ADMINISTRATIVE LAW OUTLINE 1. INTRODUCTION a. Role and Structure of Agencies i. What makes an agency independent? 1.

Independent from the President (but not completely, as the heads are appointed) a. Independent b/c heads cannot be removed by the President, except for cause 2. Headed by a multi-member group a. Not a single head agency so its a commission of a group of people 3. Terms of office 4. Terms are staggered (dont all expire at the same time) 5. Political party affiliation limitation (only simple majority can be from one political party) 6. Budgets might not be controlled of the agency 7. Independent litigation representation ii. Everything an agency does is either rulemaking or adjudication 1. Rule, resembles legislation (similar to subordinate legislation) 2. Regulation, binding rule b. Chief Executives Appointment Power i. Appointment of Officers and Inferior Officers 1. Appointments Clause Article 2, Section 2 a. The President shall nominate and appoint all officers of the US who appointments are not otherwise provided for in the Constitution by law b. Congress may enact laws allowing the President, Heads of Departments, or Courts of law to appoint inferior officers 2. Congress and the Presidents Appointment Power a. Cannot appoint executive branch officers (principle or inferior) (Buckley v. Valeo) b. Can place reasonable constraints on the Presidents appointment power c. Can condition the removal power if it doesnt unduly interference with the presidents power to faithfully execute the law (Morrison v. Olson) d. Cannot impose double for cause protection from President removal (PCAOB) e. Dont want Congress to have the power to create offices and the power to fill them 3. Buckley v. Valeo a. Struck down a federal statute that authorized members of congress to appoint official to serve on the FEC an agency that administered laws on campaign financing b. Principle Officers i. Must be appointed by the president with the advice/consent of the Senate ii. Heads of all the executive department and members who head the independent agencies (includes Art. III judges) c. Inferior Officers i. Congress may allow inferior officers to be appointed by the President, Heads of Departments, or Courts of Law (Freytag) 1

ii. inferior officer connotes a relationship with some higher ranking officer(s) below the President (Edmond v. US; PCAOB) 1. Whether he is an inferior is dependent upon whether he has superior a. Is the work directed/supervised at some level by others who were appointed by presidential nomination w/ advice/consent of Senate? d. Employees i. People who dont exercise significant authority pursuant to the laws of the US ii. Dont need to be hired pursuant to the Appointments clause 4. Morrison v. Olson a. Court upheld statute that allowed a special court to appoint an independent counsel to investigate/prosecute possible violations of federal law by high ranking executive officials b. Reasoning: i. Independent counsel = inferior officer and therefore could be appointed by a Court of law 1. Subject to removal by a higher executive branch officer (Attorney General) 2. Limited in jurisdiction (scope defined by the special court) 3. Duties limited to investigation of certain federal crimes 4. Position was temporary once the task was over, job over 5. Edmond v. US a. Judges of the Coast Guard Court of Criminal Appeals = inferior officers b. The judges work is directed/supervised by principal officers i. Subject to administrative supervision by the Judge Advocate General (who has the power to remove them w/out cause) ii. Judges decisions are subject to review by the Ct. of Apps. For the Armed Forces ii. Removal Power 1. Presidential Removal Power a. Myers v. US i. Court struck down a federal statute that required the President to get Senate approval to remove the postmaster (purely executive officer) ii. Holding: Congress cannot interfere with the Presidents removal of an executive officer whom the President had appointed with the Senates advice/consent iii. Purely executive officials may be removed at will by the President iv. Congress cannot limit the Presidents removal power over any officer the President appointed 1. Power to remove = incidental to the power to appoint 2. President has the basic power to remove executive branch officers to comply with faithful execution of the laws provision of the Constitution b. Humphreys Executor v. US

i. Court upheld a federal statute restricting the Presidents ability to remove a member of the FTC who had been appointed by the President with the Senates advice/consent 1. Congress can condition the removal power as to officials w/ quasi-judicial/quasi-legislative responsibilities 2. Different than a purely executive officer like in Myers ii. President could not remove FTC commissioner without good cause 1. Wasnt a purely executive role included both quasijudicial/legislative powers c. Morrison v. Olson i. President cannot remove without good cause 1. Restriction on the Executives removal power ii. Presidents removal powers cannot impede (unduly interfere with) the Presidents ability to faithfully execute the law 1. good cause restriction does not impermissibly undermine or impede the powers of the Executive branch d. Free Enterprise Fund v. PCAOB i. because the Board is overseen by the SEC, whose members are also removable only for cause, the Act unconstitutionally interfered with the Presidents authority to oversee the execution of federal law. ii. SEC cannot remove members of the Board without good cause, and the President cannot remove members of the SEC without good cause 1. It not only protects Board members from removal except for good cause, but withdraws from the President any decision on whether that good cause exists (unconstitutionally insulated from Presidential authority) iii. Congress cannot impose double for cause protection from presidential removal 2. Legislative Removal Power a. All executive powers rest with executive officials Congress cannot appoint them and they cannot remove them i. The only way they can remove them is through impeachment ii. Congress can restrict the Presidents power to remove certain officers b. Congress can remove officials who exclusively serve the legislative function c. Bowsher v. Synar i. Court struck down a federal law that gave budget-cutting authority to the Comptroller General who heads the GAO 1. Budget-cutting authority conferred under the law was an executive power 2. The Comptroller was removable by Congress ii. Challenged as a violation of the separation of powers because it gave Congress the power to remove an official having executive powers iii. Holding: violation of separation of powers 3

iv. Reasoning: Congress cannot reserve for itself the power of removal of an officer charged with the execution of laws except by impeachment. 1. To permit the execution of the laws to be vested in an officer answerable only to Congress would, in practical terms, reserve in Congress control over the execution of the laws. 2. DELEGATION OF POWER TO ADMINISTRATIVE AGENCIES a. Delegation of Legislative/Rulemaking Power to Agencies i. Question/Issue: To what extent can congress delegate its legislative powers to agencies? 1. The Constitution a. Article 1, Section 8 Congress shall enact all laws that are necessary and proper to implement its other function ii. Field v. Clark to the New Deal 1. Since 1933, rare for the SC to overturn statutes as invalid delegations of legislative power to agencies 2. Marshall Field v. Clark a. Court upheld delegation to the President i. (statute empowered President to raise tariffs and suspend trade w/ foreign countries) ii. Responsibility/decisions generally made by Congress b. Reasoning: i. President didnt make the law/statute Congress did ii. President was merely executing the act 3. Panama Refining Co v. Ryan a. Court invalidated the a provision in an act that authorized the President to ban interstate shipments of oil produced in violation of state law i. Congress declared no intelligible principle 1. No policy, established no standards failed to provide for what the limitations of the delegation were 4. Schechter Case a. Court struck down a provision of the NIRA that authorized the President to approve codes of fair competition for the poultry industry i. Invalid because there was a lack of any procedure for adopting the codes, no standards were set ii. Again lacked limitations to the delegation, broad scope, lack of safeguards 5. So long as Congress provides sufficient standards, broad delegations of legislative power are acceptable a. Hard substantive decisions need to be made by Congress Agencies should just fill in the blanks iii. New Deal to the present 1. Delegations do not violate the doctrine as long as Congress articulates an intelligible principle for the agency or official to follow a. May be as general as one that directs the agency or official to regulate in the public interest 2. Debate about reviving the non-delegation doctrine a. Industrial Union Dept. AFL-CIO v. American Petroleum Institute 4

i. Rehnquists concurring opinion: 1. Three rationales for the application of the non-delegation doctrine: a. (1) Ensure Congress makes social policy, not agencies i. delegation should only be used when the policy is highly technical or the ground too large to be covered b. (2) Agencies of the delegated authority require an intelligible principle to exercise discretion c. (3) The intelligible principle must provide judges with a measuring stick for judicial review b. Whitman v. American Trucking Assn, Inc i. Provision in the Clean Water Act that authorized the EPA to promulgate regulations establishing air quality standards 1. Standard to be set at levels requisite to protect the public health ii. Court held: not a violation of the delegation doctrine 1. When Congress confers decision-making 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 iii. Agency cannot cure unlawful delegation by adopting in its discretion a limiting construction of the statute 1. The agency cant make the delegation lawful by declining to exercise some of that power 2. Voluntary self-denial has no bearing on the decision re: lawful/unlawful delegation iv. Non-delegation doctrine 1. Congress power to delegate is authority is limited a. Separation of powers argument i. Constitution assigned all legislative power to the legislature 1. Congress therefore cant transfer any part of that power to the administrative agencies b. Checks and balances argument i. Legislature must impose adequate limits on the discretion of delegation the agencies can exercise 2. Thygesen v. Callahan a. Court uses "intelligible standards" test b. Intelligible standard = legislative delegation is valid if it sufficiently identifies: i. "(1) the persons and activities potentially subject to regulations; ii. (2) the harm sought to be prevented; and iii. (3) the general means intended to be available to the administrator to prevent the identified harm." c. Legislature had failed to: i. Provide standards to guide Ds discretion ii. Failed to communicate to D the harm it intended to prevent d. Court found unlawful delegation of power 5

3. Problem 390 b. Delegation of Adjudicatory Power to Agencies i. Ultimate Question: 1. Whether the delegation impairs either: a. The individuals interest in having a claim adjudicated by an impartial Art. III judge OR b. The structural interest in having an independent judicial branch decide matters that have traditionally fallen within the core of Article III business ii. Article III 1. Federal judicial power vested in Article III judges (life tenure, protection against salary reduction) a. Ensures unbiased consideration b. Ensures that other branches cant deprive the judiciary of its essential functions 2. NOTE: Transfers to the agency authority that appears to belong to the judicial branch iii. How can Congress transfer adjudicatory power from Article III judges to Article I judges? 1. Private v. Public Right a. Northern Pipeline i. Invalidation of a statute that assigned the trial of all the issues (including contract issues PRIVATE RIGHTS) in a bankruptcy case to bankruptcy judges 1. Bankruptcy judges are Article I judges not Article III judges 2. Private rights = decided by Article III judges ii. Holding: Congress may not vest in a non-Article III court the power to adjudicate, render final judgment, and issue binding orders in a traditional contract action arising under state law b. Crowell v. Benson i. Statute empowered administrative agency to conduct adjudications 1. Federal workers comp statute that provided benefits based on strict liability if an employee was injured while working on navigable waters 2. Involved public rights dispute between private person and the government a. Also involved private rights i. Tort liability of employer to employee ii. Court upheld the agency adjudication b/c public right iii. Also found that, because private rights are at issue, Article III judges had to have independent power to decide all issues of law and jurisdictional fact on review of the agencys decision iv. Commodity Futures Trading Commn v. Schor 1. Whether Congress could allow the Commission to adjudicate compulsory counterclaims by brokers, which arose under state contract law (similar to Northern Pipeline cases) 2. Balancing test for determining permissible delegation of adjudicatory power to an Article 1 court 6

a. extent to which the essential attributes of judicial power are reserved to Article III courts b. extent to which the Article I forum exercises the range of jurisdiction and power normally vested in Article III c. origins and importance of the right to be adjudicated d. the concerns that drove Congress to depart from the requirements of Article III 3. Court held: a. Commission COULD adjudicate the counterclaims without violating Article III i. The statute allowing the Commission to adjudicate compulsory state-law counterclaims did not impermissibly intrude on the judiciary 1. The class of counterclaims was small 2. Decisions were subject to judicial review 3. Decision whether to allow the agency to adjudicate a claim was left to the parties 4. Was efficient for the agency to hear the compulsory counterclaims (given the close connection b/n them and claims that the agency had unquestioned authority to adjudicate) v. Problem 406 3. SUBSTANTIVE STATUTORY CHECKS ON AGENCIES a. Statutory Interpretation and Judicial Deference i. Approaches a court might take when reviewing statutory interpretation 1. No deference to the agency 2. Strong deference to the agency 3. Weak deference to the agency a. In reviewing the legal meaning of a statute, the court can substitute its judgment for the agency but is also expected under some circumstances to give weight to the agencys position ii. Marbury v. Madison iii. Connecticut State Medical Society v. Connecticut Board of Examiners to Podiatry 1. Weak deference 2. Board issued a declaration ruling that the ankle is part of the foot 3. Court found no special deference should be given to the Boards definition a. Question at issue was purely legal and required legislative intent be determined b. Construction and interpretation of a statute = question of law where administrative decision has no special deference i. Particularly where the statute hasnt been subjected to judicial scrutiny or time-tested agency interpretations iv. Cheveron USA v. Natural Resources Defense Council 1. Strong deference given to the agency 2. Two-part test: a. (1) Whether the statute has a clear meaning i. If meaning and intent are clear, that is the end of the matter 7

1. Effect must be unambiguously given to the expressed intent of Congress ii. If agencys interpretation conflicts with the clear meaning of the statute, then its invalid iii. If the statute is ambiguous, then the court moves to step #2 b. (2) Whether the agencys interpretation is reasonable (permissive construction) 3. Does not apply to non-legislative rules or informal adjudication 4. THE GENERAL LAW OF AGENCY PROCEDURES a. Adjudication Rulemaking Distinction i. Adjudication 1. Government action that affects identifiable persons on the basis of facts peculiar to each of them (adjudicative facts) a. Ex: tax increase for individuals storeowners based on different factors b. Londoner v. Denver i. Special assessment for paving streets was apportioned among property owners in the district ii. Landowners were never afforded an opportunity to be heard violation of due process 2. Procedural due process applies a. Individual hearings are required if one can show an individual liberty/property interest at issue i. Right to support ones allegations by argument however brief and by proof, however informal 3. Formal Adjudication a. Adjudication conducted under Sections 554, 556, and 557 b. Formal, trial-type adjudication that bears similarity to trial in court 4. Informal Adjudication ii. Rulemaking 1. Government action directed in a uniform way against a class of persons a. Policy decision not based on individual circumstances (legislative facts) i. Ex: tax increase to everyone in Denver ii. Bi-Metallic Investment v. State Bd. Of Equalization 1. Whether all individuals have a constitutional right to be heard before a matter can be decided in which all are equally concerned 2. Impracticable best way to do it is through the vote not a hearing 2. Procedural due process does NOT apply a. No individual hearing are required iii. Problem 66 iv. Anaconda Co. v. Ruckelshaus b. Procedural Due Process Right to a Hearing i. Hearing and Welfare Termination 1. Goldberg v. Kelly a. ISSUE: what sort of appeal procedure a state should provide when the recipient disagrees with the welfare departments decision to terminate benefits 8

b. The rights to a continued flow of welfare benefits is an interest which is protected by procedural due process i. To have a property interest in a benefit, a person must have a legitimate claim of entitlement to it and not just an abstract need/desire for it c. The demands of procedural due process are flexible and contextual rather than rigid and non-contextual d. Due process requires a hearing before benefits are terminated i. This strict per se rule was later modified in Matthews v. Eldridge ii. Substantive Triggers of Procedural Due Process Protection liberty/property interests 1. In order for the procedural requirements of due process to be triggered there must be the following: a. Adjudicative facts at issue b. Liberty or property interest at issue i. Property Interest: [legitimate claim of entitlement to.] 1. Tangible objects (real estate, money, etc) 2. Government entitlements (public employment, education, welfare, public housing) ii. Liberty Interest: 1. Freedom from Confinement, infliction of pain, revocation of parole, to marry, religion 2. Hardships 3. Stigmas (reputation) 2. Board of Regents v. Roth a. Teacher was no re-hired after his one year employment contract expired i. Property? 1. No, not entitled to employment beyond one year ii. Liberty? 1. No, but might have been if he was stigmatized 3. Cleveland Bd. Of Education v. Loudermill a. Once an entitlement has been created, it cannot be removed without an appropriate hearing b. Property right in their employment could be discharged only for cause 4. Bishop v. Wood a. Tenure or termination for cause are property interests b. At will employment does not constitute a property interest 5. Problem 42 6. Prisoners Liberty Interest a. Hewitt v. Helms i. Limited liberty interest hearing required only if prison regulations provided an entitlement b. Sandin v. Connor i. Liberty deprivation if the decision inevitably lengthens the term of imprisonment or imposes atypical and significant hardship on the inmate in relation to the ordinary incidents of prison life 1. Examples: transfer to a mental hospital (vitek v. jones), involuntary administration of psychotropic drugs (Washington v. Harper), transfer to an extremely harsh supermax prison (Wilkinson v. Austin) 9

7. Who can assert a property/liberty claim? a. Obannan v. Town home nursing center i. Nursing home, certified by the state decided to de-certify the facility 1. Owners have a property interest, right to a hearing 2. BUT what about the residents of the nursing home? a. USSC said nope i. They didnt have a liberty/property interest ii. Statute didnt give them a right to stay in the nursing home (of their choice) iii. Indirect interest in the closing of the home (incidental impact) iv. Liberty interest the trauma of having to move was not enough to equate to an infringement iii. Timing of Trial Type hearings and the extent to which such hearings are due 1. Mathews v. Elridge a. Balancing test that determines when and what kind of process is due: i. Timing 1. Pre-termination (Goldberg) v. Post-termination (Mathews) b. Three part balancing test that determines the timing of constitutionally required hearing as well as the type of hearing required i. The private interest that will be affected by the official action 1. How much reliance on the interest (See Goldberg welfare) ii. How probable is an increase in accurate decision-making with the addition of the additional safeguard? 1. i.e. The risk of erroneous deprivation of such interest through the procedures used and the probable value of additional/substitute procedural safeguards iii. The governments interest 1. Function involved 2. Fiscal and administrative burden that the additional/substitute procedural requirement would entail 2. Ingraham v. Wright a. Whether students subject to corporal punishment were entitled to a predisciplinary hearing b. Court said NO i. There is a liberty interest at issue (paddling = infliction of harm), however, traditional common-law remedies were adequate to afford due process 3. Problem 61 c. Core Statutory Principles of Administrative Procedure

ADJUDICATION
i. Administrative adjudication 1. Statutory rights to an adjudicatory hearing a. Federal Law i. APA doesnt require formal adjudicative hearings it DOES lay out guidelines for conducting them (Sections 556, 557) 10

1. Must separate prosecuting and adjudicating functions 2. Must allow cross-examination at the hearing as may be required for a full and true disclosure of the facts 3. Private party wins entitled to attorneys fees 4. Hearing must be conducted by an ALJ 5. Decisions must be based only on info contained in the record ii. Formal Adjudicative hearings not required UNLESS an external source requires the hearing to be on the record (another statute, constitution) 1. Must be an external source (statute, constitution) that triggers the APAs adjudicatory provisions 2. If no external source requires an evidentiary hearing, agency can choose its own dispute resolution this is called informal adjudication iii. What happens if Congress merely calls for a hearing or a public hearing without using the words on the record? 1. Dominion Energy Brayton Point, LLC v. Johnson a. EPA refused to conduct a formal APA adjudicatory hearing i. Statute said, must offer an opportunity for public hearing at issue is the interpretation of public hearing b. Court deferred to EPA interpretation of public hearing i. Cheveron deference statute was unclear, so deferred to agency interpretation b. State Law i. Most state APAs also require a statute to trigger the state APA formal procedures 1. If the proceeding meets the definition of contested case formal procedures apply a. Contested case a proceeding in which the legal rights, duties, or privileges or a party are required by law (statute) to be determined by an agency b. Alternative definition (compromise b/n 1961 and 1981 MSAPA approaches) of contested case i. Includes any agency discretionary decision to suspend/revoke a right/privilege or to refuse to renew or issue a license, regardless of whether any other law requires a hearing ii. Greenwood Manor v. Iowa Dept of Public Health 1. Statute required the health Council to provide a public hearing when it received an application at which all affected parties have an opportunity to present testimony a. Greenwood manor applied for certificate to open an Alzheimers care unit, granted, competitors appealed claiming they were entitled to a contested case hearing 11

2. Court found: a. Evaluation of an application for a certificate of need by the Council didnt implicate the contested case procedures b. Administrative rules explicitly state that public hearings do not constitute contested cases (interpretation was given deference by the court) iii. Metsch v. University of Florida 1. student appeals the order of a law school denying his admission claimed he was owed an administrative hearing because his substantial interests had been determined by the University which was a state agency 2. Court found not entitled to a hearing a. Substantial interest i. Will suffer injury in fact ii. Substantial injury is of a type/nature which the proceeding is designed to protect b. Beyond wanting to study law at that school, no substantial interest iv. Problem 83 2. Limiting the Issues to which hearing rights apply a. Whether the agency must provide an adjudicatory hearing prescribed by statute if the agency has already addressed the disputed issue in a rule b. By rulemaking i. Generally agency need not provide an adjudicatory hearing prescribed by statute on an issue if they have already addressed that issue in a rule 1. Agency may issue guidelines to resolve broad classes of issues a. Heckler v. Campbell i. Whether the Secretary of an agency may rely on published medical-vocational guidelines to determine a claimants right to Social Security disability benefits ii. Court Found: reliance on the guidelines was not in conflict w/ the statute iii. Secretary had to determine an issue not unique to each claimant general factual issue may be resolved as fairly through rulemaking as by introducing the testimony of experts at each disability hearing iv. To require the secretary to re-litigate the existence of jobs in the national economy at each hearing would hinder needlessly an already overburdened agency ii. Agencies may use rulemaking to resolve certain classes of issues that do not require case-by-case determination 1. Even if a statutory scheme requires individualized determinations, the decision-maker has the authority to rely 12

on rulemaking UNLESS congress clearly expresses an intent to withhold that authority c. Waiver i. Agencies can include a waiver provision in the rule that gives affected persons the ability to seek a waiver for the rule if they can show adequate reasons to justify one d. No material issue of fact (summary judgment) i. An agency can deny a hearing otherwise required by statute when there are no disputed issues of material fact 3. The Conflict b/n institutional and judicialized decision-making a. Judicial Model i. Agencys adjudicative decision = judges decision and the process should resemble judicial process as closely as possible b. Institutional Model i. Agency is a single unit with the mission of implementing a regulatory scheme the decision-making should be whatever is efficient and effective for the agency c. Personal responsibility of the decision-makers i. The Morgan Cases 1. Morgan I a. he who decides must hear b. Administrator who takes responsibility for a decision must personally have heard the case i. Advocates for the judicial model ii. Examiner may sift/analyze the evidence, but it must be presented to the Secretary/decision-maker before the decision is made c. Agencies can get around Morgan I by delegating the power to decide i. Judicial officers who stand in the shoes of the Secretary ii. Intermediate review board (agency head has discretion to consider appeals from the board) 2. Morgan II a. Formal adjudication due process requires an intermediate report be prepared by the hearer of the evidence to focus the issues for the benefit of both the parties and the ultimate decision-maker i. Report must be made available to both parties ii. Must be given an opportunity to object to it before a final decision is made 3. Morgan IV a. Inquiry into the mental process of the decisionmaker as to how he made his decision must be avoided absent a strong showing of bad faith or improper behavior 13

b. If an agency fails to explain its decision: i. Overton Park Case the court should remand the case to the agency for them to provide an explanation ii. Applies only when there is no explanation ii. Problem 98 d. Ex Parte Contacts i. Two different types of problems: 1. Improper communication comes from OUTSIDE the agency (ex parte) a. See APA Section 557(d) p. 715 of casebook i. Communication (oral or written) ii. Between interested parties (outside the agency) any individual with an interest in the agency proceeding that is greater than the general interest the public as a whole may have iii. Relevant to the merits of the proceeding iv. Not on the public record v. No prior notice to all parties 2. Improper communication from INSIDE the agency (separation of functions) ii. Professional Air Traffic Controllers org. v Federal Labor Relations Authority 1. Facts of the case a. 2 FLRA members were contacted during the penalty phase of the case b. Ct. of Appeals ordered special fact-finding review to find out what happened c. What were the contacts at issue? i. Secretary of Transportation phoned Frazier ii. Not a violation.parties discussed procedure not merits d. Albert Shanker (head of American Federation of Teachers union) met Applewhaite (an ALJ) i. Shanker was an interested person ii. Discussed the merits in the last 15 minutes of their dinner iii. However, STILL not a violation because it didnt have an effect on the decision (there was no harm) 2. Remedies of ex parte communication (section 557) a. Disclosure b. Require the violating party to show cause why his claim or interest in the proceeding should not be dismissed/denied/disregarded/adversely affected because of the improper communication e. Agency Adjudication and legislative pressure i. Congressional interference violates due process 14

ii. Pillsbury Co. v. Federal Trade Commission 1. Pillsbury claimed: a. Deprived of due process by reason of improper interference by Congressional committees with the decisional process of FTC 2. Inappropriate for Congress to try and influence a pending administrative adjudication a. When such a congressional investigation focuses directly and substantially upon the mental decisional processes of a Commissioner in a case which is pending before it, Congress is no longer intervening in the agencys legislative function, but rather, in its judicial function f. Separation of Functions Doctrine and Internal Agency communications i. Application only to formal adjudication 1. These rules do not apply to (1) rulemaking, either informal or formal, (2) informal adjudication, (3) initial licensing, or (4) most ratemaking. ii. Issue: whether a single individual within the agency can play an adversary role in a particular case (investigator/prosecutor) and then serve an adjudicatory role (ALJ, agency head) in the SAME case iii. Why do we have separation of function rules? 1. Due Process issues, problems with conflict of interest a. Constitutional due process if at issue is property or liberty interest 2. Solution = separating the functions (provides safeguards) iv. APA Section 554(d) 1. 554(d)(1) ALJ non-consultation rule a. Cannot have the same person in both adversary and adjudicative roles b. Prohibits hearing officers (ALJs) from consulting a person/party on a fact at issue absent notice i. Relates only to information input ii. Doesnt include seeking assistance from uninvolved agency persons in evaluating what is already in the record c. Hearing officers cannot be responsible to or supervised by anyone engaged in performing investigative/prosecutive functions d. Cannot serve as an advocate and decisionmaker e. Agency heads can participate in all facets of the case i. Can initial a complaint ii. Can decide the case later on iii. Can supervise staff during all phases of the case iv. General Counsel to report to Head v. Investigating off can report to Head 15

vi. ALJs can report to Head f. CANNOT allow prosecutors/investigators to talk to the Head ABOUT a case v. Principle of necessity 1. Biased/otherwise disqualified judge can decide a case if there is no legally possible substitute decision-maker vi. Categories of agency employees 1. Decision-making personnel a. ALJs, intermediate board members, agency heads 2. Adversaries a. Investigators/prosecutors involved in the case vii. Rules of Interaction 1. Adversaries cannot provide off-record advice to decisionmaking personnel 2. Decision-making personnel can advise or consult with individuals on the same level viii. Dept of Alcoholic Beverage Control v. Alcoholic Control Appeals Board 1. One adversary should not be permitted to bend the ear of the ultimate decision-maker or the decision-makers advisors in private ix. Withrow v. Larkin 1. A physician in the State of Wisconsin challenged the Wisconsin statutes which authorized the States Examining Board (Board) to investigate physicians and temporarily suspend their license. 2. Rule of Law. Vesting the authority to investigate and adjudicate in the same agency does not violate due process. g. Bias Personal interest, prejudgment, personal animus i. Adjudicator disqualified if : 1. tainted by animus (prejudice/hostility) 2. prejudgment on the issues 3. personal stake in the decision ii. Cinderella Career and Finishing schools, inc. v. Federal trade commission 1. Test for disqualification a. Whether a disinterested observer may conclude that the agency has in some measure adjudged the fats as well as the law of a particular case in advance of hearing it iii. Problem 128

ADMINISTRATIVE PROCEDURE OF ADJUDICATION

a. While administrative complaints need not meet the specificity requirement of criminal law, they must provide sufficient detail to apprise the party of the charges against him and allow him to adequately prepare for a hearing b. Charges should be reasonably specific in light of the relevant circumstances ii. Investigation and Discovery 1. Agency needs statutory basis other than the APA to compel the production of information (not an inherent power) 2. Subpoenas a. Subpoena power is limited agencies cannot enforce their own subpoenas, must go to court b. Craib v. Bulmash i. No Fourth Amendment privacy claim can be asserted against an administrative subpoena limited to the production of records which the subpoenaed party is required to maintain for the express purpose of agency inspection 3. 4th and 5th Amendment protections apply a. Agencies can grant immunity from federal charges to compel testimony b. Attorney-client, marital privileges remain iii. Problem 154 b. Alternative Dispute Resolution in adjudication i. Three classifications 1. Negotiation litigants/lawyers work out the problem w/out assistance of third parties 2. Mediation third party mediator helps the litigants work out the problem cannot impose a solution 3. Arbitration third party arbitrator has authority to impose a solution c. Hearing Phase i. Evidence 1. Any oral or documentary evidence may be received a. Should provide for exclusion of irrelevant, repetitive, immaterial evidence b. No preclusion of hearsay 2. Reguero v. teacher standards and practices commission a. Decisions must be based on substantial evidence b. Hearsay can be admitted in administrative cases ii. Official Notice 1. Circu v. Gonzales a. Agency adjudicators can take official notice of disputable and indisputable facts i. Must furnish notice to the opposing party who must have an opportunity to rebut the noticed fact before the decision is rendered 17

d. The Decision Phase i. Decision-maker is required to state their findings of fact and reasons for the decision 1. When the opinion is not accompanied by the necessary finding of fact, the remedy is to remand 2. Post-hoc rationalizations are not permitted reasons must be given at the time of the decision ii. Ship Creek Hydraulic Syndicate v. State 1. If a statute requires reasoned decision and the legislature has not expressly or by implication limited judicial authority to decide how to review administrative action court may and should require agencies to explain their decisions iii. Problem 177 e. The Effect of Decisions i. Res Judicata (claim preclusion) 1. A valid and final judgment that is conclusive of a claim a. If judgment for P, claim is extinguished and merged into the judgment b. If the judgment is for the D, P is barred from asserting the claim ii. Collateral Estoppel (issue preclusion) 1. Bars subsequent lawsuit where: a. Issue decided in a prior action is identical to one presented in a later action b. Prior action resulted in a final judgment on the merits c. Party against whom collateral estoppels is asserted was a party to the prior action or is in privity with a party to the prior action d. The party against whom collateral estoppels is asserted had full and fair opportunity to litigate the issue in the prior action (JS v. Bethlehem School District) 2. Offensive Mutual Collateral Estoppel a. P seeks to bar D from re-litigating an issue the D has previously litigated unsuccessfully in another action against the same party 3. Offensive Non-mutual Collateral Estoppel a. P seeks to bar D from re-litigating an issue the D has previously litigated unsuccessful in another action against a different party 4. Defensive Mutual Collateral Estoppel a. D seeks to bar P from re-litigating an issue the P has previously litigated unsuccessfully in another action against the same party 5. Defensive Non-mutual Collateral Estoppel

18

a. D seeks to bar P from re-litigating an issue the P has previously litigated unsuccessfully in another action against a different D iii. Preclusion against the government - Can the government be precluded from litigating? (re-arguing the same legal issues against the same parties) 1. US v. Stauffer a. Federal government could be barred from relitigating a legal issue it had lost in an action involving the same party even if the subsequent action is brought in another district b. But not against a different party (see Mendoza below) 2. US v. Mendoza a. Non-mutual collateral estoppel is not applicable against the US b. Government should be allowed to re-litigate the issue in hopes of creating a conflict b/n the circuits so that the issue might percolate to the Supreme Court c. US shouldnt be forced to appeal every case it loses in a trial court to guard against preclusion in later litigation 3. Does this mean the govt can lose a case in the circuit and still re-litigate the same issue against different parties in the same circuit? a. No same issue = same result because of precedent b. Could re-litigate if same issue, same parties, different circuit or same issue, different parties, different circuit c. Intra-circuit Non-Acquiescence i. Government may NOT re-litigate an issue despite having lost an appeallate decision on the identical point in the same circuit against a different party d. Inter-circuit Non-Acquiescence i. Government is allowed to try to identical issue in another circuit against another party 4. What if the person wins in civil case, then the govt prosecutes you in a criminal matter: a. Paine court says government NOT precluded even though D had won civil case under the same facts iv. Problem 182 f. Consistency of Decisions and Stare Decsis i. Stare Decisis 1. Courts generally follow their own precedents and lower courts must adhere to precedents established by higher courts 19

2. Assures a reasonable degree of consistency and predictability in the law ii. UAW v. NLRB 1. Agencies can change course through rule-making as well as case-by-case adjudication a. Changes must be made w/ an explanation 2. Not bound by stare decisis but must still provide explanation 3. No specific requirement in the APA BUT you can infer it from the APA 4. Includes independent agencies and executive agencies g. Equitable Estoppel i. Government cannot be held liable when one of its agents gives bad advice ii. Footies Dixie Dandy v. McHenry 1. Four Elements of Estoppel a. Party to be stopped must know the facts b. Must intend that his conduct shall be acted on or must so act that the party asserting the estoppels had a right to believe it is so intended c. Latter must be ignorant of the true facts and d. Must rely on the formers conduct to his injury 2. Note: SC has never accepted an estoppel claim and has rejected them on a number of occasions iii. Office of Personnel management v. Richmond 1. Advice he received was erroneous (that he could work overtime and not affect his disability pay) 2. Court also said that its unlikely to uphold a claim for estoppels against the government but did not slam the door h. Administrative Judges and Decisional Independence i. What makes an ALJ independent? 1. Can only be removed for cause (for cause protection) 2. Salaries are set by statute and OPM regulations (based on senority) 3. Cannot be supervised by a prosecutor or investigator (separation of functions) 4. Process of hiring through the OPM (office of personnel management) a. Standards required i. Must be lawyer for 7 years ii. Application process iii. Submit information as to their career iv. Interviewed by a panel v. References Evaluation vi. Get a score (0-100) vii. Over 80 points = getting on the register viii. 5 10 points preference for veterans

20

b. When theres a vacancy, the agency calls and then the OPM gives them names off the registry (choice among 3) 5. Cannot be assigned other jobs within the agency 6. No performance evaluations 7. Assigned cases by rotation 8. Subject to the management of their agency ii. Article III Judges 1. Life tenure 2. Specialized 3. Subject to review by agency heads (who are politically appointed) 4. Must follow agency policies

RULEMAKING
ii. Administrative Rulemaking 1. The definition of Rule a. Statements of future effect designed to implement, interpret, or prescribe law or policy as opposed to orders, which generally concern past events and have retroactive effect i. There is always a presumption that statutes and rules do not apply retroactively and an agency may not, as a general matter, issue retroactive legislative rules unless Congress expressly authorizes retroactivity ii. General or particular applicability iii. Must be published at least once b. Can a rule have retroactive effect? i. Bowen v. Gtown University Hospital 1. Agency failed to go through notice and comment 2. Goes through the notice and comment and as part of the new rule, tries to apply it to the years that were lost (because it had to go back through notice and comment) 3. Supreme Court says: the Rule is NOT retroactive, cannot go back and apply a rule retroactively a. Provides too much incentive on avoiding notice and comment b. not favored in the law 4. Decision based on literal APA reading of rule a. Also includes interpretative rules (which are permitted to have some kind of retroactive effect) Scalia 5. Example of constitutional retroactive rule: a. Rule that creates future taxation of trust income would affect the future but also the past action of setting up the trust c. Informal rulemaking (notice and comment rulemaking) i. 553 establishes the minimum requirements ii. Publication of NPRM, opportunity for written comment, publication of final rule, 30 wait period before the rule goes into effect 21

iii. Agency floor (cannot go below, but can do more) d. Legislative rules i. Rules issued by an agency pursuant to an express or implied grant of authority to issue rules or statements of policy with the binding force of law ii. Once it has gone through notice and comment and is published in the FR in final form, a rule has legal effect and is binding e. Non-legislative rules (interpretive rules or policy statements) i. Do not go through notice and comment (APA section 553(b)(A)) ii. Do not have the force of law because they are not based upon any delegated authority to issue such rules iii. Can be made effective immediately upon publication in the Register (553(d)(2)) 2. Initiating Rulemaking Proceedings a. Informal Rulemaking Notice and Comment - APA Section 553 i. Notice of Proposed Rulemaking (NPRM) the rule shall state: 1. Time, place, nature of the proposed rule 2. Reference the legal authority under which the rule is proposed 3. Terms or substance of the proposed rule or a description of the subjects and issues involved a. Publication of the full text of the proposed rule is not required but it is rare that the full text is not published at this stage b. Technical studies and data employed in reaching the decision to propose the rule should be made available at the time of issuance i. Usually the agency places these types of disclosures in a publicly available file called the rulemaking record where people can examine them 4. Publication in the Federal Register = constructive/legal notice a. UNLESS the persons subject to the rule are served and actual notice is given ii. Adequacy of Notice 1. Portland Cement Assn v. Ruckelshaus a. In order that rule-making proceeding to determine standards be conducted in orderly fashion, information should generally be disclosed as to the basis of a proposed rule at the time of issuance 2. Connecticut Light and Power Co. v. NRC a. NRC failed to disclose technical studies about fire prevention in nuclear power plants b. If the notice of proposed rulemaking fails to provide an accurate picture of the reasoning that has led the agency to the proposed rule, interested parties will not be able to comment meaningfully upon the agencys proposal 22

iii. Comment period 1. Interested persons given the opportunity to comment a. Anyone who is interested enough to comment (could be anyone) iv. Final rule w/ preamble 1. Must be published in the Federal Register (APA section 552) 2. Must be accompanied by a concise statement of basis of purpose v. Can the final rule differ from the proposed rule? 1. Logical outgrowth test a. Notice is adequate if the changes are in character with the original scheme and the final rule is a logical outgrowth of the notice and comments already given 2. Chocolate Mfrs. Assn v. Block a. After providing notice and receiving comments, the WIC changed the rule to delete flavored milk from the list of approved supplemental food b. Logical outgrowth test i. If the final rule materially alters the issues involved in the rulemaking or departs from the terms or substance of the proposed rule then notice is inadequate b. Formal Rulemaking APA section 556 & 557 i. Trial-type procedure governed by sections 556, 557 of the APA 1. Right to present evidence, cross-examine witnesses, and submit rebuttal evidence 2. Formal rulemaking provisions only apply when rules are required by statute to be made on the record after opportunity for an agency hearing 3. Record made before the agency is the exclusive basis for agency action 4. Ex parte communications prohibited by section 557(d) 5. Separation of functions provisions of 554(d) are inapplicable c. Problem 221 3. Public Participation a. Informal rulemaking (section 553) i. Notice and Comment process in section 553 1. See notes above ii. Agency is free to limit public participation to written submissions unless the agency determines otherwise or the law requires more b. Formal rulemaking (section 556 557) i. Must identify the circumstances in which formal rulemaking applies 1. when rules are required by statute to be made on the record after opportunity for an agency hearing, sections 556 and 557 of title are applicable 23

ii. US v. Florida East Coast Ry. Co. 1. Congress directed an increase in railroad rental cars be made, in adopting the rules to implement the mandate, ICC refused to grant protesting railroads a trial-type hearing 2. Holding/Rule: a. When a statute authorizes rulemaking of general applicability, it does not require an agency to go beyond the informal procedures of section 553 UNLESS the statute explicitly provides that the rule be made after a hearing on the record or similar language i. Strong presumption against the invocation of APA formal rulemaking iii. Problem 229 c. Hybrid Rulemaking and the limits on judicial supervision of agency procedures i. Special Statutory Provisions 1. Instruct agencies to make rules using procedures that are more elaborate than the APA informal rulemaking ii. Limits to Procedural Requirements 1. Vermont Yankee Nuclear power corp v. natural resources defense council a. Atomic Energy Commission (AEC) conducted rulemaking proceeding to determine how the nuclear waste storage issue should be resolved in each licensing proceeding objective to avoid religiating every single license application b. AEC came up with a rule only support of the reasoning for the rule was a 20 page report by a doctor on AEC staff i. NRDC and others wanted to cross-examine the doc and the AEC refused to let them a. Court says: courts cannot add additional requirements over and above what is required by the APA or other statutes b. Reasoning for the decision: i. If court does engage in this behavior, the agency doesnt know if theyre using the right procedure until the Court rules on it 2. Agencies are free to grand additional procedural rights above and beyond the APA requirements (which are a floor, not a ceiling) a. Vermont Yankee says: courts are generally not free to impose additional procedural rights on agencies 4. Procedural regularity in rulemaking a. Role of agency heads i. Morgan I 1. He who hears must decide less applicable in rulemaking 24

2. Normal for subordinates to make the decisions and then brief heads of the office a. Agency head need not read all of the written submissions, transcripts, summaries b. However agency head MUST understand their contents so that an informed decision can be made 3. Because of Morgan IV (below), Morgan I violations are nearly impossible to prove ii. Morgan IV 1. Cannot examine an agency head in court to ascertain whether he understood the record assembled during the rulemaking period b. Ex parte communications i. Formal Rulemaking 1. Section 557(d) forbids ex parte communications a. if they occur contents must be disclosed to public ii. Informal Rulemaking 1. Not addressed in APA developed in caselaw iii. Home Box Office v. FCC 1. Challenge to FCC rule that would have limited types of programming and advertising that could appear on pay cable channels and subscription tv 2. Number of participants before the Commission sought out individual commissioners/commission employees for the purpose of discussing ex parte and in confidence the merits of the rules under review a. Commission even solicited communications in its notices of proposed rulemaking 3. HOLDING: a. Once a notice of proposed rulemaking has been issued any agency official or employee who is or may reasonably be expected to be involved in the decisional process of the rulemaking should refuse to discuss matters related to the proceeding with any interested private party b. If it nonetheless occurs, any written document or a summary of the oral communication must be placed in the public file immediately after the communication so that interested parties can comment thereon iv. Sierra Club v. Costle 1. Limits the holding in Home Box Office a. Congress may represent their constituents before agencies engaged in informal rulemaking so long as individual Congressmen dont frustrate the intent of Congress 2. Ex parte contacts allowed throughout and only need to be disclosed if they are of central relevance to the rulemaking v. Problem 254 25

c. Bias or Political Influence in Rulemaking i. Assn of National Advertisers, inc. v. FTC (ANA case) 1. An agency member may be disqualified from such a proceeding only where the is clear and convincing evidence that he has an unalterably closed mind on matters critical to the disposition of the rulemaking a. Higher threshold of bias in rulemaking than adjudication ii. Problem 262 d. Findings and Reasons i. Section 553 requires a concise general statement of basis and purpose ii. National Assn of Independent Insurers v. Texas Dept of Insurance 1. Challenged the validity of two administrative rules arguing that they were not adopted in compliance with the procedural requirements for rulemaking 2. Holding: the board failed to explain and failed to provide justified reasoning for the adoption of both rules and therefore failed to meet the procedural requirements 3. Statement of basis and purpose must accompany the final rule a. Should reflect the factual, legal, and policy foundations for the action taken i. Every single item doesnt need to be discussed b. Must show the rule is reasonably supported by the material gathered, how conflicting interests were resolved and how that resolution led to the rule chosen c. Should show that the distinctions drawn are reasonably supported by the record iii. Does this violate Vermont Yankee? Is this adding something to the APA?? 1. Argument that it does not violate Vermont Yankee? a. Its not adding anything because the requirement is already there, its just construing statement of basis of purpose can be construing to have requirement b. Arbitrary and capricious clause how can the court analyze the rule without understanding the reasoning for the rule iv. Bar to post hoc rationalization 1. Judicial review only looks to the text of the rule and the state of basis and purpose a. Will not accept post hoc rationalization b. Consequence:

26

i. Means the agency is going to make sure to put everything in their preamble, which will lead to the ossification of rule-making c. WHY? i. We dont want agencies to do half-baked job rule-making and then go to court ii. we need rules that hold their feet to the fire 5. Issuance and Publication a. Publication requirements i. Section 552(a)(1) 1. Agency fails to publish a rule of general applicability, they cant apply it to someone who doesnt have actual notice of it 2. What must be publically available: a. 552(2) final opinions, statements of policy/interpretations not published in the Federal Register, staff manuals/instructions, copies of records, general index of the records ii. Federal Register Act 1. Requires the Federal Register to be published each federal working day 2. Includes all rules of general applicability and legal effect and NPRM 3. Requires the publication of a complete codification of all documents having general applicability and legal effect that were published in the Federal Register b. A final rule doesnt become effective immediately upon publication or filing i. Section 553(d) final agency rule becomes effective NO SOONER than 30 days following publication in the Federal Register ii. The delay provides for compliance of a new rule c. Exemptions from section 553 publication requirements i. Subject Matter military, foreign affairs, personnel ii. Interpretative rules iii. Policy statements iv. Procedural rules v. Good cause d. In order for someone to get relief when a non-legislative rule is not published, they must show that it affected their substantive rights i. Powderly v. Schweiker 1. SS case husband died, wife kept receiving checks 2. Court found: overpayment waiver provisions were intended to benefit only designated payees who through no fault of their own received more benefits than those to which they are entitled 3. Wife argued that the rule should have been published 27

4. Court held: this rule was interpretive (merely clarified/explained existing law/regulation) and didnt need to be published a. Rules that need to be published are those that effect substantive rights ii. Substantive Rights Test (Nguyen v. US) 1. Whether the rule changed existing rules, policy, practice 2. Whether the interpretation deviates from the plain meaning of the statute or regulation at issue 3. Whether it is of binding force and narrowly limits administration discretion 6. Regulatory Analysis a. An intensive, formal examination by an agency of the merits of a proposed rule more detailed/systematic than notice and comment i. Most common variety = cost benefit analysis (CBA) b. Judicial Review of Regulatory Analysis i. Some statutes/executive orders prohibit judicial review of the agencys compliance to do a CBA ii. Corrosion Proof fittings v. EPA 1. Act prohibited the future manufacture, importation, processing, distribution of asbestos 2. EPA did a CBA 3. Court found the EPA CBA wasnt good enough meaningless c. Eisner, DOT Rulemaking Requirements (see handout) i. Agency requirements d. Problem 295 7. Exemptions from Rulemaking Procedures a. Good cause (narrowly construed) i. Two exemptions: 1. From notice and comment procedures 2. From 30 day delayed effectiveness requirement ii. Determined on a case-by-case basis iii. Must show the normal procedures would be: 1. Unnecessary a. Trivial (technical amendment) b. Direct Final Rule i. Agency publishes the rule and announces that if they do not receive adverse comments within a specified time period, the rule will become effective as of a specified later date ii. Usually done when the rule is uncontroversial c. Interim Final Rule i. When an agency relies on the impracticable or public interest prongs of the good cause exemption and adopts a final rule then requests comments on the rule after it becomes effective 28

ii. Rule is final but will be reconsidered and perhaps revised/replaced in light of the comments received 2. Impracticable a. Overriding need to take immediate action i. Sometimes this can come into play when there is a statutory deadline 3. Contrary to the public interest a. Security, emergency, etc iv. Jifry v. FAA 1. Pilots contend that the new procedures resulting in the revocation of their airman certificates issued by the FAA violated the APA (promulgated w/out notice/comment) 2. Court upheld law at issue because the national security implications yielded a good cause exemption and revocation of the license without notice/comment is permissible v. Problem 311 b. Exempted Subject matter i. Categorical exemptions generalized judgment that all rules falling into the defined categories should be exempt, regardless of individual circumstances c. Procedural Rules i. Rules of agency organization, procedure, practice ii. Substantial Impact 1. If the rule has a substantial impact on the regulated industry or those it will affect, there should be notice and comment iii. Public Citizen v. Dept of State 1. Cut-off date for FOIA requests challenged for being promulgated without notice and comment 2. Department contended was procedural 3. Public Citizen said substantially affected rights by needlessly multiplying the number of FOIA requests that might be submitted to obtain access to records 4. Court Held because the cut-off policy applies to all FOIA requests, making no distinction b/n requests on the basis of subject matter, it clearly encodes no substantive value judgment a. Judgment about procedural efficiency cannot convert a procedural rule into a substantive one b. Policy = prototype procedural rule properly promulgated w/out notice and comment d. Non-legislative rules/guidance documents i. Agency rules that do not have the force of law (non-binding on the agency and citizens) not based on delegated authority to issue the rule ii. Can have constraining effects on the agency action iii. Two kinds of non-legislative rules 1. Policy Statements 29

a. Two situations in which agencies are most likely to use general statements of policy i. To indicate when the agency will take investigative/enforcement action ii. To indicate how the agency intends to act under certain circumstances in an agency adjudication b. Motivations for making policy statements i. Provide guidance to employees ii. Announce its intentions to the public c. Professionals and Patients for Customized Care v. Shalala i. Issue whether the compliance policy guide was not a substantive rule and thus not subject to notice and comment ii. Holding not a substantive rule [did not effect a substantive change in the regulations] iii. Agencys characterization of the rule = policy iv. Court looked to whether the rule was binding no (affords an opportunity for the individual to determine compliance) (just used as guidance to help identify pharmacies that might be engaged in drug manufacturing activities under the guise of compounding) 2. Interpretative Rules a. Shouldnt add new content, should only derive a proposition from an existing document whose meaning justifies that proposition b. Hoctor v. US Dept of Agriculture i. Dangerous animal + fence requirement case ii. When agencies base rules on arbitrary choices (height of fences not based on anything) they are legislating so these rules are legislative/substantive and require notice and comment iii. The standard created was an arbitrary choice that could not be derived from the regulation through a process reasonably described as interpretation c. Factors that help determine whether the rule is interpretative i. Whether in the absence of the rule there would not be an adequate basis for enforcement action (Hoctor)

30

ii. Whether the rule interprets a legal standard or whether it makes policy (legal standard = interpretative rule); (policy = rule) iii. If the agency is interpreting a legislative rule, whether the claimed interpretative rule is consistent with the legislative rule it is supposedly interpreting (inconsistent = not interpretative) iv. Whether the interpretative rule is inconsistent with a prior definitive interpretative rule (Alaska Hunters case once a person has been notified of an agencys interpretation and over time have come to rely on it, then only notice-andcomment rulemaking can change that rule) v. Whether the agency contemporaneously indicated that it was issuing an interpretative rule vi. Whether the person signing the agency document had the authority to bind the agency/make law 8. How much freedom does an agency have in choosing between rulemaking and adjudication as the mode of policymaking? a. Federal agencies have broad, but not unlimited discretion to chose rulemaking or adjudication b. When should a purported rule of general applicability be treated as an order and made subject to adjudicative process? i. Anaconda Test 1. Rulemaking is invalid if: a. If the impact of the agencys issuance falls exclusively on one identifiable individual or entity AND b. It can be demonstrated that no other individual or entity can join the described class AND c. The issuance is based wholly on specific facts pertaining to the circumstances of the individual or entity c. When should a rule announced in an adjudicative order not be made applicable retrospectively to the parties in the case? i. Retail Clerks balancing test (when its unfair): 1. Is the issue one of first impression? a. If so, argues for retroactive application b. We generally want to encourage litigants to advance new theories 2. 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? a. If abrupt departure, may raise reliance issues 31

d.

e.

f.

g.

3. Extent to which the party against whom the new case rule is applied did reasonably rely on the prior law 4. Degree of burden the retroactive order imposes on the party 5. The statutory interest (public interest) in applying the new law, nothwithstanding the partys reliance on the prior law When should a purported order, with prospective effect (especially prospective-only effect), be required to be made through rulemaking? i. Wyman-Gordon 1. Should go through rulemaking but nonetheless allow later application after adjudication ii. Bell Aerospace 1. May use adjudication, but with limits 2. In some instances, there might be an abuse of discretion a. Where sanctions are involved fines/damages/liability being imposed iii. Ford Motor 1. Fords repossession practices against defaulting purchases a violation of the FTC Act 2. Must use rulemaking cannot use adjudication a. The rule of the case will have general application iv. St. Francis Hospital 1. Need not, if rule is allowed to be challenged in subsequence adjudication 2. Okay for agency to announce an adjudication so long as the parties in the next case can challenge the rule thats announced in the adjudication An adjudication may be invalid because it made law that was required be cabined by rule in advance of that decision i. Megdal 1. Board revoked dental license because it was fraudulently obtained malpractice coverage 2. Court remanded the case because the Board had not adopted rules to elaborate on the vague statutory standard of unprofessional conduct a. Must elaborate and narrow the scope before its applicable to an individual b. Based on the principle that if something is too vague, it should be fleshed out in rulemaking NOT adjudication A rule issued as a legislative rule after notice and comment cannot be challenged in subsequent adjudications i. May only be challenged by the agency in a subsequent rulemaking proceeding ii. DC Circuit extended this to interpretative rules interpreting their own regulations 1. Alaska Hunters The following choices can be made re: rulemaking v. adjudication i. Agency is generally free to announce new policies through and administrative proceeding

32

ii. When rulemaking is feasible and practicable, an agency which has been granted broad rulemaking authority ordinarily should use rulemaking instead of adjudication for large-scale changes 1. Ex: proscribing established industry-wide practices not previously thought to be unlawful iii. Agency should not be empowered to treat adjudicatory decisions precisely as if they were rules 1. Where precedent of prior adjudications is sought to be applied in a subsequent adjudication party should have a meaningful opportunity to persuade the agency that the principle involved should be modified or held inapplicable 9. Rulemaking petitions and agency agenda-setting a. Authorizes members of the public to petition an agency for the issuance, amendment, or repeal of a rule i. Section 553(e) of the APA ii. Also requires brief statement of the ground for denial of any application/petition filed with an agency (555(e)) b. Judicial Review i. Narrow limited to ensuring the agency has adequately explained the facts and concerns and that those facts have some basis in the record 1. Record need only include petition, comments, and the agencys explanation for rejection ii. Massachusetts v. EPA 1. Agencies have to adequately justify why they arent engaging in rulemaking in order to avoid a finding that the rule is arbitrary and capricious c. Problem 362 10. Waivers of Rules a. Agencies often entertain requests for waivers in cases in which the applicants can demonstrate that the rule does not work appropriately in their case b. Agencies are not required to include provisions for waivers but, when they do they must take a hard look at meritorious applications for waivers and articulate with clarity/precision their findings and the reason for the decision c. WAIT Radio v. FCC i. FCC rejected application for authority to operate on an unlimited time basis ii. Holding: court erred by not giving adequate reasons for denying and refusing to hold a hearing on the request for waiver of certain FCC rules d. Problem 370 5. REGULATORY REFORM a. Political Oversight of the Administrative Process i. Legislative and Executive Review of Agency Action 1. The legislature should specify its desires in the agency enabling act at the outset 33

a. When the legislature finds an exercise of authority unacceptable, it can respond by narrowing the agencys enabling act or can overturn the objectionable agency action b. Requires the concurrence of both houses of the legislature and the chief executive most legislatures use the legislative veto ii. Legislative Controls 1. Legislative Veto a. Mechanism that allows legislators to invalidate/suspend agency action by less cumbersome means than the enactment of a statute i. Ex: a resolution to disapprove of agency action passed by one house, two houses, or a committee without the participation of the chief executive 1. Has faced constitutional challenges for failure to satisfy bicameralism and presentment provisions b. Test: i. Whether Congress has sought to take legally binding action through a means other than the full enactment process 1. If it has the action violates the separation of powers principles and is not permitted (See Chadha below) c. Immigration and Naturalization Service v. Chadha i. Immigration and Nationalization Act provided for Attorney General to have discretion to suspend the deportation of deportable aliens AG delegated this power to the INS ii. Immigration judge suspended Chadhas deportation per the statute, reported the suspension to Congress iii. House adopted a resolution adverse to the deportation suspension 1. Chadha questions the constitutionality of the legislative veto that resulted in his deportation iv. ISSUE: whether one House of Congress violates strictures of the Constitution v. Holding: unconstitutional 1. Houses veto of the AG decision to suspend deportation was legislative and invalid because of a failure to satisfy bicameralism and presentment provisions a. AG was exercising legislatively delegated authority b. Any issues with that decision should have been dealt with in only one way; bicameral passage followed by presentment to the President c. Congress must abide by its delegation of authority until that delegation is legislatively altered or revoked 2. Congressional Review Act of 1996 a. Requires that virtually all rules of general applicability along with supporting documents be submitted to Congress and GAO before they take effect i. Distinguishes major from non-major rules 1. Non-major

34

a. Can take effect whenever the agency determines after 30 days from publication in the Federal Register 2. Major a. Cannot take effect for at least 60 calendar days after being submitted to Congress ii. Congress can veto all rules by a joint resolution (which is like a statute) without explanation 1. If a rule is disapproved, the agency may not issue another one in substantially the same form unless authorized 3. Other Legislative Controls a. Oversight Committees review the legality and the desirability of agency rules b. Investigations and Hearings iii. Presidential oversight 1. Executive Orders a. 12866 i. Stated purpose: to reform and make more efficient the regulatory process ii. Four ways it achieves that purpose: 1. Prescribes principles of regulation for agencies to follow to the extent permitted by law and where applicable 2. Requires each agency annually to prepare a regulatory agenda that includes a regulatory plan 3. Regularly convened meetings and conferences 4. Centralized review of regulations iii. How it applies to independent agencies 1. Must prepare regulatory agendas/plans 2. NOT subject to centralized review for each significant regulatory action 3. NOT subject to the provision authorizing the President to resolve conflicts that cannot be resolved by OMB b. Used to prescribe policies for the executive branch c. Not legally binding d. Can have the force of law if based on statutory/constitutional authority 2. Problem 475 b. The Debate over regulatory reform 6. ALTERNATIVE DISPUTE RESOLUTION a. Negotiated Rulemaking i. Neutral advisers (convenors) assembles a committee of representatives of all affected interests to negotiate a proposed rule 1. Goal: to reach a consensus on a text that ALL parties can accept ii. Negotiated Rulemaking Act 1. Criteria to be considered when determining whether to use negotiated rulemaking a. Whether there are a limited number of identifiable interests (no more than 25) that will be significantly affected by the rule

35

b. Whether a balanced committee can be convened that can adequately represent the various interests and negotiate in good faith to reach a consensus on a proposed rule c. Whether the negotiation process will not unreasonably delay issuance of the rule d. Whether the agency has adequate resources to support the negotiating committee e. Whether the agency will use a committee consensus as the basis for a proposed rule iii. Essential that negotiated issues do not require the compromise of principles so fundamental to the parties that meaningful negotiations are impossible 1. There must be a willingness to negotiate in good faith iv. Supplement to the APA process happens before issuance of notice and comment 7. JUDICIAL REVIEW OF AGENCY DECISION-MAKING a. Section 701 - 706 b. Scope of Judicial review i. Introduction 1. See APA section 706 ii. Burden of Proof 1. Preponderance of the evidence iii. Scope of review of Agency finds of basic fact 1. Most to least judicial power of review a. De novo (most) i. APA Section 706(2)(F) 1. Provides for setting aside agency action found to be unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court 2. Treats the agency decision as nullity ii. Court decides the case as if the agency proceeding never occurred b. Independent judgment on the evidence i. Court decides the case on the record compiled by the agency, but gives no deference to the agency decision c. Clearly erroneous i. Court reverses the agencys decision if it is left with the definite and firm conviction that a mistake has been committed 1. All the court must find is an error that was made and it doesnt matter if there is supporting evidence d. Substantial evidence APA formal standard section 706(2)(E) i. Whether a reasonable person viewing all the relevant evidence in the record could find that a preponderance of the evidence supports the agencys findings/decision 1. Must look at the entire record 2. If a reason person could find the same as the agency, then the decision is supported by substantial evidence and upheld e. Arbitrary and Capricious APA informal standard section 706(2)(A) i. Court may reverse the agency decision only if its findings are arbitrary, capricious, or an abuse of discretion 36

ii. Only applies to judicial review of agency fact-finding in informal adjudication or informal rulemaking 1. Should also be used when reviewing the discretionary aspects of agency action in formal adjudications f. Unreviewable (least) statute may prohibit review, etc 2. The Substantial Evidence and Clearly Erroneous Tests a. A court reviews for substantial evidence when the agency action was formal rulemaking, formal adjudication, or rulemaking/adjudication under sections 556 and 557 of the APA b. Universal Camera Corp. v. NLRB i. Lower court failed to consider the ALJs report as part of the decisional record 1. Circuit Court (reviewing court) believed itself to be bound by the ALJs decision and found there was substantial evidence in support of the Boards findings ii. Court says: Agency findings should be set aside when the record before a reviewing court clearly precludes the agencys decision from being justified by a fair estimate of the worth of testimony of witness or its informed judgment on matters within its special competence 1. APA and the Act direct that courts assume more responsibility for the reasonableness and fairness of Labor Board decisions 2. Responsible to assure that the Board keeps within reasonable grounds iii. In other words they have to look at the whole record iv. Upgrades the important of ALJ hearing examiners now their decisions are going to be looked at c. Substantial evidence test is designed to limit a review courts power to reverse agency fact findings iv. Scope of Review of Issues of Legal Interpretation 1. APA section 706 specifies the scope of review 2. Level of Deference Given to Agency Interpretation a. Weak Deference i. In reviewing the legal meaning of a statute, a court gives the agencys interpretation weak deference but may override it if they are so persuaded (Skidmore) b. Strong Deference i. Chevron Deference 1. Two Step Process: a. Court decides whether the statute being interpreted has a clear meaning i. Court use traditional rule of construction ii. If agencys interpretation conflict with that clear mean, its invalid BUT if the statute is ambiguous, the court moves on to second step b. The court asks whether the agencys interpretation is reasonable 37

3. Connecticut State Medical Society v. Connecticut Board of Examiners in Podiatry a. Agency is construing a statute, not its own regulation b. Azamo Factors what to consider when determining deference (before Cheveron): i. Is the issue (what does foot mean) technical? Require a lot of special training? no. ii. How was this decided by the agency? (rulemaking, memo, declaratory ruling, adjudicative?) 1. They considered thoroughly, strong deference iii. When was the policy instituted (contemporaneous? interpretation of long standing?) 1. No, recent interpretation, weak deference 2. Not a lot of reliance, weak deference 4. Chevron v. Natural resources defense council a. See notes above re: level of deference b. When should Chevron apply? i. Chevron deference does NOT apply to non-legislative rules or informal adjudication 1. Agencys view in these types of interpretations can have the power to persuade as distinguished from power to control ii. Courts have given Chevron deference to an agencys procedural statutes that they are experts in iii. No Chevron deference when there are Constitutional issues involved 5. Problem 540 6. Statutory Interpretation and Chevron a. Brown & Williamson Tobacco v. FDA i. By inference, Congress never intended the FDA to regulate tobacco ii. Court says: Congress has clearly precluded the FDA from asserting jurisdiction to regulate tobacco products 1. the FDA is being irrational in attempting to claim jurisdiction over regulation 2. If it really was a medical device, they would ban it, not regulate it iii. In other words, under the Chevron deference test, the statute was clear and the interpretation was in conflict with the clear meaning iv. Dissenters say: its better to regulate than not regulate at all (black market consequence) 7. Informal Interpretations and Skidmore a. Christensen v. Harris County i. Opinion letter written by department said you had to get an agreement before changing the compensatory time compensation requirement ii. Court found: 1. Interpretative documents like opinion letters do not warrant Chevron deference 38

2. Instead they are entitled to Skidmore deference a. Interpretations contained in opinion letters are entitled to respect but deference is given only to the extent that those interpretations have the power to persuade 3. Court finds agency interpretation not persuasive iii. Harder for agency interpretation to be upheld under Skidmore deference b. US v. Mead Corp. i. Whether a tariff classification ruling by the US Customs Service deserves judicial deference ii. Tariff classification has no claim to judicial deference under Chevron 1. There is no indication that Congress intended such a ruling to carry the force of law iii. Tariff classification = Skidmore deference 1. ruling is eligible to claim respect according to its persuasiveness iv. If the agency can point to something in a statute/legislative history that proves Congress intended to give the agency deference then Chevron deference if not, then Skidmore v. Judicial review of Discretionary Determinations (arbitrary and capricious test) in Adjudications 1. Administrative action judicially reviewable APA section 706(2) a. arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with the law [arbitrary and capricious test] i. Used in reviewing the discretionary element of all kinds of agency actions formal and informal adjudications ii. Often applied to review of fact finding in informal proceedings 1. If the agency failed to consider a relevant factor, or took account of a factor it should not have considered, its action should be set aside as arbitrary and capricious 2. Citizens to Preserve Overton Park v. Volpe a. Review of a decision by the Secretary of Transportation to grant funds to build an interstate highway through a park b. Statute prohibited the use of parks for highways unless there was no other feasible and prudent alternative c. Court Found: i. Substantial evidence test not applicable (only applies to formal rulemaking/adjudication) ii. Public hearing required (informal) = arbitrary and capricious test 1. Whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment 2. Review should be searching and careful 3. Dont want to shield the action from probing and thorough review 4. Narrow interpretation 39

3. Salameda v. INS a. Whether the INSs judicial officers addressed in a rational manner the questions that the aliens tendered for consideration b. Deportation = formal adjudication (substantial evidence test) i. However arbitrary and capricious applies because the court is reviewing the a discretionary determination c. Holding no, the officers did not address in a rational manner the questions that the aliens tendered for consideration i. The holdings of the judges were incomprehensible at critical junctures 1. Refused to include the son in the matter 2. Didnt address the petitioners hardship claim ii. Court remanded back for the agency to address the issues properly Legislative Formal Adjudication Non-legislative rules Informal Adjudication Chevron X X Skidmore X X

vi. Judicial Review of Discretionary Determinations (arbitrary and capricious test) in Rulemaking 1. While a court should not substitute its judgment for that of an agency, the court should determine whether the decision-making was rigorous and deliberative; whether the agency reached its result through reason; and whether the agency took a hard look at the rule before its adoption a. Hard look test (see State Farm below) i. Reviewing court scrutinizes the agencys reasoning to make certain that the agency carefully deliberated about the issues raised by its decision 1. Agency explanation must address all factors relevant to the agencys decision b. Agency changing course by rescinding a rule is obligated to supply a reasoned analysis for the change beyond that which may be required when an agency does not act in the first instance 2. Motor vehicle manufacturers Assn v. state farm mutual automobile a. Whether seatbelts or airbags should be required in cars b. Informal rulemaking = arbitrary and capricious, abuse of discretion, otherwise not in accordance with the law c. Petitioner argued rescission of an agency rule = same standard a court would use to judge a refusal to promulgate a rule in the first place d. Holding: revocation is substantially different than failure to act and therefore not subject to the same judicial review i. Under arbitrary and capricious standard reviewing court may not set aside a rule that is rational, based on consideration of the relevant factors and within the scope of the authority delegated to the agency by the statute ii. This rule was arbitrary and capricious 40

1. Agency failed to supply the requisite reasoned analysis in the case 3. Problem 600 c. Availability and Timing of Judicial Review i. Reviewability 1. Preclusion of Judicial review a. Presumption of reviewability except where congress overrides that presumption i. APA section 701 1. Judicial review does not apply to the extent that statutes preclude judicial review ii. Exception to the exception questions of constitutional law can never be withheld from the courts iii. The mere failure to provide specifically by statute for judicial review is not evidence of the intent to withhold review b. Presumption of judicial review and the need for clear and convincing evidence to overcome that presumption i. Bowen v. Michigan Academy of Family Physician 1. there must be a showing of clear and convincing evidence to overcome the strong presumption that Congress did not mean to prohibit all judicial review of executive action 2. Court presumes that Congress intends the executive to obey its statutory commands and, accordingly, that it expects the courts to grant relief when an executive agency violates such a command 3. No judicial review available here (different than Erika) = no possibility to challenge the regulations at all 4. Footnote 3 p. 623 re: constitutional review a. Disposition avoids the constitutional question to what extent can Congress preclude judicial review of constitutional issues, either in the Supreme Court or in the lower federal courts? c. Time limitations/preclusions i. Providing for review of rules only during a short period of time (60 days) ii. Persons against whom a rule is enforced may be unable to challenge the rule even though they didnt know about the rule within the 60 day period iii. Benefits? 1. Efficiency front loading all the challenges iv. What about constitutional challenges? 1. Not likely to be precluded 2. Some challenges must be allowed regardless of time limitations a. Constitutional b. Criminal i. Adamo Wrecking Co. v. United States (p. 625) c. Ultra Vires 41

d. Statutory Challenge i. On the borderline something can come up that makes the interpretation dubious (less reason to preclude) v. What challenges SHOULD be precluded? 1. Procedural challenges a. Didnt give notice/follow the rules b. Either you did or did not follow the rules, will not change over time 2. Adequacy of the Record - Arbitrary and Capricious (State Farm) a. Wasnt supported by rulemaking record, facts, comments, etc b. Adequacy of the rulemaking isnt going to change d. Problem 626 2. Committed to Agency Discretion a. Two kinds of agency discretion i. That which is reviewable 1. APA section 706 arbitrary and capricious, abuse of discretion, or otherwise not in accordance with the law ii. That which is not reviewable 1. Agency refusing to act = generally, not judicially reviewable a. Decision whether or not to enforce a law/rule discretion unreviewable (Heckler case) b. Agency non-enforcement/refusal to undertake a rulemaking no discretion reviewable (Horse soring case) 2. APA section 701 a. Excludes agency action from judicial review to the extent that the agency action is committed to agency discretion by law b. Heckler v. Chaney i. Death row prison inmate wrote to the FDA claiming that the use of drugs for capital punishment violated the FDCA because it hadnt been proved to be safe and effective 1. FDA commissioner refused to take action relying on his discretion not to enforce the Act in cases where is no serious danger to the public health or a blatant scheme to defraud ii. Court found: Agency refusal to take enforcement action should be presumed immune from judicial review iii. Why unreviewable? 1. If an agency is refusing to act, its not exercising coercive power over liberty or property interest 2. Shares similar characteristics as that of Prosecutorial discretion

42

3. Review is precluded if the statute is drawn so that a court would have no meaningful standard against which to judge the agencys exercise of discretion a. No law applied to the exercise of the FDAs prosecutorial discretion b. Therefore, decision whether to take enforcement action was committed to the FDAs discretion by law iv. Problem: 1. Makes judicial review a one way street 2. Regulated parties can seek review and get into court easier but makes it harder for those who want the law to be enforced to get into court c. Webster v. Doe i. CIA fired an employee when it discovered the employee was gay ii. Alleged firing was unlawful under the National Security Act and was unconstitutional 1. Act: Director may in his discretion, terminate the employment whenever he deems it necessary/advisable in the interest of the US iii. Holding: language of the Act exudes deference judicial review not allowed 1. Firing was not unlawful under the act 2. Note: Court allowed the constitutional claim 3. Agency Inaction and Delay a. Norton v. Southern Utah Wilderness Alliance i. Whether the authority of a federal court under the APA to compel agency action unlawfully withheld or unreasonably delayed extends to the review of the US bureau of land managements stewardship of public lands under certain statutory provisions and its own planning docs ii. Hard to challenge programmatic failure iii. Holding: 1. An agencys failure to act is reviewable agency action only if it involves failure to take a discrete action that is legally required a. Failure to act = failure to take discrete action ii. Standing of the Plaintiff to Sue 1. A person suffering 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 (APA section 702) 2. Injury in Fact and Zone of Interest Test a. Two-prong test for standing i. Injury in Fact 1. Whether the challenged action has caused the complainant injury in fact economic or otherwise 2. An invasion of a legally protected interest that is a. immediate rather than speculative 43

b. particularized to the P rather than generalized to too many citizens, and c. concrete rather than ideological 3. Associations may seek review of agency action on behalf of their members so long as: a. One or more of its members would otherwise have standing to sue in their own right b. The interests the association seeks to protect are related to the organizations purpose and c. Neither claim nor the relief requested requires the participation of individual members in the suit 4. No citizen-standing a. Must be distinct from the general population 5. Tax payer standing a. SC has allowed such standing for one case 6. The injury must be fairly traceable to the allegedly unlawful action (causation) ii. Zone of interest 1. Whether the interest sough to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the state in question a. Interest must be sufficiently linked to the statute 2. This prong of the test is in place to exclude Ps whose suits are more likely to frustrate than to further statutory objectives 3. When a statute presents polar approaches (ex: the bank is allowed to provide services or they are not allowed to) a business is within the zone of interests 3. Lujan v. Defenders of Wildlife a. Endangered species act requires federal agencies to consult w/ sec of interior to make sure not jeopardizing animals UNLESS overseas.in which case, didnt matter, didnt have to check b. Rule was challenged 2 of their members wanted to go look at these animals c. Court Found: not enough no standing i. Needed concrete plans to show actual/imminent injury ii. No redressability (remediability) 1. Even if USAID was to consult, there was no guarantee USAID would have stopped the project iii. Requirement that the injury be fairly traceable iv. Easy to show injury when the govt action threatens the plaintiffs 1. But when asserted injury arises from lack of/weak regulation more is needed 2. Harder for them to show that if they win their suit, there will be stronger regulation v. Original injury in fact test is now more complicated 4. Massachusetts v. EPA a. The injury: Loosing coastline because the waterlines were rising global warming gas emission (chain of causation) 44

i. Issue of generalization petitioners are citizens of the state 1. Court says Mass = quasi-sovereign representing their citizens can be considered particularized enough b. Why wasnt redressibility a problem? i. If the Ps win their suit EPA would start rulemaking process, explain why, address the petition ii. Seems to be a difficult issue 1. They might not grant a petition 2. They might not issue a rule 3. That rule might not require restrictions on tailpipe emissions iii. Dissenters argue there is no redressibility c. The Issue: Whether the EPA violated the Clean Air Act by failing to adopt rules limiting greenhouse gas emissions from motor vehicles d. Holding: Massachusetts had standing because it alleged that its own coastal property was being consumed by rising sea levels cause by global warming 5. Problem 656 6. Assn of Data Processing Service v. Camp a. Challenged a ruling by the Comptroller of the Currency that national banks could provide data processing services b. Petitioners allege violates National Bank Act c. Whether the P alleges that the challenged action has caused him injury in fact, economic or otherwise i. Yes, competition of the bank = future loss of profits ii. Close relation between the interests of the statute limiting the economic activities in which the financial institutions could engage and the interests of potential competitors to limit the financial institution economic activities d. Whether the interest sought to be protected by the complainant is within the zone of interest to be protected or regulated by the statute or constitutional guarantee in question i. Yes, no bank service corporation may engage in any activity other than the performance of bank service which brings competitors within the zone of interest 7. National Credit Union Admin v. First Natl Bank/Trust a. Statute that federal credit union membership is limited to groups with a shared interest or in a specific geographic area b. Holds: standing relies on data processing, clark securities, and 2 other banking cases c. Finds standing shouldnt be denied under zone of interest i. Precedent says that competitors of financial institutions have standing to challenge agency action relaxing statutory restrictions on the activities of those institutions 1. we hold that respondents interest in limiting the markets that federal credit unions can serve is arguably within the zone of interests to be protected iii. Timing of Judicial Review (when should courts decide controversies brought before them?) 45

1. Finality a. APA section 704 i. Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review b. A litigant must complete the entire administrative process before a court will review decisions made by the agency c. Two-part test for determining whether agency action is final (Bennet v. Spear test) i. The action must mark the consummation of an agencys decisionmaking process 1. Not be of merely tentative or interlocutory character ii. The action must be one by which rights or obligations have been determined or from which legal consequences will flow d. Federal Trade Commission v. Standard Oil Co. i. Whether issuance of the complaint before the administrative adjudication concludes is final agency action subject to judicial review ii. Holding: issuance of the complaint was reviewable ONLY IF it was final agency action or otherwise was directly reviewable under section 704 of the APA 1. Why the final agency action rule? a. Worried about judicial economy i. Otherwise you have piecemeal review ii. Why have review twice? Would delay final resolution there might be two separate verdicts iii. If this were allowed, every respondent would challenge it not very efficient b. Worries about interfering with agency process i. Intervening now would prohibit agencys input of expertise c. Severe practical effect MIGHT make it reviewable under these circumstances iii. How is this different from exhaustion of remedies? 1. On this particular action, they have exhausted their remedies they have challenged the reason to believe finding and its been rejected 2. But its still not final agency action its only a preliminary step in the adjudication process iv. Mere litigation cost is not enough to overcome finality unless they could show it was absolutely crippling e. Immunity of review because of finality doctrine i. Franklin v. Massachusetts 1. Massachusetts tried to challenge the results of a census b/c it would have the effect of depriving the state of one of its representatives a. Alleged that the Dept. of Commerce had made unlawful adjustments to the results 46

2. Secretary of Commerce was to report the count to the President President would report the count to Congress 3. The rule was subject to review and revision by the President before it would have any direct and immediate effect on anyone a. President is not an agency, not subject to being sued 4. Therefore, theres no way to challenge the methodology f. Agency inaction and finality i. Statute establishes a deadline for agency action failure to meet the deadline can be final agency action ii. Heckler 1. Inaction can sometimes equate to final action a. Only when an agency fails to take a discrete action it is required to take can someone bring such an action i. Cannot be asserted when an agency has discretion whether to act or to refrain from acting g. Letter from the head of the agency i. DC Courts have found a letter from the head of the agency responsible for a matter presumptively the agencys decision 1. Absent any indication that the view is only tentative/preliminary can be viewed as final ii. Opinion letters can have legal consequences 1. Addresses a specific factual situation 2. Speaks in absolute terms 3. Establishes the legal obligations and legal consequences 2. Exhaustion of Administrative Remedies a. When Congress does not explicitly require exhaustion or say that exhaustion is not required, federal courts must balance the interest of the individual in retaining prompt access to a federal forum against countervailing interests favoring exhaustion i. Exhaustion is therefore NOT required in EVERY case over which an agency has jurisdiction ii. BUT strong presumption that it is b. Circumstances in which exhaustion should not apply: i. Prejudice subsequent right to judicial review (agency is unduly slow) 1. Requiring resort to the administrative remedy may occasion undue prejudice to subsequent assertion of court action 2. May result from an unreasonable or indefinite timeframe for administrative action ii. Substantial doubt it can grant the relief thats being sought - an administrative remedy may be inadequate because of some doubt as to whether the agency was empowered to grant effective relief 1. Where the challenge is to the agency procedure itself 2. When an agency lacks the authority to grant the type of relief requested 47

iii. An administrative remedy may be inadequate where the administrative body is shown to be biased or has otherwise predetermined the issue before it 1. It would be feudal to proceed at the agency level c. Portela-Gonzalez v. Secretary of the Navy i. Internally appealed her termination ii. Had one appeal left, skipped it, went straight to Fed. Dist. Ct. iii. Finding she failed to exhaust her final administrative remedy 1. Still allowed the case to be heard and still ruled against her 2. Appeals to the 1st Circuit a. Dist. Ct. was wrong lacked discretion to waive the exhaustion of remedy b. Circumstances in which a Ct. might not require exhaustion i. Statute must be silent court in weighing considerations might find they might be outweighed for judicial review ii. Exceptions iii. Prejudice subsequent right to judicial review (agency is unduly slow) iv. Substantial doubt it can grant the relief thats being sough v. Biased tribunal/feudal to proceed at the agency c. Court weighs the above factors and finds: i. Wasnt a lost cause to make the final appeal within the agency ii. Cannot be inadequate for expensive, or because the individual wants to skip it, or if the court cannot address an issue (constitutional question still should be exhausted) 3. Ripeness a. Most legislative rules are deemed ripe for pre-enforcement judicial review i. Challenges to legislative rules that impose duties/restrictions requiring persons immediately to change their conduct or be in violation of law = ripe under Abbott Labs ii. Legislative rules that DO NOT impose such duties/restrictions = NOT RIPE under Toilet Goods b. Two-part test for allowing pre-enforcement judicial review of legislative rules (see Abbot Labs below) i. Fitness of the issues 1. Whether the issue tendered is purely a legal one 2. Whether the action is final a. Not final if the agency may suspend, order, etc., upon the happening of a certain event (see Toilet Goods) ii. Hardship to the parties would result from withholding review 48

c. Pre-enforcement review should usually NOT be allowed for nonlegislative rules because they are tentative and no definite position has been established i. Guidance Documents - not normally found ripe for review 1. National Park Hospitality Assn v. Dept of the Interior a. Challenged guidance b. Court says not ripe for review i. Legal uncertainly isnt enough of a hardship, even if its a purely legal question 2. Forest Service in Ohio Forestry Assn v. Sierra Club a. Clear cutting of the forest b. The policy of clear cutting was challenged c. Court said its not ripe, many steps between issuance of the plans and the cutting of the trees that have to happen i. First would the delayed review cause practical hardship? No. ii. Immediate judicial review could hinder agency efforts to refine its policies through application of the plan iii. The issues didnt seem fit for immediate review raised technical questions that could be illuminated through a focus on specific parcels and specific proposals 3. Hardships can be found when a. Guidance document announces a policy that could be taken as a legal action b. If you can show immediate and direct effect and youre making a legal challenge, you might get into court d. Abbott Laboratories v. Gardner i. Rule required that the generic name of the drug appear on labels ii. Presumption of reviewability iii. Wasnt ripe see two-prong test 1. Fitness of the issues a. Nature of the claims i. Is it purely legal? ii. Is it final? 2. Hardship to the parties in withholding review a. Significant harm b/c of the dilemma the companies were in either comply with the regulation and forgo review of what they believed was an unlawful regulation OR willfully violate the rule and run the risk or serious criminal/civil penalties iv. Established that rules could be reviewed in pre-enforcement manner e. Gardner v. Toilet Goods i. Unripe for review 49

ii. Final agency action challenged on purely legal grounds, but not significant enough hardship 1. No dilemma faced by the manufacturer a. The rule did not immediately establish a legal duty requiring them to alter their primary conduct (like in Abbott) only imposed a condition requirement b. Company has to wait and see if the inspector knocked on their door, if they did, they could not let them in and then challenge the rule then c. We dont even know if the FDA will decide to enforce the rule discretionary enforcement f. Problem 691 4. Primary Jurisdiction a. Not an issue of the timing of judicial review, but an issue of concurrent trial jurisdiction who should have primary jurisdiction (who should hear the case first) i. When should the court allow the agency to try the case when it has concurrent jurisdiction? 1. Court may dismiss the entire case, which would send it to the agency, OR, it can keep the case pending and let the agency decide certain issues before deciding the case a. Court usually defers to the agency before it takes up a case when: i. There is a need for uniform results ii. There is a need for the agencys expertise iii. The possibility that agency approval of a challenged practice may immunize that practice from judicial challenge or at least alter the legal status of the practice 8. OPENNESS IN GOVERNMENT a. Freedom of Information Act i. Section 552(a)(1) 1. An agency MUST PUBLISH certain important information, such as a statement of its organization and procedure and substantive rules of general applicability 2. If such material is not published, a person without actual and timely knowledge of the terms thereof cannot be adversely affected by it ii. Section 552(a)(2) 1. Agencies must MAKE AVAILABLE (not necessarily publish) specified additional material a. Final opinion, staff manuals, instructions to staff that affect the public, and policy statements and interpretations of particular applicability (rather than general) 2. Material must be indexed iii. Section 552(a)(3) 1. An agency must furnish any reasonably described record requested by any person for any reason

50

iv.

v. vi. vii. 51

2. If an agency refuses to furnish the record (or fails to act within the prescribed timeframe), the requester if entitled to go to a federal district court and compel disclosure 3. The agency has the burden to justify non-disclosure on the basis of one of the nine exemptions for each document (or part of a document) a. The court then decides the matter de novo Nine Exemptions to FOIA (section 552(b)) 1. Classified information 2. Internal personnel rules and practices 3. Where another statute precludes release a. Homeland security Act, IRS laws, etc 4. Confidential private information a. Trade secrets and commercial/financial information obtained from a person/company and privileged or confidential b. If the information is submitted to the government voluntarily i. Exempt if it is of a kind that would customarily not be released to the public by the person from whom it was obtained c. If the information is submitted to the government under compulsion it is exempt if disclosure would cause substantial harm to the competitive position of the person or company from whom it was obtained 5. Inter or Intra agency communications a. The government has a right to withhold records that would expose its deliberative processes i. This includes memos which direct the filing of a complaint b. Attorney work product is exempt i. Memos prepared by an attorney in contemplation of litigation which set forth the attorneys theory of the case and his litigation strategy ii. Includes documents iii. Court often distinguish between factual and non-factual material c. Presidential communications are covered d. Does NOT apply to any document which falls within the meaning of the phrase final opinionmade in the adjudication of the case i. The decision to dismiss a charge or not to file a complaint are such decisions 6. Invasion of privacy a. Prevents disclosure of material that would constitute a clearly unwarranted invasion of personal privacy, including personnel or medical files i. Requires the court to balance the publics interest in disclosure against the private interest in preserving privacy b. Only individuals may invoke this i. Corporations invoke exemption 4 7. Law enforcement records 8. Bank regulatory reports 9. Oil wells Judicial review de novo (552(a)(4)(B)) NLRB v. Sears, Roebuck & Co. Chrysler Corp. v. Brown 1. Court rejected the legal theory on which prior reverse-FOIA suits had rested

a. Allowed then to survive on new legal footing 2. FOIA exemptions are discretionary, not mandatory a. Just because it falls within an exemption doesnt prohibit an agency from disclosing it 3. FOIA does not create a private cause of action for a person who wants to prevent an agencys disclosure of information a. Disclosure of information = agency action so such a person has a cause of action under the APA b. Government in the Sunshine Act i. Requires the meeting of the heads of the multi-member agencies to be held in public unless the meeting fall under one of ten exemptions in the statute 1. A meeting involves: a. A quorum of members i. At least the number of individuals required to take action on agency behalf b. Acting jointly c. Conducting deliberations d. Dispositions of agency business i. Informal background discussions that clarify issues and expose varying views are NOT considered meetings 2. Statute requires a. 7 days advance public notice in the Federal Register i. Even when the meetings are going to be close b. Certification by the chief legal officer of the agency that a meeting can be closed to the public c. The making of a transcript of all closed meetings 3. Exemptions a. Generally parallel the FOIA exemptions i. Exceptions 1. Pre-decisional communications between agency members, occurring in the meetings, must be open to the public a. Leads to having staff members representing their bosses to avoid Sunshine, and then having the agency heads rubber stamp decisions in an open meeting without further deliberation 2. Information, premature disclosure of which would be likely to significantly frustrate implementation of a proposed agency action a. Has been construed very narrowly i. Almost only used for impending embargos 3. Discussions of the agencys participation in pending civil litigation or its discussions concerning the initiation, conduct, or disposition of formal, on the record, agency adjudication c. Federal Advisory Committee Act i. Applies to: 1. Any committee, not wholly composed of federal employees, formed for the purpose of advising the President, the Congress, or executive/independent agencies 52

2. Broad enough to cover any meeting of two or more outside persons with agency staff 3. Advisory Committee a. Any committee/commission/board/task force/subcommittee b. Established by statute, used by the president, one or more agencies c. To obtain advice d. Not including that composing full-time employees of the govt (but if there is one private person, then FACA applies) ii. Does NOT apply to: 1. An unstructured arrangement in which the government seeks advice from a collection of individuals who do not interact with each other iii. Requirements: 1. Membership must be fairly balanced in terms of the POV represented/functions to be performed 2. Document setting up the committee must contain appropriate provisions to assure that the advice and recommendations of the advisory committee will not be inappropriately influenced by the appointing authority or special interest 3. Notice of committee meetings must be published in advance in the FR, and the meetings must be open to the public except under the FOIA exemptions 4. Detailed minutes must be kept iv. Decision Tree 1. How to decide whether a group is giving recommendations and is a committee a. Does this collection include nongovernmental official? b. Do they have a cohesive organizational structure? c. Is that org. a result of agency effort? d. Is the group subject to agency management and control?

53