Administrative Law Funk

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Administrative Law
Authors Funk
Shapiro
Weaver
Text Image of Administrative Procedure and Practice: A Contemporary Approach, Revised (Interactive Casebook Series)
Administrative Procedure and Practice: A Contemporary Approach, Revised (Interactive Casebook Series)
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Introduction[edit]

Administrative Law is the law that governs agencies and the law that agencies make.

Agency

Agencies execute the laws of the United State. An agency is ALWAYS created by statute. An agency has no power without Congressional action. Structure:

  • Department- the highest-ranking agency in terms of status.
  • Executive Branch Agencies- subject to the control of the President. A Secretary serves until he/she resigns or is fired by the President. ex) dept. of agriculture, commerce
    • Secretaries are nominated by President and voted in by Congress.
  • Independent Agencies- headed by a multimember group that reaches a majority vote, members can only be removed for cause, members serve for a term of years, normally require that no more than a simple majority of the agency can come from a single party.

Agency Categories

Congress delegates power to executive branch agencies. The agency uses its power to make and enforce regulations. The agencies decisions and laws are subject to review by the court.

  • Regulatory Agencies- agencies that regulate private conduct. These agencies exist at state, local, and federal levels.
    • FTC regulates practices by commercial entities. p.16
    • Justification for regulation of private conduct- economic reasons (making markets more efficient)
  • Entitlement Agencies- agencies that administer entitlement programs. Focus on dispensing federal and state funds to right individuals.
    • Social Security, Medicare, Medicaid, welfare, food stamps
    • Justification- economic, in theory are insurance programs that the fed government created, thinking they would also help eliminate crime.
  • Everything Else- IRS, the US Citizenship Immigration Services, Department of the State.

Types of Agency Actions

There are three types of actions agencies can perform. Congress authorizes agencies to take these actions, specifying which agencies can do what. Agencies can exercise all three powers because an agency doesn’t derive its power from the constitution, but from Congress. Thus, it has derivative power. If it exceeds its power, it is subject to review by Congress and the Courts. Congress can modify an agency’s regulations

  1. Rulemaking- agencies can promulgate rules that have the same force and effect as a law passed by congress. This reflects the legislative power of agencies
  2. Adjudication- agencies can apply an existing rule or statute to a set of facts to determine what outcome is required by the rule or statute. Determines whether individuals deserve entitlement. An agency may be able to prosecute violators. Typically, one party. This reflects the judicial power of agencies.
  3. Investigation- agencies can determine whether someone may be in violation of an agency rule or legislative mandate. This power is necessary to obtain information outside of agency. This reflects the executive power of agencies.

RULEMAKING[edit]

§553. Rulemaking- when Congress or a state legislature creates an agency, it establishes a legislative mandate for the agency. As part of that mandate, the legislature can empower the agency to make rules. In other words, the legislature gives the agency the “power to fill up the details”

  • Whenever a new rule is made it only effects future conduct and is generally applicable (not individualized). An agency’s rulemaking authority is limited to what it has been delegated.
    • Rule- the whole or a part of an agency statement of general or particular applicability and future effect §551(4).

The Process

  1. Determination of need for a rule
  2. Draft the rule
  3. The agency then publishes a notice of the rule
  4. Advocacy of private parties who can file written comment
  5. Ends with a promulgation of the rule in the Code of Federal Regulations

Types of Rulemaking

Informal Rulemaking- §553. Involves fewer procedures than formal rulemaking. Agency must follow a simple three step process to engage in informal rulemaking:

  1. Publish a notice of the proposed rules in the Federal Register (THERE ARE EXCEPTIONS)
  2. Must give interested persons the opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation.” Thus, the agency has the option to permit oral presentation
  3. The agency must incorporate in the rules adopted a concise general statement of their basis and purpose

Formal Rulemaking- §556 & §557 governs agencies when they engage in formal rulemaking. FR will be required if “rules are required by statute (like agency’s mandate/organic statute) to be made on the record after an opportunity for agency hearing.” An agency must follow the procedures in the listed sections after publishing a notice of the rule in the Fed Register.

  • AKA- 56 and 57 require an agency to undertake the same type of trial as it would use for adjudication in formal rulemaking.
  • There is a presumption against formal rulemaking. Thus, the statute language must be as clear as possible and include at least the words “hearing” and “on the record”
  • §557 prohibits Ex Parte Communications Outside of the Notice & Comment Period.

Hybrid Rulemaking- adds more procedures than those specified under §553 informal making procedures, but impose less than those laid out in §556 and §557 formal procedure making.

  • Though APA only identifies informal and formal rulemaking, since the APA’s passage, Congress has created new agencies (or programs) while also imposing particular rulemaking procedures on those agencies.
  • When Congress has imposed additional procedures, or substituted different procedures beyond those required by the APA. These procedures are typically more burdensome than informal rulemaking but less burdensome than formal rulemaking. (not recognized by APA)

Notice and Comment- are essential to ensure the legitimacy of administrative norms and open democratic process with an opportunity for interested parties to communicate.

Sources of Rulemaking/Initiation RulemakingGeneral Sources

  • Legislation that requires specific regulation- this is the most common source (i.e. Clean Air Act and the EPA)
  • Broad mandates that require the agency to adopt rules for broad societal goals- this gives an agency broad discretion in rulemaking (i.e. OSHA and protecting safety)
    • Staff Recommendation- this is where rules typically begin. Staff may suggest a rule when they identify a problem that the agency should address.
      • BOTTOM UP APPROACH
    • Enforcement Efforts- agencies enforcement efforts may produce information that will show a need for a new or better rule.
    • Formal System of Priority Setting- Agency can identify potential rulemaking subjects and rank them according to their importance. Thus, potential rules may be identified on on-going basis.
  • Proposals from White House of Congress- TOP DOWN APPROACH. The President can instruct departments to propose a rule. Congress can threaten an investigation or to cut agency budget if agency doesn’t make certain action.

Petition for Rulemaking- looks more aggressive than lobbying, public influencing indirectly.

  • §553(3) who can petition- says each agency shall give an interested person the right to petition for issuance, amendment, or repeal of a rule. The APA does not require any further procedures, but an agency’s mandate may require more
  • §555(e) requires an agency to give “prompt notice” of a denial in whole or in part of a written application, petition, or other request of an interested person made in connection with any agency proceeding, the notice shall be accompanied by a brief statement of the grounds of denial
    • §551(13)Agency Action”- includes “failure to act” and this definition of agency action applies to the judicial review chapter of the APA.
      • §706(1) Scope of Judicial Review of Agency Action that “the reviewing court shall compel agency action unlawfully withheld or unreasonably delayed”.
      • Judged under the arbitrary and capricious standard of review.

Lobbying- strategy that aims to persuade so you don’t have to fight for it.

  • Where should efforts be aimed?
    • People who work for the agency- look to the organization form and find those who are in charge of what you want to change
    • Office of legal counsel
    • Outside the agency- members of congress who oversee the funding for the agency
  • What should be said?
    • Convince them to show how your change will help not only you, but them at the same time.


Telecommunications Research & Action Center v. Federal Communications Commission

  • ((Agency Inaction))
  • TRAC asked for judicial review of the FCC’s failure to decide whether a particular company should reimburse certain ratepayers for allegedly unlawful overcharges. The alleged overcharged occurred in 1978, and TRAC filed a petition in 1979 seeking FCC enforcement against the unlawful overcharges. The FCC issued a Notice of Inquiry seeking public comment, but failed to take any further action for the next 5 years. Chair of the Sub House Committee wrote to the FCC twice about the issue. The FCC responded that staff recommendation was expected in the fall – but during the fall, no recommendation was made. The FCC then responded that a recommendation was expected in the summer, but failed at this commitment too. After this court action was enough, the FCC announced it would have a recommendation by November 20, 1984.
    • The court said that challenging the delay is just as relevant for rulemaking as it is for enforcement. That is because §555(e) is in the ancillary matters section and governs more than just rulemaking.
  • Issue: may an agency’s delay in resolving overcharge claims warrant mandamus (an order governing an agency to do something)
  • Test for Unreasonable Delay- is the agency’s delay so egregious as to warrant mandamus?
    • The time agencies take to make decision must be governed by a “rule of reason”
      • AKA- not several years or decade
    • The agency will be held to a Higher time standard when the issue involved human health and welfare standards
    • The effect of expediting delay action on other high priority commitments the agency has.
    • the nature and extent of the interests prejudiced by delay
    • The court need not find unreasonable delay.
  • Court: they retained jurisdiction over whether the delays would justify mandamus because it was governed by a rule of reason. They told the agency they need to make a decision.
    • Although courts are normally reluctant to engage in a review when an agency has not made a decision yet, unreasonable delay in agency in agency decision making falls into the narrow class of interlocutory appeals subject to judicial review

Arkansas Power & Light Co. v. Interstate Commerce Commission

  • ((Denial of Petition))
  • The ICC regulated the rate for which railroads could ship goods. Arkansas Power and other coal companies petitioned the ICC to institute rulemaking to collect data to enable the agency to implement its responsibility for approving the rates railroads may charge to captive shippers. ICC denied petition saying it would be unduly burdensome and should be done on a case by case basis.
  • Issue: may a court compel an agency to institute rulemaking proceedings?
  • Courts need not compel rulemaking when an agency has adequately explained its denial of a petition for rulemaking. Review is limited to ensuring that agency has adequately explained the facts and policy concerns it relied on, and the facts have some basis in the record.
  • Court: yes, but only in extremely rare instances. Because the agency explained why they denied it, there is not reason for the court to compel rulemaking procedures.

Massachusetts v. EPA

  • EPA denied petitions to issue regulations governing greenhouse gas emission. they basically said that the CAA doesn’t authorize the EPA to issue mandatory regulations regarding climate change and that even if the agency had the authority to set GHG emission standards, it would be unwise to do so at that time.
  • An agency can deny a petition for rulemaking, but it must ground its reasons for action or inaction in a reasoned explanation that has basis in the mandating statute.
  • Court: the EPA offered no reasoned explanation for its refusal to decide whether GHG cause or contribute to climate change. Its action was arbitrary and capricious.

EXCPETIONS to Rulemaking Procedures:

Exceptions because the public should not have a say over the items listed

§553(a) This section applies, according to the provisions thereof, except to the extent that there is involved-

  1. Military or foreign affairs function of the United States; or
  2. A matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts.
    1. Public Property- public land, Forest Service Bureau of Land Management and National Park Service Regulation
    2. Loans- student loans, small business loans, and housing rules
    3. Benefits-social security, Medicare, Medicaid, welfare rules


§553(b) Except when notice or hearing is required by statute, this subsection does not apply-

  1. To interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice;
  2. When the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to public interest
    1. “Good Cause” exception- Unlike the other exceptions, this exemption requires the agency to find good cause for invoking the exception and to public that finding and the reasons therefore with the rule. May include:
      1. Where advance notice would defeat agency’s regulatory objective
      2. Immediate action is necessary to reduce or avoid health hazards or imminent harm to persons or property, or
      3. Where inaction will lead to serious dislocation in government programs or the market place.
    2. Impracticable- a situation in which the due and required execution of the agency functions would be unavoidably prevented by its undertaking public rule-making proceedings
    3. Unnecessary- unnecessary so far as the public is concerned
    4. Public Interest- supplements the previous terms and requires that pubic rulemaking procedures shall not prevent an agency from operating and that, on the other hand, lack of public interest in rulemaking warrants and agency to dispense with public procedure.

§552. The Freedom of Information Act- NO agency rules are exempt from this section. It contains a general requirement that 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.

American Hospital Assn. v. Bowen

  • ((Procedural (management/Personnel) Exception))
  • Congress amended the Medicaid system to create peer review organizations. Congress left the Department of Health and Services with broad discretion. They issued guidelines without notice and comment.
  • Rules of agency organization, procedure, or practice are exempt from the notice and comment requirements of agency rulemaking under the APA
  • This exception is there to make sure that agencies retain control in their internal operations. When considering whether this execution applies to a procedural rule, the court looks to whether it entails a substantive value judgment or puts a stamp of approval or disapproval on any given type of behavior.
    • Procedural- encoding a value judgment
  • Court: notice and comment for these guidelines were unnecessary because of the exception. The directive did not define a new substantive standard, it simply allowed HHS to focus its inspections in a more productive way. It involved specific day to day duties about its members

Air Transport Association of America v. Dept. of Transportation

  • ((Good Cause (procedure) Exception))
  • Overturned by JEM- this case extended substantive value judgment too far
  • Congress enacted amendments to the Federal Aviation Act. 9 months later the AAA made a body of regulations to govern the adjudication of administrative civil penalty actions. they did not follow the notice and comment procedure because they said it fell within the exemption of “good cause”
  • Rules that substantially alter the rights of individuals, even if they involved a procedural aspect (like establishing an adjudicatory scheme governing adjudication of administrative civil penalty actions) are NOT exempt from the requirement of notice and comment.
  • Court: the defendant’s argument that these rules were strictly procedural was not taken by the court. These rules substantially altered the rights or interests of regulated parties.
    • A rule is not exempt simply because it has the label “procedural”

JEM Broadcasting Company, Inc. v. Federal Communications Commission

  • ((Procedural Exception))
  • The FCC adopted a hard look regulation in anticipation of a flood of FM license applications. There was a fixed filling period during which the applications were checked for substantial completeness. If they were not complete they were not accepted and that was the end of it.
    • Hard Look rule- a rule that disallows the applicant from having a chance to amend its application
  • A “hard look rule” does not require notice and comment rulemaking under §553 because it is procedural. Two-Part Test (modern standard)
    • Does the rule alter the rights of the parties?
      • If so, it is substantive- it must go through notice and rulemaking
    • Are the substantive effects sufficiently grave so that Notice and Comment are needed to safeguard the policies underlying the APA?
      • If not, it will likely be procedural.
  • Court: this is a procedural rule because they are saying there is a time window, they didn’t add new requirements. Thus, the hard look rule did not require notice and comment.
    • The hard look rules did not change the substantive standards (like financial qualifications, proposed programming)

Formal and Informal and Hybrid Rulemaking

United States v. Allegheny-Ludlum Steel Corp.

  • ((Formal))
  • The agency statute for the ICC authorized the Commission “after hearing, on a complaint or upon its own initiative without complaint, (to) establish reasonable rules, regulations and practices with respect to car service” (i.e. not mention of requiring rules to be “on the record’). Some shippers challenged some the of ICC’s regulations believing that the regulations required the ICC to hold a hearing before promulgating the rules.
  • An enabling act that requires a rule to be made after a “hearing” is exempt form the formal rulemaking requirements of §556 & §557 UNLESS the act also requires the rule to be made “on the record”
  • Two Part Test → an agency must engage in formal rulemaking ONLY when the rule is required by statute to be made:
    • On the record; and
    • After opportunity for an agency hearing
  • Court: informal rulemaking was appropriate. Although the enabling act required a “hearing,” the rule was exempt from the formal rulemaking requirements because the act did not require the rule to be made “on the record.” Under §553, the formal rulemaking requirements of 56 and 57 are invoked when rules must be made on the record.

United States v. Florida East Coast Railway Co.

  • ((Affirmed ALS, Formal Rulemaking Trigger))
  • Same facts as above about the ICC (which no longer exists). The ICA authorizes the ICC to engage in rulemaking only “after hearing.” It does not require that the rulemaking be on the record. The ICC decided that they would only receive comments in written form. Two railroad companies challenged this arguing that it did not comply with §556 and §557; and that they were prejudiced by the ICC only receiving comment in written form. DC found that this agency must use formal rulemaking procedures before rulemaking, the ICC challenged this.
  • A “hearing” triggers the need for trial type proceedings in RM if the enabling statute outlines such requirements for the hearing…but 56 and 57 will not be invoked solely because a hearing is required.
  • Communications relevant to the agency proceeding not on the public record between an agency employee involved in the decisional process and an interested person outside the agency.
  • Court: this state requires that the rulemaking be done “after hearing,” but it does not require it be made on the record. Because of this wording, only the procedures of §553 apply. Formal rulemaking procedures are a lot stricter.

Vermont Yankee Nuclear Power Corp v. Natural Resources Defense Council

  • The NRDC challenged a rule promulgated by the atomic energy commission, arguing that the AEC denied it meaningful opportunity to participate in rulemaking proceedings.
  • A court does not have the authority to require additional procedures beyond those required in the APA (except as provided by law otherwise).
  • A court should NOT impose trial like procedures in informal rulemaking (Congress can impose additional procedures)
  • An agency cannot be compelled to support an informal rule with a full record because it would require a full adjudicatory hearing prior to the promulgation of every rule.
  • AKA- court imposed procedures beyond APA are prohibited, Congress/Agency alone can require additional procedures.

Informal Rulemaking

  1. Notice
  2. Opportunity to participate
  3. (a) Concise and General Statement of Purpose (if rule created) and (b) reasoned explanation (MA v. EPA) (if rule denied)

Notice Requirement

The APA requires that a “general notice of proposed rulemaking shall be published in the Federal Register” = constructive notice. Agencies rarely rely on actual notice. APA does not require full text of proposed rules

  • APA Requirements - §553(b), NPRM must include:
    • Time, place, and nature of the public proceeding
    • Agency indication of the legal authority under which the rule is proposed; and
    • Either the terms or substance of the proposed rule or a description of the subjects and issues involved (like in the preamble)
  • Court-imposed Rule- Agencies must identify in the NPRM the data and methodology of any scientific evidence on which they rely (despite Vermont Yankee)

The Purpose of Requiring Notice and Comment

  • Inform the agency so that the rules they adopt are as accurate and fair as possible
  • Involve the public so that there is a sense of participation in rules.
  • Agencies are not required to listen to comments, but must give consideration to. This is because they would have to start over every time a new person commented.

Common Procedural Challenge

  • Adequacy of Notice- the notice of a proposed rule must “fairly apprise interested persons” of the issues in rulemaking. Interested persons are fairly apprised if the final rule is a “logical outgrowth” of the rulemaking proceeding.
  • One issue the courts have not adequately addressed is to what extent an agency can change a final rule without being required to give new notice. If minimal change, most likely no new notice is required.

Chocolate Manufacturers Association v. Block

  • ((Logical Outgrowth))
  • WIC designs food packages based on the different nutritional needs of women, infants, and children. The USDA published a preamble, in which it discussed the general purpose of the rule and the problems associated with high sugar foods. Neither the preamble nr the rule talked about sugar in relation to flavored milks. Flavored milk had always been approved item in the WIC program. In response to comments the USDA deleted flavored milk from the WIC program. The CMA brought action to fight that final rule.
  • Although notices need not require every potential regulatory change that will be in the final rule, it must be “sufficiently descriptive to provide interested parties with a fair opportunity to comment and participate in rulemaking”
  • Logical Outgrowth Test- notice is adequate if the changes in the original plan “are in character with the original scheme,” and the final rule is a “logical outgrowth” of the notice and comments already given. Case by case analysis and fact specific.
    • Would members of the public have anticipated the change that the agency ultimately made with the final rule?
      • If yes, notice was adequate.
    • Does the final rule materially alter the issues involved during the rulemaking?
      • If yes, notice was inadequate.
    • Does the final rule substantially depart from the terms or substance of the proposed rule?
      • If yes, notice was inadequate.
  • Court: did not provide sufficient notice for its final rule. Although the rule was an outgrowth of the notices and comments during the rulemaking process, it was not a logical outgrowth nor was it in character with the original scheme.
    • Had permitted the use of chocolate milk in the WIC program for years
    • There was no indication that interested parties should be concerned about the sugar content in the flavored milk. Nowhere in the 12-page preamble did it speak of the prohibition of chocolate milk, it actually expressly noted that flavored or unflavored milk was permitted.
    • Thus, the interested parties did not have a fair opportunity to contribute to the administration rulemaking process.

Opportunity for Comment

The purpose of notice is to enable interested parties to comment on the proposed rule. §553(c) requires agencies to proved interested persons an opportunity to comment through “submission of written data, views, or arguments”

  • Oral hearings are not required
  • No pre-determined time period- no specific time for comment period
  • Final rule must be published 20 days prior to effective date §553(d)
  • Ex Parte Communication – informal context. If the statute does not expressly require anything to go in the record, a court will not enforce ex party communication.

Judicial Review of Rulemaking §706

How courts review agency actions alleged to be substantially unlawful. The procedural and substantive requirements (agency mandate) for rulemaking are binding on agencies regardless of their enforceability in courts. However, absent judicial enforcement, agencies are less likely to comply with the laws.

  1. Judicial Review §706(2)
    1. Arbitrary and Capricious
    2. Unconstitutional- de novo
    3. No Statutory Authority- chevron
    4. Procedurally Invalid- de novo
    5. Unsupported by Substantial Evidence
      1. Formal rulemaking
      2. §556/57 only
    6. Ignore


When Chevron Applies → when Congress has delegated authority to the agency to make legislative rules carrying the force of law and the agency interpretation was promulgated in the exercise of that authority.

Chevron v. Natural Resources Dense Council, Inc.

  • ((Statutory Interpretation/Authority))
  • EPA had created a rule which interpreted the words “stationary source” to include what agencies called the “bubble policy.” The bubble policy was basically a cap over factories who had more than one stationary source. The bubble policy allowed these kinds of places to fix/upgrade one stack as long as they did not go over their total cap for emissions
  • A court is required to defer to an agency’s interpretation of a statue if the statute is silent or ambiguous with respect to the question at issue and the agency’s interpretation of that statute is reasonable. Ambiguous statutes mean that Congress has granted the agency power broad deference to interpret.
  • Chevron Two Step:
    • Whether Congress has directly spoken on the issue (can matter be resolved based on plain text of the statute)
      • If statute/congressional intent is clear, no deference and apply it
      • If statute is ambiguous or silent on the matter, go to step 2
    • Ask whether the agency’s interpretation is permissible or reasonable
      • If it is, court will give deference to agency and valid.
      • If no, invalid.
  • Court: although Congress did not have specific intention to apply the “bubble concept” imposed by the EPA, the EPA’s interpretation was a reasonably policy choice because the statute did not define “sources”
    • The interpretation was a permissible construction of the statute and seeks to accommodate progress in reducing air pollution with economic growth
    • The agency’s interpretation is entitled to deference.
  • Separations of Powers- judges are not experts in the fired and must not make decisions to reconcile competing political interests. Congress gave the agency that policy-making authority and has political remedies if the agency is not acting in compliance.

What courts can and should consider when deciding if a statute is ambiguous (step 1)

  • Plain meaning approach (texualism) → specific language or definition, the language in the design of that statute as a whole. Tends to reduce ambiguity.
  • Holistic approach (interpretivisim) → congressional intent, beyond specific language, look to legislative purpose and history.

Substantive Decisions (Findings and Conclusions)

Whenever an agency promulgates a rule it makes two types of substantive decisions:

  1. Determines the basis of the evidence available to it
  2. What type of rule, if any, is appropriate in light of those facts?

Scope of Review: §706 divides the scope of review into two categories

  1. Formal Rulemaking → Substantive Evidence
    1. Courts should uphold a rule if it finds the agency’s decision to be “reasonable” or the record contains “such evidence as a reasonable mind might accept as adequate to support a conclusion.” Courts need not agree, just must think a agency’s choice is reasonable.
  2. Informal Rulemaking → Arbitrary and Capricious
    1. A court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.
    2. Agencies must provide “adequate reasons” for adoption of the rule. When an agency lacks adequate reasons, its action is A&C
    3. An agency decision will also be A&C when it goes against intent of Congress. However, typically courts will just remand the rule rather than declare it invalid.
      1. Courts should give a “hard look” at agency decisions when reviewing informal rules.
    4. This does not apply to Hybrid Rulemaking

A&C boils down to two things §706(2):

  1. Agencies finding of fact
    1. Looking at whether agency has built a table that stands with the facts serving as foundation (legs). Are those findings of fact supported by evidence in the record? If not, need to take away each leg that doesn’t support. Maybe left with not enough support.
  2. Policy conclusions the agency draws from those facts
    1. Is this a good fit for findings of fact? i.e. is it the right shape tabletop

Rulemaking Record

§706 requires the court to “review the whole record” when determining the validity of an agency rule.

  • Formal Rulemaking – the WHOLE record is the testimony and documents created by the agency conducted hearing procedure specified in §556-7
    • The “record” is the evidence that the court evaluates to determine for the agency has met the substantive evidence standard.
  • Informal Rulemaking – No record. The court will look at the information that the agency actually considered in making the decision
    • Typically composed of Federal Register notices for the proposed and final rule, comments submitted, any studies or data created or used by the agency.
  • Deference – when unknowable facts are being reviewed, courts should be highly deferential to agency decisions

Motor Vehicle Manufacturers Assoc. v. State Farm Mutual Automobile Ins. Co.

  • ((Arbitrary & Capricious))
  • The National Highway Traffic Admin appealed from a decision finding that the revocation of the requirement that new motor vehicles produced after September 1982 be equipped with passive restraints to protect occupants in the event of a collision, without considering the possible use of air bags, was arbitrary and capricious.
  • When an agency modifies or rescinds a previously promulgated informal rule, it is required to supply a satisfactory, rational analysis supporting its decision of the rational connection between the facts found and the choice made. If not, the agency decision will be arbitrary and capricious
  • Court: the agency must better explain its reasons for rescinding the rule. Must show a rational connection between the facts found and decision rendered
    • The agency failed the court’s “hard look” review- the department had made a fatal decision by failing to consider an obvious alternative to the problem proposed.

**Agencies are allowed to change their mind, but it must be on the record and they must tell us why**

Rulemaking

  1. Initiating Rulemaking
    1. Lobbying
    2. Petitioning for Rulemaking
  2. Rulemaking Procedures (APA)
    1. Exceptions
      1. Military/Foreign §553(a)
      2. Management/Personnel
      3. Public Property
      4. Interpretive Rules and Policy §553(b)
      5. Procedural – agency organization
      6. Good Cause
    2. Formal Rulemaking
    3. Informal Rulemaking
      1. Notice §553(b)
      2. Comment §553(c)
      3. Concise General Statement of their Basis and Purpose §553(c)
  3. Hybrid Rulemaking
    1. Statutes- extra rules added by congressional statute
    2. Executive Order- not required by statute
  4. Judicial Review §706(2)
    1. Arbitrary and Capricious
    2. Unconstitutional- de novo
    3. No Statutory Authority- chevron
    4. Procedurally Invalid- de novo
    5. Unsupported by Substantial Evidence
      1. Formal rulemaking
      2. §556/57 only
    6. Ignore

ADJUDICATION[edit]

Adjudication is the process for formulating an “order.” Applies to regulated entities and individuals

  • Ex) adjudication can be used to determine whether entity has violated agency rule, determine eligibility of individuals, alleged violation of statutes or regulations.

Any process that results in a final disposition, that is not rulemaking, is adjudication. Agencies can apply an existing rule or statute to a set of facts to determine what outcome is required by the rule or statute. An agency decision from adjudication will have the same force of law as if it had been made by a court. This reflects the judicial power of agencies.

  • Order- the whole or a part of a final disposition of an agency matter other than rulemaking, but including licensing. Can be affirmative, negative, injunctive, or declaratory in form
  • EX) FDC can do investigation into trade process

Overview/Review of APA Sections

§554 – outlines the procedures required for formal adjudication. These procedures resemble those used in trial.

  • The requirement of notice to the parties of the hearing (b)
  • The opportunity to reach a settlement (b) & (c)(1)
  • The person in charge of the hearing is prohibited from receiving ex parte contacts or communications from the parties (this includes employees of the agencies)

§556 – outlines the procedures required for hearings.

  • Allows an ALJ and outlines the authority of the ALJ (b) & (c)
  • Places the burden of proof on the agency (2)
  • Allows for oral and written evidence
  • Allows cross-examination of witnesses
  • Mandates that every decision be based on the entire record, including the hearing transcript and all documentary evidence (d)
  • Also, prohibits any person who makes the final decision during the appeals process from receiving ex parte contact.

§557 – outlines the procedures required for appeals.

  • Requires the ALJ to “initially decide the case.” However, the agency can bypass this step (b)
  • When the ALJ initially decides a case, any party can appeal the ALJ’s decision to an agency administrator or to commission members.
    • Only agency that congress created a separate group for appeals = OSHA
  • The parties have the right to submit briefs
  • The administrator or commission are not required to give deference to the ALJ’s factual finding because “on appeal from or review of the initial decision, the agency has all the power which it would have in making the initial decision.”

§554(d) – Separation of Functions

  • An ALJ is prohibited from consulting a person or party on a fact in issue, unless notice and opportunity for all parties to participate (1)
  • An ALJ is not responsible to or subject to the supervision or direction of an employee or agency engaged in the performance of investigative or prosecuting functions for an agency (2)

Formal Adjudication

Formal adjudication must resemble a trial, while informal does not require the same procedures. Under §554(a), whether an agency is required to engage in formal adjudication depends on what Congress has required by statute (“on the record after opportunity of hearing”). The components of FA:

  1. Pre-hearing procedures NOTICE (typically the complaint). Must begin with notice including time, place, and manner, legal authority for hearing, and matters of fact.
    1. Did the agency inform the D of the nature of the charges against him or her?
  2. Intervening Parties – district court has allowed parties to intervene in an adjudication. Public is allowed to be in here as long as they have standing.
  3. Discovery – allowed in formal but not in informal. Can use the Freedom of Information Act against agency to get information and subpoenas are also available to both the party and the agency.
  4. Settlement – courts can allow parties to enter into a consent agreement §556
  5. Hearing – resembles a judicial trial (hearings, motions, exhibits, witnesses) §556(c)
  6. Hearing Officer- head of agency or members of commission have the authority to preside over agency adjudication §556(b)(1) and (3). However, the vast majority do not preside over hearings, ALJs do.
    1. ALJ- make findings of fact. Has all the powers as a trial judge. ALJs are purportedly independent of the agency (no control over pay, not limited to fixed term and serve indefinitely, exempt from performance ratings, right to formal adjudication before terminated, agencies do not have supervisory authority over ALJs under the Separation of Powers Provision, agencies cannot assign cases to ALJ)

How to determine when §554 requires an Agency to use Formal Adjudication → D.C. says use the Chevron test. There is not presumption for or against formal adjudication. If a statute is ambiguous, use the Chevron test to determine whether formal or informal adjudication is required. AKA – the court will defer to the agency interpretation of a statute rather than determining what the language meant for itself.

  • Chemical Waste Management

When APA has to make a decision after the hearing, then what? Depends on the Circuit.

  • First Circuit- assumes that a hearing requires formal procedures. Do not need to see the phrase, “on the record,” the preference should be formal procedures for adjudication.
  • Seventh Circuit- statute has to specifically use the words “on the record.” Formal is not required unless it uses that phrase.
  • DC Circuit- apply Chevron, it is ambiguous when Congress says they have to hold a hearing because a hearing can mean many things. It should be up to the agency’s discretion.

National Labor Relations Board v. Local Union No. 25, International Brotherhood of Electrical Workers

  • Facts: NLRS protects union workers from employers. Flores complained that the union was refusing to refer him for jobs because he was not a member of the union.
  • Court: the ALJ cannot rule on issues that are not raised in the complaint. Parties are required to get proper notice first. In this case, the ALJ was looking at issues not raised and therefore could not rule on them because there was no proper notice.


Southwest Sunsites, Inc. v. Federal Trade Commission

  • Facts: FTC filed a complaint against Sunsites for “violating” the FTCA. FTC had new deception standard that imposed a greater burden of proof on the FTC.
  • Court: there does not need to be notice when an agency applies a standard that is more narrow. This standard was actually harder for the agency to prove.

John Capanos and Sons, v. Food and Drug Administration

  • Facts: the company made injectable medications. They were then told they could not produce these medications anymore because they constantly violated procedures. They wanted a hearing and were told the needed to show a genuine issue of material fact.
  • Court: the notice requirement was inadequate because it did not show them what they had to submit. The notice wasn’t clear.

Informal Adjudication

The APA does not outline any procedures for an agency that is not required by mandate to conduct adjudication “on the record after the opportunity of an agency hearing.” §554(a)

Other Constraints on Adjudication (Both Formal and Informal)

  1. Agency action must meet the minimal requirements of §555, that governs ALL agency proceedings
    1. The right in any proceeding to be represented by counsel
    2. The right of any interested person to appear before an agency in any proceeding
    3. The right to have an agency conclude a matter within “reasonable time”
    4. The right to retain copies of material to be submitted to an agency
    5. The right to utilize agency subpoena power
    6. Right to receive prompt notice of denial of a request, application, or petition, as well as a “brief statement of the grounds for denial”
  2. The statute still may require some procedures even if the mandate does not require formal adjudication.
  3. Agencies may impose their own requirements for informal procedures and publish them in the Code of Federal Regulations
  4. The Due Process Clause may apply to certain types of agency action – if there are not enough procedures in place for an informal adjudication, and a person’s property or liberty are at stake, the court will have to determine whether the due process clause obligated the agency to use more procedure than before.

Ex Parte Communications

The APA prohibits ex parte contacts in formal adjudication, but NOT informal adjudication. The prohibition applies to “any interested party outside the agency” (interested party is someone who has a greater interest in the matter than the general public).

  • §554(d) also bars an “employee or agent engaged in the performance of investigative or prosecuting functions” from communicating with anyone who is responsible for making a decision in the matter (like ALJ or Board member). The prohibition applies to both the decision maker and the party! → can’t have one sided communication
  • A person who gets a communication must completely disclose it on the record and allow the opposing party to respond.

Factors in ex parte communications:

  • Oral or written communication
  • Not on the public record,
  • To which reasonable prior notice to all parties is not given
  • Communication related to the merits of the provisions is explicitly prohibited
  • Remedy = disclosure or new hearing

§557(d)(1)(A) → outside in (relevant to the merits), interested person can’t talk about the matter to either the body comprising the agency or anyone else involved.

§557 (d)(1)(B) → inside out

§557(d)(1)(C) → disclosure

§557(d)(1)(D) → hearing

§557(d)(1)(E) → ex parte communication prohibitions begin once the party receives the notice of the complaint

Professional Air Traffic Controllers Organization v. Federal Labor Relations Authority

  • Rule: An ex parte communication will only cause a remand of the original decision if the agency’s decision making was irrevocably tainted as to make the ultimate judgment of the agency unfair. Us the following factors:
    • Gravity of ex parte communication
    • Whether the contacts influence the agency’s ultimate decision
    • The party that made the ex parte contacts benefit
    • Whether the contents were unknown to the opposing parties
    • Whether the vacation of the agency’s decision and remand for new proceedings serve a useful purpose.
  • Court: the ex parte communications were not enough to cause a remand of the original decision because the communications had no effect on the final decision of the agency.

Due Process Hearings

The Due Process Clause requires the government to hold some type of hearing (for disputes of factual issues) before it deprives an individual of “life, liberty, or property”

  1. Is it rulemaking? If yes, no Due Process issues
  2. Is the government making an individualized determination?
    1. Does not mean legislation and generalized decision making (which is the majority)
  3. Is the individualized determination by government affecting a constitutionally protected interest?
    1. Liberty
    2. Property- a contractual agreement, taxation, government entitlements
  4. How much process is due? Only go to this step if you answered “YES” to the previous three questions. If no procedure is used – then due process issue (Mathews v. Eldridge)

Individualized Decisionmaking

Due process is required for individual deprivations of property or liberty, but policy-based deprivations of property or liberty affecting a class of individuals do not.

Londoner v. Denver

  • Facts: The plaintiffs had a tax assessment placed on the land they owned by the City of Denver for the cost of paving a street near their land. The charter for the city granted the city power to make local improvements and to assess the cost upon property specifically benefited. The charted laid out requirements for the City to make such assessments, including due notice and opportunity for hearing to those affected by the assessment.
  • Rule: Due process is required when there is an individualized adjudication where someone’s deprived of his or her property or liberty.
  • Court: the assessment was void because the plaintiffs were not afforded the opportunity to be heard and did not have adequate notice
    • Before the tax became irrevocably fixed, the taxpayer shall have an opportunity to be heard and must have notice (either by personal or publication, or by a law)
    • Although an opportunity was given to submit in writing all objections and complaints of the tax, there should have been a hearing because of the issue

Bi-Metallic Investment Company v. State Board of Education

  • Facts: The State Board of Equalization decided to increase the valuation of all taxable property in Denver by 40 percent. The Plaintiff brought the suit on the grounds that he was deprived property without due process of law because he did not have an opportunity to be heard
  • Rule: Due process simply does not apply to general adjudication (lawmaking/rulemaking).
  • Due process is only required when “a relatively small number of persons was concerned, who were exceptionally affected, in each case upon individual grounds
    • If a rule affects more than “a few people” there is no requirement for an opportunity to be heard
  • Court: state board did not violate the due process rights of Denver citizens because they made a general adjudication.
    • It is impracticable that everyone should have a direct voice in the adoption of a rule that only affects a few people
    • Voters ultimately are in control of those making the rules, the safeguard in general lawmaking is the political process.

Protected Interests

Property

The court will ask does the government action constitute a deprivation of life, liberty, or property? If not, Due Process Clause does not apply. Deprivations of life, liberty or property include fundamental rights, but do not include “privileges.” In Goldberg v. Kelly, the line between fundamental rights and privileges became nonexistent when the court held that a government entitlement (welfare determination) was entitled to due process under the Due Process Clause.

  • Goldberg- we can have a due process entitlement in statute. Claim of entitlement to welfare payments that was grounded in a statute defining eligibility- right to a hearing that may attempt to show recipients were within the statutory terms of eligibility

Board of Regents v. Roth

  • ((We can have a DP entitlement in K))
  • Facts: Teacher was hired as an assistant professor for a fixed term of one year. After the term was completed, the school informed him that he would not he rehired for the next year. The teacher brought this action alleging that the school’s decision not to rehire him infringed on his 14th amendment rights.
  • Rule: If an individual has a contract for one year of employment, he cannot have a claim to more than a year → a person must be of a “legitimate claim of entitlement” to have a protected interest under the DPC.
  • Court: the school’s decision did not infringe on the teacher’s 14th amendment rights
    • Because the teacher was dismissed without cause (no charge against him for dismissal) the teacher did not lose any interests that would be protected by the 14th amendment.
    • The teacher did not have a legitimate claim of entitlement to the rehiring because his contract was for only a year and nothing more.

Perry v. Sinderman

  • ((Implicit Entitlements, Implied K))
  • Facts: Professor challenged state university decision not to employ him for another year. K had been renewed for four years, after fourth year it was not renewed so sued claiming the failure to give him notice of reasons and to provide an opportunity for a hearing violated DP.
    • Employment was not secured by a formal contractual tenure provision, there was an understanding fostered by the college administration. The college had a de facto tenure program, and that he had tenure under that program. Claimed he legit relied on that provision that had been in the college’s official faculty guide for many years.
  • Court: a formal contract of tenure would support a legitimate claim of entitlement, but it also recognized that “there may be an unwritten ‘common law’ in a particular university that certain employees shall have the equivalent of tenure.
    • Implied contract right in long term employment with usual practice went beyond agreement, usual practices.

Liberty

Liberty includes all of “those privileges long recognized…as essential to the orderly pursuit of happiness by free men”

  • The right to engage in a common occupation in life - Meyer v. Nebraska
  • The government triggers DP protection when it denies or revokes a person’s license to engage in a profession – Gibson v. Berryhill

Paul v. Davis

  • ((Reputation Alone is not protected interest))
  • Facts: In an effort to reduce shoplifting in the area during Christmas time, a couple of police departments dispersed a flyer with names and pictures of those who have been known for shoplifting in the past. One flyer names the group “active shoplifters.” One of the men on the list brought this action claiming that his designation as an “active shoplifter” deprived him of liberty protected by the 14th amendment. He claimed that this designation would inhibit him from entering business establishments and impair his future employment opportunities.
  • Rule: Reputation alone is NOT one of the liberty interests protected by DP
  • Stigma Plus Test- in order to have a liberty interest a person must have their reputation harmed PLUS a disability imposed (like loss of employment)
    • There must be something lost, for example because of bad record, police officer could not get another job or he lost a job because of bad interest.
  • Court: the shoplifting reputation was not a liberty interest protected by the 14th amendment
    • Reputation is not a tangible interest that would be covered; a tangible interest would be something like employment.


Codd v. Velger

  • ((Must have some Factual Dispute))
  • Facts: Velger claimed that he was wrongly dismissed from his position in a police department. He was dismissed without a hearing or a statement of reasons. His position was probationary, so he had no property interest in it, but he alleged that he was entitled to a hearing because of the “stigmatizing effect” of materials that were placed in his personnel file. He claimed that this material caused him to be fired at his subsequent job and had prevented him from finding other similar employment. The material contained a report that stated that Velger had put his revolver to his head in a suicide attempt during police training.
  • Rule: In order for the court to mandate a hearing, there must be some factual dispute in question relating to the alleged deprivation of the protected interest (like employment)
  • Court: Velger does not have a DP claim because there is no factual dispute at issue. There was no factual dispute between the employer and the discharged employee that had some significant bearing on the employee’s reputation. This is not such a case because Velger has not affirmatively asserted that the report of his apparent suicide attempt was false.


Cleveland Board of Education v. Loudermill

  • Facts: Law in Ohio that stated a civil servant can only be terminated for cause and allowed an administrative hearing (teacher). Lied on app because he was a felon.
  • Rule: if a state statute gives you and a protected interest in your job, it cannot deny you the right without going through constitutional procedures.

Shands v. City of Kennett

  • Facts: Four firemen were discharged by the city council when they asked a member of the city council to block the appointment of a new volunteer fireman requested by the Chief and instead appoint a friend of the four firemen. The letter stated their dismissal was for insubordination and misconduct. The four firemen appeared before the city council stating why they had done nothing wrong. The council held a closed-door session with witnesses and aid of counsel. The council found that the four firemen were justly dismissed because they tried to interfere with the hiring process. The council wrote a letter stating that they were dismissed for “department personnel matters.” The fireman brought suit claiming a deprivation of their liberty interest protected by the DPC when the Councilmen discussed their charged in the media and with the closed door session.
  • Rule: An interest must rise to the level of stigma required by the Constitution to be considered a protected liberty interest under the DPC.
  • Court: the firemen do not have a DPC because the Councilman’s statements did not rise to a level of stigmatization that would be protected by the liberty interests of the DPC.
    • The general allegation of misconduct in this case does not rise to a level of constitutional stigma. Usually the requisite stigma is found in cases were the employee is accused of dishonesty, immorality, criminality, racism or the like.

What Hearing Procedure Must be Used?

Goldberg v. Kelly

  • ((MUST have evidentiary hearing before losing welfare benefits))
  • Facts: Under the state system in effect, the welfare recipient was given notice of the proposal to terminate and the reasons therefor as well as an opportunity to respond in writing, before the termination took place. After termination, the recipient was entitled to a full-blown administrative hearing equivalent to what is provided under the APA, and if successful there, was entitled to back payments for the period after termination
  • An evidentiary hearing must occur before the termination of one’s welfare benefits
  • In addition, it required procedures normally associate with highly formalized adjudication:
    • Timely and adequate notice detailing reasons for proposed termination
    • An effective opportunity to defend (like cross examination, presenting witnesses and evidence)
    • The right to be represented by counsel
    • A decision based on the evidence
    • Impartial Decision maker
    • A statement explaining his decision and evidence relied upon.
  • Court: found post termination hearing inadequate. Welfare was the last safety net and termination deprives the recipient “of the very means by which to live while he waits.”
    • Due process required an evidentiary hearing before termination.
    • Required not only a pre-termination hearing but also one that included most of the procedures associated with highly formalized adjudication


Mathews v. Eldridge

  • ((Evidentiary hearing NOT required after loss of disability benefits))
  • Rule: Eldridge received disability insurance benefits beginning in June 1968. In March 1972, Eldridge received a questionnaire form the state agency charged with monitoring his medical condition. The state agency received reports from physicians who had treated him and decided to terminate his disability benefits. The agency informed Eldridge by letter that his benefits would tentatively be terminated. This letter included a statement of reasons for the proposed termination and advised Eldridge that he may request reasonable time to submit additional information pertaining to his condition. In a written response, Eldridge disputed a characterization of his medical condition and indicated that the agency had enough evidence to establish his disability. The state agency made its final determination and notified Eldridge that his benefits would be terminated at the end of July 1972. The notification informed Eldridge that he would be able to seek reconsideration by the state agency within six months. Instead, Eldridge brought suit relying on Goldberg to allege his constitutional right to an evidentiary hearing.
  • An evidentiary hearing is not required prior to the termination of disability benefits
  • Due Process Factors (Three Part Test) What hearing procedures must be used
    1. The magnitude of the private interest that will be affected by the official action
      • AKA- how serious is the deprivation?
        • Court- the magnitude of the interest is the uninterrupted receipt of income pending the final administrative decision. Eligibility for disability benefits, unlike welfare benefits, is not based on need.
    2. The risk on an erroneous deprivation of such interest through the procedures used, and the probable value (if any) of additional or substitute procedural safeguards.
      • AKA- what is the value of additional procedure?
        • Court- the risk of error is low because it is based on medical documentation. Physicians provide the evidence.
    3. The government’s interest (including the function involved and the fiscal and administrative burdens that additional or substitute procedures would require)
      • AKA- is there government and public interest? (is it costly?)
        • Court-administrative burden, incremental cost resulting from increased number of hearings, and expense of providing benefits to ineligible recipients pending decision. Yes, would have to do it for everyone
  • Court: the present administrative procedures fully comport with Due Process, evidentiary hearing prior to termination was NOT required.

Distinguishing between Goldberg and Eldridge

  • Eligibility for disability benefits, unlike welfare benefits, is not based on need
  • The potential deprivation is generally likely to be less in Eldridge than Goldberg
  • The determination for disability income is based on medical documentation and is a lot easier of a decision than the determination of welfare benefits
    • Ex) for the welfare benefits you may need witnesses and to check the credibility of documentation.

Board of Curators of the University of Missouri v. Horowitz

  • ((Academic evaluation is not subject to DP))
  • Facts: A student was consistently receiving poor evaluation for her clinical rotations in medical school. Faculty expressed dissatisfaction with her behavior (poor attendance and lack of concern for personal hygiene) and advanced to her final year in a probationary status. The Council decided to not allow her to graduate, and unless her performance improved, recommended her dismissal from the school. The student was reviewed by seven practicing physicians with whom she worked and additional faculty. The Council recommended she be dismissed and after the student appealed to the Dean, the Dean concurred to that decision. The student brought this action claiming that she was entitled to procedural protections of the 14th amendment and was deprived of a liberty interest.
  • Rule: A seat to a Medical School program is not a property interest, thus a trial like hearing is not required
  • Court: the student was not deprived of her liberty interests. Due Process does not require any more procedure than what occurred here.
    • The student never claimed a deprivation of a property interest, if she did, she would have to show that her sear at the Medical school was a property interest under state law.
    • The procedures in this case were sufficient under the DPC. Requiring a trial like “hearing” would make it costly for the school and would destroy the effectiveness as part of the teaching process. Academic evaluations of students are more subjective and evaluative determinations
    • This type of determination is different from disciplinary actions taken against students that require hearings.

Gabrilowitz v. Newman-

  • When a criminal case based on the same conduct giving rise to the disciplinary proceeding is pending in the courts, “the denial to the student of the right to have a lawyer of his own choice to consult with and advise during the disciplinary proceeding would deprive him of due process of law”

Osteen v. Henley

  • Facts: Osteen curb stomped someone and then broke someone else’s face because they were making fun of someone’s girlfriend. At the hearing, he was not allowed to have a lawyer. The school suspended Osteen for two years. Osteen sued arguing that his expulsion constituted a deprivation of property without due process of law
  • Issue: is there a right to counsel in student disciplinary proceeding?
  • Court: No. To determine what process is due in a student disciplinary proceeding, courts must consider:
    • The costs of the additional procedure sought – here, cost would be high
    • The risk of error if it is withheld, and
      • The right to counsel is withheld could be trivial.
    • The consequences of error to the person seeking procedure.
      • The expulsion is not so grave because he can still go back in two years.

Neutral Decision Maker

A fundamental aspect of due process is a Neutral Decision maker. In an adjudication, if a decision maker is prejudiced or biased against or for a party, it will be a violation of the Constitution’s guarantee of DP.

Withrow v. Larkin

  • Facts: The state of Wisconsin authorized its Examining Board to investigate individuals suspected of practicing medicine without a license or performing other acts of professional misconduct, and to temporally suspend a physician’s license if there was probable cause to suspect wrongdoing. The Board sent a notice to a physician that a contested hearing would be held to determine whether he had engaged in the prohibition act of performing abortions in his practice, and to decide whether his license would be temporarily suspended. Appellee moved from a restraining order against the contested hearing, the DC granted the motion and the Board appealed.
  • Test for Bias → is the decision maker’s mind “irrevocably closed?”
    • This can be shown through extrinsic evidence. This is usually only shown through public statements.
    • Does decision maker have a pecuniary interest? Has he been target of personal abuse/criticism?
  • Court: The Board stayed within the accepted bounds of DP, even with both investigative and adjudicatory powers.

Judicial Review of Adjudication

Judicial review of an agency decision typically takes place in federal district court unless the agency’s mandate authorized another federal court for review. §706 specifies the grounds for judicial review.

  • ALJ → board → court

Formal Adjudication of FACTS → The Substantial Evidence Standard

§706(2)(E) provides that agency action is to be held unlawful if it is “unsupported by substantial evidence” in FORMAL rulemaking and adjudication. The substantial evidence test is a highly deferential test but it must be applied to the whole record on both sides.

  • Substantial Evidence = enough evidence that the agency’s finding is not unreasonable
    • Court ask whether a “reasonable mind might accept” a particular evidentiary record as “adequate” to support a conclusion.

Substantial Evidence and the ALJs Credibility Findings

§557 states that an agency “has all the powers which it would have in making its decision on review” has been interpreted to give the agency the power of de novo review. Essentially meaning that the agency is not required to defer to the findings of the ALJ at all, which in turn, was also assumed by the courts. However, Universal Camera Corp. v. NLRB clarified that a reviewing court must review the ALJs decision because it was a part of the whole record.

  • Thus, the court must take the ALJ decision into account when assessing whether an agency used the substantial evidence for its findings and conclusions.

Mixed Questions of Law and Fact

  • Fact = was a person fired because of union activity or because of poor work? No reference to statute needed
  • Law = does a statute require the employer’s motivation for the discharge to be solely or only partially based on the employees’ union activity to make it illegal?

The “substantial evidence” standard governs disputes concerning facts found by the agency. A different standard for questions of law exists. §706 authorizes a court to hold unlawful and set aside agency action that is unconstitutional, “in excess of statutory right,” or “otherwise not in accordance with law.”

National Labor Relations Board v. Hearst

  • Facts: A union filed an unfair labor charge against a newspaper who refused to bargain collectively with the union representative of the “newsboys” who distributed newspapers. The newspaper refused to bargain with the union representative because they contended that the newsboys were not within the meaning of “employees” under the Wagner Act. The Act requires employers to bargain collectively with their “employees.” As Congress, did not define employee, the newspaper argued that the “common law definition” of employee should apply.
  • Rule: If a Board’s determination involves both issues of law and fact, that determination will be accepted as long as it has “warrant on the record” (i.e. substantial evidence) and a reasonable basis in law.
  • Question of fact – does the record support the NLRB’s conclusions for the working conditions of newsboys (substantial evidence)
  • Question of law – under the terms of the NLRA, what is the definition of employee? (chevron)
  • Mixed Questions of Law and Fact – are Newsboys EEs under the NLRA? (substantial evidence)
  • Court: sustained the Board’s finding that newsboys are employees
    • Congress did not intend the term “employee” under the Warner Act to be as narrow as the common-law definition of “employee.” Congress focused on the economic relationships in employment – which can include a broad range of individuals (such as independent contractors)
    • The definition of “employee” should not be determined by the courts, but by the agency created by congress to administer the act.
    • If the Board’s finding is supported by the record, it is not the courts function to substitute its own inferences of fact for the Boards.

Evening Star Newspaper Company v. Kemp

  • Fact: An employee for the Evening Star was killed while on the clock and his widow was awarded under the Longshoreman’s and Harbor Workers’ Compensation Act. The gun was owned by the employee. At the time of the shot it was in the hands of another employee. It appeared to be an accident. The handgun was carried for personal protection and for protection of the employer’s property. After an evidentiary hearing, and ALJ found for widow. This finding was affirmed by the Board. Evening Star appealed.
  • Rule: The decision in this case had warrant in the record and a reasonable basis in the law, and thus, was upheld.
  • Court: the decision should be upheld because the ALJ’s findings of fact/law was supported by substantial evidence in the record and was not inconsistent with the law.
    • There is a strong legislative and judicial policy favoring awards in workmen’s compensation cases.
    • If an employer gives employees “free time” while they are still on the clock, any accident resulting therefrom should be considered as sustained in the course and arising out of employment. This will hold true unless the activity is “totally unreasonable that it severs the employees’ connection with the employer”
      • Sever = the gun was carried for employment purposes and the injury occurred on the employer’s premises during work-time. The employee did not instigate the shot. Thus, the accident in this case does not work as a severance.

Durrah v. Washington Metropolitan Area Transit Authority

  • ((NO warrant in record or NO reasonable basis in law))
  • Rule: Durrah, a new employee of WMATA, was on a night shirt at Post No. Where he was responsible from monitoring all traffic entering or leaving the depot. At 4am, Durrah left Post No. 1 and purchased a soda from vending machine in the employees’ lounge on the premises. He slipped on a staircase on his return to the Post and has complained of a knee injury- seeking benefits under the Longshoremen’s and Harbor Workers’ Compensations Act. In contravention of WMATA’s instructions, Durrah did not report that he was leaving the Post and did not obtain a substitute to cover the post in his absence. An ALJ denied Durrah’s claim and the Board affirmed. Durrah appealed.
  • Rule: It is not “necessary that the employee be engaged at the time of the injury in activity of benefit to his employer. All that is required is that the obligations and conditions of the employment create the zone of special danger out of which the injury arose.”
  • Court: reversed the Board’s decisions and remanded. The decision did not have warrant in the record or a reasonable basis in law.
    • Durrah’s injury would have been unquestionably covered if it weren’t for the breaking of the work rule, but it was unclear by the ALJs finding just HOW the breaking of the work rule completely severed him from the service of his employer. The asserted violation did not place Durrah in the path of new risks, nor did it alter the time, place, and manner in which Durrah would have been injured if he would have complied.
      • Question of Fact- he did not check out of the post. He was on WAMATA’s premises
      • Question of Law- does contravening the policies of employment necessarily mean that you are outside the scope of employment under the Act.
      • Mixed Questions- did Durrah’s actions violated the Workers Compensation Act.

Informal Adjudication → Arbitrary and Capricious Review.

When an agency engages in informal adjudication, §706(2)(F) allows a court to overturn an agency decision if it is “unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.” Courts require an agency to provide for adequate reasons explaining their decision.

  • The APA requires agencies to “articulate a satisfactory explanation for its action including ‘a rational connection between the facts found and the choice made.’”

Three types of defects that make agency decision look non-reasoned:

  1. Irrational or implausible
  2. Adequate consideration to regulatory issues (State Farm)
  3. Agency fails to supply information for adequate information

Three Step Process for Substantial Inquiry:

  1. Did the party act within its scope of authority?
  2. Did the party make a choice that was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law?”
    1. Was the decision based on the relevant factors or has there been a clear error or judgment?
  3. Did the party’s action follow the necessary procedural requirements?

Citizens to Preserve Overton Park v. Volpe

  • Facts: The Secretary of Transportation authorized the construction of a six-lane highway that went through Overton Park. the highway would sever the zoo from the rest of the park. Under statutes passed in 66 and 68, the Secretary was prohibited from authorizing the use of federal funds for highways through public parks if: a feasible and prudent alternative rough exists OR all possible planning takes place to minimize the harm. Private citizens and organizations brought suit. The approval of the construction for the highway was accompanied by a statement by the Secretary that did not address either of those requirements.
  • A & C standard = operates as an incentive to make agencies to provide a written explanation of decision so something is available to the court when reviewing.
    • A court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.
    • This case initiated the concept of “record” for an informal agency proceeding
  • §706(2)(A)- did the secretary reasonably believe that no feasible or alternative route existed and minimized harm as much as possible.
    • To judge the secretary’s decision, there must be some type of “record” on which he made his decision (there wasn’t in this case)
  • In this case, the reviewing court must be able to find that the Secretary reasonably believed that no feasible alternative existed and that harm was minimized as much as possible.
    • The absence of factual findings does not necessarily require the case be remanded

Record = the court will look at the information that the agency actually considered in making the decision. This is typically composed of Federal Register notices for the proposed and final rule, comments submitted, and any studies or data related or used by the agency (this is what they will look at when there is no final record)

CHOICE OF PROCEDURES AND NONLEGISLATIVE RULES[edit]

Option # 1: Adjudication

Advantages Disadvantages
  • Case by case manner allows for the agency to address specialized problems which arise
  • Not ever principle needed for effective administration should be turned into a rule
  • Problems arise that an agency easily could not foresee- and there cannot be resolved by a general rule
  • The agency may not have enough experience in an area to create a rule
  • The problems may be so wide and varied that it would be impossible to make a rule
  • The party may not have any warning if the agency is adopting a new policy through adjudication (i.e. rulemaking would be fairer because it has a prospective effect and thus gives parties more notice)
  • The cost of the party to litigate the case
  • Rulemaking has a broader effect
  • Rulemaking involves a lot of input by interested parties
  • Rulemaking allows for bright line procedures

Legal Constraints

National Labor Relations Board v. Bell Aerospace Company Division of Textron, Inc.

  • Facts: A union sought to unionize “buyers” at Bell’s plant. There was an issue over whether “buyers’ were “managerial employees” and thus not subject to the NLRA. In the adjudication, the NLRB reversed its prior policy that “managerial employees” were exempt from the Act and found that only managerial employees with labor management responsibilities were exempt. The Supreme Court reversed the Board’s decision and held that the NLRB’s original policy of exempting all managerial employees was correct. The issue of whether the buyers were managerial employees still existed and the case was remanded. The court of appeals held that the decision of whether a buyer is a managerial employee could only be made via rulemaking. the Supreme Court disagreed.
  • Rule: if an agency had both rulemaking and adjudicatory authority, the decision to use rulemaking or adjudication lies primarily with the informed discretion of that agency.
  • Court: the NLRA’s choice to use adjudication rather than rulemaking was valid.
    • The agency can essentially promulgate a rule through an adjudicative proceeding (SEC v. Chenery Corp.)
    • Although there may be situations where the Board’s reliance on an adjudication would amount to an abuse of discretion or a violation of the Act, this is not the case.
    • Abuse of discretion = new liability, or fines or damages or reliance

Retail Wholesale and Department Store Union v. National Labor Relations Board

  • Facts: The Board issued a new rule that specified that former economic strikers had a right (until they obtained “other regular and substantial equivalent employment”) to reinstatement when jobs opened up (i.e. when permanent replacements left). This was a drastic change from the old rule, which did not give an economic striker any entitlement to reinstatement. The Board held that an employer had committed an unfair labor practice when it failed to hire workers who were permanently replaced during a strike to fill new job openings.
  • Issue: whether the new rule could have retroactive effect.
  • Rule: retroactive force to an agency policy will be denied if the court determines that inequality of retroactive application is not balanced by sufficient, significant statutory interests.
    • Balancing Test:
      • Whether the particular case is one of first impression
      • Whether the new rule represents an abrupt departure from well-established practice or merely attempts to fill a void in an unsettled area of law
      • The extent to which the party has relied on the former rule
      • The degree of the burden which a retroactive order imposes on a party
      • The statutory interest in applying a new rule despite the reliance of a party on the old standard.
  • Court: declined to give the retroactive effect to the policy. Retroactivity must be balanced against the mischief of producing a result which is contrary to a 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 which is condemned by the law.

Option #2: Rulemaking

Rulemaking can be enforced through adjudication. Congress alone can give an agency the authority to make legislative rules. Enforcement of a rule is distinguished from adjudication because a person does not have the ability to call on witnesses in a rule enforcement. *

An agency can curtail a party’s right to full adjudication even if Congress granted that right.

Retroactive Rulemaking → agencies need an express grant by Congress to have the authority to make retroactive rules.

  • Addison v. Holly Hill Fruit Products- the particular regulatory definition of “area of production.” for the purpose of exempting certain food processors from the wage and hour laws of the Fair Labor Standards Act was beyond the Administrators statutory authority
  • Bowen v. Georgetown University Hospital- the Secretary promulgated a new rule retroactively, in effect, making it as if the original rule had never been set aside by the courts. The rule was struck down.

Ambiguous Rules → an agency can adopt rules that may be ambiguous or unclear. If a party brings an enforcement action in court, the court will interpret the meaning and may give deference to the agency. However, if the enforcement occurs in agency adjudication, the agency will interpret it.

General Electric Company v. U.S. Environmental Protection Agency

  • Facts: EPA fined GE because it had violated a regulation based on EPA’s interpretation. Initially GE complied with the disposal requirements of the EPA regulation, but in 87 GE changed its procedures. GE and EPA essentially disagreed about whether the regulations require incineration of the disposed solvent, not just distillation.
  • Rule: if an agency interpretation is not ”ascertainably certain” from the regulations, the regulated party will not be liable for any violations.
    • Ascertainable Certainty Test = has the regulated party received, or should have received, notice of the agency’s interpretation by reading the regulations? If the party has an “ascertainable certainty” of what the agency expects of regulated parties, the party has been fairly notified.
  • Court: the agency’s interpretation is not “ascertainably certain” from the regulations, thus GE’s liability and fine are set aside.
    • The EPA interpretation is permissible, but did not provide GE with fair warning/notice, an agency must provide pre-enforcement warning of interpretation.
    • The regulations call for “distillation.” The EPA interpreted this to mean “disposal,” this strays far from the common understanding of the word and is not ‘reasonably comprehendible to people of good faith.”
    • The regulations also apparently permit distillation and do not bar it.

Option #3: Nonlegislative Rules

Nonlegislative Rules- an agency pronouncement that advises the public of the agency’s view on an issue but it is NOT legally binding on third parties, thus are exempt from the requirement of notice and comment and an agency does not need the express authority from Congress to enact them.

  • Legislative Rules- binding effect and require a notice and comment period.

§553 identifies two types of nonlegislative rules:

  1. Interpretive – a statement issued by an agency to advise the public of the agency’s construction of the statutes and rules which it administers
    1. Purpose: compliance within the agency AND advise the public, prospectively, about agency’s intention
  2. General statements of policy- a statement issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power.
Advantages Disadvantages
  • Easy means of informing the public as to agency’s views and intentions
  • Can be used as a management tool to issue guidance to agency employees- there can be nonlegislative rules for internal agency purposes
  • Regulated entities typically comply with nonlegislative rules even though they are not legally binding
  • The regulated community cannot claim “surprise”
  • Adopted without public input. It takes too much time and expenses to challenge a nonlegislative rule
  • No opportunity to contest a rule (in some cases)
  • An agency may treat a nonlegislative rule as binding on the public. This can be challenged in courts.
  • Regulated agencies can be adversely affected when they follow an agency interpretation, and that interpretation is remanded or changed.
FOIA Requirement to publish nonlegislative rules in federal register

Distinguishing Nonlegislative from Legislative Rules

  • Binding Effect Test → does the statement of agency impose a new duty OR does it merely announce the intention to impose a new duty at a future time? (must vs. should)

American Hospital Association v. Bowen

  • ((Retroactive Rulemaking))
  • Facts: HHS implemented a system of “peer review” of Medicare outlays without undertaking notice and comment rulemaking. HHS issued a series of directives and transmittals governing the PRO program. Included was a Request for Proposals (RFP) that told would-be PROs what review procedures their proposals must address, and what provisions their bids must contain.
  • Rule: if a statement does not have a binding effect, it will be considered a nonlegislative rule.
  • Court: the RFP is a nonbinding statement of policy exempt from notice and comment requirements
    • The RFP binds neither the agency nor the PROs to whom it is sent. It simply establishes “taking points” and provides a foundation on which the agency and the would-be PRO can negotiate
    • The RFP neither has a “present effect” nor does it prevent future exercises of discretion on the part of agency decision making
    • Final PRO contracts have been known to differ from the RFP

Policy Statements → issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power in subsequent adjudication or rulemaking. Don’t have a present effect. Does not impose a new legal duty*

DOES NOT purport to interpret an existing duty in a regulation but rather announces that the agency intends to adopt new policies in the future.

Interpretive Rules → clarify the nature of the duties previously established by an agency’s statutory mandate or by a regulation promulgated by the agency. In an interpretive rule, an agency announces how an existing law or statute is binding on those who are subject to it. Does not impose new legal duty

  • An agency can enforce interpretive rules ONLY through adjudication or rulemaking
  • If Congress HAS NOT granted an agency rulemaking power, and rule is issued by the agency is necessarily interpretative
  • If Congress HAS granted an agency rulemaking power, look to:
    • The agency’s characterization of its actions
    • The source of the duty a party is obligated to obey (look to the binding effect test)

Metropolitan School District v. Davila

  • Rule: interpretive rules don’t create a new duty, but clarifies and existing rule (must be in statute or regulation that has been promulgated via notice and comment)


American Mining Congress v. Mine Safety & Health Administration

  • Facts: An agency issued a three Program Policy Letters (PPLs) that purported to interpret when x-ray results constituted a diagnosis of silicosis or one of the other pneumoconiosis. The letters noted that certain x-ray readings qualified as “diagnoses” of lung disease within the meaning of agency reporting regulations. However, these PPLs were issued without notice and comment requirements. Nor was it published in the Federal Register.
  • Court: the policy letter was an interpretive rule
    • The Part 50 regulations themselves require the reporting, not the PPL. There is no legislative gap that required the PPL as a predicate.
    • The agency did not mean to act legislatively.

Legal Protection of Reliance on Nonlegislative Rules

Perez v. Mortgage Brokers Ass’n

  • ((Procedural argument))
  • Facts: Whether mortgage loan officers were exempt from overtime hours. Change it over and over again via an interpretive rule that they could or could not. Mortgage industry sued and challenges newest finding, wanting notice and comment (even though interpretive rules don’t need it)
  • Argument for reliance – interpretive rules that amend earlier IR that generate newer rules, and there is reliance.
    • It is essentially amending the regulation because the ambiguity now means what the interpretive rule is. Essentially becomes part of the regulation and that regulation needs to be amended via rulemaking with notice and comment.
  • Concurrence – shouldn’t pretend notice and comment requirement is somehow dispensable. Regulated entities are subject to an ever greater unfairness.
    • Can’t use notice and comment for more favorable record for arbitrary and capricious
    • She can wait and be the poster child for enforcement

Heckler v. Community Health Service

  • Facts: the Medicare program allows for the reimbursement of providers of heath care services rendered to Medicare beneficiaries. The interim payments that the providers receive are not always correct so Congress has authorized the Secretary to make retroactive adjustments to reimbursements that are inadequate or excessive. Some providers elect to receive the reimbursement through a fiscal intermediary. Without obtaining guidance by the Department of Health and Human Services, as was required, the Travelers Cos. (fiscal intermediary) overpaid Community Health services around $71, 480. Travelers, after three years of providing reimbursements, decided to submit a formal request to the Department for instructions. This is when Travelers realized they had paid Community Health Services certain reimbursements that they should not have. The Court of Appeals found that the government may be estopped from collecting the overpayment because of the “affirmative misconduct” of its agents and the Travelers erroneous advice coupled with its failure to seek advice from DHHS.
  • Court: estoppel cannot be used. The traditional elements of estoppel are not present in this case (traditionally) has not applied to government action.
    • The health care provider did not lose any rights, but merely as induced to do something that could be corrected at a later time. Although the provider the provider will be adversely effect, there was no finding of the extend to the effect of having to make the repayment.
    • As a participant in the Medicare program, the provider had a duty to familiarize itself with the legal requirements for cost reimbursement.
    • The provider only received oral advice from Travelers, written evidence is required.
    • The provider was put on ample notice of the care with which its costs reports must be prepared, yet the provider prepared these statements based on the oral advice of Travelers. This is not the kind of reliance that would give rise to an estoppel against a private party.

Office of Personnel Management v. Richmond

  • Facts: Charles Richmond sought advice from a federal employee and received erroneous information that permitted him to receive more than was permitted by the eligibility requirements of the relevant statute. Richmond lost six months of benefits months of benefits because of this erroneous advice. Richmond argues that the erroneous and unauthorized advice of the employee should give rise to equitable estoppel against the government, despite the fact that the payments would be made contrary to statute.
  • Rule: estoppel may not be applied to the government in an action where a government employee gave wrongful advice to a citizen, and that advise disadvantaged the citizen, but if estoppel were enforced, the government would be forced to take an action not authorized by law.
  • Court: The Federal government may not make payments not authorized by statute regardless of the advice given by a government employee to a benefits claimant.
    • There may be a case where estoppel can be applied to government action…but this is not one.
    • The operation of estoppel against the government in the context of payment of money from the treasury could render the Appropriations Clause useless – this Clause provides that no payments can be made by the treasury unless authorized by statute.
    • By allowing estoppel in cases where an employee misadvised a citizen, this control of public funds would be given to the executive. Congress has always been in charge of government funds.

Judicial Deference and Agency Choice of Procedures → will a court defer to agency’s position?

Interpreting from Interpretive Rule to Statute use these (interpreting own agency)

Christensen v. Harris County

  • Agency interpreting their own regulation
  • Before there was Chevron, Skidmore looked at what agency said and respect that, but not given deference. This became the default so that anything that is not Chevron is here.
    • AKA- agency action gets respect but NOT deference
  • Whether agency action in question used APA procedures
    • Clarification based on procedures agency uses when they create something binding, then they apply the deference.
    • If it didn’t go through APA procedures and thus not binding, that’s when we go through this one.

United States v. Mead Corporation

  • Facts: matters for tariff is planners are considered “bound diaries” or “regular notebook” because diaries are subject to a different import tax. Mead had been treating them like regular notebook but others say they are bound and need to pay more on importing them.
  • This was not meant to be policy making.
  • Court: takes what used to be a one factor test and turns it into a two-factor test:
  1. APA procedures, if used, gives ride to deference (Chevron); OR
  2. Other ways of finding Congress’s intent to be binding (doesn’t apply here though)
    1. Any evidence of congressional intent

Barnhart v. Walton

  • Did not go through notice and comment (not binding)
  • Adds to the already existing list:
    • APA procedures → chevron
    • Congress intent
      • Long standing policy interpretation – congress could have override it if they wanted to
      • If there had been intervening statutory amendments- this was even on Congress’s radar and they didn’t clarify it
      • The interstitial nature of the policy question- policy interpretation in the gray area, around things that have not been defined.
      • The related expertise of the agency
      • The importance of the question at issue
      • The complexity of that issue
      • The careful consideration.

** on exam, do analysis of all three. If you can apply the factors, would want Chevron deference. Would want to argue that the court should extend deference to agency any way possible.

  • ex) transgender bathrooms, just want to be able to use the bathroom, don’t care if the agency “wins”

Interpreting from Interpretive Rule to Regulation = Auer

  • Use when interpreting its own ambiguous interpretation to a regulation
    • When it is ambiguous and broad, when the statute says one thing and the interpretation says something completely different.
  • Outer limit – when the regulation is parroting the statute, then agencies would always get deference.
    • Gonzalez: physician assisted suicide, “legitimate medical purpose,” court says that the statute and regulation said the same thing. Thus, no deference.
  • See chart

Interpreting from Regulation to Statute = Chevron (binding)

Why would court be willing to defer to agency interpretation of its own interpretation?

  • They are the best source because of their expertise, they understand the ambiguity

REVIEWABILITY[edit]

Cause of Action

The Plaintiff must state a cause of action- is the plaintiff citing a judicially enforceable right? (i.e. statute, constitution). If the matter is not covered by statute, the APA provides a cause of action for anyone legally harmed by agency action under §702 = requires that a person has suffered a legal wrong or has been adversely affected

To successfully assert a cause of action under the APA, a plaintiff must meet five requirements established by the APA. The Government must raise any objections to the adequacy of the plaintiff’s satisfaction of the APA’s cause of action requirements or waive them.

  1. The appeal must be one that is not excluded from review either by
    1. Statute; or
    2. The agency action is committed to agency deference by law
  2. The agency must have performed an “agency action”
  3. §702 cause of action is limited to persons suffering “legal wrong” or those “adversely affected or aggrieved…within the meaning of a relevant statute.”
    1. Courts refer to the zone of interests’ requirement as an aspect of standing.
  4. §704 provides that only agency action specifically reviewable by statute or “final agency action for which there is no adequate remedy in court” is reviewability in a court under the APA.
  5. Exhaustion of remedies- §704 also states that an agency action is final for purposes of judicial review even if a person has not appealed within the agency, unless the agency by rule requires such an appeal and stays its action pending that appeal, in which case the action would be final only after the conclusion.

Adverse Affect = defendant must pass the “zone of interest” test: that his injury falls within the zone of interests sought to be protected by the statutory provision that forms the legal basis of his complaint.

  • If the plaintiff’s suit will serve the interest of the statute, it is within the zone of interest, even if the plaintiff’s motives were not contemplated by Congress
  • When a person is directly being regulated, he is always within the zone of interest.

Standing

Standing is an element of jurisdiction. The doctrine of standing comes from Article III’s statement that the judicial power of the United States extends to “cases and controversies.” It focuses on whether the person bringing the lawsuit is an appropriate person to bring the suit. It has to be a plaintiff who has a stake in the litigation.

  • If the connection between the plaintiff and the lawsuit is not sufficient, the court has no jurisdiction, because the lawsuit is not considered a “case” or “controversy”
  • Have to have standing for EACH count of complaint to get into court.

Basic Constitutional Test for Standing

Has the plaintiff suffered an injury (or is the plaintiff about to suffer an injury) caused (or about to be caused) by the alleged illegal action, and would a favorable court decision remedy (or avoid) that injury?

Injury in Fact → this will satisfy the standing requirement. If government action or inaction injures a third party in some real fashion, then the person has suffered a sufficient injury for standing purposes. An invasion of legally protected interest which is concrete and particularized (must affect the plaintiff in a personal and individual way) AND actual or imminent, not conjectural or hypothetical (Lujan).

  • Generalized Grievances- ideological or theoretical injury rather than actual, particularized injuries, will not satisfy standing. Thus, a citizen is not deemed injured simply because the government acts unlawfully and the person is upset with that.
    • Sierra Club v. Morton- SC held that the Sierra Club did not suffer injury in fact from degradation of the environment solely by reason of being an organization interested in the environment. However, the Court allowed that injury to a person’s environmental, aesthetic, or recreational enjoyment of a place could qualify as injury in fact.
  • Associational or Representational Standing- an association (like a public interest group or environmental group) can sue in its own name on behalf of its members if: (1) one of its members would have standing to bring the action, (2) the lawsuit relates to the purposes of the organization, and (3) neither the claim asserted nor the relief requested requires participation of individual members.

Causation and Redressability → the injury must be a result of government action and a favorable court decision would remedy that injury. Injury caused by agency action redressable by relief that the court can provide.

  • Simon v. EKWRO- welfare rights organization challenged IRS regulation that reduced the amount of free medical care that hospitals had to provide in order to qualify as tax exempt charitable institutions. Court said causation and redressability were “purely speculative.”

Prudential Requirements → the plaintiff cannot assert the rights of third persons. APA §702 delimits this prudential requirement by granting a COA to a potential plaintiff who is claiming the rights of a third person- all that is required under this section is that the plaintiff is suffering a “legal wrong” because of the agency action.

  • A “legal wrong” in the context of the APA means an action by the government that interferes with a person’s constitutional, statutory, or common law rights.
  • Tileston v. Ullman- court held that a physician did not have standing to assert that a state law that prohibited the prescription of contraceptives violated the constitutional rights of his patients.
  • Example: If OSHA adopted a regulation prohibiting employers from employing women in certain kinds of jobs, an employer could challenge that regulation as denying equal protection of the laws to women employees. The employer would be asserting the rights of third persons – the right of women to equal protection. But the employer has a cause of action under §702 to make this argument because the employer is suffering a “legal wrong” because of agency action. OSHA’s action interfered with the employer’s freedom to contract.
  • Exception: the court will permit associations to represent their members under the doctrine of “associational standing”

Statutory Grant of Jurisdiction → even if the plaintiff has standing, there must still be a statutory grant of power. For administrative law, this is typically not an issue. The APA itself does not grant jurisdiction.

Standing in the States → the constitutional limitation of “cases and controversies” only applies to federal judicial power (and hence, administrative law) but does not apply to the states. Most states have their own rules of standing.

Lujan v. Defenders of Wildlife

  • Facts: The Endangered Species Act was initially read by the Secretary of the Interior to protect species in foreign countries. Upon further review, the Secretary re-interpreted the Act to only protect species in the United States. Thus, the ESA was held to be inapplicable to the federal funding of projects in foreign nations. The plaintiffs, organizations dedicated to wildlife conservation, filed an action against the Secretary seeking an injunction requiring the Secretary to reinstate the initial interpretation of the ESA. Three Theories of Harm:
    • Ecosystem nexus (NO HARM)- one member claimed she visited the habitat of the Nile crocodile, and that the rehabilitation of a dam threatened to destroy the habitat. She wanted to return one day.
    • Animal nexus (NO HARM)- another member claimed that they wanted to observe the endangered species one day again.
    • Vocational nexus- maybe harm
  • Rule: Congress does not have the unlimited power to confer standing on individuals who do not meet the constitutional requirements of injury-in-fact, causal connection, and redressability.
    • A speculative injury does not qualify as an injury in fact (concrete, legally protected interest and actual/imminent). A plaintiff must allege that the government acted illegally, causing an injury which constitutional law will recognize, and asking for appropriate redress for that injury.
  • Court: maybe if the plaintiffs had purchased tickets to visit the area at a definite point in the future. Otherwise their harm is just too speculative, no concrete plans to go back.

The Implications of Lujan

Before Lujan, Congress had the unlimited power to create standing even for insufficient injuries. Congress could confer standing by defining injuries and articulating chains of causation that would give rise to a case or controversy where none existed before by statute. After Lujan, Congress does not have the unlimited power to confer standing on individuals who do not meet the constitutional requirements of injury-in-fact, casual connection, and redressability. There are certain types of injuries that are too insufficient to allow Congress to create standing.

Massachusetts v. Environmental Protection Agency

  • ((Outlier case that allows a state to have standing))
  • Facts: 12 states and several cities of the US brought suit against the EPA to force that federal agency to regulate carbon dioxide and other GHGs as pollutants. §202(a)(1) of the CAA requires the Administrator of the EPA to set emission standards for “any air pollutant” from motor vehicles or motor vehicle engines “which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.” In 2003, the EPA made two determinations: (1) the EPA lacked authority under the CAA to regulate carbon dioxide and other GHGs for climate change purposes; and (2) even if the EPA did have such authority, it would decline to set GHG emissions standards for vehicles.
    • MA argued: it was injured because increased GHG emissions induced global warming; global warming results in sea level rise; and MA owns coastal land that is being inundated by this sea level rise.
  • Court: the petitioners have standing. The current rationale for not regulating is inadequate and required the agency to articulate a reasonable basis in order to avoid regulation. MA was suffering an immediate, particularized harm caused by EPA’s failure to act and that EPA’s action would at least alleviate that harm- the normal standard for assessing standing.
    • This is a suit by a State for an injury to it in its capacity of quasi-sovereign. In that capacity, the State has an interest independent of and behind the titles of its citizens, in all the earth and air within its domain.
    • The CAA gives the EPA the authority to regulate tailpipe emissions of GHGs. GHGs fit well within the CAA’s capacious definition of air pollutant.
    • Remanded case to EPA, requiring the agency to review its contention that it has discretion in regulating carbon dioxide and other GHGs.

Summers v. Earth Island Institute

  • Facts: a statute required the United States Forest Service to provide notice and an opportunity to comment before the Service made timber sales. The Forest Service nevertheless adopted a rule that provided that it would not provide notice and an opportunity to comment for certain types of timber sales. P argued that the absence of notice and comment has created an injury to them.
  • Rule: violations of procedures designed to protect or benefit members of the public are not injuries for purposes of standing even to those members of the public who wish to utilize those procedures.
  • Court: persons who wished to comment on such types of timber sales were held not to be injured for standing purposes by being precluded from commenting.
    • Even in notice and comment, unless comment affects something that is specific and ongoing, the mere fact you didn’t get notice and comment itself is not enough.
    • The regulations under challenge neither require nor forbid any action on the part of the respondents. They only govern the conduct of FS officials. The regulation must actually affect the plaintiffs for them to have standing.
    • There is no concrete or imminent harm here, thus no injury in fact. One of the more specific cases were already settled and remedied…a party cannot bring suit after their harm has been legitimately remedied.

Monsanto Co. v. Geertson Seed Farm

  • ((possibility of injury is enough))
  • Facts: The Animal and Plant Health Inspection Service deregulated certain genetically engineered alfalfa plants. A number of organic alfalfa farmers, Geertson Seed Farms, among other parties, brought suit claiming that the APHIS decision violated NEPA. The plaintiffs claimed that because of the ruling, they would have to incur significant costs to test their plants for contamination. They also claim that the ruling would require them to incur costs to decrease the likelihood that their plants were infected. Monsanto argued that the plaintiffs lacked standing.
  • Rule: to establish standing, a party must establish that its injury is concrete, fairly traceable to the challenged action, and redressable.
  • Court: plaintiffs have alleged injury sufficiently concrete to standing. The plaintiffs showed that there is a “substantial risk” that the deregulation will result in their alfalfa plants being contaminated. Given that risk, and the fact that the plaintiffs market and sell organic alfalfa, the harm to the plaintiffs is that they are forced, at a significant cost, to take certain measures to ensure that their plants are not contaminated before they are marketed and sold.
    • Because of the sheer risk of contamination, the plaintiffs will incur these costs whether or not their plants are affected. This is sufficient to establish concrete injury.


Clapper v. Amnesty International USA

  • ((Threatened injury must be certainly impending for injury in fact))
  • Facts: The Foreign Intelligence Surveillance Act authorized the US government to conduct surveillance on non-US citizens that were outside the US Amnesty International USA. Plaintiffs are lawyers, journalists, and human rights researchers, among other things, who do work that often has them communicating with individuals abroad that the plaintiffs claimed are likely to be subject to surveillance under FISA. The plaintiffs brought suit seeking a declaratory ruling that this portion of FISA was unconstitutional. the plaintiffs claimed there was an “objectively reasonable likelihood” that the plaintiffs’ communications would be recorded under FISA. Alternatively, the plaintiffs claimed that given the risk of surveillance, they had to spend significant funds to ensure that their communications were kept confidential.
  • Rule: threatened injury must be certainly impending to constitute actual or imminent.
  • Court: plaintiffs do not present any evidence that their communication has been intercepted by FISA. They merely claim that there is an “objectively reasonable likelihood” that their communications will be intercepted in the future. No standing.

Agency Action

Only “agency action” can be reviewed by the court under §702. The action must be a final action.

“A person suffering a legal wrong because of agency action or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof” §701

  • Defined in §551(13): “the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent denial thereof, or failure to act”
  • Agency action includes: promulgating a rule (legislative or not), issuing an order, and other types of actions.
  • Example: failure to grant a license


Lujan v. National Wildlife Federation

  • Facts: The plaintiffs submitted four affidavits alleging that the “land withdrawal review program” itself harmed them. The land withdrawal review program involved all of BLM’s activities concerning the withdrawal of classifications of certain lands. The issue was whether these activities would constitute “agency action” and thus make this suit allowable under §701 review.
  • Court: The “land withdrawal review program” is not agency action within the meaning of §702 (or 701?), nor is it final agency action under §704.
    • (1) The program does not encompass a single agency action, regulation, or order. The petitioners have referred to it as the continuing operations of the BLM in reviewing the withdrawal revocation applications, the classifications of public lands, and the developing of land use plans.
    • (2) The individual actions identified by the petitioners are also insufficient because they can be considered as rules of general applicability. However, these actions are merely future actions that are not ripe yet – they must have some immediate harming affect and they do not.
  • TAKE AWAY- After this case, citizen suits have not been totally discredited but recognized as allowing congress to create standing, who must do so within constitutional requirements of Article III


Exclusions from Judicial Review Under the APA

Statutory Preclusion

§701(a)(1) of the APA makes clear that judicial review is not available when statutes preclude judicial review OR the agency action is committed to agency discretion by law. These types of statutes are rare, but many statutes limit judicial review to certain circumstances, rather than precluding it altogether.

The courts tend to not interpret statutes as precluding judicial review because (1) it would most likely be unconstitutional to preclude constitutional claims, and (2) the APA provides a cause of action for any person harmed by agency action (VERY rare, courts generally do not limit judicial review)

Preclusion by Statute→ can be expressly or implicitly.

  • Implicitly- rare and reluctant because Congress has the ability to do it expressly
    • Rejected- Abbot Labs, too generous of a standard, won’t be included just because the statute mentions it, cannot assume.
    • Accepted- Community Commission Institution, had to be a really compelling reason. It was a complex administrative scheme.

Committed to Agency Discretion

§701(a)(2) if an “action is committed to agency discretion by law” (i.e. omits a standard under which to exercise discretion of agency) review will be precluded. In other words, if statute grants discretion to an agency, and the law omits a standard under which to assess the exercise of that discretion, then Congress has committed that action to agency discretion by law (very rare)

  • Example: an agency’s choice not to prosecute or enforce its regulations absent an express statutory mandate to prosecute.

Citizens to Preserve Overton Park, Inc. v. Volpe

  • Supreme court addressed this section of 701, stating that it was a “very narrow exception” that applied only where a statute was phrased in such broad terms that “there was no law to apply
    • “No law to apply” means that Congress had created such a broad statute that a court would have no meaningful standard against which to judge the agency’s exercise of discretion.
  • If there is “no law to apply” then the action is committed to agency discretion (no standard)

Heckler v. Chaney

  • Facts: the respondents were convicted and sentenced to death by lethal injection. They appealed to the FDA, arguing that while the drugs to be involved in the lethal injection had been approved, the manner in which they were going to be used had not, in violation of the Food, Drug, and Cosmetic Act’s prohibition against “misbranding.” They also argue that the Act’s procedures for “new drugs” should be applicable, given that these drugs were being utilized for new and un-tested purpose. The respondents also argued that the FDA is required to exercise its enforcement power to ensure that states only use drugs that are “safe and effective” for human execution.
  • Rule: an agency’s decision not to pursue an enforcement action (or investigate) is presumptively unreviewable, as such actions are “committed to agency discretion by law” under §701(a)(2)
  • Three reasons why reviewing an agency’s decision not to act is unsuitable to judicial review:
    • (1) An agency decision whether to initiate enforcement actions are usually based on a complicated balancing of multiple factors, such as efficient allocation of limited resources, likelihood of success, and the relationship of potential action to the overall enforcement strategy of the of the agency. The courts are ill-suited to perform such an analysis.
    • (2) When an agency chooses not to act, they are not exercising any coercive power over others that might be worthy of heightened judicial protection.
    • (3) The Court found an agency’s discretion not to seek enforcement as being analogous to exercises of prosecutorial discretion that courts have traditionally been unwilling to review.
  • The presumption of unreviewability is rebuttable where (a) an agency declines to act based “solely” on its belief that it lacks jurisdiction, or (b) where an agency “consciously and expressly” adopts a policy that it represents an abdication of its statutory responsibility.
  • Court: the agency did not need to take action. Such decisions are presumptively unreviewable under the common law and was Congress’ intention under the APA to codify the common law.
    • Agencies have expertise in determining what enforcement actions should be
    • Alternative means of holding agencies accountable for other enforcement- use political branches to tell the agencies it is wrong. Judicial review is meant to be a safeguard against political branch.

Webster v. Doe

  • Facts: respondent was an exemplary employee of the CIA for several years, and was promoted from a clerk-typist to a covert electronics technician. He voluntarily told the CIA that he was homosexual, and was almost immediately placed on administrative leave. The Director later terminated his employment, finding him to be a security threat. The statute precluded judicial review of the Director’s determination: “The Director of Central Intelligence may, in his discretion, terminate the employment of any officer or employee of the Agency whenever he shall deem such termination necessary or advisable in the interests of the US.”
  • Rule: an agency will have broad discretion to take an action when it is expressly committed to agency discretion in statute.
  • Court: judicial review under the APA is not permitted. The statute clearly granted broad discretion to the Director. Congress intended to commit individual employee discharges to the Director’s discretion. No reviewability in the way the statute was worded, “deemed”
    • The respondent does have a constitutional claim – rational basis
      • Even if the statute doesn’t have standards to apply, can bring Constitutional claim
      • Harder when standard comes from another statute rather than the constitution.

Timing

Three principles have an impact on the timing of judicial review:

  1. A party can obtain judicial review only of final agency actions unless Congress has authorized review at an earlier stage
  2. A party may have to exhaust any administrative remedy as a prerequisite to agency review.
  3. A party can obtain judicial review of any agency action only if that action is ripe for review.

Finality

§704 says that only final agency action is reviewable, must be binding. If a statute provides for judicial review, then review proceeds pursuant to the statute (not the APA). If no specific statutory provision for review exists, the agency action must be final and no other remedy can exist for a party to proceed with review under the APA. If the agency decision is not final, the case will be dismissed for lack of subject matter jurisdiction.

  • Non-legislative rules are not binding because they could be changed at any time but does not automatically mean it’s not final – finality can be challenged before binding agency action

Direct or Immediate Effect → to determine whether an agency action is final, ask whether the agency has completed its decision-making process and whether the result of that process is one that will directly affect the parties Franklin v. Massachusetts .

Agency Actions are Deemed Final When

  1. They mark the consummation of the agencies decision process (aka they are not interlocutory), AND
    1. National Laundry v. ShultzFinal
      1. Court was deciding for everyone; whole industry was affected.
    2. Taylor Callahan Coleman v. DoleNot Final
      1. Two opinion letters that the administrator made, the opinion letters were challenged on basis that they were legislative rules. The letters were not final agency action. DOL had stated in advisory opinions that it was merely guidance.
  2. Action is one which rights or obligations have been determined or legal consequences flow
    1. Appalachian Power Company v. EPA
      1. EPA tried to say it was just advisory and said they were going to enforce it. Court said that rights, obligations, and legal consequences flowed from that advisory because they were going to enforce it.
    2. Bennett v. Spear

Elements that Demonstrate Finality Abbot Labs and Taylor

  1. Whether the challenged action is definitive statement of the agency’s position
  2. Whether the actions have the status of laws with penalties for noncompliance
  3. Whether the impact on the plaintiff is direct and immediate
  4. Whether immediate compliance was expected.


Taylor-Callahan-Coleman Counties District Adult Probation Department v. Dole

  • Facts: The Wage and Hour Administrator, from the Department of Labor, issued an opinion letter in 1974 advising a party that a certain type of probation officer (as described in the letter) was exempt from the overtime requirements of the FLSA. In 1988, DOL issued two opinion letters stating that a certain type of probation officer was not exempt from the overtime requirements of the FLSA. the Probation Department challenged the letters on the grounds that they were legislative rules that had not gone through notice and comment, nor were they consistent with prior regulations and the statute. the plaintiffs argue that the court has jurisdiction under the APA’s judicial review grant.
  • Rule: In order for agency action to be final, (1) the action must mark the ‘consummation’ of the agency’s decisionmaking process (not tentative or interlocutory in nature), and (2) the action must be one in which ‘rights or obligations have been determined’ or from which ‘legal consequences will flow’
    • Finality requires a definitive statement of agency.
  • Court: the letters are NOT FINAL AGENCY ACTION (did not have binding effect) and, thus, the case is dismissed for lack of subject matter jurisdiction. Only applied to one person, thus the narrow application of opinion letter cannot be challenged besides the person who wrote it. Not a definitive determination of law.
    • This case is distinguished from other cases because the letter involved was not one of general applicability, nor did it involve a letter that resulted in a big loss for union members who lost a chance.

Appalachian Power Company v. EPA

  • Facts: under Title V of the 1990 amendments to the CAA, states are required to submit operating permits and proposed and final permits related to stationary sources of air pollution to the EPA for approval. If the EPA objects to the permits within 45 days, the state may not issue the permit. In 1992, the EPA promulgated rules implementing the permit program. These rules mandated that permits contain a requirement for periodic monitoring. The rules were unclear as to whether this monitoring requirement trumped existing, non-periodic, monitoring requirements for certain polluters. To address this point, the EPA issued a document entitled “Periodic Monitoring Guidance for Title V Operating Permit Programs.” the Guidance clarified that permits are to require “periodic monitoring” even in situations where the source of pollution was already subject to a different, non-periodic, monitoring requirement. Electric power companies and trade associations representing the nation’s chemical and petroleum industry challenged
  • Court: although agency action was titled as “policy statement,” it was final action which policy statement flowed. The guidance letter creates obligations. It’s a letter based upon a settled agency position, a position it plans to follow in reviewing permits, a position it will insist local authorities comply with, an a position EPA officials are bound to apply.
    • The fact that the Guidance may be altered does not mean that it is not a final agency action. All laws are subject to change- even the Constitution. That doesn’t mean that they are not binding.

Exhaustion

Exhaustion is a common-law concept and is codified in §704. Where Congress has mandated exhaustion, it is required; where it has not, judicial discretion governs. Exhaustion protects administrative agency authority and promotes judicial efficiency.

  • A party must exhaust all administrative remedies within the agency before going to court. A party could potentially lose their chance to utilize all administrative remedies due to the lengthiness of a court case (aka miss deadline to file agency appeal).
  • A person need not appeal to the agency for the agency action to be considered final, unless there is a statute requiring the appeal.
  • Pros and Cons of being withheld from judicial review:
Pros Cons
  • Gatekeeper to ensure judicial economy
  • Efficiency
  • Making plaintiff go through agency could enhance record that courts can review later on
  • Might end up harming plaintiff because it takes a while to get administrative relief
  • Agency may be biased
  • Sometimes individual harm

Purpose of Exhaustion Doctrine

  • Recognized congresses delegation to agencies not the courts (separation of powers)
  • It allows agencies to correct own mistake and promotes judicial efficiency (note also creates a better record for the court)

Common Law Exhaustion Doctrine → requires plaintiffs to exhaust administrative remedies before seeking judicial review by the courts. Applies to non-APA COAs

McCarthy v. Madigan

  • ((Exception to common law exhaustion))
  • Facts: the general “Administrative Remedy Procedures for Inmates,” promulgated by the Federal Bureau Prisons allows prisoners to “seek formal review of a complaint which relates to any aspect of imprisonment.” The review process does not provide for any kind of hearing. Petitioner did not go through the prison administrative remedy, but filed suit in District Court, alleging respondents violated his 8th Amendment constitutional rights by their deliberate indifference to his needs relating to a back injury and psychiatric problems. He did not pursue the administrative remedy because he was seeking money damages (which were unavailable administratively.
  • Exhaustion Test → exhaustion NOT required where the plaintiff’s need for judicial review outweighs the government’s need for efficiency.
    • Prejudice – administrative remedy prejudices the court action
    • Remedy sought is impossible to grant – where the remedy sought is not possible by pursuit of the administrative remedy.
    • Bias of administrative process – so that recourse to the agency is inappropriate
  • Court: although petitioner did not exhaust all the administrative remedies, he was still entitled to a hearing in court based off the nature of his claims.
    • Balancing Test- given the type of claim raised and the particular characteristics of the Bureau’s grievance procedures, P’s interests outweighed the countervailing interests favoring exhaustion. Petitioner did not have to exhaust his constitutional claim for money damages
    • Congressional Intent- congress neither enacted nor mandated the general grievance procedure promulgated by the Bureau. Further, the grievance procedure did not include monetary relief.

APA Exhaustion Doctrine

§704 of the APA codifies the common-law concept and explicitly requires exhaustion of all intra-agency appeal that are mandated by either:

  1. Statute OR
    1. Agency says if you want this to be final, you have to appeal it first
    2. Not final until appeal to head of agency takes place
  2. Agency rule requiring exhaustion and agency provides an automatic stay pending appeal
    1. AKA- action meanwhile is inoperative
    2. Initial action on hold until appeal, doesn’t continue while appealed within agency
    3. Doesn’t take effect until final

EXCEPTIONS- if the statute does not require exhaustion (or silent as to exhaustion), or if the agency regulations do not require exhaustion, or there is not stay provided, plaintiffs can immediately seek judicial review.

  • Up to the agency on whether or not there is an exhaustion requirement. Final even though there might be:
    • Application for declaratory order
    • Application for reconsideration
    • Application for appeal to superior agency authority - Just because you may be able to appeal through the agency doesn’t mean it is not final

Darby v. Cisneros

  • Facts: Darby was self-employed South Carolina real estate developer whom the Department of Housing and Urban Development debarred from participation in the program for a period of 18 months. Petitioner filed suit against HUD in District Court, and Respondents filed a motion to dismiss on the grounds that Petitioner had failed to exhaust administrative remedies.
  • Rule: §704 constitutes a statutory exhaustion provision that substitutes the common-law doctrine.
    • “Automatic stay pending appeal” = they will not take action until end of agency review.
  • Federal courts cannot require exhaustion of administrative remedies unless mandated by statute or agency rules. In other words – where the APA applies, an appeal to “superior agency authority” is a prerequisite to judicial review only when expressly required by statute or when an agency rule requires appeal before review and the administrative action is made inoperative pending that review.
  • Court: Darby doesn’t have to use available process because it was an optional appeal, it was not required.

Finality vs. Exhaustion

  • The finality requirement is concerned with whether the initial decision maker has arrived at a definitive position on the issue that inflicts an actual, concrete injury.
  • The exhaustion requirement generally refers to administrative and judicial procedures by which an injured party may seek review of an adverse decision and obtain a remedy if the decision is found to be unlawful or otherwise inappropriate.

Ripeness

Judicial review is only permitted if that action is ripe (meaning that it is the correct time to hear the case). It is the requirement case be ready for litigation. It is not an APA requirement; it is a common law jurisdictional question and applies to all federal court cases. Therefore, it applies to all cases. It looks to the proper time for a court to review the agency action. Courts are concerned about intervening too soon and if a dispute is too far in the future a good record.

  • Generally, rules that require immediate enforcement with threat of fines or penalties will be ripe under Abbott Labs
  • However, conditional legislative rules will not be ripe in a pre-enforcement context under Toilet Goods.

Multi-Factor Test for Ripeness:

  1. Is the issue FIT for judicial decision? (Abbott Labs)
    • Nature of claims legal or factual? (Abbott Labs/Ohio Forestry)
    • Final agency action?
      • Abbot Labs- although it was a pre-enforcement case, the rule was final and published in the federal register, and the agency stated it expected compliance.
    • Is the record complete? aka- what was the meaning of the statute, what did congress intend?
  2. Would parties suffer HARDSHP if the court withheld review? (Toilet Goods/Abbott Labs)
      • Abbott Labs- court found hardship because the companies would have to incur cost of re-producing all their labels. Also, if they refused to comply they could immediately suffer enforcement action or fines.
    • Would judicial intervention inappropriately interfere with future agency action?
      • Ohio Forestry- the court wanted to allow the Agency to proceed with plan so they could refine policy. The Sierra club had additional opportunities to litigate before harm was incurred.

Abbott Laboratories v. Gardner

  • Facts: FDA issued drug manufactures to list generic names on bottle, not just the trade name. Plaintiffs sought pre-enforcement review, agency denied review and P’s sued.
  • Is the issue fit for judicial review now as opposed to the future?
    • Arbitrary and capricious- effects the rule itself. This is a purely legal question that is not affected by agency’s thought process.
    • Mixed questions- should wait for enforcement, not purely legal.
  • Drug companies were NOT prohibited by ripeness doctrine from challenging an FDA regulation requiring a prescription drug’s generic name to appear on all related printed materials.
  • The government argues that the case was not ripe because the regulation had yet to be enforced; however, that argument failed as the Court found the issues to be fit for judicial resolution, and the drug companies would experience substantial hardship if denied a pre-enforcement challenge to the statute.
  • Court: the basic rationale of ripeness is to avoid entangling in abstract agreements and prevent judicial interference until formal agency action.
    • NOTE → problem here was PRE-ENFORCEMENT! if post-enforcement, no ripeness issue.


Toilet Goods

  • ((Not Ripe, failed hardship))
  • Facts: rule provided that if a person failed to give an employee of the FDA access to manufacturing facility the FDA could suspend license. Private company brought a pre-enforcement challenge.
  • Court: held that action was not ripe. Unlike in Abbott Labs, it was a conditional requirement. Had to have a person come to the facility and be refused. Court found there was no sure immediate enforcement.
    • There wasn’t a double bind of hardship, both compliance and non-compliance wasn’t costly.

Ohio Forestry Association, Inc. v. Sierra Club

  • ((Factor whether intervention inappropriately interferes))
  • Facts: The Sierra Club challenged the lawfulness of a federal land and resource plan adopted by the United States Forest Service on the ground that it permitted too much logging and clearing for Ohio’s Wayne National Forest. The Plan set logging goals, selected areas of the forest which were suitable for timber production, determined which methods of timber harvest were appropriate, but did not itself authorize the cutting of any trees. Before the Forest Service could permit logging, it would have to go through additional steps, including a notice and comment procedure and an environmental analysis. The Sierra Club objected when the Forest Service first proposed its plan, and pursued various administrative remedies to have the Plan modified, prior to bringing this action in federal court.
  • Court: suit was not ripe for review. To withhold judicial consideration at that stage would not cause the parties significant hardship as the plan did not even confer the right to cut any trees.
    • From the agency’s perspective, judicial review that that stage would hinder its ability to refine its policies through revision of the plan or application of the plan in practice.
    • Review of SC’s claims at that stage would have required time-consuming judicial consideration of the details of an elaborate plan, without the benefit that a particular logging proposal could provide.
    • Congress did not provide for pre-implementation judicial review of forest plans.

AGENCY STRUCTURE[edit]

Different analytic frameworks for evaluating blendings of power that are NOT specifically authorized by the Constitution:

  1. Formalism- a technique that interprets constitutional requirements as literal as possible. Has the impact of minimizing the extent to which the powers of the three branches overlap.
    1. Under this approach, the Court identifies the power being exercised as legislative, judicial, or executive, and then it determines whether the power is being exercised by an inappropriate branch.
    2. Congress is setting intelligible principal (ultimate goal) and it is up to agency to delegate
    3. When the Supreme Court concludes that a governmental structure is unconstitutional, it usually takes a formalistic approach to constitutional interpretation
    4. Formalist is someone who classifies power then assigns it to a branch of government
      1. Youngstown Sheet & Tube Co. v. Sawyer- the court struck down President Truman’s order directing the Secretary of Commerce to seize and operate the nation’s steel mills. It held that Congress did not authorize the seizure, and the President had improperly aggregated to himself the power to make law.
  2. Functionalism – technique that has the impact of extending the extent to which the powers of the three branches overlap, on the ground that the Constitution itself commingles powers among the branches.
    1. Under this approach, the Court determines whether Congress has gone too far in commingling of powers by using a “core function” test.
      1. This test approves the commingling of power as long as one branch’s exercise of a power does not jeopardize the “core function” of another branch.
      2. AKA- whether it is a concept necessary to protect fundamental branch interests
    2. When the Court is less strict about separation of powers, it usually uses a functional approach which interprets constitutional powers in a nonliteral manner.
    3. Functionalist asks if one branch of government is unduly interfering with the power of another branch, and is it an appropriate sharing of power?

Delegation of Legislative Power

The Delegation Issue

The Constitution authorizes the delegation of rulemaking to agencies because Article 1, §8 provides that Congress has the power “to make all laws which shall be necessary and proper for carrying into execution” the other powers in Article 1.

  • All agency action must fall within the statutory grant of rulemaking power provided by congress. The constitutional Delegation Doctrine gives Congress the authority to delegate broad quasi-legislative and quasi-judicial power as long as it gives an agency an Intelligible Principle in exercising the power.

Intelligible Principle Test (Modern Application)

Congress does not violate the prohibition against delegating its legislative powers as long as it sets the boundaries of the agency authority. Meaning that a agency may make legislative like policy decision so long as they are within the overarching principle defined by congress in its enabling statute. If, however the delegation is broad and ambiguous, it may not offer sufficient guidance to the courts concerning the extent of the agency’s authority to promulgate rules.

Whitman v. American Trucking Associations, Inc.

  • Facts: ATA challenged the EPA’s promulgation of National Ambient Air Quality Standards for ozone and particular matter. The Clean Air Act requires EPA to establish standards “requisite to protect the public health” with an “adequate margin of safety.” ATA argued on judicial review of the NAAQS (National ambient Air Quality) that the EPA’s construct of the CAA violated the nondelegation doctrine
  • Issue: whether the statute has delegated legislative power to the agency.
  • Rule: when Congress confers decisionmaking authority upon agencies CONGRESS must “lay down by legislative act an intelligible principle to which the person or body authorized to act is directed to conform.”
    • Intelligible Principle Test- when IP is there, the agency’s power to exercise is no longer called legislative powers.
  • Court: remanded the case to the agency. Court reaffirms intelligible principle test and says that the CAA’s language easily meets that test. The court rejected allowing an agency to cure unlawful delegation of legislative power by adopting, in its own discretion, a limited construction of the statute. Congress must make the important policy decisions.
    • When sweeping regulations are provided by congress, there needs to be some type of guidance. Court said that requisite is enough of an agency delegation to fulfill its role
    • Justice Stevens Concurrence- he is functionalist, doesn’t think IP is real.

The Legislative Veto

Delegation of Legislative Veto is UNCONSTITUTIONAL

Until the legislative veto was declared to be unconstitutional, Congress reserved for itself the right to veto rules or orders in almost 200 statutes. The veto was popular because Congress could delegate substantial discretion to an agency and still retain the authority to disapprove of specific agency decisions (be able to delegate authority to the executive and then veto rules or orders within the statutes). The veto violates the requirements of presentment and bicameralism.

Presentment and Bicameralism

Bicameralism → every bill or resolution out of Congress must pass both houses

Presentment → every bull or resolution out of Congress must be signed by the president

Immigration and Naturalization Service v. Chadha

  • Facts: the Attorney General was given ability to stay deportation in situations of hardship. Chadha’s student visa lapsed. He was a person without a country. Under the statute, any stay of deportation by the agency had to be reported to Congress and if Congress object, they could overrule the stay. Congress did so here. Chadha appealed arguing legislative veto was unconstitutional.
  • Rule: legislative vetoes have the effect of law, violating bicameralism and presentment requirements. Every bill or resolution must pass both houses and be signed by the president.
  • Court: determined that the legislative veto in §224 of the Immigration Act was unconstitutional. Supreme Court stated that THAT part of the Act could not be severed or separated, thus the entire section was unconstitutional, despite the immigration statute having a severability clause.
    • House action altered rights, thus it was legislative in effect

Post-Veto Developments

Congress took two steps to reassert its authority over agency decisionmaking in the wake of Chadha. In 1995, the House of Reps established “Corrections Day” as a method to expedite review of both perceived mistakes made by Congress and perceived errors made by agencies. Further, a 1996 law, the Congressional Review Act, required agencies to submit all rules to Congress for its review and stays the effective state of major rules to permit legislative review.

Corrections Day

Involves a process established by the House of Reps for correction of confessional and agency “mistakes.” After a House committee approves a bill, it can apply to have it placed on the Corrections Calendar which specifies one or two days a month when the House will consider adoption of the bill under fast-track procedures. The rules for CD expedite consideration of the bill in three ways: (1) there is a limited time for debate; (2) only the chair of the committee with jurisdiction over the bill can move to amend it; and (3) opponents are limited to one motion to recommit the bill. However, a bill must pass by a 60% majority on CD. Any bill that fails to pass can be considered at a later day under normal House rules.

  • Corrections Day has essentially disappeared from view. It had virtually no effect on agency regulations and certainly did not reestablish any form of legislative check on regulations.

Congressional Review of Agency Rulemaking

Under the CRA, agencies must submit all new rules to Congress and Comptroller General, along with copies of any cost-benefit analysis, regulatory flexibility analysis, and analysis undertaken pursuant to the Unfunded Mandates Reform Act.

  • A major rule cannot take effect until 60 days after the previous information is submitted to Congress, or after the rule is published in the Federal Register, whichever date is later.
  • A “major rule” is one with an annual economic impact of $100 million or more or with other significant regulatory impacts identified in the legislation.
    • This stay does not apply if a rule is not a major rule, if the Prez certifies by executive Order that immediate implementation is necessary for an imminent threat to health or safety or other emergency, or if an agency determines that it has good cause for promulgating the rule without prior notice and comment.
  • In 17 years, Congress has voted to overturn only one agency regulation.

The Regulations from the Executive in Need of Scrutiny Act of 2011

The REINS Act would amend the CRA to require Congress to approve by law all major rules before they could take effect. Judicial review of actions under the Act would be precluded, except that a court could determine whether a Federal Agency had completed the necessary requirements under this chapter for a rule to take effect.

  • This bill has passed and failed several times

Appointment and Removal

Appointments Clause

Article 2, Section 2 says that the President shall nominate and appoint all officers of the United States whose appointments are not otherwise provided for in the Constitution of by law, but Congress may enact laws allowing the President, Heads of Departments, or Courts of Law to appoint inferior officers.

Officers of the United States

All persons who can be said to hold an office under the government, someone exercising significant authority pursuant to the law of the United States. *

Article 2 requires that the President nominate and appoint the Officers, with the advice and consent of the Senate.
  • Congress may NOT appoint Officers of the United States.
    • It may however, appoint people to positions that are not of the Officer level like employees

Inferior Officers of the United States

Generally speaking, inferior officer connotes a relationship with some higher-ranking officer or officers below the President. Lower level executive officials beneath the President. Have supervision and control.

  • Congress may allow inferior officers to be appointed by the President, Heads of Departments, or Courts of Law

Employees

People who do not exercise “significant authority pursuant to the laws of the United States” do not need to be hired pursuant to the Appointments Clause

  • Lesser functionaries, subordinate to Officers.


Buckley v. Valeo

  • Congress was trying to assert itself for appointing officers to federal commissioners in the FEC.
  • Rule: Officers do not include all employees of the US. The Appointments Clause refers only to appointment of “officers” and “inferior officers” but does not say anything about other employees.
  • Court: held that Congress may NOT appoint administrative officials. The FED could not engage in executive functions such as rulemaking and enforcement because 4 of its 6 members were appointed by members of Congress. Only officers of the US may exercise that authority and that such officials be appointed in accordance with the Appointments Clause.
  • Formalist- set precedent for formalistic approach of determining who is an officer.

Principal Officers

High-level officials in the executive branch and heads of independent agencies

  • Must be appointed by the President


Factors separating INFERIOR officers from PRINCIPAL officers p.598

  • Subject to removal by higher executive branch official
  • Only empowered to perform certain, limited duties under the statute
  • Only has power in a limited jurisdiction
  • Has a limited tenure


Morrison v. Olson

  • Facts: In passing the Ethics in Gov’t Act, Congress created the office of Special Prosecutor to investigate misdeeds by gov’t officials. It provided that the AG must investigate allegations and report to a special judicial division, which was enabled to appoint an independent counsel which in turn would have full prosecutorial authority. The counsel could be removed only by impeachment or by the AG for good cause.
  • Court: due to the limited scope of the counsel’s office, the counsel is an inferior officer, not a principal officer. Court held that the supervisory powers of the special division are of ministerial nature and do not trespass on the authority of the Executive.
    • Relied on the limited scope and duration of the independent counsel’s appointment and the AG’s removal power, to hold that the independent prosecutor is not a principal officer.
    • AKA- if inferior officer, have supervision and control

Edmond v. United States

  • Military judges were subject to supervision and control, thus were considered inferior officers
    • Control because they were subject to removal for any reason.

Removal Power/Impeachment Clauses

Constitution is silent as to the removal of officers. Congress may, under certain circumstances, restrict the Presidents power to remove executive officials but Congress itself may not retain advice and consent power over removal of officials or participate in the removal of officials except through exercise of the impeachment power. Article 2, Section 4 says that the president, vice president, and civil officers can be impeached for treason, bribery, and other high crimes.

Limits on Presidential Removal Power

The President has nearly unrestricted power to remove “the most important subordinates”

  • The President’s power to remove independent Officers (those not purely Executive in nature) is limited. Congress can require that the President only remove these people for “good cause” (Morrison v. Olson)
    • Congress can restrict the President’s power to remove even purely Executive Officers so long as the procedures do not interfere with his ability to execute the law of the US.
      • Must look to whether a restriction on the President’s removal impede the President’s ability to faithfully execute the law.

Meyers v. United States

  • Ct ruled that Congress may not statutorily require President to seek Senate’s permission before removing a local postmaster. This case is cite as establishing the President’s unlimited constitutional power to remove purely exec officials. Congress may not restrict the removal of principal officers, but may allow restrictions on inferior officers
  • Purely executive officials may be removed at will by the president


Humphrey’s Executor v. United States

  • ((Old standard))
  • FTC. The court held that Congress may limit President’s removal power to require a finding of cause before an official exercising quasi-legislative and quasi-judicial power may be removed. Ct distinguished Myers because exercised purely executive, whereas Humphrey exercised legislative rulemaking and adjudicatory powers. Therefore, Humphrey was likely not an inferior, and so Meyers did not apply to him. However, the quasi-leg and quasi-judicial nature of the functions he performed provided a sufficient justification for restricting the President’s removal of a principal officer.
  • President could not remove and FTC commissioner without good caus. Included quasi-legislative and quasi-judicial powers.
**Both cases above are formalism**

Morrison v. Olson

  • Rule: President has to show good cause for removal to give independent counsel true independence
  • Must look to whether a restriction on the President’s removal impede the President’s ability to faithfully execute the law.
  • This court takes functionalist approach – asks if one branch giving all the power to itself or is it interfering with another branches power to exercise
    • President doesn’t have to have absolute power to remove counsel
    • Good law, just addresses a statute that doesn’t exist anymore

Legislative Removal

A direct congressional role in the removal of officers tasked with executing the laws is an unconstitutional blending of the separate powers. All executive powers must rest with executive officials.

  • Congress cannot reserve for itself the power of removal of an officer charged with the execution of the law except by impeachment. AKA- congress may not remove executive officials.

Browsher v. Synar

  • Court held that the comptroller general, an official subject to removal by joint resolution of Congress (with presentment to President), could not exercise authority under the laws of the US and thus could not establish potentially binding spending reductions under the Balanced Budged & Emergency Deficit Control Act of 1985.
  • Congress assigned the Comptroller General authority to execute an Act so he clearly had executive duties and is, therefore, not subject to legislative removal.
  • The Court held this would violate the separations of powers because Congress would be interfering with the execution of the laws through the power to participate in the removal of an officer of the US
    • Congress can only do this unless it gets the President to sign a bill
  • Compare function and structure to see if the two concepts are compatible.
    • Make sure it is not an executive function
    • See how it is set up.