&C requirements, they can be issued much more quickly than legislative rules.
o Effect. Although interpretative rules are not legally binding, if it reflects a valid interpretation, parties are bound by the underlying statute or regulation, as interpreted in the rule.
* New Duty Test
o If rule creates a new duty on affect parties --> problem. If existing duty --> no problem.
o “Interpretative rules” merely explain, but do not add to, the substantive law that already exists in the form of a statute or legislative rule; whereas
o “Legislative rules” creates rights, impose obligations, or effect a change in existing law pursuant to authority delegated by Congress.
* Focus on Interpretative Reasoning.
o Setting: Despite test above, it’s not always easy to determine if a duty is imposed by the rule or underlying statute or regulation, so it may be useful to focus on the reasoning advanced by the agency to support the rule.
o General Rule 1: If looking at statutory language --> More likely an interpretative rule.
* If an agency’s reasoning in support of a rule involves interpretation of the relevant statute, using traditional tools of statutory construction, the rule is likely to be regarded as interpretative.
o General Rule 2: If looking at policy considerations --> More likely a legislative rule.
* If an agency’s reasoning in support of a rule is policy-based, and adds content NOT already present on the face of the statute, it’s likely to be regarded as a legislative rule.
o D.C. Circuit Factors Test: If the purported interpretative rule has “legal effect,” the rule is a legislative, NOT interpretative, rule. Legal effect is established if ANY of the following 4 questions are answered affirmatively: American Mining Cong., [7]
* 1. Whether in the absence of the rule there would not be an adequate legislative basis for enforcement action or other agency action to confer benefits or ensure the performance of duties?
* 2. Whether the agency has published the rule in the Code of Federal Regulations?
* 3. Whether the agency has explicitly invoked its general legislative authority?
* 4. Whether the rule effectively amends a prior legislative rule?
2. POLICY STATEMENTS TEST (NL or Legislative Rule?) [7]
* Setting: Like interpretative rules, policy statements are NOT binding on either the public or the agency.
o “An agency policy statement does not seek to impose or elaborate or interpret a legal norm. It merely represents an agency position w/ respect to how it will treat—typically enforce—the governing legal norm.”
* Binding/Nonbinding Test: Courts focus on whether a rule is binding on the parties or the agency in order to distinguish policy statements from legislative rules.
o General Rule 1: “Can’t have your cake & eat it too.” If it’s nonbinding, it’s nonbinding (a policy statement)
o General Rule 2: If the rule is binding, it’s a legislative rule.
* Focus on Facial and/or Application
o Rule: An agency pronouncement will be considered binding if it either:
* 1. Appears binding on its face; or
* 2. Is applied by the agency in a way that indicates it is binding.
3. RULES OF AGENCY PRACTICE & PROCEDURE TEST (NL or Legislative Rule?) [8]
* Setting: Substance v. Procedure (remember Erie doctrine). Primary v. Secondary conduct.
* Two likely scenarios:
o 1. Agency wants to impose procedure against party.
* Party will argue that the procedures required by § 553 haven’t been followed.
* Thus, if it meets any of the § 553(b) exceptions, then a violation is hard to prove b/c N&C need not be followed.
o 2. Agency tries to avoid its own rule; Party wants it enforced.
* Agency claims the procedure is non-binding; merely interpretative. Party argues the rule is binding—must be followed.
* Purpose: To ensure that agencies retain latitude in organizing internal operations.
o Interests promoted by public participation in RM are outweighed by the countervailing considerations of effectiveness, efficiency, expedition, and reduction in expense.
* Easy Cases: Statement of Procedural Rules that address internal IRS organization & procedural matters.
o Unfortunately, this obvious set of rules is very limited in scope.
* Most Cases. No clear test. Difficult to distinguish b/w substantive and procedural rules.
o Among the Various Tests:
* Encoded Value Judgment Test (Bowen).
* Court distanced itself from this test in JEM Broadcasting. [9].
* “Uniform Plan” Test (Chao v. Rothermel)
IMPACT OF NL RULES ON ADJUDICATION
* Setting: An agency can use a previously adopted legislative rule to resolve issues that arise in adjudications (as in unit 5.2).
* Issue: Can NL rules be used to do the same? Answer: Less clear.
o Problem: To adopt a legislative rule, the agency had to provide N&C opportunity—not so w/ NL rules.
* Shalala v. Guernsey Memorial Hosp. is an example where court permitted NL rule to resolve an issue in an adjudication. See [19] for reasoning and holding.
> Extent to which agency can rely on nonlegislative rules is unclear
* No notice and comment in promulgating
* Not binding, but can they be treated as binding in subsequent adjudications?
* Probably not—agency retains the discretion to change its position at any time
* What if a party, rather than the agency, wants to rely on the nonlegislative rule in an adjudication?
> Guernsey Memorial Hosp., hospital argued that HHS determination was invalid bc it was based on a guideline that was did not comply with 553. Ct held that the guideline was an interpretive rule, and tho not binding, it was appropriate for HHS to use it to make its determination.
JUDICIAL DEFERENCE TO NL RULES
* Setting: What standard of review applies when a litigant challenges the validity of a NL rule in court?
* Issue: Are NL entitled to deference, and if so, how much?
* Rule: It’s unclear. See [20] & Notes [51]. But most likely:
o NL Rules get Skidmore deference; NOT Chevron.
* Agency, by definition, is issuing NL rules.
* [Skidmore is applicable to most NL rules under Christensen.] [22].
o But General Regulations (after following § 553) probably get Chevron deference.
* [Chevron deference applies to most legislative rules.] [22].
> Some courts may give less than full Chevron deference to non-legislative rules
> May come down to Chevron Step 2, “reasonableness”
MINIMUM PROCEDURAL GUARANTEES & NL RULES
* Setting: Vermont Yankee ended the practice of courts imposing procedures on agencies not required by statute or agency regulations. Congress, also concerned that § 553 and OS procedures were insufficient, resorted to hybrid RM provisions to provide additional constraints on agency RM and foster agency accountability (as discussed in unit 3.6).
* Effect: Huge incentive for agencies to avoid Legislative RM (and thus § 553) altogether!
o If agencies opted for NL rules instead of Legislative rules, § 553 N&C and most hybrid procedures simply would NOT apply.
* Not really any rule here. But perhaps an incentive for agencies to opt for Legislative rules is the increased deference under Chevron rather than Skidmore deference.
* Bottom-Line: If an agency is careful to shape a NL rule then it can accomplish much of what a Legislative rule does—shape to future.
Cabais, p. 10
* Involved interpretive rule
* Agency can do almost anything if it phrases it as a procedural rule rather than a binding rule
Estate of Shapiro, p. 13
* Involved procedural rule. Primary v. secondary conduct. But secondary conduct can often regulate primary conduct also. See notes [52].
6.5: AGENCY ADVICE AND ESTOPPEL
GENERAL BACKGROUND
* Setting: Regulated entities or party relies on agency advice. Agency then seeks to alter position or the advice was bad in the first place.
* Issue: The extent to which courts will estop agency from changing their legal positions when others adversely rely on informal advice.
* Estoppel: If one party reasonably relies on another’s misrepresentation, then the latter party may be estopped from [whatever].
* Bottom-Line: If the agency changes course, a party may have 4 arguments:
1. Estoppel
2. Scienter (if a statute requires willfulness or a mental state)
3. Due Process
4. APH Argument
[None of these are easy to win. Often, you rely on agency advice at your own risk.]
AGENCY ADVICE TO TAXPAYERS
* Two Common Problems:
o Agency gives bad advice
o Agency seeks to change position, although its original advice was correct.
> IRS advises taxpayers through legislative rules, oral advice by phone, revenue rulings, PLRs, TAMs, determination letters, etc.
* IRS gives erroneous advice 10% - 20% of the time
* The less formal the situation, the more likely the advice is wrong
* IRS may also change its mind about a ruling
> Central question: What happens when the taxpayer relies on erroneous advice?
RELIANCE AND ESTOPPEL
> Estoppel Generally: the party claiming the estoppel must have reasonably relied on the other party’s conduct and changed his position for the worse.
> Estopping the government: Courts may refuse to estop the government even if all the elements of estoppel can be proven
* Very High Standard. Supreme Court has consistently rejected efforts to estop the government, tho it has left open the possibility of estoppel in an extreme case
* Parties must “turn square corners” in order to argue gov’t should be estopped
* Rationale: Rule of law. The law is binding on government officials. The legislative power belongs to the legislative branch; agency officials could effectively change the law by misrepresenting it.
* Appropriations—Money from the Treasury. Even in an extreme case, estoppel is precluded if it would require the payment of moneys to a party that are not authorized by statute.
* Rule: NO money shall be taken from the treasury except for appropriation by law (authorization by statute). If an estoppel would require payment from the treasury --> Invalid.
* OPM v. Richmond, Ct held that estoppel doctrine was precluded when claimant lost 6 months of disability benefits due to reliance on erroneous advice from an agency
* Lower court cases on estoppel are inconsistent. See [4].
* Key Factor: Did the agency invite the public to rely on rulings? See McLendon.
RELIANCE AND SCIENTER
* Setting: Even if estoppel argument fails, the taxpayer or regulated can argue a scienter defense.
> Rule: Reasonable reliance on government’s erroneous advice may negate the scienter requirement of statutes that impose liability only on those engaged in knowing or willful violations.
* Success of scienter argument depends on reasonableness of reliance and whether it was in good faith
* See Donovan, where an employer’s good faith reliance on agency advice was sufficient to establish that any statutory violations arising from the reliance were not willful
* But see DeSabato, where the court rejected delinquent taxpayers’ argument that they reasonably relied on agency advice bc they had omitted crucial facts from their conversations with the agency and therefore their reliance was not reasonable
* Argument has been used in labor law and tax contexts. See [5].
RELIANCE AND DUE PROCESS
* Fairness Concerns. Fundamental notions of fairness.
o Seems unfair to punish action that were permissible when committed.
* Relation to Retroactivity Issues
* Criminal v. Civil Penalties
o Criminal: Ex Post Facto problem
o Civil: Similar analysis. If you can’t get estoppel, argue DP—fundamentally unfair.
> PICCO, Ct held that the chemical company should have been allowed to introduce evidence concerning its reliance on the agency’s interpretation of the scope of the applicable regulation.
AUTHORITATIVE INTERPRETATIONS AND N&C RM—APH
> Rule: Under some circumstances, changes in longstanding agency interpretations must comply with the N&C requirements of 553, even though the interpretations were adopted through less formal means
* Alaska Professional Hunters [19].
* CAB gave licenses for airline pilots. Hunting guides were not “commercial pilots” and thus not required to get the licenses. CAB later decided that hunting guides needed licenses.
* Held: Can’t really do that. They’ve been doing this over 30-year period. Must change by Legislative Rule.
* Rule: To argue that changes in “authoritative interpretations” require N&C procedures, must prove 2 key elements
> Long-standing Authoritative Interpretation. Interpretation of the statute was authoritative over many years. Though it was never promulgated, it became binding, authoritative interpretation.
> Detrimental Reliance. Must show.
* Alaska Professional Hunters, the agency changed course and published a “Notice to Operators” in the Federal Register that the advise was wrong and that guides needed commercial licenses. The court held that the Notice was invalid bc the agency did not follow 553 procedures; court reasoned that once an agency “authoritatively interprets” its regulations, it can only change the interpretation by using the same process applicable to formal modification of the rule itself, ie, notice and comment rulemaking
* Rationale: entire businesses had been built up over the 30-year period; also not having formal RM deprived guides of the opportunity to argue that their operations merited special treatment
> Alaska Professional Hunters: odd case. subsequent cases consistently distinguished it.
* APH is the only case to win per Levy’s knowledge.
* Bottom Line
> You can make estoppel, scienter, DP, and Alaska Professional Hunters arguments, in that order, but all will be difficult to get
* Cases
> Estate of McClendon, p. 6
* Agency can do almost anything if it phrases it as a procedural rule rather than a binding rule
* Recognizes estoppel where agency invites the public to follow rulings.
> American Stores, p. 12
CH. 8 AVAILABILITY OF REVIEW
GENERAL BACKGROUND
* To obtain review, you must have 6 things:
o Jurisdiction.
* Must have jurisdiction to get in court.
* Subject matter jurisdiction is usually NOT a problem—usually arises under federal law.
* But might require you go to a specific court. e.g. Tax Court. Thus, limited jurisdiction.
o Cause of Action.
* Fallback if nothing else: APA §702. Usually can co-exist w/ another cause of action.
* § 702: A person suffering legal wrong b/c of agency action, or adversely affect or aggrieved by agency action w/in the meaning of a relevant statute, is entitled to judicial review thereof.
* OS can also provide basis for judicial review. Or other federal question juris. statutes.
o Reviewability. APA creates a cause for review but makes exceptions. See 8.1 for all limits.
o Standing. Among most important barriers. Can be a barrier where 3rd party is making arguments.
o Timing. Includes finality; exhaustion of other admin remedies; & ripeness of case or controversy.
o Other Doctrines. Not covered in class, but includes primary jurisdiction.
* We focus on reviewability (preclusion), standing, and timing.
8.1 PRECLUSION OF JUDICIAL REVIEW
GENERAL BACKGROUND
* APA Rule. Judicial review is generally available under § 702, with 2 exceptions:
o Statutes preclude judicial review; or
o Agency action is committed to agency discretion by law.
o However, even in applying these exceptions, there is a general presumption in favor of review.
THE PRESUMPTION OF REVIEWABILITY
* Presumption in favor of review has both constitutional and statutory dimensions.
o Constitutionally. Statutes that preclude review may violate DP or separation of powers, which under the canon of constitutional avoidance justifies construing the statute to avoid the constitutional issues.
o Statutory. APA § 702 provides review except when:
* 1. Statutes preclude review § 701(a)(1)
* Two types:
o Express exclusion. Issue is whether the case falls w/in that statute’s scope.
o Implied exclusion. Statute doesn’t expressly foreclose review, but the implication is such.
* 2. Agency action is committed to agency discretion. See bonus material. § 701(a)(2)
* Historical Approach. APA seen as having “generous review provisions” which give a presumption of reviewability unless there is “clear and convincing evidence” that the legislature intended to preclude review.
* Modern Approach. Courts have indicated that a less demanding presumption applies, such that preclusion can be implied rather than actually stated.
* Court pretends there is no difference despite clearly lower standard. Thus, easier to foreclose review.
* E.g. Block, held statute implicitly precluded bringing an action for review.
* Clear & Convincing standard (high standard) v. Fairly Discernable (more recent cases).
* Bottom-Line: Application of the statutory preclusion exception in §701(a)(1) is essentially a matter of construing the OS to determine it’s “fairly discernable” that Congress intended to foreclose review. [Either expressly or implicitly-covered next].
* To do this, courts examine OS’s language, structure, and history to determine if there is sufficient evidence of congressional intent to foreclose review.
THE SCOPE OF EXPRESS PRECLUSION PROVISION
* Setting: When a statute expressly precludes review, the statutory text provides clear evidence of the intent to foreclose review.
* Issue: Whether a specific agency action is w/in the scope of that express preclusion?
* General Approach: Courts will interpret statutes to permit review when precluding review might violate the Constitution. Narrow constructions!
o E.g. Bowen v. Michigan Academy
o Extreme case, Johnson v. Robinson
* Narrow constructions of statutes expressly precluding review are not uncommon, and at times difficult to square w/ the relevant statutory language.
* Cardinal principle: Construe statute to avoid constitutional questions.
IMPLIED PRECLUSION
* Setting: A statute that does NOT expressly preclude review may nonetheless preclude review by implication.
* Expression Unius (maxim): Express inclusion of something in a statute implies the exclusion of certain other things.
o Effect: Courts can go either way.
o Compare Abbott Labs (Refused to recognize negative and allowed review to go forward) v. Block (Court drew negative inference)
* Key Difference: Congress’s apparent intent.
TOTAL V. PARTIAL PRECLUSION
* Total: Agency action will NEVER be reviewed again. By anyone. Period.
* Partial: Party may still get review. It just has to wait and follow the right path.
CONSTITUTIONAL LIMITS ON PRECLUSION
* Spectrum. Cases suggest 3 categories of cases for which constitutionality may be at issue.
o One End—Constitutional Claims: It seems highly likely that preclusion of review of a constitutional claim would itself be unconstitutional.
o Middle Ground—Ultra Vires Manner: Agency’s compliance w/ statutory provisions it administers.
* Notwithstanding McAnnulty & Leedom, which support the conclusion that preclusion of such issues would be unconstitutional, other cases are less clear.
* Constitutionality can also be affected by the nature of the decision.
* Some decisions, like whether to prosecute, are seen as inherently a matter of executive discretion.
* Likewise, perceived necessity of review may be affected by the underlying right at issue.
o Other End—Run-of-the-Mill Decisions. It seems highly likely that Congress may preclude review of run-of-the-mill decisions finding facts and applying legal standards to them.
* Other Doctrines. Constitutionality of preclusion is further complicated by the interplay of distinct yet overlapping doctrines, including DP, limits on delegation of judicial power to agencies, and the authority of Congress to limit jurisdiction under Art. III, § 2, cl. 2.
o i.e. Might violate DP (Rule of Law) or Art. III (Separation of Power) at a minimum.
* Bottom-Line: Court has never squarely held a statute unconstitutional for precluding review, but general consensus is that it could. Thus, most outlandish efforts to construe statutes to permit review.
PRECLUSION & CAUSE OF ACTION ISSUES
* Analysis of preclusion may require careful attention to the cause of action at issue.
o E.g. a cause of action under general federal question jurisdiction.
Natural Res. Defense Council [5]. Scope of express exclusion.
United Food Workers [11]. Implied preclusion.
COMMITTED TO AGENCY DISCRETION
* Premise: Some decisions are sufficiently discretionary as to be exempt from review under 701(a)(2), which is an exception to the general rule.
o This exception is in tension with 706(2)(A), which authorizes a reviewing court to set aside agency action found to be an “abuse of discretion.”
* Focus. Both the statutory provision that precludes review and “committed to agency discretion” exceptions to reviewability turn on congressional intent, but the focus of the analysis is different.
o While statutory preclusion exception looks to the judicial review provisions of the OS; the
o Committed to Agency Discretion exception looks to whether the OS’s substantive standards reflect unreviewable agency discretion.
* Presumption of reviewability still applies
* This exception has been applied narrowly
o Applies in those “rare instances” when statute are drawn in such broad terms that in a given case there is no law to apply. Overton Park, Heckler.
* i.e. it’s so open-ended that it may reflect intention that agency have unreviewable discretion.
* See Webster, where the Director of the CIA is given the power to terminate employees when he “deems such termination necessary or advisable in the interests of the US”
* Language: “deems….advisable” or “in his discretion” dead giveaway it’s discretionary and thus not reviewable. Lester v. Doe
* But employee’s constitutional claims still reviewable
* And does national security context make a difference? May indicate more discretion.
* Reverse Presumption in Prosecutorial Decisions (Inaction)
o Rule: Presumption of review is reversed in cases involving the agency’s prosecutorial discretion
o B/c such decisions involve matters of agency priorities and resource allocation; not taking enforcement action does not involve the exercise of coercive authority against a private party; and agency enforcement actions are similar to prosecutorial decisions that historically have been a matter of unreviewable discretion within the executive branch
o To rebut the presumption of nonreviewability, a party must point to statutory language that effectively mandates prosecution. Language: “Agency shall …”
o Reverse presumption does NOT apply to rulemaking.
8.4 STANDING
GENERAL BACKGROUND
* Setting: Even if judicial review is not precluded by the APA or agency’s OS, a court does NOT have jurisdiction to address the merits of a challenge to agency action if the plaintiff lacks standing to sue.
* Standing doctrine focuses on the identity of the plaintiff rather than nature of the issues the P raises.
o Is the P an appropriate person to bring the lawsuit in question?
* Widespread perception that standing doctrine is manipulated, depending on whether courts wish to hear the merits of a case.
INTRO TO STANDING
* Essential Concept: A party must have a “personal stake” in the outcome of the lawsuit to have standing.
* Two Parts: Standing doctrine has both constitutional and prudential (statutory) components.
o Constitutional
* Derives primarily from Art. III, § 2.
* “Case or Controversy” Requirement: Judicial power extends only to concrete disputes b/w adverse parties that can be resolved through the application of law.
* Embraces a # of related doctrines: Rule against advisory opinions; Requirement of standing; Ripeness; Mootness
* “Irreducible Constitutional Minimum” for Standing has 3 elements: Lujan v. Defenders
* 1. Injury in Fact. Plaintiff must have suffered injury in fact. Not necessarily a legal right, but concrete.
o “An invasion of a legally protected interest which is:
* A. Concrete and particularized; and
* B. Actual or imminent; NOT conjectural or hypothetical.”
* 2. Causal Connection. b/w the injury and the conduct complained of.
o “Fairly traceable to the challenged action of the D; NOT the result of independent action of some 3rd party not before the court.”
* 3. Likely Redressed. Must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
* SCOTUS: Personal stake and the 3 elements above essentially seek the same thing. [2].
o Prudential
* Derived from judicial self-restraint and statutory provisions.
* Judge-made requirements. Grow out of same principles, but don’t rest on Constitution. Judge can create own rules—can be altered by Congress.
* Limits Include (list not exhaustive; limits still being defined):
* General prohibition on a litigant’s raising another person’s legal rights;
* Rule barring adjudication of generalized grievances more appropriately addressed in the representative branches; and
* Requirement that a P’s complaint fall w/in the zone of interests protected by the law invoked.
INJURY IN FACT (CONSTITUTIONAL ELEMENT #1)
* Rule: Injury must be “distinct and palpable” and “concrete and particularized,” AND injury must be actual or imminent” rather than conjectural or hypothetical. Defenders of Wildlife.
* KEY ELEMENT #1. Distinct, Palpable, Concrete, Particularized. 4 Categories Addressed by Courts:
o Ideological Injury --> Insufficient.
* e.g. “We’re committed to the environment so we should have standing.”
* Sierra Club held: Nothing concrete. No injury in fact.
* But dicta: If some of your members hiked in area, impaired: Good enough.
o Recreational & Aesthetic --> Good.
* Standard method for environmental groups to get standing. Allege that members’ use and enjoyment of areas is impaired. Sierra Club.
o (Purely) Procedural Injury --> Insufficient [Independent of interest in the outcome].
* Right to have agencies follow the procedures required by law generally insufficient.
* Rule: Denial of procedural rights generally confers standing ONLY if the P would have standing to challenge the substantive outcome. NOT merely abstract participatory opportunities. Luhan
o Lack of Information Injury --> Might work.
* Political Rights/Election Cases. Entitlement to info --> injury w/o it. Akins
* Could work in other contexts: FDA food labeling, e.g.
* KEY ELEMENT #2. Actual or Imminent.
o P Injured. Must be among the injury suffered.
* If hasn’t already occurred --> must be virtually certain to occur.
o NOT Speculative: Geographic and Temporal Nexus
* Geographic: e.g. wilderness area. Not just in the area, but right there.
* Temporal: Not just some day in the future, but concrete plans/dates to be there.
* Near-term. Tree falling in the forest; Does it make a sound? Tree says “shit!”
* Bottom Line: Must be experienced directly, and soon, by P.
CAUSATION & REDRESSABILITY (CONSTITUTIONAL ELEMENTS #2 & #3)
* Rule: To satisfy constitutional requirements of standing, an injury in fact must also be caused by the challenged agency action redressable by a favorable decision.
* Causation: Deals w/ the connection b/w the D’s conduct and the alleged injury.
o Rule: To establish causation, a P ordinarily must show that an alleged injury is “fairly traceable” to the challenged agency action.
* Similar to proximate cause in torts.
* Redressability: Implicates the connection b/w the alleged injury and judicial relief requested.
* General Principle: Neither is likely to be a problem if a person or business challenges the application of a regulatory program to it.
* Most Likely Scenario: Indirect Injury—Unlawful regulation (or lack of regulation) of someone else
o Direct Injury: Agency commands or denies permission that injures that party. No issue usually.
o Indirect Injury: Agency regulates “loosely” (grants permit/nonintervention) to 3rd party. Then the 3rd party competes/develops, causing injury to the party. Intervening party problem.
* Rule: When P is not himself the object of the government action or inaction he challenges, standing is not precluded, but it’s ordinarily “substantially more difficult” to establish. Defenders of Wildlife
PRUDENTIAL REQUIREMENTS
* Three requirements, most important to admin law is zone of interest test.
* Third Party Standing
o Rule: Litigants must assert their own rights, NOT the rights of 3rd parties not before the court.
o Setting: All 3 constitutional elements met (injury in fact, causation, & redressability); and P injured—but the rights belong to a 3rd party.
o Blackie the Talking Cat
* P’s put on show, charged admission. City made them get permit. P clearly injured, lost opportunity to put on show.
* P alleged that cat’s free speech rights were violated.
* “Blackie can clearly speak for himself.” Hahaha. Cat should assert his own rights, despite the owners being injured.
o Or, e.g., party is wrongly denied benefits, doc loses business. Doc can’t sue the agency.
* Generalized Grievances
o Flip side of injury in fact—not distinct & palpable. Better addressed politically.
o But contrast “widely shared injury,” which is distinct and does confer standing.
* E.g. Faulty levy in New Orleans. Injury is widely shared, but each person is injured in a distinct and palpable way.
* Zone of Interests Test—“Arguable w/in Zone of Interests” Test
o Defined. “Within the meaning [zone] of a relevant statute” --> You’re the type of person sought to be protected by the statute.
o Applies ONLY when the parties state a cause of action under the “adversely affected or aggrieved” component of § 702; NOT when parties challenging agency action have suffered “legal wrong.”
o But Congress may override the Zone of Interest Requirement by creating a broad cause of action.
* Statutory Language: “Any person” can bring suit … Bennett
o Air Couriers. Postal workers had injury in fact, and arguably causation and redressability; but statute meant to protect delivery routes—not the jobs. Thus, workers not in zone of interest.
SPECIAL STANDING RULES FOR PARTICULAR KINDS OF PLAINTIFFS OR COMPLAINTS
* Associational Standing
o Three-part test—Generally pretty easy to meet.
o Rule: An association has standing on behalf of its members when:
* 1. At least one member has standing;
* 2. The interests at stake are germane to the organizations purposes; and
* 3. Neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. Laidlaw
* State Standing
o States get more generous standing than individual (ordinary) citizens. Massachusetts v. EPA
o Not clear how far this will go. Might allow generalized grievances.
* Taxpayer Standing
o Challenge tax assessment (easy)
o Challenge use of taxes (hard)
* E.g. oppose Iraq War. Can you challenge the war based on unconstitutional use of tax dollars? Answer: ALMOST NEVER. Such taxpayer lacks direct injury to establish standing.
* One possible exception, but virtually irrelevant.
o Bottom Line: Don’t use this method to get standing—It won’t work!
Laidlaw. Fear-based injury recognized. Redressability: More penalties = More deterrence.
CAPH. Injury was NOT caused by agency’s action. It simply refused to intervene.
8.6 TIMING OF REVIEW: FINALITY, RIPENESS & EXHAUSTION
GENERAL BACKGROUND
* Purpose. Doctrines of finality, ripeness & exhaustion are interrelated requirements that serve to prevent premature judicial review.
o Premature review is undesirable b/c:
* Allowing agency action to run its course may make judicial review unnecessary;
* Intervention by courts may disrupt and delay agency’s decision-making process; and
* Judicial review will be more informed and accurate when based on a complete admin record and benefits from fully articulated views of the agency.
FINALITY
* Setting. Derived from APA § 704, which provides a right of review of “final agency action for which there is no other adequate remedy in a court.” Similar provisions typically included in OS.
* Rule: Agency action is final if:
o 1. The agency process is complete, AND
* (“Consummation of the agency’s decision-making process”)
o 2. It has legal effect. i.e. affects rights/duties/obligations immediately.
* (“rights or obligations have been determined and legal consequences flow from it.”)
* E.g. Denial of RM petition is final, but granting a RM petition is just the beginning.
* Exception: Excessive delay in responding.
o When agency delays action for so long that is has effectively refused to act, the finality requirement is met.
o Six Factors for Unreasonable Delay:
* 1. “Rule of Reason”;
* 2. Where Congress has provided a timetable or other indication of speed;
* 3. Human health & welfare delays are less tolerable than economic delays;
* 4. Effect of expediting delayed action on other agency actions of higher of competing priority;
* 5. Nature and extent of the interests prejudiced by delay;
* 6. Court need not find any impropriety lurking behind agency lassitude.
EXHAUSTION
* Rule: P must present his argument to the agency before taking it to court. “exhaust” admin remedies.
* Three Components:
o 1. Prevents a P from circumventing the admin process
* “Pre-Agency Action.” Don’t mess w/ agency at all. Go straight to court.
* “Statute doesn’t apply to me at all.”
o 2. Requires P to pursue admin appeals.
* “Start agency action—Don’t want to finish it.”
* E.g. Get state DDS, don’t pursue further.
o 3. Parties must raise arguments at the agency level to preserve them for judicial review.
* “Gone thru entire admin process; but try to raise new argument.”
* More like a waiver argument. Object at the time or don’t raise later.
* Exhaustion (Recognized) Exceptions. Party need NOT exhaust remedies if: McCarthy
o 1. P will suffer irreparable, immediate harm, such that P could never be made whole;
o 2. Agency lacks authority or competence to grant requested relief;
* Most commonly, arguing that (OS) statute is unconstitutional.
o 3. Admin body is biased or has predetermined the issue before it.
* Waste of time to go to agency—it’s a forgone conclusion.
* Very hard to win.
* Internal Appeals—APA Darby
o SCOTUS interpreted § 704 to define the scope of internal appeals
o Rule: Must only exhaust internal appeals when:
* 1. Agency’s OS requires it (like SSA); and
* 2. Agency requires exhaustion by rule and stays the operation of its decision pending the completion of the internal appeal.
* Can’t be forced to comply until after the appeal. “stays the effect”
RIPENESS
* Setting: Grows out of “case or controversy” requirements of Art. III.
* Pre-Enforcement Review: Happens after an agency makes a rule but before it’s enforced against a party.
o Often but not always possible.
* Test in Abbott Labs (usually cited)
o “Fitness for review” weighed against “hardship to the parties by withholding court consideration”
o Tends to be Fit when decision involves legal aspects only.
o Tends to be Unfit for review when it must be applied to specific facts.
* More Recent Ohio Forestry Test [Tends to focus more on how it interferes w/ agency.
o Must consider 3 Factors:
* 1. Whether delayed review would cause hardship to the plaintiffs;
* 2. Whether judicial intervention would inappropriately interfere w/ further admin action;
* 3. Whether the courts would benefit from further factual development of the issues presented.
Is exhaustion a jurisdictional issue?
- Matters because
o Can’t waive, it’s mandatory, so it depends.
o Courts not able to make exceptions to jurisdictional requirements.
* So irreparable harm, agency lacks power, futility exceptions would be unavailable
- Term jurisdictional
o It’s not unless the statute explicitly says so
- Finality
o Agency process complete
o Direct/immediate/legal effect
- Ripeness
Outline 4 (better .doc version available on Drobox)
Administrative Law Class Notes
* Course Objectives
o Doctrinal Coverage
o Statutory Interpretation Skills (90% of admin. law is statutes.)
* Administrative Law Doctrine
o Structure of government.
o Compliance with procedural requirements.
o Judicial review of administrative agency actions—scope and standards of review, availability of judicial review.
* Final – Page limited, take home examination. First Wednesday in exam period until last Friday of exam period.
* Statutory Skills
o Role of statutes in administrative law.
o APA – Apply to all federal government agencies.
o Organic statutes – statutes which create fed. gov. agencies.
o Materials and in-class exercises
o Group assignments – non-graded (good-faith) group assignment, meet w/ Levy afterwards.
Admin. Law as a Subject
* The Governing Agency Action
o Organic statute provides:
* Congressional mandate
* Process
* Mechanism for judicial review
o APA and admin. law doctrines
* General procedures for all agencies. Organic statute filters through
* Agencies
o 5 U.S.C. 551(1) – “Each authority of the government of the U.S., whether or not it is within or subject to review by another agency, but does not include—“
* Congress
* Federal courts
* Governments of territories or possessions of U.S.
* Government of D.C.
* (President – excluded by Supreme Court)
o Or except as to the requirements of Section 552 (FOIA) of this title:
o Executive Agencies – Wholly under the control of the president.
o Independent Agencies – Somewhat insulated from control of the president. Ex. FCC members are appointed for term of years, can’t be fired without cause.
* Rise of the Administrative State
o Early Years
* The dawn of admin law (Ex. Marbury v. Madison).
* Common law laissez faire
* Minimal federal statutes and agencies.
o Industrialization - 1890s
* “Progressive” Legislation
* Judicial obstruction of regulatory programs.
o Growth of Agencies – 1932-1980s
* New Deal – SEC, Social Security, FCC
* Great Society/Nixon – Medicare, Medicaid, welfare, OSHA, EPA
o Regulatory Reform - 1980s
* Cost-benefit analysis
* Market-based regulation
* Conservative courts and society
* Why Agencies?
o Efficiency – Agencies can develop regulations easier than Congress can enact a statute, adjudicate cases quicker than courts. The rest of the government (congress, courts) would be overwhelmed without agencies. Also, no need for duplicate decision-making.
o Expertise – Agencies can specialize and learn to solve policy problems.
o Rational Policy – Insulated from political arena to develop neutral, rational policy.
* NBC v. U.S. (1943)
o NBC challenges FCC-issued Chain Broadcasting Regulations that prevent NBC from owning/controlling too many local stations. FCC acting under authority of Communications Act of 1934 to license radio broadcasters. NBC will be denied license if it doesn’t meet new regulations.
o Organic statute – Communications Act of 1934.
* Title I: General Provisions & Creation of FCC
* Title III: Broadcast Licensing
* Sec. 301 – License Requirement
* Sec. 303 – Powers of FCC
* Sec. 307-309 – License Applications
* Sec. 312 – License Revocations
* Sec. 307(a), 309(a) – Commission should grant a license if “public convenience, interest, or necessity will be served.”
* Broad authority. Courts will have to go back later and define what this means for the agency.
o FCC decided that preventing chain broadcasters from getting too large furthered purpose of Act. Business regulation. NBC argues that statute only prevents interference NOT business.
o General Principles
* FCC and Separation of Powers
* FCC as Subordinate to Statute
* Deference to FCC Policy Judgments
Type of Issue
Manifestation in NBC Case
Statutory - FCC Authority to Issue Rule?
“Have authority to make special regulations applicable to radio stations engaged in chain broadcasting” and “Make such regulations . . . as it may deem necessary to prevent interference b/w stations and to carry out the provisions of this Act” and “Proscribe qualifications of station operators”
Judicial Review - Merits of Agency Action? (Now falls under APA)
Court applies “arbitrary and capricious” standard of review. Most deferential std. Allocating decision-making authority to the agency as Congress dictated.
Procedures – Sufficiency of Process? (Now falls under APA)
Use of public hearings mentioned as providing ample opportunities for input by affected parties.
Other – Consistency w/ Higher Law?
The FCC must comply with First Amendment.
* Justifications for Regulation—Communications Act?
o Radio is a finite spectrum—scarcity and Tragedy of the Commons problems.
o Chain Broadcasting Limits – limit monopoly power. Also, public interest in diverse radio programming.
o Larger Questions – Seperation of Powers: Legitimacy of agency action—shared oversight—everyone needs a check on agencies.
o Essential Conflict b/w 1. Administrative agencies are doing good, solving problems, and 2. Protect individuals from agency action—they can ruin people’s lives. Question in every single admin law case.
Statutory Analysis – Unit 1.1.
* 1. Legal Syllogisms – Major premise (legal rule) and minor premise (facts are true or false).
* 2. Statutes (and Regulations) as Positive Law
o Test is binding
o Implications for analysis
* 3. The FW as an Interactive Tool.
o Identity/Situate Issues
o Zoom-in on Provisions/Operative Terms
o Structure Analysis
* 4. Interpretative Issues
o Textual Ambiguity/Uncertainty
o Interpretative Inference and Canons
APA & Organic Statutes
* Applies to all agencies. (Very broad)
o Pre-APA – Just organic statutes and common law writs.
o APA an important step forward because it provided general rules for agency action. Difficult compromise.
* Two Sets of Provisions
o Procedural Provisions (Sec. 551-559)
o Judicial Review Provisions (Sec. 701-706)
* Interaction w/ Organic Statute
o OS may supplement or displace
o OS may trigger for what the agency must do.
* Organic Statute
o Creates underlying rights and duties that the agency is responsible for administering.
o Provides agency structure and functions.
o Provides substantive standards and procedural requirements.
* Organic statutes typically provide minimal procedural requirements. (Also, in APA, of course.)
* Judicial review?
* APA
o Generally applicable; procedures & JR
o Interacts with the organic statute
o APA as supplement, but OS may supersede
o Organic statute may trigger APA provisions.
In Class Exercise
* Does the FCC have to follow the APA adjudication provisions when it decides to grant broadcast licenses?
* Sec. 554(a): This (adjudication) section applies . . . in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing.
o Needs to be adjudication; AND
o Required by statute; AND
o Determined on the record after opportunity for an agency hearing
* “Determined on the record” = Record must be exclusive basis for the adjudication. No ex parte communications and no outside information without taking judicial notice.
* Organic statutes says that 554(d) doesn’t apply. This reasonably means that the rest of 554 does apply. Exception proves the rule.
Unite 1.2 Agencies & Modes of Action
* Five representative agencies each with their own organic statutes.
o EPA, The NLRB, The SSA, The IRS, The FCC
* All five head of boards appointed by President w/ advice of Senate. (Principal Officers)
o EPA & IRS serve indefinitely at will.
o NLRB Situation – Senate prevented Obama from appointing NLRB members until it dwindled to two members. Remaining two members attempted to issue decisions because 2 would be enough to be a majority of quorum (3). Obama attempted to do recess appointments. D.C. Appeals Court rejected 2-member decisions and recess appointments.
* EPA – All characteristics of Executive Agency, but it’s free standing. Most people consider it an Executive Agency because the president can fire the administrator.
o Not created by organic statute—created by presidential order as a type of White House agency. Taken over by statutes since then.
o Clean Air Act; Clean Water Act; etc.
o Mandated to protect the environment. Impose costs of negative externalities and regulate tragedy of the commons. Protect public good.
* NLRB – Classic independent agency.
o Created by National Labor Relations Act.
o Mandate is to promote labor relations—balance between labor and business. Oversee process which will produce fair unionization process.
o Prevent monopolies of business. Distribution of wealth.
o Certifies union-creation process and police Unfair Labor Practices (discrimination against union members and unions can intimidate people to sign up, etc.).
* SSA – All characteristics of independent agency, but only one person at the apex. Still probably an independent agency.
o Distributes government benefits to old people, survivors, disabled.
* IRS – Pure executive agency. One administrator serving at pleasure of the president.
o Implements IRC. Mandate is to collect taxes.
* FCC – Classic independent agency.
o Created by Communications Act.
o Address
o Regulate phone rates and broadcast licensing.
General Points About Statutes
* History of Statutory Interpretation
o Common Law - Judges were historically hostile to statutes and incorporated this view into statutory analysis. Often prevented effective implementation.
o Lochner Era – Hostile to state power, federal power, and regulation.
o “Intentionalism” – Middle 20th century belief that courts were to impose the intent of the legislature.
o “New Textualism” – Focus on written words on the paper and not legislative history. Emphasis on dictionary definitions and traditional canons of construction.
* Stages of Law
o 1. Bill
o 2. Public Law
o 3. Statute (codified law)
* Some statues are referred to by Public Law numbers and some are referred to by codified/statutory number.
* Officially, the public law is the law. When the statute and public law conflict, the public law wins. Most state constitutions say the codified version is official.
Anatomy of a Public Law
* Introductory Material
o Title and Enactment Clause (short title provision)
o Legislative findings and declarations of purpose
o Definitions (very important)
* Often a lot of substantive materials are in the definitions themselves.
* Ex. “Child in Need of Care” – Definition of this term includes the reasons why a child can be removed.
* Core Provisions
o Provide underlying rights and duties
o Implementation and enforcement provisions
* Additional Provisions
o Conforming amendments to other statues (cross references, etc.)
o Savings Clause
o Severability Clause – If one provision struck down, the rest of it should stay in effect. Make almost no difference to courts—mere boilerplate. Courts usually ask whether statute as a whole would have been adopted without unconstitutional provision.
o Effective dates provision
* Usually it’s a law upon publication in statutes-at-large or states’ equivalent.
APA Example
* APA’s Adoption
o Political struggle between new regulatory agencies and the powerful interests who were regulated for the first time. Industry wanted a very vigorous administrative procedure act. Roosevelt blocked initial attempt in 1940.
o Eventually Roosevelt dies, Truman wasn’t as liberal and wasn’t as popular. Found middle ground between the New Dealers and industry. Adopted in 1945.
* Subsequent Amendments to APA
o Change from administrative magistrates (or something) to administrative law judges who have long tenure and other protections.
o Freedom of Information Act
o Government Sunshine Act
* Two Main Chunks of APA
o Eventually codified in different places
o Title 5(II) – Procedures agencies have to follow.
o Title 5, Chapter 7 – Availability and scope of judicial review.
o Miscellaneous other provisions. (ALJs, etc)
* Procedures
o Definitions (§551)
o Information and Records (§552, §552a, §552b)
o Rulemaking (§553)
o Adjudication (§554, §556, §557)
o Specific Procedural Matters (§555, §558)
o Interaction w/ Other Laws (§559)
* Judicial Review
o Availability and timing (§701, 702 §704)
o Scope of Review (§706)
o Other provisions (703, 705)
Difference b/w Rulemaking and Adjudication
* Agency has a choice b/w rulemaking and adjudication (551).
Definition of Rulemaking
* 551(5) – Rulemaking means agency process for formulating amending, or repealing a rule;
* 551(4) – A rule is the whole or a part of an agency statement of general or particular applicability and future effect.
Key Difference – A rule applies prospectively. An adjudication determines historical facts. Important because different procedures for rulemaking than adjudication. - (551)
* Rulemaking Procedures – (553)
o (“Notice and Comment Rulemaking”) Notice; comments; statement of basis and purpose (553(b) & (c))
* Notice – 553(b)
* Statement of time, place, and nature of proceedings
* Reference to legal authority
* Terms or substance of the proposed rule or description of the subjects and issues involved (99% of time, agency just submits whole rule)
* Comment – 553(c) – Opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral argument
* Concise Statement – 553(c) – Agency shall incorporate in the rules adopted a concise general statement of their basis and purpose . . .
o (“Non-legislative Rules”) Exceptions – Less than notice and comment. (553(a), (b)(A) & (B)) –
* 553(a) “Notice and Comment” doesn’t apply to (1) military or foreign affairs of U.S., (2) agency management or personnel, or (3) public property, loans, grants, benefits, or contracts.
* 553(b) – Except when notice or hearing is required by statute, this subsection (meaning b) does not apply—
* (A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or
* (B) when the agency for good cause finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.
* 553(c) After notice required by this section, the agency shall . . .
o (Formal Rulemaking) Triggering Mechanism - 553(c) When rules required by statute to be made on the record after opportunity for an agency hearing, sections 556 and 557 of this title apply instead of this subsection.
* Formal Rulemaking is triggered when organic statute calls for it. Produces trial-like procedure.
* Very rare because almost impossible in practice. Would take years.
* Adjudication Procedures – 554, 556-57.
o 554(a) – Scope: Trigger & Exceptions – This section applies when organic statute requires decision on the record after opportunity for agency hearing.
* Then exceptions to this rule.
o 554(b) – Individual notice (not in federal register)
o 554(c)(1) – Opportunity for settlement
o 554(c)(2) – You get a hearing under 556 & 557.
* ALJ and Agency 556(b)l 557(b), (c)
* Hearing rights 556(d)
* Decision on the (basis of the) Record 556e
* Submission re decision557c
* Ex parte contacts 554(d)(1)l 557(d)
* Separation of functions 554(d)
* Separation b/w prosecutor and person who makes the decision
o Substantial Evidence Review Applies
* Judicial Review (701; 702; 704; 706)
Would APA provide cause of action for the rule? If so, what standard(s) of review would apply?
APA and Other Laws
* Effect on other laws; effect of subsequent statute: This subchapter, chapter 7, and other specified sections . . . (1) do not limit or repeal additional requirements imposed by statute or otherwise recognized by law. . . . (2) Subsequent statutes may not be held to supersede or modify this subchapter, chapter 7 except to the extent that it does so expressly.
* (1) You get all additional procedures or rights that any other source of law gives you. APA is a floor of procedural rights, not a ceiling. (Due Process Clause is a sub-floor.)
o Ex. NLRA says that Fed. R. of Evidence apply to extent practicable. APA does not require this.
* (2) No implied preemption of APA by congressional statute. Usually, later statute controls. Here, opposite rule applies—unless Congress specifically says that the APA doesn’t apply, it applies.
Richardson v. Perales
* SSA disability appeal.
* Claimant attempts to rely on three sources of law.
o Social Security Act – Even if Social Security Act doesn’t prohibit reliance on hearsay or two-hats, the APA does.
* Court – Doesn’t matter. The APA was modeled after the Social Security Act. They are the same thing. Close enough because both concerned with fundamental fairness. Fudged issue of APA’s applicability.
o APA
o Due Process Clause – Notice, opportunity to present a defense, and cross-examine witnesses.
* Court – You could have called the doctors at issue and had them testify. Due process always apply. If you’re OK with the APA, you’re probably OK with due process.
Robinette (IRS Collection DP Hearing)
* Don’t trigger 554(a), but certainly APA judicial review.
* Issue – Is Tax Court limited to agency record when it reviews agency finding?
o General Issue – Usually appeals only consider whether agency’s finding, in light of the record, was arbitrary and capricious.
* Tax Court – De novo review that considers new evidence that was not before the IRS.
* Court – No. No express language in due process collection statute which says APA is inapplicable. APA says review is limited to evidence before the agency.
NLRA Assignment
* Didn’t get to the general counsel’s ability to prosecute complaints. General counsel has some independent authority within the NLRB.
Delegation of Powers
* Basic Concepts
o Political Function – Allow ambitions of different political constituencies to make sure no one actor has too much power.
o Rule of Law – All government actors must operate with legal authority. Separation of Congress from executive is essential. Executive branch cannot decide the extent of its own power. Courts draw the lines between them and serve as the check.
* Historical Accommodation of Agencies
o Tension b/w administrative agencies and separation of powers
* NLRA – Board makes rules (like Congress), investigates violations and prosecutes (like Executive), and then decides (like Judiciary). Also independent of presidency (strange).
o Supreme Court Precedent
* Pre-New Deal – Separation of powers principles. Ex. Scheckler Poultry case.
* 1980s – Court struck down agency structures again in the 1980s.
o Formalism v. Functionalism (Progressive interpretation)
* Formalism – Legislative, executive, and judicial are distinct and separate powers. What kind of power is being exercised and who is doing it? (Ex. Regulations look like a Congressional activity and adjudications look like judicial power.)
* Functionalist – Legislative, executive, and judicial power overlap. Not distinct from each other. Agencies incorporate all three powers and are controlled by all three branches.
* Foundational Assumptions of Administrative Law
o Everything in administrative law follows from separation of power.
o Transmission Belt Model –
* 1. Congress makes the law and grants power with standards and procedures. (Gets the ball rolling.)
* 2. Agency implements the policy. Makes rules, adjudications pursuant to standards and procedures. (Agent of Congress to implement policy.)
* President appoints, supervises, and removes agency personnel.
* 3. Courts – Interpret and apply law and make sure basis for record and compliance with law.
o Both President and Agency are agents of Congress’s law, although Agencies are often more loyal to the president, etc. Huge issue of agency costs to control agencies.
* FCC v. Fox (Sup. Court 2009)
o FCC adopts a rule which reverses a longstanding policy in regards to the use of “fleeting expletives.” FCC imposes fines for the use of these words for the first time. Previously hadn’t prosecuted networks for occasional light use of expletives. Congress pressured FCC to close the “fleeting expletive” exception.
o Issue – Is the elimination of “fleeting expletives” exception arbitrary and capricious?
o SOP Implications
* Who gets to decide?
* Control of independent agencies?
* Role of politics in admin process?
o Standard of Review and Separation of Powers
* Breyer – Should be heightened because it’s an independent agency. Courts should get to decide.
* Scalia – Arbitrary and capricious. Very deferential to Congress and maybe President. If standard of review is more lax, court is less able to reverse agency on ground that agency hasn’t followed the statute.
* More deferential standard of review – more power to the agency compared to Congress.
o FCC as an Independent Agency—what does this mean?
* FCC Commissioners are removable only for cause. Restriction on presidential power.
* Breyer – FCC should be more accountable to judicial review.
* Scalia – FCC should now be more accountable to Congress. The fact that Congress browbeat FCC into doing this is how things should work w/ independent agencies.
SOP – Outer Limits of Agency Structure
* Legislative Power
o 1. Power to “make law”
* Binding rules
* Establish ends/means of Policy
* Legislature’s duty ends when it formulates the ends/means. Executive implements the law, judiciary applies it.
o 2. Delegation to other branches
* “If Congress shall law down by legislative act an intelligible principle to which the person or body authorized to [act] is directed to conform, such legislative action is not forbidden delegation of legislative power.”
* Three Functions of Nondelegation Doctrine
* Make sure Congress makes important choices of social policy and not agencies themselves.
* Intelligible principle guides the exercise of the delegated discretion. (Gives agency guidance.)
* Gives judiciary ascertainable standards to determine if agency has exercised authority properly.
o 3. Court has been formalist in regards to Bicameralism and Presentment
* Struck down Legislative Veto (Chadha)
* Struck down Line Item Veto Act (Clinton v. New York)
* Both powers were declared legislative acts.
* Judicial Power
o 1. What is judicial power?
* Find facts/apply law/decide cases or controversies
* Article III safeguards – Salary protection, for cause dismissal, etc.
o 2. Article III & Agency Adjudication
* Public Rights Doctrine (Murray’s Lessee)
* There are matters involving public rights that Congress can decide to assign it to the judiciary or agencies. If it does the latter, no need for judicial review.
* Theory – If you’re suing the government, the government has sovereign immunity. Because the government doesn’t have to give you anything, an agency adjudication will suffice.
* Private Rights Doctrine (Crowell v. Benson)
* Congress can assign initial fact-finding to an agency (like a master or magistrate), but must offer judicial review if the controversy concerns determination of private rights.
* 1983 – Supreme Court struck down Bankruptcy courts (Art. I) jurisdiction. Precedent from Bankruptcy Courts and Tax Courts apply to agencies. Said bankruptcy code gave too much judicial power to the bankruptcy courts and struck it down.
* Schor Test
* Executive Power (Presidential Control of administrative agencies)
Judicial Power
* Find facts and apply the law to the facts in order to resolve cases.
* Public and Private Rights
o Public Rights – Agencies can do this because public right adjudications are suits against the government and the government have sovereign immunity. Congress is providing an additional remedy in public rights cases, not restricting it.
o Private Rights – Private rights can be adjudicated in the first instance by agencies. It’s like a magistrate finding facts for a court. Fine as long as courts retain ultimate, de novo, review.
Schor Test
* CFTC can assert jurisdiction to govern a common law counterclaim in a suit arising from commodities dispute. Court – Congress can allow agency to determine this.
* Schor Test
o 1. Courts must retain “essential attributes of judicial power”
* A. Scope of Agency Jurisdiction – More narrow the jurisdiction that the agency has, the more likely it will be upheld.
* B. Scope of Judicial Review – Ability of courts to review agency determinations. Courts need to retain authority over the agency. More deference to agency = less power to courts.
* C. Incidental powers (jury, orders) – Can agency enforce its own orders? Can it conduct jury trials?
o 2. Nature of the Right
* CL claims at the core of judicial power, but no per se rule against delegation of common law claims to agencies.
* Public rights (non-CL) can be more freely assigned to agencies.
o 3. Congressional Purpose
* Did Congress have a good reason to allow an agency to adjudicate this type of thing? Congress can’t just stick it to the courts for some reason.
Shor Test Muddied By Granfinanciera
* On 7th Amendment grounds. Requires right to jury trial for all suits that would have been given a jury trial in 1789.
* If public right, don’t need to bother with Shor. If it’s a private right, go to Shor Test.
* New definition of public right –
o Cases not involving the federal government,
o 1. Congress created
o 2. Closely integrated into a public regulatory agency
o 3. Appropriate for agency resolution
Executive Power & Agencies
* Unitary executive principle – Framers figured out things worked better when a single figure administered the laws and not a group.
* Vesting Clause – “The executive power shall be vested in a President of the United States . . .”
* Take Care Clause – “ . . . he [the President] shall take Care that the Laws shall be faithfully executed . . .” Both the President and other executive officers must faithfully execute the laws.
* Rationale: Prompt, coordinated action
* Disagreement between formalist (absolute unitary executive) and functionalist (largely unitary executive). Formalists don’t like Congressional agencies, etc.
* Means of Control
o Appointment Power
* Addressed in Article II – President “shall nominate, and by with the advice and consent of the Senate, shall appoint . . . all other officers of the United States. . . . but Congress may by law vest the appointment of inferior officers, as they think proper in 1. President alone 2. Courts of law 3. Heads of Departments.”
* Scope: When does Article II apply?
* Exclusive for Officers of U.S. (officers of U.S. v. employees of U.S.)
* Officers = delegated authority
* Principal v. Inferior Officers
* Congress has options for appointment of inferior officers.
* Factors (Morrison) v. Hierarchy (Edmond)
* Issues for Inferior Officers
* Inter-branch appointments (Morrison – e.g. Independent Counsel)
* Courts/Heads of Department (Freytag, FEF)
o Direct Oversight
* Very little in Constitution. Nothing says President supervises members of executive branch.
* Executive Orders – Generally only cover internal working of executive branch. Generally not enforceable—City of Albuquerque Test.
* “Specific statutory foundation”
* Can’t preclude judicial review
* Must be objective standard of law to apply.
* Regulatory Review
* Every major regulation make go through Office of Management and Budget (White House) Office of INFFNE Regulatory Affairs.
o Removal
Public Rights --> Schor Test
* 1. Essential attributes of judicial power
* 2. Nature of right adjudicated
* 3. Congress’s reasons for delegating adjudicatory authority
Government Not a Party --> Granfinanciera (Swallows almost all private rights.)
* Public rights can be adjudicated freely by agencies without Constitutional considerations. (Public rights don’t fall under Schor.)
* Public rights are not limited to rights involving the government as a party; can be between private parties if (1) Congressionally created (2) Closely tied to regulatory scheme, and (3) Appropriate for agency review
Removal Power
* Most powerful means of control available to the executive.
* What is the President’s power of removal?
o Constitution is silent. Only provides that President and officers shall be removed for “treason, bribery, or other high crimes and misdemeanors.” Impeachment.
o Myers - However, President has inherent authority to remove officers.
* Limits on Removal Power of President
o Humphrey’s Executor - Congress can limit President’s authority to remove member for cause of Federal Trade Commission (Independent Agency).
* Supreme Court – In Myers we were dealing with a postmaster, that’s purely executive power. Here, the FTC is exercising quasi-legislative and quasi-judicial power. President doesn’t need absolute control over these functions. Also, FTC isn’t part of the executive branch at all—it’s an agency of the legislative or judicial departments.
o Bowsher – Congress said that if they didn’t bring budget deficit down to a certain level, then automatic cuts would occur. Enable Comptroller General (Congressional agent) to make the cuts himself.
* Court – Not allowed. The Comptroller is exercising executive authority, and cannot be removed by the President at all, even for cause. That’s not allowed. President needs the final power to remove.
o Morrison v. Olson (Independent Counsel Law) – Congress set up independent counsel to check corruption in executive branch. President couldn’t fire the prosecutor at will. Only be removed for cause.
* Relying on Humphrey’s Executor, president argued that independent counsel was purely executive. Therefore, under Humprey’s executor, you can’t limit President’s ability to remove.
* Court – This is a inferior officer. Yes, exercising executive power, but it’s an inferior officer. President doesn’t need to be able to remove this inferior officer at will.
o Free Enterprise Fund – PCAOB Case
* Court invalidated dual for-cause removal requirement. PCAOB members were removal for-cause by SEC members and SEC was only removal by President for cause.
* Synthesis – Three Questions in Order
o 1. Nature of the Removal Provision?
* President has to be able to ensure that officers are faithfully executing the law. If they don’t, or if they violate the law, the President must be able to dismiss them. For-cause removal by president is sufficient.
* Cannot prevent Faithful Execution
o Congressional control
o No dual for-cause
* Single for-cause OK
o 2. Functions of the officer?
* Quasi-legislative/quasi-judicial OK
* Except officer w/ lots of power
* Executive function may be OK
o 3. Level of the officer?
* Policymaking authority?
Problem 1.7
* Congress amends NLRA to allow Chair of NLRB to appoint General Counsel. Removal by President only for cause. Outsourcing dispute. President issues executive order telling all officials to back off outsourcing unless statute requires it. General Counsel ignores it and continues to prosecute. President attempts to fire General Counsel, but order is ignored.
* 1. Appointment of Officer?
o Appointment by SEC allowed if General Counsel is an inferior officer, not allowed if GC is principal officer.
o Because GC can only be removed by the President, GC is a principal officer. Also, unreviewable authority over prosecutions—independent policy-making authority under Morrison. Conversely, below the Board.
* 2. Can President apply executive orders to Independent Agencies?
o Yes, if the Board is an executive agency, President must be able to regulate it.
o No, if Board is an independent agency, then it must be free from this oversight. That’s the point.
* 3. If executive order applies, refusal to enforce it, allows for-cause removal.
* 4. Is it judicially enforceable?
o City of Albuquerque – No, because no “specific statutory foundation” for executive order.
* 5. Removal – Example of unresolved case. Not congressional removal and not dual for-cause removal so no problem in this case. BUT not quasi-judicial or quasi-legislative, so Humphrey’s executor doesn’t say it’s OK.
Introduction to Judicial Review
* Fundamental Question – How much deference to the agency?
o When a lot of deference, agency has the power/discretion.
o If the court retains meaningful or aggressive standard of review, the court has the power of decision.
o All these arguments are connected to separation of powers.
* Arguments for Deference
o Expertise
o Congress delegated to agency, not the court.
o Agency is more familiar with the record.
* Argument against Deference – Start from the rule of law.
o Proper role of court to police agencies for compliance with law. Court says what the law is.
o Courts have a role in determining whether agency decision is grounded in reality.
o Prevent abuses of power.
* Components of Agency Decisions
o All decisions based on facts of some type. (Some record.)
o Interpretation of law/legal standards
o Policy (mix of fact, law, discretion)
o Interpretation of law + interpretation of facts = policy choice (w/ reasons)
* Substantial Evidence Standard
o Review standard that applies to agency’s interpretation of the record/facts.
Ethyl Corp. (D.C. Circuit)
* EPA is considering regulation of lead in gasoline.
* Balance of deference (Wright Opinion)
* Bazelon Opinion
o Courts are incompetent when it comes to highly complicated, technological cases. Judges should scrutinize technical merits, but just try to police to decision-making process.
* Leventhal Opinion
o Review should be modest but not too modest; there still needs to be real, substantive, technological review.
Judicial Review and Sec. 706
* 1. Availability of review?
o Standing?
o Timing? Exhaustion of administrative remedies?
o Excepted from judicial review under Sec. 701?
* 2. Conduct of review?
Overton Park – Sec. 706 (Supreme Court 706)
* Issue – Can the Department of Transportation route I-40 in Memphis through a park. Statute says that Department can’t go through park if there are other options.
* Which 706 standards apply?
o Challengers to the highway want least deferential—substantial evidence standard.
* Court – No. It’s not an adjudication under 556-557 because it’s not on the record. Substantial evidence applies when on the record adjudication.
o Challengers also want de novo review.
* Court – No. De novo review is only to be used Very narrowly (especially after this case).
o Court – Anytime judicial review, you apply these standards.
* Within statutory authority and discretion?
* Arbitrary and capricious review of facts and policy?
* Followed necessary procedures?
* Deference to agency under Arbitrary and Capricious Standard.
o Presumption of regularity, but that doesn’t shield the action from a thorough, probing, in-depth review.
o “The court must consider whether the decision was based on a consideration on the relevant factors and whether there has been a clear error of judgment.” – Usual definition of arbitrary and capricious standard.
* Informal Action & the Record of Review
o APA didn’t proscribe procedures for decision-making because not on the record. Organic statute didn’t include procedures either. Result – no process that produced a real record.
o Lower Court – Subpoened highway administrator to ask why he did things.
o Supreme Court – Can’t do this. Can’t go back in time. Practical effect – Agencies now create records in order to later withstand agency review. Don’t want to have to defend decisions on a couple letters.
SEC v. Chenery (1930’s)
* Public Utilities Holding Companies Act – SEC given authority to break apart monopolistic utilities. SEC broke up federated water. When they reorganized the company,
Two Kinds of Issues Surrounding Judicial Review
* Is it available in a particular case?
o Standing, statutory availability of review, exhaustion of administrative remedies.
* Actual conduct of judicial review?
o Section 706.
o Which standards apply? (Section 706(2)(A)-(F)).
o Overton Park – E & F (A-D. All the time. E. substantial evidence only applies to adjudication and rulemaking or otherwise on record. F. De Novo review rarely applies.)
o Overton Park – Defines “arbitrary and capricious” standard.
o – Defines “substantial review” standard.
Reasons (Chenery)
* A core requirement for agency action is that an agency must give reasons for its decision.
o Imbedded in “arbitrary and capricious” standard.
o Focus of judicial review. Courts don’t ask if they agree on the result. Rather, they ask if the agency has provided sufficient reasons to explain its result.
* Implications
o Courts cannot supply an alternative ground that would uphold an agency’s actions for a different reason. It’s the responsibility of the agency and not the court to make decisions.
Five Step Process in Allen
* Working?
* Impairment?
* Meet listings?
Substantial Evidence Standard of Review
* Basic Doctrine
o Substantial Evidence Standards applies in formal adjudications.
o Less deferential than A & C. More deferential than clearly erroneous and de novo review.
* Application of SE – Universal Camera
* Supreme Court’s Interpretation of Substantial Evidence – “More than a mere scintilla” and “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”
* Interpretation by Lower Courts – Only look to favorable evidence.
* Amended Version – Change standard to “substantial evidence
Standard formulation of Substantial Evidence Standard in
Unit 2.3: SI Under Chevron Basic Doctrine
Should courts defer to agency on SI?
Principal Case (ACM)
* Local cable franchises impose some federal requirements, but allow local governments to grant local cable
Recap
* Chevron and statutory interpretation
o Step #1 – Standard and issues
o Step #2 – Standard and issues
* Still making arguments regarding text, effect, and history, but you have to make these arguments through the lens of Chevron.
Emergence of Chevron
* Hearst Test
o Law – De novo
o Mixed – Reasonable basis in the record
* Skidmore Test
o Courts defer, but not very much. Less deferential than Chevron.
* Implications of Chevron?
o Apply to only some agency constructions. Consequently, Chevron step #0—whether Chevron applies?
Tuesday – Wrap up 2.4 and start on unit 2.5.
Three Approaches of Statutory Interpretation
* Chevron Test
o Statutory ambiguity is a delegation to the agency to make the call.
o What makes delegated lawmaking authority?
* Christensen – Question is whether it’s binding or not.
* Mead –
* Barnhart – Use several factors to determine whether
* Skidmore Test (less deferential)
* Hearst Approach (fact/law/mixed)
* Step 0 – Chevron or Skidmore
* Step 1 – Chevron and delegated lawmaking authority.
Barnhart v. Walton (U.S. 2002)
* Agency denies benefits based on interpretation of “disability.”
* Does “can be expected to last for a continuous period of not less than 12 months” modify “impairment” or “inability to engage in any substantial gainful activity”?
* Interpretative Rule -> Regulation
Skidmore Factors
* Careful consideration
Aeroquip-Vickers, Inc. v. Commissioner of Internal Revenue (2003)
* IRS revenue ruling given Skidmore deference by Supreme Court instead of no deference as the lower court had held.
Pure Q’s of Law
* Under Hearst model, pure question of law gets de novo review.
* INS v. Cardoza-Fonseca – This is a pure question of law, we’re going to engage in de novo review.
Statutory Interpretation Decision Tree
* #0 – Does Chevron apply?
o Delegated lawmaking authority? -> Chevron
* #1 – Clear or ambiguous?
* #2 – Defer if reasonable?
o No DLA -> Skidmore
* Thoroughness, validity of reasoning, consistency over time, power to persuade.
o Pure question of law -> de novo
Come prepared tomorrow to apply Skidmore to this problem. Then talk about Unit 2.5.
Wrap Up of Chapter 2 – Judicial Review
* Arbitrary and Capricious Review – Section 706 – Generally applicable standard that applies to all agency decisions. Minimum requirement that all agency actions must meet. Other (higher) standards often overlap A&C review.
* Focus on reasons/identify flaws in agency reasoning.
* Look to State Farm et al. for the standard of review.
o No explanation at all
o Consideration of factors
o Contrary to record
o Implausible interpretation
* Problem – Fleeing expletives.
Chapter 3 – Modes of Agency Action
* “Agency Action”
o APA Sec. 551 – Rules & adjudications (and enforcement)
* Hierarchy of Agency Norms
o Constitutional
* Separation of powers
* Procedural due process
o Statute
o Legislative Rules (Legally-binding formal rules issued after notice and comment. Laws for most purposes. Superior to anything else the agency does—binds the agency. Agency’s can only change legislative rules by adopting another legislative rule.)
o Lawmaking Adjudication – Precedential adjudication. Even govern other agencies’ decisions.
o Nonlegislative Rules – Doesn’t have legislative affects. Not published in C.F.R. Doesn’t go through 533 notice and comment procedures. Non-binding. Doesn’t get Chevron deference. Not binding in an agency adjudication, but in practice agencies stick pretty close to agency interpretations.
o Nonlegislative Adjudications
o Informal Guidance and Advice
Generally, agencies have discretion to choose how they want to proceed.
Types of Statutory Inferences
* Preferences – Ex. Rule of lenity.
* Presumptions – Ex. Presumption against foreclosure of judicial review.
* Clear statement rules – Require a certain construction unless statute says something precisely to the contrary.
Rulemaking v. Adjudication
* Londoner v. Denver
o Special property tax for street improvements. Court – Due process requires an adjudicatory hearing before special assessment.
* BiMetallic Investment Company
o City systematically undervalued property for purposes of property tax. State board increases all city property values. Guy wants an individual adjudication. Supreme Court – No. This is a broad decision.
* APA – Rulemaking is prospective and has future effects.
Legal Constraints on Rulemaking
* Authority from organic statute
* Definition of a rule
* Constitutional due process
For Wednesday – Read PetroChemical case again and new units posed.
National Petroleum Refiners Case
* Supreme Court gave broad authority to promulgate “necessary” rules. This rules can define new substantive violations under the “necessary” authority. FCC delegated the authority to require gas stations to post the octane content of gasoline on the pump.
* Post-National Petroleum – “Necessary” means that agency can define what constitutes violations.
Chamber of Commerce Case
* Posting requirement wasn’t “necessary” b/c NLRB only has the power to react to violations, not the power to prevent violations.
National PetroChemicals v. EPA (D.C. Cir. 2010)
* Renewal Fuels Act – Market-based incentives to encourage companies to use renewal fuels. Requires oil companies to maintain credits (RIN) either themselves or buy them from other producers who have extra. Buy and sell RINs to fulfill renewable fuel requirement.
* EISA – Increased amount of RINs needed and set up deadlines for EPA to promulgate rules. Requires .5 billion gallons in 2009 and .65 in 2010.
* EPA misses the deadline set in EISA. EPA added 2009 requirement to 2010 requirement and told industry to fulfill joint amount. E.i 1.15 billion gallons b/w 2009 and 2010.
* Issue – Is this rule within EPA’s authority?
* Plaintiffs argue:
o Statutory amounts are mandatory, can’t combine two years? No.
o EPA missed deadline and lost it’s statutory authority? No, missing deadline doesn’t destroy statutory authority. Not an exploding grant of authority.
o Improperly retroactive? No.
Retroactive
* If Retroactive Application, then you need a clear statement from Congress. Regulation applies to past behavior. Ex. Like declaring a contract illegal.
* If Retroactive Effects, then just an arbitrary and capricious standard. Regulation produces additional consequences of past behavior. Many laws have some kinds of retroactive effects. Ex. Like voiding a contract in the future. Can still go too far—may violate Due Process, Contracts Clause, etc.
* Both types might violate ex post facto laws in criminal law.
Unit 3.2 Rulemaking Initiation
* APA 553(e) – Allows people to initiate a rulemaking petition.
* When there’s a rulemaking petition, and agency doesn’t want to act it creates the Problem of Agency Action. Much harder to challenge inaction than action.
o Barriers of judicial review at all.
o Difficult to win against agency inaction (Mass. v. EPA is unusual). Courts will rarely say that agency erred by denying a petition. Court must find a Statutory Duty to Act.
o Even if you do win, remedies are problematic. (EPA still hasn’t acted in accordance with Mass. v. EPA 7 years later.)
Section 553 APA
* Creates three different kinds of rulemaking and rulemaking procedures.
o 1. Legislative Rule/Notice and Comment – Binding rules like a statute.
* Notice and Comment Procedures
* Notice Requirement
* Comment Requirement
* Statement of Basis for Decision
* Published in C.F.R.
o 2. Nonlegislative/Publication Rules
* Arise under exceptions within Section 553(b). “This subsection does not apply to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or when the agency for good cause finds that notice and public procedure thereon are impracticable, unnecessary, etc.
* Exceptions in 553(b) are not only exceptions from notice but also comment.
* Generally not binding rules.
* Only procedure agency is required to follow is to publish in the federal register.
o 3. Formal Rulemaking Procedures
* Binding legislative rules, but require a hearing under 556 and 557.
* Quasi-trial hearings.
* 553(c) – When rules require a statute to be made on the record, then not only notice under 553, but a formal adjudicatory hearing.
* Very rare.
o Hybrid Procedures
* More formal than notice and comment, but not all the way to formal rulemaking.
* During 1970s, judges ordered agencies to do hybrids. Ended with Vermont Yankee.
* Now any hybrid is statutorily required.
o Regulatory Impact Analysis
* Reagan issued executive order making all agencies put a cost-benefit analysis into agency basis of rule. Eventually, this type of thing got picked up by statute—Paperwork Reduction Act, Small Business Requirement Act, etc.
Notice and Comment Procedures – General route.
* Vermont Yankee – Supreme Court said that lower courts have no authority to tell regulators to engage in further procedures. Court also indicated that it didn’t think more procedures produce a better outcome and they are very costly.
* 1. Notice – Prerequisite for meaningful comment. Agency must include data it relied on in its rule.
o New Notice – Agency puts out original rule, rule says X. Receives comments and changes the rule. At what point is the change so substantial that you’ve undermined the function of notice altogether?
* Test – Logical Outgrowth (Chocolate Mfrs.) Whether you were on notice that your interests were at stake under the original rule?
* Essentially goes back to necessity of ability to comment.
* 2. Opportunity for Written Comment
o Emergence of the Rulemaking Docket – Compilation of all notice documents, comments, any additional info related to the rule, and final rule.
o Post Docket Data and Information
* Agency can add data after comment period, but if new information is highly contested and important, agency may be required to re-open comment period.
o Ex Parte Communications
* Section 553 does not prohibit ex parte communications.
* Therefore, rulemaking procedures are not On the Record
* SV – When there are directly competing claims to a rulemaking, ex parte communications are restricted.
* HBO – FCC preventing HBO from getting the best movies and sporting events. Everyone engages in ex parte communications with FCC during rulemaking process. D.C. Circuit said no ex parte communications during rulemaking.
* ACT – Nevermind.
* Sierra Club – If a communication is of central relevant, put it in the docket.
* Also, some kind of ex parte communications are improper considerations, but you have to prove the agency relied on improper communications when it decided the case.
* 3. Concise Statement of Basis and Purpose
o Agency’s explanation of the rule—courts look to this statement during substantive review.
o Agency must respond to significant comments. Must consider all relevant factors.
o NE Md. Waste Disposal – Only case where there was a failure to provide a sufficient basis and purpose. Usually these arguments just go to arbitrary and capricious standard of review.
No opportunity for comment based on the final IPCC reports. We would have asked for lower.
Agency didn’t respond to our requests for regulation of additional gases.
Rulemaking Wrap-Up
* The Yin and Yang of rules
o Binding, costly to make, operate prospectively
o Rulemaking Authority – Most important constraint on the
Adjudication
* Individualized Decision/Fact-Specific
o Londoner v. BiMettallic – Due Process requires a hearing when the agency requires an adjudicatory-type decision, but not when an agency makes a legislative-type decision. Need specific safeguards when individuals’ rights are involved because there is no democratic protection.
o APA Definitions
* Uses of Adjudication
o Policy Making Adjudication (NLRB)
* Create administrative common law where you have to look to agencies decisions to determine what’s legal and illegal.
o “Mass” Adjudication (SSA)
* Processing millions of cases that must be done quickly. Not a policy-making function involved.
* Adjudicatory Procedures
o OS and Agency Regulations
o APA – §§ 554, 556, & 557
o Due Process Requirements
* Retroactivity problems
* Procedural Due Process
* Yin and Yang of Adjudication
o It’s a quick process. But no notice.
o Flexible. But not widely binding.
o Full hearings. But no broad input.
o More independent from politics. But, therefore less political accountability.
* Can only make policy by adjudication if your decisions have precedential affect.
o Agency decisions must be published, cited, and must be distinguished or overruled.
o Policy adjudication are lawmaking for Step Zero of Chevron.
* Chenery Case
o Federal government decided to break up the Federated Water during the Great Depression. Allowed SEC to force a reorganization of a company. Chenery’s went out and bought stock on the public markets to get around SEC’s rule. SEC stops them from doing this.
o Chenery 1 – Reliance on CL fiduciary duty was a mistake.
o SEC then decided that this behavior violated the statute.
o Chenery 2 - Supreme Court upholds SEC’s decision.
o Rule – OK for agency to apply new law to the parties before them in cases of first impression. Allowed to interpret laws in novel ways. This is what NLRB does all the time.
* Policymaking Adjudication in the NLRB
o Two types of adjudications-
* Certification of Union Elections - Adjudication, but doesn’t trigger 544 of APA because the OS exempts these. Only adjudications under NLRA, not APA.
* Unfair Labor Practices – APA adjudications under 554, 556, 557.
o Both types of decisions are precedential, etc.
o NLRB has a huge preference for adjudication as opposed to rulemaking.
* Constraints on Choice of Adjudication
o Organic Statutes
* Authority (jurisdiction, etc.)
* Some statutes have specific requirements that agency’s make rules. (rare)
o APA
* Definition of Adjudication (Wyman-Gordon)
* Decision in Excellesior Underwear
o Employer said companies must provide list of employees names and addresses. Refusal would be ULP.
o But it would be unfair to apply this to EU.
* WG Relied on EU to Require List to Union
o 1. EU valid?
* Not valid because decision only had future affect.
* In order for an adjudication to be valid, it must apply the rule to the parties.
o 2. WG valid w/o EU? Can you rely on EU even though not a valid adjudication?
* Yes. Valid w/o EU.
* Is the choice to adjudicate A & C?
Policy-Making by Adjudication (NLRB)
* Focus on Retroactivity (Retail Wholesale Five Factors)
o 1. Makes less sense to apply the rule retroactively to cases of second impression (facts occurred before cases of first impression, but decision in case of first impression). Not required to apply rule retroactively to cases of second impression.
o 2. Abrupt changes or departure?
o 3. Reliance?
o 4. Burden (vs. if rule was in place when they acted)?
o 5. Need for retroactive application?
Mass Adjudication
* Different issues than policy-making adjudication. The need for adjudication is clear—there are millions of cases to decide.
* Primary concerns - Efficiency, accuracy, consistency, and fairness.
* SSA is the paradigm example. (62 mil. Social Security benefits)
* Disability Programs
o 42 U.S.C. 423(d)(1)(A) – “Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment. . . . if unable to do his previous work but cannot, considering his age, education, and work experience to engage in any other work.
o 1. Medical Requirement
o 2. Unable to perform substantial gainful activity either past work or other work “that exist in the national economy.” Must consider vocational factors—age, education, prior work experience, and regional availability of those jobs. Don’t have to show you would be hired.
o 5 Step Sequential Evaluation Process
* 1. If currently engaged in SGA, not disabled. (medical)
* 2. If it’s a “severe impairment” you’re automatically in. If not a “severe impairment,” not disabled. (medical)
* 3. Don’t meet or exceed medical listings, maybe not disabled. (medical)
* 4. Residual functional capacity (what you can do vocationally)?
* 5. Other work in national economy that this person can perform?
o Procedural Levels
* 1. Application for disabled.
* 2. Initial determination by state agency DDS. -> Paper review of medical records and other info in file.
* 3. Reconsideration by state agency -> Same paper review again, but can add information.
* 4. ALJ Hearing (de novo, non-adversarial, on the record)
* ALJ’s job is to get it right. Non-adversarial. ALJ can raise arguments on behalf of both sides.
* 5. Appeals Council Review (de novo, optional review, ALJ can just grab cases it wants)
* 6. District Court Review (traditional JR based on record)
* 7. Court of Appeals
* 8. Supreme Court
Rules & Adjudications
* Generally
o Use to resolve law, policy, and facts. Can determine facts across the board. E.g. vocational grid and broadcast licensing monopoly restrictions.
o Legislative v. Non-legislative Rules
* Even non-legislative (e.g. SSRs) rules can get Chevron deference.
Step 2: The Severity Regulation
* Not disabled at step two if
o Impairment does not “significantly limit” work. De minimis impairment.
o No consideration of vocational factors.
o 1980s – Step 2 denials rose from 8% to 40%.
* Yuckert – Statute requires agency to look at vocational factors, but regulation was facially valid. O’Connor Concurrence – Regulation only valid if applied correctly.
* Dixon – SSA systematically misapplied evidence.
o Noncombination policy inappropriate. No matter how many non-severe impairments one person had, didn’t cumulatively add to a severe impairment.
* Yuckert and Dixon examples of systemic litigation.
* Step 3 – Listings-Only Approach – If you meet or exceed the listings for a specific disability, you get an automatic disability finding.
o SSA found a way to dismiss people at this step by saying, do not meet listing = not disabled. No consideration of vocational factors. Found improper in Bowen v. City of NY.
o Also can’t stop at Step 3 for children. (Zebley)
* Overreliance on Grids
o DOL grids on what type of jobs are available for people with certain traits.
o Heckler v. Campbell – Only allowed to rely on grids if the person matches the grid.
* Agency likes to try and rely on them anyways. Especially for “nonexertional” impairments-
* Environmental impairment (sensitivity to light, dust, etc.)
* Mental illness (can’t interact, etc.)
* Requires agency to find some other way of proving jobs don’t exist for this person. SSA needs to call an expert.
Sykes, Campbell, Heckler – If you can’t do all the functions to fit into the grids, SSA can’t use the grids to determine your eligibility.
Adjudicatory Procedures Overview
* Sources of Procedural Requirements
o APA
* Formal Requirements of § 554, 556, & 557
* Scope and triggering Language
* No APA procedures if not triggered – either in APA or not.
o Non-APA Procedure
* Organic statute
* Agency regulations
o Due Process as background minimum
* Can only be deprived of life, liberty, and property with due process of law.
* Due process requires opportunity for hearing before deprivation.
* If APA applies, usually safe for Due Process.
* In absence of APA, Due Process sets minimum procedures.
* Triggering Language
o APA § 554(a) – “This section applies in every case of adjudication required by statute to be determined (1.) on the record (2.) after opportunity for an agency hearing.”
o Early Approach – Seacoast
* Early on, courts found almost every hearing to fulfill this requirement.
* Opposite of rulemaking presumption.
o Movement Toward Florida East Coast
* West Chicago – Unless organic statute explicitly says “on the record” and “after opportunity for an agency hearing” then no APA procedures.
* Dominion Energy – Decision to apply APA is entitled to Chevron deference.
o Modern Rule
* Must require a hearing and some indication that hearing is on the record.
* Chevron-like approach. If agency says APA not triggered, courts will defer unless organic statute clearly triggers or non-trigger is an unreasonable interpretation of the statute.
* Unit 6 - Linguistic Inference and Canons
o Plain Meaning Rule – Apply statutes according to their plain meaning. If meaning of statute is plain, analysis stops there. Exceptions-
* Absurdity – Can disregard language of a statute if it would produce an absurd result.
* Mistake – Don’t have to follow text of statute if text is a mistake.
o Ordinary Meaning – Default rule. Construe words in a statute according to their ordinary meaning. Ex. Tomato is vegetable despite botanical definition.
o Technical Meaning – Courts will apply a term of art if that meaning is well-understood.
o Statutory Definitions – If there are statutory definitions, they are controlling.
o Punctuation and Usage – ‘May’ usually mean discretionary. ‘Shall’ means mandatory.
o Last Antecedent Rule – Modifying phrase typically only refers to last noun on the list and not all items on the list.
o Ejusdem Generus (last term) and Noscitur a Sociis (middle term) - Construe the broadest term on a list narrowly in connection with the other terms on the list.
* Unit 7 – Inferences from Coherence
o Whole Act Rule – Look at a statute as a whole. Statutory provisions are to be interpreted in the context of the statute as a whole. Use one part of the statute to interpret other parts of the statute.
* Courts will generally look to table of contents, etc. to determine meaning.
* Consistency – If legislature uses the same word or phrase, you can assume the usage is consistent.
* Variation – If the legislature uses different terms in different places, the legislature meant for the meanings to be different.
* Rule Against Surplusage – Assume that the legislature wouldn’t include language that doesn’t have any affect. The term can’t mean that.
* Derogation – Don’t construe one provision in a manner that would render another use of the language harmful.
* Specific/General – Construe the specific over the general.
o Inferences Across Statutes
* In Pari Materia – If subjects apply to the same matter, then you interpret everything to work as a whole.
* Analogy – Draw analogies between different statutes. Ex. This administrative process is based off of that administrative process.
* Borrowing – If the legislature borrows exact language from another statute, they are borrowing all the interpretations of that language.
o Conflicting Statutes
* Later in Time – Statutes later in time control over previous statutes. Legislature meant to supersede the earlier statute.
* Rule Against Implied Repeals – Don’t assume legislature meant to repeal earlier statutes if you can avoid it.
* Unit 8 – Interpretative Inferences
o Inferences from Evolution
* Statutory Changes –
* Addition, deletion, and replacement is meant to change meaning.
* Clarification - Sometimes legislature meant to clarify earlier statutory language.
* Re-Codification – Assume nothing has changed if it’s a mere recodification.
* Statutory Inaction – Inaction implies that Congress meant to keep things the same. (Courts reluctant.)
* Rejection of Change – Argument is stronger if someone introduced a law to change something and Congress declined to do so. Indication that Congress thought an interpretation is correct.
* Re-Enactment – Strongest case of Congressional assent is when Congress reenacts a statute without change.
* These types of arguments often go with other types of legislative history.
o Inferences from Effects
* Substantive canons of construction. Policy arguments.
* Preferences – Usually weak canons. E.g. Rule of Lenity
* Presumptions – Places burden on other party to show statute precludes it. Almost an evidentiary question. Pretty strong. E.g. Presumption against judicial review.
* Clear Statements – Strongest type of presumption. Very powerful. You don’t interpret a statute to mean X unless there is a clear statement in the statute to show X.
* Anti-Statute Canons – Push against statutes.
* Common Law (dead) – Statutes in derogation of the CL are to be narrowly construed.
* Mischief Rule – Construe a statute only to address the mischief it was directed to.
* Absurdity –
* Pro-Statute Canons – Push w/ statute.
* Purpose – Courts should make sure statutes fulfill their intended purpose.
* Remedial Statutes – Courts should fulfill remedial purposes of statutes.
* Constitutional Avoidance –
* Reviewability Canon -
* Nondelegation Canon –
* Retroactivity –
* Narrow Constructions to Avoid Vagueness –
* Rule of Lenity – Penal statutes are to be narrowly construed.
Sources of Adjudication Procedure
* Organic statutes and regs
* APA Procedures (554, 556, 557) (follow both organic and APA)
* Due Process minimums
APA Adjudication Procedures
* Must be triggered under 554(a) (hearing + on the record)
* Interpretative issue based on OS
* Evolution of courts’ approach. Originally, courts thought if the OS required a hearing, then APA applied. Then, courts’ applied a Chevron deference to agencies’ decisions whether or not APA applied.
* If APA triggered, requires formal, on the record, trial-type hearing.
o Generally meets Due Process requirements.
o Likely argument in this situation - Agency may make specific procedural errors.
* Drukker as illustration
Non-APA Adjudication Procedures
* Only place you can look is OS, regs, maybe Due Process.
* No APA Procedures apply. Ignore APA.
* Range wildly in contexts of types. (E.g. telephone hearings to almost APA)
o Ex. IRS procedures during collection
* NLRB Certification Process
o Exempt from APA b/c of 554(a) (“any determination based on an election”).
o Does this exclusion of certification have any implications for the unfair labor practices under the APA.
Procedural Due Process
APA Procedures
* 554(b) Notice
