MIE 305 Ch. 5 Administrative Law

Why was the Administrative Procedure Act passed? What does it do, when does it apply and how does it work?

-- federal law that establishes the operating rules for administrative agencies --A law passed in 1946 requiring federal agencies to give notice, solicit comments, and (sometimes) hold public hearings before adopting any new rules. --1946 Act requiring bureaucratic agencies to appeal to the affected parties before adopting new policies. Legislative check on Bureaucracy. Congress passed the Administrative Procedure Act (APA), in 1946, for the purpose of guaranteeing uniformity and fairness to all who are called to deal with federal admin-istrative agencies. The APA is a very comprehensive and very complicated statute that controls all aspects of agency activity. For example, the APA provides the mechanisms by which agencies can create rules, and it establishes the processes under which courts can review administrative agency actions. Congress mandates, through the APA, that federal agencies must comply with provisions of the APA, unless a particular agency's enabling legislation or other statute specifi-cally exempts the agency from following APA edicts. All states have adopted the APA, or large portions thereof, for the regulation of their own administrative agencies, by and large. The preamble of the APA indicates that its purpose is to "improve the administration of justice by prescribing fair administrative procedure." It ostensibly does this, according to a Department of Justice publication entitled Attorney General's Guide to the APA, in four primary ways: • requires agencies to keep the public informed of their organization, procedures and rules • provides for public participation in the rulemaking process • establishes uniform standards for the conduct of formal rulemaking and adjudication • defines the scope of judicial review

What are administrative agencies, and how can they be classified or categorized?

--Administrative agencies are federal or state institutions and other government organizations created by Congress or state legislatures with power to create rules and regulations within their area of authority. --rules and regulations established by appointed agencies of the executive branch --governmental bodies formed to carry out particular laws As a result of the increasing prominence administrative agencies play in government, they are often referred to as the "fourth branch" of government. While administrative agencies are created by the legislative branch, they are deemed to be a part of the executive branch because their primary purpose is to implement the will of Congress or a state legislature. At the federal level, two types of administrative agencies are recognized. An executive agency functions within an established cabinet department.An entity deemed to be an inde-pendent agency functions within the executive branch of the federal government, but it is not directly connected to an executive department. Usually, these agencies are specifically created by statute with the purpose of enforcing the provisions of major acts that Congress deems important enough to be independently administered, away from the more direct influence of the Oval Office. A number of well-known agencies are of this type (see the creation of the FCC, above), including (with their creating and enabling laws in parentheses) the Federal Trade Commission (Federal Trade Commission Act of 1912), the Securities and Exchange Commis-sion (Securities Exchange Act of 1934), and the National Labor Relations Board (National Industrial Recovery Act of 1933, supplemented with considerable executive orders). The Envi-ronmental Protection Agency is an interesting exception to this pattern, having been initially established by the executive order of President Richard Nixon in 1970, but subsequently ratified by congressional act and given significant public powers over a range of federal environmen-tal policy issues. Independent agencies can be further subdivided between regulatory agencies (such as the ones mentioned above), whose primary mission involves regulation, oversight and enforcement of specific legislative acts, and government corporations (or state-owned enterprises), which are designed to provide essential services to the public and/or to business enterprises that might otherwise go unfulfilled or underserved by the private enterprise system, usually on a fee-for-service basis and in the hopes of (or at least without objection to) paying their own way or even making some profit which can then be rolled back into service or operations quality. Many government corporations also trace their origins to specific congressional acts, although in the case of the U.S. Postal Service, it can trace its origins of authorization directly back to the Constitution of 1789 in the enumerated powers of Congress. The only obvious exception to these powers is in the initial appointment process, where "superior" officers of the government such as Cabinet secretaries and Article III federal judges also require confirmation by, a.k.a. the advice and consent of, the U.S. Senate prior to taking office.

What's the nondelegation doctrine and why was it important in the case of J.W. Hampton, Jr. Co v. US?

--The principle in administrative law that congress cannot delegate its legislative powers to agencies. Rather, when it instructs agencies to regulate, it must give them an "intelligible principle" on which to base their regulations. --the theory that one branch of government must not authorize another entity to exercise the power or function which it is constitutionally authorized to exercise itself --The nondelegation doctrine is the principle that Congress, being vested with "all legislative powers" by Article One, Section 1 of the Constitution, cannot delegate that power to anyone else.

What is the purpose of administrative agencies in government?

Administrative agencies are needed to afford business and the general public with a more focused, and hopefully more effective and efficient, response to recognized problems of society. Benefits associated with administrative agencies may be couched in four general categories. First, administrative agencies act to guard the consuming public against the actions of overzealous members of the business community. Because of the complexity of products and services offered for sale and the great distances that now may exist between merchant and consumer, opportunities for business (especially large businesses) to take advantage of individuals and other types of entities are considerable. Administrative agencies exist to provide protection to the public in general, to consumers, to employees, to shareholders—and a host of other groups within society. Ethical and moral principles have proven insufficient to appropriately control the highly competitive world of business. Next, administrative agencies possess proficiency. Administrative agencies are the government's experts in a relevant area of social concern. The administrative agency is able to develop a level of proficiency far beyond what members of the legislative, executive, or judicial branches could hope to achieve. Because agency employees are devoted to one area of the regulatory environment of business, they can be more aware of economic, scientific, and other aspects of their area of specialty as they work to create rules and regulations affecting business. While this approach to regulation necessarily infuses in administrative agencies' considerable power to craft government edicts that may greatly impact individual businesses or entire industries, the theory of administrative agency regulation presumes that those who possess proficiency in one subject can best apply the broad provisions of a statute to a specific area in need of regulation through the appropriate formation of administrative rules. The detailed nature of administrative rules demands that individuals well-versed in those rules conduct enforcement. Finally, courts and quasi-judicial dispute resolution systems are ill-equipped to address the huge number of disputes arising out of the government's regulation of business. Administrative agencies provide mechanisms where those disputes can be effec-tively handled—at least at the first level—without having to burden our court system. Third, administrative agencies provide greater certainty. The complex and rapidly changing nature of certain problems facing society demands an approach not suited to legislative law making. Congress and state legislatures cannot provide sufficient detail within statutes to cover all aspects of a given difficulty. Administrative agency rules and regulations, because they are more specific than legislation, may greatly reduce the uncertainty associated with government regulation. As a result, the business community benefits because administrative agencies can provide a better view, than that provided by the traditional three-branch system, of what behavior of business, Congress, or a state legislature has deemed illegal. Finally, administrative agencies supply information to the business community and the general public. Guidance is provided to business on a large number of fronts.

What is the role of administrative agencies in government?

Administrative agencies exist today at all levels of government. The Federal Trade Commission is an administrative agency. So, too, a state's fair employment department is deemed, properly so, an administrative agency. County, city, and town boards, bureaus, and commissions—all might well be termed administrative agencies. With the prominence of administrative agencies, it is easy to understand the significant impact administrative agencies have on our lives as customers, consumers, and shareholders, among a host of other categories relevant to each of us.

For investigations, you should understand both the powers that agencies have (including subpoenas) and the constitutional protections that attach to administrative inquiries for the accused/target.

Administrative agencies perform powers associated with the executive branch of government to enforce administrative rules. Contrary to investigations conducted by police into possible criminal behavior, administrative agencies do not need to have probable cause before commencing enforcement procedures. While agencies may begin an enforcement action based on a tip provided by a whistleblower (perhaps a current employee reporting an alleged violation of an administrative rule), agencies also are free to investigate simply to ascertain the extent to which the rules are being followed. The information gathering process occurs primarily through two mechanisms: inspections and subpoenas.

How did we describe the rulemaking, enforcement and adjudicatory functions of administrative agencies in class—what types of power do they represent in the hands of agencies?

Enabling legislation dictates the types of rules an administrative agency may create. Typically, administrative rules are characterized as internal, procedural, interpretative, or legislative. Internal rules are those policies and procedures an administrative agency adopts for its in-house operation. Knowing how an administrative agency operates is extremely important to the business community that must deal with a particular agency. For example, internal rules of the Environmental Protection Agency (EPA) provide a listing of the locations of the regional offices of the agency. The starting place for a business to formulate a relationship with members of the EPA staff is to contact a regional office. Procedural rules provide the public with the processes associated with various agency functions and, most critically, those opportunities for interchange with individuals and commercial enterprises. Under the rules of the EPA, for instance, there is a set procedure for reporting pollution emission inventory requirements. Interpretive rules are guidelines—informed suggestions—from an administrative agency to those members of society regulated by the agency. For example, the EPA has issued guidelines directed at communities to assist them in managing urban storm water. This type of rule does not possess the force of law; the administrative agency is not legally held to its statements in such guidelines. Administrative law judges and the judicial system, however, will provide considerable weight to interpretive rules. Interpretive rules issued by an agency are strong evidence as to how the agency views a particular issue, so members of the business community pay considerable attention to these edicts. Legislative rules, if formed in the proper manner, are a direct extension of the legislative act an agency is created to administer and, therefore, have the force and effect of law. The nature of legislative rules, in contrast to the other three types of administrative agency rules, require that they be created with greater formality and with considerable participation from the sector of the public that will be regulated. The APA applies to the creation and operation of these types of rules, and the following section provides information regarding the rulemaking process associated with legislative rules.

Be familiar with the exhaustion doctrine, as well as the Chevron rule.

Exhaustion Doctrine --party seeking court review must first exhaust all administrative remedies before filing suit --a rule that when a statute provides an administrative remedy, relief must be sought through appropriate agency process before a court can act to consider other relief. --requires a party to complete all agency appeals procedures before turning to a court for review Chevron Rule -- In Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984), the Supreme Court reversed the trial court decision and found that the Reagan EPA's new interpretation of the law was "permis-sible." That term was important in the decision, because the Court said that the standard for judicial review of these types of administrative cases was not what courts and judges believed the most accurate interpretation of the law was with legalistic or precedential precision, but rather simply whether the agency's interpretation of the law on which they were basing their action was a reasonable enough interpretation given the language of the rule at issue. Thus was born the concept of Chevron deference in U.S. administrative law, and the Chevron case became one of the most often-cited precedents in administrative law for many decades thereafter --Chevron deference is due to an agency's decision-making, the Court said, after courts in future cases go through a simple two-step test. First, the court looks to the specific legisla-tive language of the relevant statute to see if Congress has spoken specifically to the issue at hand in the statute. If it has, the analysis ends there and the court is bound by Congress' determination(s). If Congress has not spoken to the issue in statute, then the court proceeds to the second step of the analysis: is the agency's response to or interpretation of the statute a permissible one, i.e. within the bounds of reason? If the answer to that question is "yes," then the court defers to the agency's decision and rules in its favor --The general rule that federal courts should defer to agency rules that are based on reasonable interpretations of ambiguous statutes --Under this, courts conduct a two-part inquiry to determine whether to sustain an agency's interpretation of the statutory scheme it is charged with administering. --courts conduct a two-part inquiry to determine whether to sustain an agency's interpretation of the statutory scheme it is charged with administering

Important "reform" acts: Freedom of Information Act, Sunshine Act, Open Government Act, Regulatory Flexibility Act, Small Business Regulatory Enforcement Fairness Act (also note that SBREFA basically builds on the foundation that RFA originally established).

Freedom of Information Act- -- Provides a system for the public to obtain government records, as long as they do not invade individuals' privacy, reveal trade secrets, or endanger military security. -- The Act defines agency records subject to disclosure, outlines mandatory disclosure procedures and grants nine exemptions to the statute -- Gives all citizens the right to inspect all records of federal agencies except those containing military, intelligence, or trade secrets; increases accountability of bureaucracy Sunshine Act (1976) --requires that most government meetings be conducted in public and that notice of such meetings be posted in advance -- requires most federal agencies to hold their meetings in publicly accessible places --A law stating, with ten specified exemptions, that 'every portion of every meeting of an agency shall be open to public observation.' Open Government Act (2007) --It strengthens public disclosure requirements concerning lobbying activity and funding, places more restrictions on gifts for members of Congress and their staff, and provides for mandatory disclosure of earmarks in expenditure bills Regulatory Flexibility Act (1980) --Whenever a new regulation will have a significant impact upon a substantial number of small entities, the agency must conduct a regulatory flexibility analysis. -- requires administrative agencies to analyze the cost impact of proposed administrative rules that may have a significant impact on small businesses- ---requires admin agencies to analyze the cost impact of proposed administrative rules that may have a big impact on small businesses --has helped reduce record-keeping bur¬dens for Hometown Gas Company and other small business firms in the area of Small Business Regulatory Enforcement Fairness Act (also note that SBREFA basically builds on the foundation that RFA originally established)​. -- Allows Congress to review new federal regulations for at least sixty-days before they can take effect. --Allows Congress to review new regulations for at least 60 days prior to taking effect --Congress has 60 days to review new federal regulations before they take effect.

How are they created and what is enabling legislation?

The enactment by Congress of a statute creating a federal administrative agency is called enabling legislation. This statute will determine the purpose and scope of activity within which the agency will function. Enabling legislation not only establishes the agency but also delegates the power to regulate in a specific area to the agency. Enabling legislation usually provides that the president or another member of the executive branch appoint the leadership of the agency. Take a look, for example, at Section 1 of the Communications Act of 1934, which established the Federal Communications Commission. --A statute enacted by Congress that authorizes the creation of an administrative agency and specifies the name, composition, purpose, and powers of the agency being created. -- legislation that gives appropriate officials the authority to implement or enforce the law --A law enacted by a legislature to establish an administrative agency. Enabling legislation normally specifies the name, purpose, composition, and powers of the agency being created.

Procedural differences between formal and informal types of rulemaking

There are four basic steps in formal rulemaking. First, members of the public are given notice of the proposed rule. The established manner for giving notice is quite narrow: the agency publishes the draft administrative rule in a daily edition of the Federal Register, a publication of the executive branch of the federal government. Most agencies also post the proposed rule on their agency's web site. The notice provides the following: the complete text of the draft rule; a schedule of when and where hearings regarding the proposal will be held; and the manner that members of the public can contribute to the discussion considering whether the rule is necessary, whether as drafted it will accomplish its desired result, and whether more study is needed. The second step in the formal rulemaking process is a mandatory hearing. This type of hearing may span weeks or months. It requires the agency to make formal presentations and allow others to cross-examine those individuals testifying on behalf of the proposed rule. Industry members opposing the proffered rule are allowed the opportunity to make their own presentations at the hearing. Upon conclusion of the mandatory hearing, a detailed report is prepared by the agency, with extensive coverage of all findings developed as a result of the evidence presented. At this stage, the agency decides whether it wants to stop the process, conduct more studies, rewrite the language of the proposal, or proceed with the current draft. If the agency continues with the formal rulemaking process, the last stage is publishing the final rule, once again in the Federal Register. At this point, unless a court finds that the agency's action was unsupported by substantial evidence, the administrative rule is legal. Under the APA, the formal rulemaking process is required only in those instances where Congress expressly requires it in the relevant enabling act. While formal rulemaking provides a significant stage to debate the propriety of a suggested rule, it also is an expensive process for the government and for those entities opposing the draft. That process also allows opposing forces to delay the rulemaking function through unnecessary cross-examinations of agency witnesses and the presentation of evidence that is not germane to the language included in the proposed rule. As a result, informal rulemaking is increasingly popular. This rulemaking is also known as notice and comment rulemaking. The first step in this process is for the agency to provide notice of the proposed rule. This step is identical to that followed in formal rulemaking. The next step, however, is quite different. The agency invites interested parties to participate in a comment period during which written submissions may be presented to the agency. While a hearing may be a part of the comment period, it is not manda-tory. All comments become part of the official record. The last step is the publication of the final rule in the Federal Register. As required under the APA, the rule cannot become effective until at least thirty days after the publication of the rule and the agency's statement of purpose and basis. There are three significant advantages from the agency's standpoint to the informal rule-making process. First, informal rulemaking is usually swift, in contrast to the time generally devoted to formal rulemaking. The mandatory hearing requirement is eliminated, allowing a less adversarial and time-consuming period for soliciting comments. Also, this second type of rulemaking is efficient. Because the second stage is abbreviated, government and those factions opposing the proposed rule generally spend far less time and money on informal rulemaking than formal rulemaking. Finally, courts adopt the least rigorous test for determining whether an agency acted properly in promulgating a rule under the informal rulemaking process. The arbitrary and capricious test requires a court to overturn a newly crafted agency rule only where there is a showing of no factual basis for the rule. Thus courts give considerable deference to the agency's rule if it is a product of informal rulemaking. Agencies can obtain valuable information through the use of subpoenas. A personal subpoena, known as a subpoena ad testificandum, is an order from the agency to compel an unwilling witness to testify under oath at an administrative agency hearing. The other popular type of subpoena, a subpoena duces tecum, is used to force an individual or entity to produce documents or other physical evidence that might be germane to an investigation. With the power to subpoena people and physical evidence as part of an investigation comes the risk that an agency will trample privacy and other rights of those individuals and entities that are the focus of an investigation. Therefore, the courts require an administrative agency to show a number of factors before a subpoena will be deemed a legal exercise of administrative agency power. Included are the following requirements of the agency: • Establish that the purpose of the investigation is legitimate. • Possess the power to conduct an investigation of the type specified. • Describe the information being sought. • Explain the relationship between the purpose of the investigation and the information being sought. • Show that the information being demanded does not create an unreasonable burden on the individual or entity possessing such information.