ADMINISTRATIVE LAW OUTLINE SPRING 2010

QUESTION 1: WHAT IS THE SOURCE OF LAW FOR EACH ISSUE? The Constitution The APA The Agency’s Statute Other Statutes Traditional Common Law principles

QUESTION 2: ARE THE CONGRESSIONAL DELEGATIONS TO THE AGENCY CONSTITUTIONAL? Non-Delegation Doctrine Issues?

O Doctrine says: Constitution vests the legislative power to Congress. Congress may not delegate away the legislative power.

O Doctrine delegates how much discretionary power Congress may delegate to an agency, insures social choices are made by Congress, and assures there is a check on administrative power.

O Intelligible Principle Test: Delegation is permissible when Congress lays down by legislative act an intelligible

principle to which the person or body authorized to fix such rates is directed to conform. JW Hampton & Co v. US

O New Deal Conservative era: Panama Refining Co v. Ryan, unconstitutional since did not constrain standards

guiding Pres’s decision of whether to invoke powers in particular case. No intelligible principles.

Schecter Poultry v. US, court invalidated part of NIRA because it contained insufficient standards guiding the Pres’s discretion over whether to approve a particular code of fair competition. Codes also drafted by private groups. There was no “intelligible principle” to guide the interpretation of “fair competition.”

Carter v. Carter Coal Co, statute authorized coal producers to elect local boards to set minimum prices for coal in their districts. Court said, “Legislative delegation at its most obnoxious form.” Congress cannot delegate legislative power to private persons whose interests may be adverse to the interests of others in the same business.

O Very lenient standard. No statute has failed intelligible principle test in recent years. Early cases absolutely prohibited. Congress can legislate with a broad stroke and allow an agency to fill in the details. Wayman v. Southard

Yakus v. United States: authorized administrative agency to fix prices after consultation with industry representatives

upheld b/c the agency created a policy outlining guidelines for the price fixing.

If the delegation contains safeguards against unfair an inequitable action, they will be upheld.

O Recent cases: Benzene Case: OSHA ‘s authority to prescribe occupational work and safety

standards regarding Benzene exposure. Construed statute to require a significant risk in the workplace before the agency was authorized to promulgate a workplace

(Renquists’ concurrence): normative basis for the doctrine = Congress makes the basic policy choices and provide more definite standards for courts to apply to these cases.

1

Touby v. US, 1999: upheld delgation of power to AG to put drug on list of controlled substances. When talking about criminilizaton delegation, may need to be more specific. Satisfied in Touby.

Mistretta v US. 1989: upheld Sentencing Reform Act , delgating authority to promulgate mandatory federal sentencing guidelines to US Sentencing Commission. Act’s declaration of purposes and goals, and its specifications of the factors to be considered by the commission, provided sufficient intelligible principle.

American Trucking Associations, Inc, v. EPA (1999): overruled by Whitman! Whitman v. American Trucking Association, Inc. 2001: EPA issed final rules of

ambient air quality standards. Groups said they lacked any determinant criterion for setting the standard. Also, Clean Air Act (Enabling Act for EPA) lacked determinate criterion. Remanded to EPA to cure the constitutional defect. RULE: agency cannot cure an unlawful delegation of legislative power by adopting, in its own discretion, a limiting construction of the statute.

Separation of Powers concerns: Scalia’s dissent in Mistretta discusses agencies acting like min-legislatures.

Separation of Powers Issues? o Legislative veto: Congress was able to reject agency action with a vote by one house of

Congress or by one Committee. Not presented to President for signature or veto. o Immigration and Naturalization Services v. Chadha, 1983: House vetoed House vetoed

AG’s decision to suspend Chadha’s deportation. One house veto violates bicameralism (must pass both houses) and presentment clause (must be presented to the President) in Article I of the Constitution.

o Clinton v. NY, Cancellation provision authorized by the Line Item Veto Act are not constitutional. Article I, section 7 is silent on this, so it should be prohibited.

o Ineligibility Clause: staffing of agency with members of Congress is unconstitutional. Appointment and Removal Issues?

o Appointments Clause = Article II, Section 2, Clause 2 of Constitution. Authorizes appointment of Officers of the United States and Inferior Officers. Officers nominated by Presidnet with Senate concurring. Buckley v. Valeo, 1976: 4 of 6 officers of FEC were appointed by members of

Congress, which goes against the Appointments Clause of the Constitution. Congress has no authorit y to appoint. President appoints Officers. President, heads

of department or courts may appoint inferior officers. o Removal Powers: Constitution silent

Congress shall not have power to remove officials other than impeachment. Marbury v. Madison: although the President generally had the power to remove officers he

appoints with advice and consent, Congress can restrict the President’s authority. Myers v. United States: Rejected Marbury view. President’s removal of the post-master w/o

advice and consent of Senate. Although President is vested w/art II power, “there may be duties so peculiarly and specifically committed to the discretion of a particular officer as to raise a question whether the President may overrule or revise the officer’s interpretation the laws be faithfully executed).

Removal of Inferior Officers : the authority of Congress to vest the appointment of inferior officers in the heads of departments carries with it authority to vest department heads with the power to remove.

Congress cannot draw itself the power to remove or the right to participate in the exercise of that power.

Humphrey’s Executor v. U.S.: Roosevelt removed FTC Commissioner; he died and estate challenged the removal to get his back salary.

Ct narrowed Myers holding; reasoning that a postmaster is an executive officer restricted to the performance of executive functions and does not have duties related to either the legislative or judicial powers. FTC was appointed to carry into

2

effect legislative policies and to perform other specified duties. FTC cannot be characterized as an arm of the executive.

Wiener v. US: President couldn’t remove a member of the War Claims Commission b/c the Commission was an adjudicating body.

Bowsher v. Synar: Congress can’t play a direct role in controlling officers performing executive functions; allowing Congress the power to remove officers charged with the execution of laws is inconsistent with the separation of powers.

Morrison v. Olson: the Ethics in Gov’t Act created an independent counsel to investigate high-ranking gov’t officials for federal criminal violations; promulgated after the Nixon. Appointed upon request of Congress or an independent source. Attorney General has authority to remove the counsel for good cause. Evidence is brought to the AG, who does an initial screen; if AG finds no grounds to continue investigation, no independent prosecutor is appointed. NOT subject to review. If AG finds further investigation is needed, AG applies to a Special Division of the Ct of Appeals who appoints the independent counsel.

SCT held the act to withstand Constitutional muster w/r/t the Appointments Clause, Art III, or Separation of Powers b/c the Independent Counsel is an “inferior officer” who can be removed by a “higher executive branch official.”

How to determine whether an officer is an “inferior officer”? o is the officer subject to removal from a higher ranking executive official?o Are the officer’s duties limited?o Is the officer’s jurisdiction limited?o Is the tenure of office limited?

Removal restrictions did not violate separation of powers b/c o the exercise of the IC’s discretion is not central to the functioning of the

Executive Branch as to require the counsel to be terminated by the will of the President.

o Good cause limitation vests ample authority with the AG to assure the IC is competently performing its function.

o Any higher executive official or can remove an inferior officer UNLESS that would vest incongruous appointment authority in the courts

To check the Constitutionality of a removal process: Determine what type of official is involved. an Art II Officer can be removed by the President WITHOUT the advice/consent of

senate Inferior Officer removable by a higher ranking executive official.

Ex Parte Siebold: Congress’ decision to vest the appointment power in the courts would be improper if there was some “incongruity” between the functions normally performed by the courts and the performance of their duty to appoint.

Executive Powers? o Types of policing

Appointment and removal powers Legislatively created restrictions Constitutional limitations:

Marbury v. Madison: not all administrative officers are exclusively under the control of the President.

Kendall v. US: SCT held that although executive power is vested in the President, it does not follow that every officer in every branch of a department is under the exclusive control of the President. Congress may impose duties upon executive departments/officials.

Youngstown Steel v. Sawyer: President Truman seized steel mills during the Korean War without statutory authority, citing Art II power. SCT held that the seizure was an exercise of lawmaking power not executive power. Jackson concurrence enunciated three types of presidential actions:a) Strongest Exercise of President’s Power : those undertaken with the

authorization of Congress, express or implied;

3

b) Intermediate: President & Congress have Concurrent Power: those undertaken with neither the support nor disapproval from Congress; and

c) Presidential Power is at its Lowest Ebb : those undertaken in opposition to the express or implied will of Congress.

QUESTION 3: IS THERE A QUESTION REGARDING AGENCY’S POWER TO ACT? If so, look to the agency’s Enabling Act

QUESTION 4: WHAT WAS THE POLITICAL BACKGROUND FOR THE AGENCY’S ACTION? Public Choice Theory: Agency was captured by a powerful interest group.

o If so, express skepticism about the Agency’s action. Public Interest Theory: Agency seeking to solve a public policy issue.

o Argue for deference to the Agency’s action.

4

QUESTION 5: MAY A FEDERAL COURT REVIEW THIS AGENCY’S ACTION? DO THEY HAVE JURISDICTION?

O Which court can hear the petition for review? O Subject to Art III of Constitution, Congress can choose which courts will be granted

jurisdiction and may define the conditions under which that jurisdiction may be involved. O 1ST: Look to Enabling Act in legislation and follow directions in statute. Should state what

court it vests jurisdiction (Appellate, District, Art III). O 2nd: If statute does not say, look to 28 USC 1331 for Federal Question Jurisdiction.

Califano v. Sanders, if the APA provides no default, the default jurisdiction is federal question jurisdiction.

If statute is ambiguous about which court, trend is for appellate review. Harrison v. PPG: SCT interpreted a Clean Air statute providing for direct appellate

review of “any other final action” to include informal agency actions Florida Power and Light v. Lorion: absence of a record is not a basis to deny

appellate-type review. IS THIS REVIEWABLE?

O Reviewability Overview: Pre-1. Statutory Preclusion (701a(1))1. Categorical Approach

a. Decisions not to seek enforcement Presumptively unreviewable (Heckler v. Cheney)

o Becomes qualified by future cases. b. Deeming clauses ___ Webster v. Doec. How to spend general appropriations--- Lincoln v. Vigil

Involves reallocation of resources for medical programs for Indian children. Challenged by tribes. When Congress allocated money to the Bureau, it didn’t target how the money would be spent. Agency is given lump sum general appropriations here. Court views unsuitable for judicial review. No law to apply.

2. “No law to apply” Overton Park. No judicial standards which court could refer to examine if decision appropriately made. Courts in later decisions move toward identifying broad categories rather than going case by case. These sweep a

little more broadly. O

O SECTION 704 APA tells us what can be reviewed: Final agency actions for which there are no judicial remedies in the court, are

subject to judicial review. What is final agency action? Must be agency action (section 551) DEFINITION APA 551: WHOLE OR PART OF A RULE, SANCTION, RELIEF,

DENIAL OF, AND FAILURE TO ACT. Who may seek judicial review?

Person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action with the meaning of the relevant statute.

If seeking money damages, will have to go elsewhere. Norton v. Southern Utah Wilderness Alliance, 2004: suit was to require agency to

take action (prohibit off-road vehicles in wilderness area). Court said it was not a required action per statute. Rule: the APA 5 USC 706 (1) does not provide a right of action either for an agency’s failure to take general action that is not required to take or for failing to implement nonbinding statements of priorities in the agency’s land use plan.

Review is not available to challenge the general manner in which an agency regulates.

Johnson v. Robison, 1974: Action to declare Veterans benefits statutes unconstitutional. Question in case is whether there was statutory preclusion of judicial review. Statute that precludes review of agency action does not preclude a

5

constitutional challenge to the statute itself. Court is reviewing a decision by Congress, not the agency.

Gott v. Walters: expanded Johnson v. Robison; Challenge that guidelines used by the VA to determine injury claims following exposure to radiation were not promulgated in accordance with the rulemaking procedures in the APA. The guidelines were to be 1) allow for a public comment period; and 2) be published. ISSUE: Whether the statutory preclusion of judicial review of VA decision applies. HELD: Issues of law not decided by the administrator are excluded from the preclusion clause as are issues of law decided by the Administrator NOT in the course of a determination under veteran’s benefit law, but in the course of applying independently operative statutes such as the provisions of the Freedom of Information Act not related to the procedure for administrative decision-making.

SCT has construed other statutes NOT precluding judicial review: Traynor v. Turnage: SCT held that the VA preclusion clause did not preclude

judicial review of a veteran’s claim that application of a VA rule violated the Rehabilitation Act—statute which prohibited discrimination against the handicapped by all federal and state agencies. SCT allowed review b/c the statute was one of general applicability.

o Did Congress pass a law preventing the court from reviewing the constitutional question?

Statutory preclusion is a mess. General rules are: Completely precluding judicial review probably not acceptable. Preclusion by putting in place procedures that do not allow meaningful

review is not generally acceptable. McNary v. Haitian Refugee Center, Inc. 1991: P’s denied amnesty, claimed

the that Immigration Reform and Control Act deprived them of due process rights under the 5th amendment. Held: the statutory bar for individual case determination s does not prevent a court form reviewing collateral constitutional challenges.

“Committed to agency discretion by law” = this is an inference based on way statute is constructed.

Webster v. Doe, 1988: CIA terminated Doe because he was homosexual. He claimed statutory and constitutional violations. Statutory language said “director may terminate employees when he deems necessary.” (DEEMING CLAUSE) Final authority given to director of CIA. The decision is not judicially reviewable under the APA, however nothing in APA suggests that his constitutional claims are not reviewable.

Presumption of review rebuttable: APA § 701(a) judicial review applies except to the extent that:

O statutes preclude judicial review; ORO agency action is committed to agency discretion by law

Overton Park limited these cases to situations where there is “no law to apply.”

Allocation of appropriations (funds) Lincoln v. Vigil: lump sum appropriation to Bureau of Indian Affairs; agency

chooses not to fund an educational program and shifts the money to a different program. This action was challenged by beneficiaries under the APA. The funds were never specifically appropriated by Congress for the other program.

O ISSUE: whether the re-allocation was judicially reviewable?O RULE: “Rules of agency organization” are exempt from the notice-and-

comment requirements” of APA 553 (b)(A).

6

O HELD: The allocation of funds from a lump-sum appropriation is an administrative decision traditionally regarded as committed to agency discretion b/c the clear inference from such a grant is that Congress does not intend to impose legally binding restrictions on the agency. Lump-sum appropriations reflects a congressional recognition that an agency must be allowed “flexibility to shift funds within a particular appropriation account so that the agency can make necessary adjustments for unforeseen developments and changing requirements. Agency is in a better position than the courts to determine its spending priorities.

Reviewability of Prosecutorial Discretion (usually decision not to prosecute) Courts usually turn away these cases. They create a separations of powers

problem between the President and the courts (Art II and Art III) Heckler v. Cheney, 1985: Chaney brought an action to compel the FDA to

stop the use of lethal drugs in executions. Rule: A decision by the FDA to refrain from enforcement proceeding sis not subject to judicial review. Largely due to the respect for the greater knowledgeabilty that an agency will be presumed to have over a court. Another reason is that agency lack of enforcement generally does not involve coercive intrusion upon personal liberty, the protection of which is the is the main concern of the court.

O Court asked three questions: Whether FDA had jurisdiction to undertake the enforcement

actions requested Whether if it did have jurisdiction, its refusal to take those

actions was subject to judicial review, and Whether if reviewable , its refusal was arbitrary and capricious

or an abuse of discretion. O Ultimately, reasons court refused to review:

Decisions not to enforce often involve a complicated balancing of factors within the agency’s expertise

When an agency refuses to act it does not exercise its coercive power over an individual’s liberty or property rights and thus does not infringe on areas that courts are called upon to protect

Decision not to enforce is similar to prosecutor’s decision not to indict

o Exception (presumption of unreviewability is rebuttable) when: An agency declines to act based solely on its belief that it lacks

jurisdiction, or, Where an agency “consciously and expressly” adopts a policy that is

so extreme that it represents an abdication of its statutory responsibilities.

Public Citizens Health Research Group v. Chao, 2002: OSHA formally acknowledged that its standard for acceptable concentration of hexavalent chromium was inadequate. Later, after studies confirmed the levels doubled the risk of lung cancer, OSHA still failed to undertake a rulemaking to modify the standard. RULE: An agency’s delay in taking a required action creates a right of action under the APA 5 USC 706(1), where the delay is excessive and has no scientific justification or a valid justification based on the agency’s competing priorities.

o There were many significant reasons for delay in this case, however court finds that given OSHA’s own admission that he risk to public health in this case is grave, competing priorities cannot justify further delay.

o Ordered mediation and for OSHA to issue new rule.

IS THERE STANDING TO SECURE JUDICIAL REVIEW?

7

O Answers the question, whether the claim may be asserted by the particular party before the court. Three different sources of standing limitations:

O Constitutional standing (Article III limits courts to Cases and Controversies): Injury in fact (must be imminent) and sufficient to bring claim to court. Fairly traceable and caused by the challenged government conduct. Redressability (it can be remedied by a favorable judgment). Sierra Club v. Morton, 1972: held an abstract interest in environmental protection,

was not sufficient injury for standing purposes. Only a person who had used and planned to continue to use the parkland in its undeveloped state would have a sufficient injury to bring suit to prevent development.

Injury: Common law injuries, aesthetic injuries, economic injuries, and deprivation

of rights are sufficient for standing. Right to truthful information is statutorily created right and deprivation may

result in injury. Members of Congress may have standing to sue over interference with their

powers. Moore v. House of Representatives, 1984.

Fairly traceable to conduct US v. Students Challenging Regulatory Agency Procedures: Law students

challenged setting of railroad rates against the ICC. HELD: Students had standing b/c they alleged that the specific and allegedly illegal action of the ICC directly harmed them in their use of natural resources of the Washington Metropolitan area. Students had standing even though a large group of people could claim injury [all who breathe air] b/c CT will not deny standing simply b/c many people suffer the same injury. To do so would mean that the most injurious and widespread government actions could be questioned by nobody

Redressability: will they get relief from the court? Northeastern Florida General Contractors v. Jacksonville: SCT held that

assn of contractors had standing to challenge a local ordinance granting preferntial treatment to minority owned businesses in awarding city contracts. CT held that the contractors had standing b/c “in the context of a challenge to a set-aside program, the “injury in fact” is the inability to compete on an equal footing in the bidding process.”

Linda R.S. v. Richard D.: SCT held that the mother of an illegitimate child lacked standing to contest the constitutionality of a state statute providing for public prosecution of fathers who fail to support their children. State courts had construed the statute as applying only to fathers of legitimate children. Because the only effect of enforcing the statute was jail time, the Ct held “the prospect that prosecution will result in the payment of support can, at best, be termed only speculative.”

Simon v. Eastern Kentucky Welfare Rights Organization: IRS interpretation of “charitable” made it easier for certain nonprofit hospitals to obtain tax exempt status. Association of nonprofits representing the poor sued b/c they were denied care at nonprofit hospitals b/c of inability to pay.

o ISSUE: whether the association had standing to sue the IRS?o HELD: P’s allegation that b/c of IRS action, hospitals were denying

indigent people health services too vague a connection to confer standing. Did not establish a connection between hospital’s denial of care to the IRS tax exemption. Injury must be fairly traceable to the

8

challenged action of the defendant and not the result of the independent action of a third party not before the court.

Lujan v. Defenders of Wildlife, 1992: held that since remedy would require the cooperation of federal agencies who were not parties to the case, the injury was not redressable because a court cannot issue a judgment against a non-party.

O Prudential standing (limitations to confine courts to their proper role in govt) Arguably within the zone of interest: APA 702 Legal Right Test (Assoc. of Data Proc

Services) Generalized Grievances (is harm indistinguishable from harm suffered by a group?)

Lujan Zone of Interest or Legal Right Test:

APA 702 says “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.”

Limits APA standing to those whose interests were important to Congress in formulating the regulatory scheme.

Association of Data Processing Service Organizations, Inc. v. Camp, 1970: P challenged ruling of Comptroller of the Currency (D) that national banks could perform data processing services for customers and other banks. Comptroller attacked Associations standing to prosecute the suit. HELD: TO HAVE STANDING MUST SHOW 2 THINGS: 1) A CONSTITUTIONLLY SUFFICIENT INJURY AND 2) THAT THE INTEREST SOUGHT TO BE PROTECTED BY THE COMPLAINANT IS ARGUABLEY WITHIN THE ZONE OF INTEREST TO BE PROTECTED OR REGULATED BY THE STATUTE.

Generalized Grievances: Most often taxpayer cases. Should be addressed by political branches, not

courts. May not litigate the rights of a third party. Lujan v. Defenders of Wildlife, 1992: Sec of Interior interpreted section 7 of

Endangered Species Act to apply only to domestic actions, two members of Defenders of Wildlife who had studied species abroad claimed they would be injured by the rule. RULE: person may not challenge and administrative regulation unless he can demonstrate actual or imminent injury and redressability. Injury would relate to their experience when traveling overseas. Injury not imminent, and is conjectural.

ARE THERE TIMING ISSUES? O IS RIPENESS AN ISSUE?

Comes from “Case and Controversies”: if case brought to soon, there is not yet an injury. Ex. Bringing case before regulation has been enforced.

APA 704 grants right to judicial review of “final agency action” for which there is no other adequate remedy in court.

Agency action ripe when adjudicatory process in the agency has completely ended and agency has issued its order.

Ohio Forestry Ass’n v. Sierra Club: Facts: Forest service resource mgm’t plan adopted for nat’l forest. Issue: Whether dispute was “ripe” for judicial review when dispute centered on a mgm’t plan adopted by an A ? Rule: No, unripe for judicial review. Rationale: Additional steps had to be taken before the A could implement the plan (and cut down trees, in this case). Also, petitioners would have opportunity to challenge the validity of actions ultimately taken.

9

May be ripe upon promulgation (before enforcement) if issues are FIT for judicial review and party seeking review would suffer substantial HARDSHIP if review were delayed until after enforcement.

Abbott Laboratories v. Gardner, 1967: Amendments to the FDCA req’d drug manufacturers to print labels & advertising with the “established name” of the drug along with the “proprietary name”. Parties sued claiming that the extra req exceeded the authority granted to the FDA in the legislative stat. ISSUE: Whether dispute between the parties was “ripe” for judicial review when contested prior to enforcement action(s)? RULE: Yes, “ripe”.

O Rationale: 2 part inquiry: fitness of the issues for judicial review AND hardship to the parties of withholding court consideration.

O “Fitness of the issues”: Here, appropriate b/c all parties agree issue = purely legal issue. Also, this is “final agency action” w/in the meaning of 5 U.S.C. § 704.

O “Hardship to the parties”: Either way, the parties incur cost (changing all labels, ads, etc. OR pay severe gov penalties).

O IS EXHAUSTION OF ADMIN REMEDIES AN ISSUE? 704’s finality requirement Bennett v. Spear: Biological Opinion by agency is final because 1) iti s the

“consummation of the A’s decision-making process and 2) the action is one from which legal consequences will flow (imposes legal consequences on party or determines legal rights).

Myers v. Bethlehem Steel Pre-APA case, 1938. NLRB charged co in engaging in unfair labor practices.

Company went immediately to court and sought to enjoin admin proceedings because co’s operation were not in interstate commerce and therefore not in NLRB’s jurisdiction.

Said have to do this after admin process has been wound-up. Allows agency to apply its own expertise and create a record for later judicial

review. McCarthy v. Madison

Involves prisoner seeking damages from prison authorities on grounds subjected to cruel and unusual punishment. There were procedures he could have followed, but it did not authorize compensation to the prisoner. So court held he was not required to invoke the grievance procedure before coming to court.

Reason for requiring litigant to first present his claim through admin process in order to respect agency authority and to effectively manage judicial resources.

Notes circumstances when exhaustion might not be appropriateo If it would prejudice availability of judicial remedies (unreasonable

delay, irreparable harm during admin running its course, preclude a defense to criminal liability)

o Kind of relief party is seeking review is unavailable at the administrative level (McCarthy).

o Futility Objection: p. 320. Shown agency is not genuinely open to re-determining its view. Very hard to show.

o Agency reaches a final decision in terms of court’s view, but could be appealed to a higher level.

Darby v. Cisneros, 1993: exhaustion is required only of those remedies expressly reqired to be exhausted by sttaute or when agency rule requires appeal before

10

review and when the administrative action is made inoperative pending that review. If 704 is met, no further exhaustion is needed.

O IS MOOTNESS AN ISSUE? moot if there is no longer a live controversy between the parties.

QUESTION 6: WHAT IS THE STANDARD FOR JUDICIAL REVIEW?

APA 706 tells us the standard of review. First must ask ourselves a few questions: 1. Is this a Question of Law or Question of Fact?

O Question of Fact : combination of events and inferences which presuppose applicable standards of law. (O’Leary v. Brown Pacific Mason)

O Question of Law : deal with codified statutory interpretations2. Is this Rulemaking or Adjudication?

O What does Agency’s Enabling Act say? O What is the number of people affected? (More people = Rule-making)O Degree each person is affected on individual basis? (More individual in nature =

adjudication)O If a new standard is being handed down, more likely Rule-Making. O If standard applied to a set of existing facts presented, more likely adjudication.

3. Is it Formal or Informal?O Question of Fact:

Rule- Making: Does statute require hearing on the record? O Yes = Formal = Substantial Evidence on the recod standardO No = Informal = Arbitrary and Capricious standard

Adjudicatory: Does the statute use “on the record” language? (Dominion Energy)

O Yes = Formal = Substantial Evidence (706(2)(e)) No = Informal = Arbitrary and Capricious ((706(2)(a))

Ex parte analysis If “ambiguous” whether “record” or “hearing” exist in statute,

that in itself ambiguous, so use Chevron. Question of Law: (was agency’s interpretation of the statute “reasonable”?)

Mead analysis Skidmore analysis Chevron analysis

4. Determines which Provision of 706 applies to the case and which standard of review to use?

Substantial Evidence Test: applies only to formal adjudication and formal rule-making (subject to section 556 and 557 of APA.

De novo review: available only when, under traditional admin law principles, a party is entitled to trial de novo in reviewing court. Applies when:

Agency action is adjudicatory in nature and agency fact-finding procedures are inadequate, or

Issues that were not before the agency are raised in a proceeding to enforce non-adjudicatory agency action (Citizens to Preserve Overton Park, Inc)

Arbitrary and Capricious Test: applies to all agency action. Action should be set aside if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

Substantial Evidence and De novo review govern over A&C if they apply. O Are there issues with the Record on Review?

Consists of material the agency had before it when it made its decision. Court looks at whole record, not just evidence supporting agency’s decision.

11

QUESTION OF FACT: RULE MAKINGo FORMAL Rule-Making (SOR = Substantial Evidence on the record as a whole)

o Procedures require taking of E through adversarial proceedings involving testimony/X-exam, and initial or recommended decision by an A official, followed by an opportunity to appeal the decision to the A head on the basis of the record. (APA §556, §557).

o DOES A’s action comport with SUBSTANTIAL E RULE (§706 (2)(e)) “A court shall hold unlawful and set aside A action unsupported by substantial E in a

case subject to §556 or §557.” “Substantial E” = more than “a mere scintilla”…otherwise defined as: “such relevant

E as a reasonable mind might accept as adequate to support a conclusion.” Court performing “substantial E” review must look at the WHOLE record, not only

the E supporting the A decision. (Universal Camera). When A’s determination based on credibility of Witness’s, the A’s decision is entitle

to great deference. (Universal Camera). IS THE A DECISION SUPPORTED BY SUBSTANTIAL E ON THE RECORD AS A

WHOLE? (Universal Camera). If “yes”, Agency fact-finding upheld. When A reverses finding of the ALJ, that reversal must be taken into account

in deciding whether the A decision is supported by “substantial E.” (Universal Camera).

TIP: [REMEMBER, what counts as “evidence” here? ONLY the evidence in the record, no extemporaneous or extraneous docs,etc.]

o INFORMAL Rule-making o Requires notice in Federal Register, opportunity for interested persons to comment

on proposed A action, issuance of a concise/general statement of the A’s action’s basis and purposes. (§553).

“Notice”: give notice to public and must contain § 553(b) “Comment”: § 553(c) requires agencies to provide opportunity for written comment

(not necessarily oral hearing) “Publication”: § 553(d) substantive final rule must be published at least 30 days

BEFORE it becomes effective. Often contains “preamble.” TIP: However, the Notice & Comment process has become somewhat

burdensome, leading one court to opine that the process has led to “ossification of the legal process.”

o Substantial E Rule §706(2)(a) Courts shall hold unlawful and set aside A action that is “arbitrary, capricious, OR an

abuse of discretion.” IS THE A ACTION “ARBITRARY & CAPRICIOUS ”?? (§553)

Is the conclusion based on a consideration of the relevant factors (including the alternatives to the A’s proposal) AND without clear error of judgment and applying the correct legal standard ? (Overland Park).

o YES: A fact-finding upheld.o NO:

Relevant factors = remand Clear error of J=reversed

When applying test, certain factors must be considered (State Farm):o Did A rely on factors which Congress did not intend for it to consider ?o Did A entirely fail to consider an important aspect of the problem?o Did A offer an explanation for its decision that runs counter to the E?

12

o Was action so implausible that it could not be ascribed to a difference in view or the product of A expertise?

A must also proscribe paper hearing requirement (Nova Scotia Foods):o A must disclose the E and analytical documentation relied on in

proposing a rules to allow for informed and effective commento A must explain grounds for its decision(s).

LOOK TO SEE IF LOWER CT REMANDED TO STATE Agency FOR FAILURE TO FOLLOW PROCEDURES NOT INCLUDED IN APA OR IN ENABLING STATUTE…this prohibited by Vermont Yankee.

Vermont Yankee: This the case where A R-making IS arbitrary and capricious; however exempted from §553 ???

Substantive legislative rule which grants rights, imposes obligations, or produces other significant effects on private interests are not exempted.

Interpretive rules are exempted from notice and comment R-making TIP: **Make argument its really a LEGISLATIVE rule under guise of one of the

“exceptions”; therefore, its invalid**. Test: AHA v. Bowen, Has the “interpretative R created rights of obligations?”

If “yes”, then is a legal rule. However, this test appears to be somewhat nebulous.

A better inquiry is “Is the newly promulgated “interpretative R” a necessary ingredient in enforcement ?” or does it simply “clarify existing legislative R”? American Mining Congress v. U.S. Dept. of Labor

these are R’s that merely clarify and explain existing law and regulationso Hoctor v. USDA (big cat, 8ft. fence) Imposition of requirement was

arbitrary; therefore, when A’s base rules on arbitrariness, they are legislating and thus require notice and comment.

o Use Legal Effect Test to differentiate b/t “interpretative rule” and “legislative rules”. Legislative rules directly alter the legal rights of the public…contracts with interpretations and policy statements that merely describe the MANNER in which the A intends to act in the future. SEE LINCOLN v. VIGIL…allocation of funds = policy b/c from lump sum appropriation.

To determine the interpretive role (American Mining), ask: In absence of rule, does any legislative basis for enforcement exist? Did the A publish the R in the Fed. Reg.? Did the A explicitly invoke its legislative rule? If any to ANY OF THESE = YES, then Rule is “legislative.”

Statements of policy are exempted from notice and comment rulemaking because allows A to announce its tentative intention for the future without those comments becoming binding in nature.

To determine “If policy statement”, (American Bus), ask: Is there a present effect? (statement of policy may not have present effect)

o NO: Does the Rule leave the A free to exercise discretion?o If yes: The statement is a statement of policy.

RULES OF AGENCY ORGANIZATION (procedure or practice) are exempted from “notice and comment” requirement.

These rules that ensure the A retains latitude in organizing its internal operations.

To determine if a rule is “procedural” (ATA v. DOT), ask:o Does A action encode a substantive value judgment or put a stamp of

approval/disapproval on a given action?

13

o If NO: Rule = procedural.o *****IF AGENCY ACTION DOES NOT FALL INTO AN EXCEPTION, AND is

ARBITRARY AND CAPRICIOUS, THE RULE MUST BE SET ASIDE****O QUESTION OF FACT: ADJUDICATION

O FORMAL Adjudication (§§554, 556, 557) (SOR = “Substantial E on the record as a whole”) Requires the submission and consideration of facts, arguments, offers of settlement,

or proposals of adjustment when time, nature of proceeding, and public interest permit, and to the extent the parties are unable to determine a controversy by consent, hearing, and decision. §554

Under Formal adjudication, parties are entitles to a reasonable opportunity to submit for consideration proposed findings and conclusions, exceptions to the decisions, and supporting reasons for decision. §551(c).

A party is entitled to present his case or defense by oral or documentary E, to submit rebuttal E, and to conduct X-exam. §556(d).

IS THE CONCLUSIONS SUPPORTED BY SUBSTANTIAL EVIDENCE ON THE RECORD AS A WHOLE? (Universal Camera)

YES (upheld), NO (overturned/remanded or reversed) When A reverses finding of ALJ, reversal must be taken into account in

deciding whether the A decision is supported by Substantial Evidence (Universal Camera).

TIP: [REMEMBER TO PERFORM EX-PARTE ANALYSIS SINCE “FORMAL”].O INFORMAL Adjudication: (NOT governed by APA…so lacks the procedural accoutrements

of formal. DUE PROCESS supplements!!!) Requires notice in the Fed. Reg., opportunity for interested persons to comment on

the proposed rules by written submission, issuance of a concise and general statement of the rule’s basis and purpose. (§ 553).

IS AGENCY DECISION “ARBITRARY AND CAPRICIOUS”? §553 Is the conclusion based on a consideration of the relevant factors (including

the alternatives to the agency’s proposal) & without clear error of judgment & applying the correct legal standard ? (Overton Park)

Review is a narrow one; however, inquire must be “searching and careful.” “Searching and careful” defined by SCOTUS in Motor Vehicle Manufacturers v. State Farm. Defined as: Ct can’t substitute its judgment for the A’s, A must examine the relevant data, AND articulate a satisfactory explanation for action including a “rationale connection b/t the facts found and the choices made.”

Function of the Court is to assure the A has given reasoned consideration…a “hard look” is required. Greater Boston Television Corp. v. FCC

O YES (A fact-finding upheld)O NO

Relevant factors (remanded) Clear error of judgment (Reversal)

O WAS Agency ACTION VIOLATIVE OF DUE PROCESS? Property Interest v. Private Interest?

PROPERTY person clearly must have more than an abstract need to desire the interest,

must have more than a unilateral expectation. Must have a legitimate claim of entitlement. (Roth).

O TEST: If an external source, such as state law, creates claim of entitlement to a gov benefit, property interest exists.

14

Claim of entitlement exists when law, custom, or practice establishes that claims to the gov benefit are evaluated under a definite set of criteria.

Also defined by a functional definition where property entails protection: “grievous loss test” (Goldberg v. Kelly).

PRIVATE INTEREST not merely freedom from restraint, but also right of the individual to contract

to engage in any of the common occupations of life. CAN include damage to reputation through defamation as long as there is an

alternation of the personal legal status (Paul v. Davis). Due Process is essential “where a person’s good name, reputation, honor, or

integrity is at stake because of what the government is doing to him.” WI v. Constantineau

TIP: ESPECIALLY if facts involve STATE A action (b/c not bound by APA) and/or Fed. A adjudication but not clear whether formal adjud req’d.

o Due Process clauses of the Vth and XIVth Amendments prohibit federal and state governments from depriving an individual of “life, liberty, or property without due process of law.” (required only when a “relatively small number of persons was concerned, who were exceptionally affected, in each case upon individual grounds.” Londoner v. Denver. :

3-part balancing test for Private Interest (Matthews)o Strength of the private interest that will be affected by the A action.

(Stronger the interest is in being free from deprivation, the more procedure required)

o Risk of erroneous deprivation if additional procedure is not afforded (and whether risk of erroneous deprivation will be reduced)(Greater the risk of erroneous deprivation, the stronger the claim is for additional procedures)

o Public/gov interest in proceeding with no more process than already offered, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural safeguard would create. (This factor always favors gov minimizing process…used to balance #1 and #2 supra).

**Contrast Goldberg v. Kelly with Board of Regents v. Roth**o In Goldberg v. Kelly, the claimant was denied AFDC benefits and the

state adopted procedures which allowed for notice and hearing after a suit was brought challenging the denial of benefits. Here, the claimant challenged the denial on the grounds that there was no opportunity for a personal appearance or presentation of E. SCOTUS held that pre-termination hearing was required b/c termination of aid pending resolution may deprive the claimant of the very means to survive while the action is pending. After performing the “balancing test” of Matthews, the Court found that even though the gov had a legitimate interest to prevent increase in fiscal and administrative burdens, they were not outweighed by the claimant’s interest in this case.

o Dissimilarly, in Board of Regents v. Roth, the Court found the claimant had no violation of due process. In ROTH, the claimant was denied renewal of a teaching contract with a state educational institution. The claimant challenged the state’s action using the theory that he had a constitutional right to a statement of reasons for non-renewal and a subsequent right to a hearing on the university’s

15

decision. The Court examined the nature of the claimant’s interest and found no personal interest could be challenged. Upon examining the claimant’s property interest, the Court stated that none existed here because the claimant must “have a legitimate claim” to the interest…must be more than an “abstract need” or desire for something. SCOTUS found that the claimant’s interest was not one of the “protected interests” thus, no due process violation existed.

TIP: Inquiry is whether the STATUTE establishes entitlement NOT whether the party factually met the stat. requirements

**Exception to D.P. test: actions taken by gov.for emergent purposes** ***Can D.P. be satisfied by post-deprivation remedies?

o Person is denied a benefit or suffering a deprivation may go to court to challenge the legality of the A’s action. Then, if after a hearing and a determination of the facts, the court finds that the A’s action was unlawful, it may employ injunctive relief to cease the A’s action.

o D.P. will be satisfied by post-deprivation remedies when:o Quick action is necessaryo Pre-deprivation process is impracticalo Post-deprivations remedies have been approved most strongly when

random and unauthorized tortuous conduct by a gov. official deprives the victim of property or liberty.

Did EX-PARTE COMMUNICATION TAINT THE A ACTION??o Is the A action “formal” or “informal”?

§ 554 (d) prohibits for most “formal” §§ 556,557 prohibit in “formal” If “formal”, ask: (PATCO)

Was person an “interested person”?o any person who’s interest in A proceeding is

greater than the general publico If YES, were the communications relevant to the

proceedings ? Relevant to the MERITS

o If YES, did the communications taint the proceedings? FACTORS:

Gravity of ex-parte communications Whether contacts may have influenced

the final decision Whether the party making improper

contacts benefited from the final decision Whether the contents of the

communications were unknown to the opposing party

Whether vacation and remand would serve as useful in this instance

o **If “informal”, ex-parte communications not banned; however, may be challenged as violative of basic fairness.

o Informal contact ok “…UNTIL notice of proposed rulemaking issued…and may not take place b/t any agency official or employee who is or MAY BE reasonably expected to be involved in rulemaking process.” HBO v. FCC

16

Overton Park req’s paper hearing for informal rulemaking…thus ex-parte communications inconsistent w/ that decision.

Anytime informal rulemaking involves conflicting claims to a privilege of value, ex-parte communications are banned. (ACT v. FCC).

BUT, if A receives ex-parte communications before notice of proposed rulemaking, no worries. In fact, A’s have an interest in communications from entities with which it interacts.

Was the ex-parte communication by a government official? A’s are often contacted by Exec. Branch officials and

members of Congress concerning pending rulemakings and other actions

o ONLY applies to rulemaking, not adjudication….§ 554(d).

17

QUESTION OF LAW (was the agency interpretation “reasonable”?)o A reviewing court shall decide all relevant questions of law, interpret statutory provisions. §706.

However, courts have long said that some questions of law are not within the purview of the court and should be settled by agencies. In this instance, courts defer to the agency’s judgment, overturning the A only if its legal determination is determined to be unreasonable.

o A question of law may arise under one or more of the parts of § 706:o Person may argue that the A’s rule or order is unconstitutional.o Personal may argue that an A’s rule or order is beyond the agency’s statutory authority.o Person may argue that an agency’s interpretation of law within the rule or order is

incorrect.o Person might argue that an agency did not follow all the procedures required by law (while

the agency would respond that those procedures are not required by law).o Most questions involve meaning of a statute.**

o Statutory Interpretationo Sources to examine:

Look to statutory language (textual) Legislative history Canons of construction Policy

o Why Regulate something? Promote eco efficiency? Redistribute recources? Promote/reflect democracy? When CL system attacked, statutory regime usually replaces it (ex., “New Deal”). Could be other motives for regulation (ex., environmental law regulations may

benefit producers in certain situations). Eco analyses:

Market Failureso req’s regulatory action justified by normalization of the marketo Reg. “monopolistic” power (price & profit justifications)o Reg. allows for adequate info for consumers (Consumers evaluating

competing products justification)o “Collective action problems” (Individually rational behavior

Less Secure Eco Grounds Redistribution Disadvantage/”caste”

o DETERMINATION OF “REASONABLENESS” (Mead/Chevron)o 1st Must determine the Congressional grant of authority to the A under Mead.

Did Congress grant interpretative authority to A ? (includes rulemaking, adjudication, and other indication that the A was to fill the ambiguity rather than a court)

YES, (go to Mead step #2) NO (apply Skidmore deference examination and no Chevron analysis)

o Rules, interpretations and opinions of the Administrator are NOT controlling, but SHOULD be used as guidance by the Ct.

o Deference for these opinions/interpretations based on factors: Thoroughness evident in the A determination Validity of its reasoning Its consistency with earlier and later pronouncement All other factors giving A the power to persuade

o Mead Step 2: Was the A interpretation claiming deference promulgated in the exercise of that authority?

18

Was there an actual adjudication or rulemaking procedure? Something more than policy letters, enforcement guidelines, agency manual, etc.

YES: Go to Chevron Step #1 NO: Skidmore deference (see immediately in red)

o Chevron Step 1: Has Congress spoken to the precise question at issue? (i.e., is the congressional intent clear? Is it ambiguous?)

TIP: Have to determine whether the statutory language being interpreted is ambiguous, or whether the meaning of the provision is clear using traditional tools of statutory construction.

Textualist Argumento Fact of statute is clear/unambiguous (Scalia approach MCI v. AT&T)

Functional Argumento Use legislative History and other tools of statutory construction.

Courts should not rely on words alone (Cardoza-Fonseca) If YES: Court and Agency must give effect to the unambiguous

intent of Congress. NO: Go to Chevron step #2

o Chevron Step 2: Is the agency’s interpretation reasonable or permissible? TIP: [AZ Grocery principle: Agency must follow its own rules, can’t depart from rule

w/out R making procedure]. If Congress left gap for the agency to fill, there is an express delegation of authority

to the agency. Thus, when challenge to an agency’s construction of a statute REALLY concerns the wisdom of the A’s policy, rather than the “reasonableness” of its choice within the congressionally-created gap, the challenge must fail. In addition, if the A’s interpretation is “reasonable”, it is binding on the Court, regardless of the fact the Court may feel another interpretation would be superior to that of the agency.

Courts should not overturn an A’s determination based on policy alone. When the question is truly one of policy and cannot be answered by traditional methods of statutory construction, courts are then required to give deference to the A’s opinion. However, A can ONLY prevail on basis articulated by the A…not some new ad hoc rationalization in Ct.

A’s have some advantages when compared with traditional jurisprudence of the courts in interpreting a statutory scheme due to the fact that political accountability and technical specialization are relevant to interpretation. Also, this deference fosters judicial economy due to the fact that it reduces the disparity of federal law by limiting the number of conflicts between judicial circuits.

SCOTUS HAS NEVER INVALIDATED AN AGENCY DECISION HERE UNDER STEP #2.

EXAMINED UNDER “ARBITRARY & CAPRICIOUS” STANDARD OF REVIEW If “YES”, Ct. upholds the A’s interpretation If “NO”, Agency action is unlawful.

Quick review of Arb and Capr review: Does agency consider relevant factors? Did they make a clear error in judgment Did the agency’s interpretation change the policy? Is there a public interest? Reliance on parties against importance of applying

the policy.

19