Chapter 19: Administrative Regulation
Which of the following statements is true? a) Administrative agencies provide comprehensive regulatory schemes. b) Administrative agencies only exist in the federal government. c) Administrative agency hearings are held in federal court. d) Administrative agency decisions cannot be appealed by an individual.
a) Administrative agencies provide comprehensive regulatory schemes. Administrative agencies provide comprehensive regulatory schemes within the area of their expertise. They exist in federal and state governments. An agency hearing is held before an administrative law judge, not in a federal court. An individual may appeal an agency decision in court once he or she has exhausted agency remedies.
Which of the following statements about judicial review is true? a) Before an individual can submit an agency decision for judicial review, the individual must exhaust all administrative remedies. b) An agency cannot appeal a case brought against it after the court rules in the plaintiff's favor. c) Agency decisions are automatically subject to judicial review. d) Judges can freeze the enforcement of federal regulations after the regulations take effect.
a) Before an individual can submit an agency decision for judicial review, the individual must exhaust all administrative remedies. Before an individual can submit an agency decision for judicial review, the individual must first exhaust all administrative remedies. This is called the exhaustion doctrine. Agency decisions are not automatically subject to judicial review; a case must first be brought. Further, an agency is allowed to appeal a case that the court rules in the plaintiff's favor.
Which of the following statements about regulations is true? a) Congress is able to halt the enforcement of most federal regulations. b) Regulations provide a general overview of what the legislature wants to accomplish. c) Regulations are general guidelines that businesses must follow. d) The judicial branch of government passes regulations.
a) Congress is able to halt the enforcement of most federal regulations. Congress has the ability to halt the enforcement of most federal regulations if there is a need to investigate the way an agency's laws have been implemented. A law provides a general overview of what the legislature wants to accomplish, regulations provide detailed information on the law, and the judicial branch reviews the actions of agencies in enforcing the law.
Which of the following statements about agency creation is true? a) Enabling legislation can create an agency. b) Cabinet members must vote on an agency's creation. c) Only federal governments can create administrative agencies. d) When an agency is created on a subject, Congress loses the right to pass further laws on that subject.
a) Enabling legislation can create an agency. Federal and state congresses enact enabling legislation to create an agency and give it powers. Cabinet members do not vote on an agency's creation. By delegating tasks to an agency, Congress avoids becoming bogged down in details that can be better addressed by the specialized agency. Despite this delegation, Congress still oversees the area in which it has passed legislation and can pass new laws on the subject. For example, Congress gave several agencies the power to create regulations on the Affordable Care Act. Later, Congress made changes to the Act.
Which of the following statements about the power of administrative agencies is true? a) They exercise powers that are normally divided among the three branches. b) They exercise legislative powers only. c) They have the power to interpret laws, but not to enforce them. d) They are authorized to issue rules, but not regulations.
a) They exercise powers that are normally divided among the three branches. Administrative agencies exercise powers that are normally divided among the three branches. These agencies issue rules and regulations like the legislative branch, interpret laws like the judicial branch, and are a part of the executive branch.
Administrative agencies do not have the authority to institute price-support programs. a) True b) False
a) True
Administrative law provides a mechanism for achieving justice by giving citizens the opportunity to provide feedback to decision makers. a) True b) False
a) True
Agency power may be limited by judicial review. a) True b) False
a) True
An agency may hold an informal conference to discuss a business's noncompliance and to negotiate a settlement before the agency formally files a complaint. a) True b) False
a) True
Anita works for Turner Leather and suspects that the sludge she is exposed to during leather tanning is toxic. Anita can make a request under the Freedom of Information Act (FOIA) for safety information on the sludge. a) True b) False
a) True
Businesses are protected by the Federal Privacy Act. a) True b) False
a) True
The Administrative Procedures Act requires agencies to give the public fair notice of any proposed change in their regulations. a) True b) False
a) True
The Administrative Procedures Act requires the administrative law judge to be separate from the agency's prosecutorial and investigative staff. a) True b) False
a) True
The Bank Secrecy Act was put into place to prevent illegal activity by consumers, such as money laundering, but its regulations place the responsibility on the financial institution. a) True b) False
a) True
The Government in the Sunshine Act requires open governmental meetings. a) True b) False
a) True
The __________ doctrine gives Congress the authority to create administrative agencies and to give these agencies the power to make rules. a) delegation b) dilution c) exhaustion d) act of state
a) delegation The delegation doctrine, as authorized by Article I of the Constitution, gives Congress the authority to create administrative agencies and delegate to them the power to create rules, according to the enabling law.
The Small Business Regulatory Enforcement Act protects businesses by a) easing the regulatory burden. b) restricting the number of new regulations passed each year. c) limiting the length of a regulation. d) removing fines for regulation violations.
a) easing the regulatory burden. The Small Business Regulatory Enforcement Act protects businesses by easing the regulatory burden on businesses. The Act requires federal agencies to prepare easy-to-understand guides for business that explain how to comply with the regulations, allows Congress sixty days to review the regulations before they become effective, and creates an ombuds office (which is a confidential, neutral, and informal space) at the Small Business Administration for businesses that have a complaint about their interactions with agencies.
Administrative agencies protect small businesses by a) enforcing laws that may not otherwise be enforced through private lawsuits. b) requiring detailed recordkeeping. c) providing consumer remedies. d) giving citizens the right to sue businesses in federal court.
a) enforcing laws that may not otherwise be enforced through private lawsuits. Administrative agencies protect small businesses by enforcing laws that may not otherwise be enforced through private lawsuits. An administrative agency may sue a business on behalf of a citizen at no cost. For example, the Equal Employment Opportunity Commission (EEOC) represents individuals who have a valid claim of discrimination against their employer. The EEOC will represent the employee in an administrative hearing, and the employee does not have to hire his or her own attorney.
Most administrative agencies fall under the control of the __________ branch(es) of government. a) executive b) legislative c) judicial d) executive and legislative
a) executive Although administrative agencies are created by the legislative branch (specifically Congress), the executive branch controls and oversees most administrative agencies.
Administrative agencies can conduct warrantless inspections of a) highly-regulated businesses. b) new businesses. c) all businesses. d) manufacturing plants.
a) highly-regulated businesses. While the Fourth Amendment protects against unreasonable searches by requiring a warrant in most cases, administrative agencies can conduct warrantless inspections in highly-regulated businesses, such as those that sell firearms or liquor.
Administrative agencies have the power to a) make, interpret, and enforce laws. b) make laws, but not interpret them. c) enforce laws, but not make them. d) interpret laws, but not make them.
a) make, interpret, and enforce laws. Administrative agencies have the power to make, interpret, and enforce laws. They make laws by issuing regulations, which have the force of law. They interpret the laws when they issue regulations and rules and when they hold administrative hearings. They enforce laws by investigating businesses and suing those that do not comply with the law.
The United States' regulatory environment is a) more comprehensive than that of other countries. b) a noninterventional system. c) business friendly. d) less comprehensive than that of other countries.
a) more comprehensive than that of other countries. The United States' regulatory environment is more comprehensive than that of other countries.
The Federal Register a) publishes all proposed and final agency regulations. b) was first published in 1920. c) is published weekly. d) summarizes major changes to the law.
a) publishes all proposed and final agency regulations. The Federal Register is printed daily by the federal government and reproduces all proposed and final regulations. It was first published in 1936.
Businesses are protected from agencies that issue unreasonable subpoenas by requiring that a) the subpoenaed information must be relevant and described in specific detail. b) an agency can submit only a certain number of subpoenas annually. c) the agency first obtain a search warrant. d) the agency must pay a fee to the subpoenaed business.
a) the subpoenaed information must be relevant and described in specific detail. Businesses are protected against agencies that issue unreasonable subpoenas by requiring that the subpoenaed information must be relevant, the subpoenaed information must be described in detail, the cost to the subpoenaed party must not be burdensome, and the investigation must be legitimate.
A witness can be compelled to testify in an enforcement action if he or she is served with an agency request. a) True b) False
b) False
An administrative agency can exercise power that it has not been specifically granted if the subject at hand is related to the agency's purpose a) True b) False
b) False
Federal administrative agencies can regulate trade that occurs across state borders, but not trade with foreign countries. a) True b) False
b) False
Legislative agencies at the state level are created to serve different functions from those of federal agencies. a) True b) False
b) False
The Occupational Safety and Health Administration (OSHA) is investigating Burger Mister for a possible violation. However, Burger Mister is refusing to turn over some of its records. OSHA issues a subpoena for the documents. For which reason would a judge deny the order? a) The documents are incriminating. b) The documents contain trade secrets. c) The documents are public. d) The documents are valuable.
b) The documents contain trade secrets. A judge will not order an inspection of documents that contain trade secrets.
Congress passes the Free Education for All Act, which requires all universities to provide tuition-free education to students. Which of the following statements is true? a) U.S. universities had no input into the creation of the law. b) The law will likely delegate rule-making authority to the Department of Education. c) If stakeholders believe the law is unconstitutional, they can request an administrative hearing to determine its constitutionality. d) An administrative law judge will determine whether the act is constitutional.
b) The law will likely delegate rule-making authority to the Department of Education. The law will likely delegate rule-making authority to the Department of Education because it is an existing agency with jurisdiction over education. During congressional hearings, universities and other stakeholders would have had the right to testify before Congress on the pros and cons of the proposed legislation. A court, not an administrative law judge, would decide whether the act is constitutional.
Executive agencies a) work independently from the government. b) have a cabinet-level administrator or Secretary. c) have commissioners who can be removed at any time by the president. d) have a cabinet-level administrator who cannot be fired by the president.
b) have a cabinet-level administrator or Secretary. Executive agencies have a cabinet-level administrator or Secretary who is appointed by the President. The President has the right to remove the head of the agency at any time.
An administrative agency begins an enforcement proceeding by a) issuing a subpoena. b) issuing a complaint. c) entering a consent order. d) assessing penalties.
b) issuing a complaint. An administrative agency begins an enforcement proceeding in the same way as a plaintiff in a civil action—by filing a complaint. The complaint informs the business what it did to violate the law, when the violation occurred, and why the business's action violated the law.
The Regulatory Flexibility Act requires additional procedures beyond the Administrative Procedures Act if the regulation would have a significant impact on a) multinational corporations. b) small businesses. c) publicly-held companies. d) governments.
b) small businesses. The Regulatory Flexibility Act requires additional procedures beyond the Administrative Procedures Act if the regulation would have a significant impact on small businesses. For example, the Act requires the agency to do a cost-benefit analysis if the regulation has a substantial impact on small businesses.
Under the Chevron doctrine, a) the administrative law judge can dismiss a case if the agency does not meet its burden of proof. b) the courts can defer to the agency's interpretation of a law under its jurisdiction as long as the agency has met the notice-and-comments period and the interpretation is reasonable. c) the courts are forbidden from deferring to the administrative law judge's decision because the judge is hired by the agency and presents a conflict of interest. d) the courts will defer to the administrative law judge's decision regardless of whether there is a notice-and-comment period.
b) the courts can defer to the agency's interpretation of a law under its jurisdiction as long as the agency has met the notice-and-comments period and the interpretation is reasonable. Under the Chevron doctrine, courts will defer to the agency's interpretation of a law under its jurisdiction as long as the agency has met the notice-and-comment requirements and the interpretation is reasonable. For example, an agency interprets the phrase "reasonable rate of interest" to mean the average mortgage rate given by banks. When a court is deciding whether an interest rate is reasonable, the court will defer to the agency's interpretation rather than the prevailing rate for certificates of deposit.
An explosion at a factory kills 20 people. Which of the following is NOT a remedy OSHA can take? a) It can inspect the factory without a warrant. b) It can subpoena the factory's safety records. c) It can interview the factory's employees publicly. d) It can levy a fine.
c) It can interview the factory's employees publicly. OSHA can take many actions when investigating a serious accident. It can conduct a warrantless inspection (because this is an emergency), subpoena records, interview employees in private, and impose a fine.
Mahalia files a Freedom of Information Act request with the Federal Bureau of Investigation (FBI). Which of the following statements is true? a) The FBI must give Mahalia private internal agency memos about its policies, if requested. b) The FBI must respond to the request within twenty days. c) The FBI must give Mahalia information on how it operates, if requested. d) The FBI must give Mahalia confidential information about criminal investigations, if requested.
c) The FBI must give Mahalia information on how it operates, if requested. The FBI must provide information about how the agency operates, how it spends its budget, and statistics it has collected, if requested. It is not required to provide personal information, internal memos on internal policies, confidential information about criminal investigations, personnel records, trade secrets, or matters relating to national security. The FBI must respond to FOIA requests within ten days.
Avida, a sneaker manufacturer, is a U.S. corporation that does business in other countries. Avida decides to manufacture a new line of sneakers exclusively in Bangladesh. This new line of sneakers will be sold in the United States. Before manufacturing can begin, Avida must determine what materials can be used in the sneakers and what wages to pay its workers. For example, U.S. laws require all shoe material to be flame retardant, but Bangladeshi laws apply different requirements. Further, U.S. laws require laborers to be paid $7.25 an hour, but Bangladesh has no minimum wage. Which of the following statements is true about the regulations Avida must comply with when crafting the sneakers? a) The materials in Avida's sneakers must be flame retardant to meet U.S. regulations, since Avida is a U.S.-based corporation. Further, Avida must pay its Bangladeshi workers the U.S. minimum wage of $7.25. b) Avida's sneakers only need to meet Bangladeshi regulations, since Bangladesh is the country of origin. Therefore, the material does not have to be flame retardant, and any wage is permissible. c) The materials in Avida's sneakers must be flame retardant to meet U.S. regulations, since the sneakers will be sold in there. However, Avida must only meet the labor regulations of the country in which the labor is performed, so any wage is permissible. d) Avida's sneakers must meet the Bangaldeshi regulations, since Bangladesh is the country of origin, and also the regulations of the United States, since the sneakers will be sold in those countries. Therefore, the material must be flame retardant and wages must be $7.25 an hour.
c) The materials in Avida's sneakers must be flame retardant to meet U.S. regulations, since the sneakers will be sold in there. However, Avida must only meet the labor regulations of the country in which the labor is performed, so any wage is permissible. U.S. corporations that manufacture goods in other countries but sell them in the United States must comply with the consumer requirements of the U.S. and any other countries in which they sell the products. Because the shoes will be manufactured in Bangladesh, Avida must comply with Bangladeshi labor regulations and wage requirements, not U.S. labor laws.
Congress passes a new law that allows the Department of Homeland Security to continuously monitor household conversations via smart speakers (such as Amazon Echo and Google Home) without a search warrant. A subagency of the Department of Homeland Security issues rules that govern the continuous monitoring of cell phone conversations. Which of the following statements about this subagency is true? a) The subagency has no authority to issue rules on smart speaker surveillance. b) The subagency can issue rules, but it has no force of law. c) The subagency has exceeded its authority. d) The subagency is an independent agency.
c) The subagency has exceeded its authority. The subagency has authority to issue regulations and rules on smart speaker monitoring because this authority was granted to the Department of Homeland Security. However, the subagency exceeded its authority when it issued rules regarding the monitoring of cell phone conversations because authority was only given for smart speakers, not cell phones. These rules and regulations have the force of law. Because the Department is an executive agency, it is not independent.
A consent decree is a document in which a business a) admits that it violated the law. b) denies that it violated the law. c) agrees to accept certain sanctions to settle the case. d) notifies the agency that it plans to appeal.
c) agrees to accept certain sanctions to settle the case. A consent decree is a contract between the charged party and the agency. It is a document in which the charged party agrees to certain sanctions, such as a fine, to settle the case. It is like a nolo contendere plea; the charged party neither admits nor denies that it violated the law.
Formal agency adjudication a) does not allow discovery. b) does not allow hearsay. c) places the burden of proof on the agency. d) does not permit witnesses.
c) places the burden of proof on the agency. Formal agency adjudication is much like a trial. Discovery is allowed, and the agency that brought the enforcement action has the burden of proof. Parties may introduce evidence and examine witnesses. The rules of evidence are less strict than trial rules and hearsay is permitted.
During an administrative hearing, a business may NOT a) present evidence. b) present evidence. c) request a specific judge. d) cross-examine witnesses.
c) request a specific judge. An administrative hearing is much like a nonjury trial. During an administrative hearing, a business may present evidence, testify, and cross-examine witnesses. A business can request a hearing by administrative law judge, but cannot request a specific judge.
The executive branch of government exercises control over administrative agencies through a) executive orders. b) judicial review. c) the President, who has the power to appoint federal officers. d) the Freedom of Information Act.
c) the President, who has the power to appoint federal officers. The executive branch of government exercises control over administrative agencies though the President, who has the power to appoint federal officers, such as cabinet members. The President also has the power to veto the enabling legislation.
The Administrative Procedures Act states that the standard of proof for the judicial review of an agency decision is a) beyond a reasonable doubt. b) preponderance of the evidence. c) the arbitrary and capricious test. d) clear and convincing.
c) the arbitrary and capricious test. The standard of proof for the judicial review of an agency decision is described in the Administrative Procedures Act as the arbitrary and capricious test. An agency's actions may be arbitrary and capricious if: (1) it does not provide a rational explanation for its decision, (2) it changes a rule without justification, (3) it considers factors that are not appropriate or fails to consider an appropriate factor, or (4) its decision is clearly not supported by the evidence.
Factories usually comply with a request for an OSHA inspection because a) they do not have any OSHA violations. b) they are required to allow OSHA to inspect workplaces without a warrant. c) they want to maintain good relations with OSHA. d) they do not want to appear as if they are hiding anything.
c) they want to maintain good relations with OSHA. Factories usually comply with a request for an OSHA inspection because they want to maintain good relations with OSHA. If management does not want to be inspected and no emergency exists, management may demand an inspection search warrant.
What is the purpose of administrative law? a) to minimize the amount of administrative hearings required b) to prevent intervention by the government in matters of business c) to protect the public in interactions with the government d) to ensure efficient processes within the court system
c) to protect the public in interactions with the government Administrative law is intended to protect the public in interactions with the government and to ensure administrative action conforms to universally accepted standards. Administrative law promotes fairness by providing due process in administrative hearings, provides consistent regulations for businesses to follow, and promotes efficiency by creating specialized agencies that relieve the court of congestion.
Cosmos Industries, Inc. owns a canning factory. The FDA proposes and issues a new regulation on food labeling. Cosmos does not comply with the new labeling requirements and the FDA fines Cosmos. After repeated violations, the FDA sues Cosmos. Which of the following statements is true? a) Cosmos cannot interact with the FDA while regulations are being created, as they cannot be altered, but it could have interacted with the FDA after the violation and adjudication. b) Cosmos could have interacted with the FDA when the new regulation was proposed, but because Cosmos did not, it is unable to fight adjudication for the fine. c) Cosmos has a right not to comply with the regulation if it believes the regulation to be unfair, and it should bring this complaint up during the adjudication. d) Cosmos could have interacted with the FDA when it proposed the new regulation, enforced the regulation, and adjudicated the reasonableness of the fine.
d) Cosmos could have interacted with the FDA when it proposed the new regulation, enforced the regulation, and adjudicated the reasonableness of the fine. Cosmos could have interacted with the FDA when it proposed the new food labeling regulation, enforced the regulation, and adjudicated the reasonableness of the fine. Even though Cosmos did not comment during the regulation's notice-and-comment period, it still has the right to defend itself in the enforcement proceeding.
Which of the following is an independent regulatory agency? a) The Office of Elementary and Secondary Education b) The Bureau of Economic Analysis c) The Occupational Safety and Health Administration d) The Equal Employment Opportunity Commission
d) The Equal Employment Opportunity Commission The Equal Employment Opportunity Commission is an independent regulatory agency that operates outside the federal executive departments. The Office of Elementary and Secondary Education, the Bureau of Economic Analysis, and the Occupational Safety and Health Administration are all subagencies that operate within executive departments.
Which of the following statements about independent agencies is true? a) They are not part of the executive branch of government. b) They are not part of the executive branch of government. c) They are headed by a Secretary who reports to the President. d) Their commissioners cannot be fired by the President except for cause.
d) Their commissioners cannot be fired by the President except for cause. Independent agencies are independent of control by the President, although still part of the executive branch of government. Executive agencies are headed by a Secretary (a Cabinet member) or administrator who reports to the President. In contrast, independent agencies typically are headed by a commission. The President appoints the commissioners, who typically serve four-year terms. The President can only remove these commissioners for cause, such as incapacity or neglect of duty.
An enforcement proceeding is heard by a(n) a) federal district court judge. b) panel of business people. c) jury. d) administrative law judge.
d) administrative law judge. An enforcement proceeding is heard by an administrative law judge. Some state-level agencies refer to the administrative law judge as a hearing officer, but they are one and the same.
Businesses often complain that regulations issued by administrative agencies a) do not provide any benefits. b) appear suddenly and can surprise a business owner. c) are not specific enough. d) can be overwhelming.
d) can be overwhelming. Depending on the agency, the regulatory impact of administrative agencies on businesses can be overwhelming. For example, the regulations under the Affordable Care Act are thousands of pages long and often criticized as being too excessive to properly understand and follow.
Which of the following is NOT an important limitation on the power of federal agencies? a) informational control b) political control c) statutory control d) labor control
d) labor control Some of the most important limitations on the power of federal agencies include statutory control, such as the enabling legislation and the Administrative Procedures Act; political control by Congress and the President; and informational control as enforced by the Freedom of Information Act and the Privacy Act. There is no labor control on the power of federal agencies.
The Administrative Procedure Act has a notice-and-comment period which only requires a) notice of the proposed rule. b) notice of the final rule. c) publication of all comments made by stakeholders in response to the proposed rule. d) notice of the proposed rule, a comment period, and the final rule.
d) notice of the proposed rule, a comment period, and the final rule. The Administrative Procedure Act (APA) has a notice-and-comment period which requires (1) notice of proposed rules and regulations, (2) a comment period, and (3) the final rule or regulation. All of these documents are printed in the Federal Register. During the comment period, all stakeholders can make written comments in response to the proposed rule. If the agency holds a hearing, stakeholders may testify at the hearing. Comments are made public, and the agency must respond to significant comments when it publishes the final rule in the Federal Register. If the APA's rulemaking procedures are not followed, then the law is not binding.
A common complaint other countries have about U.S. regulations is that they are a) not organized well. b) written in English. c) difficult to obtain. d) very difficult to read.
d) very difficult to read Other countries often complain that U.S. regulations are very difficult to read. For example, many IRS regulations use a reading level of 32, which is equivalent to a college degree plus 16 additional years of education. A typical provision reads: "Paragraph (b) of this section applies to collectively bargained plans no sooner than the later of (i) February 3, 1997; or (ii) The first day of the plan year that begins after the expiration of the last to expire of any applicable bargaining agreement in effect on August 7, 1996."
If an agency enacts a law that Congress does not agree with, which of the following is NOT an action Congress can perform? a) refuse to fund the program b) disband the agency c) investigate the law's implementation d) veto the legislation
d) veto the legislation If Congress does not agree with the actions of an agency, Congress can exercise its authority over the agency through legislation. It can alter the agency's financial support by refusing to fund the program or defunding it. It can also disband the agency and investigate the law's implementation. However, Congress cannot veto the legislation.
