ADMINISTRATIVE LAW – GLICKSMAN – FALL 2010
I. THE ADMINISTRATIVE STATE
A. Introduction to Administrative Law
-Administrative law concerns the legal issues surrounding the implementation of regulatory and benefit programs
Organic statute→ Mandate/Process/Review→ Decision
-An agencyis “each authority of the government of the United States, whether or not it is within or controlled by another agency” excluding Congress, the courts, and the President (APA §551)
-A lot of this depends upon what kind of agency we’re talking about:
1) Executive Agency
2) Independent Establishment
3) Independent Agency
An executive agency is:
-established as a department or within a department
-headed by a single individual (typically) who is removable at will by the President
An independentagency is:
-free standing (not within any department)
-headed by a board or commission with multiple members not removable at will by the President
An independentestablishment is sort of a hybrid (i.e. EPA – free standing but single individual)
-Agencies regulate private conduct or implement public service/welfare programs
-Economic justifications for market intervention: Inadequate Information, Noncompetitive Conditions, Public goods
-Non-economic justifications for market intervention: Concentration of wealth, Non-market goods
Agency Advantages
1) Efficiency (streamlined process, relieve burden on Congress and the courts)
2) Expertise (specialization and experience)
3) Bureaucratic Neutrality (policy decisions on the merits, less directly political)
-The essential administrative law conflict: expertise and efficiency vs. accountability
-Agencies serve public interest, deserve deference vs. Agencies interfere with individual liberty, need safeguards
-Shared oversight of agencies:
Congress grants authority subject to standards and procedures
President appoints and removes officials and directs supervision
Courts review agency action for compliance with established standards and procedures
B. Agencies and Modes of Action
-Agency Modes of Action:Example Agency:
1) Rule makingEPA
2) Policy making by adjudicationNLRB
3) Mass adjudicationSSA
4) Informal actionIRS
5) Investigation and enforcementFCC
AGENCY STRUCTURES
Agency / EPA / NLRB / SSA / IRS / FCCComposition / SingleHead / 5 Mbr. Board / SingleHead / SingleHead / 5 Mbr.Board
Appointment / Pres + Sen / Pres + Sen / Pres + Sen / Pres + Sen / Pres + Sen
Term / Indefinite / 5 yrs. / 6 yrs. / Indefinite / 5 yrs.
Removal / At Will / For Cause / For Cause / At Will / For Cause
Location / Independent / Independent / HHS / Treasury / Independent
Status / Executive (?) / Independent / Executive (?) / Executive / Independent
C. The Administrative Procedure Act (APA)
-APA is codified at 5 U.S.C. §§ 551-559, 701-706
-Overview:
1) Basic concepts(definition of “agency”, rulemaking vs. adjudication)
2) Rulemaking
3) Adjudication
4) Enforcement
5) Judicial Review
-SEC v. Chenery established the principle that agency decisions can only be sustained on the basis of the reasons given by the agency at that time
-Two basic sections of provisions
1) §§ 551-559, which set out requirements and procedures for rules and rulemaking
2) §§ 701-706, which govern judicial review
§551 – Definitions:
(5) “rule making” – agency process for formulating, amending, or repealing a rule
(4) “rule” – the whole or a part of an agency statement of general or particular applicability and future effect
(7) “adjudication” – agency process for the formulation of an order
(6) “order” – the whole or a part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rule making but including licensing
ADJUDICATION VS. RULEMAKING
CASE / Londoner (Adjudication) / Bi-Metallic (Rulemaking)ACTION / Special Assessment / Broad Valuation Increase
CHARACTERISTICS / Few People / Many People
Especially Affected / Affected the Same
Individualized Grounds / Policy Grounds
RATIONALES / Fundamental Fairness / Too Costly
Not Politically Accountable / Political Accountability
Judicial Facts / Legislative Facts
§552(a): “Except to the extent that a person has actual and timely notice of the terms thereof, a person may not in any manner be required to resort to, or be adversely affected by, a matter required to be published in the Federal Register and not so published.”
§553 Exceptions:
(a)This section applies…except to the extent that there is involved--
1) A 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
(b)Except when notice or hearing is required by statute, this section does not apply
1) tointerpretive rules, general statements of policy, or rules of agency organization, procedure, or practice
2) when the agency for good cause finds thatnotice and public procedures thereon are impracticable, unnecessary, or contrary to the public interest
§553(b) and (c) set out requirements for informal “notice and comment” rulemaking
Three steps: (1) notice, (2) solicitation ofcomment, (3) incorporation of the final rule
§553(d) deals with final date and establishment of rules
-Rulemaking “triggering language”:
§553(c): …when rules are required by statute to made on the record after opportunity for an agency hearing, then the agency must abide by formal rules of §§556 and 557
-Adjudication “triggering language”:
§554(a): …in every case of adjudication required by statute to be determined on the record after opportunity for agency hearing, except to the extent that there is involved--(six exceptions)
-Formal Adjudication
1)Timely notice (§554(b))
2)Opportunity for settlement (§554(c)(1))
3)Hearing under §§556 & 557 (§554(c)(2))
- ALJ and Agency (§556(b), 557(b))
- Hearing rights (§556(d))
- Ex parte contacts (§554(d)(1), 557(d))
- Separation of functions (§554(d))
4)Substantive evidence review
-Reviewability exceptions
§701(a): This chapter applies, according to the provisions thereof, except to the extent that—
(1) statutes preclude judicial review
(2) agency action is committed to agency discretion by law
§702: A person suffering a legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning a relevant statute, is entitled to judicial review thereof…
§704: Agency action made reviewable by statue and final agency action for there is no other adequate remedy in court are subject to judicial review…
-The APA indicates three things about judicial review:
1) Whether judicial review is available
2) When judicial review is appropriate
3) The extent of the rigor with which courts are supposed to conduct judicial review
§706: Scope of review
To the extent necessary to decision and when presented the reviewing court shall…
1) Compel agency action unlawfully withheld or unreasonably delayed, and
2) Hold unlawful and set aside agency action, findings, and conclusions found to be
a)Arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law
b) Contrary to constitutional right, power, privilege, or immunity
c)In excess of statutory jurisdiction, authority, or limitations, or short of statutory right
d)Without observance of procedure required by law
e)Unsupported by substantial evidence in a case subject to §§556 and 557
f) Unwarranted by the facts to the extent that the facts are subject to trial de novo
In making the foregoing determinations, the court shall review the whole record.
§559:
-The various APA provisions do not limit or repeal additional statutory requirements
-These various APA provisions do not limit or repeal general requirements from other Congressional statutes
Richardson v. Perales
-Issue was whether agency violated due process and the APA by relying on documentary hearsay evidence in making the determination denying disability benefits
-SC upheld SSA’s denial of benefits: plaintiff had access to reports and opportunity for cross-exam and subpoena
-Considerations of practicality and cost: it would be prohibitively expensive if every claimant had the right to cross-examine every doctor who produced a report in the case
Robinette v. Commissioner of the IRS
-IRS held Robinette in default on his previously agreed to offer-in-compromise
-Tax Court reviews IRS hearing decision under an “abuse of discretion” standard of review (very deferential)
-Review of administrative law decisions is “ordinarily limited to consideration of the decision of the agency…and of the evidence on which it was based” (therefore, no presentation of new evidence on review)
-Without a clear statutory intent to displace this aspect of the APA, its provisions may not be superseded
-Additional evidence is limited to that which explains the hearing officer’s determination; it is not an opportunity for a de novo presentation (as Robinette had argued)
D. Agencies and Separation of Powers
-The Supreme Court has invoked two different models of the separation of powers:
1) Formalist model
-The Constitution creates three distinct branches with three distinct powers
-Agencies are part of the executive branch, therefore can only exercise executive power
2) Functionalist model (predominant)
-The lines among the three powers blur and frequently overlap (no discrete boundaries)
-Agencies fall in the area of maximum overlap and perform various functions
Regulations = legislative
Enforcement = executive
Administrative Adjudication = judicial
FCC v. Fox Television Studios
-issue is whether FCC change in policy to ban “fleeting expletives” was arbitrary and capricious
-even though agencies have broad power to change policy, they cannot do so for merely political reasons
E. Agencies and Legislative Power
-Agencies have no inherent authority – their authority comes from statutes (from Congress)
-Separation of powers principles arising from Article I place constraints on agencies, including the nondelegation doctrine, bicameralism, presentment, and the rule of law
-The protections provided by bicameralism and presentment are not present in agencies
-The nondelegation doctrine posits that Congress may not delegate its legislative power
-The exercise of delegated lawmaking authority is permissible, however, if the organic statute establishing the agency contains an “intelligible principle” to guide the agency(this delegation promotes efficiency, expertise, etc.)
-Factors which also may involve impermissible delegation of authority:
1) Breadth of power (problematic if too broad)
2) Recipient of authority (problematic if infringes on executive authority through delegation or delegates to private parties with a stake in the decision)
3) Subject of power (problematic if power is one that is defined for a specific body)
4) Procedural safeguards (problematic if there are none)
5) Criminal Sanctions (problematic b/c creation of criminal offenses is a legislative function)
6) Judicial review (problematic if there is none)
-When in doubt, uphold; Court hasn’t struck down a statute on non-delegation grounds since the 1930s
-Congress developed a technique for overcoming obstacles to agency overview and review; it passed a number of statutes that gave it the power to veto agency decisions and regulations
-The Court struck down the legislative veto as unconstitutional in Chadha v. INS, where because it alters the legal rights of those affected by the veto (violates either bicameralism, presentment, or both)
-The line-item veto was a technique which allowed the President to veto parts of statutes instead of entire statutes
-In Clinton v. City of New York, the Court found the line-item veto unconstitutional
-In some statutes, Congress has adopted “wait and see” provisions, which delay the effect of the regulations until X days after their adoptions (allows Congress to evaluate the regulations)
F. Agencies and the Judicial Power
-Congress often delegates to agencies the authority to adjudicate cases
-The question is when agency adjudication crosses over into and infringes on “judicial power”
-Constitution imposes three sets of constraints on adjudication:
1) Art. III vesting of judicial power in the Supreme Court and lower courts
2) Seventh Amendment right to a jury trial
3) Due Process clause of 5th Amendment
-Art. I ALJs lack the protections of Art. III judges (like lifetime tenure)
-Agency adjudication occurs without a jury
-Agency adjudication may be without judicial review and/or invest prosecutorial and fact-finding power in one body, which could interfere with due process
-In Murray’s Lessee, SC held that Congress can withhold from the jurisdiction of the federal courts issues involving public rights, even if those rights fall under the courts’ jurisdiction (comes from doctrine of sovereign immunity)
-In Crowell v. Benson, SC held that agency’s fact-findings are conclusive on review if they are supported by the evidence and agency’s authority; also permitted adjudication of private rights but only if statute provided for review
-If the dispute is one that involves public rights (one in which the government is a party), Congress can assign review of all matters concerning those rights to Art. III judges with no judicial involvement at all
-If the dispute is one that involves private rights (all parties are private parties), agency adjudication is permissible, as long as the “essential attributes of judicial power” are reserved to the courts on appeal from the agency decision
-The current definition of public rights also includes a dispute in which the government is not a party but the case involves a statute that creates liability among private parties
Commodity Futures Trading Comm’n v. Schor
-The court upheld the allocation of authority, holding that Schor waived any interest he might have had to guaranteed consideration in federal court b/c he filed the original fraud claim before the agency and did not object to the adjudicator’s hearing of the claim until the adjudicator ruled against him
-Distinguished between the individual litigant’s personal rights to have an issue litigated in a federal court, and the broader institutional interest of the government and the public (some rights to Art. III resolution cannot be waived)
The Schor test:
(1)Whether the court or the agency exercises the “essential attributes of judicial power”
(2)The nature of the right at issue (public vs. private)
(3)The reasons Congress has for delegating adjudicating authority to the agency
-The essential attributes of judicial power are reserved for Art. III federal courts
-In Granfinanciera, the Court said that if a statutory cause of action is not a public right for Art. III purposes, then Congress may not delegate the authority to adjudicate it to a non-Art. III court
-Granfinanciera, adopted a broad interpretation of public rights:
“The crucial question in distinguishing between public and private rights in a case in which the government is not a party is whether Congress, acting for a valid legislative purpose pursuant to Article I, has created a seemingly private right that is ‘so closely integrated into a public regulatory scheme as to be a matter appropriate for agency resolution with limited involvement by the Article III judiciary.’”
-Congress can’t just convert a private right into a public right by integrating it into a public regulatory scheme
G. Agencies and the Executive Power
Constitution vests in the President the executive power of the United States (Art II, §1)
-The President “shall take care that the laws be faithfully executed” (Art II, §3)
Five issues (appointment/removal/oversight):
(1)Can Congress directly appoint agency officials?
(2)Can Congress assign authority of appointment to someone other than the President?
(3)Can Congress directly remove executive officials?
(4)Can Congress restrict the President’s removal authority?
(5)What happens when the President’s orders and statutory authority conflict?
-Art. II §2:
[the President] shall nominate, and by and with the Advice and Consent of the Senate, shall appoint…all other Officers of the United States…
…but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, [a] in the President alone, [b] in the Courts of Law, or [c] in the Heads of Departmetns
Buckley v. Valeo: “Officers of the United States” include “any appointee exercising significant authority pursuant to the laws of the United States”
-The Court said that significant authority does not include investigative and information-gathering functions
-But significant authority does include adjudication, rulemaking, and enforcement functions that involve implementation of existing laws rather than the passage of the new ones
Three basic questions under Buckley:
(1)Is the official an “officer of the United States” so as to be subject to the clause?
(2)If yes, then is the officer a principal officer or an inferior officer?
(3)Is the particular means chosen for appointment of the inferior officer proper?
-Crucial to determine whether official is a principal officer or an inferior officer
-Four factors to determine whether officer is principal or inferior (from Morrison v. Olsen):
(1) Subject to removal by a higher Executive Branch official
(2) Empowered by the Act to perform only certain, limited duties
(3) Limited in jurisdiction
(4) Limited in tenure
-But seeEdmond (if you answer to a supervisor directly appointed by the President, you are an inferior officer)
-Officials qualify as heads of Department only if they operate on Cabinet-level, i.e. Secretaries (Freytag v. C.I.R.)
-But seeFree Enterprise Fund v. Public Co. Accounting Bd. (all freestanding agencies that are not subordinate to any principal officers qualify as Deparments for the purposes of the Appointments Clause)
-This contradicts, if not overrules, Freytag
-An official at an independent agency could argue that he is not required to abide by an executive order because the President lacks the authority to supervise independent agencies in that manner
-City of Albuquerque v. U.S.: three-part test to establish whether executive order can be judicially enforced
(1) Executive order must have some specific statutory foundation
(2) Neither statute that provides basis for executive order nor the order can preclude judicial review
(3) Must be an objective standard by which courts can judge
-The President has the power to remove unconditionally (Myers)
-However, removal of officials discharging “quasi-legislative” or “quasi-judicial” functions restricted to “for cause” (Humphrey’s Executor)
-Congress can’t reserve for itself the power to remove an official charged with executing the laws, except by impeachment (Bowsher)
II. SCOPE OF JUDICIAL REVIEW
A. Introduction to Judicial Review
-“Scope of review” refers to the issues that are subject to judicial review
-“Standard of review” refers to the degree of deference courts give to the agencies
DEFERENCE ARGUMENTS
Pro-Deference / Anti-DeferenceCongress has delegated authority to the agency / It is critical to have meaningful judicial review
Agencies typically have more competence/expertise / Agencies sometimes are captured or abuse their power
Agencies more familiar with administrative record / Familiarity with record not always implicated
Inefficient for courts to engage in de novo review / Courts must protect rights
Key provision of the APA is §706: