Ch 19 Powers and Functions of Administrative Agencies

#1 BASIC FUNCTION *rulemaking* (2)

when agency formally adopts *new regulation or amends an old regulation* - legislative = legally binding

3 reasons *settlements* are appealing

1. avoid appearing uncooperative 2. avoid expense 3. AGENCY: conserve their resources and avoid formal action

#3 ADMINISTRATIVE PROCESS *Adjudication*

resolution of dispute through a hearing conducted by the agency (administrative law judge)

*enabling legislation* (4)

specifies the 1. name 2. purpose 3. function 4. powers of the agency being created - can only use power delegated to them by congress

#4 ADJUCATION *hearing procedures* - informal adjucation - formal adjucation

( very discrete) *INFORMAL*: first solution option similar to arbitration *FORMAL*: like trial like requesting discovery (deposition, interrogatories, request document)

#2 SUBPOENA duces tecum

(Bring it with you) compel an individual/org to *hand over* books, paper, record, or documents to the agency

Bureaucracy

(FOURTH BRANCH) organizational structure consisting of government bureaus and agencies through which the govt. *implement and enforce law* - although controlled, thought to function mostly independently ex) administrative agencies

administrative agency

(federal/state) government agency that creates the *detailed regulation* necessary to *carry out the statute*(made by legislation)

2 Situations in which an *initial order* becomes a *final order *

(final decision) 1.if no party appeal the case 2. if party appeals and commission/court decline to review the case

#1 SUBPOENA ad testificandum

(to testify) it is a writ or order compelling witness to *appear to agency hearing*

#3 FACTOR *specificity of demand* for testimony or document

*ADEQUATELY* describe material being sought

Compare *Trial and* *Administrative Hearing* Characteristics 1. Both (3) 2. Difference

*BOTH*: use -party testimony, -present evidence - cross examination *DIFFERENT*: - Administrative Hearing can introduce *hearsay* (secondhand) information as evidence

#3 LAW *Regulatory Flexibility Act* - 3 steps

*CONCERNS* effects of regulation on the efficiency of businesses, particularly smaller ones, 1. whenever a new regulation will have an impact on alot of small businesses, it must conduct a *regulatory flexibility analysis* - measure cost on small business and look for less burdensome option. 2 must alert small businesses about upcoming regulations. 3.relieve small businesses of some record-keeping burdens (hazardous waste mgmt.)

Example of *EPA administrative agencies* working together at various levels 1. congress 2. federal 3. state

*CONGRESS*: enact clean air act law and provide general direction to prevent air pollution *FEDERAL*: EPA make the specific pollution control regulations *STATE*: analyze data and determine appropriate standards

*Controversy* with deferrence to agencies -RESULT

*CONTROVERSY*: good for factual question but questionable for their interpretation of its own legal authority *RESULT* US supreme court in Chevron vs. Natural Resource Defense Council says create a *standard of broadened deference to agencies on question of legal interpretation*

*Chevron vs. Natural Resource Defense Council * - problem - decision

*PROBLEM*whether court should defer to an agency interpretation of statute given authority to act *DECISION*: *defer that agency interpretation of law* as fact.as long as it is reasonably upholds the (ex. bubble policy)

#1 ADJUDICATION STEP *Negotiated Settlements* - purpose - forms it can be done in

*PURPOSE* - rectify problem to agency satisfaction and eliminate the need for additional proceeding *FORMS*: simple conversation or informal conference

1. *Who* creates federal administrative agencies? 2. *Why* do they create them?

*WHO*: congress *WHY*: because they get to delegate authority. They can pass legislation without having the burden of details and enforcing to agencies

What *article* gives the basis for all administrative law?

*article 1* It grants that 1. all legislative power to congress and oversee implementation of it 2. congress *can make laws necessary* to execute specified powers

What must the final rule *contain* ?

*concise general statement* that describe the *reasoning* behind the rule.

Federal Register

*daily publication* of executive branch that prints government order, rules, and regulations

#3 STEP NOTICE/COMMENT *final rule* - what happens if you change it too much during comment period? - where is it put after

*drafts the final rule and publishes it in the federal register * - redo proposal and comment part again - *Code of federal regulations* with other approved regulations

Administrative Process

*procedure* used by administrative agency in administration of law

*3 Example of how agencies have been created to respond to crisis* 1. Dodd Frank Wall Street Reform and Consumer Protection Act 2. Financial Stability Oversight Council 3. Consumer Financial Protection Bureau

1. *Dodd Frank Wall Street Reform and Consumer Protection Act* - recession 2. *Financial Stability Oversight Council* - finance system risk 3. *Consumer Financial Protection Bureau* - protect consumer from alleged abuse from financial institution

Ways Agencies can *gather information* through their investigations (2)

1. *on-site inspection* - sometimes only way to get evidence to prove violation 2. *inspection or test* - used in place of formal hearing to correct undesirable conditions

Challenges to hearing process for administrative agencies(2)

1. APA require to meet constitutional standard of due process 2. burden of proof is enforced

3 Bodies that push for rulemaking

1. Congress 2. agency itself 3. private parties who petition agency (repeal) ex) environmental group for stricter air pollution

*FTC* 7 Powers

1. Create "rules and regulations for the purpose of enforcing 2. Conduct investigations of business practices. 3. Obtain reports from interstate corporations about their business practices. 4. Investigate possible violations of federal antitrust statutes. (with the Antitrust Division of the U.S. Department of Justice.) 5. Publish findings of its investigations. 6. Recommend new legislation. 7. Hold trial-like hearings to resolve certain kinds of trade disputes that involve FTC regu- lations or federal antitrust laws.

4 laws congress passed to make agencies more accountable through *public scrutiny*

1. Freedom of Information Act 2. Government in the Sunshine Act 3. Regulatory Flexibility Act 4. Small Business Regulatory Enforcement Fairness Act

*US Supreme Courts standard for reviewing agency interpretation of law* 1. Did Congress directly address the issue in dispute in the statute? 2.If the statute is silent or ambiguous, is the agency's interpretation "reasonable"?

1. If so, the statutory language *prevails.* 2. *uphold agency's interpretation* even if court would have interpreted the law differently BASICALLY, IF THERE IS A LAW THAN DO NOT UPHOLD INTERPRETATION

5 *Step process* of Adjudication

1. Negotiated Settlements 2. Formal complaint 3. administrative law judge 4. hearing procedures 5. agency orders

Three *basic functions* of administrative process

1. Rulemaking 2. enforcement 3. adjudication

When are *closed meeting permitted*? (3)

1. accusing any person of a crime. 2. frustrate implementation of future agency actions. 3. future litigation or rulemaking.

What happens if a settlement cannot be reached (4)

1. agency issues a *formal complaint* 2. violator files an answer 3. if cannot agree on settlement goes to adjudicated 4. before hearing, notice issued

#4LAW *Small Business Regulatory Enforcement Fairness Act* (2)

1. allow Congress to review new regulations for at least sixty days SO that opponent can present an argument to congress. 2. court must enforce *regulatory flexibility act*

Process of Formal administrative adjucation SUMMARY (7)

1. complaint 2. answer 3. hearing before ADJ 3. Order of ADJ (cease/desist) 4. Appeal to governing board of agency 5. final agency order 6. appropriate court of review of agency decision 7. court order

Regulatory Flexibility Act

1. ensure that federal agencies consider ways to reduce the economic impact on small businesses 2. require agency to prepare guides in plain English that explain how small business *can comply* with regulations

4 Different *types of agencies* at all levels of government

1. executive agency 2. independent regulatory agency 3. state agency 4. local agency

What should be *included in* the *NOTICE ISSUED* before the hearing takes place (3)

1. fact and law on which complaint is based 2. legal authority for hearing 3. time and place

#2 ADMINISTRATIVE AGENCY *independent regulatory agencies* (3 types)

1. federal trade commission (FTC) 2. securities and exchange commission (SEC) 3. federal communication commission (FCC)

When can an agency conduct a *"Warantless" search* (4)

1. highly regulated industries 2. sell firearm or liquor 3. hazardous operations (coal mine) but need statute 4. emergency situation

What records are exempt (2)

1. national security 2 personal or confidential info

*EXECUTIVE CONTROLS* over bureau/ agencies (2)

1. president power to appoint federal officers 2. president veto power to ... - enabling legislation -congress attempt to modify existing agency authority

4 Factors to consider to determine *if subpoena is being abusive* ?

1. purpose of investigation 2. relevance of info being sought 3. specificity of demand for testimony or document 4. burden of demand on party from whom info is sought

What can trigger an investigation (2)

1. report of possible violation 2. compliance report from regulated entities ex) emission from car companies and one came back high

#2 LAW *government in the sunshine act* (1976) (open meeting law) (2)

1. requires that "every portion of every meeting of an agency" be open to "public observation." 2.requires procedures to ensure that the public is provided with adequate advance notice of the agency's scheduled meeting and agenda.

*JUDICIAL CONTROLS* over bureau/ agencies (2)

1. review of agency action 2. *Administration Procedure Act*: judicial review on agency decision

4 Type of *Inspection and Test*

1. safety inspection of *underground coal mine* 2. safety test of *commercial equipment and automobiles* 3. environmental monitoring of *factory emission* 4. ask firm to *submit documentation for inspection*

3 APA Safeguards to *ensure ADJ is unbiased*

1. separate from agency investigative and prosecutorial staff 2. prohibit *ex parte* private communication between ALJ and any agency party 3. protect ALJ from hearing disciplinary action unless there is a good cause

Why is the administrative agency qualified to make these detailed decisions required for regulation

1. special people / expertise 2. time 3. resource

#1 ENFORCEMENT *Subpoena* What are the two types

1. subpoena *ad testificandum* 2. subpoena *duces tecum*

3 Things required in a *notice*

1.*where and when* proceeding will be held 2. agency *legal authority* for making the rule (enabling) 3. *term/subject* matter of proposed rule

Enabling Legislation Example Federal Trade Commission (FTC) from FTC Act 1. name 2. purpose 3. function 4. what commission head the FTC

2. describe procedure needed to charge person for violation and judicial review of agency order 3. prohibit unfair trade practice 4. five member appointed by president (approved by senate) for 7 years, where one becomes the chair

#2 ADJUCATION *formal complaint*

Agency files a complaint against violator, if a settlement cannot be reached - public document and press release may accompany it

Government Agency Regulation BEFORE TODAY

BEFORE: simple, nonindustrial economy with little regulation NOW: *more agencies & more rules covering all aspect of business*because government grown, economy grown, and more complex

Benefit vs. Cost of Environmental regulations (EPA)

BENEFIT: clean environment than decades before COST: money from business (10 billion) although benefits are greater burden on business is big

APA *Fair Notice policy*

Before changing a regulation practice, agency must give *notice to those affected *

Bubble policy - problem

EPA clean air act interpreted "Stationary source" as entire manufacturing plant not each facility. EPA *allowed them to offset increased emission in other parts of plant* (LED TO LOWER COST FOR COMPANIES) - environmental groups challenged the EPA

#1 ADMINISTRATIVE AGENCY At *NATIONAL LEVEL*, what administrative agencies exist in the *cabinet department of executive brand* ? - examples

Executive agencies ex) FDA is within US department of Health and Human Service

Difference between 1. *statutory* law (2) 2. *administrative* law

STAT: -made by legislature -general law AD: -made by administrative agency

#2 POWER *interpretive rules*

INFORMAL rule that are *not legally binding* BUT to indicate how an agency plans to *interpret and enforce* its statutory authority (*enforcement guideline for agency officials*) ex) Equal Employment Opportunity Commission use this for American with Disabilities Act

What do agencies do after they conducted their investigation and *filed an administrative action against* an individual/org ? (2)

MOST: resolve through *negotiated settlements* in initial stage BUT can move toward an *adjudication*

What is the *difference* between 1. executive agencies 2. independent regulatory agencies

PRESIDENT POWER EXECT: a lot of power. they listen to him and he can appoint/remove officers INDEPENDENT: less power he cannot remove them without a just cause because they serve a fixed term

#2 FACTOR *relevance of info* being sought

RELEVANT to see if 1. law is being violated 2. not being violated

Do most firms 1.comply with request to inspect records ? 2.Why wouldn't they?

YESSSS: because they want to maintain good relationships with regulatory agency IF NOT: because think unreasonable or detrimental to business THUS: they use

administrative laws

administrative agencies create *body of law* to carry out their *duties and responsibilities*

#1 POWER *Legislative rule* (substantive rule)

administrative agency RULES are *legally binding* like statute as long as not specified in constitution

#5 ADJUCATION *agency orders*

after hearing 1. ADJ renders initial order 2. either party can appeal to board/commission or federal court of appeals

*exhaustion doctrine*

agency ARE NOT automatically subject to judicial review INSTEAD complaining party must first *exhaust all administrative remedy* (complaint, hearing, final agency order)

#1 STEP NOTICE/COMMENT *notice of proposed rulemaking*

agency must *publish a notice* of proposed rulemaking proceedings in *Federal Register*

#2 BASIC FUNCTION *rule enforcement* (2)

agency must ... 1. enforce the rules themselves 2. conduct investigations to monitor compliance

#2 STEP NOTICE/ COMMENT *comment period* - what - purpose - do they respond to comments - how do they respond (2) - exception for informal

allow enough time for people to comment on proposed rule *PURPOSE*: give interested parties opportunity to express view to *influence policy * - not all but significant ones that bear directly to proposal - modify final rule or explain why it didn't -accept comment after period is closed

APA definition of *"rule"*

an *agency statement of applicability and future effect* designed to implement, interpret, or prescribe law and policy

delegation doctrine (2)

based on US constitution - Congress can establish administrative agencies AND delegate to them *power to create RULES* for implementing those laws

Why is administrative agencies considered to be a *niche* in the government

because they exercise power of ALL three branches ex) only legislation make law but agency can make legislative rules

*Administrative Procedure act* - when does it apply - goal

create rules and regulation that govern agencies in doing their duty - absence of any directive from congress *PURPOSE*: judicial control over agencies

initial order

decision on case

#1 LAW *freedom of information act* (1966) -what is it - information need to be - if they do not comply - industries rely on it (4)

federal government must *disclose certain records to any person on request*, even if no reason is given for the request. - "reasonable description of info sought" - challenged in federal court - media, industry trade association, public interest group, companies

When asked to review agency by *appeals*, how do courts *historically* judge?

grant deferrence(weight) to *agency judgement* because they have expertise in that area

*Arbitrary and Capricious* Test (5)

hold agency's actions if ..... 1. there is no *rational explanation* for its decision. 2. Changed its prior policy *without justification.* 3. Considered legally inappropriate factors. 4. Failed to consider a relevant factor. 5. Rendered a decision plainly contrary to the evidence.

#4 FACTOR *burden of the demand on party* from whom info is sought

in responding to request, party must not bear certain cost ex)cost of copying document--> revealing trade secret

#1 FACTOR *purpose* of investigation

needs *legit purpose* not harassment or pressure the business into settling an unrelated matter

#2 ENFORCEMENT Search warrant

order directing law enforcement official to search a *specific place* for a *specific time* and seize it for the agency

#3 ADMINISTRATIVE AGENCY *state agency* - how are they created - who has *precedence* over conflicting regulations - example

parallel to federal agencies - federal agency ex) STATE: pollution control agency FEDERAL: environmental protection agency

#3 ADJUCATION *Administrative Law Judge* (ALJ) (4)

person who preside over agency hearing and has power 1. to administer oaths 2. take testimony 3. rule on question of evidence 4. make determination of fact

*Fourth amendment* - what case made the fourth amendment relevant to administrative processes

protects against unreasonable searches and seizures. If you must do a physical search for evidence, you need a search warrant. - Marshall v. Barlow's INC

*Notice-and-Comment rulemaking* What are the three basic steps?

regulation by APA for rulemaking. if violated, the rule is invalid 1. notice of proposed rulemaking 2. comment period 3. final rule

How do regulatory agencies respond when a *company DOES NOT comply* with a request for examination? (2)

subpoena or search warrant

Is the ADJ unbiased

technically he is required to be BUT he is not an independent judge because he works for the agency prosecuting

SUMMARY what do you do when meaning of particular statute language is *unclear* and agency interprets it ?

the court *must follow the agency's interpretation* as long as it is reasonable.

*LEGISLATIVE CONTROLS* over bureau/agencies (5)

through legislation 1. *give/take power away* from agencies through enabling legislation 2. *abolish* agency 3. *limit funding* 4. *investigate* implementation of law and agencies 5. *freeze enforcement of regulation* before putting in effect

What *power* did the APA give courts (4)

to "hold unlawful and set aside" agency action found to be" 1.arbitrary, 2. capricious, 3. abuse of discretion 4. not in accordance with the law BASICALLY challenge regulation as contrary to law or irrational

What gray areas were created in this decision

whether to give deference to all agency interpretation or just adjucation and formal rulemaking procedure ? Supreme court says agency must meet formal legal standard for notice-and-comment rulemaking. ex) FICA says students do not have to pay social security. But US Treasury said student are working 40+ hours a week are employees. Mayo foundation said does not apply to their work. Supreme court let US treasury enforce the rule