Admin Law Outline 2003

Ohnesorge, Administrative Law – Outline – Fall 2003

[Page number references are to Lawson, Fed. Admin. Law, 2nd Ed., unless noted]

APA = minimal procedural requirements when a federal agency takes action Anything or anyone who can take final actions that affect rights

o Agency or not? Amtrak case: the Supreme Court is going to decide based on actions rather than what Congress says.

Timeline, US History1. Founding

a. Agencies were in the executivei. Single-headed

ii. Not much rulemaking authorityiii. Small, limited scope

b. Courts did most of what we consider administrative law todayc. Parties and the spoils system, no civil service system

2. Rise of the railroadsa. US very dependent on the systemb. The system was fragmented

3. Granger Movementa. Rural/farmer/anti-big business/anti-wall street political movementb. Lots of commerce clause cases

4. Interstate Commerce Commission, 1887a. First modern federal agencyb. Formed mainly to regulate railroadsc. Independent Commission

5. Progressive Movement: late 1800s to early 1900sa. Get away from spoils systemb. Get politics out of agenciesc. Create non-political / non-judicial bodiesd. Civil Service Reform

6. FTB, FTC created on the same ICC model, 1910sa. Multi-member commissions

7. New Deal, 1930s continues this movementa. SEC, NLRB, FCC

i. Independentii. Professional

iii. Broader mandate... act in the public interestb. National Recovery Administration “NRA” – now gone

i. Some Con Law poultry cases got rid of this agency8. 1946 – APA

a. controversial... these agencies are not in the Constitutionb. enacted right after the war

i. a compromise between those who wanted agencies and those who did not1. How will the public participate in rulemaking by agencies?

9. 1960-70s: EPA, OSHA, NHTSAa. Congress drops the independent commission formb. These agencies are headed by people who are directly under the Presidentc. Congress no longer trusted the agencies to act in the public interest

i. Wanted the President and the heads to be accountable for their actionsii. Wanted to keep agencies from becoming the tools of corporations

iii. Action Forcing - Given specific mandates, less broad than the earlier “public interest” mandates

10. 80s to Present – Cost-Benefit analysis / Deregulation

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Conceptual views of agencies:

Madison separation of power checks and balances

Eastman Expertise theory Experts will forget affiliation and ideology and rule as philosopher kings

Landis Judges are experts at policing the boundaries, the procedural component of agency actions Deference in any review of substantive decisions because not experts

Bernstein Capture Theory Advocate of political accountability, greater executive power to combat the power of the regulated

parties and industries

Noll Mechanical like bernstein

Wilson Lets be more empirical Cautions against rigid rational actor models like Bernstein and Noll

Ideal TypesLegislation ---------------------------------------------------------------------------- AdjudicationSpeed limit ---------------------------------------------------------------------------- prosecutionGenerally Applicable ---------------------------------------------------------------- specific peopleProspective ---------------------------------------------------------------------------- retrospectiveRequires actual application to deter --------------------- concrete application of law to facts

Gray-area examples ICC – Railroads – Ratemaking Pond/Sawdust – Massachusetts – order given to specific sawmill with no hearing

When does it matter?Procedural Due Process

If it is legislation, no process is due Adjudication, yes

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Question: Is it a rulemaking or an adjudication?

Londoner, 1908 (Holmes dissents) Cul-de-sac road improvement Paid for by special assessment to people who live on cul-de-sac No hearing given, violates due process This is an adjudication

Bi-Metallic, 1915 (Holmes writes majority opinion) 40% increase in property valuations Holmes says that the question is “whether all individuals have a constitutional right to be heard

before a matter can be decided in which all are equally concerned.” no hearing given, no violation of due process

o impracticable to have more than a few people have direct voiceo Necessity - There must be a limit to individual argument for government to go on

Londoner distinguished b/c it was concrete application of law to specific people not general legislation

This is a Rulemaking

Lincoln v. Vigil, 1993 The definition of “rule” under the APA is barely less than arbitrary

Yessler Terrace, 1994 (9th Cir) HUD changes policies to allow for easier evictions when criminal activity is involved Wash. State applies the policy to its rules/laws as applied to tenants Due process is still protected under Wash. State courts HUD wants this to be adjudication b/c they do not want to have comment period

o [they had not had a comment period] Holding: this was a rulemaking/legislative act, so it is invalid under the APA b/c no comment

period Interesting – HUD’s rulemaking is NOT what was challenged in the case!

o They were challenging HUD’s approval of the Wash. State application of their ruleso This was an adjudication under the APA b/c this is basically licensing

This was result driven adjudication

Separation of Powers

Congressional Delegation: the non-delegation Doctrine How much of its own authority can Congress delegate to other actors? Example:

o The Tea Importation Act (repealed in 1996) Congress instructs HHS to create a body that will submit tea standards (samples)

to HHS All imported tea will be taste tested against these standard samples If the fails to live up to the standard, it is not let into the country. Rated on purity, quality and fitness for consumption

The First Congress: Examples of Delegation Congress says US will pay Rev. War vets pensions for one year “under such regulations as the

President [ ] may direct.” Congress says that the Sec. of the treasury may remit or mitigate any fine for violating certain

laws “if in his opinion the same was incurred without willful negligence or any intention of fraud.”

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The Second Congress: Example of Delegation Postal routes: Bill introduced into the House authorizing the carriage of mail “by such route as the

POTUS shall, from time to time, cause to be established.”o Bill ends up being defeated because many are afraid that this delegates too much leg.

Authority to the President. Why not just delegate everything and have a monarchy...?o Final legislation included language that allowed the Postmaster to determine how many

deputies he would have and where they should be assigned

Cargo of the Brig Aurora v. US, 1813 Conditional legislation

o Congress restricts trade with Britaino One of the later versions of the law says that the POTUS can end the restrictions is he

proclaims that Britain had met certain criteria This case is a Negative grant of power, like a veto based on a fact finding

o There are also positive grants of power, but not here SCOTUS says this is all fine and good Could there ever be review of the president’s fact finding?

Wayman v. Southard, 1825 Delegation of power to the federal courts

o “Such alterations and additions as the [federal] courts ... shall, in their discretion, deem expedient.

“filling in the details” language Court says this type of delegation is ok

Field v. Clark, 1892 delegation of power to president if a country had “reciprocally unequal and unreasonable” trade practices

o president could move country into higher level of tariffs Courts says this is fine

o Says legislative delegation is a no-noo BUT this is not legislative delegation

Congress specified all the duties to be paid in advance This is just expediency and operation delegated to the president

JW Hampton v. US, 1928 President can alter amount of a duty of imports “to equalize ... the costs of production” Court upholds the delegation Intelligible principle doctrine:

o As long as such direction is given by congress, then the delegation is OK

The New Deal

Panama Refining v. Ryan, 1935 New Deal, Congress and Roosevelt want to control oil prices by regulating interstate commerce,

this is to raise the price by controlling supplyo Not completely open-ended delegation b/c everyone wanted to confront deflation and

depression Court strikes down delegation saying that there would be no barriers left blocking legislative

delegation Cardozo dissents saying that this delegation is corralled

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Schecter Poultry v. US, 1935 Idea was to get industries to overcome competition and find a consensus on a Code for their

industry to be regulated byo The President would OK this codeo He can also make changes in his discretiono Limitations:

1. the industry group proposing must be truly representative, no unfair barriers to membership

2. not designed to promote monopolies or to oppress small businesseso Other than these two, the President is left to his discretion, that which is necessary “to

effectuate the policy” The goal was to increase wages

o Decrease hours of someo Same total needed, gets more people workingo Also increase minimum wage so that the new hires are making a living wage

Court strikes down on delegation groundso Cardozo concurs saying that the code is not canalized within banks that keep it from

overflowing

Modern Doctrine

Non-Delegation cases will not be well received:

Mistretta v. US, 1989 US Sentencing Commission has power to promulgate sentencing guidelines for every federal

criminal offense Intelligible Principle?

o Majority says there is more than an intelligible principleo Also says: “Congress simply cannot do its job absent an ability to delegate power under

broad general directives” Especially, when dealing with complex, changing, and technical subjects

Question: Has SCOTUS given up on enforcing non-delegation completely? Scalia dissents, saying no agency should be created to create laws, that is Congress’s job

o Delegation of “judicial” or “executive” power is fineo There should be no delegation of legislative powers

Ohnesorge says that power is now legislative for Scalia if it is co-mingled with executive of judicial power

o Fiction of non-delegation Congress makes larger decisions and then the agencies fill in the details

Also:

Skinner v. Mid-America, 1989 9-0 Court says there is “no support” for a standard different than Mistretta for Executive

delegation under the taxing power

Touby v. US, 1991 9-0 Court says even if higher standard needed in criminal cases, “necessary to avoid imminent

hazard to public safety” is plenty Court declines to address the question of whether higher standard is needed

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Rehnquist wants non-delegation back:

Industrial Union, 1980 OSHA – single-headed

o Mandate: make workplaces safer Not enough data on benzene Majority says that agency needs to provide a threshold showing before creating a permanent

standard If agency is right in its interpretation of the statute, then there are delegation problems

o Court says let’s construe the statute in a way to avoid this problem Worth reading Rehnquist’s concurrence again

Spark of Life for Non-Delegation???

South Dakota v. US Dept. of Interior 8th Cir, 1996 Strikes down delegation Discretion to buy land is given “for the purpose of providing land for Indians”

o Court says there are neither perceptible boundaries nor intelligible principles

Loving v. US SCOTUS, 1996 Executive order specified criteria for military courts to use in death penalty cases Kennedy writes for 8 justices

o Says the President does have this power as commander and chief, the EO is upheldo However, had the president made delegations of judgment and discretion that were

outside his Constitutional powers, then Delegation could be a problem

Clinton v. City of New York, 1998 Congress enacted the Line-Item Veto Court held that the cancellation of a line item in a bill, was tantamount to an amendment of the

statutory text, which can only be done by Congress, Art. I Sec. 7 Scalia, Greyer, and O’Connor would have upheld under a delegation analysis

Probably Dead, for now...

American Trucking, 2001 EPA regulates particulates DC Circuit strikes down on non-delegation basis Supreme Court reverses 9-0

o Stevens and Souter attack Scalia in concurring opiniono Thomas “asks” for more non-delegation cases

Strong re-affirmation of Mistretta in the majority opinion

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Congressional Control of Agencies:

When it wants to, how can congress control agencies? Legislative Override – Congress passes a new statute that undoes the rule/action of an agency

o Seatbelt case: NHTSA Lack of seatbelts is a public hazard, people die in large numbers

Creates rule that cars cannot start without seatbelt being engaged (seatbelt interlock)

People upset and Industry upset Industry attacks this rulemaking in the courts, fails Congress overrides NHTSA

Legislative Veto – gives power to agency, but then says, House (or Senate, or committee, etc) can veto the decision

o INS v Chadha he must meet 3 conditions to stay:

1. 7 years – objectiveo he meets this prong

2. good moral character – DELEGATIONo probably meets this one, he has been to school and worked

here for 7 years... he probably pays his taxes... we like that. 3. will suffer extreme hardship if deported – MORE DELEGATION

o From India, but UK citizen, actually lives in Kenya...o What is hardship? What is extreme?

INS decides to let him stay b/c he meets the criteria Legislative veto – House says no to that decision

Question – is this constitutional?o Presentment issue: did not present to Presidento Bi-cameral issue: just the House

Court says this is unconstitutional because of both issues Congressional Review Act of 1996 – Enacted in the wake of Chadha

o Applies to all rules (not orders), it distinguishes between major and non-major rules as OMB does

All rules must be submitted to both houses of congress and the comptroller general

Not supposed to go into effect before they are submitted, so that Congress can change it before it is enacted (60 days)

Supposed to go directly to relevant committees Efficiency and close oversight are the goals

o Congress forces itself to act more efficiently and timely

Indirect Effect: Legislative history through courts Significant debate over appropriateness of judicial use

Direct Effect: Legislative history in agencies Agencies are very aware of legislative history beyond its use in the courts because they only lose a

case of they are wrong in the courtso If they are wrong vis-à-vis Congress, they can lose funding, the entire program, and the

individual careers of the officials Do congressional committees actually control agency action via this informal conduit?

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Agencies and Article II

Appointments Clause

Buckley v. Valeo, 1976 FEC board members, are they officers? Yes Appointment procedure not ok, two problems:

o Congress cannot appointo House and Senate do not both have advice and consent

President must appoint and Senate must advise and consent

Freytag, 1991 Tax Courts – legislative creation

o Special Trial Judges (STJ) Are they officers? Primary Officers? Court says obviously officers.

Take testimony, conduct trials, rule on evidence, power to enforce compliance with discovery orders

Possibly also primary officers because there decisions are final if not acted upon by those above. They have the power to make final decisions.

Landry v. FDIC, 2000 DC Circuit Administrative Law Judge, ALJ Landry has been dismissed by the FDIC on the recommendation of an ALJ

o Landry was the CFO at a bank in Indianao Landry argues that ALJ’s are inferior officerso If they are, this will run afoul of the Appointments clause

Congress has given the FDIC (and other banking agencies) instructions to “establish their own pool of administrative law judges.”

Court distinguishes Freytag:o ALJ’s never render final decisionso ALJ’s do not receive the same deference on factual determinations that judges in Freytag

dido However, ALJ position is established by law as in Freytago Also, conduct trials, take evidence, etc

Significant discretion Court says that ALJ is an inferior officer

Removal of Officers

Decision of 1789 House and Senate have significant and sophisticated discussion of the issues and considered:

o 1. impeachment onlyo 2. presidential removalo 3. by mode of appointmento 4. congressional power to decide mode of removal

Decided that presidential removal power was the way to goo VP split tie in Senate

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Myers v. US, 1926 Portland’s Postmaster, removed by President before end of term

o But, the statute that governs says the president can remove only with the permission of the Senate

Family is suing for back pay, for the rest of the postmaster’s term Court says: the president has this power because removal of an officer is an executive power.

o Controlling subordinates = executive power, if not confident in subordinates, must be able to remove

o This applies at least to all heads of departments and bureaus

Humphrey’s Executor, 1935 Or... Roosevelt v. FTC Commissioner Humphrey FTC governs commerce

o Rulemaking, bringing suits, investigative actions Humphrey appointed by Hoover just before Stock Market Crash Roosevelt takes office, politely asks Humphrey to leave office.... Then orders him to leave office

o But, the governing act says that he cannot remove without “good cause” Courts says:

o FTC Act meant to limit President’s power in this area Must be non-partisan, etc

o Says most of Myers is dicta Confines decision to the removal of purely executive officers, not officers of

independent agencies By modern standards, this case was simply decided wrongly

Bowsher v. Synar, 1986 Budget Deficit Reduction Act Comptroller general ends up being the executor of the law

o If he is an agent of congress, then unconstitutional.o If he is an agent of the executive, then OK.

Court says he is a legislative agent b/c he can be removed by congress, in a joint resolution. Strikes down law

Morrison v. Olson, 1988 Courts says Ind. Counsel is inferior officer Independent counsel, removal by Atty. General is limited to “good cause”

o Does this interfere with the President’s executive functions?o Court says it does, but not to a very large degree and the President still has some power

b/c of good cause dismissalo Cites Humphrey’s Executor as better for this case than Myers.

Scalia dissents, argues that this is a huge blow to the presidencyo Ind. counsel is pure executive power

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Interaction with the Executive

Trading Commission v. Schor, 1986 Issue: CFTC has power to adjudicate claims under statute, but do they have power to adjudicate

counterclaims stemming from the same transaction, but based on state common law?o Did Congress overstep its Article III powers?

These judges do not have tenure, salary, etc of Art. III courts But, the courts did not lose any power b/c they have review These are very limited circumstances, only regarding counterclaims like this More efficient

Distinction: Public and private rightso Public law = historically can be adjudicated by both agencies and Article III courtso Private law = property, torts, contracts, etc – historically, only adjudicated by Art. III

Courts O’Connor writes a functionalist opinion

o These provisions the congressional scheme does not impermissibly intrude on the province of the judiciary

Only differ from traditional boundaries in one respect: jurisdiction over common law counterclaims

Dismisses slippery slop arguments Cites

RFC v. Banker’s Trust (jurisdiction over a state law claim ancillary to federal law claim, w/ judicial review) and

Katchen v. Landy (state law counterclaims from same transaction) to support argument

Brennan and Marshall write an almost formalist dissent Question: how do functionalists, like O’Connor here, explain why Congress cannot transfer all

adjudicative functions to politically controllable officials?o Schor is a narrow holding to counterclaims of same transactiono There is judicial review of allo The SCOTUS will not allow it!!!! That’s how the Constitution works!

Lawson wants to separate: Executive adjudication

o Deals with “mere privileges” Judicial adjudication

o Deals with due process – life, liberty, or property

Due Process Notice Opportunity to be heard Cross-examination / Contest / Confront Neutral adjudicator / not biased in decision making

Withrow, 1975 Wisconsin Examining Board has investigative and adjudicatory powers/responsibilities regarding

practitioners of medicineo At hearings, those under the gun can appear with a lawyer but cannot cross-examine

witnesses SCOTUS says this is all fine

o Presumption of honestyo Analogous to a judge issuing a warrant for probable cause and then sitting for the trialo Lots of precedent cited

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Bias: Decisions to not recuse oneself will be reversed where an actor has “demonstrably made up his mind about important and specific factual questions and is impervious to contrary evidence.” United Steelworkers v. Marshall. Also Cinderella Career and Finishing Schools v. FTC.

Constraints on Administrative Procedure Sources of law

o Constitution Procedural due process

Federal and stateo APAo Organic Statuteso Agency Procedural Regulationso Practiceso Court Decisions

APA – 1946, page 909 553 – notice and comment/informal hearing

o 553(c) – if “to be made on the record” then 556, 557 apply 554 – is there an informal adjudication? 556 – formal/trial-type hearing 557

Formal (no longer) Rulemaking. In rulemaking, look to organic statute.

Florida East Coast Ry., 1973, page 198 [right after Roe and Doe in US Reports] Rulemaking only needs to be formal (556, 557) if the words “on the record”

o Hybrid rulemakingo Court relied heavily on Allegheny-Ludlum in making this decisiono In the 25 years since FECR, no statute that lacks the magic words has been found to

require formal rulemaking B/C of this case, vast majority of rulemaking is under 553, notice and comment rulemaking

o Can just be in writing Criticisms of the opinion

o Goes against text of APAo Both parties thought formal was required

They were arguing escape clauseo Rehnquist writes this major decision

Complimentso Formal rulemakings were so complex and slow that it was almost useless as a rulemaking

mechanism Percentage of peanut content in “peanut butter” under formal rulemaking... it

took NINE YEARS Can cross-examine anyone involved, too many people

o This informal presumption makes the process much more streamlined

Procedural rulemaking attacks Constitutional DP – unlikely APA – b/c of FECR, unlikely to get anywhere Statute – as long as reasonable under step two...

o Chevron enhances agency discretion Regs – they will have likely changed their regs

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Practice – they will have likely changed their practiceAdjudication

Formal/Informal split Formal 554-557

o 554a: Exact same triggering language as rulemaking Informal 555

o Not much by way of requirementso Can be very informal

Courts have applied some restrictions to informal adjudication because they need to be able to review meaningfully the agencies decision

A split between the Circuits, SCOTUS has not spoken.

Seacoast anti-pollution league v. Costle (1st Circuit, 1978) Discharge of heated water, from nuclear plant Question: what language creates a presumption of formal hearing?

o The court says that any language calling for a hearing should create the presumption of a formal hearing.

Guarantees reasoned decision making an evidentiary record for reviewing courts

555 is pretty thin, also get what Congress specified in the organic statute. Court did not want to leave the factual record created under 555 and Congress alone.

The judiciary would be doing the review, they should have a say in what the record will include

o says that FECR is for rulemaking only

West Chicago v. NRC (7th, 1983) Regs – 10 CFR 2.104 and 2.105

o Very deferential reviewo Court says neither is triggered

2.104 defer to agency’s interpretation 2.105 this is not a commercial disposal

Statute – 189(a), the AEA o Adopts a stance very similar to FECR, either

“on the record” or very clear intent from Congress

o thus no APA b/c not triggered Constitutional Due Process

o Court says health and environment concerns do not constitute liberty or propertyo Even if they were, we would hold that there was sufficient process

Eventually, most people think 1st circuit will lose DC Circuit has been wishy-washy on the issue (page 227) and Chemical Waste, see below Chevron (SCOTUS, 1983) Vermont Yankee (SCOTUS, 1978)

o Courts cannot add to the procedural requirements of the APAo Trying to reign in the federal courtso But this was on rulemaking

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Chemical Waste (DC, 1989) Issue: what procedure should be used for review of EPA orders (orders result from adjudications)?

o (b), EPA uses formal, says congress “probably” intended formal, but leaves some wiggle room

o (h), EPA uses formal for some, informal for others, depends on type of situation, type of order given, severity of corrective action, level of civil penalty

Ohnesorge said in email - What you need to take from Chemical Waste is o i) that the Supreme Court's 1983 Chevron decision provides a new, deferential,

framework for courts reviewing agency interpretations of statutes, and o ii) that courts in various circuits have applied the Chevron framework to agency

determinations of whether their statutes require them to engage in formal, rather than informal, adjudication.

Informal Rulemaking

Buildup to VY: 60s and 70s saw the fear of agency capture grow DC Circuit dominated by liberal activists creates hybrid rulemaking, requiring additional

procedure from agencies, though not nearly equal to formal rulemaking Example: Portland Cement v. Ruckelshaus, “It is not consonant with the

purposes of a rulemaking proceedings to promulgate rules on the basis of ... data that, [to a] critical degree, is known only to the agency,”

Taken to mean that the DC Court would require this DC makes by far the most Admin law decisions Flight to rulemaking, as almost all rulemaking was now notice and comment after FECR

Three layers of informal rulemaking:1. Notice of Proposed Rulemaking, NPR2. conduct of rulemaking proceedings (Vermont Yankee, narrowly construed, only is here)3. publication of a statement of basis and purpose

Vermont Yankee, 1978 Rehnquist reigns in DC Circuit, 7-0 decision

o DC was requiring more formal requirements than APA Would this allow public interest/NGO orgs to challenge industry influence? Were the DC circuit justices worried about agency capture?

Apparently so Can be read in two ways

o 1. narrowly – only concerns middle section of rulemaking, courts cannot make new procedural requirements

o 2. broadly – applies to all rulemaking procedure

Did anyone listen to VY??? Seems like they did for Phase Two.

Portland Cement: 1973, DC “It is not consonant with the purpose of a rulemaking proceeding to promulgate rules on the basis

of inadequate data, or on data that [in] critical degree, is known only to the agency.”

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Nova Scotia, 1977, 2nd circuit Phase One:

o Agency promulgates rule but provides none of the data it relies ono “To suppress meaningful comment by failure to disclose the basic data relied upon is akin

to rejecting comment altogether. For unless there is common ground, the comments are unlikely to be of a quality that might impress a careful agency.” Could lead to arbitrary decision-making

o Court says this is procedurally erroneous as the burden is on the agency to show why the rule should be applied to such a broad class of fish

Phase Two:o Court strikes down on this basis as wello Agency left vital and material questions that were raised in comments unansweredo Court will not sanction silence

Connecticut Light and Power Co. v. NRC, 1982, DC Court upholds the regulations, but has “concerns” about the procedures followed, says the

commission has complied, but just barelyo Exemption procedures play an important role in the courts upholding the rule

Phase One: Rule changes from NPR to final ruleo Court says this makes comments almost useless because comments are on something that

is not the final ruleo Courts says that NPR must contain adequate technical basis for proposed rule so that

meaningful comments can be made (like Nova Scotia)o But, all is good because the final rule was a logical outgrowth of the NPR

NPR gave precise subject matter and issues as required by 553(b)(3) Phase Two:

o Court says that the statement of basis and purpose must be sufficient to allow judicial review without the court “rummaging” through the record to elicit reasoning

MCI, 1995, DC Circuit 1st phase – NPR

o buried notice In NPR, one issue is only mentioned in a footnote in the background section

Turns out to be important aspect of changeso Court applies Florida Power & Light – was the notice “adequate to afford interested

parties a reasonable opportunity to participate in the rulemaking process” More cites on 275

Exemptions from APA rulemaking procedures

Procedural rules (procedure and practice)

JEM, 1994, DC FCC creates “hard look” rule

o Any incomplete applications or errors in applications All procedural rules effect substantive rights, there must be a balance between the degree to

which rights are effected and the needs of the agency Court upholds hard look rule because after applying balance test, the rights affected are not as

important as the efficiency concerns of the agency

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Policy Statement or Interpretive Rule?

Four tests Legal Effects – legal formality test, very pro-agency, causes gamesmanship

o Substantive/Legislative Rule - Has legal effect, is binding on regulated parties, has the effect of law

o Interpretive rules are not enforceable, cannot be direct basis for enforcement action Practical effects of interpretive rules may be the same as those of legislative

rules Substantial Impact – reality-based, Vermont Yankee killed this test

o Does a rule have a real, substantial effect on the regulated parties Impact on Agency - reality-based, can only be applied much later...

o Fact/history specific: what is the agency actually doing with regard to the rule? If 100 people break an “interpretive” rule and all 100 are prosecuted by the

agency, then... See 287: US Telephone Ass’c.

Williams 4-part test

American Mining, DC, 1993 Test: If YES to any of these, then it is a legislative rule:

1. in absence of rule, there would NOT be an adequate basis for enforcement action

2. whether it has been published in the Code of Federal Regulations3. whether the agency has explicitly invoked it legislative authority4. whether the rule effectively amends a prior legislative rule

“Good Cause” 553 – “when the agency for good cause finds ... that notice and public procedure thereon are

impracticable, unnecessary, or contrary to the public interest.” Inherently fact-specific

Tennessee Gas Pipeline v. FERC, 1992, DC Interim rule challenged

o Rule requires notice to be given to the agency before construction on existing or new pipelines

Agency argues that it falls under the good cause exceptiono 1. interim measureo 2. needed to prevent environmental harm, especially if accelerated construction before

final ruling is given Court strikes it down because the agency did not back up fears about environmental problems

from construction with good data.

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Informal Adjudication

Adjudication – whatever creates an order Same “on the record” language, but not the same at all Trend is to make adjudication more like rulemaking, deference to agency, look for “hearing”

language in organic statute

Informal adjudication requirements Constitutional Due Process

o 5th and/or 14th amendments Organic Statute

o May not trigger formal, but may require some process Agency Regs Agency Practice APA DOES NOT HAVE anything beyond 555(e)

o If you have made a written application/request and it is denied, you should get a prompt notice of denial with grounds for denial

Citizens to Preserve Overton Park v. Volpe, 1971 Congress has said that Federal funds may not support the building of a highway through a park (or

other similar area) unlesso “no feasible and prudent alternative” ANDo “all possible planning to minimize harm”

Secretary of Transportation decides to run highway through Memphis’s Overton Parko Says

“no feasible and prudent alternative” AND “all possible planning to minimize harm”

o But, does not back up these findings 706 gives the court its standard or review, arbitrary and capricious

o to review using this standard, the court needs some record to go ono so, they must remand to District Court for factual record-building

This case is based on the citizens substantive complaint, but it develops additional procedural requirements.

Similar to Overton, see US Tankers Owners Committee v. Lewis, 1982, DC: Court says the trend is towards requiring the equivalent of note-and-comment procedures for

informal adjudicationso Courts require some explanation of agency actiono Also, interested parties need to be somewhat informed of and have the ability to comment

on the evidence that the agency has in front of it

PBGC v. LTV, 1990 PBGC is kinda like the FDIC, but provide pension insurance LTV files for bankruptcy, PBGC takes the LTV pension plan... then decides to give it back when

it thinks the steel industry is facing an up tick LTV refuses to take the pensions back, so agency is forced to bring an enforcement action, LTV

challenges enforcement action in court LTV argues Overton

o This decision was procedurally inadequateo Sometimes it is ok for courts to require additional procedures

PBGC argues Vermont Yankeeo Vermont Yankee says that Courts should not add procedures

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Court upholds the agency action and says that Overton and VY are not in opposition. That Overton did not create new procedures out of thin air but based them on the “arbitrary and capricious” section of 706.

Castillo-Villagra v. INS, 1993, 9th Circuit (Supplement) Legislative v. adjudicative facts

o Legislative: facts about the world, you want adjudicators to take notice of these X is president of C

o Adjudicative Fact: relevant to parties in the case, the facts under adjudication Y and Z can return to country C without fear of persecution

o Mixed Q is out of power in C

556(e) of the APAo only applies to formal adj

No clear rules about when official notice must have a chance for opponent to rebut

Chenery Saga

Chenery I, 1943, US Chenery owns Federal Corp through a complex set of corporations owning other corporations Federal is a holding company that owns shares in utilities Federal Corp has three classes of shares

o Ao B: voting rightso Preferred: often do not have voting rights, special dividend rights

1935 Public Utility Holding Acto creates SEC to force reorganization of public utility holding companieso supposed to approve reorganization plans that are “fair and equitable” and not

“detrimental to the interests of investors” Commission says

o Chenery cannot buy into the new shares of the new post-merger corp through Federal’s current preferred shares

o Why? 1. Business Law reasoning - SEC says that Chenery has a fiduciary duty to the

shareholders from Business law, Meinhard v. Salmon Unfortunately, this does not provide any real support for the SEC’s

position 2. Expertise Theory – the SEC has the experience to apply the standards of the

organic statute did not raise this until the Trial, not in original SEC order

Chenery I ruleo Cannot uphold agency action based on justifications brought up in court aloneo Must base review on actual reasoning used by agency at the time

Court seems to want SEC to use its expertise to promulgate a rule/regulation, not an adjudication

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Due Process

1. What is the action? (according to the Courts, Londoner/Bi-Metallic)a. Rulemakingb. Adjudication

2. Was there a deprivation of a Protected Interest?3. What process is due?

a. Often this means, When is the process due?i. Before deprivation can take effect?

Usually a strong presumptionii. Afterwards?

Joint Anti-Fascists Refugee Comm. v. McGrath, 1951 Ignore the majority opinion... Frankfurter’s concurrence is the important opinion Group was put on a list of communist orgs by Attorney General

a. Being called a communist in 1950s was a big dealb. Tarnished your reputation

No process given, they were lucky to even find out that they were on the list Was there a deprivation of life, liberty, or property?

a. Kinda Frankfurter uses “grievous loss of any kind” or magnitude analysis

a. Don’t necessarily worry about life, liberty, or propertyb. But if fits into life, liberty, or property then don’t worry about magnitude

Application of McGrath’s “grievous loss” standard: Wisconsin v. Constantineau (1971) (page 396)

Bd. Of Regents v. Roth One-year contracted professor is not rehired Court limits due process deprivation inquiry

o The range of protected interests [in property and liberty] is limitedo We are not going to look at magnitude, we are going to look at the nature of the

deprivationo Move magnitude to third inquiry, when and what process needed?

For property interestso “legitimate claim of entitlement”

what is that? Documentation of some kind saying you have a right to it Basically, look for a formal positive source

Some people describe this case as creating a positivist trapo The employer or legislature can control whether you get an entitlement

Entitlement Paradox Entitlement is defined by the process given to you

o So, if the process given to you says you have no process, then you have no entitlement and no due process claim

o There is a post-Roth line of cases that bring this and other problems up Likely cover these in con law II

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What procedures are due (if first two inquiries are met)?

Perry v. Sindermann, 1972 Professor at junior college in Texas is fired

o He had been there for four years under one-year contacts renewed every yearo He had some institutional disagreements with the Regents and had missed some classes

to testify before the Texas Legislatureo Regents never gave him a hearing, just did not renew contract

Court holds that his lack of tenure did not dismiss his free speech claimo Also, notes that government employees may not be fired for things covered by freedom

of speech (any constitutional protected interest)o Held that no hearing is required for the nonrenewal of a non-tenured teacher

Unless can show a deprivation of life, liberty or property even without tenure Reverses summary judgment and remands to District court for further proceedings

Cafeteria & Restaurant Workers Union, AFL-CIO v. McElroy, 1961 – “the very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.”

Mathews v. Eldridge, 1976 (page 447) a few years after Roth, 1976 Disability is cancelled by agency, enough process given? Eldridge cites Goldberg (1970) which was a Welfare case

o Goldberg was still in the “grievous loss” periodo It said that you needed a ALJ hearing before the money is taken away

Three part test to determine what procedures are dueo 1. private interest – including magnitude of harmo 2. the risk of an erroneous deprivation through procedures given

reliable? Fair? What is the value of adding additional procedures?

o 3. the government’s interest, including the burdens additional procedure will cause on the government

is the gov’t interest, the public interest? What are the costs of adding additional procedures?

Judicial Review - Facts

Under 706 Unless formal, only “arbitrary and capricious” to review findings of fact

Universal Camera (1951) “substantial evidence” review needs to be more searching

o look at whole picture, all evidence Industry and congress think that the NLRB is too pro-labor, express intent to enhance the role of

the judiciary in reviewing agency determinations Court says that action must be:

o Supported by the evidence seen in the whole picture Includes pro and con evidence Also must look at the findings of the initial determination, probably not the

“findings” in the final Commission’s decisiono What exactly does “substantial evidence” mean?

Don’t replace with new language, then we have to define the new language.... same problem faced with substantial evidence

Substantial Evidence is for formal agency actions

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Kimm v. Dept. of the Treasury, 1995, DC Kimm works for the Dept. of Treasury/the ATF and used his gov’t owned car four time in the last

year to drop his child off on his way to work, major time savings, not much extra driving at all, he is required to stay in contact and staying in the gov’t car allows him to do so. He is also highly decorated.

ATF suspends him for 30 days b/c this was “willful” violation of the statute Court cites Felton v. EEOC (DC, 1987) which said that willful violation requires more than

intentional action when the action is a violation, must have knowledge that it will be categorized as a violation

Kimm gives solid, unwavering testimony to Trial court (AJ) indicating that he did not think this was a violation and he thought this was necessary to accomplish his duty successfully. Agency normally gives discretion to officers to make this type of decision.

Court says Not supported by substantial evidence, reverse

Judicial Review of Facts – Informal Proceedings

Association of Data Processing... v. Federal Reserve, 1984, DC, page 530 Scalia’s opinion from his DC days

o He says when reviewing informal actions, arbitrary and capricious review is the same as substantial evidence

This is not the norm He is actually try to move substantial evidence test to the arb. And cap. Standard

Lawson says (page 537) that this is settled law in the DC Circuit (citing Center for Auto Safety v. FHA)

Some of the other circuits do not agree, see Corrosion Proof Fittings v. EPA (5th Circuit 1991)

Judicial Review – Law

Pre-Chevron Pure, abstract legal questions are reviewed De Novo Mixed questions, Applied legal questions, fact-specific are reviewed:

o In varying ways.... see cases

NLRB v. Hearst, 1944 Pure Law question

o When Congress defined employees as employees, did they intend for the common law definition of employee (i.e. respondeat superior) to be used?

Court rejects common law and even state laws as bases for defining employee Says congress intended a national standard

Mixed legal question:o Are full-time newsboys “employees?”

Court decides that the Board should make the decision with review by the Courts

Through adjudications, NLRB almost never uses rulemakings Various clauses are used on 553 to define the standard of review

Court should accept agency’s determination if it has: 1. warrant in the record AND 2. a reasonable basis in law

Court agrees with the agency

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O’Leary v. Brown-Pacific-Maxon, 1951 Man is on employer’s property, sees a man drowning, goes to save him, drowns himself Pure Law question

o How should scope of employment be defined? Common Law scope of employment asks Detour or Frolic of the activity. Court agrees with the agency decision

Mixed legal questiono Was O’Leary acting in the scope of his employment when he tried to rescue these guys in

the channel? Court says yes Uses substantial evidence test

Why? Cites Universal Camera.

Chevron, 1984 Opinion by Stevens

o Whether the Bubble-concept is legal Question: is this a pure question of law?

The consensus is that it is Chevron analysis

o 1. Has Congress spoken on an issue? With enough specificity? [if not, then we assume Congress had delegated some discretion to the Agency]

o 2. If not, was the agency’s determination reasonable?

INS v. Cardoza-Fonseca, 1987 Stevens writes majority opinion It was fairly well-established that plaintiff feared the Sandinistas b/c they had held relatives

prisoner and plaintiff had fled country Two ways for aliens to petition to not be deported:

o §243: mandatory withhold deportation more likely than not, subject to persecution demonstrates that “life or freedom would be threatened”

o §208: discretionary give asylum “persecution or a well-founded fear of persecution on account of...”

Court rules that the two standards are separate and the terms of each should be used exclusively for that rule, used plain meaning to determine this

o Cites chevron for the court’s and agency’s deference to congressional intent as expressed through the statute

o Also holds (citing chevron) that the judiciary has the final word on the statutory construction, no deference, de novo, just as it was before Chevron was misread by courts, and in particular by Scalia.

Scalia dissents: says Stevens, the author of Chevron, is misinterpreting Chevron. That it should be deferential review of agency interpretations of pure law. No justices join him.

NLRB v. United Food, 1987 (after Cardoza-Fonseca) Courts applies:

o 1. intent of congress through statutory constructiono 2. if silent or ambiguous, then is the agency’s construction of the statute permissible?

Scalia’s vision seems to wino He writes a concurrence (joined by 3 others) declaring that this is a re-affirmation of

strong Chevron analysis Strong Chevron has not really been questioned since this case

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Judicial Review of Agency interpretations of their own regulations

Seminole Rock, 1945 Regarding agencies interpreting their own regulations

o Same as Chevron? More deference?o Seems to be more deferential:

The agency’s interpretation is “of controlling weight unless it is plainly erroneous or inconsistent with the regulation.”

Interpretation of Constitution or Judicial Decisions De Novo review –

o Gulf Power Co. v. FCC , 11th Circuit 2000: no deference for constitutional interpretationo Reno v. Bossier Parish School Board , 2000: judicial opinions no chevron deference... de

novo? Not sure. Contracts, deeds, and other legal instruments are a mixed bag.... page 586

Chevron Step 0:

Wagner Seed v. Bush, 1991, DC Courts holds that EPA interpretation of CERCLA (Superfund) is ok because EPA “administers” it

o It says step 0 is met Chevron Analysis only if step 0 met:

o Step 0: Is this a statute administered by the agency? APA and Freedom of Info. Act not administered by any agency, so not

under Chevron analysiso Step 1: Has Congress spoken?o Step 2: Is this reasonable?

There is a split in the Circuits over whether Chevron deference applies to interpretive rules. (page 593) DC says yes: Ginsburg opinion in Wagner Seed & Health Ins. Ass’n v. Shalala (collects a whole

bunch of cases from DC that say this)o 3rd Circuit agrees with DC: Elizabeth Blackwell Health Center for Women v. Knoll.

10th Circuit disagrees:

Rapaport, 1995, DC If more than one agency interprets a statute, then proceed de novo because none of the agencies is

administering the statute Of course, it seems logical that if one is supposed to administer the statute, then other

interpretations should be discarded

Haggar Apparel, 1999, cited in Mead Held that Customs regulations receive chevron deference

Mead, 2001, Supplement QP: Whether customs classification rulings should receive chevron deference Court holds that Chevron deference applies when the agency is acting with a congressional grant

of authority to make rules that have the force of lawo Examples (safe-harbors):

Adjudication Note-and-comment rulemaking Other indications of congressional intent

Court holds that Chevron does not apply to the ruling in the case

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But, the Court revives Skidmore v. Swift o Skidmore stands for the experience and expert nature of agency decisions. Of course,

some are more than others and judges should give agency action the chance to persuade them.

o No power to control, but there is power to persuade.o “Spectrum” or sliding scale of Skidmore deference: from indifference to substantial

deference Scalia Dissents and thinks that Chevron should always apply

SWANCC v. US Army Corps of Eng., 2001 Solid Waste wants to use an old query outside Chicago as a landfill. The Army Corps of

o Engineers denies them a permit. The Army gets it’s authority from a Congressional statute that gives them jurisdiction over all

navigable waterways. Congress gets its authority from the Commerce Clause because birds travel interstate and need the waters. So, anywhere a bird may get its feet wet is a navigable water. The query outside Chicago had some small ponds and such.

o Or, at least that’s how the Army was interpreting things. Rehnquist dislikes the Army’s interpretation. An agency shouldn’t really be able to determine

their own jurisdiction. Moreover, the Army was interfering with the state of Illinois’ ability to govern it’s own land and waters.

o This is a 10th Amendment issue, and agencies should not get Chevron deference in constitutional questions.

This case is controversial for revived Federalism.

Chevron Step 1: should it be exhaustive investigation or obvious answer?

FDA v. Brown & Williamson Tobacco, 2000, page 618 Basic question: Whether tobacco should be covered by the FDCA? Be regulated by the FDA? This is the step one analysis Why not leave it to congress? (Court does not want to leave this decision to congress.)

o Political pressures will make congress leave the agency’s decision alone? O’Connor seems to make Chevron into one question or maybe reverses, in any case, she definitely

makes it all pretty confusing:o She decides that the agency’s decision is unreasonable and that the reasonable decision

would have contradicted clear congressional intent. Very extensive

Chevron Step 2: what is reasonable? Agencies seldom lose at this stage When they do lose, they seem to be either contrary to the underlying statute or completely bizarre.

AT&T Corp v. Iowa, 1999, page 643 This is an agency’s first loss on step two ever in the supreme court The statute’s standard was “necessary and impair”

o The FCC decided that necessary standard would be met even if alternatives were available because it could cause delay and higher costs for new Market entrants

o The FCC decided that the impair standard would be met if a failure by the incumbent to provide access would decrease quality or increase cost (financial or administrative) when compared with the cost and quality of using the incumbent’s network

Basically, the FCC interpreted every very expansively in order to give new market entrants and competitors the best access to incumbent networks

o Scalia says they based this on an erroneous interpretation of “at any technically feasible point”

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o But, that section only says where access will occur, not which network elements must be unbundled

Not a reasonable interpretation

Reviewing discretionary policy decisions

Q2: outcome v. process v. procedure justification

The benzene case is a good one here, see page 6 of the OUTLINE.

Industrial Union Dep’t, AFL-CIO v. Hodgson, 1974, DC, page 672 Technically supposed to be “substantial evidence” according to OSHA Statute Ends up being a “hard look” review

o The same thing the court would have done under APA arbitrary and capricious Question: is this review done on substance or on procedure? Court remands some things, keeps others...

o Says that agencies must justify the decision to regulate all agencies the same

Motor Vehicle v. State Farm, 1983, page 677 Point One: when agencies rescind a rule, they need to go through the same process and face the

same level of review as in a normal rulemaking. Then, the court applies arbitrary and capricious

o Agency tried to get around this standard by arguing: This was not a policy decision, but a pure discretion decision, so standard should

be abuse of discretion What would the difference be???

Ohnesorge says this is not necessary to know for this courseo 1. the agency never considered just requiring airbags

Test A) the agency must give a reason If no reason, it is prima facie A&C

Test B) if a reason is given, but it is a bad one... it will be overturned as A&C

“Smoking out” bad decisionso Policy decisions need to be made for the right reasons

o 2. they did not examine the actual safety gains caused by passive detachable seatbelts the agency did examine, but failed to distinguish sufficiently passed A but failed B

This is THE SCOTUS endorsement of Hard Look Review

Engraving and Printing v. FLRA, 1993, DC, page 705 Agencies must explain departures from past practice, if not A&C

o This may only result in remand for justification

Center for Auto Safety v. Federal Highway Admin, 1992, DC, page 707 This is a mandate on the states Allowing petitions to excuse from 2 year inspection requirement

o Concurrent problems: 1. A&C 2. Procedural problems with not including data from draft studies

Requiring 5 year inspections for underwater parts of bridgeso No data/insufficient data

Court will not allow the agency to define the record in a vacuum

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Chevron Step Two Conclusion In an article, Judge Silberman says that Chevron Step Two and A&C are analytically the same.

They both end up asking: whether the agency considered and weighed the factors Congress wished the agency to bring to bear on its decision”

Then in a decision, Silberman says the same thing – National Ass’n of Regulator Utility Commissioners v. ICC.

The trend is towards joining the two tests. Pages 713-716.

Preclusion Doctrine 701 (a) (1) and (2) pre-1900, presumption of non-reviewability 1900 SCOTUS gets rid of this presumption 1967, Abbott Labs creates presumption of reviewability

o also allows pre-enforcement review then Overton Park “no law to apply”

Statutory preclusion - 701(a)(1) after Abbott, the courts generally were skeptical of claims of statutory preclusion

o limited statutory preclusion to “direct” or “Express” preclusion mid-80s, near chevron, court makeup changes, New Category of Statutory preclusion:

o Implied Preclusion Block, dairy marketing programs...

Courts should not look to just the explicit grants of preclusion Statutory scheme as a whole, Nature of the action involved, etc

“Committed to Agency Discretion by Law” – 701(a)(2) Possible overlap between this and implied? Overlap in process of examining situation? Just in

practice? Overton Park

o “No law to apply” Webster v. Doe

o CIA fires an employee for being homosexual They did not follow their own regulations This is an informal adjudication

o Majority applies Overton Park and Heckler v. Chaney and find that this is a 701(a)(2) discretionary case where review is precluded

What about the agency regulations?Preclusion, Review

701(a)(1)o express: statute precludes review

courts generally hostile to express restrictions on their right to review actiono implied: preclusion is the intent of congress one way or another

relies more on standard statutory construction seems contrary to the court’s reaction to express preclusion

Block: basically gets rid of customers as plaintiffs (dairy) Bowen: does not preclude consumers (health insurance)

701(a)(2)o “Committed to Agency Discretion by Law”o Webster: when no law exists to apply (from Overton Park), then it is committed to

discretiono Lincoln v. Vigil: congress gives agency money, for no particular reason. Agency creates

program... then decides to end program. No guidance from congress. Probably no review at all b/c implied preclusion OR 701(a)(2)

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Any review (if ANY at all) will be very deferential.Standing

Two major things to know: Need to do Lujon 3 part test, know 3 part test. Adapso zone of interest

Lujon v. Defenders of Wildlife, 1992 Standing – 3-Part test

1. Injury in fact: (a) concrete and particularized and (b) actual or imminent 2. Causal Connection: traceable to challenged action of the defendant, no third party 3. “likely” that injury will be redressed by a court’s favorable opinion

702, see page 802 for summary First sentence = pretty restrictive legal interests/legal wrongs test First sentence was basically re-written by Adapso case (zone of interest), page 810

o Makes the standard for standing much broader: “”aesthetic, conservational, and recreational”

o Zone of interest test is just made up

When?

Exhaustion Twofold:

o Make use of the opportunities that exist within the agencyo Raise during these reviews any arguments you want to raise later in court

Like preserving arguments Why exhaustion?

o We want the agency to have the chance to correct and learn from its own erroro The court will get the most final opinion from the agencyo We want agency process to mean something

Common Law Exhaustion ended with Darby Darby: 704

o if statute does not make requirements for exhaustion, courts cannot create requirements (like those of common law exhaustion)

o in 704, final means exhausted

Finality 704 again

o no finality problem with rules or adjudications that have been finishedo NEED to look at the substance of the rule and the effects on the parties. Are they

substantial? FTC v. Standard Oil of Calif.

o This could also be challenged under standing, i.e. committed to agency discretion by law A lot like prosecutorial discretion

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Ripeness Not in the APA Generally, it is the desire to have agencies apply a rule before having judicial review of the rule. It

may be applied narrowly or broadly. o Actual damage

Affects standing as well Abbott Laboratories:

o General presumption of reviewability by the courts Recognition that judicial review is pat of the game. Realist view of the process.

o Then, two prong inquiry, not necessarily a test, just inquire into these areas: 1. Fitness: “fit” for judicial review?

Then it is ripe 2. Hardship: would there be hardship if we wait until the agency actually applies

this? Then we ignore ripeness and must review it

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Admin Law Outline 2003

Documents

Transcript of Admin Law Outline 2003