CH.5 ADMINISTRATIVE LAW

SECURITIES AND EXCHANGE COMMISSION

monitors the stock market and enforces laws regulating the sale of stocks and bonds

FORMAL RULEMAKING

must hold a public hearing before establishing the rule

FEDERAL TRADE COMMISSION (FTC)

(Woodrow Wilson) 1914 , A government agency established in 1914 to prevent unfair business practices and help maintain a competitive economy, support antitrust suits - Administrative agencies thus can develop the knowledge and devote the time necessary to provide continuous and flexible solutions to evolving regulatory problems.

SUBSTANTIAL EVIDENCE TEST

- For a piece of evidence to qualify as substantial, the court must review the evidence to "test" its significance. - Judges must find the evidence "reasonable in nature, credible, and of solid value." - The impact of substantial evidence is less than evidence that leaves no doubt, but exceeds mere preponderance. - Substantial evidence must actually be considerable proof equal to the burden of proof required in that particular case.

A major rule is any rule that the Office of Management and Budget (OMB) finds has resulted in or is likely to result in

- an annual effect on the economy of at least $100 million, - a major increase in costs or prices, or - a significant adverse effect on competition, employment, investment, productivity, innovation, or international competitiveness of U.S. enterprises.

In exercising judicial review, the court may decide either to...

- compel agency action unlawfully withheld or to set aside impermissible agency action - In making its determination, the court must review the whole record and may set aside agency action only if the error is prejudicial

When conducting a review, a court decides all relevant questions of law, interprets constitutional and statutory provisions, and determines the meaning or applicability of the terms of an agency action. This review of questions of law includes determining whether the agency has...

- exceeded its authority, - properly interpreted the applicable law, - violated any constitutional provision, or - acted contrary to the procedural requirements of the law.

Most legislative rules are issued in accordance with the informal rulemaking procedures of the APA, which require that the agency provide the following:

1. prior notice of a proposed rule, usually by publication in the Federal Register; 2. an opportunity for interested parties to participate in the rulemaking; and 3. publication of a final draft containing a concise general statement of the rule's basis and purpose at least thirty days before its effective date.

FOIA (FREEDOM OF INFORMATION ACT) permits agencies to deny access to nine categories of records:

1. records specifically authorized in the interest of national defense or foreign policy to be kept secret, 2. records that relate solely to the internal personnel rules and practices of an agency, 3. records specifically exempted by statute from disclosure, 4. trade secrets and commercial or financial information that is privileged or confidential, 5. interagency or intra-agency memorandums, 6. personnel and medical files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy, 7. investigatory records compiled for law enforcement purposes, 8. records that relate to the regulation or supervision of financial institutions, and 9. certain geological and geophysical information and data.

Most administrative agencies perform three basic functions:

1. rulemaking 2. enforcement 3. adjudication of controversies

In carrying out this executive function, the agencies traditionally have been accorded great discretion, subject to constitutional limitations, to compel the disclosure of information. These limitations require that:

1. the investigation is authorized by law and undertaken for a legitimate purpose, 2. the information sought is relevant, 3. the demand for information is sufficiently specific and not unreasonably burdensome, and 4. the information sought is not privileged.

GOVERNMENT IN THE SUNSHINE ACT

A law that requires all committee-directed federal agencies to conduct their business regularly in public session.

The formal procedure by which an agency resolves a matter (called _____________________________________) involves finding facts, applying legal rules to the facts, and formulating orders.

ADJUDICATION

Because of the increasing complexity of the social, economic, and industrial life of the nation, the scope of ___________________________ _______________ has expanded enormously.

ADMINISTRATIVE LAW

THE PRIVACY ACT

Act that protects the employment records of federal government employees from disclosure without prior authorization.

STATE AGENCIES

Agencies that provide employee screening, testing, and referral at no cost to the employer. - Among the more important state boards and commissions are those that supervise and regulate banking, insurance, communications, transportation, public utilities, pollution control, and workers' compensation.

In 1996, Congress enacted the __________________________________ ___________________________________________ ____________, which subjects most rules to a new, extensive form of legislative control.

CONGRESSIONAL REVIEW ACT - With limited exceptions, the Act requires agencies to submit newly adopted rules to each house of Congress before they can take effect. - If the rule is a major rule, it does not become final until Congress has had an opportunity to disapprove it.

NEGOTIATED RULEMAKING ACT (1990)

Encourages administrative agencies to engage in direct and open negotiations with affected interests when developing new regulations

In _________________________________ _____________________________________, the agency must consider the record of the trial-like agency hearing and include a statement of "findings and conclusions, and the reasons or basis therefor, on all the material issues of fact, law, or discretion presented on the record" when making rules

FORMAL RULEMAKING

FREEDOM OF INFORMATION ACT

Gives all citizens the right to inspect all records of federal agencies except those containing military, intelligence, or trade secrets; increases accountability of bureaucracy

This intermediate procedure, known as ____________________________ _________________________________________, results from combining the informal procedures of the APA with the additional procedures specified by the enabling statute.

HYBRID RULEMAKING - For example, an agency may be required to conduct a legislative-type hearing (formal) that permits no cross-examination (informal).

Most legislative rules are issued in accordance with the _________________________________ ____________________________ procedures of the APA

INFORMAL RULEMAKING

de novo

Latin, meaning "anew." A trial de novo is a completely new trial. Appellate review de novo implies no deference to the trial judge's ruling.

An ________________ "means the whole or a part of a final disposition, whether affirmative, negative, injunctive or declaratory in form, of an agency."

ORDER

ADMINISTRATIVE LAW JUDGE

One who presides over an administrative agency hearing and has the power to administer oaths, take testimony, rule on questions of evidence, and make determinations of fact.

INFORMAL RULEMAKING

Process of creating agency regulations that generally does not include a formal hearing

ADMINISTRATIVE RULEMAKING CHART

Rule Procedure Effect ----------------------------------------------------- Legislative Subject to APA Binding Interpretative Exempt from APA Persuasive Procedural Exempt from APA Persuasive

ARBITRARY AND CAPRICIOUS TEST

The APA gives courts power to hold agencies' actions "arbitrary and capricious" if they are not in compliance with constitutional due process. - requires only that the agency had a rational basis for reaching its decision.

LIMITS ON ADMINISTRATIVE AGENCIES

The legislative, executive, and judicial branches all have various means of power that limit the authority of administrative agencies.

Administrative agencies exercise powers that have been allocated by __________ to the three separate branches of government. a. the Constitution b. the administrative process c. Congress d. treaties

a

An administrative law judge for the Environmental Protection Agency decides a case against a manufacturer. The company then appeals the decision to the commission itself. Which of the following is correct regarding the appeal of the case from the administrative law judge to the commission? a. The commission may decide the case de novo. b. There is no appeal from the decision of the ALJ. c. The rules of evidence will be strictly applied by the commission in deciding the case. d. The commission will decide the case by having a jury trial.

a

As part of executive function to investigate conduct, administrative agencies may compel the disclosure of information, except under which limitation? a. the information sought is irrelevant. b. when promulgating rules. c. when notice and comment period has not taken place. d. when settlement is imminent.

a

Congress has enacted a protection statute to prohibit the unauthorized disclosure of federal agency records pertaining to an individual. This statute is: a. Privacy Act. b. Government in the Sunshine Act. c. Freedom of Information Act. d. Federal Trade Commission

a

In 1990, Congress enacted the Administrative Dispute Resolution Act. This Act does: a. encourage the federal agencies to use alternative dispute resolution. b. authorize state agencies to use mediation and conciliation. c. require the agencies to use alternative dispute resolution. d. All of these are correct.

a

Newly-elected United States President Sheryl Davidson does not agree politically or personally with the current chair of the Federal Communications Commission (FCC) and wants her former journalism professor, William Gonzalez, to lead the FCC instead. What can President Davidson do to make a change at the FCC? a. Remove the current chair and appoint Professor Gonzalez pursuant to her power as President of the United States. b. Nothing. The chair of the FCC is a lifetime position and becomes vacant upon the current chair's death. c. Sue the FCC to remove the current chair. d. Recommend to Congress to remove the current chair and appoint Professor Gonzalez.

a

The Agency for Military Intervention in the Western Hemisphere (AMIWH) is an administrative agency charged with overseeing U.S. military operations in the Western Hemisphere. If The National News, a nationally-published newspaper, seeks to request information a pursuant to the Freedom of Information Act (FOIA) from the AMIWH about military operations in Nicaragua, and AMIWH successfully resists turning over such information to The National News, what would the winning argument for resisting the records sought? a. Such information is in the interest of national defense or foreign policy and are to be kept secret. b. There is not enough time to comply with the request. c. The cost of producing such information is greater than $10.00. d. All of these are correct.

a

The Supreme Court of the U.S. heard FCC v. Fox Television Stations, Inc. In the Court's 2009 ruling what issue did they consider? a. Whether FCC's order of liability for fleeting expletives was "arbitrary and capricious" under the APA. b. Whether the FCC had jurisdiction over words used on televised broadcasts. c. Whether expletives on a national television broadcast are offensive. d. Whether the use of the expletives on the show in question was intentional.

a

The legislature may exercise control of administrative agencies in various ways. Which is NOT a control maintained by the legislative branch? a. Through the power to appoint and remove chief administrators. b. It may reverse or change an agency rule or decision by specific legislation. c. Through its budgetary power. d. By amending an enabling statute to increase, modify, or decrease an agency's authority.

a

JURY

a body of citizens sworn to give a true verdict according to the evidence presented in a court of law

ORDER

a final disposition made by an agency

JUDICIAL REVIEW

acts as a control or check by a court on a particular rule or order of an administrative agency

Parties seeking to challenge agency action must have standing and must have exhausted their...

administrative remedies

RULE

agency statement of general or particular applicability designed to implement, interpret, or process law or policy

By virtue of their power to __________, U.S. Presidents have significant control over the administrative agencies housed within the __________ branch. a. controlling the entire budgetary power; executive. b. appoint and remove the chief administrator of those agencies; executive. c. examine particular rules or orders; judicial. d. All of these are correct.

b

Federal legislation permits administrative agencies to deny access to nine categories of records is the: a. APA. b. FOIA. c. Privacy Act. d. Government in the Sunshine Act.

b

Much of federal, state, and local law in this country has been established by administrative agencies, which people label as the __________ because they possess tremendous power. a. executive committees b. fourth branch of government c. legislatures, including Congress d. the courts

b

The Environmental Protection Agency (EPA) denied a permit granting Final Frontier Technologies, Inc., a space exploration company, the right to build a rocket-launching facility on a beach in South Texas. Shortly after appealing the EPA's decision through the agency's administrative remedies, Final Frontier filed suit against the EPA in federal district court. If the EPA files a motion to dismiss Final Frontier's lawsuit, will it be successful? a. No, because the EPA violated Final Frontier's rights. b. Yes, because the EPA has not issued a final agency action. c. No, because the EPA's decision is automatically subject to judicial approval, regardless of whether Final Frontier seeks the review. d. Yes, because the EPA can never be sued in court.

b

Administrative law judges are appointed by the agency through a professional merit selection system and may be removed only: a. by the Supreme Court. b. when they retire. c. for good cause. d. when they are promoted

c

In the matter of Sackett v. Environmental Protection Agency, the main issue in this case was: a. whether the Sackett's property contained navigable waters. b. whether the Sackett's proposed use of their property was in compliance with the Clean Air Act. c. whether a compliance order of the EPA is final agency action for which there is no adequate remedy at law. d. whether the EPA deprived the Sacketts of their property without due process of law.

c

The Food and Drug Administration (FDA) would like to adopt some new rules regarding vitamins and supplements, but it is afraid that if too many people know about them ahead of time, the adverse publicity will force the agency to amend them. To avoid any public comment, the agency seeks to adopt the rules without publishing them. Which of the following statements is true regarding the agency's actions? a. The agency has a right to act in this way and a duty to be efficient with taxpayer money. b. The rules in this instance are procedural in nature and therefore are not required to be published. c. The APA sets out specific rules and procedures that this action would violate. d. The agency has no rulemaking authority, because only Congress can make legislative rules.

c

__________ are those issued by an agency having the ability, under a legislative delegation of power, to make rules having the force and effect of law. a. Interpretive rules b. Procedural rules c. Legislative rules d. Hybrid rules

c

DISCLOSURE OF INFORMATION

congressionally required public disclosure enhances oversight of agency activities

An agency may be required to conduct a legislative-type hearing (formal) that permits no cross-examination (informal) in accordance with which of the following? a. Informal rulemaking. b. Formal rulemaking. c. Negotiated rulemaking. d. Hybrid rulemaking.

d

As articulated in FCC v. Fox Television Stations, Inc., what standard do the courts review a substantive executive agency action? a. The courts review an executive agency action to determine if such action is politically correct. b. The courts review an executive agency action to determine if such action is clear and discretionary. c. The courts review an executive agency action to determine if such action is substantially compliant. d. The courts review an executive agency action to determine if such action is arbitrary or capricious.

d

Austin sustained an injury to his knee. Austin claimed the injury was suffered at work and filed a claim for workers' compensation benefits. The employer opposed this claim, saying the injury, if real, was the result of a congenital condition. In accordance with the statute, a hearing was held before the Workers' Compensation Board, which ruled against Austin. Austin became disgusted with the hearing officer and the proceedings because Austin felt that the hearing officer did not like him and wants to go directly to court because he feels that an agency appeal would be useless. Can he file the matter in federal court directly? a. No, he can only file in state court. b. Yes, he can file in court right away. c. Yes, he can directly to the Supreme Court. d. No, he must exhaust his available administrative remedies.

d

Once __________, administrative rules are applicable to all parties. a. read before the House and the Senate b. signed by the President of the United States c. approved by the Supreme Court d. promulgated

d

The Environmental Protection Agency suspects Jimmy Jameson of dumping unlawful chemicals into a stream on his company's property. The EPA has obtained evidence, claimed to be proof of unlawful activity, by way of aerial photography. In carrying out these investigations: a. must abide by the exact same rules as law enforcement. b. have the unfettered right to investigate in any way they see fit. c. an agency cannot require sworn testimony or the production of records. d. the agency have traditionally been accorded great discretion.

d

The Mayo Foundation for Medical Education and Research v. United States case involved the medical student residency program at the Mayo Clinic. The issue in the case involved: a. whether medical students work enough hours. b. whether the Mayo clinic program is a validly run medical residency program. c. whether Mayo's characterization of the students is prohibited by the U.S. Constitution. d. whether it was reasonable for the Treasury Department to distinguish between workers who study and students who work.

d

Under the Government in the Sunshine Act, meetings of many federal agencies are required to be: a. transcribed by a court reporter. b. presided over by the President. c. held in secret, undisclosed locations. d. open to the public.

d

What did the Supreme Court hold in Perez v. Mortgage Bankers Association? a. Agency interpretations require a notice-and-comment period under the APA. b. Legislative rules do not require a notice-and-comment period under the APA. c. Only a comment period is required when an agency amends or repeals a pre-existing interpretative rule. d. An agency is not required under the APA to use notice-and-comment procedures to issue an initial interpretative rule, and is likewise not required to use those procedures when it amends or repeals that interpretative rule.

d

ADMINISTRATIVE PROCESS

entire set of activities engaged in by administrative agencies while carrying out their rulemaking, enforcement, and adjudicative functions

ADMINISTRATIVE PROCEDURE ACT

federal law that establishes the operating rules for administrative agencies

ADJUDICATION

formal methods by which an agency resolves disputes

ADMINISTRATIVE AGENCIES

governmental body formed to carry out particular laws - government entity (other than a court or legislature) having authority to affect the rights of private parties - Administrative agencies, referred to by names such as commission, board, department, agency, administration, government corporation, bureau, or office, regulate a vast array of important matters involving national safety, welfare, and convenience.

FORCE OF LAW

having the same impact as a valid government-created law

EXECUTIVE FUNCTION

higher-order, complex cognitive processes, including thinking, planning, and problem solving

LEGISLATIVE CONTROL

includes control over the agency's budget and enabling statute

EXECUTIVE BRANCH CONTROL

includes the President's power to appoint members of the agency

Administrative agencies promulgate three types of rules:

legislative rules, interpretative rules, and procedural rules

UNWARRANTED BY THE FACTS

permits the court to try the facts de novo - rare instances, the reviewing court may apply the unwarranted by the facts standard, which permits the court to try the facts de novo. - This strict review is available only when the enabling statute so provides, when the agency has conducted an adjudication with inadequate fact-finding procedures, or when issues that were not before the agency are raised in a proceeding to enforce nonadjudicative agency action.

RULE OF LAW

principle that the law applies to everyone, even those who govern

RULEMAKING

process by which an administrative agency promulgates rules of law

QUESTIONS OF LAW

questions relating to the interpretation or application of the law

PROCEDURAL RULES

rules issued by an administrative agency establishing its organization, method of operation, and rules of conduct for practice before it - are also exempt from the notice and comment requirements of the APA and are not law - For example, the SEC's Rules of Practice deal with matters such as who may appear before the commission; business hours and notice of proceedings and hearings; settlements, agreements, and conferences; presentation of evidence and the taking of depositions and interrogatories; and review of hearings.

INTERPERATIVE RULES

statements issued by an administrative agency indicating its construction of the statutes and rules that it administers *do not have the force of law* - issued by an agency to advise the public of the agency's construction of the statutes and rules which it administers

LEGISLATIVE RULES

substantive rules issued by an administrative agency under the authority delegated to it by the legislature - often called regulations, are in effect "administrative statutes.

If the rule is not a major rule, it...

takes effect as it otherwise would have after its submission to Congress; it is subject to possible disapproval by Congress

ADMINISTRATIVE LAW

the body of law that regulates the operation and procedures of government agencies. - the branch of public law that is created by administrative agencies in the form of rules, regulations, orders, and decisions to carry out the regulatory powers and duties of those agencies